Earnings for the first quarter of 2024 were stable on a high basis, and the three core businesses remained stable overall. Operating profit to parent (OPAT) fell 3% year on year, mainly from the technology, financial insurance and asset management sectors. Life insurance and health insurance increased 2.2% year over year, and banks increased 2.3% year on year, partially offsetting the decline. Life insurance and health insurance+financial insurance+bank OPAT combined increased 0.3% year on year. Net profit to mother fell 4.3% year over year in the first quarter of 2024. Asset management sector: Compared with the fourth quarter of 2023, OPAT turned a loss into a profit. The company expects that the accrued impairment in 2023 is sufficient, and the sector's profit trend is improving. Life insurance and health insurance sector:
Amortization declined year-on-year due to the decline in contract service marginal balance (CSM) balance in 2023; however, operating bias, new business CSM continued to grow positively, tax exempt revenue increases, and investment service performance contributed positively to OPAT due to scale growth.
The value of the new business increased significantly, mainly due to an increase in the value rate. In the first quarter of 2024, the first-year premium for calculating the value of the new business decreased by 13.6% year on year, the value of the new business increased by 20.7% year on year (comparable caliber), and the new business value ratio was 22.8%, up 6.5 percentage points year on year, mainly due to the reduction in product reservation interest rates, the increase in the proportion of guaranteed products in the product structure, the lengthening of the payment cycle, and the banking insurance channel was affected by the integration of reporting banks to reduce the processing rate and increase in the value rate. We expect that the new business value rate will continue to increase compared to the first quarter of 2024.
The comprehensive cost ratio of financial insurance increased year-on-year. Revenue from financial insurance services increased 5.7% year on year, and the comprehensive cost ratio was 99.6% (98.4% after excluding credit insurance), up 0.9 percentage points year over year.
The return on investment declined slightly year over year. Insurance investment assets increased 4.4% from the beginning of the year, and the annualized net/comprehensive return on investment was 3.0%/3.1%, respectively, down 0.1/0.4 percentage points from the previous year.
Maintain a buy rating. The company has less risk of interest spreads: Guaranteed products account for a relatively high share of the stock business, and the traditional, dividend, and universal structures are more balanced; the proportion of lifetime increases is very small, leveling the yield below 2.5%. We maintain our profit forecast and raise our new business value forecast. We expect that as the base for the next quarter decreases, the company's profit improvement trend is clear, the three core businesses are expected to contribute to stable profits, and the profit performance of the asset management sector is expected to improve significantly. Maintain the purchase rating and target price of HK$51.