On May 15, Ping An of China issued an announcement after the market. From January 1, 2024 to April 30, 2024, Ping An achieved a total of 33.377 billion yuan in original insurance premium income, an increase of 2.4% over the previous year.

The trend of Ping An Security expenses continued to pick up was recognized by the capital market. On May 16, China's Ping An Port A share price rose simultaneously, rising by more than 7% and 3% at one point.

Looking at the long-term perspective, Ping An's value recovery has already begun. Both its Hong Kong stock and A-share prices have risen to varying degrees. In particular, its Hong Kong stock price has increased by more than 35% since April 15.

1. Performance is improving, and the valuation center is rising

Based on premium data for the first quarter, in April, Ping An of China achieved original insurance premium income of 65.955 billion yuan in a single month, an increase of 5.45% over the previous year, showing an overall accelerated growth trend.

Looking at the breakdown, premium income at both ends of life has shown an accelerated growth trend. From January to April of this year, Ping An Industrial Insurance and Ping An Life Insurance increased by 3.1% and 1.9%, respectively. Compared with the growth rates in the first quarter, they increased by 0.3 and 1 percentage point, respectively.

Looking more closely, the life insurance business, as Ping An's top priority, had outstanding performance this month. In April of this year, Ping An Life achieved premium income of 38.853 billion yuan, an increase of 6.69% over the previous year.

First, this is a microcosm of the recovery of the entire life insurance industry. The CITIC Construction Investment Research Report points out that in the context of the implementation of the integrated reporting and banking policy and the active adjustment of product structures by insurers, value ratio optimization has led to a relatively rapid growth in new business value for listed insurers. At the same time, savings insurance is still in strong demand as one of the few products that can provide a definite return on investment.

Looking further, with the recent lifting of “1+3” restrictions on “1+3” outlets by the State Administration of Financial Supervision and Administration, the space and freedom for insurers to exhibit their business has increased.

According to the Open Source Securities Research Report, leading insurers still have certain advantages with more complete and rich product and service systems, and more sufficient manpower reserves. This change may help leading insurers increase their market share in banking insurance channels. The China Merchants Securities Research Report also suggests that leading companies are expected to take a leading position in high-value business with resource advantages such as service, brand, and customer management.

As a leader in the industry, Ping An should have priority benefits.

Furthermore, with the unique advantages of the “comprehensive finance+medical care” two-wheel drive strategy, Ping An can not only broaden revenue sources, diversify business risks, reduce customer acquisition costs, and increase customer stickiness through mixed business operations, but also seize the trend of population aging, increase the market share of related insurance businesses, and open up growth points for the pension industry to create a new growth curve.

2 · Two major value supports: improving market market+balance and debt resonance

Behind the recent sharp rise in Ping An, especially H shares, on the one hand, thanks to the overall recovery in the Hong Kong stock market, the continued inflow of foreign capital and southbound capital, provided a good financial environment for value restoration for big white horses like Ping An, and brought good market expectations, which in turn were transmitted to the corresponding sectors of the mainland capital market; on the other hand, it is inseparable from the continuous improvement of the entire insurance sector, especially Ping An's own fundamentals.

Looking ahead to the future market, the support for the restoration of safe values is still interesting.

First, from a macro perspective, with the gradual recovery of the global economy and the reallocation of international capital in the Asia-Pacific market, the Hong Kong stock market has attracted large inflows of foreign capital. In particular, for high-quality assets with stable profitability and good growth prospects, it has become the focus of market capital allocation.

Earlier, several institutions have pointed out that improvements in capital are the reason for the rapid rise in Hong Kong stocks, and the continued inflow of domestic and foreign capital supports Hong Kong stocks.

Among them, CITIC Construction Investment stated in a research report that the biggest suppression of Hong Kong stocks in the second half of last year was the systematic outflow of foreign capital to Japan. Recently, the focus of foreign capital allocation in the Asia-Pacific region was shifting back from Japan to Hong Kong stocks, and the liquidity of Hong Kong stocks has improved dramatically. In terms of domestic investment, driven by favorable policies and a high dividend market, the recent sharp net inflow of capital to the south has further consolidated the upward trend in Hong Kong stocks.

Second, within the insurance industry, the gradual verification of premium data shows that the industry is booming, and the resonance between assets and liabilities will continue to be interpreted.

On the debt side, on the one hand, in the current low interest rate environment, insurance products not only provide risk protection, but also have savings and investment functions, and demand continues to be strong. In response, Zheng Jisha, chief financial analyst at China Merchants Securities, said that in terms of life insurance, considering the continued reduction in LPR and the downward trend in interest rates on bank deposits, it is not ruled out that interest rates for insurance products will be lowered again during the year, and the continued transfer of residents' asset allocations is expected to open up new space for savings insurance growth.

On the other hand, regulatory policy support, such as the recent lifting of one-to-three restrictions, promoting changes in the banking insurance channel pattern, etc., while guiding pressure to reduce debt costs and optimizing the product structure of insurance companies, is expected to help maintain a high level of prosperity on the debt side.

On the investment side, the continued implementation of the new “National Nine Rules” and a package of supporting policies has injected stabilizers into the capital market. The equity market is showing a steady recovery trend. In particular, with policy support, the real estate industry is heating up and the sector continues to strengthen, and confidence in the capital market continues to improve the performance of insurance companies on the asset side.

Furthermore, changes in the interest rate environment have also brought good expectations of a shift. In response, the Dongwu Securities Research Report said that the central bank is optimistic about economic growth prospects for a long time. Although the main logic driving interest rates on treasury bonds downward have not changed significantly, after the central bank's statement this time, long-term interest rates will gradually find a phased bottom, mainly due to low fluctuations. The upward trend at the bottom of interest rates is further transmitted to the asset side of the insurance sector, and signs of reversal may gradually become apparent.

Focusing on Ping An itself, with its leading position and excellent strategic layout in the insurance industry, the company has shown stronger market competitiveness, brought more solid support to its performance growth and valuation repair, and will also become the focus of market capital attention.

3. Conclusion

Overall, insurance companies represented by Ping An have recently shown many highlights at the management level. In particular, performance such as increased premiums and new business value growth has continued to verify the recovery of the industry.

Looking ahead to the future market, against the backdrop of a positive overall market environment, good expectations on the debt side and investment side, compounded by the low overall valuation level of the insurance sector, are expected to provide further support for the market performance of insurance stocks. It is believed that leading high-quality insurers will also achieve more excess performance in this process.