Xiaomo: China Ping An (02318) and China Life (02628) are preferred for domestic insurance's solvency in the third quarter

The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that the solvency ratio of China's insurance industry remained stable in the third quarter, although the industry generally recorded quarterly net losses. The average core solvency ratio of major life insurance companies increased by 2 percentage points to 140% from quarter to quarter, while major non-life insurance companies fell 9 percentage points to 188% from quarter to quarter. The bank continues to prefer Ping An (02318) and China Life (02628) H shares.

The bank pointed out that major insurance companies reiterated their commitment to maintain stable dividend payments at the performance meeting, and emphasized that after excluding short-term stock market fluctuations, core profit grew steadily, and that new business momentum had clearly recovered since August. Management said that new business sales will rebound rapidly in the fourth quarter, helping the market refocus on the industry's attractive dividend rate of about 5% to 8%. The bank believes that tax-preferential long-term savings and pension product policies, which are expected to be introduced at the end of the year, are also an important short-term catalyst.

J.P. Morgan said that according to Chinese accounting standards, the industry's net profit for the first nine months of this year fell 27% to 47% year-on-year. The value of China Life Insurance's new business in the first nine months increased 13% year on year. The value of the new business of Xinhua Insurance (01336) also recorded positive growth, while the value of the new business of China Taibao (02601) Life Insurance decreased 6.5% year over year. The bank pointed out that China Life Insurance and China Ping An Life Insurance have successfully reduced interest rate risk through prudent asset and liability management.