Summary of Sunshine Insurance Conference Call Company Overview - **Company**: Sunshine Insurance - **Date**: November 27, 2025 Key Points Industry Insights - The life insurance industry is facing challenges with the predetermined interest rate dropping to historical lows, with traditional products at only 2.0% [2][3] - Concerns exist regarding the growth rate and competitiveness of life insurance products, particularly due to a sales slump attributed to product switching and annual task adjustments by insurance companies [2][3] Sales and Growth Expectations - The bank insurance business is expected to benefit from banks' net interest margin pressures and strong demand for middle-income products, with an anticipated premium growth in the coming year [2][3] - Individual insurance business is under significant transformation pressure due to regulatory changes and intense competition for new customers [2][3][4] Agent Workforce and Productivity - Sunshine Insurance is focusing on high-quality transformation of its agent workforce, with approximately 49,000 agents currently, maintaining a per capita productivity of about 28,000 yuan [2][5] - The company is reducing management layers to enhance personal development among agents, although the number of active agents has slightly decreased [5] Product Strategy - Dividend insurance has become mainstream, with a significant increase in its share of new policies, expected to reach 70%-80% [6][7] - The company plans to diversify its product offerings by increasing the proportion of individual insurance channels for protection products and mid-term savings products [7] Asset Allocation Strategy - Fixed income assets constitute 75% of the company's portfolio, with over 75% in long-term bonds and approximately 200 billion yuan in ultra-long bonds [8] - The company aims to maintain a stable asset duration and will selectively overweight certain assets, with equity investments making up 15% of the portfolio [8] Regulatory Impact - The implementation of the unified reporting policy for non-auto insurance is expected to cause short-term premium fluctuations but may lead to improved profitability in the long run [10] - The company has established a special task force to develop differentiated strategies in response to regulatory changes [10] Health Insurance Development - The guidance for promoting high-quality development in health insurance provides opportunities for traditional and potential dividend health insurance products [11][12] - The company plans to focus on health insurance once regulatory details are clarified [12] Financial Management - Sunshine Insurance has developed a cost management approach aligned with regulatory directions, allowing for more precise management of various costs [13] - The company is also exploring opportunities in inclusive finance, particularly in agricultural insurance and health insurance, despite current high costs [14] Future Investments - Sunshine Insurance has recently invested 20 billion yuan in a private equity fund and plans to continue allocating funds in line with its investment strategy [18] Industry Trends - The insurance industry is adopting measures to combat "involution," focusing on product strength, risk management, and customer service rather than competing on commissions [17] This summary encapsulates the key insights and strategic directions of Sunshine Insurance as discussed in the conference call, highlighting the challenges and opportunities within the life insurance sector.

Core Viewpoint - The insurance industry has shown unexpected growth in profits for the first three quarters of the year, with major companies reporting a combined net profit of 426 billion yuan, a year-on-year increase of 33.5% [4][5]. Group 1: Profit Growth and Investment Strategies - The primary source of profit growth for the major insurance companies has been capital market gains, with investment income contributing over 60% to profits [5]. - The CSI 300 index rose by 18% in the third quarter, benefiting insurance companies with large capital and long liability durations, leading to increased equity investment ratios [6]. - Insurance companies have shifted from defensive positions to more aggressive growth strategies, with a focus on technology growth stocks and broad-based ETFs [8][9]. Group 2: Company-Specific Performance - New China Life Insurance was the most proactive player, achieving an 88% year-on-year profit increase in the third quarter, with an annualized total investment return of 8.6% [8]. - China Pacific Insurance experienced a significant turnaround, with core business profits rebounding sharply due to improved investment returns [10]. - China Ping An and China Taiping adopted more conservative investment strategies, with Ping An reporting a non-annualized investment return of 5.4% [12][13]. Group 3: Market Outlook and Future Challenges - The current profit surge may not be sustainable as the market approaches the end of the valuation recovery phase, raising concerns about balancing high returns with long-term solvency risks [16]. - The insurance industry is seeing positive signals in the liability side, with a slight increase in individual insurance agent numbers for the first time in two years [17]. - Future growth will depend on product innovation, channel optimization, and long-term interest rate management as the industry transitions to a "post-asset cycle" phase [18].

