UBS: China Pacific Insurance - Q1 Net Profit Resilient; VNB Growth Lagged on Bancassurance Discipline
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China Pacific Insurance (601601.SS) reported resilient first-quarter 2026 results, with net profit rising 4.3% year-over-year to RMB 10 billion, primarily driven by favorable tax benefits. The company recognized a tax gain of RMB 144 million, a significant swing from the RMB 1.5 billion tax expense recorded in Q1 2025. However, excluding this tax impact, pre-tax profit actually declined 12%. Group operating profit grew 3.6%, aligning with management's guidance for moderate growth.
Value of new business (VNB) increased 9.6%, trailing major peers like Ping An, which posted 21% growth. This shortfall stemmed from strict discipline within the bancassurance channel, where single-premium payments plummeted 64% and first-year premiums dropped 40%. Conversely, the agency channel performed robustly, delivering double-digit VNB growth alongside a 34% surge in first-year premiums. The property and casualty segment saw its combined ratio improve by one percentage point to 96.4%.
Net assets grew 5.8% sequentially, supported by earnings contributions and favorable interest rate trends. Core and comprehensive solvency adequacy ratios declined to 146% and 214%, respectively, reflecting market volatility and equity allocation shifts. UBS maintains a Buy rating with a 12-month target price of RMB 50.50, implying a 39% price appreciation potential.