Morgan Stanley: Maintains positive outlook on insurance stocks' full-year performance, focusing on early next year's strong sales performance.

Morgan Stanley released a research report stating that the third quarter financial results of the insurance companies covered were impressive, with AIA (01299) and Ping An Insurance (02318) outperforming expectations in terms of net profit and life insurance sales growth. The firm maintains a positive outlook on the overall performance of the insurance industry for the year and sees the sales performance of the first quarter of next year as a key driving factor that needs to be closely monitored. The report points out that, due to improvements in the stock market and higher equity allocation, major players in the industry have achieved exceptional quarterly profit growth on a high base, but this was largely anticipated as most insurance companies have already announced positive results. The annualized total investment return rate exceeded 6%, while the annualized net investment return rate declined to around 3.5%. The trend in book value is encouraging, with Ping An Insurance and China Pacific Insurance (02601) recording quarterly post-tax operating profit growth of 9% and 8% respectively. However, industry capital levels have declined, affected by the continued decrease in risk discount rates and increasing equity risk exposure, although the capital position remains relatively satisfactory. The report also mentions that life insurance sales remained strong in the quarter, driven by strong growth in bancassurance sales and demand ahead of the adjustment of insurance company pricing rates. Most companies saw improvement in both annualized premium income and profit margin, accelerated growth in new business value, stable agent force, continuous improvement in business quality, and an increasing percentage of dividend-type products. Property and casualty insurance and catastrophe insurance showed broad improvement in the first three quarters, with the comprehensive cost ratio of most insurers declining by 0.5 to 2.1 percentage points to a healthy level of 96.1% to 97.6%.