Report: It is difficult to reverse the trend throughout the year under the background of debt restructuring. Green finance and ABS may become new opportunities for insurance asset management industry.

Zhongchengxin International released the "Quarterly Observation and Outlook of Innovative Products in Insurance Asset Management". Overall, from January to September 2024, all types of innovative products in insurance asset management showed a year-on-year contraction. Debt investment plans, as the main variety, saw a decrease in both the number and scale of registrations compared to the previous year; the number of registrations for asset support plans increased but the scale decreased compared to the same period last year; the number of registrations for equity plans and insurance private equity funds decreased compared to the same period last year; in addition, there is a clear head effect in the insurance asset management industry, with some institutions showing strong product operation capabilities or strong synergies, occupying a high market share, but smaller and medium-sized insurance asset management institutions are becoming more active. Looking ahead to the whole year, innovative products in insurance asset management overall show a contraction trend, but they remain an important type of investment and financing, and will continue to focus on the issuance of structured products; in the future, insurance asset management can layout investments in agricultural enterprises, REITs-like assets, and green investment projects. Summary In the first three quarters of 2024, the number and scale of registrations for innovative products in insurance asset management continued to show a contraction trend, with debt investment plans remaining the main variety, but with a decreasing proportion of registrations. The concentration of registrations in the Zhejiang region was high, with the transportation industry leading in proportion; the number of registrations for asset support plans increased but the scale growth slowed down, with an increase in the proportion of registrations. The "hundred trillion" debt-to-equity conversion measure was introduced, the "comprehensive debt conversion policy" was adjusted and improved in a timely manner, non-standard debts of local government financing vehicles and overseas debts with high costs will be replaced on a large scale, debt pressure is expected to be relieved, but attention still needs to be paid to the implementation of debt conversion and the differentiation in the transformation of local government financing vehicles. The central bank once again released positive signals to stabilize the real estate market and expectations, which may help boost market sentiment and improve the real estate market situation. However, from a fundamental perspective, there has not been a noticeable improvement in the operating and financial performance of real estate companies, and attention still needs to be paid to the progress of real estate repair processes and the risks related to credit events of real estate companies. The government and regulatory authorities encourage and support the issuance of financing instruments for agricultural enterprises, and encourage the enrichment of green transformation financial tools; in addition, the government encourages the normalization of infrastructure REITs issuance, with a more diverse range of underlying assets types, looking forward to 2025, insurance funds can invest in REITs-like assets and green investment projects. Product Operation Analysis In the first nine months of 2024, the number and scale of registrations for innovative products in insurance asset management continued to show a contraction trend, with debt investment plans as the main variety, accounting for over 78%, but showing a year-on-year decrease. In recent years, insurance funds, as important institutional investors in China's capital market and important providers of funds for major national infrastructure construction, have played an increasingly important role in the construction and development of the national economy. Various innovative products in insurance asset management, including debt investment plans, asset support plans, equity investment plans, and insurance private equity funds, have experienced rapid development in recent years because they can meet the needs of insurance funds for large volume, long term, and high stability characteristics, meet the long-term investment needs and investment scope requirements of insurance funds, and provide long-term, stable financial support to real enterprises, supporting the development of the real economy. According to statistics from the China Insurance Asset Management Industry Association (hereinafter referred to as "the Association") and China Insurance Asset Registration Trading System Co., Ltd. (hereinafter referred to as "China Insurance Registration"), in 2023, a total of 575 various innovative products in the Chinese insurance asset management industry were registered, a decrease of 19 compared to the previous year; the registered scale was 13.150.01 billion yuan, a decrease of 2.97% year-on-year. From January to September 2024, a total of 319 various innovative products in the Chinese insurance asset management