Founder: The risk of spread in insurance interest rate differentials is relieved, policy sales are picking up and valuation is expected to gradually recover towards 1x PEV.

Founder published a research report stating that the improvement in both ends of the insurance industry's assets and liabilities is synchronized, and the good start is expected to continue the stable growth trend, with valuation expected to continue to recover. Stable interest rates and improved equities will drive the stability and rebound of investment return rates; under regulatory policies such as the integration of insurance and banking and the scheduled reduction in interest rates, the cost of liabilities can continue to be reduced, and interest rate risk is continuously alleviated. In addition, the significant flexibility of equities will further contribute to performance and valuation. The main points of Founder are as follows: Performance overview: Significant acceleration in net profit, improvement in net assets on a monthly basis The sequential growth rate of profits has accelerated significantly, and it is expected to remain stable in 4Q25. Profit growth rate ranking: China Life Insurance (+60.5%) > China Pacific Insurance Group Co., Ltd. Property and Casualty Insurance Company (+50.5%) > PICC Property and Casualty Co., Ltd. (+28.9%) > Ping An Insurance (Group) Company of China, Ltd. (+11.5%). Profit improvement and speed differentiation are expected due to differences in investment structure and investment flexibility; with a low base in 4Q25, profit growth rate is expected to remain stable. Improvement in net assets on a monthly basis: Benefiting from the contribution of rising interest rates, the effective release of insurance contract liabilities of listed insurance companies effectively hedged the pressure of bond depreciation, driving the acceleration of net assets on a monthly basis. The growth rate of net assets compared to the beginning of the year is ranked as follows: China Life Insurance (+22.8%) > PICC Property and Casualty Co., Ltd. (+12.4%) > Ping An Insurance (Group) Company of China, Ltd. (+6.2%) > China Pacific Insurance (Group) Company of China, Ltd. (+4.4%, positive compared to the beginning of the year) > Tai Ping Insurance Co., Ltd. (-2.5%). Stable growth in life insurance NBV, with growth expected to continue in 2026 Differentiation in NBV growth, with a trend of continued growth in 2026. PICC Property and Casualty Co., Ltd. (+31.2%) > Ping An Insurance (Group) Company of China, Ltd. (+46.2%) > China Life Insurance (+41.8%) > China Pacific Insurance Group Co., Ltd. (+50.8%) > Tai Ping Insurance Co., Ltd. (+18%), with marginal speed increase for China Life Insurance, Ping An Insurance, and PICC Property and Casualty Co., Ltd., and a decline in speed for China Pacific Insurance Group Co., Ltd. and Tai Ping Insurance Co., Ltd. is expected due to base reasons. NBV is expected to continue to grow in 2026. On one hand, the competitiveness of insurance products has increased and demand continues to rise; on the other hand, the continuous boost of NBV level due to the scheduled reduction in interest rates is expected to drive steady growth in NBV. Differential growth in property insurance premiums, with all CORs improving Differential growth in insurance premiums: Ping An Insurance (Group) Company of China, Ltd. (yoy +7.1%) > PICC Property and Casualty Co., Ltd. (yoy +3.5%) > Tai Ping Insurance Co., Ltd. (yoy +0.1%), the main reason for the difference in growth rates is the pace of risk clearing and base differences in each household. All CORs have improved: PICC Property and Casualty Co., Ltd. (96.1%, yoy -2.1pct) < Ping An Insurance (Group) Company of China, Ltd. (97.0%, yoy -0.8pct) < Tai Ping Insurance Co., Ltd. (97.6%, yoy -1pct), the main reason for COR improvement is the improvement in major disasters, the contribution of motor insurance integration, and with the full implementation of non-motor insurance integration, COR is expected to remain at a low level. Overall investment return rates are generally rising, with sufficient investment flexibility The overall investment return rate has increased year-on-year, but the comprehensive investment return rate has decreased. Due to the decline in interest rates leading to bond depreciation, China Pacific Insurance Group Co., Ltd. Property and Casualty Insurance Company's comprehensive investment return rate decreased by 1.4% to 6.7% (annualized); however, the total investment return rate has improved due to the year-on-year increase in equity investment returns. The ranking of the annualized total investment return rate is as follows: PICC Property and Casualty Co., Ltd. (8.6%) > China Life Insurance (8.56%) > Ping An Insurance (7.2%) > Tai Ping Insurance Co., Ltd. (6.9%). Despite the continued focus on OCI (high dividend allocation), listed insurance companies are actively seizing opportunities in structured investments, continuous entry of long-term funds into the market, and sufficient equity flexibility, which are expected to continue to benefit from market growth. Risk warning: fluctuations in stock and bond markets, pressure on dividend insurance sales, and increased risk of major disasters.