Better skies ahead for China Pacific's new business value

But patience will be needed amidst challenges in recruiting agents.

China Pacific Insurance (CPIC) can expect better recovery prospects in terms of new business value growth in 2021, according to an OCBC Research report, with valuations reflecting much of the concerns over a more modest growth outlook and impact from the pandemic.

The past year has been hard for the insurer, marred by changes in consumer behaviour due to dented financial means and higher sense of financial insecurity. Over the past year, it has taken insurers a longer period to market long term insurance policies, the report said. 

“With a lower base effect from 2020 due to the pandemic, we see an improving outlook ahead as the company works on improving agent productivity although patience will be needed given the current industry wide challenges recruiting quality agents.”

The insurer recorded a 2% growth in Q1 2021 net profit to $1.3b (CNY8.2b) with a solid 36% YoY growth in agency first-year premiums. Group net asset value (NAV) rose 3% QoQ whilst non-standard assets exposure was about 22% as of end-Q1. 

Its annualised total investment yield was 4.6%, higher than the 4.5% registered a year ago. Life and P&C comprehensive solvency ratios remained solid at 240% respectively. Per segment, CPIC Life’s profit declined 8% to $834m (CNY5.4b) but underlying business growth remains positive.

For its P&C business, premiums grew 12% YoY with an overall segmental net profit of $324m (CNY2.1b) representing a 28% growth YoY.