The net profit generally increased slightly, and the provision for reserves had a significant impact
In 2021, the total assets of the five listed insurance companies (excluding China Taiping) were 19.48 trillion yuan, a year-on-year increase of + 9.39%; The net assets were 2.20 trillion yuan, a year-on-year increase of + 7.92%; The net profit attributable to the parent company totaled 215958 billion yuan, with a year-on-year increase of – 14.41%, mainly due to the large proportion and serious decline of Ping An Insurance (Group) Company Of China Ltd(601318) net profit attributable to the parent company. Except Ping An Insurance (Group) Company Of China Ltd(601318) (- 28.99%), other insurance companies achieved positive growth in net profit attributable to the parent company. The main factors affecting the net profit attributable to the parent company include: 1) steady investment income contributes to the growth of net profit; 2) The decrease of effective tax rate caused by tax-free investment; 3) Reserves and surrender funds generally increased, dragging down the growth of net profit.
The growth rate of life insurance premiums narrowed and the value of new businesses fell sharply
In 2021, affected by the epidemic, the decline of manpower scale and insufficient demand, the growth of life insurance premiums slowed down significantly, and some insurance enterprises had negative growth. From the perspective of life insurance premium scale: China Life Insurance Company Limited(601628) (601920 million yuan)
Ping An Insurance (Group) Company Of China Ltd(601318) (490.29 billion yuan) China Pacific Insurance (Group) Co.Ltd(601601) (211685 billion yuan) New China Life Insurance Company Ltd(601336) (163.47 billion yuan) China Taiping (148695 billion yuan) The People’S Insurance Company (Group) Of China Limited(601319) (132663 billion yuan); In terms of life insurance premium growth, The People’S Insurance Company (Group) Of China Limited(601319) (+ 3.3%) China Taiping (+ 3.0%) New China Life Insurance Company Ltd(601336) (+ 2.5%)
China Life Insurance Company Limited(601628) (+ 1.0%) China Pacific Insurance (Group) Co.Ltd(601601) (- 0.1%) Ping An Insurance (Group) Company Of China Ltd(601318) (- 4.1%), of which The People’S Insurance Company (Group) Of China Limited(601319) benefits from actively promoting the value transformation of Bancassurance channels.
In 2021, the new business value of listed insurance companies decreased significantly compared with last year. Except for China Taiping, the growth rate of NBV of other listed insurance companies decreased by more than 20%, especially in the second half of the year, NBV decreased significantly year-on-year. The growth rate of China Taiping NBV was + 3.64%, up from + 20.07pct last year; NBV of other listed insurance companies fell sharply, mainly because 1) insurance companies took the initiative to clear up the deficiency, the scale of agents fell sharply, 2) individual insurance channels were dragged down, the difficulty of serious illness insurance sales increased, and insurance companies took the initiative to carry out channel transformation and business structure adjustment. The year-on-year growth rate of new business value of listed insurance enterprises is: China Life Insurance Company Limited(601628) (- 23.29%) Ping An Insurance (Group) Company Of China Ltd(601318) (- 23.55%) China Pacific Insurance (Group) Co.Ltd(601601) (- 24.82%) New China Life Insurance Company Ltd(601336) (- 34.87%)
\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 319(-34.90%)。
The turning point of auto insurance is now, and the growth rate of non auto insurance is leading
Since 2021, the covid-19 epidemic has repeatedly impacted, and the impact of the comprehensive reform of automobile insurance has continued. In January 2020, affected by the epidemic, the sales base of passenger cars was low. In February 2021, the sales volume showed a year-on-year growth of 409.9%. Since March, the sales volume has gradually recovered steadily. In 2021, the premium income of property insurance companies in the whole industry reached 1.37 trillion yuan, a slight increase of 0.68% year-on-year, down from -3.68 PCT in the same period last year The auto insurance business was under pressure throughout the year. In 2021, the premium income of the industry’s auto insurance was 777268 billion yuan, a year-on-year increase of – 5.7%. At the same time, with the deepening of reform, the decline was narrowing month by month; The premium income of non auto insurance in the whole year was 590.8 billion yuan, with a year-on-year increase of + 11%, which was the same as that of the same period last year. Among them, the premium income of health insurance, liability insurance and agricultural insurance ranked among the top three, and the growth rate of health insurance was the fastest, with a year-on-year increase of + 23.68%.
The rate of return on investment generally declined, and the proportion of equity assets was divided
In 2021, under the impact of the equity market shock (the CSI 300 index fell by 5.3%), the total investment return of listed insurance companies remained stable, except that Ping An fell sharply due to the impact of China Fortune Land Development Co.Ltd(600340) impairment provision and so on China Life Insurance Company Limited(601628) , Ping An Insurance (Group) Company Of China Ltd(601318) , China Pacific Insurance (Group) Co.Ltd(601601) , New China Life Insurance Company Ltd(601336) , The People’S Insurance Company (Group) Of China Limited(601319) , The People’S Insurance Company (Group) Of China Limited(601319) and China Taiping’s total return on investment (range of change) are 4.98% (- 0.32pct), 4% (- 2.2pct), 5.7% (- 0.2pct), 5.9% (+ 0.4pct), 5.8% (0pct) and 5.39% (- 0.05pct) respectively.
