Financial Associated Press, April 30 (Reporter Zou Juntao) recently, A-share listed insurance companies have disclosed their performance data in the first quarter one after another, generally under pressure from a profit point of view. Much attention has been paid to how insurance companies deal with declining profits.

On the afternoon of April 30, the secretary of the PICC board of directors explained the accelerated decline in profits at the performance presentation meeting, saying that the company's net profit in the first quarter showed short-term fluctuations, mainly caused by more economic losses caused by natural disasters, an increase in the occurrence rate of car insurance, a decline in equity investment income and other factors.

FishtalespinballHe said that PICC assets are implementing the "investment empowerment project" to enhance their active management capacity and strengthen the building of equity investment capacity. In the use of funds, the company will further enhance the proportion of OCI assets and enhance the stability of investment income under the new accounting standards.

Equity fluctuations accelerate the decline in profits, PICC said it will increase the proportion of OCI assets

According to PICC, the company achieved revenue of 1387 in the first quarter of this year.Fishtalespinball7.8 billion yuan, an increase of 0% over the same period last yearFishtalespinball.7%, the net profit of returning to the mother was 8.963 billion yuan, down 23.5% from the same period last year. The rate of decline has increased from the previous year.

Once upstream explained that the company's net profit in the first quarter showed short-term fluctuations, mainly affected by three factors.

First, there are many economic losses caused by natural disasters. According to the data released by the Ministry of Emergency Management, the direct economic loss caused by natural disasters in China in the first quarter was 23.8 billion yuan, the largest loss in the past five years, and the loss in the same period last year was 2.6 billion yuan, an increase of nearly 10 times compared with the same period last year.

Second, with the continued pick-up in economic activity and the growth of customer travel, the car insurance risk rate increased in the first quarter of last year, while the first quarter of last year was in the transition stage of epidemic prevention and control, and the risk rate has not yet returned to the normal level.

Third, due to the influence of the capital market, the investment income of corporate equity decreased compared with the same period last year. In the first quarter of 2024, the lack of momentum of the global economic recovery and the overlapping of domestic cyclical structural contradictions posed challenges to investment management, according to China Pacific Insurance. By the end of the reporting period, PICC's weighted average return on net assets was 3.7%, down 1.3 percentage points from a year earlier.

What is worth paying attention to is that the upstream introduced the planning of asset allocation of corporate rights and interests at the meeting. He said that PICC assets are implementing the "investment empowerment project", enhancing the ability of active management, strengthening the building of equity investment capacity, stabilizing the basic market of fixed income, opening up an alternative investment growth market, and continuously optimizing the allocation of overseas assets. give full play to the main role of investment income.

With regard to the use of funds, Zeng said that the follow-up company will actively seize investment opportunities and adjust and optimize the asset allocation structure. Further increase the proportion of OCI assets, reduce the proportion of TPL assets (including funds recognized as TPL assets under the new accounting standards), and enhance the stability of investment income under the new accounting standards. At the same time, the investment income will be further thickened by increasing the allocation of high-quality listed companies with stable profitability and high dividend rate and widening the bond trading spread.

According to a reporter from the Financial Associated Press, OCI assets are other comprehensive income assets. Wu Yifan and Xie Yuchen, non-bank teams at Cheung Kong Securities, pointed out that insurance companies increased their OCI assets to hedge against the increase in the volatility of profits and net assets caused by accounting policies.

According to the agency's analysis, listed insurance companies will need to adopt new financial instruments standards and new insurance contract standards from 2023. The new insurance contract standard allows insurance companies to exercise the OCI option to include the impact of discount rate changes on traditional insurance into other comprehensive income. In order to reduce the fluctuation of net assets, a large number of fixed income assets are reclassified as FVOCI.

A reporter from the Financial Associated Press learned that under the influence of the new financial instruments standards, some insurance companies have begun to adjust their asset allocation ideas. According to the statistics of the non-bank team of Changjiang Securities, taking the data of the mid-term report in 2023 as an example, the proportion of OCI assets in the stock assets of listed insurance enterprises is obviously differentiated, and the shares of Guoshou, Ping an, Pacific Insurance and Xinhua are classified as OCI accounts of 0.03%, 58.5%, 14.1% and 6.5%, respectively.

Insurance companies are generally under pressure on their profits in the first quarter, for different reasons.

It is understood that among the five major A-share insurance companies, only China Pacific Insurance achieved positive growth in net profit in the first quarter, with the company returning to its mother with a net profit of 11.759 billion yuan, an increase of 1.1% over the same period last year.

The net profit growth rates of the four insurance companies, namely, China Life Insurance, China Life Insurance, Xinhua Insurance and China Ping an, are all negative. Of this total, China Life's net profit in the first quarter was 20.644 billion yuan, down 9.3% from the same period last year.FishtalespinballXinhua Insurance made a net profit of 4.942 billion yuan in the first quarter, down 28.6% from the same period last year, while Ping an of China made a net profit of 36.7 billion yuan in the first quarter, down 4.3% from the same period last year.

A reporter from the Financial Associated Press noted that the profits of the five major A-share insurance companies in the first quarter of this year showed a phenomenon of "one rise and four declines", but the specific reasons behind them were different.

According to Soochow Securities, the decline in insurance service performance is a drag on China Life's profit release. The agency compared the new standard data of the same caliber, and China Life's insurance service performance fell 20.4% in the first quarter compared with the same period last year, mainly due to the actual overpayment of insurance service fees.

Soochow Securities pointed out that underwriting profit fell 27.2 per cent year-on-year, which was the core reason for the decline in China Life's current net profit, mainly due to the downward long-end interest rates slowing the rate of CSM amortization.

According to the analysis of Kaiyuan Securities, the new premiums of Xinhua Insurance in the first quarter are dragged down by the "integration of banks and banks". The company's new order premiums in the first quarter were 10.91 billion yuan,-45% compared with the same period last year, mainly due to a sharp drop of 81.4% in bulk new order premiums. From a sub-channel point of view, the new order of the bancassurance channel shrank, and the new order premium income for the period was 3.816 billion yuan,-26.5% compared with the same period last year, and 1.799 billion yuan for bulk delivery,-82.5% compared with the same period last year.

The agency believes that the contraction of new bancassurance policies of Xinhua Insurance is mainly affected by the integration of industry newspapers and banks, while the company relies heavily on bancassurance channels. The proportion of new bancassurance premiums in total long-term insurance premiums dropped from 78.3% in the first quarter of 2023 to 52.0% in the first quarter of 2024.

In addition, Soochow Securities pointed out that the reduction in the contribution of investment spreads is the reason for the slight decline in China Ping an's current net profit. The total net profit of Ping an property Life Insurance fell slightly by 3.3% under the new standards in the first quarter of 2024.

According to analysis by Soochow Securities, in the first quarter of this year, Ping An Life Insurance's "investment spread" turned from profit to loss to-312 million yuan, but the contribution of life insurance underwriting profit increased slightly by 1.6% year-on-year. It is expected that insurance service income subject to current amortization will decrease year-on-year, but due to proper cost control, under the comprehensive impact of life insurance net profit in the first quarter of this year fell slightly by 1.3% year-on-year; Although Ping An Property & Casualty Insurance sector's underwriting profit dropped significantly by 67.5% year-on-year, net profit in the first quarter of this year fell by 14.3% year-on-year due to the fact that the property insurance "investment spread" was basically flat at 3.569 billion yuan year-on-year.