Summary of the Insurance Industry Conference Call Industry Overview - The insurance industry showed stable growth in the first half of 2025, with profits slightly increasing. All listed insurance companies, except for China Ping An, achieved positive growth, with total net assets increasing by 1.2% [1][2][22]. Key Points Financial Performance - The overall performance of the insurance industry in the first half of 2025 met expectations, confirming a recovery in profits. The net profit growth ranged from -8.8% for China Ping An to positive growth for other companies, with total net assets reaching 2.19 trillion yuan [2][22]. - New business value (NBV) showed strong momentum, with growth rates between 20% and 65%, primarily driven by accelerated sales through bank insurance channels and improved value rates [2][4]. Investment Performance - Under new accounting standards, investment performance became the dominant factor for profitability. Companies like Xinhua and PICC saw significant increases in the proportion of investment performance to pre-tax profits, while China Pacific and Ping An remained focused on insurance service performance [1][3]. - Net investment income for the five listed insurance companies increased by 6% year-on-year, totaling 285.2 billion yuan, with total investment income rising by 9% to 367.4 billion yuan [8][9]. Distribution Channels - The individual insurance agent channel continued to decline, with a 3.5% decrease in the number of agents. However, the average MVA (Market Value Added) per agent improved significantly [5]. - The bank insurance channel saw an increase in efficiency, with its share of total premiums rising by 11% to 110% year-on-year. The new single value rate in this channel ranged from 12% to 29% [5]. Property Insurance - The growth rate of original premium income in property insurance slowed down, but the comprehensive cost ratio improved significantly. The growth rate for auto insurance slowed, while new energy vehicle insurance maintained rapid growth, with Ping An and PICC reporting increases of 49.3% and 36%, respectively [6][7]. Asset Allocation - The allocation of assets among insurance companies showed a trend towards increasing OCI (Other Comprehensive Income) equity. The proportion of bond assets remained high, with the highest being China Pacific at 76.5% and the lowest being PICC at 49.7% [10][11][14]. - Stock and fund asset allocations saw double-digit growth for several companies, with Ping An leading in new stock proportions at 45% [12]. Future Outlook - The outlook for insurance stocks is positive, with expectations of recovery in valuations due to low interest rates and reduced costs. The potential for increased sales of rights-based products and the impact of economic recovery are also highlighted [22][23]. Recommendations - Focus on companies with low operating costs and valuations, such as China Pacific; those with significant equity returns like Xinhua; and those with good dividend yields and undervaluation like China Ping An and China Taiping [23].

Core Viewpoint - The company has demonstrated significant business transformation and growth in new business value, with a strong outlook for the insurance industry, emphasizing the potential for further development and competitive strength [1][2]. Business Performance - In the first half of 2025, the company reported original insurance premium income of 121.3 billion, a year-on-year increase of 22.7%, and new business value of 6.182 billion, up 58% year-on-year [1]. - The company’s total assets reached 1.78 trillion, growing by 5% compared to the end of the previous year, while the investment scale exceeded 1.7 trillion, also up by 5.1% [4]. Strategic Initiatives - The company has established a dynamic adjustment mechanism for product preset interest rates to enhance asset-liability linkage and diversify product offerings, thereby improving product competitiveness [2]. - The company is focusing on a multi-dimensional product matrix and integrating products with services to create comprehensive insurance solutions [2]. Investment Strategy - The company aims to optimize asset allocation through asset-liability linkage, maintaining a strategic focus on long-term bonds and enhancing fixed income investment capabilities [4][5]. - The company is actively investing in the Honghu Fund, which has successfully completed its first two phases and is progressing well in its third phase, with planned contributions of 46.25 billion [6][7]. Future Outlook - The company is committed to maintaining a value-centric approach, focusing on high-quality development and optimizing key value drivers to achieve sustainable growth in intrinsic value [3].

Core Viewpoint - Sunshine Insurance has reported a positive performance for the first half of 2025, with growth in core business value and structural optimization, leading to multiple brokerages issuing "buy" ratings [2] Group 1: Financial Performance - Total premium income for Sunshine Insurance reached 80.81 billion yuan, a year-on-year increase of 5.7% [2] - Insurance service income was 32.44 billion yuan, growing by 3.0% year-on-year [2] - Net profit attributable to shareholders was 3.39 billion yuan, reflecting a 7.8% increase [2] - The group's embedded value reached 128.49 billion yuan, up 11.0% from the end of the previous year [2] Group 2: Life Insurance Segment - Sunshine Life's new business value (NBV) grew by 47.3% year-on-year to 4.01 billion yuan [3] - The balance of Contractual Service Margin (CSM) was 56.08 billion yuan, an increase of 10.3% from the previous year [3] - Individual insurance premium income was 15.34 billion yuan, up 12.1% year-on-year, with new single premium income at 3.44 billion yuan [3] Group 3: Distribution Channels and Customer Management - The bancassurance channel generated total premium income of 35.44 billion yuan, a 4.2% increase, with new single premium income at 12.87 billion yuan [5] - The number of active outlets increased by 7.6%, and active personnel rose by 2.1% [5] - The company launched a customer demand perception plan to enhance customer experience and optimize product and service layout [5] Group 4: Non-Motor Insurance and Cost Management - Sunshine Property Insurance reported original premium income of 25.27 billion yuan, a 2.5% increase, with a comprehensive cost ratio improved by 0.3 percentage points to 98.8% [6] - Non-motor insurance premium income grew by 12.5%, accounting for 50.6% of total premiums [6] - Health and accident insurance premiums increased by 20.0% to 5.21 billion yuan [7] Group 5: Social Responsibility and Community Engagement - Sunshine Insurance provided risk protection of 35 trillion yuan to the real economy, with an investment balance exceeding 480 billion yuan [8] - The company supported small and micro enterprises with nearly 1.2 trillion yuan in risk protection [8] - In the first half of 2025, the company mobilized 5,029 volunteers, contributing a total of 13,399 hours of service [9]

