China’s largest life insurers recorded large gains in total return on investments in 2025, according to analysis by S&P Global Market Intelligence, following an equity investment directive by the Government early in the year.
In February 2025, regulators encouraged major state-owned insurers to invest 30% of newly added insurance premiums in yuan-denominated equities. The equity investments of China Life Insurance Co. Ltd., Ping An Insurance (Group) Co. of China Ltd. and New China Life Insurance Co. Ltd. then surged in the first half of 2025.
The total return on investment of New China Life had the largest percentage gain, jumping 35% to 107.02bn Chinese yuan in 2025 from 79.43bn yuan in 2024.
China Life's investment returns jumped 25% year over year to 386.64bn yuan from 308.15bn yuan, while Ping An Insurance's investment returns grew 7% to 308.49bn yuan from 288.12bn yuan.
The strong investment returns helped all three companies post year-over-year gains in operating profit.
China Life's 2025 operating profit reached 186.12bn yuan, up 55% from 119.77bn yuan a year earlier. New China Life's operating profit climbed 29% year over year to 41.14bn yuan from 31.85bn yuan, while Ping An Insurance's operating profit increased 11% to 263.69bn yuan from 236.79bn yuan.
Low interest rates in China mean insurers will likely continue to raise allocations to equity, leading to greater sensitivity to market risks, S&P Global Ratings analyst WenWen Chen wrote in a research note, estimating an annual return on assets of 1.0% to 1.5% for the industry over the next two years.
On the other hand, a successful shift toward policies with floating returns could enable some life insurers to share investment risk with policyholders, given flexibility to adjust unguaranteed dividends, Chen said, adding that this could also enhance life insurers' value generation through lower liability costs.