industry were registered, a decrease of 47 compared to the same period last year; the registered scale was 6,811.21 billion yuan, a decrease of 14.74% year-on-year; of which, debt investment plans remained the main variety, accounting for 78.06% in quantity (a decrease of 3.36% year-on-year), while the proportions of asset support plans, equity investment plans, and insurance private equity funds in the number of registrations were 17.87% (an increase of 3.66% year-on-year), 2.19% (a decrease of 0.26% year-on-year), and 1.88% (a decrease of 0.03% year-on-year), respectively. From January to September 2024, both the number and scale of registrations for debt investment plans showed a year-on-year decrease, with a continued concentration in the Zhejiang region and the transportation industry leading in the number of registered projects and scale. Since 2023, the slow economic recovery and the problem of insufficient demand under unstable expectations have further highlighted the reduction in the real financing demand and the low investment performance; at the same time, affected by the downsizing of bank loan costs and bond issuance costs under the broad credit environment, the continued decline in interest rates leading to narrowing spreads and the impact of the scarcity of high-quality assets under the background of the debt conversion, the tightening of non-standard financing policies, the development of debt investment plans has entered a sustained downward trend. According to statistics published by the Association, a total of 444 debt investment plans were registered in the whole year of 2023, a decrease of 41 from the previous year, a decrease of 8.45%; the registered scale was 7,356.61 billion yuan, a decrease of 15.56% from the same period of the previous year. Since 2024, with the strict implementation of the debt conversion policy, debt investment plans have shown a simultaneous decline in both the number of registrations and the scale of registrations, with a total of 249 debt investment plans registered from January to September 2024, a decrease of 49 from the same period last year, a decrease of 16.44%; the registered scale decreased by 13.64% year-on-year to 4,107.42 billion yuan. In terms of regional investment, from January to September 2024, the investment in debt investment plans still focused on the eastern region, with Zhejiang and Jiangsu accounting for 21.83% and 11.39% of the registered scale, respectively, with Zhejiang having the highest proportion; followed by Guangdong, Henan, Hubei, Anhui, Shandong, Sichuan, and Fujian accounting for 5.00%~9.00%; Beijing, Shanxi, and Hunan accounting for 2.00%~5.00%. In terms of industry investment, transportation, park infrastructure, social livelihood and commercial, office real estate have always been the key investment areas for debt investment plans. In terms of the number of registrations from January to September 2024, the proportions of registrations in the above industries were 27.71%, 18.88%, 17.67%, and 14.46%, respectively. In terms of the scale of registrations, the proportions of registrations in the above industries were 39.77%, 15.26%, 12.86%, and 10.96%. In terms of product credit ratings, debt investment plans currently have a ranking of...The planned debt level is mainly concentrated in AAA, but there is a growing trend in the proportion of AA+. According to relevant statistics, from 2021 to September 2024, the proportion of projects with a debt level of AAA remained above 90%, while the proportion of AA+ projects showed an increasing trend.From January to September 2024, the number of registered asset-backed plans increased year-on-year, but the registration scale decreased slightly. Consumer finance and small and micro loans were still the main types of underlying assets. In addition, as of now, out of the 5 pilot insurance asset management companies, 4 have successfully issued the first enterprise asset securitization products on the exchange as plan managers. Insurance asset management institutions will continue to focus on the development of asset-backed securities businesses and need to explore underlying assets that fit the characteristics of long-term funds in the insurance industry. In terms of issuance quantity and scale, from August 2019 to the end of September 2024, a total of 295 insurance asset-backed plans were registered, with a total scale of 1,2287.93 billion yuan. Due to the registration reform in 2019 and the change from registration to registration system in September 2021, insurance asset-backed plans entered a period of rapid growth. From 2020 to 2023, the number of insurance asset-backed plans registered at the China Insurance Regulatory Commission and the China Banking and Insurance Regulatory Commission were 25, 40, 69, and 96 respectively, with registration scales of 725.31 billion yuan, 1,568.30 billion yuan, 3,049.29 billion yuan, and 4,604.28 billion yuan respectively. From January to September 2024, 57 insurance asset-backed plans were registered at the China Insurance Regulatory Commission, an increase of 5 compared to the previous year, with a registration scale of 2,225.74 billion yuan, a decrease of 18.65% compared to the previous year. In terms of types of underlying assets, from August 2019 to the end of