Incidents:
In the first quarter of 2024, China People's Insurance's revenue was 138.78 billion yuan, +0.7% year on year; net profit to mother was 8.96 billion yuan, -23.5% year on year; weighted average return on net assets of 3.7%, -1.3 pct year on year; comprehensive cost ratio of 97.9%, +2.2 pct year on year; value of the new life insurance business was +81.6% year over year.
Comment:
Property insurance: The business structure continues to be optimized, and although COR increased year over year, it is still superior to major listed peers.
1) In the first quarter of 2024, the company achieved property insurance premium revenue of 173.98 billion yuan, of which car insurance premium income was 69.24 billion yuan, +1.9% year on year, and non-car insurance premium income of 104.74 billion yuan, +5.0% year over year, mainly benefiting from the good growth of eHealth Insurance, Agricultural Insurance, Liability Insurance, and Enterprise Financial Insurance, which increased 6.2%, 3.2%, 1.3% year-on-year to 568.1, 199.6, 116.0, and 6.14 billion yuan, respectively, driving up 0.7pct of non-car insurance premiums To 60.2%, the business structure continues to be optimized.
2) In the first quarter of 2024, the company's comprehensive cost ratio rose 2.2 pct to 97.9% year on year. It is expected to be mainly affected by the increase in payout rates due to the blizzard disaster, but it is still at the leading level compared to major listed peers (the comprehensive cost rates of Ping An Insurance and Taibao Financial Insurance in the first quarter were 99.6%/98.0%, respectively, +0.9 pct/-0.4 pct year on year), showing strong operational resilience.
Personal insurance: New orders are under slight pressure, and improved value ratios have driven a significant year-on-year increase in the value of new businesses. In the first quarter of 2024, the company's personal insurance business (Life Insurance + Human Health, same later) achieved new premiums of 45.52 billion yuan, or -9.7% compared with the same period, mainly hampered by the switching of predetermined interest rates and strict supervision of the “reporting integration” of banking insurance channels. Among them, premiums paid for the first year of long-term insurance increased slightly by 0.7% year-on-year to 14.68 billion yuan. The first-year premium ratio of long-term insurance premiums reached 43.3%, an increase of 7.1 pct over the previous year, and the business term structure was further optimized. Although the growth rate of new orders is under pressure, it is expected that the value of the new business value of the new business will increase significantly by 81.6% over the same period last year due to lower product pricing interest rates, lower bank insurance channel fee pressure, and business structure optimization.
Both investment income and underwriting profit were under pressure, and net profit due to a high base fell 23.5% year over year to $8.96 billion.
In the first quarter of 2024, due to factors such as declining interest rate centers and high equity market fluctuations, it is estimated that the company's total investment income (interest income+investment income+fair value change - asset impairment) fell 38.7% year on year to 11.99 billion yuan. Combined with the year-on-year increase in the comprehensive cost ratio, underwriting profit was under pressure. The company's net profit to mother fell 23.5% year on year to 8.96 billion yuan in the first quarter.
Profit prediction and rating: As a comprehensive insurance and financial group, the company's service network is rooted in urban and rural areas, and has a broad and deep customer base. Among them, the property insurance business implements the new “insurance+risk reduction service+technology” business model, with a 24Q1 financial insurance market share of 35.5%, maintaining a leading position in the industry; the personal insurance business insists on returning to the source of protection and accelerating the construction of a big health and pension ecosystem, empowering the main business through “insurance+service”.
It is expected that in the future, the financial insurance business will show a strong trend due to scale effects and maintain COR's leading edge; the personal insurance business is also expected to maintain a good NBV growth trend as channel transformation results continue to show results and banking insurance channel fee control. Considering the pressure on the 24Q1 profit growth rate, we lowered the company's 2024-2026 net profit forecast of 6.1%/6.0%/2.7% to 270/302/31.7 billion yuan. Currently, the A/H stock price corresponds to the company's 2024 PEV of 0.76/0.34, respectively. It is still at a historically low level, maintaining the “buy” rating for A/H shares.
Risk warning: premium income falls short of expectations; capital markets fluctuate greatly; interest rates fall below expectations.