In December, the real estate chain recovered and the sector outperformed the market. In December, the insurance index rose by 3.19%, outperforming the market by nearly 0.94 percentage points, and the CSI 300 rose by 2.24% in the same period. Individual stocks rose, with specific increases as follows: CPIC (0.11%), Guoshou (1.82%), Ping An (4.54%), PICC (1.5%) and Xinhua (2.56%).
By the end of December, the cumulative income of the sector was – 37.1%, 31.9 percentage points lower than the market, and all component stocks were lower than the market. In terms of capital, in December, the capital went north to increase its holdings of domestic insurance stocks. At the end of December, the proportion of Ping An held by Shanghai Hong Kong stock connect in the circulating shares was 6.76%, an increase of 0.86 percentage points over the end of last month. Since the beginning of the year, the cumulative net sales of Ping An by Shanghai Hong Kong stock connect have been 3.92 billion yuan, and the net purchases in December were 3.74 billion yuan. The proportion of the remaining stocks held by the Shanghai Hong Kong stock connect in the circulating shares increased month on month, of which New China Life Insurance Company Ltd(601336) increased by 1 percentage point month on month, China Life Insurance Company Limited(601628) increased by 0.66 percentage points month on month, and China Pacific Insurance (Group) Co.Ltd(601601) increased by 0.17 percentage points month on month.
Performance tracking on the liability side: life insurance is still at a low point, and auto insurance continues to recover. 1) Life insurance: the accumulated premium of life insurance companies from January to November was 2.9 trillion yuan, a year-on-year increase of – 1.63%; In November, the monthly premium was 154.9 billion yuan, a year-on-year increase of – 2.31% (previous value: – 4.8%). It should be noted that the year-on-year data is distorted due to the change of data caliber since June. Since June, Huaxia and Tian’an have not been included in the summary. Excluding the influencing factors of Huaxia and Tian’an, the cumulative growth rate of the industry in November was + 4.6% (the previous value was 4.6%). After adjusting the monthly data, the growth rate of the industry is + 6% (previous value: + 1.8%). Regardless of the impact of data caliber, the monthly premium of life insurance in November was – 1% year-on-year; Health insurance – 5.1% year-on-year; Accident insurance year-on-year -8.9. The growth rate of various types of insurance continued to be negative, and the annual performance was under pressure. 2) Property insurance: from January to November, the original premium income of industrial property insurance companies was 1.24 trillion yuan, and the monthly premium in November was 104.2 billion yuan. Due to the adjustment of data caliber disclosed by the industry, the year-on-year data is distorted. Excluding the impact of Tian’an property insurance and Yi’an property insurance, the cumulative growth rate was + 0.8% (the previous value was 0.3%), and the monthly growth rate was 6.96% (the previous value was – 1.8%). Regardless of the adjustment of data caliber, according to the types of insurance, the monthly auto insurance premium in November was 69.6 billion yuan, 6.62% year-on-year. The high base effect was digested on the first anniversary of the “comprehensive reform”, and it is expected that the auto insurance business will continue to recover in the future. The premium of non auto insurance was 34.5 billion yuan, a year-on-year increase of 3.74%, turning negative into positive. The impact of the new Internet regulations on short-term health insurance gradually subsided and returned to positive growth.
Asset side performance tracking: the long-term interest rate continues to decline, and the performance of the equity market is differentiated. By the end of November, the total assets of the insurance industry (including reinsurance and asset management companies) were 24.6 trillion yuan, up + 5.7% from the beginning of the year, slightly expanding from the previous month. The net assets of the industry were 2.9 trillion yuan, up + 4.7% from the beginning of the year. The balance of insurance fund utilization was 22.8 trillion yuan, up + 5.0% from the beginning of the year. However, due to the change of data caliber (excluding some institutions in the risk disposal stage), the actual growth is distorted. The allocation structure of insurance assets remained stable: stocks and funds accounted for 12.3%; Bonds accounted for 39.4%, unchanged month on month. In December, the yield of long-term treasury bonds continued to decline, and the yield of 10-year Treasury bonds fell 5bp from the end of November to close at 2.78%. The overall performance of the equity market fluctuated downward in December, and the Shanghai and Shenzhen 300 rose 1.83%, with obvious market differentiation. The bond market rose, and the 10 bond index rose 0.81% month on month in December.
The asset side catalyzed to a certain extent, and the sector market recovered slightly. From the performance of the liability side of the industry in November, life insurance is still at a low ebb, and property insurance benefits from the positive marginal improvement of the growth rate of automobile insurance. In December, the insurance sector improved and outperformed the market, mainly due to the improvement of asset side expectations. The favorable real estate policy and the loose credit policy made the performance of the real estate chain rebound, driving the insurance sector to rise slightly, but we believe that we can not continue to promote the repair of the sector. At present, the first stage of each company’s good start has basically ended. In 2022, under the environment of weakening demand and strict supervision, the market has cooled significantly, and the sales plans of each company have mostly decreased year-on-year. We still maintain a cautious judgment on the performance of the industry’s liability side next year, and believe that it is still difficult to rapidly improve the liability side at the beginning of the year. Under this background, large trend opportunities will still be observed. In the short term, the valuation of the sector is expected to still hit the bottom, and the operation and performance inflection point on the liability side still needs to be observed for stock price repair. At present, the PEV (2021e) of each company is valued at China Life Insurance Company Limited(601628) (0.64-0.68x), China Pacific Insurance (Group) Co.Ltd(601601) (0.52-0.54x), New China Life Insurance Company Ltd(601336) (0.44-0.46x), Ping An Insurance (Group) Company Of China Ltd(601318) (0.63-0.66x). We believe that the industry valuation is difficult to repair until the inflection point of manpower and performance occurs. The suggested order of attention is: China property insurance, Ping An Insurance (Group) Company Of China Ltd(601318) , China Pacific Insurance (Group) Co.Ltd(601601) , China Life Insurance Company Limited(601628) , New China Life Insurance Company Ltd(601336) .
Risk tip: manpower repair is less than expected, new business recovery is less than expected, and the progress of channel reform is slow.
