Huachuang Securities: Base effect combined with policy adjustments leading to high growth in monthly life insurance premiums.

Huachuang Securities released a research report stating that driven by base effects and policy adjustments, the growth rate of personal insurance premiums in August showed a small peak on a monthly basis; the prosperity of property insurance has slightly increased, with PICC's car insurance premiums continuing to rise, expected to contribute mainly to underwriting profits, but the growth rate of agricultural insurance is still slightly lower than expected. Looking ahead to the second half of the year, the growth logic of NBV in personal insurance may have opportunities for both volume and price driving, as further interest rate cuts are expected to bring continued improvement in value rates. With a low base for new policies, positive growth in premiums is expected; in terms of property insurance, if there is no extreme weather interference in the second half of the year and considering the impact of typhoons in the background of Q3 last year, COR may improve year-on-year. The base effect on the investment side will further weaken. The main points of Huachuang Securities are as follows: Personal insurance business: Taiping and New Chinas cumulative premium growth rates for January-August have reversed, with a high increase in single-month premiums in August According to the latest disclosures by insurance companies, the personal insurance premiums and year-on-year growth rates of listed insurance companies from January to August 2024 are as follows: China Life Insurance 564.9 billion yuan, +5.9% year-on-year; Ping An 409.7 billion yuan, +8.9% year-on-year; Taiping 191.7 billion yuan, +1.5% year-on-year; New China 130.3 billion yuan, +1.9% year-on-year; PICC 133.5 billion yuan, +7.0% year-on-year. The order of personal insurance premium growth rates in January-August 2024 is as follows: Ping An > PICC > China Life > New China > Taiping. However, the premiums in August all increased year-on-year, with significant improvements in growth rates: China Life +29.0%, +20.7%; Ping An +36.0%, +18.8%; Taiping +53.0%, +65.8%; New China +122.0%, +110.7%; PICC +79.2%, +56.4%. Base effects combined with policy adjustments have led to a high level of prosperity in personal insurance premiums for August. In the same period last year, when the designated interest rate for insurance products was officially lowered to 3.0%, and affected by the overdraft of previous demand, 2023m8 insurance premiums for insurance companies saw a significant decline in growth rates. In August 2023, the year-on-year growth rates for China Life/Ping An/Taiping/New China were -10.3%/+1.5%/+3.4%/-6.8%, while PICC increased by 42.0% year-on-year, mainly due to the extremely low base brought about by the endowment insurance in August 2022. This year in August, aside from the low base, due to the further reduction of scheduled interest rates for traditional insurance, dividend insurance, and universal insurance in September/October, benefiting the short-term sales, the premiums of listed insurance companies all showed high growth in August, with a significant acceleration in growth rates. PICC: New policies are breaking out, while renewals are playing a stabilizing role. Cumulative premium growth rates have further expanded, with life insurance up 5.7% year-on-year and health insurance up 10.1% year-on-year. For life insurance, new policies for endowment insurance decreased by 10.3% year-on-year, with a 9.2% narrowing in month-on-month decline; in August, the year-on-year growth rate for new endowment insurance policies was +417.8%, benefiting significantly from the short-term sales during the period of interest rate adjustment. Renewal premiums increased by 23.3% year-on-year. Property insurance business: Listed insurance companies' premium growth rates are on the rise According to the latest disclosures by insurance companies, the cumulative property insurance premiums of listed insurance companies for January-August 2024 increased year-on-year as follows: PICC 382.2 billion yuan, +4.3%; Ping An 211.0 billion yuan, +5.3%; Taiping 142.2 billion yuan, +7.7%. The order of increase in property insurance premiums from January to August 2024 is Taiping > Ping An > PICC. In August, the property insurance premiums all increased, with Taiping showing an accelerated growth rate: PICC +7.0%, -0.6%; Ping An +12.5%, -6.1%; Taiping +9.5%, +3.5%. Growth rates in August: Ping An > Taiping > PICC. People's Insurance Company of China (PICC) Property Insurance From a cumulative perspective, the overall growth rate increased by 0.3%, mainly contributed by car insurance/accident and health insurance/liability insurance/guarantee insurance, partially offset by the positive impact. Car insurance increased by 3.0% year-on-year, with a month-on-month increase of 0.2% on the basis of an increasing base. In August, there was still no apparent boost in demand for the automobile market, with a year-on-year decline of 5.0% in car sales. However, sales of new energy vehicles continued to show an upward trend, with a year-on-year increase of 30.0% in August, expected to constitute a significant increase in the field of car insurance. For non-car insurance, accident and health insurance/liability insurance increased by 7.2%/12.6% year-on-year, with month-on-month growth rates of 1.2%/1.1%, and a month-on-month increase in guarantee insurance of 3.3% to -8.3%; agricultural insurance/enterprise property insurance/freight insurance increased by 1.7%/2.4%/7.7% year-on-year, with month-on-month growth rates of -0.7%/-0.5%/-1.2%. From the perspective of August alone, car insurance growth rate increased by 0.5% to 4.4%, guarantee insurance growth rate reversed to 27.7%, agricultural insurance premiums decreased year-on-year (-9.7%), but increased month-on-month by 5.7%. Investment recommendation: Currently, we recommend China Pacific Insurance (601601.SH), a solid basic life insurance company, and PICC P&C (02328), a leading company with long-term investment value. Risk warning: Regulatory changes, reforms falling short of expectations, worsening natural disasters, continuous decline in long-term interest rates, and volatility in equity markets.