Analyst Note| Iris Tan, CFA |
For the first quarter, China Pacific Insurance, or CPIC, reported a larger-than-expected decline in net profits at 36% year on year, primarily due to a 36% decline in total investment income. Gross investment return fell 0.9 percentage points to a new low of 3.7%. Both life and P&C insurance businesses showed better-than-peer growth momentum in premium income over the quarter. Total premium income grew 7% to CNY 149.6 billion from the year-ago period, driven by the 4% and 14% growth in life and P&C insurance segments, respectively. CPIC did not disclose new business value growth in the past quarter. We leave our full-year forecast of around 25% decline in NBV unchanged, as we believe its 44% decline in agent new premium was on track to meet our full-year forecast. We lowered our investment assumption in 2022 to reflect recent hefty market volatility but the negative impact was not enough to change our fair value estimate. We maintained our fair value estimate at HKD 30 per H-share. CPIC was approved by the regulator to implement the China Risk Oriented Solvency System II, or C-ROSS II framework in 2022.