According to Zhitong Finance APP, Orient Securities Company Limited (ASX: 600958) has released a research report stating that investment-side disturbances were concentrated and released in the third quarter, while the core insurance business remained operationally stable, and sector profitability is expected to gradually recover as equity markets stabilize. Listed insurers are trading at historically low valuations, and improvements in liability-side value alongside investment-side earnings recovery are expected to jointly support sector valuation enhancement. As the high-base disturbance from life insurance new premiums gradually fades and the suppression of investment returns from equity market corrections eases, the insurance sector has room for both earnings and valuation recovery. The report recommends focusing on leading insurers where liability-side value improvement and investment-side earnings recovery are expected to resonate. The main views of Orient Securities are as follows:

In the third quarter, the equity market correction dragged down earnings of listed insurers, while the core insurance business remained operationally stable and net assets continued to grow. For the first nine months of 2026, the five A-share listed insurers collectively achieved net profit attributable to shareholders of RMB 276.58 billion, down 35.1% year-on-year; in Q3 2026 alone, they recorded a combined loss of RMB 40.81 billion, mainly due to a decline in fair value changes of trading financial assets and the high base effect from the same period last year. During the same period, Ping An Insurance (Group) Company of China Ltd (ASX: 601318) and China Pacific Insurance (Group) Co., Ltd. (ASX: 601601) reported year-on-year growth in operating profit attributable to parent of 8.3% and 5.6%, respectively, while property insurance underwriting profit maintained growth. All five companies achieved growth in net assets attributable to parent compared to the beginning of the year, supported by cumulative profits from the core insurance business and unrealized gains on certain OCI equity assets.

Life insurance growth slowed but the trend of structural improvement remains unchanged, with new business value growth notably decelerating. For the first nine months of 2026, the life insurance industry's premiums grew 0.5% year-on-year, with September alone up 10.4% year-on-year, as the high-base disturbance from the same period last year gradually faded. For the first nine months of 2026, China Life Insurance Company Limited (ASX: 601628) and China Pacific Insurance (Group) Co., Ltd. (ASX: 601601) reported NBV changes of +13.1% and -6.5% year-on-year, respectively, significantly slower than in the first half of 2026, mainly affected by the high base of new premiums from the same period last year and adjustments in the bancassurance channel. In terms of channel structure, the individual agent channel remained operationally stable overall; bancassurance new single premiums generally declined, while some companies maintained growth in regular premium business; bancassurance fee standardization and the shift toward participating products are expected to drive continuous improvement in new business liability costs.

Property insurance premiums grew steadily, with non-auto insurance contributing the main increment, and underwriting profitability continued to improve. For the first nine months of 2026, PICC Property and Casualty Company Limited (ASX: 02328), Ping An Property & Casualty Insurance Company of China, Ltd. (ASX: 601318), and China Pacific Property Insurance Co., Ltd. (ASX: 601601) reported original insurance premium income growth of 1.7%, 3.5%, and 1.9% year-on-year, respectively, with auto insurance broadly flat and non-auto insurance growing 3.2%, 10.0%, and 3.7% year-on-year, respectively, contributing the vast majority of premium growth. The three companies' combined ratios were 95.8%, 95.6%, and 96.2%, respectively, improving by 0.3, 1.4, and 1.4 percentage points year-on-year, with underwriting profit improvement providing support for group operating performance. Comprehensive governance of non-auto insurance and expense control are expected to continue driving down underwriting costs.

The equity market correction dragged down total investment yields, while unrealized gains on OCI assets provided support for comprehensive investment returns. In Q3 2026, the CSI 800 Index fell 14.0%, compared to a 19.8% rise in the same period last year, putting significant pressure on listed insurers' trading equity investment returns. For the first nine months of 2026, China Life Insurance Company Limited (ASX: 601628), China Pacific Insurance (Group) Co., Ltd. (ASX: 601601), New China Life Insurance Company Ltd. (ASX: 601336), and The People's Insurance Company (Group) of China Limited (ASX: 601319) reported year-on-year declines in total investment yields of 3.2, 2.7, 5.1, and 1.9 percentage points, respectively. In terms of net investment yields, the continued decline in long-end interest rates increased reinvestment pressure, with China Pacific Insurance's net investment yield declining 0.2 percentage points year-on-year. In terms of comprehensive investment yields, valuation gains on OCI bonds and high-dividend stocks provided support, with New China Life Insurance's comprehensive investment yield at 5.0%, 1.5 percentage points higher than its total investment yield; Ping An Insurance (Group) Company of China Ltd (ASX: 601318) recorded pre-tax unrealized gains on high-dividend OCI stocks exceeding RMB 58 billion, enhancing net assets.

Risk warnings: long-end interest rate declines exceeding expectations; significant equity market volatility; life insurance reform results falling short of expectations; product structure transformation falling short of expectations; property insurance combined ratio increases exceeding expectations; household income falling short of expectations; regulatory policy change risks; actuarial assumption adjustment risks.