UBS has released a research report raising its investment rating for CHINA RE (01508) from "Neutral" to "Buy," with the target price increased from HK$1.70 to HK$1.75. The firm projects the company's net profit after tax for the first half of the year will grow 10% year-on-year to 6.9 billion yuan, driven primarily by comprehensive growth in insurance service performance rather than investment returns.

UBS has raised its earnings per share forecasts for CHINA RE for the 2026 to 2028 period by 8%, 13%, and 7% respectively, to 0.30 yuan, 0.34 yuan, and 0.35 yuan.

UBS estimates that property and casualty reinsurance premiums in the first half of the year rose 2% year-on-year, with domestic premiums growing 3%. This growth is supported by a higher proportion of non-auto insurance business, which is expected to outpace the industry, while overseas premiums are expected to remain broadly stable. The firm expects CHINA RE's domestic combined ratio for the first half to remain roughly stable year-on-year at around 96%. Meanwhile, the overseas combined ratio is expected to improve by 4.5 percentage points to 82.5%, primarily due to a lower level of natural disaster losses, which is the lowest for the first half of the year since 2020. In the life reinsurance segment, the firm anticipates a recovery in insurance service performance, supported by the reduction in savings-type business and additional contractual service margin releases from the early termination of some contracts.