Driven by the base effect and policy adjustments, the growth rate of life insurance premiums in August showed a slight monthly peak; the prosperity of property insurance has improved, and the growth rate of auto insurance premiums of PICC P&C continues to rise, which is expected to contribute mainly to underwriting profits. However, the growth rate of agricultural insurance is still slightly lower than expected.
According to the latest disclosure announcements of insurance companies, the life insurance premiums and year-on-year growth rates of listed insurance companies from January to August 2024 are as follows: China Life 564.9 billion yuan, +5.9% year-on-year; Ping An 409.7 billion yuan, +8.9% year-on-year; China Pacific Insurance 191.7 billion yuan, +1.5% year-on-year; New China 130.3 billion yuan, +1.9% year-on-year; PICC P&C 133.5 billion yuan, +7.0% year-on-year. The order of the growth rates of life insurance premiums from January to August 2024 is as follows: Ping An > PICC P&C > China Life > New China > China Pacific Insurance. However, the premiums in August have all increased year-on-year, and the growth rate has significantly improved: China Life +29.0%, +20.7pct; Ping An +36.0%, +18.8pct; China Pacific Insurance +53.0%, +65.8pct; New China +122.0%, +110.7pct; PICC P&C +79.2%, +56.4pct.
Huachuang Securities' main views are as follows:
Driven by the base effect and policy adjustments, the growth rate of life insurance premiums in August showed a slight monthly peak; the prosperity of property insurance has improved, and the growth rate of auto insurance premiums of PICC P&C continues to rise, which is expected to contribute mainly to underwriting profits. Looking ahead to the second half of the year, the growth logic of life insurance NBV may have the opportunity of dual driving of volume and price, and the further reduction of the benchmark interest rate will bring continuous improvement in value rate. With the low base of new policies, positive growth rate is expected to be achieved; as for property insurance, if there is no extreme weather interference in the second half of the year, COR may improve compared with the same period last year Q3, when it was affected by typhoons; the base of the investment end will further weaken.
In August, PICC P&C's life insurance business and health insurance business had a further increase in the growth rate of accumulated premiums, with life insurance up 5.7% year-on-year and health insurance up 10.1% year-on-year. As for life insurance, the year-on-year growth rate of new policies for long-term insurance decreased by 10.3%, with a month-on-month decrease of 9.2pct. However, in August, the year-on-year growth rate of new policies for long-term insurance increased by 417.8%, which was mainly due to the super low base brought by the removal of the initial lump-sum payment in August 2022. In addition to the low base, the further reduction of benchmark interest rates for traditional insurance, dividend insurance, and universal insurance in September/October will benefit the short-term sales end, resulting in a high growth rate of premiums for listed insurance companies in August and a significant increase compared to the previous month.
Due to the combined effect of the base effect and policy adjustments, the premium for life insurance in August showed a high level of prosperity. In the same period last year, when the pre-determined interest rate for life insurance products in the industry was officially reduced to 3.0%, and affected by the previous overdraft of demand, the growth rate of life insurance premiums of insurance companies in August 2023 decreased significantly. In August 2023, the year-on-year growth rates of life insurance premiums for China Life/Ping An/PICC P&C/New China were -10.3% /+1.5% /+3.4% /-6.8%, and the year-on-year growth rate for PICC P&C was +42.0%, which was mainly due to the ultra-low base brought by the removal of the initial lump-sum payment in August 2022. In August of this year, in addition to the low base, due to the further reduction of the predetermined interest rate for traditional insurance, dividend insurance, and universal insurance in September/October, the short-term sales end benefited, resulting in high premiums for listed insurance companies in August and a significant increase compared to the previous month.
PICC P&C: New policies surged, while renewal policies played a stabilizing role. The growth rate of accumulated premiums further expanded, with life insurance up 5.7% year-on-year and health insurance up 10.1% year-on-year. As for life insurance, the year-on-year growth rate of new policies for long-term insurance decreased by 10.3%, with a month-on-month decrease of 9.2pct. However, in August, the year-on-year growth rate of new policies for long-term insurance increased by 417.8%, as the short-term sales end benefited significantly from the adjustment period of the predetermined interest rate. The year-on-year growth rate of renewal premiums accumulated to +23.3%.
Property insurance business: The growth rate of premium of listed insurance companies is improving.
According to the latest disclosure announcement of insurance companies, from January to August 2024, the cumulative growth rate of property insurance premiums of listed insurance companies was as follows: PICC 382.2 billion yuan, +4.3% year-on-year; Ping An 211 billion yuan, +5.3% year-on-year; CPIC 142.2 billion yuan, +7.7% year-on-year. The order of growth rates of property insurance premiums from January to August 2024 is: CPIC > Ping An > PICC. Property insurance premiums in August for all three companies increased: CPIC +7.0% and -0.6 percentage points; Ping An +12.5% and -6.1 percentage points; CPIC +9.5% and +3.5 percentage points. The growth rates in August are: Ping An > CPIC > PICC.
PICC Property Insurance
From the cumulative perspective, the overall growth rate is up by 0.3 percentage points, mainly contributed by motor insurance, medical insurance, liability insurance, and guarantee insurance. Agricultural insurance, corporate property insurance, and cargo insurance partially offset the positive impact. Cumulative year-on-year growth rate of motor insurance is +3.0%, month-on-month growth rate is +0.2 percentage points, achieving acceleration on the basis of a higher base. In August, the demand for the automobile market has not seen a significant boost, with a year-on-year decrease in automobile sales of -5.0%. However, sales of electric vehicles continue to show an upward trend, with a year-on-year increase of +30.0% in August alone, which is expected to constitute an important increment in the auto insurance sector. In terms of non-motor insurance, year-on-year growth rates for medical insurance and liability insurance are +7.2% and +12.6% respectively, with month-on-month growth rates of +1.2 and +1.1 percentage points respectively; the growth rate of guarantee insurance has changed from +3.3 percentage points to -8.3% month-on-month; the cumulative year-on-year growth rates for agricultural insurance, corporate property insurance, and cargo insurance are +1.7%, +2.4%, and +7.7% respectively, with month-on-month growth rates of -0.7, -0.5, and -1.2 percentage points respectively.
From the perspective of August alone, the month-on-month growth rate of motor insurance increased by +0.5 percentage points to 4.4%, the growth rate of guarantee insurance reversed to 27.7%, and the year-on-year growth rate of agricultural insurance premiums decreased by -9.7%, but the month-on-month growth rate increased by 5.7 percentage points.
Investment recommendation: Currently, it is recommended to invest in China Pacific Insurance (601601.SH), which has a stable basic situation and the alpha effect brought by the transformation of Changjiang Navigation, as well as the long-term investment value of being bullish on the leading company PICC P&C (02328).
Risk warning: Regulatory changes, reform delays, increased natural disasters, continued decline in long-term interest rates, and volatility in equity markets.
