Life insurance premium growth faced pressure in May 2026 due to a high comparison base, though long-term demand for insurance savings products from households remains supported by the ongoing trend of "deposit migration." Property and casualty insurance saw a return to positive monthly growth, with a divergence in performance between non-auto lines. The outlook is positive for profit improvement in 2026 driven by a dual resonance from assets and liabilities, supporting a maintained "Overweight" rating.

Current insurance stocks are still subject to disturbances from non-rational trading factors. However, leading insurers are showing a trend of profit improvement. While the liability side of life insurance faces short-term growth pressure from the high base, medium-to-long-term demand resilience persists. It is advisable to actively monitor valuation repair opportunities for insurance stocks as expectations for interest rate stabilization solidify.

The key points from the analysis are as follows:

Life Insurance Premium Growth Slows in May 2026 Due to High Base Effect

For the first five months of 2026, the insurance industry's cumulative original premium income reached 3.1908 trillion yuan, a year-on-year increase of 4.3%, which is 1.0 percentage point lower than the growth rate for the first four months. The life insurance sector's cumulative original premium income for Jan-May was 2.3928 trillion yuan, up 5.0% year-on-year, decelerating by 1.4 percentage points from the Jan-Apr period. The single-month original premium in May was 322.8 billion yuan, down 3.0% year-on-year.

By product type, premiums for life insurance, health insurance, and accident insurance were 1.9888 trillion yuan, 387.7 billion yuan, and 16.2 billion yuan respectively, with year-on-year changes of +6.2%, essentially flat, and -11.3%. Their single-month growth rates in May were -2.8%, -3.5%, and -11.2% year-on-year, respectively.

For the first five months, new premium contributions for policyholder investment accounts totaled 376.3 billion yuan, up 10.5% year-on-year, with the single-month figure for May rising 8.1%. New premium contributions for unit-linked insurance independent accounts were 4.6 billion yuan, down 27.6% year-on-year for Jan-May, with a sharp decline of 45.0% for May alone.

The view is that short-term disturbances stem from the high base and new bancassurance regulations, but long-term household savings demand continues to provide support for the liability side.

Property & Casualty Insurance Cumulative Growth Stable in May, Monthly Growth Turns Positive

For the first five months of 2026, the P&C insurance industry's cumulative original premium income was 797.9 billion yuan, up 2.2% year-on-year. Within this, auto and non-auto original premium income were 371.1 billion yuan and 426.8 billion yuan, with year-on-year changes of -0.2% and +4.5% respectively. Auto/non-auto premiums accounted for 46.5% and 53.5% of total P&C premiums.

The single-month P&C premium in May was 135.0 billion yuan, up 2.3% year-on-year (previous value: -0.2%). Auto insurance premiums were essentially flat year-on-year for the month, while non-auto premiums grew 5.3% year-on-year.

Regarding auto insurance, May passenger vehicle/new energy vehicle sales saw year-on-year changes of -4.2% (a narrowing decline from April's -4.2%) and +14.4% (an expansion from April's +9.7%). Non-auto insurance benefited from growth in liability, health, and accident insurance. Their cumulative year-on-year growth rates were 8.9%, 14.6%, and 8.1% respectively (previous values: 7.5%, 14.3%, 8.6%), with single-month growth rates of 15.9%, 16.8%, and 5.9% (previous values: 9.5%, 0.7%, 8.7%). Conversely, agricultural insurance and other insurance, with cumulative year-on-year declines of 8.8% and 1.0%, dragged on the overall growth rate.

Improving Asset-Liability Management Supports Valuation Recovery for Insurance Stocks

1) On the liability side, it is expected that the trend of household deposit migration will continue, sustaining robust medium-to-long term demand for insurance savings. Insurers are enhancing their New Business Value Margin by optimizing the structure of regular-premium products. The trend of increasing concentration in bancassurance channels persists, with listed insurers continuing their high-quality growth trajectory in New Business Value.

2) On the asset side, the rise in growth-oriented assets in the second quarter is anticipated to drive performance improvement for insurers. The outlook remains positive for medium-to-long term profit improvement for insurers under expectations of a slow bull market.

Risks include a decline in long-term interest rates, volatility in the equity market, and limited sustainability of customer demand.