The Zhitong Finance App learned that Huachuang Securities released a research report stating that in the dividend boom, insurers are both funders and important members of high-dividend pools. Listed companies are expected to respond positively to “improving quality, efficiency, and return”. Dividend assets will maintain a certain level of popularity, and recommend China Taibao (02601), a high-dividend product with stable fundamentals; if macroeconomic recovery accelerates and real estate risks are significantly mitigated, it is recommended to focus on Ping An China (02318). Optimistic about the performance of flexible varieties after a clear recovery in the later market, we recommend Xinhua (01336) and China Life Insurance (02628). China's financial insurance can still be used as a defensive investment option. At the same time, you can pay attention to China People's Insurance (01339). In the long run, high dividends+stable market share+gradually improved risk management system have both offense and defense.

The main views of Huacheng Securities are as follows:

Basic framework for insurance capital allocation: Combining medium- to long-term strategic asset allocation (SAA) and tactical asset allocation (TAA)

Huachuang Securities said that for different time dimensions, insurance companies' asset allocation ideas can be divided into three levels, in descending order: strategic asset allocation (SAA), dynamic asset allocation (DAA), and tactical asset allocation (TAA). At the practical level, most domestic insurance companies mainly do SAA and TAA.

The three steps of formulating SAA: determine the overall plan, determine the allocation plan for each product investment account within the framework of the overall plan, and use long-term dynamic simulation to verify the effectiveness of the plan. (1) Use Markowitz or other models, use solvency adequacy ratio as the core indicator for measuring overall risk, determine the company's overall strategic asset allocation options, and adopt a multi-index comprehensive scoring system screening plan. (2) On the basis of the overall plan, asset allocation is carried out for each product investment account based on the characteristics of liabilities. (3) Generate future long-term random economic scenarios based on cross-cycle economic assumptions for various types of assets, and enter an asset-liability linkage model to complete simulations of key indicators such as investment income, asset liability, and profit, thereby verifying the effectiveness of the plan.

The main contents of TAA: review of operations in the previous investment period, macroeconomic and market analysis, determination of tactical asset allocation, risk measurement, and adjustment plan. The tactical asset allocation plan confirms the secondary allocation of major asset classes, and determines the high/low/standard allocation of certain types of assets based on macroeconomic and market analysis. In line with SAA, TAA also emphasizes risk control. Breaking the upper limit indicates that the plan is too aggressive, while breaking the lower limit means insufficient investment. Generally speaking, since insurance capital has high safety requirements, in principle, assets with low volatility will be allocated more and less volatile assets will be allocated.

There are three main directions in the allocation of insurance funds:

(1) Assets that are less sensitive to interest rates and are not affected by fluctuations in fair value; (2) assets with high interest rate sensitivity and measured at fair value; (3) assets that are less sensitive to interest rates but measured at fair value for the purpose of obtaining excess returns. In terms of asset allocation, the industry and listed companies mainly allocate fixed income assets, with bonds as the main component. In the past, non-standard was used as a means to increase profits, but in the context of an “asset shortage”, it is expected that some of the funds will increase equity assets.

There is still room for improvement in insurance equity allocation. High dividends, undervaluation, low volatility, high roe assets may be favored by insurance capital

There is still some room for improvement in insurance capital's current equity asset allocation compared to the upper regulatory limit, but under the new standards, more equity assets are measured by FVTPL, increasing fluctuation in statements and limiting insurance equity allocation to a certain extent. However, at the same time, by specifying FVOCI or equity law measurement, it is possible to avoid the impact of stock price fluctuations of the holding company on the statements to a certain extent, and iron out the fluctuation in the statement. Huachuang Securities believes that in the context of the new standards, high dividends, undervaluation, low volatility, and high ROE assets are expected to be favored by insurance capital, and increased allocation of insured capital in sectors such as coal, banking, petroleum and petrochemicals.

Risk warning: changes in regulatory policies, continued decline in long-term interest rates, equity market turbulence, rising real estate risk