Description of the event
China People's Insurance released its 2023 annual report. The company achieved net profit of 22.77 billion yuan, a year-on-year decrease of 10.2%; China People's Insurance achieved a comprehensive cost ratio of 97.6%, an increase of 0.9 pct over the previous year; and China People's Insurance Life Insurance achieved a new business value of 3.66 billion yuan, an increase of 69.6% over the previous year.
Incident comments
Natural disasters, recovery in mobility rates, and capital market shocks dragged down this period's results. For the full year of 2023, the company achieved a performance of 22.77 billion yuan, a year-on-year decrease of 10.2%. The expected performance is relatively leading among peers. Specifically, the year-on-year contraction in performance is mainly due to two reasons. First, market shocks led to a decline in return on investment, which fell from 4.6% in 2022 to 3.3% in 2023; on the other hand, due to increased travel and frequent natural disasters, the comprehensive financial insurance cost ratio increased in 2023, and underwriting profit fell 22.1% year on year to 11.07 billion yuan.
Financial insurance underwriting is leading in profitability, and the leading position is stable. In 2023, Human Insurance achieved insurance service revenue of 457.20 billion yuan, an increase of 7.7% over the previous year; underwriting profitability declined slightly, mainly affected by natural disasters and increased travel rates, and the comprehensive cost ratio increased by 0.9 pct to 97.6% year on year. Looking at the types of insurance, the comprehensive cost rate of car insurance increased significantly, rising 2.4 pct to 96.9% over the previous year, while the comprehensive cost ratio of agricultural insurance, health insurance, and liability insurance all improved. The company's original premium revenue market share was as high as 32.5%, ranking first in the industry, and has a strong scale advantage. At the same time, in terms of channels, 63.5% of premium revenue comes from personal agents and direct sales channels, which have strong fee control advantages, so it is expected that the company will maintain its underwriting profitability advantage in the future.
The value of the life insurance and health insurance sector is growing rapidly. Human Insurance Life Insurance achieved a sharp rise in volume and price. The original premium income increased 8.6% year on year in 2023. Among them, ordinary life insurance contributed mainly to the increase. The value of the new business increased 69.6% year on year, and is expected to lead the listed industry.
Judging from the payment structure, individual insurance transactions and bank guarantee transactions all achieved year-on-year pressure drops, and the proportion of new prepaid orders increased. Human Insurance Health also achieved a double increase in premiums and value. Among them, the original premium collection increased by 10.2% year on year, and the value of the new business increased by 182.9% year on year.
Investment returns are under pressure. Affected by market turbulence, the company achieved total investment income of 44.12 billion yuan in 2023, a year-on-year decrease of 19.7%; net investment income of 58.43 billion yuan, a year-on-year decrease of 2.7%. In terms of return on investment, the total return on investment fell from 4.6% to 3.3%, the net return on investment fell from 5.1% to 4.5%, and the pressure on asset allocation increased.
I am optimistic about the improvement in both underwriting profit and investment income. In 2023, underwriting performance was slightly pressured due to relatively frequent natural disasters, and profits declined due to capital market fluctuations, but short-term factors such as natural disasters and market fluctuations did not affect the company's steady fundamentals and profitability. At the same time, along with increased supervision of market competition, it is judged that the medium- to long-term concentration of the industry will continue to rise, and I am optimistic about the room for improvement on both sides of the company's wealth and upward valuation.
Risk warning
1. Major adjustments to industry policies;
2. The equity market fluctuated greatly, and interest rates declined sharply.