Core Viewpoint - The article emphasizes the importance of the new business profit margin as a more effective indicator for assessing the profitability of life insurance companies compared to the new business value ratio, particularly under the new insurance contract standards [1][6][10]. Summary by Sections New Business Profit Margin - The new business profit margin is calculated using the formula: New Business Profit Margin = (Current Initial Recognition of Insurance Contract Service Margin - Initial Recognition of Loss) / Present Value of Future Cash Inflows from Insurance Contracts [1][10]. - The 2024 new business profit margin for the life insurance industry (12 companies combined) is 8.2%, an increase of 1.2 percentage points year-on-year [3][18]. Company-Specific Profit Margins - In 2024, Taiping Life has the highest new business profit margin at 11.8%, followed by Zhongyou Life at 11.5%, and Taibao Health at 10.4% [4][17]. - For Ping An Life, the new business value ratio is 22.7%, while the new business profit margin is 8.7%, indicating that the latter is a more accurate reflection of profitability [5][22]. Comparison with New Business Value Ratio - The article discusses the limitations of the new business value ratio, which can be misleading as it does not accurately reflect the profit margin due to its calculation method [6][7]. - The new business value ratio is defined as the ratio of new business value to the first-year premium, which can lead to inflated perceptions of profitability when compared to other industries' sales net profit margins [7][24]. Financial Data Insights - The present value of new business premium income for China Life in 2024 is 812.1 billion yuan, making it the largest in terms of premium scale [12]. - The article provides detailed financial data for 2024, including estimates of future cash inflows and the impact of loss contracts on the overall profit margin [9][11]. Conclusion - The implementation of new insurance contract standards has enriched the financial disclosures of life insurance companies, allowing for a more nuanced analysis of profitability through the new business profit margin [6][10].

Investment Rating - The industry investment rating is "Recommended," indicating an expected increase in the industry index by more than 5% over the next 3-6 months compared to the benchmark index [21]. Core Insights - The insurance index rose by 1.03%, outperforming the market by 0.15 percentage points, with notable individual stock performances such as Xinhua (+5.94%) and Taiping (+5.64%) [2]. - China Ping An plans to issue HKD 11.765 billion in convertible bonds, with an initial conversion price of HKD 55.02 per share, aimed at supporting business development and capital needs [3][4]. - As of Q1 2025, Ping An's solvency ratios were 225% for comprehensive solvency and 189% for core solvency, indicating a strong capital position [5]. Summary by Sections Market Performance - The insurance sector showed a mixed performance with individual stocks varying significantly, where Xinhua and Taiping led the gains while Sunshine and Zhong An faced declines [2]. - The 10-year government bond yield was 1.65%, down by 2 basis points from the previous week [2]. Company Developments - China Taiping announced a new private equity fund with a target size of RMB 50 billion, focusing on state-owned enterprise reforms [3]. - Ping An Asset Management received regulatory approval to establish a private fund management company, targeting a first-phase fund size of RMB 30 billion [3]. Financial Metrics - As of June 3, 2025, the closing price of Ping An's H shares was HKD 46.45, with the proposed convertible bond's conversion price exceeding this by HKD 18.45, reflecting confidence in future stock price growth [5]. - The new business value (NBV) for Ping An increased by 35% year-on-year, with significant growth expected from the bancassurance channel [5]. Investment Recommendations - The report suggests a cautious outlook for the short term due to performance pressures but anticipates a recovery in the medium to long term as the industry adapts to interest rate changes and improves operational quality [5]. - Current price-to-earnings (PE) and price-to-book (PB) ratios for key companies are provided, with Ping An rated at 1.04 PB and a strong buy recommendation [10].