Net profit growth exceeds 70%, PICC's performance growth rate is on track to set a ten-year record

Another listed insurance company has disclosed a "good news" report.

On January 24, PICC Group announced that the company achieved a net profit attributable to shareholders of 39.853-44.407 billion yuan in 2024, with a year-on-year growth rate expected to be in the range of 75-95%.

A net profit growth rate of up to 70% is not common in the history of PICC Group.

Since 2014, it has only achieved a full-year performance growth of 66.55% in 2019; this also indicates that both the scale and growth rate of PICC Group's net profit are expected to reach a new high in nearly 10 years.

Regarding the reasons for the performance forecast increase, PICC Group stated, "The group is implementing the specific requirements of the new 'National Ten Articles' in the insurance industry, firmly adhering to the direction of high-quality development."

Specifically, first, optimizing the business structure and deeply promoting cost reduction and efficiency improvement; second, actively seizing opportunities in the capital market, with total investment income significantly increasing year-on-year, leading to a substantial growth in net profit compared to last year.

Quarterly performance can indirectly verify the above statements.

According to the announcement data, the net profit growth rates for PICC Group in the four quarters were -23.5%, 68.19%, 2093.6%, and 55-257%, respectively.

It can be seen that since the second quarter, net profit has consistently maintained high growth; the growth rate in the third quarter during the "924" market was the highest.

The overall profit growth trend may benefit from good results in cost reduction and efficiency improvement.

For example, in the first half of the year, the comprehensive cost ratio of PICC Group's auto insurance decreased by 0.3 percentage points year-on-year, and the overall comprehensive cost ratio, excluding the impact of major disasters, decreased by 0.5 percentage points, aligning with the expectation at the beginning of the year of "auto insurance within 97%, non-auto within 100%."

At that time, Yu Ze, president of PICC Property and Casualty, pointed out that the company had enhanced its risk reduction service capabilities while optimizing channels.

For instance, during the heavy rains in South China in June, the company deployed and utilized water immersion IoT devices in advance, arranged alerts and monitoring for flood-prone areas, and quickly harvested and relocated agricultural insurance subjects.

Yu Ze stated, "We have reformed some agricultural insurance products, carried out risk reduction management, and emergency claims handling. The claims ratio in the first half of the year dropped to 71.3% for the first time."

The significant increase in net profit in the third quarter is also attributed to the boost from the A-share market.

At the end of the first half of the year, PICC Group had total stock assets of 44.987 billion yuan, accounting for 2.9% of investment assets, a year-on-year decrease of 0.3 percentage points.

This proportion is not high among listed insurance companies in the A-share market, but it can still bring considerable returns.

PICC Group stated, "While solidifying the operational foundation, the group has also benefited from the warming of the capital market, resulting in a significant year-on-year increase in total investment income and a large increase in net profit compared to the same period last year."

Regarding the topic of equity asset allocation, Cai Zhiwei, vice president of PICC Group, said, "Fixed income is the ballast, and equity is the decisive factor."

He stated, "The company's allocation ratio of equity assets in the public market is at a leading level in the industry. In the future, we will focus on directions related to new productive forces. Strategically, we will better grasp the relationships between absolute and relative returns, current and long-term returns, value investment and growth investment." Recently, after the release of the "Implementation Plan for Promoting Long-term Funds to Enter the Market," the topic of unblocking the obstacles for insurance funds to enter the market has sparked renewed discussion.

PICC Asset Management responded that the "Plan" demonstrates a policy orientation to guide insurance funds to become steadfast value investors, cultivating insurance funds into patient capital, fully leveraging their advantages of large scale, long duration, and stable sources, and achieving cross-cycle investment layout, thereby opening up broad policy space.

In the future, PICC Asset Management stated that it will continue to uphold the principles of long-termism and patient capital management. On one hand, it will continuously enhance investment management capabilities; on the other hand, it will actively explore innovation, further enrich product tools, and enhance the stability and vitality of the capital market