Between June and July of last year, the personal insurance market experienced a sales boom due to the switch in preset interest rates. Against this base, the premium performance of major listed insurance companies in July this year has also attracted market attention.

As of this week, the five major A-share listed insurance companies have all released their premium data for July. According to statistics, they have achieved a total premium income of 1.95 trillion yuan in the first seven months, a year-on-year increase of 3.49%, of which personal insurance business increased by 2.8%, showing a differentiated situation of "three rises and two declines." However, when narrowed down to the single month of July, only China Pacific Insurance showed a year-on-year decline, while the others all increased, with several showing double-digit growth.

According to industry insiders, this is mainly due to the different strategies of various insurance companies in July last year, leading to different bases. Although the personal insurance premiums still show a differentiated trend, the overall warming trend remains unchanged, and the overall performance of the liability side for the whole year is optimistic.

Personal insurance is generally warming up, with individual differentiation

Although the switch in preset interest rates in the middle of last year raised the overall base of life insurance, it did not seem to make this year's life insurance premium growth look too bleak.

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According to the premium data released by the five major A-share listed insurance companies recently, the total premium of personal insurance for the five companies in the first seven months increased by 2.8% year-on-year, and the increase was further expanded by 0.6 percentage points compared to the first six months, showing a clear trend of warming up.

Everbright Securities stated that one of the major factors for the further warming up of personal insurance premiums in the first seven months is expected to benefit from the continuous release of demand for savings insurance under the operation of the switch in preset interest rates. Since the end of June this year, the market has already had news and expectations that the preset interest rate for personal insurance will be further reduced from 3%. Many insurance agents have also used this as a "selling point" to promote sales. On August 2, the regulatory authority officially issued a document "announcing" that the preset interest rate for personal insurance will be officially reduced from September and October according to the type of insurance.

At the same time, the renewal business generated during the last round of the switch in preset interest rates last year also played an important "ballast stone" role in the premium performance in the middle of this year. Taking the premium structure published by PICC Life Insurance as an example, the year-on-year increase in its renewal premiums in the first seven months reached 24.9%, and further expanded by 0.4 percentage points compared to the first six months.

In terms of individual insurance companies, the performance of personal insurance shows a differentiated trend. Specifically, their total premiums in the first seven months show a "three rises and two declines" trend. According to data from Open Source Securities, China Ping An, China Life, and PICC all showed year-on-year increases, with an increase of about 3.5% to 6.5%. China Pacific Insurance and New China Life Insurance respectively decreased by 2.6% and 6.4% year-on-year. Open Source Securities analysis said that China Ping An and China Life are expected to continue to benefit from the improvement of individual insurance new single-period payment capacity and the high increase in renewal business, while the year-on-year decline of China Pacific Insurance is expected to be related to the active adjustment of business structure.

If you only look at the single-month premium in July, the total premium of personal insurance for the five listed insurance companies was 117 billion yuan, with a year-on-year increase of 8.7%, and the growth rate increased by 1.1 percentage points compared to June. Different from the "three rises and two declines" of the total premium in the first seven months, New China Life also joined the "camp" of the year-on-year increase in single-month premium in July, and together with China Ping An and PICC, they all achieved double-digit growth, with only China Pacific Insurance showing a downward trend.Huachuang Securities analysis indicates that this is primarily due to the different bases caused by the varying strategies of insurance companies last July. China Pacific Insurance saw a significant year-on-year increase of 89.8% in its monthly premium in July of last year. In addition to this, the other four A-share listed insurance companies, before discontinuing 3.5% guaranteed interest rate products in 2023, all chose a more conservative product strategy, with monthly premium growth rates all declining sequentially. In July 2023, the premium growth rates were significantly lower than that of China Pacific Insurance, ranging from 4.7% to 21.9%, with a relatively lower base compared to China Pacific Insurance.

Positive performance on the liability side throughout the year

Despite the current differentiation in the performance of life insurance premiums among listed insurance companies, and the overall growth rate is still relatively slow, industry analysts generally have a positive outlook on the performance of the liability side for the whole year.

In the view of Everbright Securities, the confidence in the full-year performance of the liability side is supported by several aspects, with the base effect being the foremost. Since July last year, the sales of traditional insurance products with a 3.5% guaranteed interest rate have been gradually "curtained," and with the strict regulation of the "unification of reporting and conduct" in the bank insurance channel starting in August, the base has been gradually decreasing.

With a low base, it is easier to achieve better year-on-year performance in the second half of this year. From the data, in addition to the "ballast stone" of renewal premiums, the new single premiums of some listed insurance companies have begun to warm up from the pressure. Data from People's Insurance shows that the new single premium for the first 7 months fell by 14.8% year-on-year to 19.4 billion yuan, with the decline narrowing by 1.7 percentage points from the previous month, of which the single month of July increased by 17.5% year-on-year to 1.37 billion yuan.

On the other hand, the official announcement on August 2nd of the switch to the guaranteed interest rate is bound to trigger the market's "speculation on discontinuation" behavior. Everbright Securities believes that this is expected to drive the further release of market savings demand in the short term and boost the performance of new orders in the third quarter. In addition, from a structural perspective, influenced by the different paces of product switching, the upper limit of the guaranteed interest rate for traditional insurance and dividend insurance in September is both 2.5%. The "2.5% guaranteed + floating" return characteristics of dividend insurance may be more attractive, and the proportion of new single orders for dividend insurance is expected to increase.

Guosen Securities also stated that it expects the industry's premium income growth rate to stabilize in the second half of the year as policies are implemented and channels stabilize.

However, some industry insiders predict that since the two adjustments to the guaranteed interest rate are only about a year apart, demand has been fully released last year, and this switch in the guaranteed interest rate is unlikely to replicate last year's growth rate.

In addition to the switch in the guaranteed interest rate, the deepening of "unification of reporting and conduct" was also emphasized again in the regulatory document on August 2nd. In this regard, industry analysts predict that as "unification of reporting and conduct" is further implemented in various channels, the product cost rate will further decrease, thereby improving the new business value profit margin of insurance companies, and together with premium growth, supporting the new business value to maintain a good growth level throughout the year.