Insurance Asset Management Co'S Ability To Allocate Assets Is Facing Challenges

From the previous "entrusted insurance fund" to the "trustee management insurance fund", the China Insurance Regulatory Commission recently issued a notice - "the notice on adjusting the relevant provisions of the Interim Provisions on the administration of insurance Asset Management Co" (hereinafter referred to as the "notice"), has not only improved the establishment of insurance.

"Release" is not

Insurance funds refer to various insurance reserves, capital funds, working capital, provident fund, undistributed profits and other liabilities, as well as various assets formed by these funds.

According to the original regulations, the insurance Asset Management Co can only manage shareholders or own.

According to statistics, as at the end of 3 in 2011, the balance of insurance funds in China was 5 trillion and 20 billion yuan, an increase of 6.6% over the beginning of the year.

Among them, bank deposits amount to 16257 billion yuan, accounting for 32.4%; bonds 23400 billion yuan, accounting for 46.7%; securities investment funds 282 billion 700 million yuan, accounting for 5.6%; shares 409 billion 700 million yuan, accounting for 8.2%; long-term equity investment 178 billion 300 million yuan, accounting for 3.6%; investment real estate 21 billion 500 million yuan, accounting for 21 billion 500 million.

In 1~3 months, the income of insurance funds was 51 billion 500 million yuan, with an average yield of 1.07%.

From the perspective of the insurance Asset Management Co, there are more than 10 insurance Asset Management Co (including AIA insurance asset management center), but because of the passive management of insurance funds, the proportion of the third party asset management is very low, so the current professional insurance Asset Management Co has a very low contribution to the insurance group's profitability.

Take China Life Asset Management Co, the largest insurance company, for example, net profit in 2010 was 493 million yuan, accounting for only 1.5% of the national net profit.

According to the circular issued recently, the insurance business scope of the Asset Management Co has been adjusted and expanded as follows: (1) the renminbi and foreign currency insurance funds entrusted to manage its shareholders; (two) funds entrusted by the insurance companies that are entrusted with the management of their shareholders; (three) management of funds from Renminbi and foreign currencies; (four) other business approved by the CIRC; (five) other businesses approved by other departments of the State Council.

"In fact, as early as 2007, the insurance Asset Management Co has been allowed to carry out third party business and so on. It has developed from" insurance fund utilization "to" asset management ", and has now become the highest asset management organization in the annuity market share.

The business scope of insurance Asset Management Co has been widened since 2007, which is only clarified in the notice.

An insurance regulator said.

An insurance expert also said that with the gradual loss of the traditional advantages of the insurance industry in the low cost debt financing, liability business has no longer been a source of profit. The ability of asset management has led the insurance company's profitability and core competitiveness.

"Internationally, large insurance groups have large assets entrusted to management, and professional Asset Management Co not only accept the entrustment management of their parent insurance funds, but also rely on their strong financial strength and investment management capabilities to accept the management of assets entrusted by social security funds, charitable welfare funds and other institutions and individuals."

Coordination and interaction with solvency regulation

It is worth noting that expanding the scope of insurance funds entrusted by insurance Asset Management Co is not only conducive to improving the level of management funds of insurance Asset Management Co, thereby greatly enhancing the financial strength of insurance groups, but also has a profound significance for improving the reputation and status of insurance companies and improving solvency.

In recent years, the supervision focus of insurance regulatory departments has focused on the solvency of insurance companies, and the regulatory indicators of solvency have been rigidly rigid.

For insurance companies with insufficient solvency, regulators can ask for additional capital, stop new businesses, restrict branch offices, limit senior executives' salaries, and even adopt other mandatory regulatory measures such as takeover by other insurance companies.

Insurance experts told reporters that strengthening the solvency supervision is to effectively protect the interests of policyholders, and early warning of financial risks of insurance companies.

The actual solvency margin of an insurance company is recognized assets minus authorized liabilities, and the solvency adequacy ratio is the actual solvency margin / minimum solvency margin. Therefore, the enhancement of solvency should start with two aspects of assets and liabilities.

"In the past, because the role of insurance asset management has not been brought into full play, the negative methods have often been used to improve solvency, that is, to reduce the scale of insurance business and reduce authorized liabilities. Later, through the innovation of insurance products, we should develop more non risk insurance products, such as investment linked insurance, so as to alleviate the pressure of solvency.

In fact, a positive and proactive approach should be to strengthen asset management, on the one hand, enhance asset management capabilities and increase return on investment; on the other hand, optimize portfolio structure and increase authorized assets.

The improvement of asset management capability can better serve solvency supervision and greatly enhance the solvency of the company. Strict supervision of solvency, especially the dynamic supervision of solvency, also requires insurance companies to turn from traditional liability management or asset management to modern asset liability management.

Set up asset management "barrier"

In order to prevent the risk of capital utilization and promote the development of asset management business, the notice has raised the solvency and total assets requirements of shareholders. The total assets of the insurance companies that meet the requirements of the CIRC are not less than 5 billion yuan, of which the total assets of insurance companies (Group) companies and insurance companies that run life insurance business are not less than 10 billion yuan RMB, and are adjusted to "solvency of not less than 150%, total assets of not less than 10 billion yuan, and the total assets of insurance groups (holding companies) not less than 15 billion yuan RMB", but the requirement of "net assets of not less than 1 billion yuan" is removed.

Moreover, the notice also raised the requirement of registered capital from 30 million yuan to 100 million yuan (RMB or equivalent convertible currency).

Insurance experts say that in terms of matching assets and liabilities, in order to achieve the matching of returns, it is necessary to moderately expand the allocation of insurance assets on the basis of traditional investment fields.

In recent years, the channels for the use of insurance funds have been greatly broadened. From initial treasury bonds, financial bonds, bank deposits to corporate bonds, convertible bonds, securities funds, stocks, unlisted shares and claims, from domestic assets to overseas assets, and even real estate, they have been incorporated into the scope of insurance asset allocation.

"Therefore, the outstanding contradiction in current insurance asset management is not asset class, but allocation capability. It is how to minimize the expected risk while maximizing the expected return.

In terms of insurance regulators, how to prevent the Asset Management Co from engaging in the third party asset management may be related to the "problem of oil", that is, the power of profit pfer between the trustee and the insurance company's Asset Management Co to its parent company.

Therefore, at the level of system design, the notice sets up a "separation wall" for different funds, that is, "the insurance Asset Management Co manages the following funds, and should be treated fairly, accounting separately and managed by different investment personnel: (1) self owned funds and entrusted management funds; (two) entrusted with the management of different funds of the same client."

"On the basis of such regulations, how to ensure that the insurance Asset Management Co has an independent social corporate governance structure is also very important."

Insurance experts emphasize that the biggest obstacle to the internalization of the market is the pparency of the paction.

Therefore, ensuring the impartiality of the procedure and fulfilling information disclosure as far as possible has raised higher requirements for the independent operation of the insurance Asset Management Co. In this respect, it depends on strengthening the pparency and standardization of the paction activities between the insurance Asset Management Co and its parent company.

Source: Financial Times