September 2024, a total of 295 asset-backed plans were registered with the China Insurance Regulatory Commission and the China Banking and Insurance Regulatory Commission, with a total scale of 1,2287.93 billion yuan. The main types of underlying assets were consumer finance and small and micro loans, supply chain assets, financing leases, fund shares, and debt restructuring assets. Among them, the proportion of financing lease assets was the highest in the registered project scale in 2019, with real estate supply chain assets being the main focus in 2020, and the proportion of consumer finance and small and micro loan assets increasing year by year since 2021, accounting for 31.56%, 54.09%, 69.74%, and 35.72% in 2021-2023 and January-September 2024 respectively. From January to September 2024, consumer finance and small and micro loan assets remained the highest proportion of assets, followed by supply chain (20.70%) and financing leases (4.83%). In addition, 2 new CMBS projects were added from January to September 2024. In terms of product term, the product term of real estate supply chain projects is mainly within 1 year (including 1 year); the product term of financing lease projects is mainly 3 years or 5 years; the product term of non-performing restructuring debt projects is mainly 5 years; due to the dispersed remaining terms of the underlying assets in consumer finance and small and micro loan projects, the product structure often sets up a revolving purchase mechanism, and the product term varies greatly, mostly within 6-12 months or within 1-3 years; the term of the newly added CMBS projects is relatively long, set at 3+3+3+3+3+3 years. In terms of product credit ratings, according to relevant statistics, from 2021 to 2023 and from January to September 2024, product bond credit ratings were concentrated at AAAsf. Small and micro loan projects mostly use a senior/subordinated payment mechanism, with seniors concentrated at AAAsf and AA+sf. In March 2023, the China Securities Regulatory Commission instructed the stock exchanges to formulate the "Guidance on Insurance Asset Management Companies Engaging in Asset Securitization Businesses," encouraging eligible insurance asset management companies to actively engage in ABS and REITs businesses. The first batch of 5 companies including Taikang Asset, China Life Asset, Taibao Asset, Renbao Asset, and Ping An Asset were allowed to pilot related businesses. In May 2024, Taikang Asset as the plan manager of the "Taikang Asset-China Power Investment Leasing No. 1 Carbon Neutral Green Asset Support Special Plan" and China Life Asset as the plan manager of the "China Life Insurance-Chuanggong Financing Lease Asset Support Special Plan" successfully issued on the exchange. In July 2024, Ping An Asset as the plan manager of the "Ping An Asset-China Aviation Lease 2024 First Batch Green Asset Support Special Plan (renewable)" successfully issued on the exchange, making it the first green renewable asset support special plan issued by an insurance asset management institution, expanding new ways for enterprises to conduct green financing and supporting high-quality development of enterprises. In September 2024, Renbao Asset as the plan manager of the "Renbao Asset-Renbao Life Insurance Policy Pledge Loan 1-5 Term Asset Support Special Plan" successfully issued on the exchange. Insurance asset management institutions will continue to focus on the development of asset-backed securities businesses and continue to explore underlying assets that fit the characteristics of long-term funds in the insurance industry. From January to September 2024, the number of registered insurance private equity funds and equity investment plans both decreased year-on-year, but the registered scale showed a polarized trend with a significant increase in the registered scale of insurance private equity funds and a significant decrease in the registered scale of equity investment plans. Historically, the mismatch between assets and liabilities in the Chinese insurance industry, especially in the life insurance sector, has been severe. Equity investment plans and insurance private equity funds can well fit the long-term, stable, and large-scale nature of insurance funds, increase investment returns, alleviate liability pressures, and also serve the deleveraging needs of real enterprises. In September 2021, the China Banking and Insurance Regulatory Commission issued the "Notice on Registration Matters for Asset-backed Plans and Insurance Private Equity Funds," changing the registration system to a registration system, leading to further growth in the number and scale of registered insurance private equity funds. However, since 2023, due to the macroeconomic impact, investors have become more cautious in asset allocation, and the alternative investment market is facing difficulties in fundraising, resulting in a decrease in investment scale. In 2023, the Insurance Asset Management Association registered a total of 14 insurance private equity funds, a decrease of 7 from the same period in the previous year, with a registration scale of 52.27 billion yuan, a significant decrease of 56.72% from the 1,218.28 billion yuan in the same period last year; 21 equity investment plans were registered, a decrease