In fact, as early as this years semi annual report and the first quarter report, the insurance industry has handed over its creditable report card for the market. The capital market also responded to this: since the beginning of the year, the Shanghai Stock Exchange index has risen by 17%; however, in the same reporting period, the five major insurance companies have risen by more than 40% on average, and the insurance industry index has risen by 54%; among them, the share prices of Ping An (601318), PICC (601319) and China Life Insurance (601628) have risen by more than 50% in the year, while those of Taibao (601601) and Xinhua have risen by more than 50% Insurance also rose about 20%.
What kind of report card did the five insurance companies hand over? How sustainable is it? Is it worth over matching?
Profit of insurance enterprises increased greatly
On the same day of performance announcement, Ping An also released the announcement on the change of senior management position. In order to consolidate the collective decision-making mechanism of joint CEO + functional executive officer, sun Jianyi retired from the management, Xie Yonglin and Chen Xinying became the executive directors of the company, and elected Huichuan as the vice chairman of the 11th board of directors of the company, and Xie Yonglin as the general manager of the company.
Although a number of securities analysts gave recommendations, but more than 60% of the performance growth did not bring significant stock price performance, the day after the release of performance, Ping An shares closed down 2%.
China Life Insurance is the second insurance company to disclose the third quarter report card. During the reporting period, China Life Insurance achieved an operating revenue of 624.024 billion yuan, a year-on-year increase of 15.4%, and a net profit attributable to the parent of 57.702 billion yuan, a year-on-year increase of 190.4%.
In the first three quarters of 2019, the company achieved a net profit attributable to the parent of 22.914 billion yuan, an increase of 80.2% on a year-on-year basis - China Taibao also delivered a report card with satisfactory growth. In the first three quarters of the last Chinese PICC to enter the capital market, the insurance business revenue was 440355 million yuan, an increase of 12.3% year on year; the net profit attributable to the shareholders of the parent company was 21.368 billion yuan, an increase of 76.3% year on year.
Xinhua insurance, which focuses on life insurance business and completes the management adjustment at the beginning of the year, also achieved a net profit growth of more than 50%. According to the data of the companys third quarter report, at the end of the reporting period, the companys total assets reached 822.083 billion yuan, operating revenue was 132.842 billion yuan, and net profit attributable to the parent company was 13.003 billion yuan, up 68.8% year on year.
According to the data of premium income, during the reporting period, Ping An insurance, China Life Insurance, PICC, China Taibao insurance and Xinhua Insurance realized the original premium income of 614.728 billion yuan, 497 billion yuan, 437.274 billion yuan, 285.66 billion yuan and 107.912 billion yuan respectively, with a year-on-year growth of 9.47%, 6.08%, 11.93%, 8.0% and 7.9% respectively.
In the first nine months, the five insurance companies achieved premium income of 1.95 trillion yuan, a year-on-year increase of 8.56%, and net profit of 244.554 billion yuan, a year-on-year increase of 85.63%. It is worth noting that the premium income of the top five insurance companies in the first three quarters is 87% of the total premium of the whole year last year, 56.41% of the premium income of the first three quarters of the insurance industry (345.2 billion yuan); the total profit of the first three quarters not only increased significantly compared with the same period last year, but also increased 55% compared with the total net profit of the whole year last year and 158.19 billion yuan.
What is the reason for the great increase in the performance of insurance companies? In addition to the business growth mentioned by several insurance companies in the annual report, the main reasons for the sharp increase in the performance of insurance companies are the favorable investment income and the adjustment of the pre Tax Deduction Policy for the service charge and commission expenditure of insurance companies.
On May 29 this year, the Ministry of Finance and the State Administration of Taxation issued the announcement on the policy of pre tax deduction of service fees and commissions of insurance enterprises, which increased the proportion of pre tax deduction of service fees and commissions of insurance enterprises to 10% of the former personal insurance and 15% of the former property insurance, up to 18% of the balance of the current years total premium income after deduction of surrender, and allowed more than part to be carried forward Deduction will be made in the following years, and the new regulations will be implemented in January 2019.
The adjustment of tax policy has brought sweetness to all listed insurance companies: statistics show that the impact of tax reduction on profits of five insurance companies is expected to exceed 27 billion yuan.
