Description of the event

Xinhua Insurance released its 2024 mid-year report. The company achieved net profit of 11.083 billion yuan, an increase of 11.1% over the previous year; the value of the new business was 3.902 billion yuan, an increase of 57.7% over the previous year.

Incident comments

The improvement in investment returns led to an improvement in profit performance. In the first half of the year, Xinhua Insurance achieved net profit of 11.083 billion yuan, a year-on-year increase of 11.1%, a significant improvement over the 28.6% decline in the first quarter. Looking specifically at the improvement in return on investment performance, the company's total return on investment increased by 1.1 pct to 4.8% year on year, and also increased by 4.6% compared to Q1. The return on comprehensive investment improved by 1.8 pct to 6.5% over the same period last year, including floating profits generated by allocation-type debt instruments. It is different from other listed insurers and is not easy to compare directly.

Business quality continues to improve, and the new business value growth rate is at the top. The company achieved premium income of 98.832 billion yuan, a year-on-year decrease of 8.4%. The payment structure has improved. The first-year premium for long-term insurance was 18.59 billion yuan, a year-on-year decrease of 45.1%; while premiums paid for 10 years or more increased 16.3% year over year to 2.04 billion yuan, and the business structure is expected to continue to be optimized. The company actively manages. At the same time, under the requirements of pricing interest rate switching and reporting integration, business quality continued to improve. The withdrawal rate, 13-month continuation rate, and 25-month continuation rate improved by 0.2 pct, 5.8 pct, and 6.6 pct, respectively. The new business value rate increased by 12 pcts year on year, driving the new business value to reach the leading level of the industry of 57.7% year on year, and higher than 51% in the first quarter.

The increase in new individual insurance policies continues to be high, and the payment structure continues to be optimized. Due to the impact of the integrated reporting and banking policy, channel performance was divided: individual insurance and bank insurance term payments achieved premiums of 8.26 billion yuan and 7.14 billion yuan respectively, an increase of 4.1% and a decrease of 24.9% over the previous year; individual premiums decreased by 42.5% and 82.3% year on year, respectively, and the payment structure continued to improve. Looking forward to the future, the company will actively promote the “three modernization” transformation of the agent team, launch a special team construction project for the “XIN Generation” program, and enhance support in recruitment, training, and customer development. It is expected that the scale will stabilize and grow. The banking insurance channel adheres to channel management, customer management and team building, increases the development of the wealth team, and is expected to achieve more premiums and value contributions.

The allotment of bonds was reduced, and stocks and funds were increased, and flexibility was increased. In terms of return on investment, the company's comprehensive return on investment increased by 1.8 pct to 6.5% year on year, and the return on total investment increased by 1.1 pct to 4.8%, and the net return on investment decreased by 0.2 pct to 3.2%, leading the industry. In terms of asset allocation, the allocation of bonds was reduced by 1 pct, stock allocation was increased by 2.1 pct, and funds were increased by 1.8 pct, and sensitivity to the equity market increased.

The focus is on recommending Xinhua Insurance, which is highly flexible. The reduction in debt-side pricing interest rates will not change the nature of insurance, and it is expected to maintain a similar level of prosperity in the future. The main conflict in the industry focuses on the asset side. As a pure life insurance company and increased equity in the first half of the year, Xinhua has the first level of asset-side flexibility in the industry, and focuses on recommendations based on flexibility.

Risk warning

1. Major adjustments to industry policies;

2. The equity market fluctuated greatly, and interest rates declined sharply.