On August 30th, China Pacific Insurance held its 2024 mid-term performance press conference. China Pacific Insurance Chairman, Fu Fan, along with other executives, responded one by one to the public's focus questions.

Data shows that in the first half of 2024, China Pacific Insurance achieved operating income of 194.634 billion yuan, a year-on-year growth of 10.9%. Among them, insurance service income was 137.019 billion yuan, a year-on-year growth of 2.2%; net income attributable to the parent company was 25.132 billion yuan, a year-on-year growth of 37.1%; and net operating profit attributable to the parent company was 19.738 billion yuan, a year-on-year growth of 3.3%.

In the low interest rate cycle, many insurance companies have begun to emphasize products with 'guaranteed + floating' income types, especially the sales of dividend insurance. Zhang Yuanhan, the CFO and Chief Actuary of China Pacific Insurance, stated that due to the downward adjustment of the interest rate for life insurance products and changes in the macro-environment, China Pacific Insurance is also shifting towards protection and dividend-type business. In the long run, the proportion of dividend-type products is expected to exceed 50%. Looking ahead to the second half of the year, Su Gang, Chief Investment Officer of China Pacific Insurance, believes that the capital market is likely to maintain a stable and volatile pattern, while also nurturing new structural opportunities.

Life insurance product structure is shifting towards protection and dividend types, and the value contribution ratio of bank-insurance channels continues to increase.

In the first half of 2024, China Pacific Life Insurance achieved original premium income of 153.159 billion yuan, a year-on-year decrease of 1.2%; scale premium was 170.105 billion yuan, a year-on-year increase of 0.3%; net income attributable to the parent company was 20.055 billion yuan, a year-on-year increase of 43%; and net operating profit attributable to the parent company was 15.2 billion yuan, a year-on-year increase of 1.8%.

During the reporting period, the new business value of China Pacific Life Insurance was 9.037 billion yuan, a year-on-year increase of 22.8%; the new business value rate was 18.7%, an increase of 5.3 percentage points.

Looking at different channels, in the first half of 2024, the agency channel of China Pacific Life Insurance achieved scale premium of 136.211 billion yuan, a year-on-year increase of 2%, including period-paid new insurance scale premium of 18.194 billion yuan, a year-on-year increase of 3.9%. Bank-insurance channel achieved scale premium of 21.922 billion yuan, a year-on-year decrease of 1%; but the new business value increased by 26.5% year-on-year.

In terms of product structure, the traditional insurance scale premium of Tai Bao Life Insurance reached 106.437 billion yuan, a 6% year-on-year increase; affected by policy adjustments and product structure optimization, the scale premium of dividend-type insurance was 38.1 billion yuan, a 12.2% year-on-year decrease.

It is worth noting that during the downward interest rate cycle, many insurance companies have begun to emphasize products with 'guaranteed + floating' income types, especially the sales of dividend insurance.

Zhang Yuanhan, the financial director and chief actuary of China Pacific Insurance, said that with the decrease in interest rates and changes in the macroeconomic environment of life insurance products, the original product structure is no longer suitable for customer needs, and the direction of Tai Bao Life Insurance is to shift towards protection and dividend business.

In the long run, the proportion of dividend products of Tai Bao Life Insurance is expected to exceed 50%. Since the beginning of this year, Tai Bao Life Insurance has increased the sales of dividend products, and the sales volume has increased by 5 times year-on-year.

Regarding the company's future plans for the banking and insurance channels, Zhao Yonggang introduced that Tai Bao Life Insurance will continue to increase the value contribution ratio of the banking and insurance channels, focusing on the following three aspects of work.

Firstly, strategically focus on central cities, especially provincial capitals and some key cities. At the same time, focus on promoting strategic cooperation with banks to promote coordinated and win-win cooperation between banking and insurance; secondly, implement insurance products and supporting value-added services together; thirdly, take production and service as the starting point to build a 'four-high' banking and insurance team of high quality, high production capacity, high performance, and high retention.

Regarding the recent changes in the management of Tai Bao Life Insurance, Zhao Yonggang stated that the management team of the life insurance company has smoothly achieved the transition between the old and new, and the new management team will adhere to the consistency and continuity of the strategy and continue to promote the 'long voyage' transformation.

Tai Bao Property Insurance will strengthen risk warning and risk reduction construction, and accelerate the transformation and innovation of non-auto insurance business.