of 2 from the same period in the previous year, with a registration scale of 661.85 billion yuan, a slight increase of 1.82% from the 577.15 billion yuan in the same period last year. From January to September 2024, the scale of registered insurance asset managementIndustry associations jointly registered 6 private equity insurance funds, a decrease of 1 from the same period last year; the registered scale reached 305.05 billion yuan, a significant increase of 353.74% from the same period last year; there were 7 registered equity investment plans, with 2 fewer than the same period last year, and a registered scale of 173.00 billion yuan, a decrease of 57.71% from the same period last year. Considering the significant decline in yields of fixed income products and the weak performance of the stock secondary market, many insurance asset management institutions will increase their efforts in exploring the equity field. Insurance asset management institutions can intervene or cultivate in the equity field through equity plans and funds, but due to the slow economic recovery in China, the investment side is relatively sluggish, and it is expected that it will be difficult to reverse the downward trend in 2024.Institutional Operation Analysis From January to September 2024, Allianz Asset Management's debt investment plan registration volume remained at the forefront, with Minsheng Tonghui Assets ranking first in the number of projects registered in asset support plans. In terms of equity investment plan registration, there was a clear trend of concentrated scale, with China Life Asset Management's equity plan registration volume exceeding 90% of the industry's equity plans. Regarding debt investment plans, in 2023, a total of 31 institutions registered 444 debt plans. Institutions with a higher number of registrations included CMB Trust, Allianz Asset Management, Huatai Assets, China-Italy Assets, Everbright Assets, Ping An Assets, Taikang Assets, PICC Capital, all with 15 or more registrations. Among them, Allianz Asset Management had 48 registrations, showing a significant increase. Other institutions like Huaxin Assets, PICC Asset Management, China Life Investment, ICBC Ansheng Asset Management, and Taiping Capital had 10-15 registrations. From January to September 2024, Allianz Asset Management, Huatai Assets, and China-Italy Assets registered 37, 24, and 20 plans respectively. Minsheng Tonghui Assets, Ping An Assets, China Life Investment, Taikang Assets, and CHINA BEST Xingyi Asset Management had 11-15 registrations, while CMB Trust, CCB Insurance Asset Management, Everbright Assets, PICC Asset Management, Taiping Assets, China Life Assets, Taibao Assets, CPIC Investment, Changjiang Pension and Life Assets had 5-10 registrations. In terms of asset support plans, by the end of September 2024, China Insurance Depository and the CBIRC had registered 295 projects with a total registration size of 1.2287 trillion yuan. Among them, projects where Ping An Assets served as the trustee had a registration size of around 2263.01 billion yuan, with 48 projects. From January to September 2024, China Insurance Depository registered 57 projects with a total registration size of 2.22574 trillion yuan. Among them, Minsheng Tonghui Assets registered 10 projects with a size of 36.271 billion yuan, Everbright Yungming Assets registered 9 projects with a size of 51.00 billion yuan, Jia Asset, China Life Investment, and Taikang Assets each registered 5 projects with sizes of 29.00 billion yuan, 16.153 billion yuan, and 10.582 billion yuan respectively. Regarding equity investment plans, in 2023, a total of 10 insurance asset management companies registered 21 equity investment plans with a total registration size of 66.185 billion yuan. From January to September 2024, insurance asset management companies registered a total of 7 equity investment plans with a total registration size of 17.3 billion yuan, with China Life Assets registering 4 plans with a size of 12.00 billion yuan, accounting for 69.36%. China Life Investment, Citic Insurance Asset Management, and Minsheng Tonghui Asset Management each registered 1 plan with sizes of 5.00 billion yuan, 2.00 billion yuan, and 1.00 billion yuan respectively. Regarding insurance private equity funds, in 2023, a total of 8 fund management companies (subsidiaries of each insurance asset management company) registered 14 insurance private equity funds with a total registration size of 52.727 billion yuan. From January to September 2024, the Insurance Asset Management Association registered a total of 6 insurance private equity funds with a total registration size of 30.505 billion yuan, with China Life Jinshi Asset Management Co., Ltd. registering 2 funds with a size of 12.005 billion yuan. Ping An Chuangying Capital Management Co., Ltd., Citic Equity Investment Management Co., Ltd., Sunshine Ronghui Capital Investment Management Co., Ltd., and Ping An Basic Industry Investment Fund Management Co., Ltd. each registered 1 fund with sizes of 10.00 billion yuan, 1.50 billion yuan, 2.00 billion yuan, and 5.00 billion yuan respectively. Outlook Looking ahead for the full year, innovative products in insurance asset management are generally showing a trend of contraction, but they are still an important