#### China Pacific Insurance (601601) Company Annual Report Comment： Long-term health insurance + every 10 years the investment side is robust NBV, EV, and profit are higher than expected

China Pacific Insurance (601601) Company Annual Report Comment: Long-term health insurance + every 10 years the investment side is robust NBV, EV, and profit are higher than expected

Investment points: The proportion of long-term protection new orders has increased significantly; long-term health insurance premium income has increased by + 60% each year; manpower has developed.

NBV was initially +1.

5%, the investment side is stable, and the EV growth rate exceeds expectations.

The comprehensive cost rate of property and casualty insurance continued to be optimized, but the commission rate continued to increase; non-auto insurance had a high growth rate.

The floating profit of bonds increased, and the comprehensive investment yield rose instead.

The performance is dazzling, and it is estimated that it is still low, with a “continuous market” rating.

CPIC’s 2018 annual report performance: 1) Net profit attributable to mothers was 18.1 billion, a decade of + 23%; single-quarter growth in the fourth quarter + 42%.

Net profit of life insurance and property insurance increased by + 39% and -7% respectively.

2) Net assets of 1496 trillion, +8 earlier.

8%, +4 at the end of the last three quarters.

6%.

3) NBV +1.

5%, EV +17 from the beginning of the year.

5%.

4) The remaining margin is 285.4 billion yuan, + 25% from the beginning of the year.

5) The comprehensive cost ratio of property insurance is 98.

4% per year -0.

3ppt.

The average growth rate of the company’s NBV, EV, and profit exceeded our expectations in the “Low Base + Guaranteed Development, Value Storage for 2019 Value Growth-Insurance Industry Annual Report 2018 Preview” released on February 23.

Life insurance: Long-term health insurance with high growth, NBV, EV exceeded expectations.

1) Individual insurance new orders for half a year -5.

6%, but long-term guaranteed new single year +7.

7%, the proportion increased by 7.

4ppt to 49.

1%.

Long-term health insurance premium income + 60% per year.

2) New business value margin +4.

3ppt to 43.

7%.

3) The average monthly healthy manpower is 31.

20,000, 14.

90,000, previously + 26%, 15%; long-term average monthly manpower is 84.

70,000, a year -3%.

4) Benefit from the increase in floating profit of bonds + low proportion of equity allocation, investment bias in life insurance business, and market value adjustments all contribute positively to life insurance EVs, accounting for a total of 1 at the beginning of the period.

5%, significantly preset peers.

Property and casualty insurance: The comprehensive cost rate continued to be optimized, 2018-0.

3ppt.

1) The profit before tax of property insurance + 9% per year, and the litigation fee rate is increased by 1.The impact of 7ppt, the average interest rate + 35%, the return rate is as high as 46%, and the net profit is -6 twice.

9%.

2) The auto insurance compensation rate is -4 for half a year.

6ppt to 56.

8%, driving the company’s payout ratio for three years -3.

6ppt to 56.

3%.

3) Non-auto insurance premiums for three years + 30%, the proportion increased by 3.

5ppt to 26%; non-auto insurance comprehensive cost rate is -0 for half a year.

4ppt to 99.

2%.

The income of agricultural insurance is 4.2 billion US dollars, + 55 percent per year, and the market share is rapidly rising to the third place in the industry.

Investment: The allocation of core equity is extremely low, and the rate of return on comprehensive investment rises without decline.

1) The proportion of solid income is as high as 83.

1%, the equity category accounts for 12.

5%, of which equities and equity funds account for only 5.

6%.

Affected by the floating profit change of bond assets, the comprehensive investment yield is as high as 5.

1%, ten years +0.

3ppt.

2) Total investment yield 4.

6%, -0 per year.

8ppt, net investment yield 4.

9% every year -0.

5ppt.

3) The fixed income / equity / investment real estate / cash and other investment yields are 5 respectively.

twenty one.

1% / 9.

0% / 1.

9%.

Transformation 2.

0 continues to advance, and life insurance is expected to develop; estimates are still low.

Currently the corresponding 2019E PEV is only 0.

8 times higher safety margin.

Give 无锡桑拿网 1.

0-1.

1x 2019E PEV, corresponding to a reasonable value range of 43.

96-48.

36 yuan, maintaining the investment rating of “permanent market”.

Risk reminders: 1) the downward trend of interest rates; 2) the stock market plummets; 3) the protection-type growth is less than expected