PICC P&C Earnings: Combined Ratio Better Than Peers; Upside Remains for Full-Year Nonauto Business

We retain our fair value estimate for PICC P&C at HKD 12 per share following its interim results, which show 5% growth in insurance revenue, in line with expectations, but a 9% decline in net profit year on year. Despite a surge in catastrophe losses during the first half of the year, PICC P&C’s overall combined ratio, or CR, of 96.2% was slightly better than expected. This represents a 0.4-percentage-point increase year over year, or a 0.5-percentage-point decrease when excluding weather-related loss. This performance supports our long-term thesis that PICC P&C’s strong risk management, quality customer base, and leading scale should continue to deliver steady and above-peer underwriting margins.