Open Securities: Improvement in the growth rate of personal insurance in August is expected to benefit from the release of suspended demand. The outlook for the liability side for the whole year is optimistic.

Open Source Securities released a research report stating that the debt side of listed insurance companies in the first half of 2024 exceeded expectations, with individual insurance manpower stabilizing and production capacity increasing, new single premium maintaining good growth, value contribution of bank insurance channels significantly increasing, and NBV and EV both achieving high-quality growth. Among them, 4 listed insurance companies saw a high increase in premiums in August, and are expected to benefit from the continued high increase in renewal premiums. At the same time, in August, with a low base period, listed insurance companies seized the opportunity to adjust pricing rates, releasing some new demand ahead of time. Looking ahead to the second half of the year, the decline in new single premium base numbers will support new single growth through individual insurance channels, and the comprehensive implementation of bank-insurance convergence and the adjustment of settlement interest rates will help improve the value rate. The NBV is expected to achieve high-quality growth for the whole year. The main points of Open Source Securities are as follows: Improved growth rate of life insurance in August is expected to benefit from the release of suspended demand, and the outlook for the debt side for the whole year is optimistic. From January to August 2024: the total premium of 5 listed insurance companies increased by 5.9% year-on-year, an increase compared to 3.1% in July. Among them, Ping An Insurance +8.9%, The People's Insurance +7.7%, China Life Insurance +5.9%, New China Life Insurance +1.9%, China Pacific Insurance +1.5%. Ping An Insurance and China Life Insurance are expected to benefit from the increase in the production capacity of new individual insurance and continued high growth in renewals, while China Pacific Insurance and New China Life Insurance have recovered positive growth in total premiums year-on-year. In August 2024: the total premium of life insurance of 5 listed insurance companies was 136.3 billion yuan, a year-on-year increase of 47.5%, an increase compared to 38.7% in July. Among them: The People's Insurance +95%, Ping An Insurance +36%, New China Life Insurance +122%, China Life Insurance +29%, China Pacific Insurance +53%, 4 listed insurance companies saw a high increase in premiums in August, and are expected to benefit from the continued high increase in renewal premiums. At the same time, in August, with a low base period, listed insurance companies seized the opportunity to adjust pricing rates, releasing some new demand ahead of time. Outlook: The high-quality growth of the debt side for the whole year is expected to continue. With the debt side of listed insurance companies exceeding expectations in the first half of 2024, new single premiums have maintained good growth under the stabilization of individual insurance manpower and the increase in production capacity, the value contribution of bank-insurance channels has significantly increased, and both NBV and EV have achieved high-quality growth. Looking ahead, the decline in new single premium base numbers will support new single growth through individual insurance channels in the second half of the year, the comprehensive implementation of bank-insurance convergence and the adjustment of settlement interest rates will help improve the value rate, and the NBV is expected to achieve high-quality growth for the whole year. The People's Insurance saw a high year-on-year increase in first-year premium in August, mainly due to seizing the opportunity to sell due to a low base period. The life insurance sector of The People's Insurance saw a long-term first-year premium of 52.81 billion yuan in the first 8 months of 2024, a year-on-year decrease of 6.4%, an improvement compared to 8.4% in July. In August, the long-term first-year premium was 5.7 billion yuan, a year-on-year increase of 401%, a significant improvement compared to July. Among them, the lump sum payment was 0.81 billion yuan, a year-on-year increase of 64.9%, and the first-year period payment was 49.4 billion yuan, a year-on-year increase of 663%. The new single period payment saw a high increase year-on-year due to the low base period, and the company's individual insurance channel production capacity is expected to continue to increase. Renewal period payment was 3.43 billion yuan, a year-on-year decrease of 3.9%. The growth rate of property insurance premiums continued to improve in August 2024, and PICC's auto insurance business continued to recover month by month. In August 2024, the premium income of property insurance of 4 listed insurance companies was 81 billion yuan, a year-on-year increase of 9.4%, an increase compared to 2.4% in July, with year-on-year changes for each company in July as follows: ZA ONLINE +14.2% (July +9.6%), PICC +7.0% (July +7.6%), Ping An Property Insurance +12.5% (July +6.6%), and Taiping Property Insurance +9.5% (July +6.0%). In August 2024, the year-on-year changes in sales of passenger cars and new energy vehicles were -4.0% and +30.0% respectively, with cumulative growth rates of +3.3% and +30.9% respectively. In August, PICC's auto insurance premium increased by 4.4% year-on-year, an increase compared to 0.5% in July, with a cumulative year-on-year growth rate of 3.0% in August, an increase compared to 0.3% in July. Non-auto insurance saw a year-on-year decrease of 4.3% in August, a decrease compared to 12.1% in July, with a cumulative year-on-year decrease of 3.4% in August, a decrease compared to 0.1% in July. Among them, monthly changes in health insurance/agricultural insurance/liability insurance/commercial insurance/credit guarantee insurance/freight insurance were +30.7%/-9.7%/+22.9%/-2.7%/+27.7%/-1.4%, with health insurance continuing to see positive year-on-year growth. The outlook for the whole year is positive, with the debt side showing good prospects and attention being paid to catalyzing the asset side, continuing optimism for the life insurance sector. Insurance interim reports have exceeded expectations on both the debt and asset sides, and looking ahead, the outlook for the debt side is optimistic. Firstly, the supply of dividend-type products (increasing the proportion of interest-variable products in response to the background of interest rate margin losses) and demand (continuously improving cost-effectiveness after the adjustment of interest rates) are positive, expected to replace traditional insurance as a new driver of growth in new business. Secondly, the relaxation of restrictions on 1+3 network cooperation is beneficial for further expanding the bank-insurance channels of leading insurance companies, and the bank-insurance channels are expected to continue to grow with high quality. Additionally, the comprehensive deepening of the convergence of bank and insurance operations and the adjustment of product structures are expected to further support the value rate. In the medium to long term, the debt side of the life insurance sector is showing good prospects, with continued improvement in operating quality, EV benefiting from operational and investment deviation improvements, expansion of growth rates, CSM positive growth benefiting from subsequent operational profit release, and stable dividends. Currently, valuations and institutional holdings in the life insurance sector are still at low levels, and attention is focused on the long-term bond interest rates on the asset side, real estate policies, and equities elasticity, with continued optimism for excess returns in the life insurance sector. Risk warning: Economic recovery is slower than expected; Insurance product demand recovery is slower than expected.