With the efforts of people, the help of heaven and the dividend of policies, the profits of listed insurance companies are expected to increase significantly in 2019.
Judging from the listed insurance companies that have issued pre-increase announcements, China Life's net profit has soared by 400% Mel 420%, and is expected to reach 56.975 billion-59.254 billion yuan, while PICC's net profit is expected to increase by 60%-80%, and is also expected to reach the best in history of 21.52 billion-24.21 billion yuan.
The reasons for the big increase in performance include the increase in investment income and policy "tax cuts". In addition, PICC also mentioned the factors of improving the insurance business.
In fact, in the first three quarters of last year, the growth rate of net profit of insurance companies ranked first in all industries of listed companies, which has already provided some reference for the annual performance. The market also reflected that the insurance sector rose 53% for the whole year, which is at the top of all industries, with an increase of 2.4 times that of the market as a whole.
The net profit of China Life is expected to soar by 400% and 420%.
On the evening of the 19th, China Life issued a pre-increase announcement that the net profit of 2019 is expected to increase by about 45.58 billion-47.859 billion yuan over 2018 (11.395 billion yuan), an increase of about 400 percent over the same period last year. The expected performance has not been audited. As a result, China Life's net profit in 2019 is expected to reach 56.975 billion-59.254 billion yuan.
For the full-year performance growth, the main reasons stated in the announcement are still the same as those in the previous pre-growth period:
First, the investment income has increased significantly. In 2019, the company has promoted the market-oriented reform of the investment management system, continuously strengthened asset and liability management, continuously optimized asset allocation strategies, strengthened basic assets and strategic asset allocation, and greatly improved the company's investment income.
Brokerage Chinese reporters learned that China Life Group, the shareholder of the listed company China Life, had an investment income of 210 billion last year, a sharp increase of more than 70 billion compared with the same period last year, according to the data of the recent annual working meeting of the China Life Group, a listed company. Although it is not the investment income of listed China Life, its investment income performance can be used as a reference because China Life is the most important subsidiary of the group.
Second, it is affected by the adjustment of the policy of pre-tax deduction for handling fees. On May 29, 2019, the Ministry of Finance and the State Administration of Taxation issued the announcement on the Policy of pre-tax deduction of Insurance Enterprises' fees and Commission Expenditure (hereinafter referred to as the "New Policy of handling fees"). It is clear that the settlement and payment of enterprise income tax for 2018 shall be carried out in accordance with the announcement. As a result of the implementation of this policy, China Life's enterprise income tax payable in 2018 will be reduced by about 5.154 billion yuan, with a corresponding reduction in income tax expenses in 2019 and a corresponding increase in profits in 2019.
The tax credit policy factor is the impact of non-recurrent gains and losses, that is, an one-off increase in 2019 of the "tax rebate" profits that should be realized in 2018. If you deduct the influence of this factor, the net profit in 2019 is expected to increase by about 350% compared with the same period last year. 370%, the growth rate has narrowed down, but it is still high.
China Life's high performance growth in 2019 is inseparable from the strategic effect of "revitalizing national life" from the analysis of brokerage research and report. For example, in the middle of last year, the non-bank team of China Merchants Securities issued a research report saying that the firm determination and efficiency expectations of the current market for the transformation of Guoshou are not sufficient, and it is not sufficient for the company to continue the higher value growth trend in 2020. Optimistic about the company's chairman Wang Bin as the helmsman of the new management to revive Guoshou's strategic thinking and policy implementation, transformation is not a temporary slogan.
Why the annual growth rate of 2019 is much higher than that of the previous three quarters
It is worth noting that since the "tax cut" effect of the new fee policy in May last year, China Life's net profit last year also performed well in the China report and the three-quarter report, but the growth rate was only 1-2 times, down from 4 times for the whole year. Why is that?
Of this total, the net profit in the first half of last year was 37.599 billion, up 128.9% from the same period last year; and the net profit in the first three quarters of last year was 57.702 billion, up 190% from the same
Now, in the fourth quarter of last year, China Life's full-year growth rate soared to 400 per cent, which looks a bit "scary". On January 20, the day after the results were released, China Life shares rose more than 3.4 per cent, leading insurers higher.