investment and financing tool. They will continue to focus on the issuance of structured products; in the future, insurance asset management can layout investments in agricultural enterprises, REITs, and green investment projects. Although the central bank has once again released positive signals to stabilize the property market and expectations, the effects of various relaxing property purchase restrictions policies still need to be observed. Currently, the gradual adjustment and improvement of the "comprehensive debt policy" and the addition of a 10 trillion yuan debt limit to replace local government outstanding hidden debts and ease the pressure of local government debt require attention to the actual effects of resolving hidden debts. Overall, from January to September 2024, various types of innovative products in insurance asset management have seen a year-on-year decrease. Debt investment plans, as the main type, have both registrations and scales decreased year-on-year; the number of registrations for asset support plans has increased, but the registration scale has decreased compared to the same period last year; the registration numbers for equity plans and insurance private equity funds have decreased; in addition, there is a significant top effect in the insurance asset management industry, with some institutions having strong product operation capabilities or strong synergies, occupying a higher market share, while some small and medium-sized insurance asset management institutions are becoming more active. Looking ahead to the full year of 2024, innovative products in the insurance asset management industry may have the following trends: In terms of development trends, in 2024, innovative products in the insurance asset management industry will continue to show an overall contraction trend, but they will still be an important type of investment for insurance funds. On the one hand, as the "debt-for-equity" policy deepens, high-cost debts such as "non-standard" will be required to be exchanged on a large scale, and various insurance asset management institutions have introduced lower-cost "non-standard" products accordingly. On the other hand, most financiers still have a demand to expand financing channels to alleviate the impact of policy changes on a single financing channel. In terms of product types, debt investment plans are expected to remain an important part of innovative products in the insurance asset management industry. In addition, in March 2023, the China Securities Regulatory Commission guided securities exchanges to formulate "Business Guidelines," allowing qualifying insurance asset management institutions to conduct ABS and REITs businesses. It is expected that insurance asset management will continue to focus on the issuance of structured products, increase research and investment, further enrich the types of underlying assets, and drive the development of China Insurance Depository insurance asset support plans. In terms of underlying investments, regulatory support for the issuance of financing tools involving agricultural enterprises and encouragement to enrich green transformation financial instruments. Insurance asset management registered 28 green debt investment plans in 2023, and 38 more from January to October 2024. The number of green debt investment plan issuances is gradually increasing, the importance of insurance asset management on green projects is increasing, and insurance funds can further layout investments in innovative green financial products and agricultural enterprises. Against the background of the normalization of infrastructure REITs issuances, insurance asset management is expected to further explore REITs-like projects and tap into the growing trend of green investment.The underlying assets types that match the characteristics of long-term funds.From the perspective of credit performance, the central bank has once again released positive signals to stabilize the real estate market and expectations. However, the real estate market is still operating at the bottom, and the effects of various relaxations of purchase restrictions policies are still to be observed. Investment in various products in the real estate industry is still limited, and the risks related to credit events of real estate enterprises still need to be monitored. In terms of government financing platforms, the current "comprehensive debt policy" has been timely adjusted and improved to reduce the pressure of high-interest foreign debts, lower the overall financing costs of domestic and foreign sources, ensure the overall liquidity of urban investment, and supplement the list of platforms for urban investment exits. In addition, the first session of the Standing Committee of the People's Congress has clarified the key points for a new round of local debt replacement, adding a 10 trillion debt limit for the replacement of local government's hidden debt, easing the pressure of urban investment debt, and thickening the "safety cushion". Overall, with the acceleration of debt conversion and urban investment transformation, the differentiation of risks between regions and platforms is intensifying, and it is expected that the integration and transformation of financing platforms will accelerate.