Key takeaway

In 1H26, NCI delivered solid overall results, driven by strong asset-side performance and resilient liability-side operations. The asset side benefited from the equity market recovery and an optimized asset allocation strategy, with both total investment income and investment results posting strong growth and providing the key support for the substantial increase in profit. The liability side remained resilient amid continued business mix optimization. Growth in first-year regular premiums from longterm insurance and new business in the individual insurance channel drove steady NBV growth, while the value margin continued to improve. The CSM balance and new business contribution increased significantly, building momentum for future profit release; the individual insurance agency force achieved higher per-capita productivity and an increase in highperforming agents, while the bancassurance channel's value margin also improved, reflecting a continued enhancement in business quality.

Event

NCI releases 1H26 results

In 1H26, the company's net profit attributable to shareholders of the parent company increased 54.0% YoY to RMB22.79 bn, while NBV rose 11.9% YoY. Its annualized comprehensive, total and net investment yields were flat YoY, up 0.8 pcts YoY and down 0.4 pcts YoY at 6.4%, 6.7% and 2.6%, respectively.

Quick Take

1. Overall results: Strong asset-side performance drives profit growth

In 1H26, net profit attributable to shareholders of the parent company increased 54.0% YoY to RMB22.79bn, mainly driven by a 149.7% YoY increase in total investment income to RMB46.856bn. The company plans to pay an interim dividend of RMB0.73 per share, up 9.0% YoY. At the end of 1H26, embedded value attributable to shareholders of the parent company reached RMB310.38bn, up 7.8% from end-2025; equity attributable to shareholders of the parent company stood at RMB123.58bn, up 10.8% from end-2025.

2. Liability side: Strong growth in long-term insurance new business drives NBV growth, while the individual insurance channel consolidates its strengths

In 1H26, NBV increased 11.9% YoY to RMB6.92bn, mainly driven by growth in first-year regular premiums from long-term insurance and continued business mix optimization. The company's new business premiums decreased 3.1% YoY to RMB41.11bn in 1H26, while NBVM based on first-year premiums increased 2.3 pcts YoY to 17.2%. Benefiting from its business strategy of balancing premium scale and value, the NBV margins of the bancassurance and individual insurance channels increased 0.4 pcts and 0.3 pcts YoY to 4.6% and 7.5%, respectively. These were the primary drivers of the overall improvement in value margin. The company focused on product diversification and longer-term sales to enhance value contribution and consolidate its core strengths in individual insurance marketing. New business premiums from the individual insurance channel increased 24.0% YoY to RMB18.68bn, while NBV rose 20.6% YoY to RMB3.74bn. The channel’s share of NBV increased 3.9 pcts YoY to 54.1%.

The individual insurance channel improved both the quality and size of its agent force. It embraced the modern marketing philosophy of “products + services + scenarios + technology” and promoted the transformation toward a higher-performing agent force. Productivity per agent increased 18% YoY. NBV from the individual insurance channel increased 20.6% YoY to RMB3.74bn. This was mainly driven by a 24.0% YoY increase in new business premiums from the channel to RMB18.68bn, primarily due to a 24.3% YoY increase in new regular premiums from long-term insurance products to RMB17.72bn. The individual insurance channel had 128,000 agents, down 4.0% from the end of last year. The average monthly number of high-performing agents increased 16.2% YoY to 20,800, while the average monthly number of agents with FYC over RMB10,000 was 4,600.

CSM contributed by new business increased significantly, while the CSM balance recorded steady growth. CSM contributed by new business increased 35.2% YoY to RMB8.31bn in 1H, mainly driven by growth in new business premiums, in our view. The CSM balance increased 6.7% YoY to RMB193.86bn. The steady growth in the CSM balance provides a solid foundation for future profit recognition. The insurance service result from insurance contracts issued increased 27.7% YoY to RMB10.87bn in 1H.

3. Asset side: Investment income maintained YoY growth despite a high base in the same period last year

Benefiting from the equity market recovery, total investment income increased 27.0% YoY to RMB57.53bn in 1H. The comprehensive, total and net investment yields were unchanged YoY, up 0.8 pct YoY and down 0.4 pct YoY at 6.4%, 6.7% and 2.6%, respectively. Investment assets totaled RMB1.90tn at the end of 1H, up 3.3% from the end of last year. Benefiting from the strong improvement in total investment income, the company recorded an investment result of RMB17.96bn in 1H, up 88.3% YoY.

In terms of asset allocation, the company continued to strengthen the resilience of its asset operations and its momentum for long-term development. It also enhanced its investment capabilities and diversified investment strategies. In fixed income, the company selectively allocated long-duration government and policy bank bonds, managed the asset-liability duration gap and actively invested in fixed-income enhancement assets, further strengthening its core fixed-income portfolio. In equity investment, the company actively allocated fixed-income enhancement assets and built a core portfolio of buy-and-hold equity assets to stabilize long-term investment returns.

4. Investment recommendation: Asset-side upside and improved liability-side value drive strong earnings growth

In 1H26, NCI delivered solid overall results, driven by strong asset-side performance and resilient liability-side operations. The asset side benefited from the equity market recovery and an optimized asset allocation strategy, with both total investment income and investment results posting strong growth and providing the key support for the substantial increase in profit. The liability side remained resilient amid continued business mix optimization. Growth in first-year regular premiums from long-term insurance and new business in the individual insurance channel drove steady NBV growth, while the value margin continued to improve. The CSM balance and new business contribution increased significantly, building momentum for future profit release; the individual insurance agency force achieved higher per-capita productivity and an increase in high-performing agents, while the bancassurance channel's value margin also improved, reflecting a continued enhancement in business quality. Interim dividend increased by 9.0% YoY to RMB0.73 per share. Based on the closing price on September 11, the implied 2026 dividend yield was 4.9%. In terms of valuation, based on the closing price on September 11, the company traded at 0.59x 2026 PEV, at the 55th/73rd/42nd percentiles of its three-/five-/10- year ranges, indicating an ample margin of safety. We forecast the company’s NBV to grow by 7.8%/12.5%/10.6% in 2026/2027/2028, respectively. We set a target price of RMB80.29 and maintain our “Buy” rating.

Risks:

Unexpected delays in liability-side reform: The ongoing transformation of the company's life insurance business may be hindered if the quality of the agent team does not improve as expected, potentially affecting the company's NBV.

Unexpectedly sharp decline in long-term yields: If the long-term yields decline more sharply than expected, it may adversely affect the company's investment income.

A significant downturn in equity markets: A significant decline in equity markets could negatively impact the company's investment income.

Recovery in household demand for protection products continues to fall significantly short of expectations: Protection products generally have higher NBV margins. If household demand for such products remains subdued, the company's NBV growth may be adversely affected.