UOB Kay Hian
Date of Report: Friday, 29 August 2025
PICC Property & Casualty Delivers Robust 1H25 Earnings Beat: What Investors Need to Know
Executive Summary
PICC Property and Casualty Company (2328 HK), China’s largest domestic P&C insurer, posted a stellar set of results for the first half of 2025. Backed by an improved combined ratio, higher investment income, and continued product innovation, the company exceeded earnings expectations and maintained its progressive dividend policy. This comprehensive analysis covers all aspects of PICC P&C’s performance, including detailed financials, segmental insights, management outlook, and valuation metrics.
Company Overview
Company: PICC Property and Casualty Company Limited
Ticker: 2328 HK
Sector: Financials (Insurance)
Market Cap: HK$417.9 billion (US$53.6 billion)
Shares Outstanding: 6,899.3 million
Major Shareholder: PICC Insurance Group (69%)
FY25 NAV/Share: RMB 12.77
Standout 1H25 Performance: Earnings Highlights
PICC P&C reported a 32% year-on-year surge in net profit for 1H25, supported by a 1.4 percentage point improvement in its combined ratio (CoR) and a 27% increase in investment income, buoyed by equity market gains. The interim dividend was raised by 15%, consistent with the company’s progressive payout strategy.

Key Drivers Behind the Earnings Beat
1. Combined Ratio (CoR) Excellence
CoR declined by 1.4ppt to 94.8%, beating both internal and peer benchmarks.
Auto insurance CoR dropped 2.2ppt to 94.2% due to stringent cost control and regulatory commission enforcement.
Non-auto CoR improved slightly to 95.7%, with commercial property and agriculture outperforming, offsetting higher loss ratios in accidental injury and health (A&H).
2. Strong Investment Performance
Robust equity markets lifted total investment income by 26.6% year-on-year.
Unannualised investment yield rose 0.2ppt to 2.6%.
Significant mark-to-market gains from listed equities (RMB 3.1bn vs. RMB 279m in 1H24).
Strategic asset reallocation: Bank deposits reduced by 13.2% half-on-half, treasury bond exposure up 20.5%.
3. Progressive Dividend Growth
Interim dividend increased by 15.4% to RMB 0.24.
The payout ratio, however, was trimmed to 22% (from 25%) to maintain policy consistency and support future growth.
Segmental Performance: Motor, Non-Auto, and More

Segment Insights
Motor Insurance: Revenue up by 3.5% YoY; CoR improvement offset by higher claims due to more new energy vehicles, rising personal injury cases, and higher spare parts costs.
Non-Auto Insurance: Grew by 8.9% YoY, with commercial property and liability showing marked CoR improvement. Accidental injury & health saw a 25% surge in revenue, but CoR deteriorated due to higher loss ratios from riskier products.
Agriculture Insurance: Slight decline in revenue (-0.5% YoY), but CoR improved moderately, reflecting strong risk management.
Investment Portfolio and Asset Allocation
Total investment yield (unannualised) increased to 2.6% due to strong capital market performance.
Listed equity holdings up 34% half-on-half, with significant mark-to-market gains.
Asset reallocation: Reduced bank deposits, increased treasury bond positions to optimize yields amid falling deposit rates.
Management expects investment momentum to moderate in 3Q25 due to a high base from previous stock market rallies.
Management Outlook and Regulatory Tailwinds
Regulatory commission reforms for non-auto lines are set for 4Q25, with substantial benefits to CoR projected for 2026.
Natural disaster losses fell 40% YoY to RMB 4.0bn in the first eight months of 2025.
Management is confident in achieving its CoR targets and maintaining a market-leading ROE.
Upward Revisions and Valuation
Earnings forecasts for 2025-2027 were raised by 9.7%, 9.5%, and 6.5%, respectively, on the back of lower CoR assumptions.
Target price raised to HK$21.00, pegged to 1.4x 2026F P/B, reflecting a cost of equity of 8.0%, ROE of 14.4%, and terminal growth of 4.0%.
Despite a 50% YTD re-rating, current valuation at 1.2x P/B remains attractive given the improved outlook.
Forward-Looking Financials

Key Metrics and Ratios
Gross Premium Growth (2025F): 4.1%
Net Profit Growth (2025F): 23.9%
Loss Ratio (2025F): 72.7%
Expense Ratio (2025F): 23.5%
Combined Ratio (2025F): 96.2%
Total Investment Yield (2025F): 4.3%
Dividend Payout Ratio (2025F): 35.0%
Shareholders’ Funds/Total Assets (2025F): 33.7%
Liquid Assets/Short-term Liabilities (2025F): 211.2%
Conclusion: Investment Case for PICC P&C
PICC Property and Casualty continues to outperform with strong earnings momentum, cost discipline, and strategic asset allocation. The company’s proactive approach to regulatory changes, effective risk management, and commitment to shareholder returns underpin its market leadership. Given the attractive valuation, robust financials, and improving outlook, PICC P&C remains a compelling BUY for both institutional and retail investors seeking exposure to China’s insurance sector.