State-owned shareholders are concentrated, and dividends are continuously stable.
The state-owned asset background is strong, and the Ministry of Finance has absolute control. China People's Insurance Group Co., Ltd. (“China Insurance” for short) originates from the People's Insurance Company of China, which was established in Beijing on October 20, 1949, and is the first national insurance company since the founding of New China. According to the company's 2024 quarterly report, the Ministry of Finance, as the sponsor and actual controller of China People's Insurance, holds 60.84% of the company's shares and is the company's controlling shareholder; the Social Security Fund holds 12.68%, making it the second largest shareholder of China People's Insurance. The total shareholding ratio of the two is as high as 73.52%. Their holdings are concentrated and the shareholding structure is stable.
The overall profit strength is stable, and the dividend rate is high and continuously stable. The company's weighted ROE has basically stabilized at around 10%. The company's profit distribution focuses on a reasonable return on investment for investors. It has maintained a high dividend rate over the past 5 years, and the distribution policy has maintained continuity and stability. The cash dividend ratio for 2020-2023 is higher than 30%. The solvency adequacy ratio of the People's Insurance Group and its core subsidiaries has remained stable in recent years. In recent years, the comprehensive solvency adequacy ratio of the People's Insurance Group, Human Insurance, Life Insurance, and Human Insurance Health has remained above 150%, and the core solvency adequacy ratio has basically remained above 100%, far higher than regulatory standards. Adequate solvency provides the company with flexible business space and a guarantee of continuous and stable dividends.
High quality financial insurance, stable leading position and outstanding profitability.
Overall, the People's Insurance Company leads the industry in terms of premium size and profitability. The leading position in the human insurance industry is stable. The original premium market share was stable at more than one-third, and the share was greater than the sum of the second and third places. In terms of profitability, compared to the other two of the “old three” financial insurance companies, the comprehensive cost ratio of human insurance has always remained below 100% in the past 14 years, and continued to maintain positive underwriting profits, which has outstanding advantages. The other two companies, on the other hand, experienced underwriting losses in different years at comprehensive cost ratios. In terms of car insurance, People's Insurance Auto Insurance has a significant underwriting profit advantage. The comprehensive cost ratio has remained low for a long time. It is basically ahead of the other two leading insurers. It mainly relies on a high-quality business structure, continuous strengthening of its own channel construction, and huge customer accumulation and technology accumulation. As the fourth comprehensive car insurance reform continues to be deepened in September 2020, the average car premium will gradually decline. Improving accurate pricing and fee control capabilities is becoming more and more important for insurers to achieve underwriting profits, and the advantages of human insurance car insurance are obvious. In terms of non-car insurance, the financial insurance industry is accelerating its transformation to non-car insurance. Competition is fierce, underwriting is difficult, requires long-term investment and has high technical barriers. Human insurance and non-car insurance continuously improve the quality of coverage and improve underwriting conditions. Non-car insurance achieved underwriting profits in 2023, driving the total underwriting profit of financial insurance far higher than other insurers.
Potential life insurance, the results of high-quality transformation are gradually showing.
People's Insurance Life Insurance actively promotes high-quality transformation and development, and has great potential for value growth. In terms of product structure, the company increased sales of medium- and high-value whole life insurance and annual insurance; in terms of payment structure, human insurance increased the proportion of value futures products; in terms of channel structure, although the banking insurance channel is currently the company's main new policy premium, under strict implementation of the “integrated reporting” requirement, the scale and value ratio of new channel orders improved at the same time, and the scale and value of individual insurance channels achieved a significant steady recovery.
The scale of human health insurance has increased significantly, and the structure has improved in 2023. The compound annual growth rate of Human Insurance Health's original premium income during the period 2018-2023 was as high as 25%, driving the rapid growth of personal insurance premiums. The company relies more on sales through banking channels. In 2023, the share of new banking insurance policies was 82.6%, and the channel value ratio increased sharply by 3.7 pct to 4% year on year from 0.3%; the company actively planned the innovation, transformation and development of agent channels to increase the per capita production capacity of sales staff. Although premiums for new orders declined year on year, the increase in value ratio drove channel NBV to increase dramatically year over year.
Profit forecasting and investment advice
Based on stable expectations on the investment side, benefiting from the steady profits of the financial insurance business and the high-quality transformation results of life insurance, we expect the Group's revenue to be 6,025/6,471/696.2 billion yuan respectively in 2024-2026, with corresponding growth rates of 8.9%/7.4%/7.6%; net profit to mother will be 262/290/31.4 billion yuan, respectively, corresponding growth rates are 14.9%/10.9%/8.1%; EPS is 0.59/0.66/0.71 yuan respectively, corresponding to 2024 The closing price of 5.25 yuan/share on January 7, PE was 8.87/8.00/7.40 times, respectively, and PB was 0.90/0.84/0.78 times, respectively, covered for the first time, giving a “buy” rating.
Risk warning
Risk of transformation falling short of expectations; risk of drastic adjustment of relevant policies; sharp fluctuations in capital markets; risk of natural disasters