New China Life Insurance’s Agent New Business Value Declined Despite Better Bancassurance Sales

No-moat New China Life Insurance, or NCI’s, 2021 results were mixed. In line with our expectation, new business value, or NBV, declined 35% to CNY 6 billion. This decline was larger compared with the around 25% declines for leading insurers. This was attributable to sharp declines in both NBV margin and agent headcount. NCI’s agent headcount dropped 35.8% to 389,000 from 606,000 in 2020. Compared with China Life and Ping An, which posted a 40% decline in agent headcount, this contraction was smaller than expected. We retained our fair value estimate for NCI at CNY 27 per A-share and HKD 30 per H-share. H-shares are trading at the historical low of 0.2 times forward price to embedded value, and we believe they are undervalued. Our preferred Asia life insurers are AIA and Ping An Insurance given their better fundamentals.