Since late September, with a package of incremental policy measures and the release of positive policy shift signals, the A-share market has seen a resurgence of the "bull market" trend, with the insurance sector showing sustained strength.
It is worth mentioning that Ping An has performed exceptionally well in this round of market movement. Specifically, Ping An A-shares have seen an impressive increase of 40% from September 24th to the high point on October 8th, with a rare trading halt due to a price limit during this period.
In terms of H-shares, from the low point on September 16th to the high point on October 7th, the increase has been nearly 70%, making it stand out among insurance companies. Currently, the total market value of Ping An A-shares has returned to the trillion yuan mark, closing at 1.04 trillion yuan on October 15th.
It is also worth noting that recently Ping An and China Life have successively released quite good premium data for the first three quarters, with the industry's fundamental trend remaining positive. Looking at the present, what are the logical supports behind the sustained popularity of the insurance sector? And where lies the opportunity for Ping An?
1. Premium growth continues to expand, realizing growth momentum
Let's first look at the latest premium data released by Ping An.
In the first nine months, the original insurance contract premium income of Ping An Property Insurance, a subsidiary of Ping An, was 239.371 billion yuan, a year-on-year increase of 5.9%; Ping An Life Insurance's premium income was 421.716 billion yuan, a year-on-year increase of 10.2%; Ping An Pension Insurance's premium income reached 14.197 billion yuan, a year-on-year decrease of about 4.9%; Ping An Health Insurance's premium income was 13.891 billion yuan, a year-on-year increase of 14.6%.
It can be seen that while property insurance has seen single-digit growth, life insurance and health insurance have maintained double-digit growth, especially the core life insurance growth rate, which remains strong.From an overall perspective, Ping An's total premium income for the first nine months amounted to approximately 689.1754 billion yuan, representing a year-on-year increase of 8.42%. By examining the premium income for the first few months of this year, it can be observed that Ping An's growth rate has consistently been in an expansionary state.
Although it is not difficult to see from the September data alone that the overall growth rate has slowed compared to the previous month, considering the high growth influenced by factors such as the rush to sell before the suspension last month, Ping An's growth rate for September is still quite impressive, demonstrating a relatively strong growth trend. This is also reflected in the details of the core business segments.
It can be seen that in the life and health insurance business, the premium income from individual business reached 435.14 billion yuan, with new business amounting to 123.85 billion yuan, achieving a year-on-year growth rate of 12.8%, reflecting the company's strong new policy sales performance and significant business expansion effects.
Additionally, looking at the September life insurance data alone, the monthly premium income reached 37.087 billion yuan, with a year-on-year growth rate of 22.40%, continuing the strong growth momentum unabated.
Overall, the excellent performance of premium income has brought a good expectation for the release of subsequent performance, which further confirms the company's continuous expansion posture, bringing confidence to the market.
2. Insurance stocks receive a "booster shot" as both supply and demand sides continue to solidify.
From an industry perspective, it is clear that the insurance sector has also entered a new phase.Over the past few years, the industry's fundamentals have been continuously solidified around both the supply and demand sides, coupled with the current policy stimulus, which has brought a continuous valuation catalytic effect to the market.
From the supply side, the industry has been promoting supply-side reforms over the past few years, with insurance companies transitioning towards high-quality development. Whether it is the transformation of the efficiency of the agent channel to increase agent productivity, or the optimization of the bank insurance channel to enhance the value rate of channel business, both have positively driven the benign development of insurance companies.
Now, it can be seen that the excellent performance of the core indicators that have been successively cashed out shows that the industry is welcoming a stable recovery, and it is expected to continue the repair trend.
From the demand side, with the acceleration of population aging, the demand for pension and health-related needs is becoming increasingly prominent, and insurance companies are also entering the fields of health and pension from multiple angles.
Taking Ping An of China as an example, the company has built a product and service ecosystem that deeply integrates "comprehensive finance + medical pension" by integrating various resources and services under its control, which can provide customers with a full range of solutions from basic financial services to high-end wealth management, and then to medical care, pension services, and health management. This not only increases customer stickiness but also provides new momentum for the growth of insurance business. As a result, the growth space of the entire industry is also being continuously opened up.
Combining the views of securities firms recently, institutions also mostly express optimism about the trend of the insurance sector, and believe that insurance stocks are expected to show continuous attractiveness under the joint action of multiple factors such as policy support, market environment improvement, increased investment returns, performance exceeding expectations, and interest rate environment.
