Chinese insurance stocks extended their declines. As of press time, New China Life Insurance (ASX: 01336) fell 5.46% to HK$39.8; The People's Insurance Company (Group) of China (ASX: 01339) dropped 3.66% to HK$4.875; China Life Insurance (ASX: 02628) slid 2.88% to HK$22.94; and China Pacific Insurance (Group) (ASX: 02601) declined 1.74% to HK$26.
On the news front, the National Financial Regulatory Administration recently issued a notice on conducting a comprehensive review and rectification of "quick-return" products, launching a full-scale review and rectification of "quick-return" endowment insurance products. Donghai Securities noted that strengthened regulation during the "good start" period aims to eliminate liquidity risks arising from "long-term policies treated as short-term." In the short term, the "good start" campaign may face pressure, but over the long term it will improve insurers' liability duration structure and the stability of investment-side allocation.
Huachuang Securities released a research report stating that the sector is gradually trading on third-quarter earnings expectations, and some high-beta insurers are expected to face clear single-quarter earnings pressure, while the sector as a whole is also affected by the market pullback. On the liability side, under the impact of a high base in the third quarter plus the new rules of Bancassurance Document No. 65, new premiums are expected to contract significantly, dragging down NBV growth. In the property insurance segment, under strong El Niño conditions, major disaster claims are expected to rise year-on-year. The "unified reporting and execution" initiative is expected to bring expense optimization but will not fully offset the negative impact on the claims side.
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