Recently, Anbang Insurance has been at the forefront of public opinion. On May 5, the China Insurance Regulatory Commission issued a regulatory letter prohibiting Anbang Life from releasing new products within three months. For a time, some people were concerned about Anbang's operating risks. concerns and doubts about the safety of its products. So are there any problems with Anbang’s insurance products? Let’s hear what insurance experts have to say.

The author of this article, Guo Zhenhua, is an associate professor and graduate tutor at the School of Financial Management, Shanghai University of International Business and Economics. PhD from the School of Economics and Management of Tongji University (risk management and insurance direction), director of the insurance major at the School of Financial Management, director of the Insurance Society of China, consultant to Shanghai Anxin Agricultural Insurance Company, and member of the Shanghai Construction Project Risk Management System Research Group.

Recently, there have been more and more negative reports about Anbang Insurance! There are two climaxes: one is Caixin's "Penetrating Anbang Magic", questioning Anbang's false capital injection problem; the other is the China Insurance Regulatory Commission's announcement that two new products of Anbang Life Insurance Co., Ltd. are not allowed to be launched on the market and that they are not allowed to apply for new products for three months. Supervision letter; in addition, one is questioning Anbang’s cash flow issues; the other is saying that the stocks purchased by Anbang have fallen significantly!

The widespread dissemination of the above reports has made Anbang customers a little uneasy, worried that if there is any problem with Anbang, their policy interests will be affected! Among my colleagues and students, there are Anbang customers, and they are also asking the same questions!

My point of view is: Anbang’s customers can rest assured that despite the above-mentioned negative news, the customer’s policy benefits will not be affected!

In response to the above reports, let me talk about five reasons:

1. Anbang will not have cash flow problems

A company has problems, especially financial institutions. If there is a problem, it must be a cash flow issue, which means the inability to cope with the necessary cash outflows. Therefore, there is news that Anbang is short of 20 billion in money and borrowed 100 billion from Minsheng Bank (7.900, -0.10, -1.25%). This is a fatal problem.

But to be honest, it is false at first glance to say that "Anbang is short of money and borrowed hundreds of billions from China Minsheng Bank"! Because Anbang's cash inflow has been so abundant in recent years, especially in the first quarter of this year, the cash inflow has become even more fierce. Anbang Life's premium income has risen to second place in the industry, surpassing Ping An and approaching China Life (27.500, -0.61 ,-2.17%), how could it be short of money?

It is true that the actual term of Anbang’s business is shorter than that of established life insurance companies, but as long as premiums are growing and inflows are greater than outflows, there will be no cash flow problems, and Anbang’s inflows are now far greater than outflows. , this can be seen from the rapid growth of Anbang's asset size.

In fact, Anbang is not short of money, but short of good investment projects. It needs to invest a lot of money effectively instead of borrowing from others.

In the financial market, insurance companies have always been investors, not borrowers.

For this matter, Anbang issued a special statement, saying that its Anbang Life Insurance Company has a cash reserve of more than 200 billion yuan, Anbang Property & Casualty Insurance Company has a cash reserve of more than 300 billion yuan, and the company has a cash reserve of more than 500 billion yuan. My gut feeling is that this is too much cash reserve!

In fact, media reporters cannot look at insurance companies in the same way as real economic enterprises. The more cash reserves the insurance company has, the better, because the investment income generated by cash reserves is very low. The more cash reserves the insurance company has, the better. The lower the investment return rate, which in turn affects and reduces customer returns.

In other words, insurance companies should keep cash reserves as low as possible in order to achieve the highest possible rate of return!

If it really doesn’t work, you can also borrow some money through selling and repurchasing, etc. However, even if you borrow, it doesn’t mean that the insurance company has a cash flow problem!

2. Anbang does not have solvency problems

(Revolving capital injection)

Caixin said Anbang may have used insurance funds to self-inject 30 billion yuan . First of all, whether this situation is true needs to be verified.

If it is true, it should be illegal!

From the perspective of customer interest protection, false capital injection can only mean that the solvency of Anbang Life and Anbang Property & Casualty Insurance is not as high as claimed in their solvency reports, but it does not mean that the two companies must have solvency problems. !

Caixin mainly accuses Anbang Property & Casualty Insurance of its recurring capital injection problem. I checked the data of Anbang Property & Casualty Insurance Company. At the end of 2016, its actual capital was 78.3 billion yuan. The minimum capital required by the China Insurance Regulatory Commission was 18 billion yuan. Its solvency adequacy ratio was 434%, far exceeding the solvency requirements of the China Insurance Regulatory Commission.

Assuming that Anbang Property & Casualty Insurance’s registered capital is indeed RMB 20 billion due to false capital injection as stated by Caixin magazine, its solvency adequacy ratio will be reduced to 324%, which is still far higher than the CIRC’s requirement of greater than 100% .