Core Viewpoint - The article highlights the significant growth in the embedded value of Sunshine Insurance, indicating a strong operational performance during the high-quality transformation phase of the insurance industry [2]. Financial Performance - In the first half of 2025, Sunshine Insurance achieved total premium income of 808.1 billion, a year-on-year increase of 5.7% [2]. - The insurance service income reached 324.4 billion, growing by 3.0% year-on-year [2]. - The net profit attributable to shareholders was 33.9 billion, reflecting a 7.8% increase compared to the previous year [2]. - The group's embedded value reached 1284.9 billion, marking an 11.0% growth from the end of the previous year [2]. New Business Value (NBV) - Sunshine Life's new business value (NBV) saw a year-on-year increase of 47.3%, reaching 40.1 billion [4]. - The NBV for the current year showed a 7.0% increase compared to last year, exceeding market expectations [4]. - The contract service margin (CSM) balance was 560.8 billion, up 10.3% from the previous year [5]. Strategic Initiatives - The company is implementing a diversified development strategy, enhancing operational efficiency and value creation capabilities [5]. - The individual insurance segment reported a total premium income of 153.4 billion, a 12.1% increase year-on-year [5]. - The company is focusing on a dual product strategy of "floating income + risk protection," with over 50% of products falling into these categories [5]. Distribution Channels - In the bancassurance channel, total premium income was 354.4 billion, up 4.2% year-on-year, with new single premium income of 128.7 billion [6]. - The proportion of floating income products in new single premium income increased by 11.0 percentage points to 27.1% [6]. Product Development - The company is upgrading its product strategy to align with new economic cycles and the aging population [7]. - Innovations in pension financing and health insurance are being prioritized to meet diverse customer needs [7]. Non-Car Insurance Growth - Sunshine Property Insurance reported original premium income of 252.7 billion, a 2.5% increase, with a combined cost ratio improving by 0.3 percentage points to 98.8% [9]. - Non-car insurance premium income grew by 12.5%, accounting for 50.6% of total income [9]. Social Responsibility - Sunshine Insurance provided risk protection of 35 trillion for the real economy and invested over 480 billion [12]. - The company supports small and micro enterprises with nearly 1.2 trillion in risk protection [12]. - In the area of public welfare, the company has mobilized over 5,000 volunteers, contributing to various community service initiatives [14].

Core Viewpoint - Sunshine Insurance reported a year-on-year increase of 7.8% in net profit attributable to shareholders for the first half of 2025, reaching 3.39 billion yuan, with life insurance and property insurance net profits growing by 5.6% and 2.6% respectively [1][2] Group 1: Performance Summary - The net business value (NBV) of life insurance increased by 47.3% year-on-year to 4.01 billion yuan, with individual insurance and bank insurance channels growing by 23.5% and 53% respectively [1] - The comprehensive cost ratio (CoR) for property insurance improved by 0.3 percentage points to 98.8%, with claims and expense ratios showing mixed trends [2] - Sunshine Insurance's total insurance premium income rose by 2.5% year-on-year to 25.27 billion yuan, with a notable increase in non-auto insurance premiums [2] Group 2: Investment and Valuation - The internal value of Sunshine Group grew by 11.0% to 128.49 billion yuan, while net assets decreased by 10.1% to 55.84 billion yuan due to the impact of interest rate declines [2] - The company is currently trading at 0.38x and 0.33x P/EV for 2025 and 2026 estimates, with a target price of 4.60 HKD and a potential upside of 2.7% [2]

