UBS has released a research report stating that PICC P&C (02328) delivered first-half results that exceeded market expectations. The firm believes the net profit after tax (NPAT) growth was driven by the following factors: underwriting profit surged 45% year-over-year and total investment income increased 27% year-over-year.

UBS has raised its 2025 net asset value and net profit after tax forecasts for PICC P&C by 4% and 6% respectively, reflecting better-than-expected combined ratios and improved market sentiment. The firm has also increased its valuation multiple to reflect a more favorable macroeconomic backdrop and policy tailwinds. Consequently, UBS has upgraded PICC P&C's target price from HK$18.7 to HK$20.7, maintaining a "Buy" rating.

In its 2025 estimates, UBS projects total premium, auto insurance, and non-auto insurance premium growth of 4.5%, 3.5%, and 5.8% respectively. The insurer targets combined ratios below 96% for auto insurance and approximately 99% for non-auto insurance.

UBS notes that regarding investment income, third-quarter growth momentum may decelerate in line with industry trends due to the following factors: high equity return benchmarks and rising interest rates potentially leading to lower fair value of bonds.

Nevertheless, UBS believes that given PICC's smaller fair value through profit or loss equity exposure and lower investment leverage, it will face less earnings pressure compared to peers.