10M17 life premiums update Ping An’s 10M17 life GWP increased 35% YoY. Inparticular, its Oct FYP (agency channel) increased 30.7% YoY. After the No.134Document came into effect in Oct, Ping An has released a series of new products whichare in line with the Document. The company’s number of exclusive agents increasedfurther by 8% QoQ in 3Q17 as well. We think these measures above will support thecompany’s life premiums growth next year. 10M17 life GWP for China Life, CPIC, andNCI grew by 19%, 29% and -4% YoY respectively. We think their Oct FYPs might beweak temporarily due to an adjustment to the preparation for the 2018 ‘jump-start’campaign (a typical strategy used by life insurers to boost sales at the beginning ofyear). For example, CPIC Life launched a Jubaopen ( 聚宝盆) Annuity Insurance(participating type) in Nov, which is the first new product released by the company afterthe CIRC issued the No.134 Document.    Maintain Positive rating on China life insurance sector We have a positive outlookon the China life insurance sector given: 1) there is now a better-regulated life insurancebusiness environment; 2) life insurance companies may benefit from the rising 750D-MA10Y government bond yield; and 3) a tax-deferred pension plan would be long-termpositive for the China insurance sector. We have a Buy rating on all four major China lifeinsurance companies, i.e. Ping An (2318 HK, Buy), China Life (2628HK, Buy), CPIC(2601 HK, Buy) and NCI (1336 HK, Buy).    Rising market share for leading life insurers helped by enhanced regulation TheCIRC has issued a series of measures to enhance regulation, following the principlesthat the insurance business should be protection-oriented and that financial stabilityshould be maintained. Among these series of measures, the No.134 Document is at thecore of the CIRC’s requirement. As second-tier life insurance companies are no longerable to sell wealth-management products aggressively at the cost of business quality,we note that the aggregate market share of leading life insurance companies in terms ofGWP is consolidating in 2017.    Life insurance companies may benefit from rising 750D-MA 10Y government bondyield Since end-3Q17, due to the rise in the 10Y government bond yield, its 750D-MAline has gradually moved onto an upcycle, which will reduce the required reserve fundand release accounting profit for life insurance companies. Assuming the 10Ygovernment bond yield remains stable at the current level until end-2018, the expected750D-MA of the 10Y government bond yield will climb up steadily in 2018.    Tax-deferred pension plan long-term positive for China life insurance sector TheState Council has issued guidance on speeding up the development of non-stateprovidedpension insurance, clearly indicating for the first time that a tax-deferredpension pilot will be launched by end-2017. We estimate resulting new premiums of~Rmb96-288bn for China life insurance companies in the medium term. In the longerterm, as the number of tax payers increases and as the percentage of tax payers willingto purchase this type of pension increases, we expect the tax-deferred pension plan tocontribute more premiums for the sector and to benefit the fund management sector aswell.

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