Founder: Maintain strong buy rating on PICC P&C (02328), with expected improvement in both full year premium and COR trends.

Founder released a research report stating that it maintained a strong recommendation rating for PICC P&C (02328). The company's premium growth rate is stable, COR continues to improve, the effects of risk reduction governance are significant, and the operational level on the liability side continues to improve. The company has a high proportion of OCI stocks, actively seizing structured market opportunities, and the investment side continues to improve. The resonance of assets and liabilities will drive ROE and valuation improvement. It is expected that the company's net profit attributable to shareholders for 2025-2027 will be 452 billion, 475 billion, and 498 billion yuan, with year-on-year growth of +40.6%, +5.0%, and +4.9% respectively. The current stock price corresponds to a P/B ratio of 1.30/1.20/1.12 for 2025-2027E. The main points of Founder are as follows: Event: On 10/16, PICC P&C released a performance forecast for the third quarter report. It is expected to achieve a year-on-year growth of 40%-60% in net profit attributable to shareholders for the first three quarters. Profit scale in 9M25 exceeded the full year of 24 and reached a historical high According to the company announcement, the net profit attributable to shareholders in 9M25 is 374.5 billion to 428 billion yuan, with a year-on-year growth of 40% to 60%; of which the net profit attributable to shareholders for the third quarter of 2025 is 130 billion to 183.5 billion yuan, with a year-on-year growth of 57.3% to 122.1%. The cumulative profit scale has reached a historical high, with the profit for the first three quarters of 25 already exceeding the full-year profit for 24 (321.6 billion yuan). Based on the net assets for the first half of 25, the static ROE for the first three quarters is 13.5% to 15.4%, and the simple annualized ROE for 25E is 17.9% to 20.5%. High profit growth is expected to benefit from COR improvement and equity market growth It is expected that the high-speed growth in net profit of PICC P&C is due to two factors: 1. Significant improvement in underwriting profit: the weakening of large catastrophe risks in the third quarter of 25, the impact of the unification of car insurance and report lines, and significant effects of risk business governance are expected to significantly improve COR year-on-year (COR for the third quarter of 24 is estimated to be 102.1%), combined with steady premium growth, it is expected that the underwriting profit will be driven by a year-on-year high growth to propel profit growth (underwriting profit of the company increased by 44.6% year-on-year in the first half of 25). 2. Equity market growth drives the increase in company investment income: the proportion of company stock investment in the total investment assets is relatively low (25.6% in the first half of 25), but the proportion of stocks + funds in the investment assets reaches 14.5% (with a stock proportion of 9.2%), with a high proportion of equity, combined with the optimization of the allocation structure, jointly driving the increase in company investment income. It is expected that the improvement trend in premiums and COR will continue throughout the year 1. Premium growth rate is expected to rebound in the fourth quarter of 25: in the short term, in the period from January to August 25, the premium income of property insurance companies in China reached 1.22 trillion yuan, with a year-on-year growth of 4.7% (monthly growth of 0.9% in August), the growth rate is expected to decline due to factors such as the high base of the previous year, combined with the short-term landing of non-auto insurance report lines, there may be pressure on the growth rate; but with the company's risk business governance pace being ahead, the relative low product rates combined with the low base of agricultural insurance and other factors, it is expected that the premium growth rate may rebound in the fourth quarter of 25. 2. The trend of COR improvement may continue: the weakening of major catastrophe risks reducing the claims ratio, the gradual improvement in expense ratio as various product report lines are integrated, will continue to drive the favorable trend of COR, leading to a continuous increase in underwriting profit. Risk warning: fluctuations in the equity market, unexpected major catastrophes, lower-than-expected non-auto insurance sales.