On February 7, A-Shares ushered in the first trading day of the year of the tiger, and the three major stock indexes rose. Insurance stocks also swept away the “gloomy” performance in 2021 and achieved a “good start” in the year of the tiger. Among them, Ping An Insurance (Group) Company Of China Ltd(601318) led the rising sector, closing up 4 percentage points on the same day, China Pacific Insurance (Group) Co.Ltd(601601) , China Life Insurance Company Limited(601628) , New China Life Insurance Company Ltd(601336) increased by 2.44%, 2.32% and 2.27% respectively, The People’S Insurance Company (Group) Of China Limited(601319) was slightly inferior, but also gained an increase of 1.54%.
Looking back on 2021, the performance of insurance stocks was sluggish, with an overall decline of more than 30%, and the valuation fell into a low level. After the shock adjustment period of A-Shares in January 2022, the performance on the first day of the year of the tiger is highly expected. Looking forward to 2022, from the discussion of many institutions, the early release of pessimism and the upcoming two sessions provide imagination space for the rebound of insurance stocks, but the downturn on the liability side may be difficult to reverse in the short term. Although the industry is optimistic about the insurance sector currently under valued, it seems too early to judge the inflection point of the industry.
On the first trading day of the year, insurance stocks made a “good start”, Ping An Insurance (Group) Company Of China Ltd(601318) led the increase by 4%
At the opening of the year of the tiger, the three major A-share indexes collectively closed up on the first trading day, and the Shanghai index rose in shock. On the same day, it closed up 2.03% to 3429.58 points, the Shenzhen Component Index rose 0.96% on the same day, and the gem index fluctuated, and finally closed up 0.31% to 2917.86 points.
Among them, the insurance sector swept away last year’s “haze” and performed brilliantly, with an increase of 2.52% on the same day. Specifically, the performance of individual stocks was led by Ping An Insurance (Group) Company Of China Ltd(601318) . On February 7, the daily closed at 51.98 yuan, an increase of 4.02%. The main inflow was 2.278 billion yuan, and the amount of large orders entered the top ten stocks on the same day. On February 7, the total net purchase of northbound funds was 5.552 billion yuan, of which Ping An Insurance (Group) Company Of China Ltd(601318) net purchase ranked first, with 1.035 billion yuan.
On the news side, a year ago, Ping An Insurance (Group) Company Of China Ltd(601318) announced that the China Banking and Insurance Regulatory Commission approved Ping An Life to invest in new Founder group. According to the agreement on restructuring investment and the selection of creditor’s rights settlement plan by the restructuring subject, Ping An Life plans to invest 48.2 billion yuan to acquire 66.51% equity of new Founder group. Western Securities Co.Ltd(002673) believes that this investment is expected to help Ping An further open the closed loop of insurance + medical services. At the same time, Ping An builds differentiated value-added services through the mode of self built medical network, which is expected to improve its competitive advantage and customer stickiness.
China Pacific Insurance (Group) Co.Ltd(601601) shares rose by 2.44% on February 7, ranking second in the industry and closing at 26.9 yuan. At the beginning of 2021, China Pacific Insurance (Group) Co.Ltd(601601) released the transformation program of “long voyage action”, and then introduced Cai Qiang, the former regional CEO of AIA. At the same time, China Pacific Insurance (Group) Co.Ltd(601601) changed the positions of the heads of many subsidiaries, such as property insurance, Changjiang pension and asset management. With emphasis on staffing optimization, China Pacific Insurance (Group) Co.Ltd(601601) regarded it as an important part of transformation and development. In addition, CPIC life insurance proposed to switch the new basic law, and simultaneously launched four reform measures: demand sales, activity management, recruitment and process system, and customer management and operation. Zheshang Securities Co.Ltd(601878) the current performance evaluation of China Pacific Insurance (Group) Co.Ltd(601601) is that it is at a low valuation and is optimistic about the valuation and profit improvement after the deepening and implementation of reform.
China Life Insurance Company Limited(601628) which fell for two consecutive trading days two years ago achieved an increase of 2.32% on the first trading day of the year of the tiger to close at 28.2 yuan. Looking back to the performance in January, on January 4, China Life Insurance Company Limited(601628) opened at 30.03 yuan, but there were several falling markets in late January, and the daily closed at 27.56 yuan on January 28. At the 2022 working conference of China Life Insurance Company Limited(601628) group, Bai Tao, the new secretary of the Party committee, made his first public appearance and proposed “two stabilities, two controls and five improvements”. Among them, steady growth is to maintain steady growth in operating revenue and profitability; Stabilizing the position is to ensure the stability of market share and market leading advantage. Cost control is to reduce costs, increase efficiency, live within our means and continuously improve our core competitiveness; Risk control is to coordinate development and security, and firmly hold the bottom line of no systemic risk. “Five improvements” is to improve the leading ability of Party construction, value creation ability, collaborative development ability, digital operation ability and product service innovation ability.
