Incident: China Taibao released its 2024 quarterly report. In the first quarter of 2024, China Taibao achieved insurance service revenue of 66.968 billion yuan, an increase of 2.4% over the previous year. Among them: Taibao Life Insurance achieved insurance service revenue of 20.859 billion yuan, a year-on-year decrease of 5.1%; Taibao Industrial Insurance achieved insurance service revenue of 45.556 billion yuan, an increase of 5.9% over the previous year.
Achieved net profit of 11.759 billion yuan, an increase of 1.1% over the previous year.
Comment:
Life insurance NBV has increased, and premiums in banking insurance channels have declined. In the first quarter of 2024, Taibao Life Insurance achieved large-scale premiums of 105.95 billion yuan, of which new large-scale premiums were 32,833 billion yuan, an increase of 0.4% over the previous year; the value of the new business reached 5.191 billion yuan, an increase of 30.7% over the previous year. (1) Agent channel: First, the business grew steadily. The agent channel achieved new insurance premiums of 16.124 billion yuan in the first quarter, an increase of 31.3% over the previous year; second, the size of the outstanding team was stable, production capacity and revenue continued to rise, with monthly premiums of 8.3 million yuan per person, up 33.7% year on year; third, better business quality. Personal life insurance customers had a 13-month policy continuation rate of 96.9%, an increase of 7.3 percentage points over the previous year. (2) Banking insurance channel: Affected by the “integration of reporting and banking” policy, premiums for the new insurance scale decreased by 21.8% year-on-year.
The cost rate of industrial insurance has improved. (1) In the first quarter of 2024, Taibao Insurance achieved original premium income of 62,491 billion yuan, an increase of 8.6% over the previous year. Among them, auto insurance and non-car insurance premium income increased by 2.2% and 13.8%, respectively, over the same period last year, while non-car insurance maintained a relatively rapid growth rate. (2) The comprehensive underwriting cost ratio was 98.0%, down 0.4 percentage points from the previous year, and business costs were further optimized.
The net return on investment remained flat year over year. Since this year, fluctuations in the A-share market have increased, and market interest rates have continued to fall. China has continued to allocate equity investment types with low valuations, high dividends, and good long-term profit prospects, and investment returns have remained steady. By the end of the first quarter, China Taibao's investment assets were 2.34 trillion yuan, up 4.2% from the end of the previous year. In the first quarter of 2024, the net return on investment assets was 0.8%, the same as the previous year; the return on total investment was 1.3%, down 0.1 percentage points from the previous year.
Investment advice: China Taibao is the only insurance company with positive net profit growth in A-share shares in the first quarter of this year, maintaining China Taibao's “buy” rating. The estimated intrinsic value per share of China Taibao in 2024 is 58.89 yuan, and the PEV corresponding to the current stock price is 0.46.
Risk warning: the risk that the loss of agents exceeds expectations, production capacity increases less than expected, and the development of banking insurance channels falls short of expectations; the risk that return on asset-side investment falls beyond expectations due to a rapid decline in long-term interest rates; the risk that the return on asset-side investment will fall beyond expectations; the risk that the continued tightening of regulatory policies will make it more difficult to sell new insurance policies.