我们估计，1H24 新华保险NBV 可比口径下同比增长109%，个险/银保渠道NBV 分别同比增长53%/447%，银保渠道对NBV 的贡献由28%（1H23）增至35%（1H24）。1H24 公司新单保费同比下降42%，NBV 增长主要来自于利润率提升。整体NBV 利润率同比+12pcts 至18.8%，我们估计代理人和银保渠道分别同比+8.6/+11.1pcts。我们认为定价利率下调和费用压降推动利润率提升。公司代理人规模仍持续下滑，月均合格人力由3.4 万人（1H23）下滑至2.7 万人（1H14），显示代理人产能不断增长。我们预计新华保险2024 年NBV 增长94%。EPS increased 10.9% year over year
Xinhua Insurance 1H24 EPS RMB3.55, a year-on-year increase of 10.9%. The company paid an interim dividend of RMB0.54 per share. 1H24's new business value (NBV) increased 109% year over year (comparable caliber), mainly due to an increase in NBV profit margins. According to our estimates, the company's insurance service performance declined slightly by 6%, while investment performance increased sharply by 52%. We believe it was mainly due to an increase in the fair value of FVTPL assets, which led to an increase in investment returns. 1H24's total return on investment increased by 1.1 pcts to 4.8%. Considering investment fluctuations, we raised 2024-26EPS to RMB4.82/3.77/3.64 (previous value: RMB3.69/3.78/4.16), maintained a DCF-based target price of RMB41 (A) /HKD22 (H), and maintained a “buy” rating.
Significant increase in profit margins drives high NBV growth
We estimate that 1H24 Xinhua Insurance NBV increased 109% year over year under a comparable caliber, individual insurance/banking insurance channel NBV increased 53%/447% year on year respectively, and the banking insurance channel's contribution to NBV increased from 28% (1H23) to 35% (1H24). 1H24's premiums for new orders fell 42% year over year, and NBV growth was mainly due to increased profit margins. The overall NBV profit margin was +12pcts year over year to 18.8%. We estimate that agents and banking insurance channels were +8.6/+11.1 pcts year over year, respectively. We believe that lower pricing rates and lower cost pressure will drive up profit margins. The number of agents in the company continues to decline, with the average monthly qualified manpower falling from 0.034 million (1H23) to 0.027 million (1H14), indicating that agent production capacity continues to grow. We expect Xinhua Insurance's NBV to grow 94% in 2024.
Improved investment supports profit growth
Affected by the sharp drop in premiums for new policies, 1H24's premium income fell 12% year on year, and insurance service performance also fell 6% year on year. The increase in the company's profit was mainly driven by improved investment. Interest rates declined and equity markets fluctuated in the first half of the year, and the company's investment performance increased 52% year-on-year. The main reason was the increase in investment income due to fluctuations in the fair value of FVTPL assets. We believe this reflects the increase in the volatility of corporate profits under the new accounting standards. 1H24's annualized net return on investment was 3.2%, slightly lower than the previous year (1H23 3.4%), while the annualized return on total investment reached 4.8% (1H23 3.7%). We think it may be due to an increase in the fair value of FVTPL assets.
Net assets have declined
The core/comprehensive solvency of 1H24 Xinhua Insurance was 122.57%/225.20%, respectively, down from the end of 2023 (157.01%/278.43%), but it is still at a sufficient level. The company's net assets fell 14.3% from the end of 2023. On the one hand, it may be due to a long-term mismatch between assets and liabilities. On the other hand, quite a few of the company's bonds are measured at amortized cost, which is unable to hedge against debt fluctuations, which may also have caused a decrease in net assets. 1H24 has an annualized ROE of 22.7%. We expect the 2024 ROE to be 16.0%, and the net profit to mother will increase by 72.5%.
Risk warning: The growth rate of life insurance NBV has deteriorated sharply, and investment losses have been huge.
