保险框架：“慢牛市”下的戴维斯双击

Summary of Conference Call on the Insurance Industry Industry Overview - The insurance industry is currently experiencing a "slow bull market" driven primarily by investment yield improvements, with a low proportion of new business relative to existing liabilities. The key to future profitability lies in the widening gap between investment yields and liability costs [1][2]. Core Insights and Arguments - Investment Yield and Liability Costs: The pricing rate for ordinary life insurance is set to decrease by 50 basis points (BP), which will improve existing liability costs, although the extent of this improvement remains to be seen. The dynamic adjustment mechanism and cost control measures are expected to continue enhancing the cost of existing liabilities [1][2]. - Regulatory Adjustments: Regulatory changes and market stabilization measures have increased the capacity and willingness of insurance funds to allocate to equity assets. It is anticipated that 30% of new premiums will be allocated to equity assets, which will help boost investment yields [1][2]. - Market Valuation: The market currently undervalues the existing business of insurance companies, failing to fully account for the potential impacts of increased equity allocation and reduced cost structures. This presents an opportunity for valuation recovery within the industry [1][3]. - Davis Double Opportunity: The current insurance industry presents a Davis Double opportunity based on three factors: investment yield, liability costs, and leverage effects. Historical data indicates that investment yield improvements have significantly influenced valuations during previous upturns [2]. Stock Selection Criteria - High Leverage Life Insurance Stocks: Focus on companies that are significantly impacted by expected improvements in interest spreads, such as New China Life, China Life, and China Pacific Insurance [4]. - Stable Dividend Stocks: Consider companies with stable operations and dividend outlooks, such as Ping An Insurance, China Re, and China Taiping [4]. Future Profitability and Valuation - Valuation Recovery Potential: The insurance industry's valuation should be assessed from both net asset and existing business perspectives. The current low market valuation of existing business does not consider the potential for equity allocation and cost reductions. In an ideal scenario, industry valuations could recover to one times net asset value, with further upside potential [3]. - Profitability Model Breakdown: The profitability model can be dissected into investment yield, liability cost rate, and leverage. All three factors currently show growth potential, supporting the case for industry valuation recovery [6]. Additional Considerations - Leverage and Investment Yield: The potential for increased leverage and investment yield, combined with declining liability costs, suggests that future interest spreads have room for improvement. This is supported by the current market and regulatory environment [5][6].