Guotai Haitong: Life insurance growth picked up from January to September, while property insurance growth remained steady; the insurance sector's valuation is expected to still have room for recovery.

Guotai Haitong released a research report stating that from January to September 2026, life insurance premium growth picked up, with monthly growth rising notably, indicating a strong appetite for business expansion; property insurance premiums maintained positive growth, with non-auto insurance premiums growing steadily. The report is optimistic about earnings improvement driven by lower liability costs and stabilizing asset returns, and maintains an "Overweight" rating. Guotai Haitong's main views are as follows: Life insurance premiums turned positive year-on-year from January to September 2026, with monthly growth rising notably. According to the National Financial Regulatory Administration, cumulative original premium income of the insurance industry in the first nine months of 2026 was RMB 5,261.3 billion, up 0.9% year-on-year, 0.5pt higher than the first eight months; cumulative original premium income of the life insurance industry in the first nine months was RMB 3,863.1 billion, up 0.5% year-on-year, 0.7pt higher than the first eight months, with September monthly original premiums of RMB 291.2 billion, up 10.5% year-on-year. By product line, life insurance, health insurance and accident insurance were RMB 3,200.4 billion, RMB 635.2 billion and RMB 27.4 billion respectively, up 0.9%, down 1.1% and down 9.8% year-on-year respectively, with monthly growth of +14.6%, -1.0% and -9.1% year-on-year respectively. In the first nine months, new contributions to policyholder investment funds were RMB 537.8 billion, up 6.9% year-on-year, with September monthly down 8.8% year-on-year; new contributions to separate accounts of unit-linked insurance were RMB 8.3 billion, down 50.2% year-on-year, with September monthly down 77.7% year-on-year. Life insurance industry premium growth picked up, and medium- to long-term resident demand for savings-type insurance allocation remains robust. Property insurance premiums rose 2.0% year-on-year cumulatively from January to September 2026, with non-auto insurance premium scale maintaining steady growth. According to the National Financial Regulatory Administration, cumulative original premium income of the property insurance industry in the first nine months of 2026 was RMB 1,398.2 billion, up 2.0% year-on-year (previous value 2.2%), of which auto insurance and non-auto insurance original premium income were RMB 683.4 billion and RMB 714.8 billion respectively, basically flat and up 4.0% year-on-year respectively, with auto insurance/non-auto insurance accounting for 48.9%/51.1% of property insurance premiums respectively; September monthly property insurance premiums were RMB 150.9 billion, down 0.1% year-on-year (previous value 1.8%), of which auto insurance monthly was down 0.2% year-on-year (previous value -0.1%), and non-auto insurance monthly was up 0.1% year-on-year (previous value 4.6%). Affected by the decline in auto sales (September monthly down 8.4% year-on-year), September monthly auto insurance premiums edged down; the steady growth of non-auto insurance was mainly driven by growth in liability insurance/health insurance/accident insurance, up 8.3%/15.4%/5.5% year-on-year cumulatively (previous values 8.5%/16.6%/6.3% respectively), with monthly growth of 7.3%/3.2%/0.6% year-on-year respectively (previous values 8.7%/28.9%/2.5% respectively). Asset and liability operations improving; optimistic about valuation recovery of insurance stocks. 1) On the liability side, the bank expects insurers to face greater base pressure in Q3, with earnings under temporary pressure. However, medium- to long-term savings demand for insurance remains robust, the appeal of participating insurance continues, and insurers continue to develop diversified products; judging from expectations for next year's opening campaign, the appetite for business growth is expected to remain strong. 2) On the asset side, affected by recent equity market volatility, listed insurers continue to optimize asset allocation, gradually balancing toward dividend/growth styles; the bank remains optimistic about the earnings improvement trend under insurers' steady operations. Investment recommendation: In an environment of market style rebalancing, along with improved liability costs and gradually stabilizing asset-side returns, the insurance sector's valuation is expected to still have room for recovery. Maintain the industry "Overweight" rating. Risk warnings: decline in long-end interest rates; equity market volatility; limited sustainability of customer demand.