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The industry generally believes that insurance funds should lower their profit expectations, and at the same time, they should not increase high-risk investments in pursuit of high returns
■Our reporter Leng Cuihua
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With huge amounts of money in hand, how do you manage your investment well? In the context of a low interest rate environment and an “asset shortage”, it will not be easy for insurance funds to answer this question well this year.
Chen Wenhui, vice chairman of the China Insurance Regulatory Commission, recently wrote an article saying that currently, the insurance industry is facing investment difficulties, and the only way is to reduce liability costs and lower income expectations. However, the reporter learned that judging from the current contact between insurance funds and local governments, there are no obvious signs of insurance funds lowering their income expectations. Compared with other financing channels, the cost advantage of insurance funds is not outstanding. In addition, the phenomenon of some local enterprises returning insurance loan funds in advance is increasing, posing a more severe test to the use of insurance funds.
How can insurance funds better embrace the real economy? Industry insiders believe that strict risk prevention and control cannot be relaxed, but it is necessary to lower earnings expectations.
Countercyclical” investment advantages. Judging from the actual actions of local insurance regulatory bureaus, financial offices and other departments, local governments have spared no effort in introducing insurance capital.
Recently, the Guangdong Provincial Finance Office and the Guangdong Insurance Regulatory Bureau jointly held a Guangdong insurance fund utilization project promotion meeting to build a communication platform for both fund supply and demand parties. Data show that in recent years, the pace of “insurance capital entering Guangdong” has continued to accelerate. In 2016, the balance of insurance funds invested in Guangdong reached 547.9 billion yuan, and the new investment amount reached 136.7 billion yuan. Its role in serving local construction and supporting the development of the real economy has become increasingly prominent. .
Judging from the situation at this promotion meeting, the financing demand for local projects is also very strong. In addition to 9 on-site promotion projects, more than 600 key projects from Guangdong provincial platforms and various cities have also been collected. , with a total investment of more than 1 trillion yuan and a planned financing amount of more than 600 billion yuan.
As a province with a large insurance premium, Shandong has also taken a number of measures to introduce insurance funds to serve the real economy. On November 11, 2016, the Shandong Insurance Regulatory Bureau pointed out in its notice to further promote the introduction of insurance funds in the province that in recent years, the scale of Shandong’s insurance fund utilization has expanded rapidly, and has achieved remarkable results in serving local key projects and people’s livelihood projects. , however, as the main form of local insurance fund utilization, the scale of debt investment plans invested in Shandong ranks only seventh in the country, significantly lower than its premium ranking. To this end, the Shandong Insurance Regulatory Bureau has made detailed regulations on the working mechanism and working methods for introducing insurance funds.
In order to better build a docking platform between the supply and demand sides of funds, the Shandong Insurance Regulatory Bureau innovatively created the country’s first local insurance project docking information platform. The reporter found through this platform that project financing information, investment preferences of insurance companies, Shandong investment and financing policies, insurance capital application cases and policies, etc. were all displayed. The person in charge of the operation of the platform told reporters: “The online platform plays a very good role in information collection and communication bridge. As a channel for supply and demand parties to get to know each other for the first time, more and more important docking work needs to be completed offline.”
The reporter learned that various places will increase their efforts to introduce insurance funds to serve the real economy. The more common point is to encourage insurance funds to support major infrastructure, shantytown renovation, and urbanization construction in various ways. and other major projects and livelihood projects; encourage insurance funds to participate in the mixed ownership reform of state-owned enterprises. Guide insurance funds to meet the financing needs of the real economy through public-private partnership models (PPP), asset support plans and other methods.
At the same time, each locality has also launched some specialized financing docking projects based on its own characteristics. For example, Shandong will increase insurance funds’ support for the “Two Districts, One Circle and One Belt” strategy and guide insurance funds to participate in the construction of Jinan regional financial center and Qingdao Wealth Management Financial Comprehensive Reform Pilot Zone. Insurance institutions are encouraged to initiate the establishment of asset support plans, participate in the securitization of accounts receivable for transportation projects such as railways, highways, and airports, revitalize existing assets, and optimize financial allocation. Guizhou will actively seek to pilot the “Insurance Funds to Support Agricultural Financing” project in the province.
Insurance funds need to lower their income expectations
Although various localities have a positive attitude towards the introduction of insurance funds and the demand for project financing is also huge, it is understood that , there are still some problems when insurance capital enters the construction of the local real economy. One of the more critical points is that insurance capital has high expectations of return on investment, which makes the project’s interest in insurance capital weaken. Moreover, in the past two years, the low Under the interest rate environment, various sources of funds are relatively sufficient, and the phenomenon of companies returning insurance loan funds in advance is increasing. Industry insiders believe that insurance capital embraces the real economy.It is necessary to adjust expectations, reduce the comprehensive cost of using insurance funds for enterprises, highlight their own advantages, and obtain long-term and stable investment returns.
“At present, insurance capital investment in the real economy still continues its consistent style, requiring projects to provide strong guarantees and having a low tolerance for risks.” An industry insider told reporters. He said that for insurance funds, pursuing sound investment is in line with their consistent style and is also a measure that should be taken to protect the rights and interests of insurance consumers.
However, in terms of investment income expectations, insurance capital still maintains consistent high-yield expectations, which is not conducive to its entry into the real economy. The above-mentioned industry insiders said that compared with other funds, insurance funds have obvious advantages in terms of long-term and stability, but at present, their cost advantages are not obvious. “In the past few years, capital liquidity was tight, and insurance funds played an important role in supporting the construction of the real economy. However, with the changes in the financial market and the arrival of the low-interest era, insurance funds still maintain high requirements for investment return rates and are attractive. It just dropped,” the person said.
The reporter learned that in practice, the phenomenon of enterprises returning insurance loan funds in advance is increasing. “On the one hand, the comprehensive cost of borrowing insurance funds is relatively high; on the other hand, the current social funds, money and credit are relatively sufficient, and we are in a period of low interest rates, so companies are trying to find ways to return high-cost borrowed funds first.” said the above-mentioned person.
So, how can insurance funds, which currently hold huge sums of money and face an “asset shortage” and low interest rate environment, better embrace the real economy? Industry insiders believe that on the one hand, insurance investment still needs to strictly control risks, and the requirements for projects cannot be relaxed due to the “asset shortage” to avoid the emergence of new risks in addition to interest rate risks; on the other hand, adjusting income expectations is also Very important, if you continue to maintain high return expectations, you will lose investment opportunities.
Wang He, executive vice president of PICC Property & Casualty Insurance Company, recently wrote an article and clearly pointed out that the essence of “asset shortage” is the “mismatch” and “difficulty in matching” of assets and liabilities. The root cause of the “asset shortage” is a problem with expectation management. Therefore, an important part of the new mentality is to solve the problem of expectation management. Regardless of industry or enterprise, the top priority is to adjust and manage expectations. If the expected problems are not resolved and high returns are pursued unrealistically, “asset shortage” will become inevitable and may even lead to systemic risks.
Embrace the real economy, use better risk control methods, and lower profit expectations. Are insurance funds ready?
