Dongwu Securities: Life insurance premium growth turns negative in Aug; some insurers may start 2027 'opening red' campaign early

Life Insurance Premium Growth Continues to Face Headwinds; Some Insurers May Advance "开门红" Campaigns

• August single-month life insurance premium growth remained under pressure, though we expect improvement in September.
• For the period of January–August 2026, life insurance companies recorded original premium income of RMB 3,571.9 billion, down 0.2% year-on-year, turning negative from +1.8% in the first seven months.
• In August alone, original premiums reached RMB 401.1 billion, down 13.6% year-on-year, with the decline widening by 0.4 percentage points (pct) from July.
• Policyholder investment deposits (mainly universal life insurance) grew 8% year-on-year in the first eight months, while investment-linked insurance fell 42%. In August, policyholder investment deposits declined 8% year-on-year, reversing from +4% in July; investment-linked insurance dropped 69%, with the decline widening by 22 pct from July.
• We estimate that the short-term pressure on new policy premiums in July–August was mainly due to a high base in the same period last year and the impact of the 65th document on bancassurance channels. Premium growth may see marginal improvement in September.
• According to Jinribao reports, some insurers have begun holding their 2027 "开门红" launch meetings since mid-to-late September, potentially advancing the campaign schedule compared to last year. We expect that 2027 "开门红" products will likely continue to feature participating (dividend) insurance as the main offering, with a guaranteed return (1.75%) plus floating returns, which remains attractive to customers.

Health Insurance Premium Growth Slowed Significantly in August

• January–August 2026 health insurance premiums totaled RMB 783.8 billion, up 3.1% year-on-year.
• August single-month health insurance premiums reached RMB 73.8 billion, up 0.1% year-on-year, slowing by 3.6 pct from July.
• Health insurance as a share of total premiums stood at 20% at end-August, down 0.4 pct from end-July.
• We believe that against the backdrop of deepening cooperation between medical insurance and commercial insurance, commercial health insurance has significant growth potential. By integrating insurance, health check-ups, rehabilitation, elderly care, pharmaceuticals, and hospital services, insurers can build a one-stop health ecosystem of "health management + medical services + insurance," effectively enhancing customer stickiness and empowering business growth.

Property & Casualty Insurance Premium Growth Slowed in August

• January–August 2026 P&C insurance premiums reached RMB 1,247.3 billion, up 2.2% year-on-year.
• August single-month P&C premiums totaled RMB 129.1 billion, up 1.8% year-on-year, slowing by 1.9 pct from July. Both auto and non-auto insurance premium growth rates declined month-on-month.
• Auto insurance premiums were flat year-on-year on a cumulative basis. In August, auto insurance premiums fell 0.1% year-on-year, turning negative again (vs. +0.2% in July). According to data from the China Association of Automobile Manufacturers, August auto production and sales fell 4.7% and 5.1% year-on-year, respectively, with domestic market monthly sales continuing to face pressure. New energy vehicle production and sales grew 19% and 18% year-on-year, respectively.
• Non-auto insurance premiums grew 4.4% year-on-year on a cumulative basis. In August, non-auto premiums rose 4.6% year-on-year, slowing by 3.7 pct from July. Breakdown by line:
• Health insurance: +29% year-on-year (up 2 pct from July)
• Liability insurance: +9% (down 1 pct from July)
• Accident insurance: +2% (flat vs. July)
• Agricultural insurance: -3% (down 8 pct from July)
• We believe that Q3 saw more natural disasters compared to the same period last year, which may have a short-term impact on the combined operating ratio (COR). However, with the ongoing comprehensive rectification of non-auto insurance and continued cost-reduction and efficiency-improvement efforts by insurers, the overall profitability of the P&C insurance industry is expected to gradually improve.

Fundamentals Remain Resilient; Continued Upside for Insurance Sector Valuation Recovery

• We believe market demand remains robust. The transition to participating (dividend) insurance will further optimize rigid liability costs, alleviating pressure from interest rate spread losses.
• The 10-year government bond yield recently fell to around 1.67%. We expect that as the domestic economy recovers, if long-term interest rates continue to recover and rise, the pressure on insurers' new fixed-income investment returns will ease.
• At end-Q2 2026, public fund holdings of insurance stocks fell to 0.42%, significantly underweighted.
• As of September 24, 2026, the insurance sector was valued at 0.45–0.83x 2026E PEV and 0.88–1.58x 2026E PB, near historical lows. We maintain an "Overweight" rating on the sector.