Rate cut cycle, the market interest rate will be gradually approaching the life insurance industry's lowest cost of capital, Li Chasun the possible resurgence of the policy; premium growth, as well as the possible expiration of the product and pay claims peak in the torture of insurance 's Winter clothes.
Buffett's Berkshire Hathaway Inc. said fiscal third-quarter net profit fell 77 percent, mainly due to insurance and investment market volatility drag losses. The company fourth quarter earnings decline, Buffett has come true earlier this year, "the end of the carnival," the pessimistic expectations.
Similarly, China's insurers have begun to meet the "39 days." In the face of reversal do not know when the capital markets, insurance company profits in 2009 will decline further.
Premium will get help
According to the China Insurance Regulatory Commission announced in September 2008 national premium income, life insurance premium income growth rate, 1-drop back in September a total premium income in August fell 4 percentage points. From a single month in terms of large-scale insurance premium growth rate also fell significantly. Country life, peace and Taibao September cumulative growth in premiums were 57%, 54% and 30% higher than in August of the situation and a larger decline. The allies, such as Allianz and the city has a row of negative growth.
Shanghai's situation, in October Bancassurance growth has been negative growth. Unlimited scenery in the first half of the Banks and Insurance Companies, has become a sore point for insurance companies. On the one hand, the Bank of China Insurance Regulatory Commission security sources strict control on the other hand, due to the rapid expansion of the Bank of security, but also the burden of capital brought about by insurance companies. "Even if the China Insurance Regulatory Commission does not straighten out, insurance companies will be contracted own security silver front." One industry source, "Paul Silver channels although it can enhance the size of the premium, but sales of the company's insurance operations are very difficult to optimize the structure of the What contribution. On the other hand, also easily lead to potential policy Licha Sun. "
Bull market, many insurance companies have big sales of high-yield fixed-income commitments or insurance products, and the A-share market in the second half because of the continuing adjustment of going from bad to worse, insurance companies, investment yield has shrunk a lot, and market interest rates have begun to approach life Insurance industry's lowest cost of capital, such as high-yield, high-fee products of the Bank of security payments due to the temporary peak, insurance companies will face great financial pressure.
Bank of more than 000 business security risk to the business capital of a higher occupancy. In general, life insurance companies on insurance premium income of the bank capital requirements are basically in accordance with premium income of 3.5% to 4% (an insurance business in the average 2.5 percent), that is 10,000,000,000 yuan for each additional security of the Banking, Insurance Fee income, is likely to take occupancy of about 4 billion yuan of capital. "For small and medium-sized insurers, the result of the lack of solvency, and large insurance companies, will not take up too much capital to maximize effectiveness."
Related statistics show that China Life Insurance, Xinhua Life, Taikang Life Insurance, Pacific Life, Ping An Life and Pacific Life 7 silver, and other major security throughout the country in September Paul Silver market premium income of 23,310,000,000 yuan more than in August of 27,280,000,000 yuan Has been a sharp fall of 14.6 percent.
The first half of this year by the Bank of business insurance premiums driven by high growth for next year's negative growth in premiums potential problems. "September the major life insurance company's insurance premium revenue from silver decline has been confirmed, and until a few months before the end of next year, the National Bank and Insurance premium income growth continues to decline also appears almost certain, but as to whether or not there will be Negative growth, and so far no prediction. "Insurance industry analyst at Guotai Junan Yu-Long Peng said. "Life Insurance Company will take the initiative next year should be adjusted capital in the configuration of products, development of more sales of insurance products, or the development of phase connotations of the higher value of silver to pay insurance products."
Profits will be down
Beginning in 2004, in the interest rate increase cycle, the life of the deposit rate of return from 2005's 3.9 percent rise in 2008 to 5.07 percent in the medium term, and the bonds of net investment income increased from 2005's 4.15 percent rise to the mid-2008 The 4.44 percent.
Rate cut cycle, the opposite was true. Shun Yang Jianhai securities of the view that interest rates on the bonds in the short term negative impact on smaller, but the low interest rate environment has been a long time, with the continued allocation of additional funds to bonds, as well as in the stock of debt after the expiry of the re-investment Bond yields will be down constantly. "We observed in the last round of rate cut cycle, bond yields continued to be pulled down. In 2002 when the 10-year bond yields have been as low as 2.72 percent, at the time due to the bear market in stocks has not been able to make a positive contribution to investment income, Therefore, the insurance industry's rate of return on investment in 2003 when the minimum went to 2.68 percent. "
According to the current market conditions, the benchmark interest rate next year is likely to cut down on a cycle that is low in the vicinity of 2% level, if this happens in a low interest rate cycle to stay a long time, the stock market at the same time not There is obviously a positive contribution, then the insurance industry's rate of return on investment is also likely to be in this round of economic adjustment to 3%.
China Life Insurance Company does not match the duration of assets and liabilities, the liabilities of long duration, short duration assets, liabilities, costs have been relatively locked, and the capital gains rate cut cycle will be reduced step by step. At present, the cost of liability insurance of at least 2.5%, to cut interest rates in an environment of the insurance industry's rate will be reduced to a very low level. If you take into account the high interest rate policy, safety and liability Taibao costs will be higher, spreads are likely to be at a loss.
On the other hand, according to Yang Jianhai the calculation, the life, safety and the rights and interests of Taibao the average cost of the investment were 2400, 3200 and 3280 point out that if CITIC Securities (600,030, it shares) of investment, the country's average life Cost is 2700 points. This means that Shanghai Composite Index rebounded from the current location of the 60% -90% more than the cost in order, and only more than the cost can be released through the floating surplus to make a positive contribution to the profit report.
With the slowdown in premium income growth, a variety of expenses remained relatively fast growth, according to data from the China Insurance Regulatory Commission, the September monthly life insurance payment rate from 15% to 18%, life insurance premium growth From 65% to 37% in recent years, many life insurance companies will face over the peak period of benefit, but also increase the risk of surrender. Premium income growth slowdown caused by the cash flow to make payments to reduce the pressure increased, insurance companies, such direct pressure on the performance of a profit report for the reduction of net profit.
As the fixed-income investment category and the rights and interests of the profit contribution will likely decline, coupled with the beginning of next year as a result of the Fund would be less dividends, and the effective tax rate may increase next year the whole of the insurance companies will continue to decline in net profit, safety China ( 601,318, it shares) with the exception of. Ping An of China this year may be little growth or loss and therefore "a blessing in disguise."
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