(Caixin) On September 5th, it was reported that several insurance asset management companies have disclosed their semi-annual reports, showing stable and increasing profits in the first half of the year. However, industry insiders believe that there is still significant pressure in the industry in the second half of the year.

On September 3rd, China Life Insurance Asset Management Co., Ltd. (hereinafter referred to as "China Life Asset Management") released its semi-annual report, revealing that the company achieved revenue of 2.88 billion yuan and net income of 1.529 billion yuan in the first six months of this year, with year-on-year growth rates of 5.38% and 2.62% respectively. Earlier, Taikang Asset Management Co., Ltd. (hereinafter referred to as "Taikang Asset Management") released its semi-annual report, showing that the company achieved revenue of 2.776 billion yuan and net income of 1.09 billion yuan in the first six months, with year-on-year growth rates of 4.24% and 9.55% respectively.

Several insiders in the insurance asset management industry told Caixin reporters that the performance of various institutions' investment in the bond market improved in the first half of the year, but the industry as a whole still faces significant pressure going forward. In particular, the performance of equity assets such as stocks and bonds may face new challenges, which will test the investment capabilities of institutions. In addition, some industry insiders pointed out that it is currently difficult to invest in non-standard (products).

Insurance asset management has shown stable and increasing profits in the first half of the year, but there are concerns within the industry about increased pressure in the second half of the year.

According to the mid-year reports, the investment income of many listed insurance companies rebounded in the first half of the year, mainly due to the recovery of the equity market. Chen Li, Chief Economist of Chuancui Securities, analyzed that the increase in investment income of insurance companies in the first half of the year is mainly due to the allocation of fixed income assets and the improvement in the returns of bonds and high dividend equity assets compared to previous years.

Recently, several insurance asset management institutions have disclosed their year-on-year improvement in operating performance. The mid-year reports of China Life Asset Management and Taikang Asset Management show that the net income of the two companies in the first half of the year increased by 2.62% and 9.55% respectively compared to the same period last year. Industry insiders believe that this is mainly due to the investment income from the bond market in the first half of the year.

According to exchanges and discussions with industry insiders, as the fund management institutions of insurance companies, the investment style and goals of insurance asset management institutions are influenced by their parent companies. Recently, a senior insider in a leading insurance asset management institution told reporters that the good investment income of the insurance funds is mainly due to the good performance of the bond market in the first half of the year, as well as the performance of related equity investments. The insider also stated that the investment performance of their institution in the first half of the year was also good.

However, many insiders in the insurance asset management industry generally believe that there will still be relatively high pressure on the performance of the second half of the year. "Stocks and the bond market are not doing well now, which tests investment capabilities," said one insider. "The investment results for the first half of the year were good, but we need to see the situation at the end of the year for the second half. It's quite volatile now."

Industry institutions generally believe that the bond market may shift from a previous one-sided bull market to volatility. On September 5, according to a research report by Citic Securities, although the problem of insufficient effective domestic demand still exists and the possibility of a rate cut by the Federal Reserve may help further open up the domestic monetary policy space, the bond market still faces a lot of uncertainty.

The institution also stated that on the one hand, with the requirement to achieve the target for annual economic growth, the urgency of implementing stable growth policies has increased, and on the other hand, the central bank may continue to adjust the government bond yield curve. In addition, factors such as the difficulty in lowering capital interest rates in September, low liquidity in the bond market, and redemption pressure on wealth management and funds still exist. It is expected that the bond market in September may still experience range volatility and increased fluctuations.

Innovative product businesses are contracting, and non-standard issuances are still declining.

In addition, the latest data shows that in the first half of 2024, the number and scale of innovative products in the insurance asset management industry continued to shrink, and the issuance of non-standard bond investment plans remained on a downward trend.

According to the statistics from China Insurance Asset Management Association and China Insurance Regulatory Commission website, in 2023, a total of 575 innovative products were registered in the Chinese insurance asset management industry, a decrease of 19 compared to the same period last year; the registered scale was 1.315 billion yuan, a decrease of 2.97% compared to the same period last year. From January to June 2024, a total of 220 innovative products were registered in the Chinese insurance asset management industry, a decrease of 17 compared to the same period last year; the registered scale was 420.522 billion yuan, a decrease of 8.46% compared to the same period last year. Among them, bond investment plans remain the main variety, accounting for 80.91% in quantity, while asset support plans, equity investment plans, and insurance private equity funds account for 15.91%, 2.27%, and 0.91% respectively.

"In the first half of 2024, due to the impact of multiple factors such as slow economic recovery, sluggish investment and financing markets, the substitutive effect of reduced bank credit and bond costs, and the implementation of debt-for-equity policies, the registration number and scale of innovative products in the insurance asset management industry continue to decline," pointed out by China Chengxin International analysis.

At the same time, the latest data shows that in the first half of 2024, the number of registered bond investment plans has decreased, but the registered scale has slightly increased. Investment is increasingly concentrated in the Zhejiang region, and the number and scale of projects registered in the transportation industry have increased significantly, while the proportion of commercial real estate has rapidly declined.

According to the data from the China Insurance Asset Management Association, a total of 444 registered debt investment plans were recorded in the whole year 2023, a decrease of 41 compared to the previous year, a decrease of 8.45%, with a registered scale of 735.661 billion yuan, a decrease of 15.56% compared to the same period last year. Since 2024, with the strict implementation of the debt-to-equity policy, the number of registered debt investment plans has shown a downward trend. In the first half of 2024, a total of 178 registered debt investment plans were recorded, a decrease of 19 compared to the same period last year, a decrease of 18.63%, and the registered scale increased slightly by 0.19% to 280.994 billion yuan, returning to the level of the same period last year.

China Credit International stated that since 2023, the slow recovery of the economy and the further highlighting of the problem of insufficient demand under unstable expectations have led to a decrease in the demand for real financing and a low investment performance. At the same time, influenced by the downward substitution effect of bank loan costs and bond market issuance costs under the broad credit background, coupled with the continuous decline in interest rates and the narrowing of interest rate spreads, the impact of the difficulty in obtaining satisfactory assets under the backdrop of a shortage of high-quality assets, and the tightening of non-standard financing policies under the debt-to-equity background, the development of debt investment plans has entered a continuing downward trend.