On November 1, according to Caixin Global (Reporter: Xia Shuyuan), Rui Zhong Life once again ventured south to acquire high-yield assets. On November 1, Rui Zhong Life issued a temporary disclosure announcement showing that on October 28, Rui Zhong Life acquired 4.188 million shares of China Longyuan's H-share, totaling 0.417991 billion shares, accounting for 5% of the total share capital of the listed company.

Before participating in the current equity acquisition transaction, Rui Zhong Life already held 0.413803 billion shares of China Longyuan's H-share, representing 4.95% of its total share capital (A+H). According to Caixin Global, as of November 1, insurers have participated in equity acquisitions 12 times this year, targeting 11 listed companies, marking the highest number of equity acquisitions in almost four years.

Chief Insurance Researcher at the China Insurance Research Institute, Qiu Jian, said that insurers frequently acquiring stakes in listed companies is not only related to the investment environment and market entry timing faced by insurers, but also closely linked to insurers adjusting their investment strategies under the new accounting standards. Qiu Jian also cautioned: "In a low-interest rate environment, while insurers can leverage the long duration advantage to gain substantial returns, they should strengthen their forward research and judgment on the mid-term interest rate trend, enhance yield protection under the premise of strengthening asset-liability matching, and prevent reinvestment and interest spread risks."

Rui Zhong Life once again took action to acquire a stake in China Longyuan's H-share, involving 30.0377 million Hong Kong dollars.

As an indispensable and important investment force in the capital markets, the repositioning dynamics of insurers are closely monitored by investors.

On November 1, Rui Zhong Life issued a temporary disclosure announcement showing that on October 28, Rui Zhong Life acquired 4.188 million shares of China Longyuan's H-share, involving 30.0377 million Hong Kong dollars.

After the aforementioned equity participation, Rui Zhong Life holds 0.417991 billion shares of China Longyuan's H-share, accounting for 5% of its total share capital. Based on China Longyuan's H-share closing price of 7.13 Hong Kong dollars per share on October 28, with the Hong Kong dollar to Renminbi exchange rate at the day's end as the benchmark, Rui Zhong Life's book value of holding China Longyuan's H-shares is 2.734 billion yuan.

It is reported that ruizhong life's purchase of Longyuan Electrical H shares this time is funded by its own capital account and universal account insurance liability reserve, dividend account insurance liability reserve. In addition, this stakeholding of Longyuan Electric H shares is included in equity investment management.

It is worth noting that as early as July 22 this year, Ruizhong Life increased its holdings of Longyuan Electric by 5.26 million shares at a price of 7.45 Hong Kong dollars per share, with a total amount of about 39.187 million Hong Kong dollars. After the increase, the shareholding ratio reached the 5% stakeholding line.

Public information shows that Longyuan Electric was established in 1993 and is a large comprehensive power generation group mainly engaged in the development and operation of new energy, currently under the State Energy Group.

In 2009, Longyuan Electric successfully listed on the main board in Hong Kong, and in 2022, it was listed on the A-share market, becoming the first domestic H-share new energy power central enterprise to return to the A-share market, the first of the five major power generation groups new energy companies to land on the A-share market, the first to simultaneously implement share swap absorption and merger, asset sales, and asset purchase projects.

Currently, Longyuan Electric owns wind power, photovoltaic, biomass, tidal, geothermal, and thermal power projects, with business operations in 32 provinces and regions in China as well as countries such as Canada, South Africa, and Ukraine. By the end of 2023, Longyuan Electric's controlling installed capacity is 35,593.67 megawatts.

In the first three quarters of 2024, Longyuan Electric achieved operating revenue of 26.35 billion yuan, a decrease of 6.39% year-on-year; net profit attributable to the parent company was 5.475 billion yuan, a decrease of 10.61% year-on-year.

Related personnel from Ruizhong Life told Caixin reporters that the main reason for acquiring stakes in power companies is the company's recognition of the importance and urgency of energy security and green transformation. They also believe that excellent companies in the energy sector can better serve national strategies and ensure the country achieves high-quality development.

Insurance companies have launched a total of 12 stake holdings in listed companies this year, the highest number in nearly 4 years.

In fact, Ruizhong Life's stake in China Longyuan Power is just a microcosm of the resurgence of insurance companies' enthusiasm for takeovers.

Specifically, this year, insurance companies taking stakes in listed companies also include Changcheng Life, Zijin Property & Casualty Insurance, as well as a concerted action group formed by a subsidiary of China Pacific Insurance.

Among them, Changcheng Life is the main force of the stake-holding, having staked in a total of 6 listed companies this year, namely Wuxi Rural Commercial Bank, City Development Environment, Qinhuangdao Port, Jiangsu Jiangnan Water, Jiangxi Ganyue Expressway, and Dynagreen Env. As of June 30, the equity asset book balance of Changcheng Life was 18.683 billion yuan.

At the same time, Zijin Property & Casualty Insurance holds stakes in Wuxi Huaguang Environment & Energy Group, while a subsidiary of China Pacific Insurance holds stakes in Huadian Power and Huaneng Power; Ruizhong Life holds stakes in China Longyuan Power (twice this year) and China Tourism Group Duty Free Corp.

According to reporters from Caixin, as of November 1, insurance companies have taken stakes 12 times this year, targeting 11 listed companies. The number of times and the number of targeted listed companies have both reached nearly a 4-year high.

The Chief Risk Management Officer of a certain insurance asset management company told Caixin reporters that the acceleration of insurance companies' takeovers of listed companies is partly due to regulatory encouragement for insurance funds to enter the market.

"From a policy perspective, regulators have successively issued documents encouraging the insurance industry to increase its holdings of listed company stocks. For example, lowering the risk indicators for investing in CSI 300 index constituent stocks, lowering the risk indicators for investing in ordinary shares listed on the STAR Market, and lowering the risk indicators for investing in non-transparency of publicly offered REITs are all intended to guide insurance institutions to allocate more funds to equity assets, to some extent improving the capital utilization efficiency of insurance companies."

On the other hand, with the decline in deposit rates, bond yields, and returns on non-standard assets, insurance funds also have a demand to increase their overall investment returns by allocating to equity assets.

From the above-mentioned industry classification of the listed companies that were taken by insurance companies, it includes utilities, banks, transportation, commerce, and professional services. At the same time, these companies that were taken have the characteristic of high dividend yields.

The above-mentioned individuals stated that the industries where the listed companies taken by insurance companies operate have good development prospects, as well as good fundamentals such as stable profitability and healthy cash flow. In addition, the valuations of these listed company stocks are relatively reasonable, with a certain safety margin.

For companies listed in both A shares and H shares, insurance companies mostly choose H shares for takeover. In this regard, Chen Hui, Director of the China Actuarial Science and Technology Laboratory at the Central University of Finance and Economics, believes that insurance companies are keen on taking over H shares primarily due to the need for asset allocation. From the perspective of asset selection, blue chip stocks in the domestic A-share market are currently generally undervalued, while H-share investors are mainly institutions, with a strong price discovery function. From a long-term perspective, insurance funds will gradually seek stocks with stable dividend yields, no longer blindly pursuing highly volatile stocks.