Financial Services Association, March 27 (Reporter Wang Hong) At China People's Insurance's 2023 results conference today, China People's Insurance Chairman Wang Tingke, President Zhao Peng, Vice President Xiao Jianyou, and Vice President Yu Ze responded one by one on hot topics such as profit and loss, car insurance supervision, market value management, and dividend policies.

Wang Tingke said that the insurance industry faces multiple opportunities, and modernization will spawn more insurance coverage needs and risk pools. Policy dividends have also continued to be released, and national governance and policies are increasingly incorporating insurance mechanisms into the policy toolbox. Yu Ze, on the other hand, anticipates a further decline in car insurance expenses, and that car insurance supervision will be strengthened. Zhao Peng said that the People's Insurance Company will strengthen market value management to maintain continuous and stable dividends.

Auto insurance is the main reason for the decline in net profit. Executives look forward to the competitive pattern of car insurance

Financial reports show that in 2023, China People's Insurance achieved insurance service revenue of 503.9 billion yuan, an increase of 7.5% over the previous year. Net profit attributable to mother was 22.773 billion yuan, a year-on-year decrease of 10.2%.

Financial reports show that People's Insurance's core business, Human Insurance, achieved revenue of 457.203 billion yuan, an increase of 7.7% over the previous year. Affected by factors such as the disaster and the return to normal insurance rates after the epidemic, the net profit of Human Insurance was 24.566 billion yuan, down 13.3% from the previous year. In the financial insurance business, the underwritten profit of the car insurance business was 8.623 billion yuan, down 41.1% from the previous year, mainly affected by the recovery in travel rates and changes in cost sharing under the new standards.

Dongwu AfDB pointed out that in 2023, the payout rate for human car insurance increased 2.1 percentage points year on year to 70.4%, due to the resumption of social transportation and travel after the epidemic, and the impact of major disasters such as typhoons and torrential rain; the comprehensive car insurance cost rate was 26.5%, up 0.3 percentage points year on year, mainly due to the impact of insurance policy acquisition cost amortization under the new insurance contract standards. The cost amortization period was lengthened, which is more in line with the actual nature of business development.

Yu Ze responded to the competitive pattern and direction of supervision in the car insurance market at the performance meeting. The pre-car insurance fee rate will drop further, and car insurance supervision will be strengthened.

“It is expected that in the future, auto insurance payout rates will increase further, the expense ratio will drop further, and the Matthew effect will be further evident. Furthermore, on the basis of effectively mitigating financial risks, the General Administration of Financial Supervision has stepped up the supervision of integrated vehicle insurance reporting and reporting. It is expected that a more permanent and strict inspection and punishment mechanism will be formed. Market regulations are more beneficial to reducing vehicle insurance costs and increasing efficiency. It is expected that in 2024, with strict supervision, all entities will reap good benefits,” Yu Ze said.

Referring to the NEV insurance business, Yu Ze said that the comprehensive cost rate for NEV commercial insurance is about 7 percentage points higher than the overall cost rate. The industry is expected to play a role of 10 percentage points. However, he believes that human insurance has several advantages in terms of new energy, such as pricing advantages, cost advantages, and claims advantages, so there is information to maintain the bottom line of profit and ensure the overall operation of new energy vehicles.

Combining assets and liabilities to prevent interest spreads and losses, and increase the allocation of high-dividend listed companies

At the results conference, in response to the risk of interest spreads faced by the industry, Xiao Jianyou believed that although the entire industry is actively studying and preventing interest spread loss risks, the industry's stock debt costs are somewhat rigid.

Regarding how the People's Insurance Company can prevent the risk of interest spreads and losses, Xiao Jianyou said that what the debt side pursues is to continuously reduce debt costs, such as optimizing products, actively promoting sales of products with low scheduled interest rates, and strengthening cost reduction and efficiency. The investment side pursues improving return on investment, promptly grasping the influencing changes that may affect long-term interest rate trends, and adopting dynamic and flexible asset allocation strategies to enhance return certainty. In addition, it is also necessary to strengthen the joint management of assets and liabilities. In the face of rising interest rates, it is necessary to actively manage long-term gaps, prolong the long-term life of assets, and prevent the risk of long-term mismatches.

Referring to the differences between the 2024 investment strategy and the previous year, Huang Benyao, CEO (proposed) of People's Insurance Asset Management, said that there are several main changes:

The first is to strengthen asset liability management, strengthen the linkage of assets and liabilities, and raise the level of refined management of investment-side accounts; the second is to improve and perfect the risk management system, improve risk management capabilities, and reasonably set investment risk preferences according to changes in the capital market; the third is to actively seize investment opportunities, optimize the asset allocation structure, and increase the allocation of listed companies with relatively stable profitability and high dividend levels that are sustainable for a long time. Increase the yield on bond spreads, increase return on investment; accelerate the layout of industries closely related to the main insurance industry.

Wang Tingke believes that the insurance industry faces several major opportunities: the high-quality development of China's economy will lay a solid foundation for the insurance industry; China's modernization drive has spawned more insurance coverage needs and risk pools; disaster prevention and mitigation, emergency management, social security, grassroots governance, health care, production safety, etc., and insurance mechanisms are increasingly being incorporated into the policy toolbox, and policy dividends are continuously released; a high level of openness brings more opportunities; and strong supervision creates a strong regulatory and market environment for the high-quality development of the insurance industry.

Market value management will be strengthened to maintain continuous and stable dividends

Cinda Non-Bank pointed out that under the new standards, China People's Insurance's total investment income in 2023 was 20.807 billion yuan, with a total return on investment of 3.5%. The investment balance at the end of 2023 was 60.711 billion yuan, an increase of 4.3% over the beginning of the year.

Among them, in terms of equity, investment accounted for 26.4% of the total investment portfolio, an increase of 2 percentage points over the beginning of the year, mainly due to the increase in the size of funds and perpetual bonds. However, the size of stocks declined, accounting for 6% of the total investment portfolio, down 0.8 percentage points from the beginning of the year. In terms of fixed income, treasury bonds, government bonds, long-term debt investment plans, and other types of fixed income investments increased significantly over the same period last year.

The annual report also announced the dividend policy. China People's Insurance plans to pay a cash dividend of 6.899 billion yuan (tax included) to shareholders in 2023. The dividend payment rate calculated based on net profit attributable to shareholders of the parent company was higher than 30% for four consecutive years.

“The company will maintain the continuity and stability of the dividend policy. The People's Insurance Group's dividend ratio will remain above 30% for 4 consecutive years, and the People's Insurance Insurance dividend ratio will remain above 40% for 5 consecutive years. It will not fall below this ratio in the future. Furthermore, the Group will respond positively to investors' demand for dividends, optimize and improve its dividend policy, and enhance its own profitability,” Zhao Peng said when discussing future dividend policies.

The State Assets Administration Commission indicated that market value management assessments for listed companies should be fully implemented in 2024. On this hot topic, Zhao Peng also responded.

Zhao Peng said that China People's Insurance has always attached great importance to market value management and included market value management assessments in relevant departments earlier in the industry. People's Insurance Group's A- and H-share stock price increases have outperformed the industry average for three consecutive years, and People's Insurance's stock price has led the industry in the past three years. The next step will be to place market value management in a more prominent position, further strengthen market value management, and strive to achieve steady growth in stock prices and market capitalization. This includes improving business performance, enriching market value management methods and tools, and maintaining a continuous and stable dividend policy.