The Zhitong Finance App learned that Open Source Securities released a research report stating that the implementation of banking insurance has brought about an increase in value ratio and a reduction in fee differences, compounded by individual insurance increases. It is expected that listed insurers will continue to enjoy a relatively good NBV boom in the first quarter. The reduction of scheduled interest rates, integration of reporting and regulatory guidance, and the reduction of universal and dividend insurance settlement interest rates are all beneficial to life insurance to reduce the cost of debt and risk of interest spreads. Listed insurers actively transform, adjust product structures to meet long-term low interest rate environments, and improve asset allocation on the asset side.

Debt costs in the insurance industry are expected to drop significantly in 2024, and the debt-side boom is worry-free. Focusing on beta catalysis brought about by anticipated economic recovery, insurers with leading debt-side transformation and lower debt costs are expected to maintain their leading edge. Currently, the PEV valuation of listed insurers is at the bottom of history. Insurance stocks have both beta elasticity and debt-side alpha. They are optimistic about left-side layout opportunities and recommend China Life Insurance (02628), China Taibao (02601), and China Ping An (02318). We recommend China Financial Insurance (02328), which has a high dividend ratio.

The main views of Open Source Securities are as follows:

Personal insurance premiums maintained positive growth in March. Q1NBV is expected to continue to grow at a high rate, and the outlook for the debt side is optimistic for the whole year

(1) In March 2024, the total premiums of the five listed insurers totaled 194.4 billion yuan, +6.0% year-on-year. The growth rate was 2.4 pct higher than in February. Among them: China Insurance +31.2%, China Ping An +5.1%, China Taibao +4.7%, China Life Insurance +4.4%, and China Insurance -4.4%. China Insurance led the total premium growth rate of the five companies to increase significantly.

From January to March 2024, the total premiums of the five listed insurers were -0.4% year-on-year, with a growth rate of +1.7 pct compared with February, with China Life Insurance +3.2%, China China Insurance -3.7%, China Taibao -5.4%, and Xinhua Insurance -11.7%. It is expected that some insurers will have accumulated negative growth due to differences in Kaimei's preparation strategies, the integration of banking insurance reporting banks, and the Kaima Hong cooling new regulation policy. The leading growth rate of China Life Insurance is expected to be related to the lower share of banking insurance.

(2) Looking ahead, it is expected that NBV, a listed insurer, will continue to grow in 2024Q1. The growth rate is expected to decline somewhat in Q2 due to the high base of 3.5% sales stoppages in the same period, but NBV is expected to continue to grow positively throughout the year. Open Source Securities expects most listed insurers to continue to see a high year-on-year increase in new installments of Q1 insurance. The new banking insurance policy is affected by the “integrated reporting and banking” policy, but it is expected to reduce fee differences and losses in the future, which is conducive to improving the value contribution of banking insurance. Demand for pension savings is strong. The transformation of insurance channels is still effective, and the production capacity of individual insurers continues to increase. The full implementation of “integrated reporting and banking” and the reduction in pricing interest rates are expected to reduce insurers' debt costs. Product structure optimization is driving margin improvement. It is expected that NBV will continue to grow positively throughout the year.

China's Ping An's new Q1 order business is under pressure. People's Insurance's March new orders and futures both improved

(1) China Ping An's 2024Q1 insurance premiums were 45.2 billion yuan, -4.8% YoY, down 7.4pct from +2.7% YoY in 2023Q4, +2.7% YoY, and 1.2pct YoY down from 2023Q4.

(2) China People's Insurance's new personal insurance orders and futures both improved in March, driving a cumulative year-on-year ratio of -3.7% in March. The first-year premium for long-term insurance was 8.06 billion yuan, or +26.5%, of which the first-year premium paid was +1.2%, and the monthly renewal was +48.6%. The increase in March payments is expected to be related to the pace of product launch. The high increase in renewal premiums is expected to be related to factors such as the ongoing business base, payment and term structure, and renewal rate.

Financial insurance premiums improved year-on-year in March 2024. Car insurance benefited from a recovery in passenger car sales, and a recovery in human insurance rather than car insurance

(1) In March 2024, financial insurance premium income of the four listed insurers was 127.4 billion yuan, a significant improvement over February. The three companies were: Zhongan Online +22.3% (February +11.6%), Taibao Financial Insurance +12.7% (February +1.6%), Human Insurance +7.8% (February -1.6%), and Ping An Insurance +5.9% (February +0.9%). In addition, Sunshine Insurance +13.8% (February +11.7%). Passenger car/NEV sales volume in March 2024 was +10.9%/+35.3% YoY, compared to +30.2pct/+44.5pct in February 2024.

(2) People's Insurance's auto insurance premiums in March were +3.1% year-on-year, with a growth rate of +4.5 pct compared to February. The recovery in passenger car sales led to improvements in car insurance. Non-car insurance was +7.8% year-on-year, compared to +9.4pct in February. Among them, iHealth Insurance/Agricultural Insurance/Enterprise Financial Insurance/Credit Guarantee Insurance were +10.1%/+14.7%/+16.5%/+27.2%, respectively, which is expected to be related to the pace of policy insurance tendering.

(3) Ping An Insurance's 2024Q1 premium was +2.8%, of which car insurance/non-car insurance/eHealth insurance were +3.5%/-9.7%/+34.1%, respectively.

Risk warning: The economic recovery fell short of expectations; the recovery in demand for insurance products fell short of expectations.