Recently, US listed company MetLife (NYSE: MET) released its Q4 2023 performance report. During the reporting period, the company's revenue was 19.028 billion US dollars, a year-on-year increase of approximately 21.91%, better than the market expectation of 18.24 billion US dollars; The net profit was 574 million US dollars, a decrease of approximately 63% from the same period last year's 1.549 billion US dollars.
In addition, Metropolitan Life Insurance's adjusted net investment income was $5 billion, an 11% increase from the same period last year, mainly due to an increase in recurring investment income caused by rising interest rates and asset growth.
MetLife is one of the largest life insurance companies in the United States, and some of its business in the mainland Chinese market is carried out by its affiliated company, China US United Tai MetLife.
On January 31st, China US United Tai Metropolitan Life Insurance also released its latest solvency report, disclosing performance information such as premium income, net profit, comprehensive investment return rate, and solvency adequacy ratio.
The premium income growth rate of China US United Tai Metropolitan Life Insurance is relatively high, the solvency adequacy ratio is at a high level, and the investment return performance is relatively stable. However, in 2023, the net profit declined by more than 50%.
"Due to compliance considerations, it is not convenient to respond," said a reporter from Time Weekly who called the relevant person in charge of Metropolitan Life Insurance regarding issues such as the decline in net profit of China US United Tai Life Insurance
The decline in net profit of Sino US United Tai Metropolitan Life Insurance is not an exception. A reporter from Time Weekly noticed that in 2023, many foreign life insurance companies, including China Merchants Xinnuo Life, Zhongying Life, and Hengan Standard Life, saw a significant decline in net profit.
"The main reason is the severe capital market environment. The poor performance of the investment market and low returns directly affect the investment returns of insurance companies, thereby reducing net profits." Yang Fan, General Manager of Beijing Paipaiwang Insurance Agency Co., Ltd., told Time Weekly reporters.
However, relatively speaking, foreign-funded life insurance companies have stronger capital strength, which can better resist risks and manage investment portfolios more effectively; At the same time, the financial management system of foreign-funded insurance companies is usually more robust, focusing more on capital adequacy and debt management, so their profitability level is relatively stable.
Sino US United Tai Metropolitan Life Insurance Business Revenue Growth by 15%
Established in 2005, Sino US United Tai Metropolitan Life Insurance is a joint venture between a subsidiary of the Metropolitan Group of the United States and Shanghai Lianhe Investment Co., Ltd. (hereinafter referred to as "Joint Investment"), with a registered capital of RMB 2.72 billion and each holding 50% of the shares. Lianhe Investment is a state-owned sole proprietorship investment platform under the Shanghai State owned Assets Supervision and Administration Commission.
According to the solvency report for the fourth quarter of 2023, the insurance business revenue of Sino US Liantai Metropolitan Life Insurance in 2023 was 18.741 billion yuan, an increase of approximately 15.33% compared to 16.251 billion yuan in 2022; The net profit in 2023 was 397 million yuan, a year-on-year decrease of about 50.09% compared to 795 million yuan in 2022. As of the end of 2023, the total assets of the company were 101.842 billion yuan.
The growth of insurance business revenue for Sino US United Tai Metropolitan Life Insurance is inseparable from the overall environment of the recovery in the growth rate of life insurance premium scale in 2023. On January 26th, the State Administration for Financial Supervision and Administration disclosed the operating situation of the insurance industry in 2023. In 2023, life insurance companies achieved original insurance premium income of 3.54 trillion yuan, a year-on-year increase of 10.25%.
However, the significant decline in net profit of Sino US United Tai Metropolitan Life Insurance in 2023 may be related to the decline in investment returns. According to its latest solvency report for the fourth quarter of 2024, the investment return rate of Sino US Liantai Metropolitan Life Insurance in 2023 was 3.62%, and the same period in 2022 was 3.98%.
Although there has been a decline, the investment return rate achieved by Sino US United Tai Metropolitan Life Insurance in 2023 is at the median level among foreign insurance companies, and overall it is relatively stable.
At present, the solvency of Sino US United Pacific Metropolitan Life Insurance remains at a good level. According to the latest solvency report, the comprehensive solvency adequacy ratio of the company at the end of the fourth quarter of 2023 was 451%, an increase of 4% from the previous quarter, and the core solvency adequacy ratio was 265%, an increase of 9% from the previous quarter.
