Shen Wan Hongyuan: The investment side is expected to drive higher year-on-year performance and the insurer 1H26COR is expected to continue the year-on-year improvement trend
The Zhitong Finance App learned that Shen Wan Hongyuan released a research report saying that the insurance sector's performance came to an end, and the market's focus was on shifting back to business performance in the third quarter. Under the influence of a high base and the “integration of reporting and banking” of the new version of banking insurance, the year-on-year performance of assets and liabilities may be under phased pressure. The relative attractiveness of some of those that previously surpassed the decline has increased in stages. Some of the targets are Shanghai and Shenzhen 300 weighted stocks, which are in a significant underbalance. It has strong upward flexibility, such as changes in market style/reduction of financial concerns.
Shen Wan Hongyuan's main views are as follows:
The total net profit of 1H26 A-share listed insurers is estimated to be +70.6% YoY to reach 304.1 billion yuan
The sharp rebound in the 2Q26 equity market is expected to drive impressive investment performance. The total net profit of 1H26 A-share listed insurers is expected to increase 70.6% year-on-year to 30.073 billion yuan, a sharp increase of 87.6pct from the 1Q26 level (yoy -17.0%); among them, the total net profit of 2Q26 A-share listed insurers is YoY +149.1% to 234.190 billion yuan, showing impressive performance. Looking at the company segments, as of July 20, three listed companies have issued pre-performance announcements. The net profit of China Lifestyle/China Taiping/Xinhua Insurance 1h26 is expected to return YoY to +215%-235%/+85%-95%/+40%-60%. The bank expects 1H26 net profit to be reflected in China Life Insurance (yoy +217.3%), Xinhua Insurance (yoy +51.5%), China Insurance (yoy +34.0%), Sunshine Insurance (yoy +33.4%), Ping An (yoy +22.9%), and China Taibao (yoy +16.9%).
The NBV of 1H26 listed insurers is expected to grow steadily, and the dividend insurance transformation will affect the NBVM performance of some insurers to a certain extent
The bank expects 1H26 NBV to perform year-on-year for China Life (yoy +31.5%), China Taibao (yoy +15.7%), Sunshine Insurance (yoy +14.3%), Xinhua Insurance (yoy +11.8%), Ping An (yoy +10.0%), and Life Insurance (yoy +9.3%). Since 2026, the comparative advantages of dividend insurance products have been further highlighted after the scheduled interest rate was changed, and channel and customer acceptance have increased significantly. We are optimistic about the results of optimizing the product structure throughout the year and its positive effect on reducing the cost of rigid debt.
Excellent structure and cost reduction results continue to be released. 1H26COR is expected to continue the year-on-year improvement trend
The original premium income of 1-5M26 Financial Insurance Company reached 797.9 billion yuan, +2.2% year on year, and compensation expenses were 432.4 billion yuan, +1.6% year over year. The growth rate of compensation expenses was lower than the growth rate of premium income. At the disaster level, according to data from the Ministry of Emergency Management, the total direct economic losses from natural disasters in 1H26 were 42.14 billion yuan, down about 22.1% year-on-year from 1H25's 54.11 billion yuan. The overall pressure of the disaster in the first half of the year was less than in the same period last year. Leading insurers continue to promote better structures, risk control, and cost reduction strategies, combined with the gradual liberalization of independent pricing coefficients for new energy vehicle insurance and steady progress in comprehensive management of non-car insurance. It is expected that the COR trend of 1H26 listed insurers will continue year-on-year. Looking at the company segments, 1H26 COR is expected to perform 94.6% (yoy-0.2pct), China Ping An 95.1%, China Taibao 95.7% (yoy-0.6pct), and Sunshine Insurance 97.9% (yoy-0.9pct).
The structural rebound in the 2Q26 equity market drives the restoration of investment returns, and the decline in long-term interest rates supports the fair value of bonds
1Q26 was affected by rising geopolitical risks, the equity market fluctuated in stages, and insurers' investment-side performance was under pressure; the 2Q26 market showed a structural rebound. During this period, the Shanghai and Shenzhen 300/China Securities 800/China Securities Dividend/Science Innovation 50/Hang Seng Index rose and fell +11.9%/+13.7%/-12.3%/+75.7%/-7.7%, respectively, +10.6pct/-12.4pct/+77.6pct/-11.8pct. By the end of 2025, the equity allocation ratio of major insurers in the secondary market had increased significantly. As the share of FVTPL equity assets increased, the profit side's flexibility in the equity market increased. In terms of bonds, as of June 30, the yield to maturity of 10-year treasury bonds was 1.73%. Compared with the levels at the end of March/end of 25, respectively, the fair value of FVTPL bonds was positively supported.
Risk warning: Long-term interest rates are declining, equity markets fluctuate greatly, major disasters are frequent, and policy impacts have exceeded expectations.