Orient: The resilience of the liability side of the insurance industry remains strong, waiting patiently for the repair of asset-liability resonance.

Orient released a research report stating that after a continuous correction, the valuation-cost ratio of the insurance sector is further highlighted, and it is recommended to focus on the medium to long-term allocation opportunities under the resonance of debt improvement and asset repair. On the liability side, the premium income of life insurance continued to grow rapidly in the first three months of 2026, and the resilience of life insurance remains strong. The optimization of product structure will push down liability costs gradually, and the potential pressure on interest spread is expected to ease. Both auto insurance and non-auto insurance in property insurance have improved marginally, and top insurance companies still have advantages in underwriting quality. Key points from Orient: Event The China Banking and Insurance Regulatory Commission announced the operational situation of insurance companies from January to March 2026. The insurance industry's premium income from January to March 2026 was 2,310.5 billion yuan, an increase of 6.3% year-on-year. Of this, life insurance premium income was 1,780.3 billion yuan, an increase of 7.3% year-on-year; property insurance premium income was 530.2 billion yuan, an increase of 2.9% year-on-year. Life insurance premium growth is slowing down after a strong start, but savings-type demand remains resilient From January to March 2026, life insurance premium income was 1,503.5 billion yuan, an increase of 8.7% year-on-year, down 2.2 percentage points from the +10.9% in January to February, but significantly improved compared to the same period last year. The single-month premium income of life insurance in March was 371.2 billion yuan, an increase of 2.5% year-on-year. After the peak of the "strong start", the growth rate naturally declined, but the industry's liability side still maintained positive growth. The research value of ordinary life insurance products recently increased to 1.93%, up 4bp from the previous quarter, marking the first upward adjustment since the disclosure of this index, and has not triggered the dynamic adjustment mechanism of the stipulated interest rate. Product pricing has entered a relatively stable period. Combined with the current stabilization of long-term interest rates, the limited probability of a significant downward adjustment in the 5-year fixed deposit rate and the 5-year LPR, the bank predicts that the probability of a further downward adjustment in the stipulated interest rate of ordinary life insurance within 2026 is low, which will help alleviate the disruption of product sales rhythm caused by the switch of product suspension. In the low-interest-rate environment and the background of residents' funds repositioning, demand for traditional savings-type products still has support; at the same time, dividend insurance, under the "guaranteed + floating" framework, balances prudence and income flexibility, and is expected to remain an important direction for the transformation of life insurance products. Health and accident insurance premiums remain under pressure, with protective demands recovering weaker than savings-oriented businesses In January-March 2026, health and accident insurance premium income was 276.8 billion yuan, an increase of 0.4% year-on-year; the single-month premium income in March was 98.3 billion yuan, a decrease of 3.2% year-on-year. The bank predicts that current resident insurance allocation demand still focuses more on savings-type products, and the short-term demand for protective-type products is relatively weak, with continued growth in health insurance depending on the joint efforts of medical insurance, commercial insurance, health management services, and product supply optimization. New premiums of policyholders' investment funds continued to rebound, with new premiums of universal life insurance's separate accounts still under pressure, with stronger demand for savings-oriented products than risk preference products From January to March 2026, new premiums of policyholders' investment funds were 298.2 billion yuan, an increase of 14.5% year-on-year, mainly supported by the demand for account-type savings products such as universal life insurance; new premiums of universal life insurance's separate accounts were 3.0 billion yuan, a decrease of 11.8% year-on-year, mainly affected by market volatility and cautious customer risk preferences. Property insurance overall maintains growth, with non-auto insurance performing better than auto insurance From January to March 2026, the premium income of auto insurance/non-auto insurance was 222.6 billion yuan/307.6 billion yuan, a decrease of 0.4% and an increase of 5.3% year-on-year, respectively. Auto insurance premium income continued to be under slight pressure, with the short-term fluctuations related to new car sales: from January to March 2026, passenger car and new energy vehicle sales were 5.936 million units and 2.962 million units, a decrease of 7.5% and 3.6% year-on-year, respectively. Non-auto insurance remains the main support for property insurance premium growth, with accumulated premium income of liability insurance/agricultural insurance/short-term health insurance/short-term accident insurance of 45.5 billion yuan/44.3 billion yuan/132.7 billion yuan/16.0 billion yuan, an increase of 7.1%/ -2.6%/ 16.3%/ 8.8% respectively year-on-year. Non-auto insurance overall performed well, while agricultural insurance experienced temporary pressures and there is still structural differentiation within non-auto insurance. Investment recommendations and investment targets Recommended to focus on: leading insurance companies with strong performance in the "strong start", leading the transformation of dividend insurance, and stable channel operations; companies with higher equity flexibility on the asset side, higher proportion of other comprehensive income (OCI), and better duration match, which have stronger valuation repair and performance elasticity. Related targets: Ping An Insurance, China Pacific Insurance, The People's Insurance, New China Life Insurance, China Life Insurance. Risk warning Policies falling short of expectations, increased volatility in capital markets, slower-than-expected growth in residents' wealth, sharper-than-expected decline in long-term interest rates, and slower-than-expected reform of insurance companies.