## Xinhua Insurance (601336)： New orders increase investment side and flexibility

Category : 洗浴

Xinhua Insurance (601336): New orders increase investment side and flexibility

New orders and investment helped, and net profit attributable to mothers increased by 29%, and the expense ratio was stable.

1) High net profit increase: In Q1 of 2019, Xinhua Insurance achieved net profit attributable to mothers of 3.4 billion (YoY + 29%), mainly due to ① new single-item growth of 24%; ② business transformation helped bancassurance high-priced products to surrender and reduce surrender expenses.The gold rate has fallen by 80% each year; ③ The expense rate remains relatively stable: During the start of the company, the company’s insurance and savings insurance were both developed, and the proportion of new insurance insurance orders increased, but the fee and commission expense rates and management fee rates were basically stable, without significant changes.Growth, the cost side is properly controlled.

2) The comprehensive income growth brought by the flexibility of the equity market, and the total investment yield is basically stable: Xinhua’s total investment yield in 1Q1 is 4.

2% (YoY-0.

1pct).

Investment income was 69 million US dollars, an increase of 700 billion US dollars from the previous quarter, or due to the impact of the reallocation of asset redistribution was lower than the previous high, the debt-based dividends were reduced, and the equity assets realized some floating losses.

Fair value gains and losses of 6 trillion, an increase of 7 trillion compared with the previous quarter, basically replaced the replacement of investment income.

The numerator end of the total investment yield is basically the same every year, so the slight decrease is mainly due to the increase in the investment assets of the denominator end.

However, other comprehensive income was as high as 42 trillion, which was a huge increase of 50 trillion compared with the first quarter of last year. After calculation, the 19Q1 comprehensive investment return rate (estimated) reached 6.

6%, when it is suspected that the sale of financial assets is ultimately sold, other comprehensive income will be converted into investment income, which will increase the total investment return.

3) The 750-day moving average moves online, more reserves are withdrawn, or the increase in new orders is high, and the actuarial assumptions are more cautious: after calculation, at the end of 19Q1, the 10-year Treasury bond maturity yield is moved once every 750 daysIs 3.

38%, an increase of 8bps at the end of the first quarter. Generally speaking, insurance companies will increase the discount rate of traditional insurance reserves and leave the insurance contract reserve to be reduced, but the Xinhua Insurance reserve reserve will be withdrawn YoY + 239%, The new single-year increase in 19Q1 is 24%, and the proportion of insurance coverage is increased; instead, the accrual rate of reserves is much higher than the new order growth rate, and the actuarial assumptions of large probability are more cautious.

Health insurance increased rapidly, savings insurance steadily increased, and new single premiums increased on schedule.

1) The structure of new orders is improved. It is expected that NBVM will be further improved, and the growth rate of NBV will exceed that of new orders.

The company’s 19Q1 new policy premium was 93% (YoY + 24%). ① 深圳桑拿网 In terms of channels, the individual insurance and bank insurance new policies were 67% (YoY + 40%) and 17% (YoY + 26%).

② In terms of terms, 19Q1 10 years and above paid 3.4 billion yuan (YoY + 10%).

The payment period of the main storage product “Hui Tianfu” sold by the company “Opening Doors” in 2019 is 3/5 years. Based on this, we take this, and the products with ten-year period of 19Q1 and above are mainly health insurance.

It is estimated that 18Q1 health insurance, long-term savings insurance (ten-year term and above) new orders were 2 billion and 1.1 billion; 19Q1 were 3 billion and 400 million; 19Q1 health insurance new orders increased by 50%, and new orders accounted for 32%(18Q1 is 27%).

Therefore, the probability of NBVM increased in 19Q1, and the growth rate of NBV exceeded new orders.

2) The 成都桑拿网 growth rate of renewal premiums has transitioned or expired with the payment of some savings insurance, and the renewal of protection insurance has not yet arrived.

The company’s 19Q1 surrender rate was only 0.

6%, a sharp drop of -2 previously.

5pct, policy quality continues to improve.

The renewal premium was 33.8 billion (YoY + 6%), or because ①Q1 “starter” is the main time point for the sale of savings insurance, and a large number of payment periods sold in previous years expired in 3/5 years; ② Insurance sales generally start from Q2Begin volume, it is not yet time to pay.

Absolutely, Xinhua’s surrender rate has continued to decline, policy continuity rates have continued to increase, renewal premiums have grown without worry, and Q2 growth may have improved.

The 18-year floating loss of the equity class has been dragged down by 19 years of flexibility.

The equity market bottomed out, and the yield on ten-year Treasury bonds rose by nearly three.

4%, an increase of about 20bps earlier +.

Under the neutral assumption, the bond yield is 4.

5%, non-standard rate of return 7.

1%, Xinhua 19Q1 stock + stock fund income increased negative.

Combined with the 19Q1 stock market’s 30% increase and other comprehensive income increasing by 5 billion US dollars per year, we predict that it may be realized in the early part of the floating loss.

To be conservative, we assume bond yields of 4.

5%, stock + fund yield of 5%, the total investment return of Xinhua at the beginning of the year will reach 5.

4%.

Investment suggestion: New orders are increasing rapidly, and the proportion of health insurance will increase further. NBVM will be further improved, and NBV growth will exceed the new orders.

The equity market bottomed out and the 10-year Treasury bond maturity yield increased. It is expected that the long-term total investment yield will remain stable.

The company’s overall expectations correspond to 0/2019 P / EV respectively.9, 0.

8, 0.

7 times, maintaining the highly recommended level.

Risk reminders: interest rates continue to fall, market volatility, investment income growth; health insurance resources consumption, and premium growth are less than expected.