Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

People's Insurance (PICC) / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/people-s-insurance-co-group-of-china-ltd-h" target="_blank" data-smartkarma-citation="entities:362:1" rel="noopener">People's Insurance (PICC) (1339 HK)</a> has bounced off its lifetime low implied stub and simple ratio (PICC/<a href="https://www.smartkarma.com/entities/picc-property-casualty-h" target="_blank" data-smartkarma-citation="entities:350:1" rel="noopener">PICC Property &amp; Casualty (2328 HK)</a>); but still trades below its historical trailing/forward metrics.</li>
<li>Preceding my comments on PICC are the current setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>



People's Insurance (PICC) (1339 HK) has bounced off its lifetime low implied stub and simple ratio (PICC/PICC Property &amp; Casualty (2328 HK)); but still trades below its historical trailing/forward metrics.
Preceding my comments on PICC are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


Event-Driven

<ul>
<li>Back in October, I wrote in <a href="https://skr.ma/gLnnk" target="_blank" rel="noopener">PICC's (1339 HK) Lifetime Low Implied Stub</a> that <a href="https://www.smartkarma.com/entities/people-s-insurance-co-group-of-china-ltd-h" target="_blank" data-smartkarma-citation="entities:362:1" rel="noopener">People's Insurance (1339 HK)</a> was trading at an all-time low implied stub. It's widened further since. </li>
<li>Over the past 12-months, excluding PICC's 68.98% stake in <a href="https://www.smartkarma.com/entities/picc-property-casualty-h" target="_blank" data-smartkarma-citation="entities:350:1" rel="noopener">PICC Property &amp; Casualty (2328 HK)</a>, the market has assigned HK$42.6bn less for PICC's steady and profitable life/health insurance stub ops.</li>
<li>What gives? Falling interest rates is one. EV insurance in another. Yet this bifurcation is extreme.</li>
</ul>


Back in October, I wrote in PICC's (1339 HK) Lifetime Low Implied Stub that People's Insurance (1339 HK) was trading at an all-time low implied stub. It's widened further since. 
Over the past 12-months, excluding PICC's 68.98% stake in PICC Property &amp; Casualty (2328 HK), the market has assigned HK$42.6bn less for PICC's steady and profitable life/health insurance stub ops.
What gives? Falling interest rates is one. EV insurance in another. Yet this bifurcation is extreme.


PICC's (1339 HK)'s Implied Stub Plumbs New Lows As Interest Rate Cuts Bite

<ul>
<li>
<a href="https://www.smartkarma.com/entities/people-s-insurance-co-group-of-china-ltd-h" target="_blank" data-smartkarma-citation="entities:362" rel="noopener">People's Insurance (PICC) (1339 HK)</a> is currently trading at an all-time low implied stub.</li>
<li>Stripping out PICC's 68.98% stake in <a href="https://www.smartkarma.com/entities/picc-property-casualty-h" target="_blank" data-smartkarma-citation="entities:350:1" rel="noopener">PICC Property &amp; Casualty H (2328 HK)</a>, the market is assigning HK$35.6bn less for its steady and profitable life/health insurance stub ops, year-to-date. </li>
<li>PICC is outperforming the HSI. It's just that PICC P&amp;C is on a hot streak, possibly driven (pun intended) by EV insurance. </li>
</ul>



People's Insurance (PICC) (1339 HK) is currently trading at an all-time low implied stub.
Stripping out PICC's 68.98% stake in PICC Property &amp; Casualty H (2328 HK), the market is assigning HK$35.6bn less for its steady and profitable life/health insurance stub ops, year-to-date. 
PICC is outperforming the HSI. It's just that PICC P&amp;C is on a hot streak, possibly driven (pun intended) by EV insurance. 


PICC's (1339 HK) Lifetime Low Implied Stub

Product Marketing Manager, Criat

Raghav Chandra Mathur

Product Marketing Manager

Next-Generation Credit Analytics Provider

Criat

Criat specializes in new-generation data-driven credit analytics. Leveraging our industry-leading DeepCredit analytical technologies, we produce daily-updated forward-looking credit assessment and valuation to help financial institutions stay ahead of risks. Coupled with use-case-driven applications, we extract insights, answer questions and enable smarter credit decisions.

