CMBI: China's life insurance industry returned to positive growth in September; maintains an outperform view on Chinese insurance stocks.

CMBI issued a research report stating that China's life insurance industry returned to positive premium growth in September, and the bank maintains an "outperform" view on Chinese insurance stocks. The National Financial Regulatory Administration released insurance industry premium data for January to September, showing total premiums rose slightly by 0.9% year-on-year to RMB5.26 trillion, with September single-month premiums up 6.6% year-on-year to RMB442 billion, reversing the decline of the past four months. Life insurance premiums rebounded 10.5% year-on-year in September to RMB291 billion, returning to positive growth, mainly driven by life insurance premiums which rose 14.6% year-on-year that month to RMB225 billion; the bank expects the fourth quarter to continue reflecting the recovery in life insurance sales, supported by the gradual launch of 2027 "good start" sales. The bank noted that property insurance premiums were roughly flat in September at RMB151 billion, with auto insurance and non-auto insurance down 0.2% and up 0.1% year-on-year respectively, slowing from August. Auto insurance was dragged by weak new passenger car sales, while non-auto insurance was affected by slower health insurance premium growth (up 3.2% year-on-year in September versus 28.9% in August). Direct economic losses from natural disasters fell 58% year-on-year, driving a 19% year-on-year decline in natural disaster claims in the third quarter, better than market estimates. The bank maintains its view that life insurance products are shifting toward participating/floating-return products, and expects full-year premium growth to slow to mid-to-low single digits in 2026; after accounting for weaker underwriting in the third quarter, new business value growth for listed life insurers is expected to drop to single digits in 2026. On property insurance, the bank maintains its forecast of low single-digit premium growth in 2026 and expects combined ratios of listed property insurers to improve in the third quarter. The bank noted that industry valuations are inexpensive, with leading peers trading at approximately 0.19 to 0.47 times 2026 forecast P/EV and 0.48 to 0.96 times price-to-book, close to one standard deviation below the two-year historical average, with expected dividend yields of 5% to 7%. Valuations fell notably in October as the market factored in the high base in the third quarter, increased stock market volatility, and a downward yield curve. The bank remains constructive on industry re-rating supported by improved asset-liability matching, and maintains its "outperform" rating on the industry.