Shenwan Hongyuan Group Co., Ltd. has released a research report forecasting that the total net profit attributable to shareholders of A-share listed insurance companies in Q3 2025 will increase by 26.7% year-on-year to reach CNY 186.49 billion. Benefiting from the robust performance of the equity market, as of October 15, one listed insurance company has already announced an earnings forecast increase. For the first three quarters of 2025, NCI is expected to achieve a net profit attributable to shareholders increasing by 45% to 65% year-on-year, amounting to CNY 9.306 billion to CNY 13.442 billion, continuing to exceed expectations despite a high comparative base. Overall, it's anticipated that in the first three quarters of 2025, the combined net profit attributable to shareholders of A-share listed insurance firms will rise by 14.3% year-on-year to CNY 364.68 billion, with the growth rate improving by 10.6 percentage points compared to the first half of 2025. In Q3 2025 alone, the total profit growth for A-share listed insurance companies is expected to be 26.7% year-on-year, reaching CNY 186.49 billion.

In terms of individual companies, the net profit forecasts for the first three quarters of 2025 show NCI (up 54.2% YoY), CHINA LIFE (up 18.1% YoY), CHINA TAIPING (up 14.1% YoY), CHINA PACIFIC INSURANCE (up 13.6% YoY), and CHINA PENSON (up 4.3% YoY). For Q3 2025, the expected net profit growth rates show NCI (up 78.1% YoY), CHINA PACIFIC INSURANCE (up 26.3% YoY), CHINA LIFE (up 24.6% YoY), CHINA TAIPING (up 20.2% YoY), and CHINA PENSON (up 8.1% YoY).

Key insights from Shenwan Hongyuan include:

Life Insurance: Supported by expectations of lower benchmark interest rates, the NBV performance of listed insurers in July and August is anticipated to be robust, providing a solid backing for steady NBV growth. On July 25, the insurance association announced that the benchmark interest rate research value for ordinary life insurance products in Q2 was 1.99%, with the difference compared to the upper limit of the benchmark interest rate exceeding 25bps for two consecutive quarters, triggering a reduction in rates. From September 1, the maximum benchmark rates for ordinary, participating, and universal insurance products were lowered by 50bps, 25bps, and 50bps to 2.0%, 1.75%, and 1.0%, respectively. With expectations for rate reductions, the demand for product allocation from clients is anticipated to surge again in July and August, effectively sustaining the NBV growth rate. The expected NBV growth for listed insurers in the first three quarters of 2025 includes NCI (up 49.7% YoY), CHINA PACIFIC INSURANCE (up 40.4% YoY), CHINA TAIPING (up 33.5% YoY), and CHINA LIFE (up 24.5% YoY).

Property Insurance: Following a low base, the COR is expected to continue improving year-on-year in the first three quarters. From January to August 2025, the original insurance premium income of property insurance companies reached CNY 1.22 trillion, representing a 4.7% year-on-year increase, with claims expenditures amounting to CNY 771.7 billion, up 0.01% YoY. Natural disasters from July to August caused direct economic losses totaling CNY 71.71 billion (down 39.9% YoY). Although significant disasters in September are expected to create temporary pressure on claims, leading insurers continue to implement strategies to optimize structure, control risks, and reduce costs. Given the low comparative base, the COR for listed insurers in the first three quarters of 2025 is expected to maintain a trend of year-on-year improvement. Individual company COR forecasts include CHINA PROPERTY INSURANCE (down 1.8 percentage points to 96.4%), CHINA PACIFIC INSURANCE (down 1.2 percentage points to 96.6%), and CHINA TAIPING (down 0.9 percentage points to 97.8%).

Investment Sector: With strong equity market performance, insurers that effectively seize opportunities in growth stocks are projected to outperform their peers. In Q3 2025, the CSI 300 Index, CSI 800 Index, CSI Dividend Index, and STAR 50 Index have seen respective increases of 17.9%, 19.8%, 0.9%, and 49.0%, which are 1.8 percentage points, 3.7 percentage points, -5.5 percentage points, and 26.5 percentage points higher compared to the same period last year. Additionally, in Q3 2025, long-term rates have seen a phased rise, with the 10-year treasury yield at 1.86% as of September 30, up by 21.4bps from the end of June, which is expected to add some pressure to the FVTPL classified bonds, yet positively impacting insurance service performances.

Investment Recommendation: The insurance sector, characterized by low valuations and the performance catalyst of the Q3 report, is expected to benefit from the strong equity market performance and ongoing trends of insurers entering the market. Profits for A-share listed insurance companies in Q3 2025 are projected to remain positively growing, with overall performance exceeding expectations. In the short term, it is advisable to focus on low-valuation, high-elasticity stocks, continuously recommending CHINA LIFE (02628), NCI (601336.SH, 01336), CHINA TAIPING (601601.SH), CHINA PACIFIC INSURANCE (601318.SH), SUNSHINE INS (06963), and CHINA PENSON (601319.SH), while also recommending CHINA TAIPING (00966).

Risk Warning: Potential declines in long-term rates, equity market volatility, frequent disasters, and unexpected policy impacts.