Thematic (Sector/Industry)

<ul><li>Insurers domiciled in Advanced Asian Economies have reaped the benefits of the higher-for-longer interest rate environment that has buoyed profitability for the sub-sector, even though operational headwinds and policy uncertainty remain key challenges for the sector in the latter half of the year.</li><li>Suffice to say the trend in Insurers’ credit risk profiles, measured using Criat’s Credit Cycle Indices (CCCIs), has been non-homogenous across the continent with firms domiciled in economies such as South Korea and Hong Kong facing a substantially higher risk than those domiciled in Singapore, Japan, and Taiwan.</li><li>Strong net investment returns over the past year have helped boost profitability for most of the sub-sector that has increased its exposure to government securities. </li></ul>

Insurers domiciled in Advanced Asian Economies have reaped the benefits of the higher-for-longer interest rate environment that has buoyed profitability for the sub-sector, even though operational headwinds and policy uncertainty remain key challenges for the sector in the latter half of the year.Suffice to say the trend in Insurers’ credit risk profiles, measured using Criat’s Credit Cycle Indices (CCCIs), has been non-homogenous across the continent with firms domiciled in economies such as South Korea and Hong Kong facing a substantially higher risk than those domiciled in Singapore, Japan, and Taiwan.Strong net investment returns over the past year have helped boost profitability for most of the sub-sector that has increased its exposure to government securities. 

Leaders and Laggards in Advanced Asia-Domiciled Insurance Sector

Fintech & EM-focused Analyst, KT Capital Group

Alec Tseung

Fintech & EM-focused Analyst

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

PICC Property & Casualty H / Equity Bottom-Up

<ul>
<li>The insurance sector should definitely warrant more investor attention going forward as some insurance names in the region have had a very strong year in 2022.</li>
<li>Two key markets we view positively in 2023 are China's P&amp;C and Korea's L&amp;H insurance markets, given their favorable industry catalysts and tailwinds. </li>
<li>Among all the insurance stocks in these two markets, we believe PICC P&amp;C and Samsung Life will continue to have an exciting year ahead.</li>
</ul>


The insurance sector should definitely warrant more investor attention going forward as some insurance names in the region have had a very strong year in 2022.
Two key markets we view positively in 2023 are China's P&amp;C and Korea's L&amp;H insurance markets, given their favorable industry catalysts and tailwinds. 
Among all the insurance stocks in these two markets, we believe PICC P&amp;C and Samsung Life will continue to have an exciting year ahead.


APAC Insurers Series (#1): A Hidden Gem in This Bear Market?

China

New China Life Insurance Company Limited provides life insurance in local and foreign currencies, acts as an insurance agent, provides checks, claims and insurance consulting. The Company's main products include life insurance, accident insurance, health insurance products and services.

China Pacific Insurance (Group) Company, Ltd. is an integrated insurance services provider. The Company offers life and property insurance products through its subsidiaries.

China Reinsurance (Group) Corporation is a reinsurance company. The company operates four principal business segments, consisting of P&C reinsurance, life and health reinsurance, primary P&C insurance and asset management businesses.

ZhongAn Online P & C Insurance Co., Ltd. operates as an insurance company. The Company develops and sells health, airline, and automotive insurance, and other products. ZhongAn Online P & C Insurance also offers online consumer finance services.

PICC Property and Casualty Company Limited provides insurance services. The Company provides property loss insurances, liability insurances, credit insurances, accidental injury insurances, short term health insurances, guarantee insurances, and other insurance products. PICC Property and Casualty also operates investment businesses.

Fanhua, Inc. operates an independent insurance agency and brokerage company. The Company provides wealth management, property, casualty, and life products, as well as consumer finance, insurance claims adjusting services,such as damage assessments, surveys, authentications, and loss estimations.

Haitong Securities Co., Ltd. offers securities services. The Company provides securities brokerage, asset management, securities investment, share transfer agency, and capital intermediary services. Haitong Securities focuses on  online brokerage, wealth management, and institutional investors.

Haitong Securities Co Ltd (A) (600837 CH)

Huatai Securities Co., Ltd. provides financial company. The Company provides securities brokerage services, research consulting services, investment banking and direct investment services, fixed-income services and asset management services.

