Recently, the hot discussion of the delayed retirement policy has triggered widespread public concern about the pension issue, which will obviously promote residents to pay more attention to personal pension planning, and give rise to greater demand for commercial pension insurance.
Based on this, Ping An, as a leading insurance company with in-depth layout in the field of medical and elderly care services, is also ushering in greater historic opportunities.
Recently, Ping An's premium data for the first eight months of the year was released, and the premium data showed its steady growth trend, so what signals are worth paying attention to behind this? How do you see the opportunities for the company's long-term growth?
1· Perspective on the premium data in the first eight months: the inflection point is established, unlocking new growth opportunities
First of all, let's look at Ping An's total premium income.
From January to August, Ping An's total premium income was RMB620.706 billion, an increase of 7.64% year-on-year, a record high for the same period in history.
Judging from the year-on-year growth rate of premium income in the first few months of this year, it is not difficult to find that Ping An continues to maintain a trend of growth expansion.
Although the year-on-year growth rate was negative in January at the beginning of the year, and the premium income declined, the year-on-year growth rate of cumulative premiums turned positive from February, and continued to increase steadily, expanding from 0.29% in the previous February to 7.64% in the previous August.
(Data source: company announcement)
It can be seen that Ping An's premium income has shown a positive growth trend, and the growth rate has accelerated month by month, and the overall performance has achieved strong recovery and growth.
Let's take a closer look at the monthly data.
In the second half of this year, the year-on-year growth rate of Ping An's monthly premium income also showed a significant acceleration trend, especially in the second half of the year, with the year-on-year growth rate of 11.40% and 13.17% in June and July, respectively, and a significant increase to 26.29% in August, indicating strong growth momentum.
(Data source: company announcement)
Further analysis of the income of each type of insurance shows that Ping An's property insurance, life insurance and health insurance businesses have all shown a positive growth trend, especially the driving effect of life insurance on the overall premium income is obvious.
In the first eight months, property insurance achieved premium income of 211.000 billion yuan, a year-on-year increase of 5.32%; Life insurance achieved premium income of about 384.629 billion, a year-on-year increase of 9.15%; The premium income of pension insurance was about 12.812 billion, a year-on-year decrease of 2.43%; The premium income of health insurance was about 12.265 billion, a year-on-year increase of 13.70%.
In terms of monthly data, in August, property insurance increased by 12.48% year-on-year, life insurance performed the most prominently, with a year-on-year increase of 38.04%, and pension insurance decreased slightly by 0.39% year-on-year; Health insurance increased by 14.35% year-on-year.
Overall, the sharp increase in premium income in August, especially the strong performance of life insurance, was partly due to the rush to stop selling in the market, that is, customers accelerated the purchase of insurance products before the scheduled interest rate adjustment.
It is worth noting that last year's "731" also had the factor of rushing to stop selling, and the overall premium base was at a high level, and from the data in June and July this year, even under the high base in the past, Ping An still maintained a high growth rate.
In August this year, the State Administration of Financial Supervision issued the "Notice on Improving the Pricing Mechanism of Life Insurance Products" and the "Notice on Doing a Good Job in the Switching of Life Insurance Products in a Smooth and Orderly Manner", starting from September 1, 2024, the upper limit of the predetermined interest rate of newly filed ordinary insurance products will be adjusted to 2.5%, and from October 1, 2024, the upper limit of the predetermined interest rate of newly filed participating insurance products will be further adjusted to 2.0%.
Therefore, it is not difficult to see that the premium income of major life insurance companies, including Ping An, performed quite strongly in August.
From the perspective of the overall data of the industry, the top five life insurance companies, including Chinese Life, Ping An Life, Taibao Life Insurance, Xinhua Insurance and PICC Life Insurance, had a total monthly premium income of 130.515 billion yuan in August, a year-on-year growth rate of 48%. In addition, in the first eight months, the growth rate of Ping An Life's premium income was significantly ahead of the industry, which shows that it has shown stronger momentum in the industry's boom stage.
(Data source: company announcement)
Looking ahead, combined with the policy trend and Ping An's own "alpha", it can be reasonably expected that Ping An's year-on-year premium income growth rate in September is also expected to continue to maintain a good level, and may even perform better due to the market's reaction to the upcoming change in the scheduled interest rate.
From a longer-term perspective, in the low-interest rate environment, as bank deposit interest rates enter the "1" era, savings insurance products are expected to meet the market's demand for prudent financial management, and the value of participating insurance will continue to be highlighted, which is expected to promote the growth of demand for insurance products, thereby bringing new growth opportunities to Ping An.
