UBS: Upgrading the China Reinsurance (01508) rating to “buy”, net profit after tax is expected to increase 10% year-on-year in the medium term

The Zhitong Finance App learned that UBS released a research report saying that it raised the China Reinsurance (01508) investment rating from “neutral” to “buy”, and the target price was raised from HK$1.7 to HK$1.75. It is predicted that the company's net profit after tax will increase 10% year-on-year to RMB 6.9 billion in the first half of the year, mainly driven by overall growth in insurance service performance rather than investment income. UBS raised China Reinsurance's earnings forecasts for 2026 to 2028 by 8%, 13% and 7%, respectively, to 0.3 yuan, 0.34 yuan and 0.35 yuan.

UBS estimates that financial reinsurance premiums increased 2% year-on-year in the first half of the year, with domestic premiums increasing by 3%, benefiting from the high share of non-auto insurance businesses. The increase is expected to outperform the industry, while overseas premiums are generally stable. The bank expects the domestic comprehensive cost rate of reinsurance to be roughly stable at about 96% year on year; the overseas comprehensive cost ratio improved 4.5 percentage points year over year to 82.5%, mainly due to natural disasters, which was the lowest level in the first half of 2020. In terms of life insurance reinsurance, insurance service performance is expected to recover, benefiting from the reduction in savings businesses and the marginal release of additional contract services brought about by the early termination of some contracts.