China Taiping Performance Conference Record: There is no suspense about the value growth of life insurance in 24H1

Zhitong Financial APP learned that on March 26, China Taiping Insurance Holdings Co., Ltd. (China Taiping, 00966) held its 2023 results conference in Hong Kong. Under the new standards, the Group's total assets exceeded HK$1.5 trillion, an increase of 14.2% from the end of 2022, profit attributable to shareholders was HK$6.19 billion, a year-on-year increase of 44.1%, and assets under management reached nearly HK$2.5 trillion. The net investment return was 3.56%, and the comprehensive investment return was 5.01%.

"China Taiping Management is headquartered in Hong Kong, with business and assets at home and abroad, and has withstood the impact and impact from many aspects last year," said Wang Sidong, chairman of the group, 2024 is the 95th anniversary of the founding of China Taiping, although the external environment is still severe and complex, but always optimistic about the development prospects of China's economy, I believe that 2024 is a new year for China's insurance industry to play a huge potential. "We will firmly take high-quality development as the top priority, anchor the goal of becoming a financial power, actively forge ahead in changing the mode, adjusting the structure, improving the quality and increasing the efficiency, and strive to create a new situation of high-quality development of the group. ”

The management concept of "integration of newspaper and bank" has been implemented for a long time, and there is no suspense about the growth of H1 value of life insurance

Gong Xiaojie, general manager of the group's finance and accounting department, said that in 2023, the value of Taiping Life's new business will reach 8.52 billion, which is still considerable under the high base of the industry's benchmark growth rate for two consecutive years, and the growth rate will reach 27.8% under the same economic assumption. Among them, the individual insurance channel increased by 8.7% year-on-year, and the bancassurance channel increased by 221.8% year-on-year (contributing 1.82 billion yuan in new business value). The company's 2024 is off to a good start. From January to February, the value of new business of individual insurance increased by more than 300% year-on-year, the value of new business of bancassurance channel increased by more than 400% year-on-year, the business value rate increased by more than 20 percentage points, and the contribution rate of bancassurance value to the overall value of the company increased by about 8 percentage points year-on-year.

Cheng Yonghong, general manager of Taiping Life Insurance, said that in terms of individual insurance, the premium paid in January alone exceeded last year's Q1, and the goal of this year's Q1 is to achieve substantial quarterly growth and effectively fill the gap in the high base after the switching of the pricing rate from June to July last year; This year, the bancassurance channel should be an important contributor to the value increment to ensure positive growth in both value and scale.

Why has the new business value of the bancassurance channel increased so much?

Cheng Yonghong bluntly said that the company has actually implemented the value management system since 2015, horizontally to the edge, deep to the end, and implemented to every grassroots organization and every agent. Specifically, the marginal value of the product is subdivided into 7 levels so that the salesman can clarify the marginal value of each policy, and for example, fixed costs and variable expenses are also included in the value management system. In the past 8 years, the value management system has been continuously iterated, upgraded, and optimized, and has now reached version 5.0.

Cheng Yonghong also revealed that although the official implementation of the "integration of newspapers and banks" was on January 1 this year, the company has begun to implement the value management system of the integration of newspapers and banks since the fourth quarter of last year. After the integration of newspapers and banks, the cost investment of the bancassurance channel has decreased by about 20 percentage points compared with before, and the profit of Taiping Life's bancassurance in January and February reached 127 million yuan (instead of the common "fee difference" in the industry), which is the background for investors to see the excellent growth results of the bancassurance channel.

"Taiping Life Insurance has had a very good start this year", said Cheng Yonghong, "as of yesterday (March 25), the bancassurance NBV has increased by more than 500%, and the individual insurance has also achieved a growth of nearly 200%, and there is no suspense about the positive growth of value in the first half of the year." ”

The new standard truly reflects the quality of development, and the annual new CSM is "expected to be relatively ideal"

Morgan Stanley analysts asked questions about the impact of the new accounting standards on annual report results and future profit fluctuations.

Zhang Ruohan, CFO and secretary of the board of directors, said that the new standard has new rules on revenue recognition and measurement of investment assets, and operating income will decline under the new standard. Compared with the old standard, there is a relatively large difference in the cost of insurance services, but the main reason for this difference is that it has been re-established in the time dimension. In terms of space, the new accounting standards separate the insurance component and the investment component, which is precisely the proper meaning of "returning to the origin of insurance".

Therefore, the new accounting standards are more in line with the internal development logic of the insurance industry, and the impact on China Taiping is positive rather than negative, and can more truly reflect the Group's operating and management results.

On the one hand, the quality of financial reports has been significantly improved, the profit sources of insurance companies and operational risks have been more fully revealed, the revenue recognition of insurance services is more comparable with other financial industries, the measurement of financial assets and insurance contract liabilities has been more reasonable, and the effective linkage of assets and liabilities has been strengthened.

Zhang Ruohan happily advises analysts and investors to take the time to carefully read the group's financial statements just released this year, which will definitely be very rewarding.

