Abstract
China’s life insurance industry has just started in the 1990s after the reform and opening up, and its development experience is obviously insufficient, and it has not gone through a very complete life insurance development cycle. No matter from the actuarial technology, the professional level of the agent, the popularization time of the agent system, or the management experience, it is far from the developed areas of the world’s life insurance industry. In addition, many professional investors are worried about the future prospects of China’s life insurance industry because of the long-term existence of a low interest rate environment. However, after reading detailed materials (research papers, books, reviews, etc.), the final conclusion of this report is different from that of other too cautious investors . This report holds that: the current situation and prospect of China’s life insurance H shares meet the conditions of Davis double-click, and the main investors in the secondary market will encounter a unique opportunity to obtain excess returns by investing in domestic insurance H shares. On the level of objective factors, we analyze from the following four aspects: (I) the potential demand for life insurance in China will continue to increase significantly in the future; (II) most of the representative life insurance companies in China have low valuations; (III) the possible style switching in China’s secondary market is conducive to the rise of blue chips such as life insurance companies; (IV) from the long-term perspective of history, the insurance index has significantly outperformed the Shanghai Composite Index, which represents the market. In terms of subjective factors, we consider them from the following four perspectives: (I) the development and problems of life insurance industry in Japan and Taiwan; (II) on the liability side, China’s life insurance industry vigorously develops new products with high business value, so as to resist the impact of low interest rates; (III) the diversification of asset allocation at the investment end of China’s life insurance industry can make the profit of life insurance industry not limited by the interest rate; (IV) the change of service quality at the supply side is conducive to the life insurance companies to tap the potential market demand in China.
Highlights
According to the Statistics Bureau, China's GDP is still growing at a high speed, only second to the United States, reaching 100 trillion yuan, or about 14.4 trillion US dollars
At the end of 2019, China's per capita GDP has exceeded the node of 10000 US dollars. 1
1.2 From the perspective of premium depth and density, China's life insurance industry still has a huge space for development
Summary
1.1 Per capita GDP of more than 10000 US dollars means a new growth point is coming. According to the Statistics Bureau, China's GDP is still growing at a high speed, only second to the United States, reaching 100 trillion yuan, or about 14.4 trillion US dollars (according to the annual average exchange rate). The lack of state expenditure and the increase of individual expenditure indicate the absence of commercial medical insurance In line with this analysis, the growth rate of health insurance business in China's life insurance industry has reached more than 30% per year. The babies born in these two periods of extremely high number of newborn babies coincide with the population aged 35-54 between 2018 and 2025, which is the main consumer group of insurance This indicates that the demand of insurance industry will increase in the five years 4. Compared with the United States: the first, second and third pillars account for 10.15%, 58.14% and 31.71% respectively (the second and third pillars account for more than 90% in total), which can reflect the huge development space of China's commercial endowment insurance in the future (source: China Enterprise Industry Research Institute).
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