Guotai Haitong: Industry concentration is expected to increase; bullish on opportunities for valuation recovery of leading insurers from low levels.

Guotai Haitong released a research report stating that the "Insurance Law (Draft Amendment for Public Comment)" focuses on improving systems for shareholder constraints, prudential regulation, risk disposal, and consumer protection. It is expected that the market will pay more attention to insurers' capital strength and governance levels, which benefits leading insurers with prudent operations. Industry concentration is expected to increase, and the report is bullish on opportunities for valuation recovery of leading insurers from low levels, maintaining an "Overweight" rating on the industry. Guotai Haitong's main views are as follows: Listed insurers' interim results are broadly in line with expectations; insurance stocks perform steadily amid style rebalancing From August 28 to September 11, the SW Insurance Index (801194.SI) fell from 1222.61 to 1212.55, a decline of -0.82%. Over the same period, the CSI 300 changed by -2.15%, the Shanghai Composite Index by -1.62%, and the Hang Seng Index by -3.05%. Insurers have completed their interim report disclosures. The divergence in profit performance was mainly driven by differences in equity strategies. Interim dividends were generally stable, reflecting a focus on shareholder returns, and core operating indicators for both property and life insurance were broadly positive. Currently, insurance stock prices still reflect the impact of the external environment more than internal operating results. Against the backdrop of style rebalancing, we continue to be bullish on valuation recovery opportunities in the sector. The National Financial Regulatory Administration solicits public comments on the "Insurance Law (Draft Amendment for Public Comment)"; five central state-owned insurers receive capital injections from the Ministry of Finance 1) Data on August 28 showed a new round of QDII quota expansion, with insurance institutions receiving an additional USD 1.36 billion in investment quota; 2) On September 3, central bank data showed that at the end of Q2, total assets and liabilities of the insurance industry grew steadily year-on-year, at +11.8% and +12.2% respectively; 3) On September 4, the National Financial Regulatory Administration publicly solicited opinions on the revision of the "Insurance Law (Draft Amendment for Public Comment)," improving industry regulation, risk disposal, and consumer protection mechanisms across multiple dimensions. 4) On the same day, the State Council Information Office held a press conference in its "Starting the 15th Five-Year Plan" series, stating that China's long-term care insurance system has achieved outstanding results, covering over 320 million insured people and benefiting more than 4.6 million disabled persons. 5) News on September 6 indicated that the Ministry of Finance plans to inject a total of RMB 70 billion into five central state-owned insurers to strengthen the industry's capital strength and risk resistance. The People's Insurance increased A-share equity allocation in H1; Guo Shi approved to serve as Vice General Manager of AIA Life 1) On August 31, The People's Insurance revealed at its interim results conference that in H1 it increased its A-share positions by approximately RMB 30 billion on a net basis, completed the establishment of a RMB 10 billion private securities investment fund, and its investment performance outperformed the CSI A500 Dividend Index; 2) News on September 8 indicated that Guo Shi was approved in August 2026 to serve as Vice General Manager of AIA Life. Risk warnings: Liability cost improvement falls short of expectations; sustainability of customers' insurance savings demand falls short of expectations; long-end interest rates decline; equity market volatility.