20260318-招银国际-China_Insurance_Sunshine_Insurance_FY25_Strong_NBV_momentum_One-off_tax_gain_lifted_net_profit_4页_713kb

Summary of Sunshine Insurance FY25 Results

Core Content

Sunshine Insurance Group (6963 HK) reported its FY25 financial results, highlighting strong New Business Value (NBV) growth and a one-off tax gain that significantly boosted net profit. Despite challenges in insurance service and investment results, the company demonstrated resilience, with key performance indicators showing varied trends across segments.

Main Financial Highlights

Net Profit and Earnings

• Net profit increased by 15.7% YoY to RMB6.31bn, with a 26.5% YoY rise in 2H25.
• The growth was primarily driven by a one-off deferred income tax adjustment of -79.1% YoY due to the transition to IFRS 9 & 17.
• Income tax expense dropped to RMB536mn from RMB2.57bn in FY24.

Net Asset Value (NAV)

• NAV declined by 6.3% YoY to RMB58.2bn, but rose 4.2% HoH in FY25.
• The decline was attributed to fair value losses on FVOCI debt instruments due to a rising interest rate environment.
• The 10-year government bond yield increased by 19bps to 1.87% by end-FY25, with a 21bps rise in 2H25.

Return on Equity (ROE)

• ROE increased by 1.6pct YoY to 10.5%.

Dividend

• The dividend remained broadly stable at RMB0.19 per share, with a payout ratio of 34.7%.

Key Performance Metrics

NBV Growth

• NBV surged by 48.2% YoY to RMB7.6bn, with 49.3% YoY growth in 2H25.
• Bancassurance was the main growth driver, up 65% YoY.
• Channel mix for NBV was 62% Bancassurance, 27% agency, and 11% group and others.

CSM Release and Balance

• CSM release grew 16.1% YoY to RMB4.7bn, reflecting a second consecutive year of double-digit growth.
• CSM balance increased 13.3% YoY to RMB57.6bn, with a release rate of 7.6%.

Group and Life EV

• Group EV edged up 4.3% YoY, while Life EV rose 2.9% YoY.
• Both were affected by a negative investment experience variance (IEV) of RMB11.5bn in 2H25, which was partly due to mark-to-market losses on debt.

P&C Segment Analysis

• CoR (Combined Ratio) deteriorated by 2.4pct YoY to 102.1%, primarily due to guarantee insurance recording a UW loss of RMB1.5bn with a CoR of 129%.
• Excluding guarantee insurance, P&C CoR improved to 98.9%, suggesting UW profit of RMB0.49bn.
• Auto premium declined 3.3% YoY to RMB25.8bn, while non-auto premium rose 4.5% YoY to RMB22.1bn.
• P&C net profit fell 49% YoY to RMB313mn, reflecting underperformance in underwriting results.

Investment Performance

• Total investment assets amounted to RMB640bn, up 16.7% YoY.
• Core equities (stocks and equity funds) accounted for 14.8% of total investment assets, a high level among listed peers.
• Net Investment Yield (NIY) was 3.7% (-0.5pct YoY), Total Investment Yield (TIY) at 4.8% (+0.5pct YoY), and Comprehensive Investment Yield (CIY) at 6.1% (-0.4pct YoY).
• Net investment results dropped 12.9% YoY to RMB7.5bn, with Life segment contributing a 32.9% YoY decline.

Valuation and Outlook

• The stock is trading at 0.3x FY26E P/EV and 0.6x FY26E P/BV, based on Bloomberg consensus.
• The CMBIGM analyst rating is OUTPERFORM, indicating the industry is expected to outperform the relevant broad market benchmark over the next 12 months.

Summary of Key Trends

• Life segment maintained strong NBV momentum and robust CSM release, despite a decline in net investment results.
• P&C segment faced underwriting challenges, particularly from guarantee insurance, but showed potential for improvement when excluding this factor.
• Investment performance was mixed, with a rise in core equities and a decline in net investment results due to interest rate volatility.
• The one-off tax gain played a crucial role in boosting net profit, while NAV was impacted by fair value losses on debt.

Recent Reports and Industry Context

• Recent reports highlight improvements in life and P&C premiums, easing solvency risk factors, and optimization of stock investment risk factors.
• There are indications that insurance funds are accelerating long-term stock investments, which could support future performance.