2022年1月20日

Insurance Asset Management Company Seeks to Increase Registered Capital in One Step

Insurance asset management company team recently welcomed the expansion of capacity, Guohua Xingyi insurance asset management was approved to build, investment CIGNA asset management was approved to start business. It is worth noting that the registered capital of both companies has reached 500 million yuan, far higher than the 100 million yuan capital threshold for insurance management companies.

In addition, CITIC Prudential Asset Management, which opened in March this year, also has a capital of 500 million yuan. New insurance asset management companies have a tendency to have higher registered capital at the initial stage. The personage inside course of study expresses, registered capital reaches 500 million, have certain benefit, will no longer form restriction to management risk capital scale. However, the higher the registered capital, the better, especially for asset management institutions.

There is a view in the industry that the level of capital may affect the market incentive mechanism of a capital management organization and its attraction to talents, and even its competitiveness.

Registered capital has 500 million start

Recently, the insurance asset management industry ushered in 2 “new recruits”, one was approved for business, one was approved for preparation.

The company approved to start business is CIGNA Asset Management Co., Ltd., located in Beijing, with a registered capital of 500 million yuan and four shareholders, including: CIGNA Life Insurance Co., Ltd., which invested 436,729 million yuan, accounting for 87.3458%; China Merchants Financial Holdings (Shenzhen) Co., Ltd. invested 13.371 million yuan, accounting for 2.6742%; China Merchants International Financial Holdings (Shenzhen) Co., Ltd. invested 24.95 million yuan, accounting for 4.99%; China Merchants International Capital Management (Shenzhen) Co., Ltd. invested 24.95 million yuan, accounting for 4.99%.

The company that received the approval is Guohua Xingyi Insurance Asset Management Co., Ltd., which is jointly sponsored by Guohua Life Insurance and Xinli Group Co., Ltd., with a registered capital of 500 million yuan and registered in Shanghai. The CBRC required the company’s preparatory team to complete the preparation work within six months.

Previously, the latest insurance asset management company to open is CITIC Prudential Asset Management Co., Ltd., which is 100% invested by CITIC Prudential Life Insurance and has a registered capital of 500 million yuan.

Thus, the latest approved 3 insurance management companies, registered capital has reached 500 million yuan. Among them, the registered capital of CITIC Prudential assets was raised to 500 million yuan before the opening of the business, and its capital at the time of preparation was 300 million yuan.

500 million capital, has been far higher than the regulatory authorities minimum requirements of 100 million yuan. However, according to the requirements of the current regulations, the registered capital of an insurance management company shall not be less than one thousandth of the insurance funds entrusted to it. If the registered capital is less than one thousandth of the insurance funds entrusted to it, it shall increase its capital accordingly. However, if the registered capital reaches 500 million yuan, the capital may not be increased any more.

This also means that the newly established insurance asset management companies generally have registered capital at the initial stage, reaching the level that will not restrict the scale of management insurance capital, and realizing “one step to achieve the goal”.

Insurance asset management institution

Capital difference is large

Since the establishment of the first insurance asset management company in 2003, with the development of the insurance asset management industry and the increase of related companies, the registered capital of insurance asset management presents a big difference.

The capital of the first group of insurance management companies is already at a high level. PICC Assets, China Life Assets, Huatai Assets, China Re Assets, Ping An Assets, Taikang Assets, Pacific Assets, Taiping Assets, Xinhua Assets, etc., were established between 2003 and 2006. Among them, in addition to Xinhua assets, Huatai assets, the registered capital of more than 1 billion, the highest national life assets reached 4 billion.

With the establishment of the original Anbang assets in 2011, more insurance management was established, and the registered capital was generally less than 500 million, most of which were 100 million and 200 million.

In the latest insurance asset management expansion stage, foreign insurance asset management companies are also increasing. The insurance asset management companies that started business in the same year in 2019, namely ICBC AXA Asset and BOCOM Kanglian Asset, both have registered capital of 100 million yuan.

In contrast, the newly established CITIC Prudential Assets, CIGNA Assets and Guohua Xingyi Insurance Assets all have registered capital of 500 million, which means that the newly established insurance asset management companies have a trend of increasing the registered capital.

Registered capital scale

Or affect the degree of marketization

However, for the capital management company, the higher the registered capital is not the better. Taikang assets CEO Duan Guosheng this year in an interview with the media about the competition in the capital management industry, with special emphasis on the issue of capital. He believes that light capital is an important advantage of public funds.

“The first reason why the public offering has gathered a large number of talented people is its capital management.” Duan Guosheng believes that capital management and the market-based mechanism based on it make public offering funds a strong force in the asset management market.

Although asset management institutions are entrusted by people to manage financial affairs on behalf of others and do not need too much capital itself, in actual business, different types of asset management institutions have different registered capital thresholds, and some set capital requirements related to business scale, which are capital-heavy.

For example, bank wealth management subsidiaries, as the latest asset management business, are required to have a minimum registered capital of 1 billion yuan. Up to now, the registered capital of 20 bank finance subsidiaries has reached 5 billion yuan, and the registered capital of four major banks has reached more than 10 billion yuan, among which ICBC Wealth Management has 16 billion yuan and CCB Wealth Management has 15 billion yuan.

In Duan’s opinion, if capital is heavy, it will bring some constraints from the perspective of ROE. For example, if the shareholders invest $100 million in the company, the company makes $200 million, and the shareholders are happy; But if the capital is $5 billion, even if the company makes $1 billion, the returns to shareholders will not be as good.

If the capital is small, it is easy for the company to make profits to reach the return level required by shareholders. Under the premise of high ROE, the company can take supporting market-oriented measures, such as introducing sufficient salary incentive mechanism. There are a lot of employee shareholding in the public offering fund companies now, which is such a situation. For institutions with large capital, employee stock ownership is relatively difficult to be implemented. Even if it is implemented, the incentive effect for employees will be discounted due to the low return on equity.

From this point of view, the registered capital threshold of public offering fund companies is 100 million yuan. At present, most fund companies generally have capital of 100 million or 200 million yuan, which is more advantageous than many capital-heavy asset management institutions.

According to Wind data, 136 public fund companies have an average registered capital of 304 million yuan. Only 8 companies, including 5 banking departments, 2 trust departments and 1 insurance department, have registered capital of more than 1 billion yuan. The highest registered capital is Pudong Yin AXA Fund with 1.91 billion yuan.

Since 2018, 20 newly established public fund companies, with the exception of Xizang Dongcai Fund Company with a registered capital of 400 million yuan and BlackRock Fund with a registered capital of 300 million yuan, the registered capital of the other companies has not exceeded 200 million yuan.

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