Since May, a number of listed insurance companies, including Ping An Insurance (Group) Company Of China Ltd(601318) , AIA, have conducted intensive share repurchases. Industry analysts pointed out that during the year, insurance stocks performed poorly in the secondary market, and listed insurance companies continued to repurchase shares for many times, which may be related to their low share price and low valuation. At the same time, from the financial report data, the performance growth of insurance companies is under pressure, and they transfer confidence to the market through stock repurchase or intention.
high density share repurchases by insurance companies
AIA announced on May 20 that the number of shares repurchased by the company on that day was 1176600 shares, and the repurchase price range was HK $78.75/share to HK $79.9/share, with a total repurchase amount of HK $936109 million. Since May, AIA has carried out 13 share repurchases. Among them, from May 16 to 20, the Company repurchased 6675600 shares for five consecutive days, spending HK $510 million.
AIA’s repurchase plan began in March, and then concentrated on dozens of share repurchases in the past three months. According to incomplete statistics, as of May 21, the cumulative number of shares repurchased by AIA during the year was 776896 million. If calculated at HK $75 / share, the total amount of shares repurchased during the year was about HK $5.826 billion.
On March 11, AIA announced that the company plans to repurchase the company’s common shares through the open market in the next three years and return up to US $10 billion of capital to the company’s shareholders (share repurchase plan), and the repurchase funds will be allocated with the available capital and cash reserves of AIA Group. AIA said that the shares repurchased under the share repurchase plan would be cancelled. The share repurchase program improves shareholder returns while allowing the company to retain its financial strength to continue to invest in significant growth opportunities available.
The repurchased shares of Ping An Insurance (Group) Company Of China Ltd(601318) the A-share listed insurance company will be fully used in the company’s employee stock ownership plan, and the company has also carried out several repurchases in May. From May 7 to May 13, Ping An Insurance (Group) Company Of China Ltd(601318) respectively announced five share repurchases, and 248275 million shares were repurchased within a week, with an investment of 1.101 billion yuan.
According to the proposal on reviewing and repurchasing shares of the company deliberated and adopted by Ping An Insurance (Group) Company Of China Ltd(601318) at the fourth meeting of the 12th board of directors held on August 26, 2021, the company plans to use its own funds of no less than RMB 5 billion and no more than RMB 10 billion (both inclusive) to repurchase A-Shares of the company at a repurchase price of no more than RMB 82.56/share. The company said that all the shares to be repurchased will be used in the company’s employee stock ownership plan, including but not limited to the long-term service plan that has been deliberated and approved by the company’s general meeting of shareholders. The repurchase period is no more than 12 months from the date when the repurchase plan is deliberated and approved by the company’s board of directors.
Previously, Ping An Insurance (Group) Company Of China Ltd(601318) announced that as of April 30, 2022, Ping An Insurance (Group) Company Of China Ltd(601318) had repurchased 777651 million A-Shares through centralized bidding, accounting for 042541% of the total share capital of the company. The total amount of funds paid was 3.899 billion yuan (excluding transaction costs), the lowest transaction price was 48.18 yuan / share and the highest transaction price was 51.96 yuan / share.
As of May 21, Ping An Insurance (Group) Company Of China Ltd(601318) has repurchased 1025926 million a shares, at a cost of 5 billion yuan. So far, Ping An Insurance (Group) Company Of China Ltd(601318) ‘s share repurchase has reached the lower limit of the promised amount range of its repurchase plan Ping An Insurance (Group) Company Of China Ltd(601318) CEO and CFO Yao Bo said at his 2021 performance briefing that in terms of market value management, the company will take stock repurchase as one of the ways to convey confidence to the market. The company’s stock repurchase reflects the management’s action that the current stock price is lower than the actual connotative value of the company. In the follow-up, the company’s management will promote according to the specific market conditions and fulfill their commitments as required, which also reflects the company’s responsible attitude towards shareholders and confidence in the future development prospects.
the current valuation of insurance sector is low
According to the financial report, the net profit attributable to the parent of the five A-share listed insurance companies generally declined in the first quarter of this year, with a total net profit attributable to the parent of 51.361 billion yuan, a year-on-year decrease of 36.35%. Among them, the net profit of New China Life Insurance Company Ltd(601336) attributable to the parent decreased by 78.68% year-on-year, with the largest decline. A number of insurance companies said that the decline in the company’s net profit attributable to its parent was mainly affected by the epidemic, the high base and the downturn in the capital market.
Many institutions believe that although the insurance industry is currently under pressure at both ends of debt and investment, all insurance enterprises are actively taking measures to implement channel reform, and the improvement of the debt end is expected. The short-term investment income of insurance enterprises is under pressure, but it has been reflected in the absolute undervaluation. The insurance industry has low valuation and long-term allocation value.
Everbright Securities Company Limited(601788) released a research report that the pressure on the liability side of life insurance has not been significantly improved, and the long-term good trend of property insurance remains unchanged. The transformation of life insurance is still at the bottom stage, and the inflection point of the liability side has not yet arrived. In the long run, the dividend rate is relatively guaranteed. At present, the industry valuation and institutional positions are low, both at the bottom of the decade. Under the background of promoting channel transformation and upgrading reform in the life insurance industry, listed life insurance companies have launched protection products represented by increased life insurance, providing targeted and high-quality services guided by customers, which is expected to rebound in the future. Affected by the epidemic, the growth rate of auto insurance premiums in the property insurance industry has slowed down periodically, and the development of non auto premiums has made steady progress. Ping An Securities also believes that from the liability side, the human resources, new orders and new business values of the main listed insurance companies have not improved significantly, and the life insurance transformation is still in the bottom stage.
China Greatwall Securities Co.Ltd(002939) research report shows that the market value of shares held by the insurance sector decreased, but the allocation proportion increased slightly. In the first quarter of 2022, the market value of shares held by the insurance sector was 26.669 billion yuan, a year-on-year decrease of 5.06 percentage points, and the proportion of sector allocation was 0.83%, an increase of 0.07 percentage points over the previous period. From the internal configuration of the non bank financial industry, the insurance sector accounted for 19.11% in the first quarter, up 3.14 percentage points from the previous period. The agency believes that the superposition of high dividend strategy of insurance stocks with undervalued value highlights its allocation value, and is optimistic about valuation repair in the medium and long term.
