REAL-TIME GLOBAL RESEARCH
China Insurance: 9M26E: NP Distorted by Acct. Rules amid Tech Stocks’ Pullback; BV Stable; NBV Soft on High Base; CoR Enhanced
Key takeaways
- 9M26E: NP Distorted by Acct.
- Rules amid Tech Stocks’ Pullback; BV
- In 9M26E, we expect earnings to be notably affected by tech stocks’ pullback in 3Q26 while the rally of high-dividend stocks would only be reflected below the line due to different accounting treatment.
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Research evidence excerpt
9M26E: NP Distorted by Acct. Rules amid Tech Stocks’ Pullback; BV
Stable; NBV Soft on High Base; CoR Enhanced
In 9M26E, we expect earnings to be notably affected by tech stocks’ pullback in 3Q26 while the rally of high-dividend stocks would only be reflected below the line due to different accounting treatment. Coupled with a high base for comparison last year, we forecast 15~49% yoy declines in 9M26E earnings. As such, we think BV growth is a fairer metric to assess profitability, and we expect insurers’ BV to stay largely stable qoq vs. the sharp decline of reported earnings in 3Q26. Meanwhile, we also expect OPAT of the top 3 insurers to log mid-to-high single-digit increase in 9M26E. As to NBV, amid banca regulatory disruption in 3Q26 and a high base last year due to pricing rate cut, we estimate 9M26 growth to decelerate to -14% (Ping An) to +12% (China Life). For P&C, we estimate PICC/Ping An/CPIC’s 9M26E CoR to improve to 95.9%/96.0%/96.9% despite higher NAT CAT losses.
Earnings distorted by accounting rules amid tech stock pullback; BV largely stable qoq; mid-to-high single-digit OPAT growth in 9M26E – For 9M26E, we expect insurers’ earnings to be notably affected by tech stocks’ pullback while the rally of high-dividend stocks would only be reflected below the line due to different accounting treatment. Coupled with a high base for comparison last year, we forecast -15% (CPIC)~-49% (China Life) yoy net profit contraction in 9M26. In particular, we estimate CPIC/Ping An/PICC Group to book -15%/-28%/-29% yoy earnings decline in 9M26E, followed by NCI/PICC P&C’s -31%/-34% yoy fall, and China Life’s -49% yoy decline. As such, we think book value development in 3Q26 would serve as a better reference to assessing insurers’ profitability and we expect book value to be largely stable qoq. In addition, stripping out capital-market related fluctuations, we expect China Life/Ping An/CPIC to continue to deliver mid-to-high single-digit OPAT growth in 9M26E.
Life insurers: 9M26E NBV growth decelerating from 1H26 growth due to high base
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