Shen Wan Hongyuan: Strong performance on the investment side is expected to drive insurers' 25Q3 profits to exceed expectations

The Zhitong Finance App learned that Shen Wan Hongyuan released a research report saying that the total net profit of 3Q25 A-share listed insurers is expected to increase YoY +26.7% to the mother to reach 186.486 billion yuan. Benefiting from the impressive performance of the equity market, as of October 15, a listed insurer had announced a pre-increase in performance. The net profit from 1-3q25 Xinhua Insurance is expected to be +45%-65% YoY to reach 93.06-13.442 billion yuan, and the performance continues to exceed expectations on the basis of a high base. Overall, the total net profit of 1-3Q25 A-share listed insurers is estimated to be +14.3% YoY to 364.678 billion yuan, a further increase of 10.6pct over 1H25. Among them, the total profit growth rate of A-share listed insurers in the 3Q25 single quarter was YoY +26.7% YoY +26.7% to 186.486 billion yuan, showing impressive performance.

Looking at the company segments, the net profit performance of 1-3Q25 is expected to be Xinhua Insurance (yoy +54.2%), China Life Insurance (yoy +18.1%), China Taibao (yoy +14.1%), China People's Insurance (yoy +13.6%), and China Ping An (yoy +4.3%); among them, the net profit growth rate for the 3Q25 single quarter is expected to be achieved by Xinhua Insurance (yoy +26.3%), China Life Insurance (yoy +24.6%), China Taibao (yoy +20.2%), China Taibao (yoy +20.2%) Insurance (yoy +8.1%)

Shen Wan Hongyuan's main views are as follows:

Personal insurance: Benefiting from the expected reduction in scheduled interest rates, the listed insurer NBV is expected to perform well in July-August, which clearly supports the steady growth of NBV

On July 25, the Insurance Industry Association announced that the research value of the scheduled interest rate for ordinary personal insurance products in the second quarter was 1.99%. The difference between the predetermined interest rate research value and the upper limit of the predetermined interest rate exceeded 25 bps for two consecutive quarters, triggering a reduction in the scheduled interest rate. Starting September 1, the maximum predetermined interest rates for regular/dividend/universal products were reduced by 50 bps/ 25 bps/ 50 bps to 2.0%/1.75%/1.0%, respectively. In anticipation of a reduction in scheduled interest rates, it is expected that in July-August, customer product configuration demand will once again be released centrally, which will effectively support the NBV growth rate. The NBV growth rate of 1-3Q25 listed insurers is expected to show Xinhua Insurance (yoy +49.7%), China Ping An (yoy +40.4%), China Taibao (yoy +33.5%), and China Life (yoy +24.5%).

Financial insurance: Under a low base, it is expected that COR will continue to improve year-on-year in the first three quarters

The original insurance premium revenue of 1-8M25 financial insurance companies reached 1.22 trillion yuan, up 4.7% year on year, and compensation expenses were 771.7 billion yuan, up 0.01% year on year; direct economic losses due to natural disasters in July-August reached 71.71 billion yuan (yoy -39.9%). Although the September disaster is expected to put phased pressure on compensation, leading insurers continue to promote excellent structure, risk control, and cost reduction strategies, and the cumulative base is low. It is expected that 1-3Q25 listed companies' COR performance will continue to improve year on year; looking at the company breakdown, 1-3Q25COR's performance is expected to continue. China Financial Insurance (yoy-1.8pct to 96.4%), Ping An Financial Insurance (yoy-1.2pct to 96.6%), Taibao Financial Insurance (yoy-0.9pct to 97.8%).

Investment side: The equity market has performed well. It is expected that insurers that have better grasped growth stock opportunities will outperform their peers

The 3Q25 Shanghai and Shenzhen 300 Index/China Securities 800 Index/China Securities Dividend Index/Science Innovation 50 Index were +17.9%/+0.9%/+49.0% respectively, +1.8pct/+3.7pct/-5.5pct/+26.5pct compared with the same period last year. Meanwhile, 3Q25 long-term interest rates rebounded in stages. As of September 30, the yield to maturity on 10-year treasury bonds was 1.86%, up 21.4 bps from the level at the end of June, which is expected to put some pressure on the performance of bonds classified as FVTPL, but on insurance Service performance constituted favorable.

Investment advice: Optimistic about the insurance sector that is undervalued and has three quarterly performance catalysts

Under the high performance base trend, benefiting from the impressive performance of the equity market and the continuation of the trend of insurance capital entry into the market, the profits of 3Q25 A-share listed insurers are expected to maintain positive growth, and the overall performance has exceeded expectations. Short-term recommendations focus on undervalued and highly flexible targets. We continue to recommend China Life Insurance (02628), Xinhua Insurance (601336.SH,01336), China Taibao (601601.SH), Ping An (601318.SH), Sunshine Insurance (06963), and China Insurance (601319.SH). It is recommended to focus on China's Taiping (00966).

Risk Alerts

Long-term interest rates have declined, equity markets have fluctuated, major disasters have occurred frequently, and policy impacts have exceeded expectations.