Affected by the downward pressure of the economy, the central yield of 10-year Treasury bonds fell, the interest rate yield was affected, and the net investment yield fell as a whole. The net return on investment (range of change) of the six listed insurance companies were 4.38% (+ 0.04pct), 4.6% (- 0.5pct), 4.5% (- 0.2pct), 4.3% (- 0.3 PCT), 4.8% (- 0.2pct) and 4.07% (- 0.14pct) respectively.
From the perspective of asset allocation of insurance funds, affected by the shock of the equity market and the decline of the yield of long-term treasury bonds, the listed insurance enterprises still dominated by fixed income investment in 2021, but the proportion fluctuated. The proportion of fixed income assets of life insurance, Ping An, Xinhua, CPIC, PICC and Taiping were 77.86 (+ 2.77pct), 72.33% (- 1.5pct), 80.9% (+ 4.1pct), 75.7% (- 2.6pct), 62.9% (+ 0.4pct) and 77.6% (- 0.8pct) respectively. Stock + fund investment accounted for 8.79% (- 2.54pct), 11.59% (+ 0.04pct), 15.42% (+ 0.8pct), 12.38% (+ 1.01pct) and 14.88% (+ 1.84pct) respectively. Investment in non-standard projects took into account both investment income and risk control, and the proportion of non-standard investment decreased slightly.
2022q1 performance outlook
Although life insurance is still in the transition period, facing the continuous impact of the epidemic and the sales pressure of new orders, the worst time point has passed. At present, the data reflect that the marginal improvement trend has appeared, and the manpower scale is beginning to stabilize after a sharp decline in recent years. The agent’s production capacity is expected to increase steadily with the improvement of access threshold, strengthened training and resource support. It is expected that the growth rate of premium will improve significantly in March, and the decline of q1nbv growth rate will narrow. However, throughout the year, the sales difficulties of life insurance and serious illness insurance and the influence of product structure factors are still in progress, and they are still facing the negative growth pressure of new orders and NBV.
The property insurance business has shown a trend of improvement after experiencing the uncertainty of the comprehensive reform of automobile insurance in 2021 and the clearing of the credit insurance business. According to the latest data, the industry property insurance maintained a high growth, and the growth rate of property insurance of listed insurance companies was strong.
Subsequently, with the gradual recovery of average vehicle premium and the stable growth of vehicle insurance stock and new business (new energy vehicles), the annual vehicle insurance premium growth has shown a deterministic inflection point, and the annual premium growth is expected to maintain a double-digit level. Affected by frequent natural disasters and intensified industry competition, the overall performance of non auto insurance in 2021 was poor. However, due to the pro cyclical nature of the non auto insurance business, it is expected to achieve steady growth under the tone of “steady growth” of the economy in 2022.
In the short term, the asset side is subject to the uncertainty of investment income caused by the shock of the equity market. In the long term, it will benefit from the stabilization of the current interest rate and the gradual release of risks in the real estate sector. With the encouragement of policies, it is expected to increase the allocation of equity assets in the future. The industry pays attention to the track consistent with the policy direction, the steady growth of undervalued value, and the investment opportunities with the theme of steady growth. At present, the valuation of the insurance sector is at a historically low level, and the P / EV of the main listed insurance companies is between 0.37-0.55 times, which is the bottom of the valuation of life insurance and has room for repair. In 2021, the dividend rate of listed insurance companies has been adjusted compared with that before, but the overall dividend level is still at a high level, which is attractive for investment.
Valuation and investment suggestions:
At present, the yield to maturity of 10-year medium-term bonds has rebounded to around 2.8%, and it is expected to fluctuate around 2.8% for some time in the future. Compared with China’s long-term stable economic fundamentals, the risk-free interest rate expectation reflected by the current stock price is pessimistic, the regulators continue to promote market reform, and the allocation value of insurance stocks with high dividend and undervalued value is prominent. At present, the market is “high-low switching”, insurance stocks usher in a rare valuation repair period, and they are optimistic about valuation repair in the medium and long term, so we still need to pay attention to the allocation value. At the same time, we also need to pay close attention to the development of the epidemic in overseas areas, the action of the Federal Reserve’s interest rate and the trend of China US relations. In addition, from the transaction level, the insurance sector has basically shown an undervalued value. Under the background of market style switching, the insurance sector is in line with the strategic choice of exchanging time for space. In the future, the elderly care and health industry will become an important source of revenue and profit. Focusing on the layout of the health care industry, insurance enterprises are expected to benefit in the long term.
From the perspective of individual stocks, focus on recommending Ping An Insurance (Group) Company Of China Ltd(601318) , China Life Insurance Company Limited(601628) , and pay attention to China Pacific Insurance (Group) Co.Ltd(601601) , New China Life Insurance Company Ltd(601336) .
Risk tip: Sino US friction intensifies the risk; The risk of continued narrowing of interest rate spread between China and the United States; Geopolitical risks; Macroeconomic downside risk; Evergrande’s handling of events is not as good as expected; The systematic decline risk of stock market; Risk of stricter supervision; Risk of continued spread of pneumonia.
