According to reports, The Pacific Securities Co., Ltd. has reiterated its "Buy" rating for PICC P&C (02328), forecasting the company's operating revenue to reach ¥530.72 billion, ¥565.11 billion, and ¥602.32 billion for the years 2025-2027. The net profit attributable to shareholders is expected to be ¥40.15 billion, ¥43.93 billion, and ¥48.46 billion, with net asset per share projected at ¥12.50, ¥13.53, and ¥14.66, respectively. The company reported strong performance in the first half of the year, driven by rapid growth in profits from both underwriting and investment. With the ongoing deepening of the "report and operate as one" policy, the competitive landscape of the industry is expected to optimize further, solidifying the company's leading position.
Event: PICC P&C has released its 2025 mid-year report, showing that in H1 2025, the company achieved original insurance premium income of ¥323.28 billion, a year-on-year growth of 3.6%; realized insurance service income of ¥249.04 billion, a year-on-year increase of 5.6%; and reported net profit attributable to shareholders of ¥24.45 billion, a year-on-year surge of 32.3%. The company plans to distribute a mid-term dividend of ¥0.24 per share.
Key insights from The Pacific Securities include:
1. Steady growth in premiums and continued optimization of channel structure: The company’s original premium income grew by 3.6% year-on-year, maintaining a leading market share of 33.5%. Premium income from auto insurance rose by 3.4% to ¥144.07 billion, while non-auto segments like health insurance (+7.9%) and corporate property insurance (+5.7%) showed rapid growth, though agricultural insurance saw a slight decline of 3.9% year-on-year due to policy pacing. The significance of direct sales channels continues to rise, with premium income increasing by 11.3% year-on-year, accounting for 43.5% of the total, up by 3 percentage points. Meanwhile, the proportion of agency channels has declined, reflecting the company’s strategic adjustments in channel transformation and cost efficiency.
2. Improvement in underwriting profits and effective cost control: In the first half of 2025, the company registered a combined ratio (COR) of 94.8%, improving by 1.4 percentage points year-on-year, marking the best interim figure in nearly a decade. The improvement in the COR is primarily driven by the cost side, with a significant reduction of 3.1 percentage points in the total expense ratio to 23.0%. However, the combined loss ratio saw an increase of 1.7 percentage points to 71.8% due to changes in the business structure. Auto insurance COR decreased by 2.2 percentage points to 94.2%, yielding an underwriting profit of ¥8.73 billion, a remarkable growth of 67.7%, primarily sourced from this segment. Despite the increased claims ratio year-on-year due to a higher proportion of new energy vehicles and rising compensation standards, stringent cost control led to a substantial decrease of 4.1 percentage points in the expense ratio, enhancing business profitability.
3. Significant growth in investment income and proactive equity asset allocation: In H1 2025, the company achieved total investment income of ¥17.26 billion, reflecting a year-on-year increase of 26.6%, with an annualized total investment return rate of 2.6%, up by 0.2 percentage points. The growth in investment income is attributed to the company’s effective grasp of the structural dynamics within the A-share market, bolstered by flexible trading strategies that enriched equity investment returns and enhanced active management to improve bond spread income. The company has adopted a more proactive approach to asset allocation, concluding the reporting period with equity investment assets totaling ¥186.05 billion, accounting for 26.1% of total investment assets, an increase of 1 percentage point from the beginning of the year, including a stock allocation of ¥65.32 billion, up 1.9 percentage points to 9.2%.
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