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"daily economic news" was informed that in order to implement the spirit of the third plenary session of the 20th cpc central committee and the central financial work conference, and implement the deployment of the political bureau meeting of the cpc central committee on september 26, we should vigorously guide medium and long-term funds into the market, open up social security, insurance, the entry of wealth management and other funds into the market has been blocked, and efforts have been made to boost the capital market. recently, with the approval of the central financial commission, the central financial office and the china securities regulatory commission jointly issued the "guiding opinions on promoting the entry of medium and long-term funds into the market" (hereinafter referred to as the "guiding opinions").

the main measures mentioned in the "guidance opinions" include three aspects: first, build and cultivate a capital market ecosystem that encourages long-term investment; second, vigorously develop equity public funds and support the steady development of private securities investment funds; third, strive to improve various types of supporting policies and systems for long-term capital entry into the market.

the reporter noticed that in terms of improving the supporting policies and systems for the entry of various types of medium and long-term funds into the market, the "guiding opinions" proposed a number of practical measures, such as establishing and improving long-term investment of more than three years for insurance funds, various types of pensions and other medium- and long-term funds. assessment mechanism, breaking through the institutional obstacles that affect the long-term investment of insurance funds, etc., provide a clear "action plan" for accelerating the entry of medium and long-term funds into the market and improving the capital market functions that coordinate investment and financing.

limited by multiple factors, equity investment in insurance funds faces practical difficulties.

insurance funds have always been considered to have natural advantages in developing long-term equity investments due to their stable sources and long liability periods, and are well suited to the capital market. at the same time, as long-term interest rates continue to decline, the risk of interest rate losses for insurance companies is gradually increasing. actively developing equity investments is one of the important ways for insurance funds to cover costs and maintain and increase value.

in recent years, the scale of investment by insurance companies in equity assets such as domestic and foreign unlisted corporate equities and listed company stocks has generally increased. however, the overall equity investment proportion has been declining, and there is still much room for tapping potential.

the reason is mainly due to restrictions on accounting, performance appraisal, solvency and other aspects. insurance funds still face certain practical difficulties in equity investment, making it difficult to achieve "long-term investment".

for example, an industry insider told the reporter of "daily economic news" that in terms of accounting standards, according to current accounting standards, except for long-term equity investments, insurance companies generally account for equity assets as trading financial assets. the price changes of similar assets will be directly reflected in the current income statement of the insurance company, causing the equity investment behavior of the insurance company to become conservative and short-term.

in november 2023, with the approval of the state council, the china securities regulatory commission, together with the ministry of finance and the state administration of financial supervision, promoted the implementation of a pilot program for long-term stock investment with insurance funds. specifically, china life and new china insurance jointly invested 50 billion yuan to establish a private equity fund to invest in secondary market stocks and pilot equity method accounting. under the equity method accounting model, price changes in investment stocks do not directly affect the current profits of insurance companies, which is conducive to long-term investment of insurance funds. however, the pilot still faces problems such as limited fund scale and high coordination costs.

for another example, in terms of performance appraisal mechanisms, insurance funds currently have short-term appraisal problems in unlisted corporate equity and stock investments, which inhibits the enthusiasm and stability of insurance companies' equity investments and makes it difficult to leverage their long-term funding attributes.

in addition, the equity investment ratio of insurance companies is subject to solvency regulatory indicators. the higher the solvency adequacy ratio, the higher the equity investment ratio policy upper limit. after the new solvency regulations in march 2021 fully penetrated the measurement risk requirements, the overall solvency adequacy ratio of the insurance industry dropped from 246% at the end of 2020 to 196% at the end of june 2024. the upper limit of the equity investment ratio of each insurance company also varied to varying degrees. downshift. in addition, the new solvency regulations have adopted more stringent business restrictions on over-allocation of equity assets, forcing insurance companies to reserve a larger space in actual investment, further affecting the enthusiasm of insurance companies for equity investments.

break through the institutional obstacles that affect the long-term investment of insurance funds and release the compatibility with the capital market

mao qingqing, head of the insurance industry at cicc research department, told reporters that the technical obstacles to the entry of insurance funds into the market are mainly due to the need for insurance to ensure its own financial stability and solvency stability. the obstacles to the assessment method are also largely due to financial and solvency stability considerations.

