China Merchants Securities Co., Ltd. (CMSC) released a research report indicating that from January to June, the decline in life insurance company premiums slowed, while demand for medium- to long-term savings remained strong. For property and casualty insurers, premium growth was stable, and auto insurance returned to positive growth. The Insurance Association of China recently published the latest research value for the life insurance product guaranteed rate at 1.94%, marking a second consecutive quarter of recovery. The guaranteed rate for life insurance products is expected to remain stable within the year, and the demand for resident wealth allocation is likely to support long-term growth on the liability side. Currently, the valuation and holdings of the insurance sector are at low levels, leading to a maintained recommendation rating for the industry.
Key Points from CMSC:
Life Insurance Companies: Premium Decline Slows, Medium- to Long-term Savings Demand Remains Strong
From January to June, cumulative premium income for life insurance companies reached 2,871.6 billion yuan, a year-on-year increase of 3.6% (previous: +5.0%), with growth slowing month by month. On a monthly basis, June premium income for life insurers was 478.8 billion yuan, down 2.5% year-on-year (previous: +3.0%), with the decline narrowing slightly. Within this, life insurance premium income was 405.2 billion yuan, down 2.1% year-on-year, serving as the primary support for the industry's premiums. Health insurance premium income was 70.6 billion yuan, down 3.9% year-on-year, and accident insurance premium income was 3.0 billion yuan, down 8.9% year-on-year. The firm estimates that due to the high base in the same period last year and the implementation of the new "reporting and execution consistency" regulations for the bancassurance channel, short-term growth in new policy premiums may still face pressure. However, the long-term trend of funds shifting from bank deposits is expected to continue, and the industry's growth momentum has not been weakened.
Property and Casualty Insurance Companies: Premium Growth Stable, Auto Insurance Returns to Positive Growth
From January to June, cumulative premium income for property and casualty insurance companies was 984.6 billion yuan, a year-on-year increase of 2.1% (previous: +2.2%), continuing a trend of low growth. On a monthly basis, June premium income for P&C insurers was 186.7 billion yuan, up 1.5% year-on-year (previous: +2.3%). Within this, auto insurance premium income was 79.3 billion yuan, up 1.0% year-on-year (previous: +0.0%), with growth rebounding month-on-month, mainly benefiting from the recovery in auto sales. New energy vehicles, in particular, were a key growth driver. According to data from the China Association of Automobile Manufacturers, China's auto production and sales in June decreased by 1.2% and 3.2% year-on-year, respectively, while production and sales of new energy vehicles increased by 26.0% and 23.6% year-on-year, respectively. Non-auto insurance premium income in June was 107.4 billion yuan, up 1.9% year-on-year (previous: +5.3%), with health insurance, liability insurance, and accident insurance being the main contributors, posting year-on-year growth rates of 20.7%, 5.4%, and 5.2%, respectively. The full implementation of the "reporting and execution consistency" regulations for non-auto insurance in the second half of the year is expected to lead to institutional reductions in expense ratios, but close attention must be paid to the impact of major catastrophes on the combined operating ratio (COR).
Industry Overview: Premium Growth Slows Month by Month, Asset Performance Remains Stable
From January to June, cumulative premium income for the insurance industry was 3,856.2 billion yuan, a year-on-year increase of 3.2% (previous: +4.3%), with growth continuing to slow. In June alone, premium income was 665.5 billion yuan, down 1.4% year-on-year (previous: -1.5%). As of the end of June, the total assets of the insurance industry were 43,857.3 billion yuan, up 6.2% from the beginning of the year. Net assets were 4,070.3 billion yuan, up 11.1% from the beginning of the year.
Risk Warnings: Economic growth falling short of expectations; regulatory tightening; declining product appeal; capital market volatility; falling interest rates; increased frequency of major catastrophes.
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