At the end of the fourth quarter of 2023, its actual capital was 20.802 billion yuan, an increase of 513 million yuan compared to the end of the previous quarter; The minimum capital at the end of the fourth quarter was 4.61 billion yuan, an increase of 69 million yuan compared to the end of the previous quarter. China US United Tai Metropolitan Life Insurance stated that the above changes are mainly caused by hypothetical factors such as the company's going concern, market environment, and discount rate. "At the end of this quarter, the overall solvency level of the company continued to remain sufficient and exceeded regulatory standards."
Last year, 23 foreign-funded life insurance companies received nearly 300 billion yuan in premium income
According to incomplete statistics from Time Weekly reporters, as of February 2, 23 foreign-funded and joint venture life insurance companies have disclosed their solvency reports for the fourth quarter of 2023.
The report shows that 23 joint venture life insurance companies had a total premium income of 293.088 billion yuan in 2023, of which 10 had premium income exceeding 10 billion yuan. ICBC Ansheng Life Insurance ranked first with a premium income of 40.495 billion yuan, followed closely by China Merchants Xinuo Life Insurance and CITIC Prudential Life Insurance with 34.646 billion yuan and 31.582 billion yuan, respectively.
However, the overall net profit is not optimistic.
Among the 23 insurance companies mentioned above, only 12 had a positive net profit in 2023, while 11 insurance companies were in a loss making state in 2023, accounting for nearly half of the total. Among them, only Zhongyi Life Insurance had a net profit of over 1 billion yuan, which was 1.246 billion yuan. The second and third ranked insurance companies in terms of net profit were China Merchants Xinnuo Life Insurance and Zhonghong Life Insurance, both with a net profit of 402 million yuan. The total net profit of the 23 insurance companies mentioned above is 1.237 billion yuan.
In addition, a reporter from Time Weekly noticed that several foreign life insurance companies saw a significant year-on-year decline in net profit in 2023, such as a decrease of about 96.81% in net profit of China UK Life Insurance, a decrease of about 49.27% in net profit of Tongfang Global Life Insurance, a decrease of about 50.70% in Hengan Standard Life Insurance, and a decrease of about 40.32% in net profit of China Merchants Xinnuo Life Insurance.
The decline in net profit of insurance companies may be related to the narrowing of interest rate spreads caused by the decline in interest rates.
At present, residents are still cautious in their consumption and pursue more stable asset allocation. Insurance consumption is more inclined to increase the amount of savings products such as lifelong life. However, the decline in interest rates and fluctuations in the stock market have increased the difficulty of developing bank wealth management products, trusts and other businesses. The decrease in fixed income income caused by the decline in interest rates and the increase in reserves have put great pressure on the company's net profit. The hot sales of savings products in the life insurance market have hindered the company's business transformation, External factors have a certain impact on the implementation of a company's strategy Zhongyi Life Insurance stated in its latest solvency report.
Yang Zeyun, a professor at the Finance Department of the School of Business at Peking Union University, explained to Time Weekly reporters that interest rate spreads are the main source of profits for domestic insurance companies and also the main reason for losses. On the one hand, in recent years, with the continuous reduction of interest rates, the investment return rate of insurance companies has shown a significant year-on-year decline; On the other hand, with the continuous reduction of market interest rates, the predetermined interest rate of life insurance products is also lowered, leading to an increase in the liability reserve of life insurance products, resulting in a decrease in profits or losses. Especially for some more aggressive life insurance companies, in order to expand their business, they promise high guaranteed returns to their customers in businesses such as opening up well, speculation and suspension of sales. However, the decline in market interest rates has caused these companies to suffer significant losses.
"However, most foreign life insurance companies are relatively stable, and the losses suffered by interest rate spreads are relatively small," said Yang Zeyun.
From the investment returns of the 23 foreign-funded insurance companies mentioned above, in 2023, the investment returns of Hengan Standard Life and Lujiazui Guotai Life exceeded 5%, which were 5.43% and 5.01% respectively; The investment return rate of 7 insurance companies, including Zhongyi Life Insurance and Tongfang Global Life Insurance, exceeds 4%; The investment returns of CITIC Prudential Life Insurance, Peking University Founder Life Insurance, China Korea Life Insurance, and Junlong Life Insurance are all below 2%, at 1.69%, 0.96%, 0.03%, and -1.43%, respectively.