Investment Rating - The investment rating for the insurance sector is as follows: China Ping An - Strong Buy, China Pacific Insurance - Buy, China Life Insurance - Buy, New China Life Insurance - Buy, China People’s Insurance - Buy [4][3] Core Viewpoints - The report emphasizes that the long-term valuation anchor for the insurance sector should focus on changes in liability management quality, with a specific analysis of break-even yields and rigid costs to assess the cost of liabilities in the industry and listed companies [9][32] - The current PEV (Price to Embedded Value) of domestic insurance companies is generally below 1x, primarily due to potential "spread loss" pressures, reflecting cautious pricing assumptions regarding investment returns [9][40] - The report predicts that the break-even yield for listed insurance companies will be significantly lower than the net investment yield, indicating that the current PEV valuation may be overly pessimistic [9][51] Summary by Sections Section 1: Introduction - The report anticipates a further reduction in the predetermined interest rate in Q3, which may be implemented within the quarter, driven by market rate adjustments [13][14] Section 2: "Spread Loss" Crisis Assessment - The report discusses the formation of "spread loss" risks, highlighting the lagging nature of the insurance cycle in relation to economic and interest rate cycles [33][34] - It notes that the average liability duration in the life insurance sector is approximately 12-13 years, while asset duration is only 6-7 years, leading to reallocation pressures during a declining interest rate environment [35][40] Section 3: Dynamic Measurement of Rigid Costs - The report provides a dynamic measurement of the rigid costs associated with existing policies, predicting a rapid decline in these costs over the next two years (2025-2026) due to adjustments in predetermined interest rates [9][27] Section 4: Investment Recommendations - The report suggests that the quality of liability management is expected to improve gradually, with a focus on the shift towards dividend insurance products, which are anticipated to alleviate overall cost pressures [25][26] - It highlights that the insurance sector is increasingly prioritizing high-dividend strategies to compensate for declining interest income, thereby stabilizing net investment yields [25][30]

Investment Rating - The report maintains a "Buy" rating for both A-shares and H-shares of the company [1]. Core Insights - The company achieved significant year-on-year profit growth, with a net profit of 26.23 billion yuan, representing a 201.1% increase [4][8]. - The company maintained a stable dividend payout ratio of 30.1%, with an annual dividend of 2.53 yuan per share, up 197.6% year-on-year [4][8]. - The new business value (NBV) reached 6.25 billion yuan, a year-on-year increase of 106.8% [4][7]. Financial Performance - In 2024, the company's operating revenue was 132.56 billion yuan, up 85.3% year-on-year, while insurance service revenue slightly decreased by 0.5% to 47.81 billion yuan [4][10]. - The weighted average return on equity (ROE) was 25.9%, an increase of 17.9 percentage points year-on-year [4]. - The net investment yield was 3.2%, a slight decrease of 0.2 percentage points year-on-year, while the total investment yield increased by 4.0 percentage points to 5.8% [4][8]. Business Development - The company continues to strengthen its individual insurance channel, with a focus on high-performing agents, achieving a monthly average productivity of 0.81 million yuan per agent, up 41% year-on-year [5]. - The individual insurance channel's first-year premium for long-term insurance reached 13.72 billion yuan, a year-on-year increase of 17.2% [5]. - The company is actively transforming its silver insurance business, with a total new business decline of 4.6% to 42.59 billion yuan, but the decline is narrowing compared to previous quarters [6]. Valuation and Forecast - The report adjusts the company's net profit forecasts for 2025 and 2026 to 22 billion yuan and 27.5 billion yuan, respectively, and introduces a new forecast for 2027 at 30.6 billion yuan [9]. - The A/H share prices correspond to a price-to-earnings value (PEV) of 0.59 for A-shares and 0.31 for H-shares in 2025 [9][10].