Shenwan Hongyuan Group Co., Ltd. released a research report stating that the insurance sector has experienced notable overcorrection under the influence of external factors. However, expectations for medium-term improvements in assets and liabilities remain unchanged, and the firm continues to be optimistic about the sector's value reassessment trend. The "good start" new business performance has been impressive, with listed insurers' NBV expected to maintain double-digit growth in the first quarter. The methods for insurance funds entering the market are likely to become more diversified, and under a low base effect, first-quarter results are anticipated to be promising. Shenwan Hongyuan's key views are as follows:

**Review: Significant Overcorrection Since the Start of the Year Under the Influence of "High Volatility" Label** Escalating conflicts in the Middle East, combined with a lack of phased positive news in the sector's fundamentals after the Spring Festival holiday, have amplified the high-beta characteristics of the insurance sector, leading to significant overcorrection. As of March 19, the insurance sector has declined by 9.5% since the beginning of the year, underperforming the CSI 300 Index by 8.5 percentage points, which is a notable deviation from the better-than-expected "good start" performance.

**Policy: Growing Importance of Commercial Insurance During the "15th Five-Year Plan" Period** The outline of the "15th Five-Year Plan" emphasizes that public services should be provided "to the best of one's ability and within one's means," highlighting the elevated importance of commercial insurance. Pension and healthcare remain the two core development directions. The financial regulatory authority has identified resolving risks in small and medium-sized financial institutions as a key task for 2026, supporting expectations that leading insurers will enhance their competitiveness and pricing power amid increasing industry concentration.

**Liabilities: Strong "Good Start" Performance in Life Insurance, Steady Repricing in Property Insurance** The 2026 "good start" campaign demonstrates three key trends: 1) impressive growth in new business premiums; 2) significant results from the transition to participating insurance; and 3) bancassurance channels expected to contribute substantially to performance growth. Companies with NBV growth alpha are likely to gradually gain valuation alpha. It is estimated that approximately 44 trillion yuan and 50 trillion yuan of three-year and longer-term deposits from financial institutions will mature in 2026 and 2027, respectively. Assuming 5% of these funds flow into insurance, this could contribute potential increments of 2.18 trillion yuan and 2.50 trillion yuan. Repricing in property insurance is progressing steadily, with comprehensive management of non-auto insurance entering the implementation phase. The floating range of self-pricing coefficients for new energy vehicle insurance is gradually expanding, supporting the continuation of the combined ratio improvement trend.

**Assets: Insurance Fund Market Entry to Remain a Key Trend in 2026, with Diversified Approaches** In 2025, insurance funds' equity allocations in the secondary market increased by 1.6 trillion yuan, with the proportion rising by 2.4 percentage points year-on-year to 14.8%. The implementation of new short-term trading regulations and support for insurance funds to participate in private placements as strategic investors through public consultations are expected to diversify the ways insurance funds enter the market. Insurance funds have increased cornerstone investments in Hong Kong-listed IPO companies, with the information technology sector being a key focus. As of March 19, the total return rate reached 139.6%, demonstrating strong performance.

**Risk Warnings:** Regulatory policy impacts exceeding expectations, decline in long-term interest rates, significant fluctuations in the equity market, and greater-than-expected effects of major disasters.