The Zhitong Finance App learned that Dongwu Securities released a research report saying that the insurance industry has entered a new era of asset liability management. 1) Asset liability management is a series of policies and procedures for insurance companies to maintain a reasonable match between assets and liabilities and reduce the risk of mismatch. Management goals include term structure matching, cost benefit matching, and liquidity matching. 2) Under the constraints of low interest rates, new standards and solvency, the new asset management regulations lead the industry into a new era of asset liability management. Currently, the insurance industry is facing an external environment of continued low interest rates and scarce assets. Combined with the full implementation of the new accounting standards in 2026 and the strengthening of solvency constraints under the second generation of repayment projects, the importance of insurance companies' asset liability management is further highlighted.
The main views of Dongwu Securities are as follows:
Status: Internal and external training, gradual improvement of asset matching management
1) Insurance companies' asset liability management is comprehensive collaboration from product development to asset allocation. Currently, under the combined effects of external supervision and active industry adjustments, the asset balance situation is gradually improving. 2) In terms of specific matching: ① Cost-benefit matching: On the one hand, do a good job of matching rigid costs with net return on investment, reducing rigid cost requirements through predetermined interest rate cuts and dividend insurance transformation, and stabilizing net return on investment by adding long-term interest rate bonds and high dividend assets; on the other hand, do a good job of matching comprehensive costs with comprehensive return on investment, mainly through upper guidance on dividend/universal insurance settlement levels and relaxation of equity investment restrictions. At present, the results of both matches have been significantly improved. ② Maturity structure matching: During the period of declining interest rates in the past few years, listed insurers generally actively allocated long-term interest rate bonds to prolong the life of assets and shorten the long-term gap.
Overseas Mirroring: Asset Management Experience in the US, Europe, and Japan
1) Cost matching: On the debt side, reasonably control the level of predetermined interest rates, generally establish a dynamic adjustment mechanism linked to macro interest rates, and adjust the debt structure to increase the proportion of non-interest sensitive businesses when interest rates decline. Europe and the US tend to develop floating income products, while the Japanese life insurance industry is vigorously developing dead margin products. On the asset side, the US has clearly differentiated allocations to different accounts, and the share of equity is clearly higher in separate accounts; European insurers place importance on alternative investment allocations and generally use derivatives for risk hedging management; the Japanese life insurance industry has greatly increased the allocation of overseas bond investments. 2) Term matching: Europe, America, and Japan generally place importance on term matching. In particular, large European insurers all maintain a very small long-term gap and will adjust dynamically as the interest rate environment changes, and need to simultaneously control the long-term period of both assets and liabilities to achieve a reasonable match.
Outlook: Establishing a financial liability management system in line with China's reality
1) Although developed overseas markets have provided useful empirical references, not all experiences are feasible to implement in the domestic market, and it is necessary to establish an asset management system in line with China's reality. 2) Debt side: It is necessary to give full play to the institutional advantages of floating income products. At present, the transformation of domestic dividend insurance has achieved phased results, but there is still the problem of “disguised settlement” of dividend insurance in a fierce competitive environment; vicious competition and disguised settlement must be avoided. Furthermore, in the future, it is possible to follow the example of Hong Kong Insurance and launch products with a low insurance+high variable income structure to further reduce rigid costs. 3) Asset side: Give full play to the advantage of patient capital and implement the principle of longevity. Small and medium-sized private insurers should follow the example and improve the long-term assessment mechanism. The industry allocation continues to focus on the dumbbell allocation of long-term interest rate bonds+high-quality equity investments, and balance growth and value investment structures within equity.
Risk warning: 1) long-term interest rate trend downward; 2) equity market fluctuations; 3) new order growth falls short of expectations.