Overall, it will be a high probability event that Ping An will continue to deliver on the steady growth of premium income this year. Judging from the company's operating performance this year, the inflection point of its insurance business has been repeatedly confirmed, which also shows that the previous life insurance reform has entered a new stage of kinetic energy release from the painful period.
From the perspective of the new business value ratio, which determines the future profit of insurance companies, it also continues to verify its reform results and subsequent potential.
According to the previous interim report, in the first half of this year, the new business value of Ping An's life insurance and health insurance business reached 22.32 billion yuan, a year-on-year increase of 11.0%. Among them, the new business value of the agent channel increased by 10.8% year-on-year, and the per capita new business value increased by 36.0% year-on-year.
(Image source: company information)
It can be said that these data fully reflect the significant improvement in the efficiency and production capacity of Ping An's agent channels, and reflect the gratifying results achieved in the reform of Ping An's agent management and incentive mechanism, which also lay a solid foundation for Ping An to achieve sustainable growth in the future.
2·“ The strategic advantages of "comprehensive finance + medical care and pension" continue to release growth potential
The sustained and steady development of the business is, to a certain extent, also an extension of strategic determination and superiority.
Ping An's two-wheel drive model of "integrated finance + medical care for the elderly" can cover the entire life cycle of customers from young to old, which is the core of building differentiated competition.
On the one hand, relying on diversified financial businesses such as insurance, banking, asset management, trust, and securities, Ping An has broken down the boundaries between traditional financial businesses, so that customers can get one-stop solutions for their different financial needs. Through this cross-selling and cross-service approach, Ping An's different financial businesses can achieve lower customer acquisition costs and higher customer loyalty.
The cost of internal customer acquisition of Ping An Bank, health insurance and securities is only 73%, 55% and 53% of the external cost respectively. At the same time, when the customer holds more than 4 contracts, the retention rate will reach more than 97%.
On the other hand, Ping An has an insight into the huge demand for medical care brought about by the aging trend in mainland China, and has extended its business reach by providing multi-level medical and elderly care services such as "insurance + health management" and "insurance + home care".
According to the 2024 interim report, as of June this year, the total number of health management customers of Ping An Life exceeded 16 million. The home-based elderly care business has been implemented in 64 cities across the country, and a total of more than 120,000 customers have obtained relevant service qualifications; The high-quality health care community project has been launched in five cities, including Shanghai, Hangzhou and Shenzhen, and has entered the construction stage one after another, and will gradually open from 2025.
This is inseparable from Ping An's long-term cultivation of medical and health ecological resources. As of the first half of 2024, Ping An has achieved 100% cooperation coverage of the top 100 hospitals and tertiary hospitals in China, with a team of about 50,000 internal and external doctors and 233,000 cooperative pharmacies.
The huge medical and health resources have achieved remarkable results in empowering the main business of insurance.
In the first half of 2024, 28.6% of the new customers came from the medical and elderly care ecosystem, and the new business value of life insurance covered by customers with the service rights and interests of the medical and elderly care ecosystem accounted for more than 68%. Among them, medical and health equity customers contributed 30.4% of NBV, an increase of 0.7 percentage points year-on-year, and pension equity customers contributed 38.3% of NBV, an increase of 9.3 percentage points year-on-year.
(Image source: company information)
It can be seen that Ping An's unique model not only enhances the sense of gain and experience of customers, but also brings tangible performance growth to the company. By continuously optimizing services, expanding cooperation, and strengthening the application of science and technology, Ping An will be able to provide a stronger impetus for the company's long-term development and provide valuable experience and inspiration for the transformation and upgrading of the entire insurance industry through a two-legged approach of integrated finance and medical care for the elderly.
3· From macro to micro, examine the three major aspects of Ping An's valuation potential
In addition to the long-term positive development at the business level, the potential for improvement at the valuation level is also the key to the positive attitude of most long-term funds in the market towards Ping An.
First of all, the insurance industry itself has obvious pro-cyclical characteristics, and with the steady recovery of the macro economy, the consumer demand for insurance products will also increase.
Especially in the context of the booming supply and demand of savings insurance, even under the impact of the high base in the first half of 2023, the NBV of the top listed insurance companies still generally achieved rapid growth in the first half of this year. According to the research report of Zheshang Securities, from September 2024, the scheduled interest rate of traditional insurance will be lowered to 2.5%, but the scarcity of savings insurance with long-term principal and interest protection is still there.
