With the new team in place, how will NCI "restart"?

The Party Committee Organization Department of CITIC Corporation recently announced internally that Gong Xingfeng, Vice President of New China Insurance (601336.SH), is expected to be appointed as the main person in charge of the company's operations.

According to market expectations, the "main person in charge" is expected to be the President of New China Insurance.

The current President, Zhang Hong, is expected to retire within the month; Gong Xingfeng, who joined New China Insurance in 1999, has held positions such as Chief Actuary, Secretary of the Board of Directors, and Chief Financial Officer, and is currently the top-ranked Vice President.

In August last year, Yang Yucheng, President of Shenwan Hongyuan Securities, was appointed Chairman of New China Insurance.

Once Gong Xingfeng's appointment is approved, the new management team will be officially established.

In the midst of deep industry transformation and continuous bottoming out, the attention is focused on whether Yang Yucheng and Gong Xingfeng, this new pair of partners, can hit the nail on the head.

In 2019, New China Insurance proposed a "second takeoff" strategy, aiming to return to the top of the life insurance "pyramid".

The "takeoff" was thwarted after the outbreak of the epidemic. Since 2022, revenue and net profit growth rates have been continuously negative, and the premium scale has gradually been surpassed by companies such as Taikang and Yangguang, falling out of the top five in the industry.

Behind the poor performance, the switched product channel strategy and frequent "changing of the guard" have been heavily questioned.

After Kang Dian stepped down in 2016, New China Insurance experienced five "leaders" in seven years, including Wan Feng's downfall, Li Quan's disappearance, Liu Haoling and Xu Zhibin's terms of office were all less than 2 years, until Yang Yucheng took office as the current Chairman in August last year.

The new leadership's actions were swift.

In less than a week after taking office, Yang Yucheng pointed out 7 major challenges at the "Ninety Double Fly" launch meeting of New China Insurance, stating that the company "lacks strong core competitiveness, has low efficiency in regional resource allocation, and has an imperfect customer management system."

Gong Xingfeng has also shared product strategies in the new situation multiple times, stating that "products are the leader in helping insurance companies deal with interest rate and market environments. We must maintain stability in our main products, implement diversified strategies, and increase dividend development and sales."

Overall, in the first half of the year, New China Insurance has many highlights.

First, there is value growth, with revenue down 8.4% year-on-year and new business value up 57.7%.

Second, investment is picking up, with the annualized total investment and comprehensive investment yield reaching a nearly three-year high.

Third, there is systematic market-oriented reform, with breakthroughs in channels, marketing, organizational structure, and incentive constraints.

For example, on the liability side, the "XIN Generation Plan" emphasizes the marketing system, while products like "Xinhua An" emphasize customer feedback.

In terms of personnel, there is a "reshaping" underway, with the headquarters adjusting the heads of multiple departments including product development and actuarial departments; more than half of the heads of branch institutions have been adjusted, and organizational structure reforms at the third and fourth levels of branch institutions have been implemented.

Stalled "Second Takeoff"

Among the 5 listed insurance companies in A-shares, the growth of New China Insurance has been quite bumpy.

After the controlling shareholder changed to Central Huijin, New China Insurance successfully listed on the A-share main board in 2011.

In its first year of listing, then Chairman Kang Dian stated that "winter is not over yet."

During this period, the absolute main force accounting for 90% of premiums was still the low-value dividend insurance, based on which New China Insurance proposed a product strategy to maintain dividend advantages and increase the development and sales efforts of other new types of products

Reform "Without Stopping"

"Scale without value is not sustainable," Kang Dian once said. "The company is transitioning to a protection-oriented insurance model, but the long-standing model, structure, and sales force cannot withstand sudden changes."

The successor continues Kang Dian's legacy.

In 2016, Wan Feng was promoted from president to chairman. Under the concept of "returning to the essence of insurance," the company significantly reduced its single premium business scale and transitioned to protection and regular premium businesses.

That year, New China Insurance's single premium business decreased by 11.7 billion yuan, while first-year regular premium increased by over 40%, and first-year regular premium for 10 years and above increased by 23.2%.

During his three-year tenure, Wan Feng decisively chose structure over scale, and New China Insurance's market ranking dropped from "top three" to "top five."

In contrast, Wan Feng's successor, Liu Haoling, prioritized scale advancement, proposing the "Second Takeoff" strategy to drive dual-wheel balance of assets and liabilities.

During this period, frequent changes in leadership occurred.

In 2019, Liu Haoling, deputy general manager of Central Huijin, took over as chairman of New China Insurance. The following year in December, he joined the leadership team of China Investment Corporation, and later resigned as chairman of New China Insurance.

In 2021, Xu Zhibin, deputy general manager of Central Huijin, became chairman of New China Insurance, but resigned in September the following year.

In 2022, Li Quan, who had previously partnered with Liu Haoling and Xu Zhibin, became chairman of New China Insurance. However, he retired due to age after less than a year and went missing after retirement.

Misfortunes never come singly.

On one hand, frequent changes in senior management inevitably lead to talent loss and strategic fluctuations.

Under the "Second Takeoff" strategy, premium scale growth has increased, but income mainly comes from low-value short-term financial products.