China Life's full-year net profit increased sharply, which is much higher than the growth rate of the previous three quarters, due to the low base in the fourth quarter. China Life's net profit in the first three quarters of 2018 was 19.869 billion yuan, compared with a net profit of 11.395 billion yuan in 2018 and a net loss of 8.4 billion in the fourth quarter of last year. Thus, full-year 2018 net profit, which serves as the base for 2019, is lower than the base for the first three quarters of 2019, which will boost growth significantly, especially if 2019 results are good.
The loss in the fourth quarter of 2018 is related to the decline in the equity market and investment income, as well as the higher impairment. Some brokerage research reports have analyzed that China Life has a higher impairment provision after the fall in the equity market in 2018, which has laid a basic advantage of "light travel" for its 2019 performance. The head of China Life Investment has said that as listed insurance companies in A shares, H shares and US stocks, China Life has implemented relatively stringent accounting policies since its listing in 2003, and the impairment conditions for open market equity investments are more stringent than those of the same industry.
PICC is expected to make a profit of 21.5 billion-24.2 billion, the best in history.
On the evening of the 21st, PICC announced that according to preliminary estimates, the net profit of 2019 is expected to be 21.52 billion-24.21 billion yuan (unaudited), an increase of 8.07 billion-10.76 billion yuan over the same period last year, or 80% of the year-on-year increase. This level of net profit will be the best in its history.
After deducting non-recurring profits and losses, the net profit is expected to be 18.249 billion-20.856 billion yuan in 2019, an increase of 5.214 billion-7.821 billion yuan over the same period last year, or 40%, 60%.
According to PICC, there are two main reasons for the pre-increase in performance: first, the impact of the main business. Including a steady increase in insurance business in 2019 and an increase in investment income compared with the same period last year. The second is the influence of non-recurrent profit and loss. Under the aforementioned poundage new policy, PICC property insurance and life insurance will confirm the impact of the new policy on income tax expenses in 2018 in 2019 at one time, and increase the net profit of the current period accordingly.
In terms of insurance business, auto insurance has entered a strict supervision cycle, which is good for the leader, while PICC mainly focuses on property insurance and benefits greatly. PICC property insurance premiums have long occupied 1 / 3 share of China's property insurance market, and it is the largest property insurance company in China and Asia. Last year, the premium income reached more than 430 billion yuan, the annual premium exceeded 400 billion for the first time, and its global ranking is expected to rise from the third to the second.
PICC property insurance not only pays attention to the advantage of scale, but also pays attention to benefit, which sets the development direction of synchronous promotion and optimization of scale, benefit and structure. Among them, the comprehensive cost rate of commercial property insurance business has set a long-term target of about 95%, which is also the level of the international advanced industry.
Life insurance is a relatively weak area of PICC Group, which is currently promoting value transformation, and the goal of life insurance is to raise the value of new business to a higher level within 3-5 years. According to the PICC Group last year, the business value of life insurance has increased greatly, and the brokerage research newspaper believes that there is still much room for growth in life insurance.
Insurance stocks led the market last year.
Judging from the information released by the 2020 working meeting held by insurance companies, the performance of many insurance companies in 2019 has reached an all-time high, which has been reflected in the capital market.
In 2019, A shares came out of the structural bull market. The Shanghai Composite Index rose 22.3%, the Shenzhen Composite Index rose 44.08%, the small and medium-sized Board Index rose 41.03%, and the gem Index rose 43.79%, which led to a substantial increase in the investment income of insurance companies.
The increase in investment income has further promoted the profit growth of insurance companies, and the share price of insurance stocks outperformed the market last year. The insurance sector rose 53% for the whole year, ranking first among all industries, with an increase of 2.4 times that of the overall market.
Among them, China Life's A shares rose 72%, leading the insurance sector up, followed by a total market capitalization of more than $100 billion to regain the label of the world's largest market capitalization life insurance. Meanwhile, China Life's third quarterly report in 2019 showed that a new sovereign fund increased its holdings in the quarter, namely, the Abu Dhabi Investment Authority (AbuDhabi Investment Authority, ADIA), which holds 10.2383 million shares, accounting for about 0.05 per cent of outstanding shares.
People in the insurance industry generally believe that China's insurance penetration is low, coupled with entering an aging society, and the population has a longevity trend, the growth space and long-term potential of China's insurance market are optimistic. The Swiss re Institute predicts that China will become the world's largest insurance market in the next 10 to 15 years.
National policy is also guiding the development of commercial old-age insurance. The executive meeting of the State Council on December 30 last year proposed to actively develop commercial insurance in the field of social services to provide support to deal with aging more effectively and meet the other insurance needs of the masses.