Guosen: Switching fixed interest rates, increasing demand for insurance configuration.

Guosen released a research report stating that since August, the life insurance industry has been gradually switching products, driving a rapid increase in short-term premiums in the industry. With the continued switching of remaining products in September and the low base from last year, there is a positive outlook for the year-on-year increase in industry premium income. In addition, as the scale of premium income increases, it is favorable for insurance funds to allocate to high dividend (OCI equity) and long-term bond assets, which are relatively stable sources of incremental funds in the current market. It is recommended to pay attention to China Pacific Insurance (601601.SH) and China Life Insurance (601628.SH), which benefit from both assets and liabilities, and to maintain the "outperform the market" rating for these two insurers. "Speculative halts" activate short-term premium growth in the industry From January to August 2024, the five listed insurance companies on the A-share market achieved original insurance premium income of 2.1655 trillion yuan, a year-on-year increase of 5.6%. Influenced by the industry's planned interest rate switch, life insurance companies have increased their short-term sales efforts. Among them, Ping An Insurance, China Life Insurance, The People's Insurance, China Pacific Insurance, and New China Life Insurance saw year-on-year increases of 7.6%, 5.9%, 5.0%, 4.1%, and 1.9% in premium income in the first eight months, respectively. Recently, regulators have continued to guide the insurance industry to lower debt costs, reducing the interest rate risk under the current shortage of assets in insurance funds. As the only financial product in the market with medium to long-term liquidity attributes, savings-type insurance still has certain attractiveness, and "speculative halts" have activated short-term premium growth in the industry. Ordinary products switch interest rates as scheduled, increasing premium allocation demand for insurance funds Recently, in response to the policy of lowering interest rates, ordinary products in the life insurance industry completed the switch by the end of August, with the upper limit of the announced interest rate for newly filed ordinary insurance products being 2.5% (a decrease of 50bp). Looking at monthly premium income, listed insurers all achieved significant year-on-year increases. New China Life Insurance, PICC Life Insurance, Taiping Life Insurance, Ping An Life Insurance, and China Life Insurance saw monthly premium increases of 122%, 79%, 53%, 36%, and 29%, respectively. In September, dividend insurance and universal insurance will undergo product switching, favoring the continuation of premium growth in September. It is expected that the corresponding increase in premium will significantly increase the short-term asset allocation demand for insurance funds, along with factors such as the end of the quarter, with the core allocation direction possibly focusing on bonds and high dividend stocks measured at FVOCI. Property insurance premium growth picks up, with a significant year-on-year increase in monthly premium income As of the end of August, the "Big Three" collectively achieved property insurance premium income of 698.7 billion yuan, a year-on-year increase of 5.3%. Taiping Property Insurance, Ping An Property Insurance, and PICC Property Insurance saw year-on-year increases of 7.7%, 5.3%, and 4.3%, respectively. As of the end of July, PICC auto insurance and Taiping auto insurance businesses achieved year-on-year growth rates of 2.5% and 2.8%, respectively. Looking at monthly premium income, the three aforementioned insurers all achieved significant year-on-year improvements, with Ping An Property Insurance, Taiping Property Insurance, and PICC Property Insurance seeing year-on-year increases of 12.7%, 9.5%, and 7.0%, respectively. Since August, affected by frequent natural disasters and typhoons, the level of claims in the property insurance industry is expected to increase to some extent, but the overall risk level is manageable. The stability of the full-year COR of listed insurers is still promising. Risk warning: Market demand is lower than expected; agent reform is slower than expected; continuous volatility in the capital market; decline in long-term interest rates; stricter regulatory environment, etc.