New China Life Insurance Company Ltd(601336) , whose share price fell by more than 30% in 2021, fell again after a slight correction in January 2022. On the last trading day before the year, New China Life Insurance Company Ltd(601336) had an interval low of 37.42 yuan, with a decline of 2.11% on that day. However, on the first day of the opening of the year of the tiger, New China Life Insurance Company Ltd(601336) outperformed the market and closed at 38.34 yuan, up 2.27% on the same day.
The People’S Insurance Company (Group) Of China Limited(601319) the increase on the first day of the year was slightly “inferior” to other stocks. Looking back, the data provided by The People’S Insurance Company (Group) Of China Limited(601319) at the 2022 working conference held on January 24 showed that in 2021, the group’s premium income exceeded 580 billion yuan, the net profit increased rapidly, the annual agricultural insurance premium was 42.7 billion yuan, a year-on-year increase of 19.3%, the serious illness insurance covered 550 million people, and the people’s insurance business was carried out in more than 140 cities. However, the annual results failed to boost the share price of The People’S Insurance Company (Group) Of China Limited(601319) . On January 27, The People’S Insurance Company (Group) Of China Limited(601319) bottomed at 4.55 yuan. On February 7, after the beginning of the year, The People’S Insurance Company (Group) Of China Limited(601319) realized a correction, with an increase of 1.54% on the same day to close at 4.62 yuan.
the debt side is difficult to reverse the downturn in the short term, “it’s too early to judge the inflection point of the industry”
Looking back on 2021, insurance stocks were abnormal and collectively plunged into a downturn, involving many factors: including the impact of epidemic factors on Residents’ purchasing power and the scale of premiums; The number of insurance agents fell sharply, restraining the growth of premiums; In addition, the long-term interest rate fell and the credit risk exposure of the real estate market also had a negative impact on the investment side of the insurance industry.
Looking forward to 2022, the performance of insurance stocks deserves attention. From the perspective of fundamentals, in January, A-Shares entered the adjustment period, which was also considered by many institutions that the negative sentiment of the market has been fully released. At the same time, Haitong Securities Company Limited(600837) believes that the strong performance of peripheral markets is expected to make up the outflow of funds before the festival, which will boost the risk appetite of investors after the festival.
In February 2022, China Merchants Securities Co.Ltd(600999) is expected to have a short-term rebound after rapid adjustment, but the overall trend is dominated by shock bottoming, waiting for a new starting point of the upward cycle. After the rapid decline of the market, pessimism has been released. On the one hand, it has entered the performance vacuum period. On the other hand, the two sessions will be held in March, and the market will begin to have new expectations for steady growth.
In the long run, the industry expects the undervalued insurance stocks to recover from the bottom in 2022. Caitong Securities Co.Ltd(601108) that is, the first quarter is the time point for the intensive introduction of policies and measures to stabilize growth, which will help the economy climb from the bottom in the first half of 2022. On the whole, the bancassurance sector with Pro cyclical attributes at the bottom of the valuation is expected to be favored.
From the perspective of the industry, on the liability side, the transformation of the life insurance industry remains to be observed. There are different estimates for the progress and scale of channel transformation, but it is still difficult to reverse the downturn in the short term. China Merchants Securities Co.Ltd(600999) it is expected that the growth rate of new business value will show a double-digit downward trend in 2021, but the rhythm will show a marginal improvement trend. In the property insurance industry, with the stabilization of average vehicle premium and the continuous and steady growth of non vehicle insurance business, the premium growth of the property insurance industry will return to a near double-digit growth level.
It is worth mentioning that in terms of policy, the CBRC issued the measures for the administration of insurance guarantee funds (Draft for comments) years ago. According to the analysis of Dongxing Securities Corporation Limited(601198) , the main changes are to adjust the fixed rate (0.8% of premium income) to the benchmark rate and risk difference rate, and establish a financing mechanism between property insurance and life insurance guarantee funds, These two major changes will affect the payment scale of insurance enterprises, and then have a certain impact on the performance. At the same time, under the influence of the implementation of the new regulations of the second generation and the loss of agents and other factors, “it is too early to judge the inflection point of the industry. At present, the lengthening of the investment cycle of the insurance subject matter is a high probability event.”
Huachuang Securities pointed out according to the performance of years ago, “the insurance stocks have been corrected after a short repair, but the core fundamentals of the industry have not changed. The liability side is expected to be weak in the first quarter and the first half of the year. The sector will still be in the bottom stage for a period of time, and the inflection point of the liability side needs to be observed for the rising market”.
On the investment side, according to the analysis of China Securities Co.Ltd(601066) securities, in the central economic conference in 2021, the monetary policy setting is “stable, flexible, moderate and reasonably abundant”, the fiscal policy setting is “moderately advanced”, and the long-term interest rate is expected to be “protected” and stabilized. At present, the bottom trend of long-term interest rate is obvious, which is conducive to the improvement of the income of fixed income assets at the investment end of insurance enterprises.
“The macro-control on the investment side is mainly ‘stable’, and it is expected that the long-term interest rate will continue to decline with limited space. The valuation and repair process of insurance stocks mainly focuses on the marginal improvement on the asset side”, Everbright Securities Company Limited(601788) is expected.
