Event:
Listed insurance companies recently disclosed the premium income in February 2022.
Brief comment
1. Property insurance: the leading growth rate has increased, and the profit of China’s property insurance is expected to improve
Cumulative premium growth from January to February: CPIC (YoY + 15.7%), China Property Insurance (YoY + 13.7%), Ping An Finance (YoY + 11.0%); Monthly premium growth in February: CPIC (YoY + 22.5%), Ping An Finance (YoY + 17.6%), China Property Insurance (YoY + 13.4%).
China Property Insurance disclosed the changes in business structure:
1) auto insurance: it is expected that “both volume and price will rise”. The company’s auto insurance premium continued to increase month on month (February yoy + 14.9%, the previous value was 14.5%), superimposed on the impact of the epidemic on customers’ travel demand, the frequency of car use decreased, and the comprehensive cost rate is expected to continue to improve.
2) non auto insurance: the profit is expected to improve. The growth rate of non vehicle insurance of the company slowed down (YoY + 12.2% in February and 13.2% in the previous value). Among them, enterprise property insurance continued to compress (yoy-16.1% in February and – 1.8% in the previous value), and the growth rate of liability insurance slowed down (YoY + 8.0% in February and 16.9% in the previous value). Affected by the comprehensive reform of auto insurance, small and medium-sized companies have increased competition for mature non auto insurance. The comprehensive cost rate of enterprise property insurance and liability insurance (especially employer’s liability insurance) is expected to be under pressure, while the growth rate of this kind of insurance of the company has decreased, and the profit of non auto underwriting of the company is expected to continue to improve.
Resume the company’s performance in similar periods: during 2020q1 / 2020h / 2020q3 / 2020, which was the first impact of this round of epidemic, the comprehensive cost rate of the company’s auto insurance was also improved to 94.8% / 94.8% / 96.4% / 96.5%; The company’s overall credit insurance business growth rate of 101.9% under the current epidemic situation will be 101.2% of the company’s overall credit insurance business, while the overall credit insurance business has experienced a decline of 101.9% under the current epidemic situation, and the overall credit insurance business has experienced a decline of 101.2% instead of the current comprehensive insurance business.
To sum up, China’s property insurance fundamentals continue to improve, and the company’s annual comprehensive cost rate and premium growth are expected to exceed expectations.
2. Life insurance: February is still in a high base pressure area, and March is expected to pick up
Ranking of accumulated premiums from January to February: PICC Life Insurance (YoY + 26.4%) Xinhua (YoY + 5.2%) Taibao life insurance (YoY + 2.3%) Guoshou (yoy-5.0%) Ping An (yoy-1.8%); Ranking of premiums in February: TPL (YoY + 14.9%) Xinhua (YoY + 11.1%) PICC (YoY + 5.4%) Guoshou (yoy-3.1%) Ping An (yoy-4.9%).
Affected by the redefinition of serious diseases in the same period last year, the new single premium of the industry broke out intensively in February and then continued to decline. It is expected that the trend will pick up in March. For each branch company:
1) Ping An: the pace of channel reform is steady, and the home-based elderly care project came out in March. The main products are royal wealth, Royal golden Rui, and the new increased life-long Shengshi Jinyue (the estimated value rate is about 40%). The current channel transformation of the company is more stable than that of last year. It is expected that new orders and value will pick up in March. The company’s new home-based elderly care project came out. Based on the company’s existing medical services, it drives the sales of front-end insurance and opens up a new incremental NBV. The home-based elderly care project is different from the heavy asset elderly care community model promoted by other listed insurance enterprises, which is expected to continue to ferment and lay a new market competitiveness in the future elderly care field of the company.
2) CPIC: channel transformation is the most thorough, focusing on high-value guaranteed products. The company’s main products are long companion (celebration version) and Jinfu (serious illness insurance). Since the implementation of the new basic law on January 1, the company has made the most firm and thorough transformation. It is expected that there will be great pressure on the short-term new single premium and NBV. In March, the company will enter the staff increase season of the industry. If the company launches a series of measures to increase the staff increase, it is expected that the short-term marginal change will be greater.
3) Guoshou: the pace of reform is steady. It is still in a good start period, and its main product is long-term reserve annuity; Affected by the main customer base, the company’s channel reform is relatively stable, and the decline of manpower is expected to be lower than that of major peers. Although the premium in February is under pressure, it is expected that the new single premium in March will pick up significantly under the influence of the base effect.
4) Xinhua: the product portfolio is strong, the value rate is under pressure, and the pace of channel reform is relatively steady. The company’s main products are ex gratia pension (annuity), new health pension (serious illness insurance) and kangjianhuazun guaranteed renewal (long-term medical insurance). In March, the company launched a monthly pension annuity, which spurred the growth of premium through product portfolio. Moreover, the pace of channel reform is relatively steady, and it is expected that the value growth of subsequent new businesses will also pick up
5) people’s life insurance: the scale effect is significant, but the value rate is under pressure. Pay attention to the marginal change of channel quality. The minimum interest rate of the universal account corresponding to the company’s opening product “excellent Jinsheng” is 3%, which is higher than that of major peers. The scale effect is significant, but the value rate is under pressure. At present, the company’s total new policy premium continues to increase (cumulative new policy yoy + 47.2% in January and February and yoy + 41.0% in February). Among them, the new long-term insurance policy has increased significantly (YoY + 38.1% in February and the previous value is 50.6%), but it is still dominated by single payment (YoY + 94.8% in February and the previous value is 136.6%), and the estimated value rate is under pressure. The new term payment of long-term insurance increased (11.7% in February, compared with – 13.5% in the previous month), and the renewal premium decreased (yoy-15.4% in February). The future mainly depends on the change of human quality, and the improvement of agent retention rate and new long-term insurance payment forms are the main observation points.
3. Investment: the long-term interest rate has stabilized and risen, and the equity market is under pressure, so as to compensate the investment stability of the second generation phase II insurance enterprises
As of March 15, the yield of 10-year Treasury bonds was 2.8177%, an increase of 4.23bps since the beginning of the year, which is conducive to the improvement of the yield of fixed income assets; However, recently, the international situation has been under pressure, and the equity market has been under pressure (the CSI 300 index has fallen by 19.05% since the beginning of the year). The investment income of equity assets has been negatively affected.
Listed insurance companies will disclose the capital adequacy ratio under the second generation phase II in Q1. Second generation phase II emphasizes penetration measurement, and the minimum capital required for impenetrable non-standard assets is increased; The minimum capital of the equity requirements of unlisted companies has increased significantly (especially for non insurance related subsidiaries, the risk factor has increased from 0.1 to 100%). The cautious requirements of phase II project on the investment side will affect and improve the anti risk ability of insurance enterprises’ investment side in the long term.
4. Investment suggestions
On March 15, affected by the external macro environment, the PEV of major listed insurance companies was only 0.3-0.5 times, at the bottom of historical valuation. The key recommendation has ushered in the improvement of fundamentals and will continue to be good: China Property Insurance (H). Life insurance recommendation: AIA (H), China Pacific Insurance (Group) Co.Ltd(601601) (A / h), Ping An Insurance (Group) Company Of China Ltd(601318) (A / h); It is suggested to pay attention to: China Life Insurance Company Limited(601628) (A / h), New China Life Insurance Company Ltd(601336) (A / h).
5. Risk warning
The growth rate of new orders fell sharply, the capital market fell sharply, policies continued to tighten, and interest rates fell more than expected