I checked the data of Anbang Life Insurance. Its actual capital at the end of 2016 was 73 billion yuan, the minimum capital required by the China Insurance Regulatory Commission was 48.7 billion yuan, and its solvency adequacy ratio was 150%.

Assuming that Anbang Life’s registered capital of RMB 10 billion is falsely injected, its solvency adequacy ratio will be reduced to 140%, which still meets the CIRC’s requirement of greater than 100%.

In other words, even if Anbang does have problems with cyclic capital injection and false capital injection of 30 billion, its solvency will not be a problem.

The fundamental reason is that Anbang Life Insurance and Anbang Property & Casualty Insurance have made huge profits in recent years, and the profits are basically retained in the company to support the company's development, which has greatly improved the company's capital or solvency.

In fact, Caixin is mainly blaming Anbang Property & Casualty Insurance for its capital injection problem. In fact, Anbang Property & Casualty Insurance’s solvency is very sufficient: its registered capital is 37 billion yuan, but its undistributed profits amount to 32.1 billion yuan. Yuan, as well as capital reserves, surplus reserves and general risk reserves amounted to 8 billion yuan, resulting in very abundant solvency.

3. The regulatory letter from the China Insurance Regulatory Commission has limited impact on Anbang Life

This regulatory letter is directed at Anbang Life and has two main results: first, two products are prohibited from being sold on the market; One is annuity insurance and the other is endowment insurance (universal type); the second is that it is prohibited to declare new products within three months.

Sales information for these two products is currently unavailable. But what is certain is that in the first quarter of 2017, Anbang Life Insurance has comprehensively adjusted its product strategy, switching from universal insurance to ordinary life insurance, which has led to a substantial increase in its original premium income. Therefore, this latter universal insurance product will basically not have a big impact on Anbang Life’s premium income.

From a time point of view, April 1, the key point for adjusting product design, has long passed. According to the regulations of the China Insurance Regulatory Commission, starting from April 1 this year, all life insurance companies will Products all need to improve their protection levels, and the risk insurance amount generally needs to be increased from the original "minimum 5% of the premium" to "minimum 40% of the premium".

It is already early May. Therefore, it can be speculated that Anbang Life Insurance should have submitted new insurance products for approval in March. There should be no problem of insufficient products or no products to sell.

So, from the perspective of premium inflow, this regulatory letter from the China Insurance Regulatory Commission will not have a great impact on Anbang Life’s premium income.

4. The drop in the stock price of Anbang concept stocks has little impact on Anbang’s operations

A recent article was titled "Minsheng Bank, which has a heavy position, has fallen 21%." It shows that there is a problem in Anbang's operation.

Indeed, Anbang Insurance recently held 24 stocks, with a market value of 188.4 billion yuan. It is highly concentrated in banks and real estate infrastructure, holding 101.8 billion yuan in banks and 74.1 billion yuan in real estate infrastructure.

However, what the author does not know is that most of Anbang’s shares are included in long-term equity investments, and a small amount is included in available-for-sale shares. According to Anbang's report, at the end of 2016, the total long-term equity investment of Anbang Life and Anbang Property & Casualty Insurance was about 200 billion yuan.

After taking into account long-term equity investment, the drop in stock price will not affect Anbang's balance sheet, nor will it affect Anbang's income statement, nor will it affect Anbang's cash flow statement.

Because these long-term equity investments are measured according to the "equity method", the asset book value = purchase price + investment income, no matter how the stock price fluctuates, it will not have an impact on Anbang's asset value. Investment income is divided according to the net profit of the investee, regardless of the stock price. Moreover, Anbang is a long-term holding and is not in a hurry to sell, and it has nothing to do with the cash flow statement.

Of course, if the stock market is not good, it will affect Anbang's securities bid-ask spread income, mainly from some stocks in available-for-sale assets, but the number is not large, and all insurance institutions will be equally affected.

In other words, the rise and fall of stock prices will not have a great negative impact on Anbang's operations as some reporters think.

5. The interests of policyholders are protected by the insurance law

Finally, taking a few steps back, even if something goes wrong with Anbang, the interests of policyholders are protected by the insurance law.

In terms of capital security, treasury bonds and government bonds are the safest, followed by bank deposits and insurance products, followed by other financial products.

Why are insurance products and bank deposits so safe? Because, first, insurance companies and banks have strict capital management systems. Banks have capital adequacy ratio supervision, and insurance companies have solvency adequacy ratio supervision. ; Second, there are corresponding insurance mechanisms. Banks have deposit insurance systems, and insurance companies have China Insurance Guarantee Fund, and the coverage of the insurance guarantee fund is higher than that of deposit insurance.

In other words, theoretically speaking, within the guaranteed rate of return, buying insurance is basically a risk-free investment and is safer than bank deposits!

Extended reading: How to buy insurance, which one is better, and step-by-step instructions to avoid these "pitfalls" of insurance