Looking to the future under the framework of the new standard, Zhang Ruohan said: "What really determines the performance of insurance services is the stock, increment and process of release of CSM (Marginal Balance of Contracted Services). In the coming period, China Taiping's life insurance will form a smooth and stable CSM creation and release speed, and everyone can have a stable psychological expectation of the release of CSM on the insurance service performance brought by the life insurance sector - stable and gradual growth. Zhang Ruohan also said that under the guidance of the new regulatory regulations and the integration of newspapers and banks, the cost control and reduction of sales expenses in the entire insurance industry will be a general trend. Under this trend, China Taiping's new CSM additions will improve significantly in the early stage, "The annual increase in new CSM that we can look forward to will be a relatively ideal number." ”

The scale of property insurance business exceeded 30 billion yuan for the first time and will maintain steady growth in 2024

Some analysts asked about the premium growth and combined ratio (COR) level of Taiping P&C Insurance in 2024, and asked in detail about the competitive strategies of motor insurance and non-motor insurance.

Zhu Jie, Vice President of the Group and General Manager of Taiping Property & Casualty Insurance, said that in 2023, the property insurance industry will face fierce competition, rising insurance rates, business forms and extreme weather impacts. In this context, the company's operating performance is still steadily improving, and the company's business scale has stepped onto a platform of 30 billion yuan, which is the first time in history. Last year, we also overcame the catastrophic impact of typhoons such as Doksuri, Sura and Haikui, and continued to achieve underwriting profitability. Under the new accounting standards, the combined ratio was 98.38%, and the cash flow from operating activities maintained a positive contribution. The national strategic premium for serving the country was 11.64 billion yuan, an increase of 22.5% year-on-year, and all 33 branches obtained the agricultural insurance business qualification last year, and the agricultural insurance premium increased by 44% year-on-year last year.

Zhu Jie believes that the property insurance business environment in 2024 will further improve, and Taiping P&C Insurance's premium income can achieve steady growth, and its operation will continue to maintain underwriting profitability. From the perspective of products, the auto insurance sector will strengthen the concept of systematic operation, improve the ability of accurate quotations, continue to optimize the business structure, optimize the quality, focus on the development of private cars, focus on the improvement of the renewal rate, and do a good job in the service of new energy vehicles. Non-auto insurance will continue to focus on serving the national strategy and the real economy, do a good job in five major financial articles, actively develop green insurance, and improve the supply of products and insurance services.

The regional layout of the "southeast, northwest, and central" of the elderly care community has been basically completed, and the number of self-built and self-nutritious old beds has exceeded 10,000

At the press conference, General Manager Yin Zhaojun explained the layout of the pension financial sector that the media paid attention to.

He said that in the context of the continuous deepening of the aging population, the pension finance has a long slope and thick snow, and the industrial development potential is great. China Taiping has always attached great importance to the development of pension finance from the strategic level, vigorously laid out, continued to cultivate, and has formed a good foundation for development.

Taiping Pension is one of the earliest professional pension insurance companies in China, and Taiping Life Insurance and Taiping Pension are the first to obtain the qualification of personal pension business, which has a first-mover advantage. By the end of 2023, the Group has provided enterprise annuity trustee management services for approximately 13,000 corporate customers and 1.9 million employees, served more than 50,000 people in the personal pension business, and handled 37 long-term care insurance businesses with 27 million service personnel.

The regional layout of the asset-heavy pension community "southeast, northwest, and central" has been basically completed, with the official operation of the Guangdong Kapok family, the first Hong Kong elderly to move in, the trial operation of the Beijing Yulan family, the full opening of the Sanya Haitang family, the Chengdu Furong family will open in the middle of this year, and the number of elderly people living in the Shanghai Wutong family has exceeded 1,000. In terms of Chinese assets, the first project was settled in Kunming, and the ancient Yunnan camellia family in Kunming has been successfully landed. The group has built and cooperated with 50 elderly care communities, covering 22 provinces and 40 cities. The number of members of the Medical and Health Care Ecological Alliance has also reached 26, and the number of self-built and self-nutritious old beds has exceeded 10,000. Actively carry out pilot projects of home-based elderly care services, and gradually improve the Group's online and offline services for the elderly.

In addition, in the field of pension finance, the group has formed a number of projects with Taiping characteristics, such as the "Taiping Nantong" model of long-term care insurance, the construction model of pension ecology combining "heavy, medium and light", and the "Hong Kong Bay Area Pension Taiping Service Program", which have achieved good market influence and reputation, and laid a good foundation for the vigorous development of pension finance.

The provision for impairment of risk assets is relatively sufficient, and the dividend policy will remain stable

CLSA analysts asked whether the impairment of the company's historical problem assets has been accrued, and looking forward to 2024, will there be greater impairment pressure? The company made it clear that the group has achieved good results in controlling incremental risks and resolving stock risks, and the management and independent auditors have assessed that the cumulative impairment of relevant risk assets has been provided for more prudently and sufficiently.

The Board has recommended the payment of a dividend of HK$0.30 per share. Regarding the future dividends that investors are concerned about, Gong Xiaojie, general manager of the financial and accounting department, said, "In order to share the company's operating results with the majority of investors, the amount of dividends and dividends will be moderately increased in 2023. "Under the new accounting standards, the company's dividend policy will also remain stable, and the dividend policy will be determined comprehensively according to the annual operating results, taking into account the company's development strategy, solvency requirements, capital demand at each stage, etc., to ensure the stability and continuity of the dividend policy.