Industrial Securities Co.,Ltd. has released a research report stating that against the backdrop of strong expansion in the bancassurance channel, SUNSHINE INS (06963) is well-positioned to seize the opportunities presented by the rapid development of bancassurance. This is due to its extensive existing bancassurance network, differentiated services, and higher per capita productivity, which are expected to support overall value growth. The property and casualty insurance segment is proactively clearing high-risk business, leading to a continuous improvement in the underwriting profitability of its core operations. In terms of investment strategy, while maintaining a steady overall style, the company has appropriately increased its allocation to TPL assets. Under a "slow bull" market scenario, this move is anticipated to significantly enhance the short-term flexibility of its investment performance. The current price-to-embedded value (PEV) ratio is only 0.27, placing it at the 23rd historical percentile, indicating a relatively high cost-performance ratio for investment.
Main Perspectives from Industrial Securities
Overview: Broadly in Line with Expectations
1) Net profit attributable to shareholders for 2025 increased by 15.7% year-on-year to RMB 6.31 billion, primarily influenced by income tax effects, aligning with expectations.
2) New business value (NBV) grew by 48.2% year-on-year, driven by new premium growth, meeting expectations. The NBV margin increased slightly by 0.1 percentage points year-on-year to 16.9%.
3) The group's embedded value increased by 4.3% compared to the beginning of the year, with growth slowing due to negative contributions from investment return variances and a high base in the same period last year.
4) The combined operating ratio increased by 2.4 percentage points year-on-year to 102.1%. Excluding surety insurance, the COR was 98.9%.
5) The dividend per share was RMB 0.19, flat year-on-year, in line with expectations.
Life Insurance Bancassurance Contribution Continues to Rise, Agent Quality Steadily Improves
1) Bancassurance and individual agent channel NBV increased by 64.6% and 18.5% year-on-year, respectively. The contribution share of bancassurance NBV rose by 6.1 percentage points year-on-year to 61.8%, becoming the primary driver of value growth.
2) New premium income increased by 47.3% year-on-year, with bancassurance new premiums surging by 69.0% year-on-year, driving the overall growth in new premiums.
3) The quality of the agent force improved, with per capita productivity of the traditional force reaching RMB 22,000, while the elite force's per capita productivity was more than double that of the traditional force, indicating the deepening of the "One Body, Two Wings" strategy.
4) Business quality showed steady improvement, with the 13-month and 25-month policy persistency rates increasing by 0.2 and 3.7 percentage points year-on-year to 97.1% and 95.5%, respectively.
P&C Insurance Proactively Adjusts Business Structure, Core Business Underwriting Profit Improves
1) Original premium income for P&C insurance increased by 0.1% year-on-year, with the contribution of non-auto insurance continuing to rise, its share increasing by 1.9 percentage points year-on-year to 46.1%.
2) The COR increased by 2.4 percentage points year-on-year to 102.1%, mainly attributed to the company's decision to halt new financing-related surety insurance business and make prudent reserve provisions, leading to a 30.0 percentage point year-on-year increase in the surety insurance COR to 129.0%. Excluding surety insurance, the COR decreased by 1.0 percentage points year-on-year to 98.9%, achieving an underwriting profit of RMB 490 million.
3) The auto insurance COR decreased by 0.9 percentage points year-on-year to 98.2%, which is estimated to be primarily due to improvements in the expense ratio.
Increased Allocation to TPL Assets, Investment Performance Strong Amid Favorable Equity Market
1) Total investment assets at the end of 2025 increased by 16.7% compared to the beginning of the year.
2) The proportion of equity assets increased by 1.4 percentage points year-on-year to 21.4%, with the share of stocks and equity funds rising by 1.6 percentage points year-on-year to 14.9%.
3) The investment strategy was marginally optimized. At the end of 2025, OCI stocks accounted for 68.1% of total stock holdings, mainly as the company moderately realized gains from early-stage, high-appreciation OCI stock investments in recent years, while marginally increasing allocations to TPL assets to enhance the flexibility of investment returns.
4) The estimated full-year price appreciation for OCI equity instrument investments was approximately +14.1%.
Risk Warnings
Significant decline in long-term interest rates; substantial pullback in the equity market; new premium sales falling significantly short of expectations.
Comments