The rebound in the capital market led to a sharp increase in the company's profits. In the third quarter of 2024, the capital market rebounded sharply, compounded by the stabilization of long-term interest rates, and the company's asset-side revenue and profit contribution increased significantly. In the first three quarters, the company achieved revenue of 310.56 billion yuan, a sharp increase of 21.3% year on year; insurance service revenue reached 209.41 billion yuan, an increase of 2.3% year on year. Benefiting from the continued release of the company's debt-side transformation results and asset-side stabilization, the company achieved net profit of 38.31 billion yuan to mother, an increase of 65.5% over the previous year. In the current industry transformation cycle, the company has shown strong profit resilience, and we continue to be optimistic about the company's future asset and liability side valuation repair space.

Life insurance continues to advance the “long-haul” transformation, and NBV increased significantly over the same period last year. In the first three quarters, Taibao Life Insurance continued to advance various channel transformation strategies, achieving a total of 230.06 billion yuan in large-scale premiums, an increase of 3.3% over the previous year; achieving a new business value of 14.24 billion yuan, an increase of 37.9% over the previous year. 1) Personal Insurance: Deepening the “Core Personal Insurance” transformation strategy, the quality of agents and production capacity per capita are steadily improving. Individual insurance channels achieved new premiums of 33.83 billion yuan, an increase of 16.3% over the previous year. Among them, the core workforce was 0.058 million, an increase of 2.4% over the previous year. It basically stabilized, corresponding to a 15.0% first-year premium growth rate per capita. 2) Banking Insurance: Focus on key regional operations and promote the development of long-term delivery products. The channel achieved large-scale premiums of 34.73 billion yuan in the first three quarters, an increase of 6.2% over the previous year.

Among them, the new insurance business declined by 18.4% year on year. The decline was further narrower than in the middle of the year. It is expected that the impact of “integration of reporting and banking” has clearly weakened.

Financial insurance maintained a high business growth rate, and COR remained flat year over year. In the first three quarters, Taibao Insurance achieved original premium income of 159.82 billion yuan, an increase of 7.7% over the previous year. The growth rate ranked first among listed insurers. Against the backdrop of increased compensation due to frequent natural disasters, the company's COR for the first three quarters was 98.7%, demonstrating the company's strong level of risk control. The auto insurance business continues to strengthen resource-intensive management, and achieved original insurance premium income of 78.13 billion yuan in the first three quarters, an increase of 3.3% over the previous year. The non-auto insurance business continues to strengthen product innovation and increase product research and development efforts, including “Agricultural Insurance +”. In the first three quarters, insurance service revenue was 145.2 billion yuan, an increase of 4.1% over the previous year.

Asset returns have improved significantly, and the allocation structure has been continuously optimized. In terms of fixed income, the company actively allocates long-term debt assets to extend the term of assets. In terms of equity, China Taibao used “dividend value” as the core equity investment strategy. In the first three quarters, the company achieved a total return on investment of 4.7%, an increase of 2.3 points over the previous year. Among them, OCI equity assets were 126.83 billion yuan, an increase of 29.5% year over year. As the capital market rebounded, the company achieved fair value change profit and loss of 42.1 billion yuan, a year-on-year correction.

Investment advice: With the steady progress of the company's “Changhang” Phase II transformation strategy, the operating results are steady. In addition, the recovery in the capital market is beneficial to asset side valuation repairs for insurers, so we raised our profit forecast. From 2024 to 2026, the company's EPS is 3.33/3.67/3.93 yuan/share (previously 3.28/3.52/3.65 yuan/share). The current stock price corresponds to P/EV of 0.66/0.62/0.56x, maintaining a “superior to the market” rating.

Risk warning: premiums fall short of expectations; increase in COR due to natural disasters; decline in asset returns, etc.