① Make adjustments to traditional insurance policies before August 31st, and make adjustments to participating insurance and universal insurance products before September 30th. The next step is to focus on participating insurance and hope to bring new growth momentum through participating insurance; ② The mid-term dividend accounts for 15% of the net income attributable to the parent company in the first half of the year, equivalent to 19% of last year's annual profit; ③ Regarding asset allocation strategy, follow the basic rule of asset-liability matching and not give up the opportunity for phased allocation of equity investments.
On August 30th, Xinhua Insurance's stock price hit the limit up, with a market cap of 100 billion yuan. During today's 2024 mid-year earnings conference, Xinhua Insurance executives responded to the strategy for dealing with the interest rate cut for insurance policies. Vice President Wang Lianwen stated that traditional insurance adjustments will be made before August 31st and dividend insurance and universal insurance product adjustments will be made before September 30th. Vice President and Chief Actuary Gong Xingfeng stated that the next step is to focus on dividend insurance and hopes to bring new growth momentum through dividend insurance.
In response to Xinhua Insurance's first mid-year dividend, Gong Xingfeng stated that the mid-term dividend accounts for 15% of the net profit attributable to the parent company in the first half of the year, which is equivalent to 19% of last year's annual profit. Regarding asset allocation strategy, Qin Hongbo stated that they will follow the basic rule of asset-liability matching, while also not giving up the opportunity for phased allocation of equity classes while fixed income accounts for the majority. Chairman Yang Yucheng believes that insurance funds hold too much position in bonds and there needs to be a moderate strategic shift.
The products will be adjusted in two batches, hoping to bring growth momentum through dividend insurance.
"After August 31st, there will be a product adjustment in the market", Wang Lianwen stated that a dedicated team has been formed to respond to the optimization and adjustment of 1+N products. The first batch of adjustments for traditional insurance will be made before August 31st, and the second batch of adjustments for dividend insurance, universal insurance, and other products will be made before September 30th.
Gong Xingfeng stated that after this product adjustment, the characteristics of different types of products will become more prominent. On the one hand, they will optimize traditional insurance, and on the other hand, they will focus on dividend insurance. They will launch more dividend insurance products to meet customer demands for protection, savings, and asset inheritance. They also hope that the development of dividend insurance will bring new growth momentum and dividends to the company.
Regarding the strategy adjustment direction after the comprehensive reduction of the contracted interest rate for insurance products, Gong Xingfeng revealed that the next step will involve implementing a diversified product strategy, increasing product innovation, optimizing business structure, building a service ecosystem for insurance and services, and improving business aspects of the team to deal with challenges.
Wang Lianwen stated that the company must form a diversified product strategy and launch various products such as savings-type, dividend-type, universal insurance, and health insurance to meet diverse customer needs. "At the same time, we must focus more on the customer. First, we must maintain the stability of core products and ensure a smooth transition for the team. Second, we must increase product innovation through differentiated product design, more accurate customer identification, and tiered business team sales to drive product innovation," said Gong Xingfeng.
"The integration of individual insurance channels with banks is an inevitable trend," said Wang Lianwen. It has been anticipated that the integration with banks will be launched across all channels, and the company has prepared countermeasures to deal with the changes. The company has also initiated cost reduction and optimization of actuarial assumptions and other related work in advance to ensure product competitiveness; increased the development efforts and promotion strategies for savings and dividend products, and explored insurance innovation with service.
Does the integration of individual insurance channels and banks affect the enthusiasm of the sales team? Wang Lianwen believes that as long as the company's team capacity and sales volume continue to increase, even after the commission rate in the entire industry has decreased, the short-term decrease in team income can be offset. Overall, it is necessary to improve product competitiveness, raise the level of sales team, and achieve a win-win situation for customers, the company, and the team.
Optimize bond investments and strategically shift. Mid-term dividends account for 15% of the profits in the first half of the year.
When asked about the investment strategy in the volatile equity market this year, Qin Hongbo said that in terms of equity allocation, it is necessary to follow the rules of the life insurance industry and adhere to the basic principles of asset and liability matching. While fixed income plays a dominant role, it is also important not to give up the opportunity for phased equity allocation. Especially in the different opportunities for allocation in the Hong Kong stock and A-share markets, the fixed income and equity allocations should be adjusted to a relatively appropriate position in line with the market rhythm.
Regarding fixed income, "Historically, we have held a considerable amount of high-yield bond varieties in our hold-to-maturity accounts, which has achieved relatively good returns for our fixed income portfolio and laid a solid foundation for mitigating interest rate risk. It is also an important weapon to cope with the low interest rate cycle in the future," said Qin Hongbo.
In terms of specific directions, Qin Hongbo revealed that the company mainly follows three directions: closely following the direction of national industries, especially the new productive forces and key areas supported by the country; focusing on leading companies in various industries, especially in terms of investment in Hong Kong stocks; optimizing equity investment institutions based on the high dividend strategy, and striving to make more achievements in terms of long-term patient capital and strategic asset allocation.
Yang Yucheng said that each insurance capital company has an excessive position in bonds, with a proportion of investment in fixed deposits and bonds that is too high. "We need to make strategic shifts in a moderate manner, keep up with the development of the situation, improve the investment varieties, not only focus on industry leaders and subdivision leaders, but also actively explore investments in preferred stocks, ABS, REITs, and other aspects, comprehensively enhancing the stability of portfolio returns". Overall, the emphasis is on the overall allocation of assets.
In response to the first mid-term dividend payout in the history of New China Life Insurance, Gong Xingfeng stated that it was in response to the requirement of the China Securities Regulatory Commission to give back to investors. Taking into account various factors, the company's mid-term dividend in 2024 accounts for 15% of the net income attributable to the parent company in the first half of the year, which is equivalent to 19% of the annual profit last year. The next step will comprehensively consider the company's business development needs, strike a balance, and steadily launch the annual dividend plan.