ZHONGTAI SECURITIES·2026-01-06 13:32Investment Rating - The industry investment rating is "Increase Holding" [2] Core Viewpoints - The tax adjustment for listed insurance companies has a limited overall impact, primarily affecting cash flow rather than profit and loss statements or balance sheets [5][10] - The new accounting standards provide insurance companies with an OCI option, which reduces the impact of interest rate fluctuations on net profit [5] - The average effective tax rate for listed insurance companies has been low, with rates of 10%, 8%, -1%, -6%, 12%, and 17% from 2020 to Q3 2025, indicating a disconnect between tax burdens and actual operating performance [5][12] - The estimated taxable profit difference for listed companies under the new and old standards is projected to be 42 billion in 2023 and 93 billion in 2024, with a significant portion of this difference being attributable to insurance contracts [5][18] Summary by Relevant Sections Tax Adjustment Impact - The tax adjustment is expected to have a minimal effect on operating cash flow, with an average impact of 2.27% across listed insurance companies [5][18] - Specific companies like New China Life and China Life may experience a more significant impact, estimated at around 14% for New China Life [5][18] Financial Performance - The listed insurance companies have seen record high pre-tax profits in the first three quarters of 2025, exceeding the total profits of 2024 [11] - The actual income tax paid has not kept pace with rising profits, indicating a potential for future tax liabilities [12] Recommendations - The report suggests focusing on companies such as China Life (A/H), Ping An (A/H), China Pacific Insurance (A/H), New China Life (A/H), and China Property & Casualty Insurance (A/H) for investment opportunities [5]