Jinwu Financial News | CMB International stated that the decline in life insurance premium growth in October is in line with market expectations, mainly due to the previous adjustment of the preset interest rates leading to some customers overspending on savings demand, as well as the listed insurance companies basically achieving their annual performance and shifting focus to a strong start in 2025, driving changes in products and operational strategies. In the first ten months, the cumulative life insurance premium growth of listed insurance companies slightly declined compared to last month. Channel research results show that the sales of participating insurance still face certain challenges; the bank expects that the 2.5% priced incremental whole life insurance, annuity insurance, and endowment insurance will still be the main products for sales during the strong start, especially for mid-tier insurance companies. Looking ahead to the fourth quarter, the bank expects life insurance new policy premium growth to face some pressure, but the overall new business value is expected to achieve steady growth with the continuous improvement of the new business value rate; it is expected that the growth rate of new policy premiums during the strong start will be in the mid-to-high single digits.
The bank continues to indicate that the growth of property insurance continues to improve, benefiting from the dual contributions of auto insurance and non-auto insurance. Looking ahead to the fourth quarter, the bank believes that auto insurance premiums are expected to continue the warming trend with policy support, combined with the further increase in electric vehicle penetration rate, which will drive an increase in high-premium insured vehicles; the bank maintains its forecast of a 4% growth in auto insurance premiums for leading insurance companies for the entire year; in the future, as pricing models improve and more entrants join the auto insurance market, there is further room for the average premium of electric vehicle insurance to decrease.
The bank is bullish on leading insurance companies with a high asset-liability matching degree. Currently, the sector is trading at 0.2-0.5 times FY24P/EV and 0.5-1.0 times FY24P/BV, with a dividend yield of 3%-6%. After the third quarter performance disclosure, there was a certain correction in the sector's stock prices, and the market has reflected the significant positive contribution of the substantial increase in the fair value changes of equity investments in the third quarter on profitability. The growth trend of annual net business value for leading life insurance companies is bullish, maintaining the sector's "outperform market" rating, and recommending buying China Pacific Insurance (02601, buy, target price: HKD 35.5), China Life Insurance (02628, buy, target price: HKD 20.0), and PICC P&C (02328, buy, target price: HKD 14.0).
