GF SEC: Investment drives performance + New policy drives value. Third-quarter performance of insurance companies exceeds expectations across the board.

GF SEC released a research report stating that the net profit growth rate attributable to the parent company of listed insurance companies in the first three quarters of 2025 was China Life (60.5%) > New China (58.9%) > PICC P&C (50.5%) > Ping An (28.9%) > Taiping (19.3%) > Ping An (11.5%), achieving high growth in the single quarter. Looking ahead to the full year, with the steady increase in the equity market, some insurance companies have relatively low Q4 performance base numbers, and are expected to continue the high growth trend for the whole year. Looking ahead to 2026, the floating income of dividend insurance and the expansion of bank branches are expected to drive new business growth, improvement in investment yield differentials is expected to drive an increase in value rates, and the value is expected to maintain steady growth; the merger of non-auto insurance and new energy vehicle insurance pricing coefficients is expected to optimize the COR, and property insurance premiums are expected to maintain steady growth. GF SEC's main points are as follows: Profit: The upward trend in the equity market drives high investment performance growth, and the net profit in the single quarter of the third quarter exceeds expectations under a high base The growth rates of the net profit attributable to the parent company of listed insurance companies in the first three quarters of 2025 were China Life (60.5%) > New China (58.9%) > PICC P&C (50.5%) > Ping An (28.9%) > Taiping (19.3%) > Ping An (11.5%), achieving high growth in the single quarter: first, the equity market is on the rise, and insurance companies have increased their equity allocation proportion and optimized their investment structure, thereby greatly improving their investment performance, with China Life/New China/Taiping's annualized total investment return rates increasing by +1.8pct/+0.7pct/+1.0pct respectively year on year; second, some insurance companies have benefited from the reversal of loss-making policies and positive operational deviations driving improvements in insurance service performance, with China Life/Taiping growing by 210% and 54% respectively year on year in the third quarter. Among them, China Life and New China have higher growth rates than major competitors, mainly due to a higher proportion of FVTPL stocks combined with a higher proportion of growth asset allocation, and China Life has also benefited from the increase in interest rates leading to the return of insurance service fees. PICC P&C has benefited from improvements in underwriting profits and investment income, while Taiping's slightly lower growth rate compared to its counterparts is due to one-time impacts related to consolidation and tax rate increases. Looking ahead to the full year, with the steady rise in the equity market, and some insurance companies having Q4 performance base numbers relatively low, it is expected to continue the trend of high growth for the whole year. Net assets: Continuously rising on a quarter-on-quarter basis The quarter-on-quarter growth rates of net assets attributable to the parent company in the third quarter of 2025 were as follows: New China (20.5%) > China Life (19.5%) > Ping An (10.2%) > Taiping (4.5%) > Taiping (0.8%). Life insurance: Suspension of sales drives high growth in new business in Q3, pushing the overall growth of NBV The year-to-date growth rates of NBV in the first three quarters of 2025 were New China (non-comparable caliber year-on-year +50.8%), People's Life (+76.6%), Ping An (+46.2%), China Life (+41.8%), Taiping (+31.2%), China Life, Ping An, and People's Life having an expanding growth rate compared to the interim report, mainly due to the switch in fixed interest rates driving high growth in FYP year on year in the single quarter, with China Life (52.5%) > People's Life (46%) > Ping An (21.1%) > Taiping (-1.8%) > New China (-3.7%). In addition, the manpower team is showing a positive trend, with China Life and Ping An's agency scale increasing by +2.5% and 4.1% respectively quarter-on-quarter in Q3. Looking ahead to 2026, the floating income of dividend insurance and the expansion of bank branches are expected to drive new business growth, improvement in profit commission differentials is expected to drive an increase in value rates, and the value is expected to maintain steady growth in 2026. Property insurance: Reduction in major disasters coupled with the merger of report and operation drive continuous improvement in COR Volume: The growth rates of premiums in the first three quarters were Ping An Property (7.1%) > People's Property (3.5%) > Taiping Property (0.1%); Price: COR was People's Property (96.1%) < Ping An Property (97.0%) < Taiping Property (97.6%), with year-on-year changes of -2.1pct, -0.8pct, and -1.1pct respectively, mainly benefiting from the reduction of losses due to natural disasters and the promotion of report and operation mergers. Looking ahead to 2026, the merger of non-auto insurance reports and the opening of pricing coefficients for new energy vehicle insurance are expected to optimize the COR, and property insurance premiums are expected to maintain steady growth. Investment recommendations Third quarter performance exceeded expectations, and in the medium to long term, insurance companies are expected to see marginal improvements in profit commissions. It is recommended to actively focus on the insurance sector. Specific stock recommendations include New China Life Insurance (601336.SH, 01336), China Life Insurance (601628.SH, 02628), China Pacific Insurance (601601.SH, 02601), CHINA TAIPING (00966), Ping An Insurance (601318.SH, 02318), The People's Insurance (601319.SH)/PICC GROUP (01339), PICC P&C (02328), AIA (01299). Risk warning Fluctuations in the equity market, decline in long-term interest rates, frequent natural disasters.