The central bank yesterday announced that financial institutions reduced one-year yuan loans to keep the benchmark interest rate 1.08 percentage points in all other grades of the deposit and loan period of interest rate adjusted accordingly. The industry believes that such a sharp cut down the insurance funds investment income, the insurance industry overall, will have a negative impact. Insurance companies to reinvest the proceeds of the bond market will decline in traditional life insurance products in space will be spread compression. In addition, as the sharp decline in interest rates, the possibility of risks Licha Sun also increased significantly.
Investment income will decline
The central bank cut interest rates substantially, it will further lower bond yields, the future of insurance funds in the bond market will be a serious decline in investment income.
Orient Securities analyst Wang Xiaogang, insurance companies in the allocation of assets and liabilities for a long time period has been the existence of %26quot;mismatch%26quot;, liability insurance policy for a long time period is usually 15 years, and the basic assets for a long time period is 7-8 years, which means that a large part of the old Debt after the expiry of the re-investment will be faced with lower investment income.
In addition, the State Council Development Research Center of the financial complex Chen Daofu, deputy director of the Research Office, said insurance funds in the bond market has been a net buying in the bond yields fell, prices of the situation, the new premium return on investment will be lower .
Bond yields dropped, making the insurance companies have been held in bond prices, %26quot;a corresponding rise in%26quot; contributions to the insurance company for the floating surplus, but the vote in the Securities analyst Xu insurance Thu Duc do not think this is a positive. According to his analysis, insurance is not the allocation of bonds in order to obtain the opportunity of the transaction, so the main due to take hold in the form of bonds from the market price of Change.
Wang Xiaogang also of the view that even if the insurance companies to float part of the surplus cash, of course, will increase profits in the current period, but this is part of the funds to continue to invest in, facing the same lower bond investment income.
In addition, he pointed out that the investment income due to the decline of traditional life insurance products in space will be spread compression. As the traditional life insurance products, the cost of insurance has been fixed, the decline in investment income to its lower margin space, insurance companies, profits would be affected. However, universal insurance, risk sharing, is due to the policy holders and insurance companies a total of risk, coupled with the rate cut on the settlement of such products or lower dividend rate will advance to play the role of the insurance costs will drop , So this part of the products do not affect the profits of insurance companies.
However, the drastic rate cut this agent may be aroused positive reaction in the stock market, insurance funds in the stock market or will be harvested.
Li Chasun risk or hit
Rate cut cycle, the arrival of the market means that interest rates will be gradually approaching the life insurance industry's lowest cost of capital lines, Li Chasun risks may come.
Licha Sun Life Insurance Company refers to the use of capital investment income lower than the effective life insurance policy, the average interest rate target caused by the loss. China Insurance Regulatory Commission stipulates that the traditional life insurance products is scheduled to cap interest rates at 2.5%.
%26quot;Therefore, to determine whether there Licha Sun, it is necessary to look at the insurance fund investment income is less than 2.5 percent.%26quot; Wang Xiaogang, %26quot;The deposit insurance alone, the one-year deposit rate to 2.52 percent after adjustment However, due to general insurance companies and banks enter into the larger deposits, real interest rates close to three-year deposit rate 3.6 percent, higher than the 2.5 percent target rate, it is still not constitute risks Licha Sun. %26quot;
Xu Shou and Germany also indicated that the deposit insurance relative to bonds, small-scale and therefore interest rate cut on the negative impact.
However, if the economic situation has not improved in the future, efforts to cut interest rates further, bond market interest rates close to the 2.5 percent level of risk Licha Sun on the far away. Everbright Securities analyst Xiao Chao-hu said that if a further decline in interest rates, the new policy will be faced with the risk of Licha Sun.
But the rate cut on the insurance industry is not entirely bad. Experts believe that this reduced the interest rate on deposits will increase the insurance products more attractive and at the same time, such efforts to stimulate the economy, but also conducive to the development of the insurance industry as a whole.
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