Guotai Haitong: The financial stability of the insurance industry is expected to remain solid, but the trading structure is still likely to be a factor causing price fluctuations.

Guotai Haitong released a research report stating that insurance industry premiums have steadily increased from January to April, with insurance companies accelerating capital replenishment within the year. They predict that the trading structure will continue to be a disruptive factor causing a decline in the insurance sector, but the capital structure remains stable. The bank expects the new business value of life insurance and the underwriting profit of property insurance to remain steady, with capital warming in Q2 driving improvements on the asset side. They recommend paying attention to opportunities for valuation recovery in the insurance sector and maintain a "hold" rating for the industry. Guotai Haitong's main points are as follows: The trading structure remains a disruptive factor causing a decline in the insurance sector From May 22 to June 5, the Shenwan Insurance Index (801194.SI) fell from 1180.12 to 1162.00, a decrease of -1.54% in that period. During the same period, the Shanghai and Shenzhen 300 Index fluctuated by -0.58%, the Shanghai Composite Index by -2.07%, and the Hang Seng Index by -2.52%. The bank predicts that the fundamentals of insurance companies in the second quarter may show certain differentiation, with the core focus on equity investments on the asset side and an expected stable and fluctuating phase on the liability side. Stock prices will need further observation of the impact of trading structure factors, which is expected to be an important factor affecting stock prices. From January to April, life insurance premiums continued to be prosperous while the growth rate of property insurance was under pressure. Eight insurance companies have already issued capital replenishment bonds within the year. 1) From January to April 26, the cumulative premium income of the insurance industry was 2,732.9 billion RMB, a year-on-year increase of 5.3%. The cumulative premium income of life insurance industry from January to April was 2,070 billion RMB, a year-on-year increase of 6.3%, with life insurance, health insurance, and accident insurance amounting to 1,728.9 billion RMB, 327.5 billion RMB, and 13.5 billion RMB respectively, year-on-year increases of 7.6%, 0.6%, and -11.3%; the property insurance industry's cumulative premium income was 662.9 billion RMB, a year-on-year increase of 2.2%, with motor insurance and non-motor insurance premium income of 295.8 billion RMB and 367.1 billion RMB respectively, year-on-year changes of -0.3% and 4.3%. 2) As of May 25, eight insurance companies have issued capital replenishment bonds within the year, with a total scale exceeding 18 billion RMB, involving institutions such as CCB Prudential Life, China Taiping, Great Wall Life, Sunshine Life, and China Post Life. At the same time, in May, Taikang Pension, Sino-Dutch Life, and Union Global Life were approved to issue capital bonds. 3) On May 26th, due to heavy rain and flooding disasters in Hubei, Hunan, Guizhou, Guangdong, Guangxi, Jiangxi, Chongqing, and 7 other provinces (autonomous regions, municipalities directly under the central government), the insurance industry received a total of 42,000 reported cases, estimated losses of 910 million RMB, and payouts and prepayments of 260 million RMB. Ping An Life continues to hold China Life Insurance H-shares, and the President of PICC P&C receives regulatory approval for appointment 1) Ping An Asset Management, on behalf of Ping An Life, invested in China Life Insurance H-shares stocks, reaching 15% of China Life Insurance H-shares and triggering a takeover bid; Great Wall Life increased their holdings in DYNAGREEN ENV, with the latest ownership ratio at 28.99%. 2) The China Banking and Insurance Regulatory Commission has approved Mr. Zhang Daoming to assume the position of President of the company. 3) Taikang Pension plans to publicly issue capital bonds without a fixed term of no more than 2 billion RMB; Dinghe P&C's registered capital increased from approximately 4.64 billion RMB to 6 billion RMB; CCB Prudential issued 4 billion RMB of perpetual capital bonds (second issue). 4) New China Life Insurance announced the distribution of a final dividend of 2.06 RMB per share on August 7th. Risk warnings: Decline in long-term interest rates; volatility in the equity market; improvement in the cost of liabilities falls short of expectations.