The Zhitong Finance App learned that Orient Securities released a research report saying that the 3Q26 listed insurers are under pressure on both sides of their assets and liabilities. The investment side is affected by the correction in the equity market and the high base for the same period last year. Investment income and net profit attributable to mother are expected to decline markedly; the life insurance debt side is affected by the high base of the new order business in the same period last year and the recent negative premium growth rate, and business growth is under pressure. Looking at the main insurance business, the new business value of the five listed 1H26 insurers has all achieved positive growth. The comprehensive cost ratio of major financial insurance companies has remained around 95%, and the main insurance industry still has some profit support. In terms of valuation, rolling P/EV valuations of major A-share listed insurers are at a historically low level, and China People's Insurance PB valuations are also below the historical average. Currently, valuations are at a historically low level. As the equity market stabilizes and investment returns improve, the profits of listed insurers are expected to gradually recover, and the sector has room for valuation repair. It is recommended to focus on insurance sector allocation opportunities in the context of short-term performance pressure.
Orient Securities's main views are as follows:
The equity market has clearly recovered, and the investment income of listed insurers is under great pressure
The 3Q25/ 2Q26/ 3Q26 China Securities 800 Index rose and fell by +19.8%/+13.7%/-14.0%, respectively. Equity market performance in the third quarter was significantly weaker than the same period last year and the second quarter of this year. Listed insurers have large trading stocks and fund assets. Fluctuations in the equity market had a significant impact on current investment income. Among them, China Lifestyle/China Ping An's trading equity base assets at the end of 1H26 were $11,295.2/$10,29.53 billion respectively, accounting for 68.8% of the five listed insurers. The equity market pullback is compounded by the high base for the same period last year. The investment income of listed insurers is expected to decline markedly in the third quarter.
Equity capital gains are expected to drop sharply in the third quarter, partially offset by financial gains and losses on insurance contracts
Under a neutral scenario, the five listed insurers are expected to have a total 3Q26 equity capital gain of about -396.23 billion yuan, of which China Life Insurance is -2,197.7. The improvement in financial profit and loss of insurance contracts can offset some losses on the investment side. It is estimated that compared to 2Q26, the equity capital gain of 3Q26 decreased by about 785.22 billion yuan, and the financial profit and loss of insurance contracts improved by about 345.79 billion yuan, and the offset ratio for investment losses was about 44.0%. Taking into account bond investment income, credit impairment and other gains and losses, the total investment and insurance-related financial performance of the five companies is estimated to be approximately -$224.07 billion.
The net profit of the five listed insurers is expected to be negative in the third quarter, and the cumulative profit for the first three quarters declined markedly year-on-year
Under a neutral scenario, the net profit of China Life Insurance, China Taibao, Xinhua Insurance, and China People's Insurance is estimated to be -951.7/-58.9/ -129.5/ -1930 billion yuan respectively in 3Q26. The total net loss of the five companies to the mother is about 152.13 billion yuan. The decline in financial performance related to investment and insurance was the main reason for the pressure on profits in the third quarter, and insurance service performance maintained a positive contribution. The five companies' cumulative net profit for the first three quarters is estimated to be about 165.26 billion yuan, a year-on-year decrease of 61.0%.
Risk Alerts
Equity investment income forecasts are biased; financial profit and loss offsets from insurance contracts fall short of expectations; credit impairment losses exceed expectations; new life insurance business growth falls short of expectations; and financial insurance compensation expenses exceed expectations.