Considering that the current situation of "asset shortage" in the market is difficult to completely reverse in the short term, the scarcity of savings insurance may be the first choice for funds to embrace certainty in the long term, which is conducive to the NBV growth of leading insurance companies throughout this year.
In the first half of the year, the value of new business in the agent channel was 18.106 billion yuan, a year-on-year increase of 10.8%, and the per capita new business value increased by 36% year-on-year.
In addition to the expectation of improvement on the liability side, the asset-side repair of the insurance industry is also an important catalyst for the valuation of insurance companies.
On the one hand, long-term interest rates represented by the 10-year Treasury bond yield have stabilized periodically, although they are at a low level, and the pressure on new fixed income investment has eased. Its new "National Ten Articles" and other policies clearly mention that it is necessary to prevent the risk of interest margin loss of insurance companies, promote the high-quality development of the insurance industry, and reduce the scheduled interest rate to help alleviate the market's negative expectations for the investment side of insurance companies.
On the other hand, with the introduction of a package of stable growth policies to stimulate consumption and stabilize the property market, the market's confidence in asset repair has been strengthened. GF Securities Research Report believes that the force of fiscal policy will promote economic growth and asset pricing recovery, with the gradual acceleration of the broad fiscal progress, "contraction and destocking", etc., it is expected that nominal GDP will improve moderately, which is conducive to the recovery of the price center and the equity market.
The resonance repair of assets and liabilities has brought a loose environment for the overall valuation repair of the insurance industry. At the same time, the valuation and holdings of the insurance sector are at the low levels of the historical range, which also provides a low base environment for subsequent performance.
Although the overall trend of the insurance sector in the first half of the year was good, it still has great potential for development. According to wind data, the price-to-earnings ratio and price-to-book ratio of the insurance sector as a whole are at the low levels of the historical range.
(Source: Wind)
At the same time, although public funds have increased their holdings of insurance stocks under the stimulation of the high dividend strategy, as of the first half of 2024, the insurance sector of public funds is still only 0.37%, which is also at a historical low.
(Source: Wind, Haitong Securities Research Institute)
Considering the improvement in the fundamentals of the insurance industry and the high dividend characteristics of insurers, the relatively higher certainty is expected to continue to attract long-term capital to increase the allocation to insurance stocks.
As a leading insurance company recognized by the market, Ping An will undoubtedly be the core beneficiary of the increase in insurance valuation, and more importantly, the development model of "comprehensive finance + medical pension" created by Ping An has greatly improved its own development ceiling.
As Sheng Ruisheng, secretary of the board of directors and brand director of Ping An, said, Ping An's model is similar to an upgraded version of "Wells Fargo + United Health". Wells Fargo is recognized as a practitioner of integrated finance in the industry, and UnitedHealth is a leading provider of health insurance and pharmaceutical benefits. Among them, the profit of United Health is comparable to that of Ping An as a whole, but the market value is 4.8 times that of Ping An.
Backed by China's huge market, Ping An has every opportunity to give full play to the huge growth potential of "integrated finance + medical pension", and rely on its own brand, resources and technological advantages to bring lasting growth momentum to itself.
4. · Conclusion
It is not difficult to see from the premium data in the first eight months that the entire insurance industry is continuing to recover, and at the same time, it can be seen that the performance of various companies on the premium side of the life insurance business is still showing a relatively obvious differentiation. The competitive landscape within the insurance industry is changing, and the strategies and market positioning of different companies are constantly showing different effects.
For Ping An, the steady growth of its life insurance business, especially the significant increase in the agency channel and the per capita new business value, shows that the company has made positive progress in improving efficiency and optimizing its business structure, and more profoundly demonstrates its unique competitive advantage of the "integrated finance + medical pension" model.
It is worth mentioning that just recently, the list of "2024 BrandZ Most Valuable Chinese Brands" was released, and Ping An ranked 9th on the list, up 2 places from the previous year, and the brand value increased to 20.514 billion US dollars, which is the tenth time that it has ranked first in brand value in China's insurance industry.
It is not difficult to predict that with the continuous deepening of the company's strategic layout of "comprehensive finance + home care for the elderly", Ping An will continue to realize the resilience of steady operation and the momentum of continuous upward growth, continue to drive value creation and upgrading, and occupy a core dominant position in the future market competition.