Description of the event
China Life Insurance released its 2024 quarterly report. The company achieved net profit of 20.64 billion yuan, a year-on-year decrease of 9.3%; the value of new business increased 26.3% year-on-year (comparable caliber).
Incident comments
The year-on-year decline in profit is expected to be mainly affected by market fluctuations. The company achieved performance of 20.64 billion yuan in the first quarter of 2024, down 9.3% year on year. Weak market performance may be the main reason. From an investment perspective, total and net return on investment fell 0.98 pct and 0.8 pct year on year to 3.23% and 2.82%, respectively.
The value of the new business achieved a high growth rate, and the value ratio provided a major contribution. NBV increased 26.3% year over year in the first quarter, achieving a high growth rate. In terms of items, the improvement in value ratios is the main reason. Among them, premiums for new policies fell 4.4% year on year, which may be mainly affected by the implementation of integrated reporting through banking insurance channels and the reduction in pricing interest rates. The payment structure has improved. The share of new orders over ten years increased by 5.6 pct to 33.7% compared to the same period last year, while the share of new orders with term payments also increased from 60.7% to 66.5%. The main reason may be the decline in premium payments through banking insurance channels.
The team's production capacity continues to increase, and the scale has basically stabilized. The size of the individual insurance team dropped to 622,000, down 1.9% from the beginning of the year, and is expected to outperform the industry's performance. The quality of the team continues to improve. First-year premiums per capita increased by 17.7% over the same period last year. It is expected that per capita NBV and income will also increase steadily, and the team reform has achieved certain results. The company insists on effective teams to drive business development, further push forward marketing system reform, and launch the “Seed Plan” to explore new marketing models. It has now been launched in Guangdong, Jiangsu, Shenzhen and other provincial organizations, and it is expected that the trend of improving team quality will continue.
Investment advice: Recommended as a high-quality and highly elastic target. 1) Interest rates on deposits have declined, and the company's agent production capacity has stabilized, and it is expected to effectively support future growth, so the debt side is difficult to suppress valuations; 2) The current industry's main contradictions focus on the asset side, and China Life Insurance, as a pure life insurance company, has the sensitivity and flexibility of the first tier in the industry, and has high-quality beta asset allocation value; 3) The company's debt costs as the leading life insurance company are relatively manageable, and the risk of interest spread loss is small. It is expected to be 0.60 times PEV in 2024, at the bottom.
Risk warning
1. Major adjustments to industry policies;
2. The equity market fluctuated greatly, and interest rates declined sharply.