"financial stability can be divided into two aspects: accounting statement stability and long-term financial stability. since various types of statements have regular disclosure requirements, in order to ensure that the company's financial statements have a certain degree of stability, insurance capital must consider corresponding short-term fluctuations in decision-making. risks, especially the new accounting standards, have given greater prominence to the principle of fair value measurement, which also forces insurance funds to take into account short-term fluctuation risks when formulating top-down assessment methods. the same is true for improving these technical obstacles. , we believe that there may still be a fundamental need to improve the contradiction between the short-term nature of financial accounting and solvency measurement and the short-term fluctuations that may occur in long-term investments.”

on august 30, the state council executive meeting clearly stated that it is necessary to cultivate and expand patient capital such as insurance funds, break through institutional obstacles, improve the assessment and evaluation mechanism, and provide stable long-term investment for the capital market and technological innovation.

the latest "guiding opinions" also clearly stated that it is necessary to break through the institutional obstacles that affect the long-term investment of insurance funds, improve the assessment and evaluation mechanism, and urge and guide state-owned insurance companies to optimize the long-term assessment mechanism.

industry insiders pointed out that this will help solve the institutional obstacles faced by equity investment in insurance funds, promote insurance companies to become firm value investors, and provide stable long-term investment for the capital market and technological innovation. insurance funds can also share the dividends of economic development and technological innovation, better maintain and increase value, enhance the solvency of insurance companies, lay a solid foundation for the sustainable and healthy development of the insurance industry, and form a virtuous cycle.

reduce the impact of short-term market fluctuations and establish and improve a long-term assessment mechanism for medium and long-term funds

long-term assessment is one of the key measures to improve the stability of investment operations. from a practical perspective, among medium and long-term funds, in addition to the national social security fund actively practicing long-term assessment, annuity funds, insurance funds, etc. all have short-term assessment problems, which affects investment stability and obtaining long-term investment returns. among them, the problem of frequent short-term examinations of annuity funds is more prominent. the pressure of examinations on agents and trustees is transmitted layer by layer. the mentality of investment managers seeking stability is prominent, and the investment portfolio cannot withstand large short-term market fluctuations.

in recent years, with the vigorous promotion of the china securities regulatory commission and relevant ministries and commissions, the long-term assessment of medium and long-term funds has made positive progress. in september 2023, the state administration of financial supervision issued a notice clarifying that insurance companies should strengthen the assessment of long-term investment returns and publicly disclose the average investment rate of return and comprehensive investment rate of return in the past three years on a quarterly basis; in october 2023, the ministry of finance issued a notice clarifying that implement a three-year assessment mechanism for the return on net assets of state-owned insurance companies.

the "guiding opinions" clearly proposes to "establish and improve a long-term assessment mechanism of more than three years for insurance funds, various types of pensions and other medium and long-term funds." by building a multi-level assessment system that connects investment management institutions, investment managers, product portfolios, etc., and establishing and improving a management system that is compatible with long-term assessment, it will help reduce the impact of short-term market fluctuations on medium- and long-term capital investment performance, and promote all types of medium and long-term funds can better implement the concepts of long-term investment and value investment, and better play the role of "stabilizer" and "ballast stone" in the capital market.

duan guosheng, executive vice president, chief investment officer of taikang insurance group and ceo of taikang asset, pointed out that on september 26, the central financial office and the china securities regulatory commission jointly issued the "guiding opinions on promoting medium and long-term funds to enter the market", which included insurance asset management relevant areas include: establishing and improving a long-term assessment mechanism of more than three years for commercial insurance funds, various types of pension funds and other medium and long-term funds, and promoting the establishment of a long-term performance orientation; improving the investment policy system of the national social security fund and basic pension insurance funds, and supporting those with the necessary conditions. employers have liberalized personal investment options for enterprise annuities, and encouraged enterprise annuity fund managers to explore and carry out differentiated investments.

“as an insurance asset management institution, we very much agree with the guiding opinions. these policy directions effectively address the problems that insurance, annuities, social security and other funds often face in the actual investment process. the guiding opinions solve these problems. all have been mentioned. we look forward to relevant policy details being put in place as soon as possible to further realize the nature of insurance funds as patient capital and make greater contributions to boosting confidence in the capital market.”

in addition, great wall life's recent bid for the jiangxi-guangdong expressway in the secondary market through centralized bidding has also attracted market attention. in this regard, great wall life stated that jiangxi-guangdong expressway has excellent quality, stable performance, and standardized governance among listed expressway companies, and its industry status is highly recognized. however, the value of listed companies has been seriously underestimated by the market. based on its firm confidence in the long-term stable operating performance and future development of jiangxi-guangdong expressway, great wall life has continued to increase its holdings through the secondary market and has become one of the important shareholders of the listed company.

"while great wall life provides long-term and stable financial support for listed companies and promotes value discovery for listed companies, it also effectively relieves its own asset allocation pressure, improves its own income level, achieves mutual benefit and win-win results for both parties, and reflects the important functions of a financial service entity. as a financial service entity, as a national life insurance company controlled by state-owned assets, great wall life, under the guidance of policies, adheres to the long-term investment philosophy, implements patient capital practices, and gives full play to the advantages of "long-term investment" of insurance funds to serve the real economy and industrial development. "

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