Establish a sound mechanism, optimize the environment, care for insurance funds, and be a friend of time
2024-09-14
The latest data shows that the total assets of the insurance industry have exceeded 33 trillion yuan, and the balance of insurance fund utilization is about 30 trillion yuan. For the insurance industry driven by both guarantee and investment businesses, how to do a good job in asset allocation is related to its own stable development and largely depends on the development of the capital market. The recently issued "Several Opinions on Strengthening Supervision, Preventing Risks, and Promoting High Quality Development of the Insurance Industry" proposes to cultivate genuine patient capital. Insurance funds are highly anticipated due to their long-term nature, and the market calls for insurance funds to further play a role as a ballast stone. Industry insiders interviewed by China Securities Journal believe that it is necessary to further improve the long-term investment mechanism, optimize the capital market environment, enhance market profitability, and allow insurance funds to truly settle down and become patient capital. Specifically, appropriate encouragement should be given from the aspects of assessment and evaluation system, repayment ability risk factors, accounting system, and financial and tax system to protect insurance funds and be a "friend of time" with peace of mind. Patient capital is highly anticipated. Many industry insiders have stated that insurance funds with long maturity naturally have the gene of valuing medium and long-term benefits and serving long-term interests. The insurance industry has a long-term mindset and follows the logic of long-term investment in investment concepts, asset allocation, fund management, product creation, etc. It has the natural conditions to become a long-term and patient capital in the capital market Duan Guosheng, CEO and General Manager of Taikang Asset Management, stated that with the high-quality development of the industry, insurance funds are expected to play a role as long-term funds and patient capital, striving to cross the cycle in investment layout, playing the role of institutional investors, and providing more stable financial support for the long-term stable development of the capital market and the growth of the real economy. The role of patient capital played by insurance funds is reflected not only in the primary market but also in the secondary market. From the latest industry practices, in the primary market, the main focus is on investing in early, small, and hard technology to support the development of new quality productivity; In the secondary market, the main focus is on long-term equity market layout, adhering to long-term investment and value investment, and serving as a market ballast. For the real long money, the country has now given a strategic direction, which is to do a good job in five major articles. We need to be patient capital, dive deeper, increase our efforts to explore underlying assets, and layout strategic emerging industries, venture capital, and other fields through innovative investment methods The person in charge of everyone's assets stated. We have many new layouts around the five major articles, all of which are considered from a medium to long-term perspective. We don't take short-term challenges too seriously The person in charge of Guoshou Asset Management stated, "Every time the stock market is sluggish, we will increase our holdings, and there is still a lot of room for the future of the capital market." "The biggest advantage of insurance capital is' long money '. According to relevant arrangements, we will play the role of long-term capital, patient capital, and strategic capital, strengthen asset liability matching management, take asset allocation work to a higher level, orderly and steadily allocate long-term assets, and pursue long-term stable expected returns," said the person in charge of Xinhua Insurance. Further leveraging the role of ballast stones, the asset allocation department of an insurance company determines the scale and timing of equity asset allocation, as well as the issue of matching with the liability side. Within a certain period of time, the overall proportion of equity asset investment will not change significantly unless the company's asset allocation department takes the initiative to make major adjustments. The role of patient capital is a medium - to long-term matter, not just a market trading issue, "said the head of equity investment at a Beijing insurance asset management institution. At present, compared with the upper limit set by regulatory regulations, there is still a lot of room for improvement in the equity asset allocation ratio of many insurance companies. By the end of June, the equity assets of China Life Insurance, China Pacific Insurance, China Ping An Insurance, Xinhua Insurance and PICC were all less than 20%, and some small and medium-sized companies were even below 10%. In addition to being constrained by factors such as solvency, the profit making effect of the stock market also has a significant impact on the equity investment ratio of insurance companies. The money making effect and investment targets can bring reliable returns, allowing capital to settle down. To strengthen the patient capital of the insurance industry, there must be a long-term stable and upward capital market, and the development of the capital market requires a fair, just, and open legal system environment Professor Wang Guojun from the School of Insurance at the University of International Business and Economics believes that only when the capital market brings stable returns to insurance investment, can insurance companies better gather short-term funds into long-term funds. To create a favorable investment environment, the investment safety of insurance funds is the top priority. Therefore, it is necessary to make the investment projects and targets of insurance funds more reliable. With the confidence of market recovery, some insurance companies chose to increase their holdings in the first half of the year when the market was sluggish. For example, officials from Xinhua Insurance stated that since the beginning of this year, they have increased their allocation of equity investments in the primary market and timely made moves in the secondary market during the stock market downturn, seizing a good time window. According to the semi annual report, at the end of the first half of the year, the stock and fund allocation scale of Xinhua Insurance increased by more than 35% compared to the end of the previous year, and investment returns improved significantly. A reporter from China Securities Journal learned in an interview that in the actual investment process, insurance funds attach great importance to investment success rate. Against the backdrop of low interest rates and high stock market uncertainty, many insurance funds have adopted high dividend strategies, increasing their allocation of dividend stocks and other assets to grasp deterministic returns. However, in the future, grouping together for high dividends is no longer a good choice, and there is also significant uncertainty in the trend of other equity assets A senior insurance industry insider in Shanghai expressed concern. From the perspective of the primary market, there are still problems such as difficulty in exiting insurance equity investments, passive increase in capital costs, and scarcity of truly high-quality projects The above-mentioned individuals said that the mechanisms for fundraising, investment management, and withdrawal in the primary market still need to be further optimized. Experts believe that long-term investment is the key to patient capital, and mechanisms that meet long-term investment requirements need to be established at all stages. For example, the contradiction between long-term investment philosophy and short-term performance evaluation pressure needs to be resolved. Wang Guojun stated that in order to make insurance funds more patient, attention should be paid to the long-term evaluation of insurance institutions, the current incentive and restraint mechanisms should be adjusted, and a long-term assessment system should be established. Chen Li, Chief Economist of Chuancai Securities, stated that although there have been policy directions to extend the assessment cycle of insurance companies, there are still few institutions with assessment cycles of more than 3 years, and actual investments are still more concerned about short-term fluctuations. The accounting mechanism for insurance funds should be optimized, and institutions should be further encouraged to establish long-term assessment mechanisms. At the same time, a multi-level interconnected assessment system should be constructed, including investment management institutions, investment managers, products, and portfolios. Cao Deyun, Vice President of the China Insurance Asset Management Association, suggested that relevant policies and systems should be unblocked, and appropriate encouragement should be given in areas such as solvency requirements, risk factor determination, and investment ratio calculation to promote the real practice of long termism in insurance funds and strengthen the characteristic style of long-term investment. Industry insiders suggest that by adjusting accounting systems and establishing better financial and tax arrangements, insurance funds can be encouraged to become "friends of time". (New Society)
Edit：NiChengRan Responsible editor：LiaoXin
Source：China Securities Journal
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