On the other hand, the insurance industry was once in a predicament due to the impact of the epidemic.

On the liability side, agents found it difficult to conduct business, the number of personnel continued to decline, the equity market was weak, and New China Insurance's profitability continued to decline.

At the 2022 performance release conference, Gong Xingfeng stated that the company's business structure and agent scale had suffered significant impacts.

"From a rational perspective, we encourage long-term products," Gong Xingfeng said. "But the frontline feedback is the opposite. Our main customers are in third- and fourth-tier cities, the group most affected by the epidemic and least certain, they cannot accept insurance for ten or twenty years."

"We are very concerned about the situation of agents and hope that the sales team can weather the winter with the industry," Gong Xingfeng said. "But the loss is still significant, no business means no income."

Even by the time Yang Yucheng took over in 2023, the "Second Takeoff" had not been achieved.

That year, New China Insurance achieved a total operating income of 71.547 billion yuan and a net profit attributable to the parent company of 8.712 billion yuan, a decrease of 66.6% and 11.3% respectively compared to the previous year.

Reform "Without Stopping"

Similar to Liu Haoling and Xu Zhibin, Yang Yucheng, formerly the president of Shenwan Hongyuan Securities, was directly appointed by the shareholders.

Just one week into his tenure, Yang Yucheng appeared at the "Ninety Double Fly" launch meeting, pointing out seven dilemmas such as weak core competitiveness, low efficiency of regional resource input, incomplete customer management system, and insufficient market-oriented incentives.

Subsequently, reforms continued "without stopping." For example, the implementation of the new version of the "Basic Law" (Marketing Channel Management Rules), the launch of the specialized team construction project "XIN Generation", the adjustment of over half of the branch heads, and the rollout of the reform of the three to four-level organizational structure.

An in-service employee of NCI, with the username TradeWind01, commented on the reform, "This reform is the most systematic in recent years."

The "systematic" aspect is reflected in various ways.

With "customer management" as the main focus, adjustments were made to channels, marketing systems, organizational structure, and incentive constraints.

For example, in terms of organizational structure, Yang Yucheng revealed at the press conference that several core departments at the headquarters have undergone personnel adjustments this year, involving the development department, actuarial department, group insurance department, and marketing department.

Regarding branch institutions, 18 out of 35 branch heads have experienced adjustments, and the reform of the three to four-level organizational structure has been rolled out.

This change aims to stimulate vitality through human resource adjustments.

As the main market is primarily in third and fourth-tier cities, NCI's premium income structure is not ideal during the economic downturn.

"We hope to seize the regional development dividends," said Yang Yucheng. "The Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area, and the Chengdu-Chongqing Economic Circle all have further room for our market share development. We will strengthen strategic layouts in these regions and promote productivity through internal reforms."

In line with this strategy, Yang Yucheng stated, "Those leaders with a stronger pioneering spirit can go to economically developed areas; those relatively stable can focus on business in existing markets. The adjustment is significant and smooth."

While the reform is in full swing, premium performance remains bleak.

The accumulated premium in the first half of the year was 98.832 billion yuan, a year-on-year decrease of 8.4%. Among them, the bancassurance channel decreased by 24.1%, and individual insurance slightly decreased by 0.71%.

Guosen Securities' research report believes that this performance is still related to the rectification of "separating banking and insurance". With the strengthening of high-end customer management and the continuous development of traditional insurance product systems, it is expected to achieve long-term value growth.

Compared to the reform on the liability side, which has not yet shown results, the direct performance on the investment side is more eye-catching.

In the first half of the year, NCI led the five listed insurance companies with a total investment yield of 4.8%, becoming the "biggest winner" on the investment side.

There is a significant increase in equity asset allocation.

Wind data shows that NCI has appeared among the top ten circulating shareholders of 48 A-share listed companies, a substantial increase from the same period last year.

The top three holdings are Postal Savings Bank of China (601658.SH), China Construction Bank (601939.SH), and Yanzhou Coal Mining (600188.SH).

This aligns with the investment strategy shared by Yang Yucheng.

"In terms of equities, we acted promptly in the bear market and seized a good timing window," said Yang Yucheng.

Regarding specific investment strategies, one is to focus on the national strategic development direction represented by new quality productivity, and the other is to focus on high-quality high-dividend stocks with stable operations and high dividend yields.

On the fixed income side, Yang Yucheng stated that the company has over 400 billion yuan of long-term assets as a solid base.

There are also expectations for a cooling down after the tightening of funds by the central bank affects the bond market sentiment.

"At present, various institutions have too heavy bond holdings, and the proportion of time deposits and bond investments is too high. We need to make moderate strategic shifts," said Yang Yucheng, "such as exploring preferred stocks, perpetual bonds, ABS, etc "We have done a lot of work in this area and will continue to extend the duration of bonds at the right time."

Just looking at the performance in the first half of the year, there are still many "highlighted areas" in Yang Yucheng's first half of the year after taking office. However, what New China Insurance, which has been under pressure for a long time, needs is not only a strategy, but also the determination, speed, and courage in strategic execution.

Regarding the cooperation and direction of liabilities and assets between Gong Xingfeng and Yang Yucheng after taking office, Xin Feng (ID: TradeWind01) will continue to pay attention