PICC Group Reports Sharp Decline in Life Insurance NBV, Better Profitability Outlook for P&C

PICC Group’s 2021 results were mixed, in our view. Net profits grew 8.2% from 2020 to CNY 21.6 billion. The fourth quarter saw net profits shrinking 35% year on year to CNY 860 million, mainly driven by a CNY 5.4 billion reduction in profit before tax due to an unfavorable change in economic assumptions. Total premium grew 3.9% from 2020 to CNY 585.4 billion, driven by 3.8%, 0.7%, and 11% respective growth in property and casualty, life, and health insurance premium. Return on equity was largely flat with 2020 at 10.3%. The results reflected strengthening advantages in auto insurance business after the comprehensive auto reform that began in September 2020, while the life insurance business continued to struggle, with new business value seeing a larger-than-peers decline of 35% from 2020. However, bancassurance channel remained positive growth in NBV.