中國保險(xiǎn)業(yè)報(bào)告產(chǎn)業(yè)轉(zhuǎn)型的現(xiàn)實(shí)檢驗(yàn)

1、,,UBS Evidence Lab survey: what are agents saying amid growth headwinds? UBS Evidence Lab conducted its second annual survey of 798 insurance agents in Asia (297 in China), and for the first time we analysed t

2、he geographical footprints of Chinese insurers' branch locations. The key read-through for China includes significant product mix improvement (Ping An and Taiping ahead of peers) and diverging job sati

3、sfaction (insurers good at selling protection more resilient to retention risk). We believe Q118 marks a growth trough; we expect new premium recovery and margin expansion to underpin a 10% new bus

4、iness value (NBV) rebound for the rest of 2018. Down 10% YTD, our reverse engineering suggests the current sector valuation of 1.0x 2018E P/EV implies interest rate risk of over 250bp, or cost of equity over

5、 20%, or persistently falling NBV. We are positive on the sector; we launch Ping An as a Key Call.Our proprietary data sheds some light on retention riskWeak premium growth in Q118 has raised investor concern about a

6、gent retention. Our survey suggests agents' job satisfaction is highly correlated with the ability to sell protection. With their product mix more long-term protection-driven, Ping An and Taipin

7、g agents have a more positive business outlook, and importantly, demonstrate much higher satisfaction and optimism about team expansion, especially at Ping An. NCI has a higher proportion of agents w

8、ho expect headcount to decline in 2018. The UBS Evidence Lab geospatial study suggests Ping An's branch network is the most aligned with locations with higher potential to sell protection product.We expe

9、ct sector NBV growth to recover by about 10% for rest of the year Industry data implies new premium growth is recovering (up 5-10% in April-May, from down 30% in Q118). Factoring in the challenging Q118, we low

10、er our sector 2018 NBV growth estimate from 10% to 5%, implying about 10% growth for the rest of 2018 (Ping An and Taiping likely to outperform), driven by stabilising new premium growth and

11、 margin expansion from product mix improvement. We believe the key driver of sector new business growth will shift to protection products due to robust demand from under-penetration and rising awar

12、eness. We expect sector NBV growth to recover to 19% in 2019. We will be closely monitoring potential pricing competition.We launch Ping An as a UBS Key Call; we also like TaipingWe believe the valuations of Chinese li

13、fe insurers have bottomed out. Ping An remains our top pick (leading platform for selling protection and optionality on technology). We also like Taiping (underappreciated strengthened agency channel).Figure 1: China

14、insurance sector—revising price targets mainly on our lower new business outlook for 2018,Note: data as of closing of 20 June 2018. Source: Bloomberg, UBS estimates,,China Insurance SectorUBS Research THESIS MAP a gui

15、de to our thinking and what's where in this report,MOST FAVOURED,LEAST FAVOURED,Ping An, TaipingChina Re,PIVOTAL QUESTIONS,Q: Will the sector return to double-digit NBV growth in 2019?Despite a challenging Q118, we

16、 expect NBV growth to recover over the rest of 2018 and return to double digits from 2019 onwards. We believe new business sales at Chinese life insurers will continue to shift from deposit substitutes to protectio

17、n, where insurers with strong agency force are better positioned. In addition, for savings-type products we see room for product design and margin,improvement because of lengthening duration.,more ?,

18、Q: Is agency retention a risk to business mix transformation?We believe pressure on sector agency headcount will begin to fade after Q118, as we expect new business momentum to stabilise. We believe rising penetration

19、of protection products will support the commission income pool for agents. We think headcount pressure from regulatory tightening on short-term savings products provides a good opportunity for insurers to enh

20、ance the quality of their agency force, which has almost doubled over 2014-17. We expect industry headcount growth to pick,up to around 10% pa from 2019 onwards.,more ?,Q: How much does the bond yield recovery support in

21、surers’ profitability?If current interest rates persist, we estimate insurers would sustain an investment yield of at least 4.5%. Therefore, we apply an investment yield assumption in our embedded value (

22、EV) calculation of 4.5% (still below most insurers’ 5.0% reported EV assumption). On average, our adjusted life EVs are now only about 13% below the reported basis. Fading reserving pressure underpi

23、nned by stabilization of the 750-day moving average bond yield should also drive significant earnings recovery,in 2018-19E.,"China Insurance Sector – Riding on the interest rate tailwind" 11/22/2017 ?,UBS VIE

24、W,We are positive on Chinese life insurers. We expect sector NBV growth to recover to double-digits into 2019, underpinned by a recovery of new business growth and margin expansion that we think are not in the price. We

25、also expect positive impact from insurance reserving on stabilised interest rates.,EVIDENCE,The Evidence Lab survey suggests agents' job satisfaction and outlook for headcount growth is highly correlated with how

26、well the insurers sell protection products. We see a potential virtuous cycle of new business growth and agency channel expansion at Ping An and Taiping.,WHAT'S PRICED IN?,The sector is trading at 1.