How much space does the industry have behind the performance
Although the profit report card is beautiful, it can still be seen in the third quarter that the expected data are not achieved under the background of industrial restructuring and intensified competition, and the business strategies of various insurance enterprises are also differentiated.
At the beginning of the year, China Taibao, which played down the strategy of getting off to a good start, also faced the pressure of new policy decline in the transformation period. The companys individual insurance channels new policy premium was 34.7 billion yuan, down 12.3% year-on-year, of which the new policy premium in the third quarter decreased by 18.5% year-on-year, and the new policy in the first three quarters decreased by 18.6% year-on-year, with a larger decline than that in the first half of the year.
China life achieved a 6.5% increase in new premium income in the first three quarters, better than 2% in the first half of the year, but the renewal premium declined slightly. The reason why the new premium is superior to the industry is the continuous expansion of the companys personal insurance agent team. At the end of the reporting period, the companys agent scale increased to 1.663 million, 15.6% higher than last years year-on-year growth, and 90000 more than the medium-term growth. At the same time, the monthly average effective sales manpower increased by 37.4% year-on-year, and the guaranteed effective sales manpower increased by 49.7%.
As of the third quarter report, the agent scale of Xinhua insurance has reached 460000, an increase of 24% over the scale at the beginning of the year. Ping An Life Insurance is another strategy: by the end of September 2019, the number of agents of Ping An Life Insurance was 1.24 million, down 12.1% compared with the beginning of the year, down 3.2% compared with the end of June 2019. It is understood that Ping An of China has been increasing its sales force in terms of talent selection, strict assessment and retirement, and promoting the excellent talent plan. China Pacific Insurance is also planning to reduce its staff and improve its quality.
In the property insurance business, behind the rise of the proportion of non auto insurance is the weakness of auto insurance business. The third quarter report data shows that PICC Property insurance premium for non auto insurance has increased, and the comprehensive cost rate has increased. In the first three quarters, the company realized a net profit of 21.985 billion yuan, with a comprehensive cost rate of 97.9%, 30 basis points higher than that in the medium term. Affected by the continuous downturn of the automobile market, the automobile insurance revenue reached 189.1 billion yuan, an increase of 2% year on year, and the proportion of non automobile insurance premium increased year by year, from 36.9% to 43%. In the same period, FPA achieved the original insurance premium income of 19.875 billion yuan, a year-on-year increase of 8.7% and a comprehensive cost rate of 96.2%; among them, the companys automobile insurance business premium income achieved a growth of 6.3% and non automobile insurance business growth of 14.9%; the first three quarters of CPIC achieved the property insurance premium income of 100.5 billion yuan, a year-on-year increase of 12.9%, a growth rate of 6 percentage points lower than that of the same period in 2018, automobile insurance business The fee income was 67.4 billion yuan, up 5.3% year on year, better than that of peoples Paulson Ping An.
After the above five insurance companies issued their financial statements, although some of the data did not meet expectations, most of the securities companies gave a rating of recommendation or purchase. For example, the non bank research team of China Merchants Securities once said in the research report that Guoshou took the lead in the campaign of opening up in 2020, and other companies may follow up in November to launch the activity of opening up, which is significantly more positive than last year, considering the market environment It is expected that the industry will get off to a good start with an overall optimistic result. At the same time, considering the end of the year valuation switch, it is suggested that investors must over match insurance and give more patience to securities companies. Zhao Xianghuai, an analyst at Everbright Securities, gave a buy rating to the five insurance companies in the third quarter report.
It is worth noting that the allocation of institutions to insurance enterprises decreased in the third quarter. Industrial Securities Research Report shows that based on the market value of A-share circulation, the industry standard proportion is calculated. In the third quarter of 2019, the circulation market value of insurance shares is 1884.4 billion yuan, and the standard proportion is 4.25%, down 0.16 percentage points compared with the second quarter. In the third quarter of 2019, the proportion of fund heavy position insurance was 1.15 percentage points higher than the industry standard allocation, and the over allocation continued to be maintained, but the over allocation ratio decreased by 0.85 percentage points compared with the second quarter (2.01% over allocation).
Source: editor in charge of economic observation network: Yang Zeyu ufe63 nf6036