[Incident] China People's Insurance Company announced its results for the first quarter of 2024:1) Net profit of 8.96 billion yuan, -23.5% year-on-year. Net profit of financial insurance/life insurance/health insurance was 5.87 billion yuan, 3.82 billion yuan, and 1.52 billion yuan respectively, -40.2%, +28.0%, and +48.7%, respectively. 2) Net assets returned to mother of 245.8 billion yuan, +1.4% compared to the beginning of the year.
Industrial insurance: Natural disasters and other factors have led to a year-on-year increase in the comprehensive cost rate. 1) The total premium income of Q1 industrial insurance reached 174 billion yuan, +3.8% year-on-year. Among them, car insurance and non-car insurance were +1.9% and +5.0%, respectively. Apart from credit guarantee insurance, all other types of insurance increased positively year over year. 2) The comprehensive cost rate was 97.9%, +2.2 pct compared to the previous year, mainly affected by disasters such as low temperatures, rain, snow and freezing, and increased traffic travel. We believe that as the company continues to reduce costs and increase efficiency, and continuously improves risk identification and prevention and control capabilities, the comprehensive cost ratio is expected to remain at a good level in the future.
Life & Health Insurance: Life insurance NBV achieved high year-on-year growth. 1) Human Insurance Life Insurance continues to focus on high-quality development, actively promote excellent strategies, and carry out in-depth business model innovation and management model transformation. 2024Q1 long-term insurance premiums were -21.4% YoY, first-year premiums were -4.9% YoY; NBV was +81.6% YoY under comparable standards. 2) The quality and efficiency of human health insurance management increased steadily. The first-year premium of 2024Q1 long-term insurance was +2.4%, and the first-year premium of term payment was +48.1% year-on-year.
Investment: Pressured by short-term capital market fluctuations. 1) Affected by capital market fluctuations, the company's investment income and fair value change income were -69.1% and -52.8%, respectively. 2) The total return on investment of People's Insurance Insurance 24Q1 is 0.8% without annualization.
Optimistic about the competitive advantage of the company's financial insurance business and maintain a “superior to the market” rating. People's Insurance's car insurance business is in good condition. In the car insurance business, home-owned cars with low payout rates account for a relatively high share, and channel rates are manageable. Therefore, we believe that the company's profit margin far exceeds that of small and medium-sized insurers, and its competitive advantage will become more prominent in the second half of the comprehensive auto insurance reform. China People's Insurance currently values 2024E shares 0.68 times PEV and 0.91 times PB. We carry out a segmented valuation of China People's Insurance:
People's Insurance and Financial Insurance businesses are given 1.1x-1.2x 2024E PB; People's Insurance and Life Insurance and Health Insurance are given 0.45-0.50x2024E PEV; and 0.85x 2024E PB for other businesses. Under the Segment Valuation Act, the reasonable value range of China People's Insurance Company is 6.50-7.05 yuan/share, maintaining a “superior to the market” rating.
Risk warning: 1) The industry's premium growth rate is lower than expected; 2) Commercial vehicle fee reform continues to put pressure on industry underwriting profits.