Citi: Cautiously optimistic on China's life insurance industry growth in 2027; prefers Ping An Insurance (02318), China Pacific Insurance (02601), and PICC P&C (02328)

Citi released a research report stating that Chinese life insurers' new business value grew modestly in the first nine months of 2026, in line with expectations, reflecting a high comparative base and regulatory disruption in the bancassurance channel. The bank remains cautiously optimistic on life insurance industry growth in 2027, believing that the continued structural shift in household wealth allocation and the restructuring of the bancassurance channel can provide support. Given economic uncertainty, the bank continues to prefer defensive stocks with high dividends and progressive dividend policies, including Ping An Insurance (02318), China Pacific Insurance (02601), and PICC P&C (02328). On the property insurance side, despite higher natural disaster losses, Ping An Insurance, China Pacific Insurance, and PICC GROUP (01339) saw their combined ratios improve year-on-year by 1.4 percentage points, 1.4 percentage points, and 0.3 percentage points, respectively, in the first nine months of this year, to 95.6%, 96.2%, and 95.8%. The bank expects the regulatory-driven upcycle in the property insurance industry to continue, with the combined ratio expected to improve further in 2027. On profitability, insurers' net profit fell by between 20% and 47% year-on-year in the first nine months of 2026, with overall performance relatively weak, but operating profit still recorded resilient growth of 6% to 16% year-on-year, while book value and solvency levels were broadly stable quarter-on-quarter in the third quarter.