"Big Banks" UBS: President of Property Insurance Reportedly Under Investigation, Dragging Down Stock Price

UBS published a research report indicating that domestic media reported that Yu Ze, a member of the Party Committee and Vice President of PICC Group (01339.HK), as well as the Party Secretary and President of China Pacific Insurance (02328.HK), was recently suspected of being taken away for investigation, which dragged down the stock prices of PICC and China Pacific Insurance by 5% and 3% respectively yesterday (1st). UBS noted that no official announcement has been made yet, and information shows that during Yu Ze's tenure, the scale of losses in credit and guarantee insurance business at China Pacific Insurance has been significantly reduced.

The bank also mentioned that the management of China Pacific Insurance revealed during a recent investor event that they expect the combined cost ratio for the fourth quarter to improve year-on-year, but it will still be higher than the same period in 2023. Looking ahead to 2026, unless catastrophic losses increase significantly, there is still potential for improvement in the combined cost ratio. PICC and China Pacific Insurance aim to provide a dividend payout ratio of no less than 30% and 40% under the old accounting standards, and to achieve long-term growth in dividends per share. UBS currently estimates that the dividend per share for China Pacific Insurance will grow by 32% year-on-year to RMB 0.71 in 2025, with a dividend yield expected to reach 4.6%. UBS currently gives China Pacific Insurance a "Buy" rating, with a target price of RMB 22.5