Core Viewpoint - The report from CICC maintains the target price for Sunshine Insurance (06963) at HKD 4.60, with a rating of outperforming the industry, reflecting a potential upside of 2.7% based on the 2025-2026 P/EV ratios of 0.40x and 0.34x respectively [1] Group 1: Life Insurance Performance - Sunshine Life's new business value (NBV) increased by 47.3% year-on-year to CNY 4.01 billion in 1H25, with individual insurance and bank insurance channels growing by 23.5% and 53% respectively [2] - The contract service margin (CSM) balance for life insurance reached CNY 56.08 billion, a 10.3% increase from the end of the previous year, indicating a positive trend in product structure optimization [2] Group 2: Property Insurance Performance - Sunshine Property's original insurance premium grew by 2.5% year-on-year to CNY 25.27 billion in 1H25, with non-auto insurance premiums increasing by 12.5% and accounting for 50.6% of total premiums [3] - The combined ratio (CoR) improved by 0.3 percentage points to 98.8%, with the loss ratio and expense ratio changing by +2.5 percentage points and -2.8 percentage points respectively [3] Group 3: Investment Performance - The net and total investment returns for Sunshine were 3.8% and 4.0% respectively in 1H25, showing stable performance despite a high base effect from bond investments in 1H24 [4] - The company increased its stock allocation by 1.8 percentage points compared to the end of the previous year, while also adding long-duration interest rate bonds to optimize the duration structure and cost-return matching [4] Group 4: Group Value Growth - The intrinsic value of Sunshine Group reached CNY 128.49 billion in 1H25, an 11.0% increase from the end of the previous year, with net assets amounting to CNY 55.84 billion [5]

Core Viewpoint - The report from CICC maintains the profit forecast for Sunshine Insurance for 2025-2026, with a target price of HKD 4.60, indicating a potential upside of 2.7% based on the current trading multiples of 0.38x/0.33x P/EV for 2025e and 2026e [1] Group 1: Life Insurance Performance - Sunshine Life's new business value (NBV) increased by 47.3% year-on-year to CNY 4.01 billion in 1H25, with individual insurance and bank insurance channels growing by 23.5% and 53% respectively [2] - The contract service margin (CSM) balance for Sunshine Life reached CNY 56.08 billion, reflecting a 10.3% increase from the end of the previous year [2] - The product structure has improved significantly, with over 50% of individual insurance channel products being floating income and protection-type products [2] Group 2: Property Insurance Performance - Sunshine Property's original insurance premium grew by 2.5% year-on-year to CNY 25.27 billion in 1H25, with non-auto insurance premiums increasing by 12.5% [3] - The combined ratio (CoR) improved by 0.3 percentage points to 98.8%, with the loss ratio and expense ratio changing by +2.5 percentage points and -2.8 percentage points respectively [3] - The combined ratio for auto insurance decreased by 1.6 percentage points to 98.1%, with the proportion of household vehicle premiums increasing by 3 percentage points [3] Group 3: Investment Performance - The net and total investment yields for Sunshine were 3.8% and 4.0% respectively in 1H25, showing stable performance despite a high base effect from bond investments in 1H24 [4] - The asset allocation saw an increase in stock proportion by 1.8 percentage points compared to the end of the previous year, along with an increase in long-duration interest rate bonds to optimize the duration structure and cost-revenue matching [4] Group 4: Group Value Growth - The intrinsic value of Sunshine Group reached CNY 128.49 billion in 1H25, marking an 11.0% increase from the end of the previous year [5] - The net assets amounted to CNY 55.84 billion, primarily due to the use of a 60-day moving average of government bond yield curves for discounting traditional insurance reserves [5]

Core Viewpoint - The insurance industry is witnessing a significant change as some listed insurance companies have chosen to stop disclosing monthly premium income data, marking a shift in the industry's information disclosure practices [2][5]. Group 1: Changes in Disclosure Practices - China Ping An, China Life, and China Pacific Insurance have not disclosed monthly premium data for seven consecutive months, while New China Life continues to do so [2]. - The cessation of monthly premium disclosures is not a uniform action across all A-share listed insurers, indicating a divergence in practices within the industry [2]. Group 2: Reasons for Change - The shift is partly attributed to the adoption of new standards, which suggest that original insurance premium income does not fully reflect the insurance service income of companies, particularly in life insurance [2]. - Companies are focusing more on value indicators rather than scale indicators, as short-term data may not provide significant value to investors [2]. Group 3: International Perspective - Some international insurance companies, such as Allstate and Prudential, also do not disclose monthly premium information, focusing instead on annual financial reports and other metrics [3]. - The practice of disclosing monthly premium data has both advantages and disadvantages, with transparency being beneficial for investors but short-term fluctuations potentially misleading [3]. Group 4: Strategic Shift - The decision to stop disclosing monthly data reflects a strategic shift from a focus on short-term performance to long-term planning, emphasizing the development of protection-oriented products and optimizing business structures [4]. - This transition aligns with a broader industry trend moving from a "scale-oriented" approach to a "value-oriented" strategy [5]. Group 5: Market Transparency and Investor Impact - The lack of monthly premium data may increase information asymmetry in the market, making it more challenging for investors, especially smaller ones, to assess company performance [4]. - To mitigate this information gap, companies are encouraged to enhance market transparency through detailed quarterly reports and regular investor communications [4].