Guotai Haitong: Trading factors suppress valuation, recommend increasing holdings in insurance sector.

Guotai Haitong released a research report stating that, in terms of liabilities, it is expected that strong savings demand will drive the continued growth of NBV of listed insurance companies in 2026, and the profitability of property insurance underwriting will continue to improve. In terms of investments, it is expected that insurance companies will steadily increase their equity asset allocation, improve the duration gap of assets and liabilities, and drive steady profit growth. The industry maintains a "buy" rating, with stock recommendations for Ping An Insurance (02318), China Pacific Insurance (02601), New China Life Insurance (01336), PICC P&C (02328), China Life Insurance (02628), and PICC GROUP (01339). The main points of Guotai Haitong are as follows: Short-term valuation pressure does not change profit improvement expectations From March 2nd to March 13th, the Shenzhen Insurance Index (801194.SI) fell from 1401.76 to 1369.48, with a decrease of -2.30% in the period. During the same period, the Shanghai Shenzhen 300 index had a change of -1.26%, the Shanghai Composite Index had a change of -2.08%, and the Hang Seng Index had a change of -2.28%. The bank believes that concerns at the trading level (more likely worries than actual trading pressure) are the core factors leading to the deviation between corporate profit improvement and stock prices. With stable interest rates and the assumption of a slow bull market in equities, the certainty of profit improvement in the insurance sector is high, and undervalued insurance stocks are expected to see a valuation recovery. Policy work report guides high-quality development of the insurance industry, new single premium in the bancassurance channel is booming, and multiple insurance companies are orderly promoting capital replenishment this year 1) The government work report for 26 mentions insurance multiple times, spanning key areas such as people's livelihood protection, rural revitalization, and risk prevention, with a clear goal of high-quality development by improving quality and expanding coverage. 2) According to CaiXin's report, in February 26, a total of 79 life insurance companies in China recorded new single premiums of 69 billion yuan through bancassurance channels, a year-on-year increase of 6.9%; the cumulative new single premiums for January-February reached 281.4 billion yuan, a year-on-year increase of 21.7%. 3) The People's Bank of China released the fourth-quarter financial balance sheet of financial institutions in 25, with a total assets of 41.31 trillion yuan in the insurance industry, a year-on-year growth of 15.1%. 4) Insurance institutions such as New China Life Insurance, Zhong Hui Life Insurance, and China Life Insurance have invested in the Beijing-Tianjin-Hebei Venture Capital Guidance Fund Limited Partnership. 5) In the year, Ping An Life Insurance, Dajia Property Insurance, and other 6 insurance institutions have pushed for increased capital, with a total scale exceeding 5 billion yuan. Taiping Life's new management team is in place, and Zhongan Insurance has launched the "Zhongmin Bao High-End Medical Insurance 2026" product 1) Taiping Life announced in a temporary disclosure report that the China Banking and Insurance Regulatory Commission has approved Wang Xuzi as the company's general manager. 2) Zhongan Insurance has launched the "Zhongmin Bao High-End Medical Insurance 2026", further improving the high-end medical illness insurance protection system. Risk factors: Decline in long-term interest rates; volatility in equity markets; improvement in liability costs falling short of expectations.