2022-01-03-瑞士信贷集团-展望2022_黎明还没有到来_71页_1mb

China Insurance Sector Outlook 2022: Summary

Despite regulatory and macroeconomic challenges, the long-term potential for China's insurance sector remains intact.

Key Summary Points:

Life Insurance

• New Business Sales (VNB) Pressure: VNB declined significantly in 2022 due to agency force contraction and persistently tepid demand for long-term protection products, particularly critical illness insurance. Persisting headwinds include enduring demographic and economic headwinds.
• Co-Rating: Life insurers are grappling with reduced agency headcount and inadequate agency quality, challenging the recovery until 2023.
• Valuation & Growth: Although new business sales recovery is expected starting in 2023, long-term secular trends suggest sustained growth, driven by pension and health insurance demand amid aging population.
• Regulatory Scrutiny: Regulations like C-ROSS Phase II and double-recording aim to improve customer protection and agency quality, but may weigh on short-term performance.

Property & Casualty Insurance (P&C)

• Mixed outlook: While auto premiums are expected to recover in 2022 (5-8% YoY), the combination of multiple headwinds in non-auto business lines increases the risk.
• Co-Rating Uncertain: Regulatory uncertainty, business mix shifts and distribution channel headwinds create pressure on combined ratios (CoR).

Economic & Asset Risks

• Bond Yields: Face pressure alongside expected economic slowdown, adding to debt-related risks for insurers.
• Stock Market Support: A-share recovery provides a potential supportive factor.

** long-term Growth**

• Wealth & Healthcare Protection: Investment and saving-oriented insurance products are riding on wealth reallocation, while health and pension segments offer strong secular demand drivers.
  -China’s insurance market notably addresses longevity and protection gaps.

Stock Calls

• Top Picks: AIA Group (1299.HK) and CPIC (H) (2601.HK) are favoured for their resilience, transformation progress, and undemanding valuations.
• Sector Outlook: Regulatory scrutiny is expected to moderate in 2022, stabilizing the environment for insurers with strong fundamentals.

Market context: For the 2022 report, the insurance sector is seen as being in transition, with near-term headwinds producing a long-term tailwind.