Orient Securities has released a research report stating that after a sustained period of adjustment, the valuation attractiveness of the insurance sector has become more prominent. The report recommends paying attention to medium-to-long-term allocation opportunities arising from the combined improvement in liabilities and the recovery of assets. From the liability side perspective, life insurance premiums continued their relatively rapid growth in the first three months of 2026, indicating sustained resilience in the life insurance segment. Optimization of product structures is expected to gradually reduce liability costs, potentially alleviating pressure from spread compression. Both motor and non-motor lines in the property and casualty insurance sector showed marginal improvement, with leading insurers maintaining an advantage in underwriting quality. The main viewpoints of Orient Securities are as follows.

The National Financial Regulatory Administration disclosed the operational data for insurance companies from January to March 2026. Total premium income for the insurance industry during this period reached 2,310.5 billion yuan, a year-on-year increase of 6.3%. Life insurance premium income was 1,780.3 billion yuan, up 7.3% year-on-year, while property and casualty insurance premium income was 530.2 billion yuan, up 2.9% year-on-year.

Following the strong start to the year, the growth rate of life insurance premiums showed a marginal slowdown, yet demand for savings-type products remained resilient. Life insurance premium income from January to March 2026 was 1,503.5 billion yuan, a year-on-year increase of 8.7%. This represents a deceleration of 2.2 percentage points compared to the 10.9% growth seen from January to February, but it is a significant improvement over the same period last year. In March alone, life insurance premium income was 371.2 billion yuan, up 2.5% year-on-year. While growth naturally moderated after the peak season, the liability side of the industry maintained positive growth. Recently, the reference assumed interest rate for standard life insurance products rose to 1.93%, an increase of 4 basis points from the previous quarter. This marks the first increase since the indicator was disclosed and did not trigger the dynamic adjustment mechanism for assumed interest rates, indicating a period of relative stability in product pricing. Considering the current stabilization of long-term interest rates and the low probability of a sharp near-term decline in the five-year fixed deposit rate and the five-year LPR, the institution expects a low likelihood of a further reduction in the assumed interest rate for standard life insurance products within 2026. This should help minimize disruptions to new business sales cycles caused by product suspensions and transitions. Against the backdrop of a low-interest-rate environment and the reallocation of household funds, demand for traditional savings-oriented products remains supported. Concurrently, participating insurance, which balances stability and potential returns under a "guaranteed plus floating" framework, is expected to remain a key direction for the transformation of life insurance products.

Health insurance and accident insurance premiums remained under pressure, with the recovery in protection-type demand lagging behind that of savings-oriented business. Premium income for health and accident insurance from January to March 2026 was 276.8 billion yuan, a slight increase of 0.4% year-on-year. In March alone, premium income was 98.3 billion yuan, down 3.2% year-on-year. The institution anticipates that current household demand for insurance allocation is still more concentrated on savings-type products, with short-term demand recovery for protection-type products being relatively weaker. Future growth in health insurance will likely depend on synergistic efforts between basic medical insurance and commercial health insurance, enhancements in health management services, and optimization of product supply.

New premium contributions for policyholder investment accounts continued to recover, while new premium contributions for unit-linked insurance separate accounts remained under pressure, indicating that demand for savings-type products is stronger than for risk-preference-based products. From January to March 2026, new premium contributions for policyholder investment accounts amounted to 298.2 billion yuan, a significant year-on-year increase of 14.5%, primarily supported by demand for account-based savings products like universal life insurance. In contrast, new premium contributions for unit-linked insurance separate accounts were 3.0 billion yuan, down 11.8% year-on-year, likely due to capital market volatility and a more cautious customer risk appetite.

The property and casualty insurance sector maintained overall growth, with non-motor insurance performing better than motor insurance. From January to March 2026, premium income for motor insurance and non-motor insurance was 222.6 billion yuan and 307.6 billion yuan, representing year-on-year changes of -0.4% and +5.3%, respectively. Motor insurance premiums continued to experience slight pressure, likely related to short-term fluctuations in new vehicle sales. Passenger vehicle and new energy vehicle sales from January to March 2026 were 5.936 million and 2.962 million units, down 7.5% and 3.6% year-on-year, respectively. Non-motor insurance remained the primary driver of growth for P&C premiums. Cumulative premium income for liability insurance, agricultural insurance, short-term health insurance, and short-term accident insurance was 45.5 billion yuan, 44.3 billion yuan, 132.7 billion yuan, and 16.0 billion yuan, with year-on-year changes of +7.1%, -2.6%, +16.3%, and +8.8%, respectively. The overall performance of non-motor insurance was robust, although agricultural insurance faced temporary pressure, indicating structural differentiation within the non-motor segment.

Investment recommendations and targets suggest focusing on two types of companies. First, leading insurers that demonstrated strong performance during the peak season, are advancing in the transition to participating insurance, and maintain stable channel operations. Second, companies with greater flexibility on the asset side due to higher equity exposure, a higher proportion of assets measured at OCI, and better duration matching, which are poised for stronger valuation recovery and earnings flexibility. Relevant targets include China Pacific Insurance, Ping An Insurance, People's Insurance Company of China, New China Life Insurance, and China Life Insurance.

Risks include policy outcomes falling short of expectations, increased volatility in capital markets, household wealth growth undershooting forecasts, a sharper-than-expected decline in long-term interest rates, and slower-than-expected progress in insurance company reforms.