Bank of Nanjing Co., Ltd. operates commercial banking businesses. The Company offers deposits, loans, settlement, discounting, financial bond issuance, government bond underwriting, bank guarantee, and other related financial services. Bank of Nanjing provides services for enterprises and individuals.

Bank of Beijing Company Ltd. attracts deposits and offers commercial banking services.  The Bank offers short-, medium- and long-term loans, insurance, foreign exchange, international settlement, government bonds, and other products and services.

Samsung Life Insurance Co., Ltd. provides insurance services. The Company offers life and health insurance services. Samsung Life Insurance serves customers in South Korea.

Samsung Fire & Marine Insurance Co., Ltd. provides insurance services. The Company offers auto, fire, marine, casualty, health, leisure, and retirement products and services. Samsung Fire & Marine Insurance serves customers in South Korea.

Samsung Fire & Marine Insurance (000810 KS)

Insurance Australia Group Limited (IAG) is an Australian-based international general insurance group with operations in Australia, New Zealand, and Asia. The Group provides a range of personal and commercial insurance products, primarily motor vehicle and home insurance.

QBE Insurance Group Limited is an insurance company which underwrites most forms of commercial and industrial insurance policies, as well as individual policies. QBE also manages Lloyds syndicates and provides investment management services. The Company provides its services both domestically and internationally.

Suncorp Group Ltd. offers retail and business banking, life and general insurance, superannuation and funds management services.  The Company's services include personal banking and loans, personal insurance products, credit cards, pension savings accounts, term deposits, property development finance, commercial lending, investments and lease financing.

Erie Indemnity Company is the management company for the Erie Insurance Exchange. The Company is also involved in the property and casualty insurance business through its wholly-owned subsidiaries and through its management of Flagship City Insurance Company. Erie Indemnity sells auto, home, life and business insurance in the United States.

Everest Re Group, Ltd. provides reinsurance to property and casualty insurers in the United States and international markets.  The Company also provides property and casualty insurance to policyholders in the United States and Canada.  In addition, Everest Re offers excess and surplus lines insurance in the United States.

Loews Corporation is a diversified holding company.  The Company, through its subsidiaries, is involved in a variety of businesses including commercial property-casualty insurance, offshore drilling, natural gas exploration and production, operation of natural gas pipeline systems, and the operation of hotels and resorts.

CNA Financial Corporation operates as an insurance holding company. The Company, through its subsidiaries, provides commercial property and casualty coverages such as risk management, information services, warranty, and claims administration. CNA Financial serves clients throughout the United States.

RenaissanceRe Holdings Ltd. is a global provider of reinsurance and insurance. The Company's business primarily consists of catastrophe reinsurance, specialty reinsurance, and individual risk business.

The People's Insurance Company (Group) of China Limited, through its subsidiaries, offers a range of property and casualty insurance products. The Company also offers asset management services for a variety of customers throughout China.

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People's Insurance (PICC) (1339 HK)

StubWorld: Stay Long PICC (1339 HK)

People's Insurance (PICC) (1339 HK) has bounced off its lifetime low implied stub and simple ratio (PICC/PICC P&C (2328 HK)); but still trades...

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PICC's (1339 HK)'s Implied Stub Plumbs New Lows As Interest Rate Cuts Bite

When the NAV discount/implied stub momentum starts to reverse, go long that People's Insurance (1339 HK), short PICC Property & Casualty (2328 HK).

David Blennerhassett

PICC's (1339 HK) Lifetime Low Implied Stub

PICC is trading marginally below its trailing/forward metrics; and PICC P&C is slightly up. When the NAV discount/implied stub momentum starts to...

David Blennerhassett

Leaders and Laggards in Advanced Asia-Domiciled Insurance Sector

Insurers domiciled in Advanced Asian Economies have reaped the benefits of the higher-for-longer interest rate environment that has buoyed...

Criat

APAC Insurers Series (#1): A Hidden Gem in This Bear Market?

China P&C and Korea L&H are two insurance markets in Asia that we view positively in 2023, thanks to the continued catalysts. PICC P&C and Samsung...

Alec Tseung

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