Investment Rating - The report maintains a "Buy" rating for China Life Insurance [2][8]. Core Views - The report suggests that with the increase in equity allocation, the long-term interest spread in the industry is expected to improve. The demand on the liability side remains robust, and the market is concentrated, indicating a positive outlook for the industry's long-term profitability and valuation re-evaluation. In the short term, the asset side presents the main challenges for the industry. As a pure life insurance company, China Life is positioned in the first tier of the industry in terms of sensitivity and elasticity, making it a quality beta asset for allocation. The current valuation stands at 0.78 times PEV [2][12]. Summary by Sections Financial Performance - In the first half of 2025, China Life achieved a net profit attributable to shareholders of 40.93 billion yuan, representing a year-on-year increase of 6.9%. The comparable new business value was 28.55 billion yuan, up 20.3% year-on-year [6][12]. Investment Strategy - The company has increased its equity allocation by 1.12 percentage points to 8.7% and its fund allocation by 0.28 percentage points to 4.92%, reflecting a commitment to long-term capital market responsibilities [12]. New Business Growth - The new business value for the first half of 2025 was 28.55 billion yuan, with a year-on-year growth of 20.3%. The improvement in value rate was a significant factor, with new single premiums slightly increasing by 0.6% year-on-year [12]. Individual Insurance and Bancassurance - The individual insurance long-term new single premium was 64.25 billion yuan, down 24.2% year-on-year, primarily due to the transformation of dividend insurance. The bancassurance long-term new single premium reached 35.67 billion yuan, a strong increase of 112.4% year-on-year, indicating a significant trend of "deposit migration" [12].

Investment Rating - The report indicates a positive outlook for the insurance sector, recommending strong beta stocks and companies with good business quality, particularly focusing on leading life insurance companies and those with favorable dividend policies [4]. Core Insights - The combined net profit of five A-share listed insurance companies increased by 3.7% in H1 2025, with Q2 showing a year-on-year growth of 5.9%, primarily driven by improvements in the asset side [1][11]. - The growth rates of net profit for major companies in H1 2025 were as follows: Xinhua 33.5%, China Property & Casualty 32.3%, PICC 16.9%, Taiping 12.2%, Taikang 11.0%, Sunshine 7.8%, China Life 6.9%, Ping An -8.8%, and AIA -23.1% [1][11]. - The operating profit for Ping An and Taiping grew by 3.7% and 7.1% respectively, with all listed insurance companies achieving positive growth in operating profit [2][16]. Financial Performance - **Net Profit**: The net profit of five listed insurance companies increased by 3.7% in H1 2025, with Q2 showing a 5.9% increase [1][11]. - **Contract Service Margin**: The contract service margin showed positive growth across the board, with the highest growth rates seen in PICC (+12.0%) and Sunshine (+10.3%) [19]. - **Net Assets**: The growth rates of net assets varied, with PICC leading at +6.1%, while Sunshine and Xinhua experienced declines of -10.1% and -13.3% respectively [1][23]. Revenue Analysis - **Insurance Service Performance**: The insurance service performance showed overall growth, with notable increases in companies like Sunshine (+13.3%) and PICC (+1.7%) [25]. - **Investment Performance**: Investment performance varied significantly, with Ping An and Taiping showing declines, while companies like Xinhua and PICC reported positive investment results [26]. Life Insurance - **New Business Value (NBV)**: The NBV growth rates for listed insurance companies in H1 2025 were led by PICC (+62.7%), Sunshine (+47.2%), and Ping An (+39.8%) [29][30]. - **Margin Improvement**: The margin for new business improved due to strong demand for savings products and a reduction in the preset interest rate [29]. Non-Life Insurance - **Premium Growth**: The non-auto insurance premium growth was mixed, with overall low growth in the property and casualty insurance sector [4]. - **Combined Operating Ratio (COR)**: The COR improved year-on-year, with China Property & Casualty showing the best performance at 94.8% [4]. Investment Recommendations - The report recommends focusing on leading life insurance companies with good business quality, strong beta stocks like Xinhua Insurance, and companies with favorable dividend policies such as China Taiping [4].

Investment Rating - The report maintains an "Outperform" rating for the insurance industry [5][6]. Core Insights - The insurance industry is experiencing a structural shift due to declining liability costs and improved asset returns, leading to a narrowing of interest spread risks [4][6]. - Regulatory guidance has prompted insurance companies to lower the preset interest rates for new products, transitioning from high guaranteed return products to lower guaranteed and floating return products [2][4]. - The focus on dividend insurance is increasing as companies adapt to lower interest rates and seek to enhance their investment returns through equity investments [3][4]. Summary by Sections Liability Side - Regulatory measures have led to a continuous reduction in preset interest rates for various insurance products, dynamically lowering the risk of interest spread losses [2][20]. - The average liability cost for 2024 is projected to be 2.56%, with further declines expected in the following years [2][32]. Asset Side - Insurance companies are increasing their allocation to equity investments to stabilize returns amid low long-term interest rates and declining fixed-income asset yields [3][42]. - The expected comprehensive investment returns for the life insurance sector from 2025 to 2027 are projected at 4.06%, 3.93%, and 3.92% respectively [3][39]. Investment Recommendations - The report suggests focusing on companies with a high proportion of life insurance business and relatively flexible asset sides, such as China Life and New China Life, as well as companies with strong sales foundations like Ping An and China Pacific Insurance [4][5]. Key Company Profit Forecasts - The report provides profit forecasts and investment ratings for key companies, all rated as "Outperform" [5]. - For instance, China Life is expected to have an EPS of 3.83 in 2025, with a P/EV of 0.69 [5].

Investment Rating - The report maintains an "Outperform" rating for the insurance industry [5][6]. Core Insights - The insurance industry is experiencing a structural shift with a focus on savings-type insurance products, which are attracting significant inflows due to higher preset interest rates. This has led to an increase in the market share of traditional life insurance, which is expected to account for 56% of total premium income by the end of 2024, up three percentage points from 2019 [1][13]. - Regulatory guidance is pushing insurance companies to lower preset interest rates for new products, transitioning from high guaranteed return products to lower guaranteed and floating return dividend insurance [1][24]. - The asset side of insurance companies is under pressure due to low long-term interest rates and declining returns on fixed-income assets. Companies are increasing their allocation to equity investments to stabilize returns and ensure long-term cash flow [3][42]. Summary by Sections Liability Side - Regulatory measures have led to a continuous reduction in preset interest rates for insurance products, dynamically lowering the risk of interest spread losses. The average liability cost is projected to decrease from 2.56% in 2024 to 2.28% by 2027 [2][32]. - The preset interest rates for ordinary life insurance and dividend insurance are expected to be adjusted to 2.0% and 1.75%, respectively, reflecting a downward trend [2][31]. Asset Side - Insurance companies are focusing on high-dividend sectors and increasing their allocation to equity assets to enhance the stability of investment returns. The comprehensive investment return for the life insurance sector is projected to be 4.06% in 2025, gradually declining to 3.92% by 2027 [3][39]. - The report highlights a significant shift in asset allocation strategies, with a growing emphasis on equity investments to counteract the challenges posed by low interest rates and a lack of high-quality non-standard assets [3][42]. Investment Recommendations - The report suggests that the narrowing of interest spread risks and stable investment returns from high-dividend assets will catalyze improvements in the fundamentals of listed insurance companies. It recommends focusing on companies with a high proportion of life insurance business and relatively flexible asset sides, such as China Life and New China Life, as well as strong sales foundations like Ping An and China Pacific Insurance [4][5].