Guotai Haitong: Expected acceleration of profit growth for the third quarter of 2025 in the insurance industry, driven by multiple channels leading to high growth in new business value.

Guotai Haitong released a research report stating that the overall equity market trend was positive in the third quarter of 2025, combined with insurance companies optimizing their asset structure to enhance equity asset allocation. It is expected that investment returns will significantly boost, and it is forecasted that the net profit of listed insurance companies in the first three quarters of 2025 will continue to increase substantially year-on-year on the basis of high growth in the same period of 2024, with further acceleration compared to the first half of 2025. In the period from January to August 2025, life insurance premiums grew well, benefiting from the period before the adjustment of pricing interest rates when listed insurance companies concentrated on selling new policies, and the bancassurance channel increasingly becoming an important source of value growth. Regarding property insurance, it is expected that the comprehensive reform of car insurance and the trend of non-car insurance "combined reporting" will gradually shift the industry's premium growth from pursuing scale and speed to pursuing quality and efficiency. Key points from Guotai Haitong: - Investment returns continue to improve, with net profit growth accelerating in the first three quarters of 2025 and a quarter-on-quarter improvement in net assets. - The equity market trend was positive in the third quarter of 2025, and with insurance companies optimizing their asset structure, investment returns are expected to increase significantly. It is forecasted that the net profit of listed insurance companies in the first three quarters of 2025 will continue to see substantial year-on-year growth based on the high growth in the same period of 2024, with further acceleration compared to the first half of 2025. - Due to the improvement in net profit contribution, the assessment interest rate of liabilities, and the optimization of asset-liability management, it is expected that the net assets of listed insurance companies will improve quarter-on-quarter. The predicted changes in net assets since the beginning of the year are as follows: PICC P&C (+11.2%), The People's Insurance (+8.5%), China Life Insurance (+3.4%), Ping An Insurance (+2.5%), China Pacific Insurance (-1.2%), New China Life Insurance (-6.0%). - Supply and demand are synchronized, with multiple channels driving high growth in life insurance NBV. - Life insurance premiums grew well from January to August 2025, benefiting from listed insurance companies seizing the opportunity before the price interest rate adjustment to drive concentrated sales of new policies. The bancassurance channel is increasingly becoming an important source of value growth. It is predicted that multiple channels will collectively drive good growth in the value of listed insurance companies, with the forecasted growth rates of NBV for the first three quarters of 2025 as follows: - PICC P&C (96.1%, -2.1pt year on year), Ping An Property Insurance (96.6%, -1.2pt), Taiping Property Insurance (97.1%, -1.6pt). - Investment suggestions: - On the liability side, it is expected that the NBV of listed insurance companies will continue to grow rapidly due to multiple channels, while property insurance will benefit from strict expense management to promote continued improvement in underwriting profitability. On the investment side, it is expected that listed insurance companies will benefit from the positive equity market trend and optimized asset allocation, leading to significant growth in investment returns, improving profits and net assets. The industry's "hold" rating is maintained. - In terms of individual stocks, it is recommended to hold New China Life Insurance, China Life Insurance, China Pacific Insurance, Ping An Insurance, PICC P&C, and The People's Insurance. - Risk warnings: - Decline in long-term interest rates. - Volatility in the equity market. - Customer demand not meeting expectations.