Research on value chain of insurance companies based on investment perspective = 基于投资视角的保险公司价值链研究

Abstract

As an essential pillar of the financial system and social security system, the insurance industry is booming vigorously with the continuous economic development: the coverage is constantly expanding, the products and services are shifting from the traditional to non-traditional sectors, and its significance in the chain of social risk management is continually increasing. Insurance companies’ internal and external value chains are restructured with sustained innovation in the operating and business models. With investment business strengthened and highlighted, strong support and drive for the value chain of insurance services is generated, providing a multidimensional guarantee for the innovation and development of insurance products and services, and playing an increasingly prominent role in enhancing the commercial value and social value of insurance companies. Based on the study of the value chain theory and the value of insurance companies, this paper proposes the analysis framework on value chains in a different dimension for the first time, summarizes the value chain links of insurance companies in micro and meso perspectives, and forms the value models of the commercial value and social value of insurance companies. On this basis, this paper develops a consumer value ecosystem while considering the value chain of stakeholders and further explores the application of the value chain theory in the insurance industry. This paper analyzes the value chain of insurance companies and their key influencing variables. It makes a preliminary study on the transmission mechanism of insurance investment business in the value chain from two aspects of commercial value and social value. In the insurance industry, this paper has been the first to put forward research and analysis of the value chain of insurance companies from the perspective of investment. Conducting empirical research through a panel data model with a large sample, namely the financial data, risk information, and other publicly-disclosed information of life insurance companies in China from 2017 to 2020, and considering the actual operation situation of such companies, this paper quantitatively analyzes the impact of investment business on the value chain of insurance companies from three dimensions of corporate value (competitiveness), risk and service quality. The findings are as follows: first, in terms of the impact on corporate value, the profit contribution of investment business has a significant influence on a company's overall value as well as other parameters (capacities of profitability, operation, risk, capital, and development); whereas return on investment has a significant negative impact on the overall competitiveness of a company and a significant positive effect on profitability. Second, in terms of the impact on risks, the profit contribution of investment high , the capacity of solvency is reduced; a high return on investment can improve the ability of solvency; in addition, this paper concludes that investment business bolsters solvency for independent asset management companies. Third, in terms of service quality, the investment capacity facilitates product development and service quality. Supported by empirical research data, this paper bears a profound theoretical significance and application value. This paper presents a case analysis of the specific practice of domestic and foreign insurance industries and companies. From the development process and trend of the value chain of the insurance industry in the United States and Germany, the structure of insurance products is constantly evolving with the change of population structure and the downward trend of one-year fixed deposit interest rate, which requires continuous optimization of portfolio management and asset allocation in the investment business. Comparing the practical experience of major international insurance groups, Allianz introduces third-party funds through the acquisition of asset management, presenting a trend of investment-driven business performance improving corporate value; Legal & General expands the insurance business through acquisition, and therefore enhances corporate value; UnitedHealth generates business synergy through M&A of companies on the industrial chain and achieves value enhancement. Reshaping corporate values through investment activities in insurance has profound social significance in improving the social distribution system, serving the real economy, and ensuring the comprehensive development of people. In addition, it is significant in promoting common prosperity and national modernization. In recent years, the limitations on domestic insurance funds have been gradually lifted: diversified investment and macroeconomic stability have provided favorable conditions for asset management; a more benign interaction has been created between the application of insurance funds and insurance business; and the investment sector now plays a more critical role on the value chain of the insurance industry, with sound investment business as an essential guarantee for the insurance industry to improve solvency and profitability. However, compared with mature asset management systems overseas, there are still some gaps in promoting the development of the insurance business, the contribution of insurance groups, and the high-quality and stable growth of the financial market. With the transformation and development of China's insurance business, it is necessary to re-examine investment’s position in insurance companies from the perspective of the value chain of insurance companies and to improve and optimize the value chain of insurance companies from the perspective of investment. This study provides certain enlightenment for the strategic planning and operational development of insurance companies: firstly, coordinate investment management and product development, further improve the capacity of investment management, strengthen the synergistic effectiveness of assets and liabilities, and promote the development of insurance business; secondly, in the current period of transformation and development of the domestic insurance industry, “insurance + wealth management”, “insurance + medical care” and other models can effectively expand the value chain of insurance companies; thirdly, “insurance + investment” can provide strong support for high-quality development and supply-side reform of the real economy, serve national security and risk management, and enhance the social value of insurance companies.