CICC has released a research report stating that the share prices of Chinese insurance companies have not followed the broader market recovery since April. Recent roadshows have provided significant insights, suggesting that the current short-term selling pressure may reverse, potentially leading the sector towards a valuation recovery. The firm is optimistic about high-quality companies and recommends CPIC (02601), Ping An Insurance (02318), China Life Insurance (02628), and PICC Group (02328).
Regarding the persistent decline in the insurance sector, CICC points out that the recent market style has been extreme, making insurance less attractive compared to sectors like technology, leading to outflows of funds chasing short-term relative returns. Furthermore, sustained selling by long-term shareholders such as China Securities Finance and related asset management plans in A-share insurance stocks has created additional funding pressure. Some investors have noted that insurance valuations have already recovered from previous lows, and the logic of high earnings volatility offers limited appeal for further upside at current levels.
The report indicates that the industry needs a long-term recovery narrative, not just trading on short-term earnings volatility. Over the past two years, sector share prices have been heavily influenced by short-term equity market return expectations, largely due to low valuations and significant potential for upward revisions in both stock market and insurance earnings. The firm previously believed at the end of 2025 that the sector would shift towards valuation recovery, but the rapid rise in early 2026 was again driven by high expectations for stock market gains. The recent underperformance of insurance stocks once again signals that the market is beginning to focus on the weakening upside potential as the earnings base rises, with high-volatility earnings struggling to command high valuations. The industry requires a more stable, long-term logic. Interest rates, liability costs, and expansion speed are the core factors influencing the long-term value of life insurance. The pace of liability expansion after considering costs is what ultimately supports higher valuations.
The firm states that a return to growth in the agency channel and protection-type insurance could be key to a deep valuation recovery. It maintains that the significance of savings-type insurance lies not only in achieving growth but also in attracting high-net-worth clients and high-quality agents, thereby helping the agency channel and protection-type products return to growth. These two factors are core to enabling insurance companies to achieve differentiated liability costs, enhance long-term profitability and shareholder returns, and attain valuations comparable to excellent international peers. Currently, being content with rapid growth in the bancassurance channel while neglecting investment and exploration in the agency channel and protection-type products would be counterproductive.
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