On the one hand, the continuous rise of the current A-share market has brought significant positive effects to the asset side of insurance companies. With the hot market, the investment returns of insurance companies have been improved, especially the growth of equity asset returns, which will directly increase the quarterly profits of insurance companies. Against the background of the low base effect, the expected profits of insurance stocks in the third quarter report are expected to far exceed market expectations. Looking at it from a medium-term perspective, the market also expects the bull market to continue, which will also have a positive impact on the profits of insurance companies in the fourth quarter, and the annual performance is expected to bring surprises.
On the other hand, on the liability side, due to the low base effect of the same period last year, coupled with the impact of the suspension of 3% guaranteed interest rate products, it is expected that the new business value of life insurance companies in the third quarter will achieve rapid growth. At the same time, looking at a longer cycle, with the positive shift in real estate policies and policies to stimulate consumption and other policy drivers to warm up the economy, it is also expected to drive the basic face of insurance companies to improve, and the logic of asset-liability resonance will continue to be played out, and will also form a positive feedback to the market.
3. "Bull market" timing is not as good as stock selection, how to view the opportunities in the future market of Ping An?Prior to this, it can be said that the securities brokerage stocks officially sounded the horn for a "bull market."
If recent pullbacks have caused the market to worry about the sustainability of the trend, now with the continuous release of positive signals from the policy side, it has also brought more positive expectations for the subsequent equity market to improve.
From the perspective of a bull market, in several historical bull market trends, the insurance and banking sectors have performed well in the early stages. On the one hand, this is due to the good performance of these companies' earnings against the backdrop of a favorable macro economy and bull market expectations. On the other hand, the large market capitalization of these companies also makes their pulling effect on the overall market more significant.
At the current stage, it is clear that the market is still in its early stages. However, in a bull market environment, timing is often more challenging than in a market adjustment, where it is easy to miss the rhythm and fail to keep up with the market's pace. Therefore, choosing targets with a solid fundamental basis and potential catalysts to wait for positive market feedback is a wise move.
From Ping An's perspective, the company currently benefits from the following catalysts.
Firstly, policy favorable factors. The Ministry of Finance press conference held on October 14 focused on the central finance leveraging to support local debt resolution, bank capital replenishment, and real estate inventory reduction. Some analysts believe that the scale of this debt resolution support should be the largest in recent years, and compared to the scale from 2015 to 2018, the subsequent debt resolution scale is expected to reach over 10 trillion.
It is clear that the debt resolution information released at this press conference directly benefits insurance companies holding a large amount of real estate. Previously, Ping An's stock price was to some extent dragged down by fixed asset investments, and debt resolution helps to increase asset valuation, which is expected to bring about a phased repair opportunity.
Secondly, the introduction of swap facilities. Previously, the innovative introduction of swap facilities has given insurance companies more investment operation flexibility and is expected to bring cost advantages. At the same time, supporting bond issuance and stock buybacks can help high-dividend listed companies to leverage additional funds, stimulating market performance.
Lyon's view previously mentioned that this series of policies is most relevant to insurance stocks, and the bank regards Ping An as the main beneficiary. It pointed out that the policy proposes that companies with stock prices significantly lower than their book value should try to strengthen value, and index heavyweight stocks should establish systematic rules to strengthen shareholder value, which is particularly beneficial to Ping An and Taikang. Supportive real estate policies should also improve investor sentiment, which is particularly beneficial to Ping An.
Thirdly, the insurance company's third-quarter report is imminent. In combination with the previous rush to stop sales, reduce reserves and interest rates, and stimulate consumption-related policies, the market expects the growth of new business value of insurance companies to accelerate, and the performance of the liability side is expected to exceed expectations. At the same time, the recovery of the stock market will also drive the investment income of insurance companies, thereby improving their overall performance. The subsequent financial report performance will still have highlights and is expected to further catalyze market valuation.4. Conclusion
From the current perspective, the financial sector remains an important emotional observation point for monitoring the subsequent trends in the market. In the medium to long term, the introduction of a package of policies to support economic recovery and restore market confidence has brought favorable expectations for the performance of the capital market. At the same time, under the Federal Reserve's interest rate cut cycle, the inflow of foreign capital is expected to further support the Hong Kong and A-share markets.
In addition, considering the performance of the global capital market in recent years, both Hong Kong and A-shares are lagging behind major mainstream markets in terms of gains and valuations, possessing potential for recovery.
As the saying goes, confidence is more important than gold. The long-awaited arrival of a bull market, with the insurance sector being the most eye-catching sector in historical bull market trends, is believed not to disappoint this time. For investors, choosing high-quality companies with a solid foundation and catalyst expectations to follow may also be more conducive to exploring opportunities for excess returns within a robust safety margin.
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