In the first half of 2024, China Pacific Insurance achieved original premium income of 113.203 billion yuan, a year-on-year increase of 7.8%, higher than the industry average.

Looking at different types of insurance, the original premium income of auto insurance was 52.167 billion yuan, a year-on-year increase of 2.8%, with the premium for electric vehicle insurance growing by 41.7% year-on-year. The original premium income of non-auto insurance was 59.636 billion yuan, a year-on-year increase of 12.7%.

In terms of core indicators, in the first half of the year, China Pacific Insurance's comprehensive underwriting expense ratio was 97.1%, a year-on-year decrease of 0.8 percentage points. Among them, the comprehensive claims ratio was 69.6%, a year-on-year decrease of 0.8 percentage points, while the comprehensive expense ratio remained unchanged at 27.5%.

Zhao Yonggang introduced that in the first half of the year, the optimization of China Pacific Insurance's overall underwriting expense ratio was mainly due to the company's strengthened cost control for auto insurance, resulting in a decrease in the comprehensive expense ratio of auto insurance. It is reported that in the first half of 2024, the comprehensive underwriting expense ratio for auto insurance of China Pacific Insurance was 97.1%, a year-on-year decrease of 0.9 percentage points.

In response to natural disasters, China Pacific Insurance will effectively reduce losses through an integrated disaster response service model and risk reduction management system. At the same time, it will focus on high-cost business areas and gradually accelerate the development of enterprise property insurance, cargo insurance, and home insurance while consolidating the development of traditional property and casualty insurance businesses.

Adhering to the core strategy of "dividend value," the tactical allocation structure is dynamically optimized to increase income.

In the first half of 2024, due to the significant increase in fair value change gains and losses, China Pacific Insurance achieved total investment income of 56.037 billion yuan, a year-on-year increase of 46.5%. Benefiting from increased dividends and income from stocks, China Pacific Insurance's net investment income increased by 1.7% year-on-year to 39.089 billion yuan.

As of the end of June 2024, China Pacific Insurance managed assets of 3.26 trillion yuan, an increase of 11.7% compared to the end of the previous year, including investment assets of 2.46 trillion yuan, an increase of 9.2% compared to the end of the previous year.

In terms of yield, in the first half of 2024, China Pacific Insurance's total investment yield was 2.7%, an increase of 0.7 percentage points compared to the same period last year; net investment yield was 1.8%, a decrease of 0.2 percentage points compared to the same period last year; comprehensive investment yield was 3%, an increase of 0.9 percentage points compared to the same period last year.

Su Gang said that in the first half of this year, the stock market first rose and then fell, but structural opportunities brought good returns. China Pacific Insurance has always adhered to active management of equity assets, thus achieving performance that surpasses the market benchmark in the first half of the year.

It is reported that in the first half of the year, China Pacific Insurance reduced the proportion of debt-financial assets by 0.7 percentage points from the end of last year to 73.8%; the proportion of equity-financial assets increased by 0.4 percentage points, reaching 14.9%, with the core equity accounting for 11.2%, an increase of 0.5 percentage points from the end of last year.

Regarding the asset allocation strategy for the second half of the year, Su Gang, Chief Investment Officer of China Pacific Insurance, believes that in the second half of this year, the capital market will likely maintain a stable and volatile pattern, while also giving birth to new structural opportunities. Su Gang believes that the central market interest rate will maintain an overall downward trend, but will also be accompanied by periodic fluctuations.

Su Gang believes that since the second half of the year, high dividend assets have been under pressure, which is actually a basic law of stock market operation that prices inevitably fluctuate around value. The investment value chain of Taibao Group consists of strategic allocation, annual allocation, tactical allocation, and delegated management. Its core competence is long-term logic - value as a precondition, steady and firm adherence, and internalization of responsibility. Taibao will adhere to a strategic allocation that spans the cycle to achieve long-term returns after risk adjustment, and use moderately flexible tactical asset allocation to increase short-term returns.

"The company's overall investment portfolio will depend on long-term value growth, rather than the short-term rise and fall of individual varieties. Taibao will continue to dynamically adjust and optimize the investment portfolio to achieve sustained and stable growth of overall investment performance, in line with the requirements of insurance fund's long-term investment income goals and risk constraints." Su Gang said.