2025-07-15 01:58Investment Rating - The industry investment rating is Attractive [7][9]. Core Insights - The insurance sector has shown strong performance over the past two years, driven by anti-involution, improved business quality, and market beta [9]. - Anti-involution measures are expected to continue benefiting both life and property & casualty (P&C) insurers, enhancing long-term profitability and balance sheet strength [3][9]. - Life insurers face risks related to interest rate spread loss, which has pressured valuations down to approximately 0.5x price-to-book (P/B) by early 2024 [4]. - P&C insurers are expected to benefit from eased competition in both auto and non-auto lines, potentially expanding underwriting margins [9]. Summary by Sections Life Insurance - The anti-involution measures for life insurers include cutting commissions and expenses across all channels, reducing pricing interest rates from 3.5% to an estimated 2-2.25%, and introducing a floating pricing interest rate mechanism [4]. - The introduction of a long-term evaluation mechanism on insurers' investment and efficiency is also part of the regulatory changes [4]. Property & Casualty Insurance - A restricted expense policy for P&C insurers has been in place since 2018 and was further strengthened in 2023 and 2024, with regulations expanding to non-auto lines in July 2025 [5]. Company Ratings - AIA Group Ltd: Overweight [61] - Ping An Insurance Group Co of China Ltd: Overweight [61] - China Life Insurance Co Ltd: Equal-weight [61] - China Pacific Insurance Group Co Ltd: Overweight [61] - PICC Group: Overweight [61] - ZhongAn Online P & C Insurance Co Ltd: Overweight [61]