China Securities Co., Ltd.: Flexibly choosing between internal growth and expansion to achieve high-quality differentiated development in insurance asset management.

China Securities Co., Ltd. released a research report stating that insurance asset management is the main force in managing patient capital. By the end of 2024, a total of 34 insurance asset management companies collectively managed assets worth 33.30 trillion yuan, accounting for 19.7% of the large asset management industry. The internal growth and external merger and acquisition of insurance asset management each have their advantages and disadvantages, and can flexibly choose based on their own strategic goals, resource endowments, and market opportunities. Insurance asset management is an important participant in the large asset management industry. Looking ahead, the company believes that insurance asset management should fully leverage its unique advantages in managing long-term funds, allocating long-term assets, and creating long-term products, and explore a differentiated and high-quality development path with its own characteristics. The main opinions of China Securities Co., Ltd. are as follows: Insurance Asset Management Insurance asset management is the main force in managing patient capital and has great potential in serving national strategies and the development of the real economy. In the future, insurance asset management should not only play a good role in investment management but also take the initiative from the liability side, play a greater role in creating and transforming patient capital, manage existing assets well while expanding incrementally, and provide more solid support for the development of the real economy. By the end of 2024, a total of 34 insurance asset management companies collectively managed assets worth 33.30 trillion yuan, accounting for 19.7% of the large asset management industry. Client Base Serving groups is the foundation of survival, and expanding third parties is the growth engine. Internal insurance funds account for about 70% of insurance asset management AUM, which is still the foundation, while third-party business is of strategic importance for opening up growth space and enhancing the comprehensive competitive advantage of the group. Specifically: 1) Pension funds: a large client group with huge development space, but long-term investment is needed to fully leverage the advantages of insurance asset management; 2) Bank funds: the trend of net asset operation is inevitable, and deep cooperation based on long-term interests of both parties is needed; 3) Third-party insurance funds: fully leverage the advantage of demand insight and realize efficient external output of investment capabilities; 4) Retail clients: short-term direct business is still limited, and there is greater space for long-term integration into the group's comprehensive financial layout, and strengthening the supply of products and guiding concepts in the pension scenario. Product Layout Combine with their own endowments to create a differentiated product matrix. Specifically: 1) Fixed income and fixed income +: a key focus area. Explore multiple strategies to enhance returns under the premise of controllable retracements, such as "fixed income + public equity", "allocation-based fixed income + trading-based fixed income", "fixed income + derivatives", etc. 2) Alternatives: Traditional debt models are difficult to sustain. Focus on areas that can obtain risk premiums and serve national strategies, and vigorously develop ABS and equity products. 3) Equities: Relying on the advantage of managing long-term capital, create sources of excess returns with characteristics of insurance asset management, including reverse investment in the time dimension, active shareholders in governance dimension, and industrial transformation in cognitive dimension. Solutions Pure product competition is prone to homogenization and price wars. Solutions can create higher customer stickiness and deeper moats. The advantage of insurance asset management's large asset allocation capabilities provides a solid foundation for its solution efforts, but it is also necessary to see that one of the prerequisites for the full play of insurance asset management's asset allocation capabilities in the past is that insurance companies, as a source of funds on the liability side, have relatively mature investment concepts and allocation thinking. When insurance asset management provides solutions to external clients, the biggest challenge is not the investment capability on the asset side, but whether they can effectively guide clients' goals, expectations, and behaviors from the liability side. Development Path Internal growth and external mergers and acquisitions each have their advantages and disadvantages, and can flexibly choose based on their own strategic goals, resource endowments, and market opportunities. In overseas insurance asset management, FTSE Russell Group focuses on internal growth, while Allianz and Prudential Group achieve rapid expansion through external mergers and acquisitions. Risk Analysis Reforms on the liability side are slower than expected; long-term interest rates decline more than expected; equity markets experience significant declines; and the recovery of demand for protection products by residents is significantly lower than expected for a prolonged period.