27、0x 2018E adjusted P/EV, 1sd below the historical average. Our reverse engineering suggests the current sector valuation implies substantial interest rate risk (>250bp),,or cost of equity of >20%, or persi

28、stently negative NBV growth.,more ?,Agents at Ping An and Taiping are more optimistic than the rest of sector on retention risk,Source: UBS Evidence Lab,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

29、,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,14,16,10,29,33,4,3,11,7,45,44,46,53,33,49,50,22,33,30,26,36,13,14,36,37,28,53,7,8,69,310,5,39,0,2220,5,0000,0%,20%,40%,60%,80%,100%,China,Major Domestic,International,Pin

30、g An Life,Taiping Life,China Life,CPIC,NCI,PICC Life,,Prefer not to answer,,,Don't knowSignificantly decreasing headcount,,,Moderately decreasing headcount No change,,,Moderately increasing headcount Significantly i

31、ncreasing headcount,,,,,China Insurance Sector 21 June 2018,?? 2,China insurance sector,UBS Research,,OUR THESIS IN PICTURES,return ?,Lengthening policy duration in China suggests improving product mix,Ping An and Tai

32、ping appear to be ahead of peers on product mix,Q: Does new regulation make it hard to sell insurance product?A: Agents at China Life, CPIC and PICC Life see this as a bigger risk than agents at Ping An, Taiping and NCI

33、,Demographic distribution within a 15-minute drive from branches—Ping An has more effective reach to more affluent areas,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

34、,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

35、,,,,,,,,,,,,,,,,,,,0,5,10,15,20,25,100%90%80%70%60%50%40%30%20%10%0%,W1 W2 W1 W2 W1 W2 W1 W2 W1 W2 W1 W2 W1 W2 W1 W2 W1 W2,,,,,,,,Total China2 years or less 11 to 20 yearsPrefer not to an

36、swer,HKIndia Indonesia Japan Malayia SG Thailand,,3 to 5 years21 years or more Mean (Year; RHS),6 to 10 years Don't know,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

37、,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,24,21,29,13,10,32,28,18,42,33,33,33,28,38,36,37,37,31,38,42,30,57,51,29,29,44,21,1211,15,9,8,15,16,12,11,100%90%80%70%60%50%40%30%20%10%0%,China,Major Domest

38、ic,International,Ping An Life,Taiping Life,China Life,CPIC,NCI,PICC Life,,Others,,Protection type product,,Long term saving type products,,Short term saving type products,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

39、,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,100%90%80%70%60%50%40%30%20%10%0%,Ping An Taiping LifeLife,China Life,CPIC,NCI PICC Life,,Don't know,,,,,,Strongly disagreeSomewhat disagreeN

40、either agree nor disagreeSomewhat agreeStrongly agree,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,China Life,China Insurance Sector 21 June 2018,?? 3,China Pacific Picc Life,Tai Ping Life,12,000New China,Life,Ping An Life,0,2,00

41、0,4,000,6,000,8,000,10,000,14,000,15,17,19,21,Per Capita Income (Rmb k)232527,Aggregated Income (Rmb m),China insurance sector,UBS Research,,OUR THESIS IN PICTURES,return ?,Sector NBV margin—despite first-year premiu

42、m (FYP) headwinds, we expect the NBV margin to continue to improve in 2018 on better product mix,Ping An—superior agent job satisfactory levels, with most criteria exceeding expectation,Agents at Ping An and Taiping are

43、more optimistic about retention risk than the rest of sector,Source: UBS Evidence Lab, Datastream, UBS estimates,The sector is trading at 1.0x 2018E P/EV,,,,,,,,,,,,,,,,,,20%15%,25%,30%,45%40%35%,201220132014,

44、20152016,2017,2018E 2019E 2020E,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,50,60,908070,Commission income100,Product design,Sales technology,Training (frequency),Training (quality),Back office support,Other

45、incentives (e.g. trips),,,,,,Importance,,,,Satisfaction,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,14,16,10,29,33,4,3,11,7,45,44,46,53,33,4950,22,33,30,2

