Key investment points
Life insurance: the debt side continued to be weak, with both volume and price falling. In 2021, the five listed A-share insurance companies achieved a total life insurance premium of 1616435 billion yuan, a year-on-year decrease of 0.4%, and the growth rate continued to slow down by 1.4pct compared with 2021h1. The debt side of the industry continued to be depressed, and the scale of new orders of listed insurance companies generally decreased. In 2021, the year-on-year growth rates of new insurance premiums of Guoshou, Ping An, CPIC, Xinhua and PICC were - 4.8%, - 9.3%, + 17.1%, + 0.1% and - 1.1% respectively. The overall growth of individual insurance channels of listed insurance companies continues to be under pressure due to the intertwined influence of factors such as repeated epidemic and a large loss of agents. In 2021, the year-on-year growth rates of new individual insurance policies of Ping An, Guoshou, CPIC and Xinhua were - 5.9%, - 17.4%, - 0.2% and - 12.3% respectively, which continued to decline by 10.8%, 0.8, 18.7 and 5.3pct compared with 2021h1. In 2021, Ping An, Guoshou, CPIC, Xinhua and PICC achieved NBV year-on-year of - 18.6% (comparable caliber), - 23.3%, - 24.8%, - 34.9% and - 40.6% respectively. From the perspective of attribution, the demand for serious illness insurance was over consumed when the products were fried and stopped at the beginning of the year. Since then, under the intertwined influence of repeated epidemics, slowing growth of residents' income and team decline, the demand for products has not recovered, and the overall nbvmargin has declined significantly. In 2021, Ping An, Guoshou, CPIC and Xinhua nbvmargin were 30.7%, 41.6% (individual insurance), 23.5% and 12.9% respectively, with a year-on-year decrease of 2.6, 6.3, 15.4 and 6.8pct respectively. On the whole, the liability side of life insurance in 2021 continued the weak trend in 2020. The recovery of the industry was slow, and it remains to be seen whether the industry can recover in the medium term. We need to pay attention to the improvement of team quality, the product implementation strategy of insurance enterprises and the process of life insurance reform. Looking forward to 2022, we expect the year-on-year growth rate of new orders and value to be low in the first half and flat in the second half of the year. We expect an inflection point in the second half of the year, and pay attention to the leading indicators of effective manpower stabilization.
Property insurance: auto insurance covers marginal repair, and major disasters raise the comprehensive cost rate. In 2021, the three traditional property insurance companies and Zhongan online, an Internet insurance enterprise, achieved a total property insurance premium of 892.59 billion yuan, a year-on-year increase of 1.0%. Henan comprehensive insurance company has made great efforts to optimize the premium structure of the auto insurance industry and gradually ease the pressure of one-year auto insurance, but the average loss rate of auto insurance industry has been improved. From the perspective of comprehensive cost rate, the performance of traditional insurance companies China property insurance, Ping An Property Insurance and CPIC property insurance was relatively differentiated in 2021. Due to multiple factors such as the increase of compensation pressure caused by the comprehensive reform of vehicle insurance in the early stage and the frequent occurrence of natural disasters, the comprehensive cost rate of China property insurance increased from + 0.7pct to 99.6% year-on-year, while the comprehensive cost rates of Ping An Property Insurance and CPIC property insurance were 98.0% (year-on-year - 1.1pct) and 99.0% (year-on-year flat) respectively. In 2021, the underwriting profits of China property insurance, Ping An Property Insurance and CPIC property insurance (excluding Anxin agricultural insurance) were 1.521 billion yuan, 5.136 billion yuan and 1.276 billion yuan respectively, with a year-on-year increase of - 63.6%, + 145.7% and + 37.1% respectively. Among them, Ping An Property Insurance benefited from better cost control of auto insurance and credit guarantee insurance to turn losses into profits (2020: - 3.125 billion yuan, 2021: 2.810 billion yuan), and the underwriting profits increased significantly year-on-year. Looking forward to 2022, we expect that the annual auto insurance underwriting profit is expected to rise both in volume and price, the business structure of the head company is expected to be further optimized, and the underwriting loss of non auto business is expected to be significantly narrowed. We pay attention to the emergencies of natural disasters in the second half of the year.
Investment suggestion: Property Insurance: after more than one year of comprehensive reform, the pressure of premium growth slows down, the market competition pattern improves, and the average vehicle premium shows signs of recovery. The leading insurance enterprises are expected to focus on high-quality business and further strengthen the competitiveness of pricing, channels and brands by virtue of their scale and data advantages. In the first quarter of 2022, the epidemic spread all over the country, reducing the frequency of automobile insurance and promoting the improvement of the profit margin of overall property insurance underwriting. Life insurance: under the background of repeated epidemics, slow recovery of industry demand and unresolved structural problems on the supply side, the liability side of 2022q1 may remain depressed and the value growth will continue to be under pressure. Superimposed on the impact of the high base in the same period last year, we expect the year-on-year growth rate of new single premiums of listed insurance companies in 2022q1 to be: Ping An Insurance (Group) Company Of China Ltd(601318) (- 20%), China Life Insurance Company Limited(601628) (- 15%), China Pacific Insurance (Group) Co.Ltd(601601) (+ 10%), New China Life Insurance Company Ltd(601336) (- 15%); NBV： Ping An Insurance (Group) Company Of China Ltd(601318) （-25%）、 China Life Insurance Company Limited(601628) （-20%）、 China Pacific Insurance (Group) Co.Ltd(601601) （-50%）、 New China Life Insurance Company Ltd(601336) （-35%）。 In addition, in 2022q1, affected by the turbulence of the external environment and repeated epidemics, the equity market continues to fluctuate, and the investment side of insurance enterprises may face growth pressure. In combination, the pressure on both ends of the asset negative of insurance enterprises in 2022q1 remains unchanged, and the fundamentals of the property insurance sector is expected to be better than that of the life insurance sector. As of the closing on April 1, 2022, the valuation of the sector is at a historical low, which has fully reflected the pressure on short-term performance, optimistic about the long-term allocation value, maintained the "overweight" rating, and recommended China property insurance, Ping An Insurance (Group) Company Of China Ltd(601318) and China Pacific Insurance (Group) Co.Ltd(601601) .
Risk tips: 1) the premium of new life insurance policies continues to decline; 2) The long-term interest rate continued to decline; 3) Stock market fluctuations have led to a decline in investment returns.
