Incident: China Taibao announces 2023 results. Overall, the company's profit and value growth is in line with expectations. Life insurance's core manpower production capacity has increased dramatically, production insurance and non-vehicle premiums have grown rapidly, and overall operating performance has been steady.
1. Overall performance: Profit and value growth are in line with expectations.
1) Profit and net assets. Net profit due to mother for the year was 27.3 billion yuan, -27.1% year on year; Q4 net profit to mother was 4.11 billion yuan in a single quarter, -39.3% year over year. Operating profit attributable to mother was 35.5 billion yuan, -0.4% YoY. Net assets due to mother were $249.6 billion, +27.0% at the beginning of the year and +4.6% at the end of Q3.
2) Assuming adjustments and value growth. The 2023 annual report lowered the long-term return on investment assumptions and risk discount rate assumptions from 5% and 11% to 4.5% and 9%, respectively. At the end of 23, the Group and Life Insurance EV were $5295 and 402 billion yuan respectively, +1.9% and +1.0%, respectively. Taibao Life Insurance's NBV was 11 billion yuan, +19.1% YoY (NBV +30.8% YoY under comparable caliber); the NBV of China Insurance and Banking Insurance was +8.8% and +115.6%, respectively. NBV margin is 13.3%, of which the NBV margin for personal insurance/banking insurance is 29.5%/5.6%, respectively.
2. Life insurance: The share of traditional insurance increased, and the production capacity of core manpower increased dramatically 1) Premium: Taibao Life Insurance's new insurance premiums were +3.7% year-on-year; the premiums for each insurance/banking insurance were +14.2%/+3.6%, respectively. The new personal insurance period paid 26.2 billion yuan, +32.3% year-on-year; the new banking insurance period paid 9.02 billion yuan, +170.2% year-on-year. In terms of product structure, the ratio of traditional insurance was +33.3%. The popularity of whole life insurance in 23 years led to an increase in the share of traditional life insurance.
2) Manpower: The average monthly manpower of agents is 210,000, -24.7% compared to the beginning of the year and -4.1% compared to the middle of the year. The monthly first-year premium for core workers was 43,503 yuan per person, +26.6% over the same period last year. The monthly commission income of core workers was 6051 yuan per capita in the first year, +46.3% over the same period last year. The production capacity of core human resources has increased dramatically, and the future is an important source of contributing new business value.
3. Financial insurance: Non-vehicle growth continues to be relatively rapid, and the comprehensive cost ratio is in line with expectations 1) Production insurance underwriting profits and premiums. Taibao Industrial Insurance's annual underwriting profit was 4.14 billion yuan, -15.6% year-on-year. Taibao Insurance's original premium income was 188.3 billion yuan, +11.4% year-on-year. Among them, car insurance and non-car insurance were +5.6% and +19, respectively.
3% The proportion of car insurance and non-car insurance was 55.0% and 45.0% respectively, which was relatively stable for 22 years.
2) Taibao Insurance's comprehensive underwriting cost ratio was 97.7%, +0.8pct compared to the previous year. Among them, the comprehensive insurance cost rate and compensation rate were 28.6% and 69.1%, respectively, -0.3 pct and +1.1 pct year-on-year, respectively.
4. Investment: Significant increase in bond allocation, fixed deposit reduction
1) The Group's investment assets were 2250.1 billion yuan, +15.0% compared to the beginning of the year. Bonds, stocks, equity funds, and fixed deposits accounted for 51.7%, 8.4%, 2.3%, and 7.3%, respectively, +8.7pct, -0.6pct, -0.2pct, and -3.1pct, respectively.
2) Net return on investment 4.0%, -0.3 pct year on year; total return on investment 2.6%, -1.5 pct year on year; comprehensive return on investment 2.7%, +0.4 pct year on year.
Investment advice: Overall, the company's profit and value growth is in line with expectations. Life insurance's core manpower production capacity has increased dramatically, non-vehicle insurance premiums have increased rapidly, and overall operating performance is steady. Considering the impact of market fluctuations on the investment side of life insurance companies, we adjusted the company's 2024-2026 EPS to 3.09 (previous forecast value was 3.41), 3.77 (previous forecast value was 3.51), and 4.23 (new forecast value), respectively. The year-on-year growth rates were 9.2%, 21.7%, and 12.2%, respectively.
Risk warning: The equity market has declined sharply, long-term risk-free returns have declined sharply, the growth rate of new premiums has not been as high as expected, and the results of life insurance reform have fallen short of expectations.