【出版时间及名称】:2010年4月中国保险行业研究报告
【作者】:星展银行
【文件格式】:pdf
【页数】:56
【目录或简介】:
Table of Contents
Investment summary 3
Valuation & recommendation 6
Premium Growth 8
Underwriting Profitability 12
Investment performance 15
China’s insurance industry: Overview 17
P/EV bands for life insurance companies 21
P/E and P/B bands 21
Stock Performance 23
Glossary 28
Stock Profiles 30
China Life Insurance (2628 HK) 30
Ping An Insurance (2318 HK) 36
China Pacific Insurance (2601 HK) 42
PICC Property and Casualty (2328 HK) 48
Appendix: Major foreign shareholding and lock up 52
Investment summary
Risk averse environment favor defensive insurers. BUY
CLI and CPIC.
We are initiating coverage on lower beta China Life (“CLI”)
and China Pacific Insurance (“ CPIC”) with a BUY
recommendation. We believe the market will continue to
favour lower beta, defensive counters, given the recent
market correction and increased risk aversion due to
imminent monetary tightening in China.
We rate higher beta Ping An Insurance (“PAI”) and PICC
with a HOLD and FULLY VALUED recommendation
respectively. We think PAI’s higher risk profile in its
integrated financial business model and focus on universal
life insurance will be less profitable in the mid term. P&C
insurer PICC continues to face cutthroat competition, and
we think its laggard potential has largely been played out in
the past 3 months.
CLI to outperform in a budding rally.
We think now is the right time to be positioned into
insurance stocks, in anticipation of a market recovery after
the recent correction. CLI is typically the first target to
outperform due to its relative defensiveness, a favored trait
during the initial market rally. Historically, insurance stocks
have performed well during bull rallies and vice versa.
Premium growth will quicken in 2010.
We forecast China’s premium growth at 19% and 18%
respectively in life and P&C segments in 2010. This will be
a material improvement for life premiums from 2009 as it
showed 11% yoy growth during the year, a historical low
due to the adverse impact from the financial crisis.
Meanwhile, P&C premium growth should continue to be
driven by auto related sales and recovery of the commercial
segments.
Life insurance to be dominated by participating
products in 2010.
We think the 2010 life insurance market will continue to be
dominated by participating life insurance products with
regular premiums. CLI and CPIC are companies that have a
strong franchise in this area, and will be chief beneficiaries.
The overall margins should improve with this strategy. The
recent popularity of participating products is largely due to
the fallout of investment linked products after the financial
crisis in 2008. Given the low interest rate and challenging
investment environment in 2010, this preference should
persist.
P&C insurance improves, but not much.
We prefer the life sector over the P&C sector due to the
cutthroat competition still prevalent in the P&C market.
Compared to 2008, we have seen a general improvement in
underwriting profitability, as indicated by a lower loss and
expense ratios for P&C companies in 2009 which may be
indicating a hint of rationalized competition. Some
investors may want to speculate on this theme, but we think
it is too early to expect meaningful improvements in
underwriting profitability. In addition, a higher proportion
of higher loss ratio motor insurance in the overall insurance
mix will continue to exert pressure on underwriting
profitability. So whilst we think the competition situation
may have eased, it is still too early to re-rate the P&C
segment.
Investment performance unlikely to repeat in 2010.
It is unlikely to see a repeat of the strong “V” shape
rebound of the capital gains in 2010. Fortunately, the
recovery of dividend income from equities should partially
make up for the shortfall.
As long as the anticipated interest rate increase is orderly
and gradual, we think insurers can thrive in this
environment by taking advantage of the higher yields. On
the other hand, rapid interest rate rise may increase lapse
rate as customers may lapse policies in order to enjoy higher
returns elsewhere.
China’s insurance companies face great opportunities
and challenges.
Chinese insurers must face a number of challenges, namely
1) a highly competitive landscape, 2) an evolving regulatory
environment and 3) limited and often volatile investment
opportunities.
Despite the great challenges, we think China’s insurance
market continue to offer ample opportunities to the skillful
operator. It is still very true that China’s insurance
penetration, as defined by gross written premiums as a %
of GDP, is still low at only 3.3%. In addition, rising
disposable income and the Government’s strong intent to
develop a healthy insurance sector continues to provide long
term growth drivers.