[Incident] China People's Insurance Company announced its 2024 interim results: 1) Net profit for the first half of the year was 22.7 billion yuan, +14.1% year over year, and 13.7 billion yuan per quarter in Q2, +68.2% year over year. ROE was 9.0%, +0.7pct year over year. 2) Net assets to mother were $253 billion, +4.4% at the beginning of the year and +2.9% at the end of Q1. 3) The interim dividend was 0.063 yuan per share, with a total dividend of 2.786 billion yuan, accounting for 12.3% of net profit attributable to mother.

Industrial insurance: premiums have increased steadily, and the comprehensive cost rate has increased slightly due to natural disasters and other factors. 1) Net profit of 17.5 billion yuan, -9.2% YoY Underwriting profit of 7.6 billion yuan, -6.0% YoY. 2) Industrial insurance premiums were +3.7% year-on-year, with a market share of 34.0%, +1.5pct compared to the beginning of the year. Auto insurance/health insurance/agricultural insurance were +2.5%, +5.7%, and +3.4%, respectively.

3) Comprehensive cost rate 96.8%, +0.4pct year on year; payout rate 70.7%, +1.2pct year on year; expense ratio 26.1%, -0.8pct year on year. With the exception of the year-on-year improvement in car insurance and agricultural insurance, all other major types of insurance increased year-on-year. The comprehensive cost rates for car insurance/agricultural insurance were -0.3 pct, -1.7 pct to 96.4% and 94.8%, respectively, while eHealth insurance/liability insurance/enterprise financial insurance were +1.4 pct, +1.3 pct, and +7.6 pct, respectively. The comprehensive cost rate for car insurance was 96.4%, -0.3 pct year on year. Among them, due to natural disasters and other factors, the compensation rate was +1.5 pct year over year, while strengthened cost control drove the cost rate to -1.8 pct year over year.

Personal insurance: Net profit, NBV, and EV all achieved extremely high growth. Life insurance: 1) Net profit of 9.9 billion yuan, +191% year-on-year. Among them, insurance service costs were -87.4% year-on-year. We expect this is mainly due to the transfer of some loss-making businesses from expenses after turning profit. 2) Total premiums were +0.3% year-on-year, with traditional insurance accounting for +9.1pct to 52.1%; long-term insurance's first-year contract ratio was -16.5%. 3) NBV +91% YoY. The NBV margin was +6.5 pct year over year to 11.3%. EVs are +33% compared to the beginning of the year. 4) The number of marketers was 0.082 million, +3.7% compared with the same period last year. The average monthly effective manpower was 0.023 million, +4.9% YoY. Monthly average monthly premium of 0.014 million yuan per person, +8.2% year-on-year. Health insurance:

1) Net profit of 3.4 billion yuan, +26% year-on-year. 2) The premium is +7% compared to the same period, including +17% for the first year of long-term insurance.

3) NBV +159% YoY. NBV margin was +6.4pct YoY to 10.9%. EV is +28% compared to the beginning of the year.

Investment: Increase the allocation of treasury bonds, government bonds, and reduce allocations of stocks and funds. 1) Investment assets were +6.9% to 1.53 trillion yuan at the beginning of the year, and fixed income/equity assets accounted for 67.3%/19.2% respectively, and +2.8pct/-2.3pct compared to the beginning of the year. Chinese government bonds/stocks/funds were +5.1 pct, -0.2 pct, and -1.8 pct, respectively, compared to the beginning of the year. 2) Total annualized return on investment 4.1%, -0.8 pct year on year; net return on investment 3.8%, -0.6 pct year on year. 3) The OCI stock investment scale was +13.8% compared to the beginning of the year, accounting for +5.3pct to 40.5% at the beginning of the year. The return on OCI equity market capitalization was 19.5%, higher than the Shanghai and Shenzhen 300 dividend index of 7.1 pcts.

Optimistic about the competitive advantage of the company's financial insurance business and maintain a “superior to the market” rating. People's Insurance's car insurance business is in good condition. In the car insurance business, home-owned cars with low payout rates account for a relatively high share, and channel rates are manageable. Therefore, we believe that the company's profit margin far exceeds that of small and medium-sized insurers, and its competitive advantage will become more prominent in the second half of the comprehensive auto insurance reform. China People's Insurance currently values 2024E shares 0.74 times PEV and 0.99 times PB. We carry out a segmented valuation of China People's Insurance:

People's Insurance and Financial Insurance businesses are given 1.1x-1.2x 2024E PB; People's Insurance and Life Insurance and Health Insurance are given 0.45-0.50x2024E PEV; and 0.85x 2024E PB for other businesses. Under the Segment Valuation Act, the reasonable value range of China People's Insurance Company is 6.56 to 7.12 yuan/share, maintaining a “superior to the market” rating.

Risk warning: 1) The growth rate of industry premiums is lower than expected; 2) Commercial vehicle fee changes continue to put pressure on industry underwriting profits.