\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) China Pacific Insurance (Group) Co.Ltd(601601) 601)
Matters:
China Pacific Insurance (Group) Co.Ltd(601601) released the annual report of 2021, which realized the net profit attributable to the parent company of 26.8 billion yuan (YoY + 9%), and the operating profits of the group and life insurance were 35.3 billion yuan (YoY + 14%) and 28.3 billion yuan (YoY + 9%) respectively; The group and life insurance EV were 498.3 billion yuan (YoY + 8%) and 376.6 billion yuan (YoY + 10%) respectively. The company plans to pay an annual cash dividend of 1.0 yuan per share (including tax), totaling 9.6 billion yuan, accounting for 35.8% of the net profit attributable to the parent company.
Ping An View:
Life insurance: restart value bancassurance, build multiple channels, increase new orders, but the structure is callback, NBV is still under pressure.
1) bancassurance and group insurance promoted the growth of total new orders. In 2021, the total new orders were 48.9 billion yuan (YoY + 17%), and the new orders of individual insurance, bancassurance and group insurance were 29.2 billion yuan (yoy-0.2%), 6.7 billion yuan (YoY + 331%) and 13 billion yuan (YoY + 19%) respectively.
2) the new single business structure callback is obvious, nbvm and NBV decline significantly. In 2021, NBV will be about 13.4 billion yuan (yoy-25%), and NBV of individual insurance and bancassurance will be 13.1 billion yuan (yoy-26%) and 300 million yuan (YoY + 168%) respectively; It is estimated that the nbvm of individual insurance fell sharply by 18.5pct to 42.6% year-on-year, which dragged down the nbvm of life insurance from – 15.4pct to 23.5% year-on-year (the decline was wider than that of 21h1). Specifically, 24.8 billion yuan (YoY + 12%) of individual insurance periodic new orders, accounting for 85% (YoY + 9pct) of the total individual insurance periodic new orders. 21q1-21q4 quarterly individual insurance periodic new orders were + 49%, + 4%, – 40% and – 19% year-on-year respectively. We believe that the protection for serious diseases of customers with certain consumption capacity has been relatively sufficient. At the end of January, 21, after the switching of new and old serious disease products and the centralized insurance of old serious disease products, new orders were paid in 21h2 insurance periods, especially the sales of guarantee insurance were under pressure.
3) the number of agents has fallen sharply, and the improvement of production capacity is mainly driven by short-term insurance. In 2021, the average number of agents per month is 525000 (yoy-30%), the average monthly production capacity is 4638 yuan (YoY + 42%), the average monthly performance rate of the agent team is 52.1% (yoy-6pct), and the average monthly new long-term insurance is 1.38 (yoy-13pct).
4) channel strategy: “Changhang action” aims to comprehensively upgrade the agent team; Meanwhile, CPIC life insurance will restart value bancassurance, which will drive business growth through multiple channels. In terms of personal insurance, we innovated and launched the “long voyage action”, created an agent team of “three modernizations and five best”, and strengthened the construction of high-performance echelons. In terms of bancassurance, we implemented value outlets, value products and high-quality teams, and arranged strategic regions and strategic channels for cooperation.
Property insurance: non auto insurance business maintained rapid growth, and the comprehensive cost rate was flat year-on-year. In 2021, the property insurance premium was 152.6 billion yuan (YoY + 3%), the loss ratio was + 8.2pct year-on-year, the expense ratio was – 8.2pct year-on-year, and the comprehensive cost ratio was 99%, which was flat year-on-year. Specifically, 1) the premium of automobile insurance is 91.8 billion yuan (yoy-4%), and the comprehensive reform of automobile insurance and major disasters lead to 71.1% (YoY + 10.6pct), 27.6% (yoy-9.8pct) and 98.7% (YoY + 0.8pct). 2) Non auto insurance premium is 60.8 billion yuan (YoY + 17%), and the comprehensive cost rate is 99.5% (yoy-2.4pct).
Adhere to the “dumbbell” asset allocation strategy, and the rate of return on investment decreased slightly. In 2021, the total return on investment was 5.7% (yoy-0.2pct), the net return on investment was 4.5% (yoy-0.2pct), and the estimated comprehensive return on investment was 5.2% (yoy-0.9pct). In terms of asset allocation, the company strengthened the allocation of long-term interest rate bonds to extend the duration of fixed income assets. National bonds, local government bonds and policy financial bonds accounted for 22.1% (YoY + 4.6pct), and the duration of fixed income assets was 7.1 years (YoY + 0.9 years).
Investment suggestions: the company actively responded to the difficulties of the life insurance industry, innovatively launched the “long voyage action”, upgraded the agent team, restarted value bancassurance and assisted business growth through multiple channels. However, the transformation of life insurance is still in a critical period, and the effect has not yet been reflected; At the same time, the policy continuation rate fell and the 750 day moving average moved down. Since 21q4, the growth rate of auto insurance has been corrected and rebounded rapidly, and the total underwriting profit of leading insurance enterprises is expected to improve. Based on this, we adjust the assumptions of new order, nbvm, policy continuation rate and Reserve discount rate. The predicted EVPs in 2022 and 2023 are adjusted from 61.73 yuan and 73.87 yuan to 57.08 yuan and 62.79 yuan respectively, and the predicted EVPs in 2024 is 68.86 yuan. The company’s current share price corresponds to about 0.41 times of PEV in 2022, maintaining the “recommended” rating.
Risk tips: 1) the equity market fluctuates greatly, β Property led to increased volatility of the sector market. 2) The number of agents continued to decline, the quality improvement was less than expected, and the new orders fell more than expected. 3) The interest rate is lower than expected, and the allocation of maturing assets and new assets is under pressure. 4) The average vehicle premium fell more than expected, the loss ratio increased more than expected, and the underwriting profit of vehicle insurance was under pressure.
