Guojin Securities: Insurance equity allocation ratio loosened and the equity allocation limit is expected to increase by more than 600 billion dollars

The Zhitong Finance App learned that Guojin Securities released a research report saying that the capital market has been improving for a long time, and the risk of interest spreads and losses is expected to be greatly mitigated after the entry of insurance funds into the market increases. Central Huijin continues to increase its holdings in transactional open index funds, and the General Administration of Financial Supervision raised the upper limit of insurance companies' equity allocation ratios in due course, and actively promoted the entry of medium- to long-term capital into the market, all fully demonstrating the determination of the supervisory authorities to stabilize the market and strengthen confidence. Currently, China's economy is stabilizing and improving, and expectations for the long-term healthy development of the capital market remain unchanged. Active entry of insurance funds into the market is expected to mitigate the risk of interest spreads and losses and drive upward valuation recovery.

Guojin Securities's main views are as follows:

On April 8, the State Administration of Financial Supervision and Administration issued the “Notice on Matters Relating to Adjusting the Supervision Ratio of Insurance Funds and Equity Assets”

The first is to raise the upper limit of equity asset allocation. Simplify the tier standards and raise the upper limit of equity investment ratio for insurers with comprehensive solvency at [150%, 200%), [250%, 300%) and above 350%, by 5%, further broadening the equity investment space.

The second is to increase the concentration ratio of investment in venture capital funds. The book balance of insurance companies investing in a single venture capital fund must not account for more than 30% of the fund's actual payment scale (previously 20%), to guide insurance funds to increase equity investment in the country's strategic emerging industries and serve new quality productivity accurately and efficiently.

The third is to relax the regulatory requirements for tax-deferred pension ratios. Make it clear that ordinary tax-deferred pension insurance accounts will no longer calculate the investment ratio separately, helping the high-quality development of third-pillar pension insurance.

Analysis and interpretation

As of 2024Q4, the comprehensive solvency of property insurance and personal insurance was 238.5% and 190.5% respectively, and the corresponding equity investment limits could be increased by 0% and 5% respectively. Therefore, the incremental funding for this round of policies is expected to mainly come from the personal insurance industry.

1) According to simple estimates, it is estimated that the maximum equity allocation increase in the personal insurance industry will be 646.1 billion yuan: ① By the end of 2024, the comprehensive solvency adequacy ratios of Ping An, Taiping, and People's Insurance Life Insurance were 189%, 298%, and 275% respectively, and the corresponding upper limit increase was 2,827, 691,37 billion yuan; ② According to incomplete statistics, as of 2024, out of 74 personal insurance companies, the maximum equity allocation ratio increase was 41.8%. Using this, it is estimated that the maximum equity allocation increase for the remaining personal insurance companies is 257.2 billion yuan.

2) According to simple estimates, the current personal insurance industry is estimated to increase equity space of about 2.56 trillion yuan: the comprehensive solvency ratio, equity allocation ratio and current equity allocation upper limit of listed life insurance companies as of 2024Q4 are Taiping Life (298%/12.6%/40%), People's Insurance (275%/27.9%/40%), Xinhua Insurance (218%/19.1%/30%), Taibao Life Insurance (210%/17.2%/30%), China Life Insurance (208%/21.4%/30%), China Life Insurance (208%/21.4%/30%), China Life Insurance (208%/21.4%/30%), China Life Insurance (208%/21.4%/30%), China Life Insurance (208%/21.4%/30%) ), Sunshine Life (206%/22.9%/30%), and Ping An Life (189%/18.8%/30%), corresponding equity increases are Ping An Life 632.7 billion yuan, China Life Insurance 582.3 billion yuan, Taiping Life Insurance 378.7 billion yuan, Taibao Life Insurance 318.5 billion yuan, Xinhua Insurance 184.9 billion yuan, People's Insurance Life Insurance 89.3 billion yuan, and Sunshine Life 365 billion yuan; personal insurance industry comprehensive solvency adequacy ratio, equity allocation ratio, and current equity allocation caps are 191% and 21.9%, respectively (assuming 50% of funds are equity funds and others, respectively) Equity accounts for 25%) and 30% of the assets, and the corresponding equity allocation space is 2557.3 billion yuan, but the details need to consider the current solvency status of each insurer.

Risk Alerts

1) Equity market fluctuations; 2) Interest rates have declined sharply; 3) Policy implementation falls short of expectations; 4) The estimates have many assumptions or errors with the actual situation.