1-2M26: Life sustained double-digit rise; P&C auto premiums dipped for two consecutive months

1-2M26: Life sustained double-digitrise; P&Cautopremiums dipped for two consecutive months In 1-2M26, total insurance premiums amounted to RMB1.64tn, up 8.4% YoY with Febpremium income up 0.8% YoY (vs. Jan: +11.6%) partly due to theimpactof ChineseNew Year(Feb: 16 working days). Personal life and P&C industry premiumsgrowthdiverged by +10.2%/-1.4% YoY to RMB1.4tn/RMB240bn in 1-2M26 given the strengthin Life jumpstart sales and weakenedUW demandsfrom autoinsurance.Wehaveobservedthree key trends in the industry forthefirst two monthsincl.1) Life growthsustained in double-digit (+10.9%)driven by resilient savings demands amid the trendof deposit migration; 2) P&C weakened (-1.4%)asauto premiumsdipped for twoconsecutive months(Jan/Feb:-0.8%/-1.1%)due to the lackluster new vehicle sales;3) P&C Healthdrove non-auto premium growth up by 20.5% YoY in 1-2M26,signalling upside potentialamid deepeningcooperation betweenbasicmedicalandcommercialhealth. Looking into 2026E, we expect the mixofparticipating in newproduct sales tofurthertick up from~50% for major listed life insurersas reported inFY25,andbancaNBV to remain as akey driver for growthdiversification.On P&Cfront,non-auto CoR awaits improvement uponcompletionof expense reporting andimplementation. We view the recent stock price fluctuationsmore affected bytradingsentiment,andsolidearningsimprovementshouldfuelvaluationrecovery.Maintainsector OUTPERFORM. ChinaInsurance Nika MA(852) 3900 0805nikama@cmbi.com.hk Recent reports: 1.China Insurance-Sunshine InsuranceFY25: Strong NBV momentum; One-offtax gain lifted net profit, Mar 18 2026 (link) 2.China Insurance-Dec Life and P&Cpremiumsmarginally improved,Feb 4,2026 (link) 3. China Insurance-Easingsolvency riskfactors to steer insurance funds into long-term stockholdings, Dec 8, 2025 (link) 4.中国保险-股票投资风险因子拟再优化，险资长钱加速入市可期,May 8, 2025(link) Life premiumsustained double-digitgrowth.In 1-2M26,personal life industrypremiumgrew 9.7%YoY to RMB1.31tn,with life/health/accident premiums+10.9%/ +3.1%/-12.4% YoYto RMB1.13tn/RMB172bn/RMB6bn. Life premiumwas+13.8%/ +2.5% YoY to RMB861bn/RMB271bn in Jan/Feb 2026, representingamix of 88%/86% respectively. Top-up premium(mainly from universal life) and unit-linked rose 16.8%/1.7% YoY to RMB239bn/RMB2bn in 1-2M26,withariseof 2.8%/33.8% YoYin Feb(Jan: +20.4%/-25%). Wesee the robust jumpstart sales fromcontinuedstrong onshore savingsdemandsamidthetrend ofdeposit migration.Thegrowthin universal life premiumswelltracking that of life insurance, which weexpect thelineto benefit from an increasing mix of participatingpolicysales. 5.China Insurance:Raised cap forinsurer’sequity asset allocation couldunleash max. RMB 1.7tn to stock market,Apr 9,2025 (link) 6.China Insurance-4Q24 insurancefunds:industry financial rate of returnextended rally in a five-quarter streak,Feb 25, 2025 (link) 7. China Insurance-11/12M Monthly: Lifesales diverged during the jumpstart; P&Csoftened by non-auto slowdown, 21 Jan,2025 (link) Loweredillustration rate capforparto 3.5%mayboostshort-termsales.According toCailian Press,Chinese regulars havereducedthe illustration rate capfor participating policies to 3.5%from 3.9% (link). Products with an illustration ratehigher than 3.5% must completethere-filingprocedureor discontinue sales before30Jun 2026.Also, the industry came into a consensus on the actual dividend levelfor participating products at 3.2%.We expect the mix of participating in new productsales to furtheredgeup fromthe~50% for major listed insurers as reported in FY25and referring to the ANPperformance of HK-listed life insurers in 3Q25, the loweredillustration rate cap for par policies could boost short-term salesdue to front-loadeddemands(i.e.AIA HK’s ANP+37% in2Q25vs. +16% 1Q25according toHKIA). 8. China Insurance-10M24 Monthly: Lifepremiumretreated as expected,P&Cgrew withauto sales momentum, Nov 19,2024 (link) 9. China Insurance-9M24 Monthly: Lifegrowth normalized with highlights; P&Cexpected to see better UW profit, Oct 21,2024 (link) 10. China Insurance-8M24 Monthly: Lifejumpedon top of low base;P&C topplayersrebounded in growth,Sep 23,2024 (link) P&Cweakened by auto dips and slower non-autouptick.P&Cpremium wasRMB331bn in 1-2M26, up 3.5% YoY, with auto/non-auto premium-0.9%/+7% YoYto RMB142bn/RMB190bn, representing a mix of 43%/57%. Auto premium fell 1.1%YoY to RMB53.4bn in Feb (vs. Jan:-0.8%), retreating for two consecutive monthsaspassenger vehiclesand NEV salesfell15.4%/14.2%YoY in Feb, per CAAM.Ticket size could remain relatively stable on prudent expense rate, as we estimate.Non-auto premiumwas RMB67.2bn in Feb, +0.3% YoY (vs. Jan: +11.1%) mainlydriven by P&C health increase. Premiums from health/liability/accident/agricultural/others were +20.5%/+10.2%/+6.3%/-3.9%/-7.1% YoY in 1-2M26, with only healthsustaininggrowthin Feb,upby10.2% YoY to RMB35bn.We thinktheintroductionof expense reporting and implementationfornon-autosegmentscouldimproveCoR over the longrunyetmaylead toUWs