2019 overall results in line with our forecastChina Reinsurance announced 2019 results. Net profits （attributableto shareholders of parent） increased 62% YoY, in line with ourexpectation. COR at P&C Re and Continent was 101.3% and 99.9%.Group EV rose 14% YTD.
　　Trends to watch
　　Net profit （attributable to shareholders of parent） rose 62% YoY, inline with our forecast. The strong net profit performance was drivenby better investment returns related to the stock market rally, theacquisition of Chaucer, and tax rule changes in 2019.
　　Life Re’s protection business delivered strong （37%） growth, whilethe short-term protection business’ COR continued to improve. Weexpect the company to see more opportunity in the critical illness （CI）market once new regulations on CI in China are in place.
　　P&C Re’s COR was 101.3%, up 1.7ppt YoY. Domestic COR rose 2.4pptYoY due to African swine fever, while overseas COR declined 1.0pptYoY. Premiums grew significantly by 47% YoY due to the acquisition ofChaucer. We expect the domestic business’s COR to improve in 2020as the impact of African swine fever gradually eases.
　　Continent’s COR was 99.9%, down 0.4ppt YoY, mainly due to a betterproduct mix （less auto）。 We believe premium growth in 2020 will faceheadwinds while COR may improve due to continuously tighteningregulations on auto insurance.
　　Financials and valuation
　　As the recent fluctuation in global equity markets may affect thecompany’s income, we adjust our 2020 and 2021 earnings forecasts-5%/+1%, and raise our 2020/2021 EV forecasts 4%/3%.
　　The stock is trading at 0.4x 2020e P/EV.
　　Given falling interest yields and fluctuation in equity markets, wemaintain NEUTRAL but lower our TP 14.3% to HK$1.20 （0.5x 2020eP/EV）， offering 33% upside.
　　Risks
　　Unexpected catastrophes; stock market plunges.