Weaker life due to effect of Regulation No. 134    Life premium recorded a decline in Oct with yoy growth ranging from -28.5%to 27.0% (vs. 6.2% to 44.8% in Sept), most likely driven by the implementationof Regulation No.134starting 1Oct, which prohibits certain savings policies. Asthere was a rush to buy in Sept ahead of the change, a subsequent slowdown inOct should not come as a surprise. Ping An was the only life insurer seeing doubledigitgrowth of 27.0% yoy (note Ping An started to adopt Reg 134in June) withstrong FYP (ex-grp) growth at 30.7% (vs. 47.5% in Sept). P&C premium growthwas largely stable, ranging from 11.6% to 63.1% (vs. -9.6% to 20.9% in Sept), ledby Ch Taiping (+63.1%). We maintain our positive view on Chinese insurers andprefer life over P&C. Top picks: Ping An and NCI.    Life – A decline not a surprise    Ping An led Oct growth at 27.0% yoy (vs. +34.8% in Sept), followed by ChinaLife at 6.6% (+37.3%), CPIC at 3.2% (+24.0%), Taiping at 0.8% (+29.4%), NCI at-4.5% (+44.8%) and PICC Group at -28.5% (+6.2%). Taiping Life’s (ex-Pension)0.3% growth was driven by individual regular (+2.7%) and other channels regular(+38.4%), more than offsetting the weakness in bancassurance (-10.6%). In termsof 10M17, Ping An led at 34.9% yoy (vs. +35.5% in 9M17), followed by CPIC at28.8% (+30.7%), Taiping at 25.7% (+27.6%), China Life at 19.0% (+19.6%), PICCGroup at -2.4% (-1.5%) and NCI at -3.9% (-3.8%).    P&C – Steady growth    P&C premium growth remained steady in Oct, with underlying yoy growthranging from 11.6% to 63.1%. Taiping led Oct growth at 63.1% yoy (vs. -9.6% inSept), followed by Ch Continent at 17.2% (+10.3%), Ping An at 13.6% (+20.9%)driven by non-auto (+32.8%), CPIC at 11.6% (+12.3%), and PICC at 14.0%(+13.8%). On a YTD basis (ex-VAT impact), Ping An led at 25.5% (vs. +26.8% in9M17), followed by Taiping at 21.9% (+17.4%), Ch Continent at 18.8% (+19.0%),PICC at 14.7% (+14.8%) and CPIC at 11.8% (+11.8%).    Prefer life players with strong protection focus    We reiterate our positive view on the Chinese insurance sector, and believethe current valuation of 1.2x 2017E P/EV (assuming 4.0% long-term investmentreturn) for life insurers is low, given the sector's strong growth outlook. Weprefer insurers with a strong protection focus, and thus have Ping An and NCIas our Top Picks. We believe Ping An’s strongest protection focus and superiorrisk management capabilities should justify a premium valuation, while concernson NCI’s balance sheet risk may be overdone. We also have Buys on CPIC, ChTaiping, and China Life-H. Investment risks include significant investment marketweakness, asset quality risks, a sharp decline in bond yields and China’s macrorisks.

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