Guosen: The long-term growth space and strategic value of new energy vehicle insurance are clear. Traditional leading companies are more likely to enjoy excess growth.

Guosen releases research report saying that the new energy vehicle insurance track is transitioning from initial extensive growth towards a high-quality competition stage centered around technology and ecology. Despite short-term profitability pressure, its long-term growth space and strategic value are clear. The bank believes that attention should be focused on insurance companies that lead in data technology investment, have deep partnerships with top new energy vehicle manufacturers, and have a head start and clear path in international layout. Insurance companies, represented by the "big three", are more likely to turn their current scale and scene advantages into long-term risk pricing and cost control capabilities, thus crossing cycles and sharing the excess growth brought by industry structural changes. The bank suggests focusing on investment opportunities in the top property insurance companies under the structural reconstruction opportunities of the auto insurance business. Guosen's main points are as follows: Industry cycle view on property insurance: Shanxi Guoxin Energy Corporation's auto insurance has entered a "golden development period" of simultaneous increase in quantity and price Under the national strategy guidance of the "dual carbon" goal and continuing policy incentives such as purchase tax reduction, Shanxi Guoxin Energy Corporation's car market penetration rate continues to increase rapidly. By 2024, Shanxi Guoxin Energy Corporation's car sales account for 40.9% of total new car sales, with a retail penetration rate of nearly 50%, and its sales growth significantly surpassing traditional fuel vehicles, providing solid native power for car insurance premium growth. At the same time, the penetration rate of "Advanced Driver Assistance Systems (ADAS)" exceeds 50% and the popularization of innovative models such as "Usage-Based Insurance (UBI)" are reshaping the risk management and pricing logic of car insurance at a technical level, providing key tools to solve the cost dilemmas in the industry. The high growth of new energy vehicle insurance is due to the current "high cost, high claims" pressure, rooted in the essential differences in risk structure between new energy vehicles and traditional fuel vehicles The high cost and high repair barriers of the "three electric systems" core components - battery, motor, and control, have not been fully priced by traditional actuarial models. The introduction of intelligent components complicates accident liability determination, and the younger, more frequent use of vehicle owners leads to higher accident frequencies. Data from 2024 showing an industry underwriting loss of 5.7 billion yuan intuitively demonstrates the profound mismatch between traditional auto insurance models and the structural features of new energy vehicles. The industry's profit model urgently needs restructuring, with core directions in risk reduction, ecological integration, and standard international expansion building competitive barriers and highlighting leadership effects Firstly, in recent years, insurance companies, led by the top "big three", have vigorously developed risk reduction services in risk management systems, empowering business development and optimizing risk management levels. Ping An Property Insurance has cumulatively reduced losses by over 10 billion yuan through such technologies; meanwhile, PICC Property and Casualty Company Limited provides dynamic risk profiles and warnings through the "Wanxiang Cloud" platform to shift risk control from "post-claims" to "prevention". Secondly, ecological integration with vehicle manufacturers to solve data islands and repair cost issues. Car manufacturers are deeply involved through setting up or acquiring insurance companies, while insurance companies cooperate strategically with manufacturers in data sharing, maintenance network construction, shifting relationships from zero-sum games to symbiotic wins. Finally, following the Chinese auto industry chain going global, opening up a second growth curve. For example, PICC Property and Casualty Company Limited providing localized services for BYD Company Limited's European car owners through Ansheng Network is a typical case. Chinese insurance companies are using a model of "front-end cooperation, middle-end empowerment, and back-end reinsurance" to export data and risk control capabilities accumulated domestically to overseas markets along with the global expansion of domestic new energy vehicles. Risk warnings: High repair costs for new energy vehicles insurance; COR performance below expectations; intensified market competition, etc.