CN Insurers outweighed amid recovery of premium income growth, optimization of product mix and premium structure and the A shares climb year-to-date. According to the China Insurance Regulatory Commission (CIRC), the total premium income nationwide for the first five months up 14% year-on-year, compared to the 4% year-on-year change for the whole year 2018. On the other hand, Insurers improved the product mix by raising shares of long-term protections and regular payment, therefore the product margins. On the policy level, the authority announced the pre-tax deduction policy for fees and commission expense. The pre-tax deduction ceiling of commission and handling fee has been raised to 18% of gross written premiums from the previous 15% (life) and 10% (property and casualty). The tax cut is expected to directly boost the earnings. In addition, the authority has been mulling uplifting the investment limit on equity investments, which improves the risk-to-return profile. Under the volatile market with the recent negative earning alerts announced by several companies, we overweigh CN Insurers with competitive product mix and new business value growth prospect due to the relatively stable earnings estimates and the currently attractive valuations, where the sector’s average price-to-embedded value (P/EV) ratio is currently around 0.9 standard deviation below its three-year mean.