德银-中国-保险行业-十月份保费：人寿保险放缓，财产灾害险稳健-20171117-Deutsche_Bank-China_Insurance_SectorOctober_premiums~Life_slowed_on_regulatory_change，steady_P＆C_25页_2mb

China Insurance Sector Summary - October 2017

Core Content

The document provides an analysis of the performance of the Chinese insurance sector in October 2017, focusing on both life and property and casualty (P&C) insurance segments. It highlights the impact of regulatory changes, company-specific performance, and market valuations.

Main Points

Regulatory Impact

• Regulation No. 134, implemented on 1 October 2017, prohibited certain savings policies, leading to a decline in life insurance premiums.
• The decline in life premiums was anticipated due to a surge in sales in September as customers rushed to purchase before the regulation took effect.

Life Insurance Performance

• Ping An was the only life insurer with double-digit growth in October, recording a 27.0% year-over-year (yoy) increase in premiums.
• China Life saw a 6.6% yoy growth in October, down from 37.3% in September.
• CPIC had a 3.2% yoy growth in October, down from 24.0% in September.
• Taiping experienced a 0.8% yoy growth, with individual regular and other channels regular contributing positively, offsetting the weakness in bancassurance.
• NCI reported a -4.5% yoy growth, down from 44.8% in September.
• PICC Group saw a -28.5% yoy growth, down from +8.4% in September.
• The YTD growth for life insurance in October was led by Ping An at 34.9%, followed by CPIC at 28.8%, Taiping at 25.7%, China Life at 19.0%, and NCI at -3.9%.

Property and Casualty Insurance Performance

• P&C premiums remained stable in October, with growth ranging from 11.6% to 63.1%.
• Taiping led with a 63.1% yoy growth in October, up from -9.6% in September.
• Ch Continent had a 17.2% yoy growth in October, up from +10.3% in September.
• Ping An reported a 13.6% yoy growth in October, up from +20.9% in September.
• CPIC had a 11.6% yoy growth in October, up from +12.3% in September.
• PICC recorded a 14.0% yoy growth in October, up from +13.8% in September.
• On a YTD basis, Ping An led at 25.5%, followed by Taiping at 21.9%, Ch Continent at 18.8%, PICC at 14.7%, and CPIC at 11.8%.

Valuation and Investment Outlook

• The current valuation of life insurers at 1.2x 2017E P/EV is considered low given the strong growth outlook.
• Ping An and NCI are highlighted as top picks due to their strong protection focus.
• Deutsche Bank maintains a Buy recommendation for Ping An and NCI, and a Buy for China Life and CPIC.
• PICC Group is recommended as Hold due to concerns over balance sheet risks.
• Upside risks include strong investment market rallies and favorable regulatory changes.
• Downside risks include investment market weakness, asset quality issues, sharp bond yield declines, and macroeconomic risks in China.

Key Information

• Ping An showed the strongest performance in both life and P&C segments.
• Regulation No. 134 had a significant impact on life insurance premiums, leading to a slowdown in October.
• Taiping had a notable increase in P&C premiums in October.
• The sector valuation is seen as attractive, with life insurers being preferred over P&C insurers.
• Deutsche Bank provides specific target prices and recommendations for key insurers in the sector.

Summary Table

Company	Life Premium YTD (Rmb m)	Life Premium Growth (yoy)	P&C Premium YTD (Rmb m)	P&C Premium Growth (yoy)
China Life	469,600	19.0%	17,726	21.9%
Ping An	338,212	34.9%	173,840	25.5%
CPIC	162,474	28.8%	85,584	11.8%
NCI	98,185	-3.9%	-	-
Taiping	107,728	25.7%	17,726	21.9%
PICC Group	118,663	-2.4%	287,057	14.7%
Ch Continent	-	-	30,467	18.8%

Investment Recommendations

• Buy: Ping An (2318.HK), NCI (1336.HK), China Life (2628.HK), CPIC (2601.HK)
• Hold: PICC Group (1339.HK), PICC P&C (2328.HK), China Re (1508.HK)

Analysts

• Esther Chwei: Research Analyst, +852-2203 6200
• Lexie Zhou: Research Analyst, +852-2203 6180