46、6,36,13,14,3637,28,53,7,8,6,3,5,9,10,39,0,2,2,2,0,5,0,0,0,0,0%,20%,40%,60%,80%,100%,China,Major Domestic,International,Ping An Life,Taiping Life,China Life,CPIC,NCI,PICC Life,,,Prefer not to answerDon't know,,Signi

47、ficantly decreasing,,,Moderately decreasingNo change,,,Moderately increasingSignificantly increasing,,,,,,,,,,,,,,,,,,,,,,,,,,,0.5x,1.0x,3.0x2.5x2.0x1.5x,Jun 04,Jun 05,Jun 06,Jun 07,Jun 08,Jun 09,Jun 10,Jun 11,Ju

48、n 12,Jun 13,Jun 14,Jun 15,Jun 16,Jun 17,Jun 18,,,,Sector P/EVAll time average,,Average (Since 2008) 5-yr average,China Insurance Sector 21 June 2018,?? 4,China insurance sector,UBS Research,,PIVOTAL QUESTIONS,China I

49、nsurance Sector 21 June 2018,?? 5,return ?,Q: Will the sector return to double-digit NBV growth in 2019?UBS VIEWDespite a challenging Q118, we expect NBV growth to recover over the rest of 2018 and return to dou

50、ble digits from 2019 onwards. We believe new business sales at Chinese life insurers will continue to shift from deposit substitutes to protection, where insurers with strong agency force are better

51、 positioned. In addition, for savings-type products we see room for product design and margin improvement because of lengthening duration.EVIDENCEIn addition to a low insurance penetration rate, UBS

52、 Evidence Lab projects suggest: 1) the average sum assured for in-force protection products remains insufficient; 2) product mix has improved significantly across the sector YTD, but there is still plenty of

53、room to catch up with developed markets in Asia; and 3) agency retention risk varies across insurers—we observe a high correlation between agent job satisfaction levels and the ability

54、 to sell protection products.WHAT'S PRICED IN?The sector is trading at 1.0x 18E P/EV. Our reverse engineering suggests the current sector valuation implies substantial interest rate risk (>250bp), or

55、cost of equity of >20%, or persistently negative NBV growth.,UBS Evidence Lab has conducted its annual survey with 798 insurance agents in Asia, including 297 exclusive agents in China. The key re

56、ad-through for Chinese life insurers from this survey: 1) product mix has improved significantly, with Ping An and Taiping ahead of peers, 2) higher job satisfaction at major Chinese insurers that do well in protec

57、tion products and hence are more resilient to retention pressure; 3) foreign insurers' JVs, on aggregate, have yet to show any clear competitive advantage over major domestic insurers in pr

58、oduct mix and agent satisfaction.Our analysis of UBS Evidence Lab's geospatial study on insurers' branch networks suggests Ping An's allocation of distribution resources is relatively aligned with the le

59、vel of household wealth. Amid industry transformation, from selling deposit substitutes to protection products, insurers that have a strong hold in affluent regions are better positioned.We lower ou

60、r 2018 sector NBV growth estimate from 10% to 5% to reflect the challenging Q1, but we still expect a robust growth recovery of 10% over the remainder of 2018 and for sector growth to normalise to 19% in 201

61、9. Growth catalysts could arise from stabilisation of agency headcount, regulatory tightening on banks' wealth management products (WMPs), and upselling of protection products to existing policyholders.

62、We expect new business growth for Ping An and Taiping to be more resilient than that of major peers.,Product mix improvement on the way in ChinaWe believe policy payment duration is correlated with the quality of

63、 product mix, as protection products with cash value typically offer better protection if structured with longer duration. Our data suggests average payment duration for regular paid protection products in China has

64、 improved significantly, from eight years to 12 years, since 2017. We believe this was mainly driven by regulatory tightening (Document 134) of product design for savings-type insurance products. That be

65、ing said, at least from the duration perspective, there is still plenty of potential for protection products in China to catch up other Asian markets such as Hong Kong and Singapore.Figure 2: Average premi

66、um payment duration in Asia; China has improved the most since 2017. We believe this has been driven mainly by regulatory tightening on savings-type products,,,Source: UBS Evidence LabAt the company level, our respon

67、dents suggest Ping An and Taiping's product mix have the highest proportion of protection products. In contrast, China Life and PICC Life still sell a relatively high proportion of savings-type products. W

68、e believe this provides some useful colour on product mix quality from the agents' perspective. It also confirms our view that Ping An has one of best product mix among peers. We