Where to begin

While investment approaches varied across A-share listed insurers, the liability-side trends during the first half of the year painted a remarkably consistent picture — life insurance new business value rose across the board, while property & casualty (P&C) combined ratios continued their collective decline. Data compiled by Yicai shows that the five A-share listed insurers generated a combined RMB 89.722 billion in life insurance new business value during H1, a year-on-year increase of 18.96%. Meanwhile, the three major P&C insurers delivered combined underwriting profits of RMB 27.247 billion, up 17.31% from a year earlier. Industry analysts noted that after several years of proactive adjustments, the rigid liability costs of both new and in-force business have improved for listed insurers, easing concerns over long-term spread losses, while the overall quality of operational fundamentals continues to strengthen.

Life insurance: broad-based growth in new business value, dividend-type policies near 90% of new premiums

The most significant signal on the life insurance liability side is the continued expansion of new business value that began in the first quarter. In H1, A-share listed insurers achieved RMB 89.722 billion in life insurance new business value, up 18.96% year on year. All five listed insurers reported growth, with China Life Insurance Co., Ltd. (SSE: 601628.SH) posting the largest increase at 33.7%, while People's Insurance Company of China (SSE: 601319.SH) (including life and health insurance, same below) saw a modest gain of just 2.5%.

According to the team led by Sun Ting, chief non-bank financial analyst at Soochow Securities, the sustained growth in new business value during H1 stems from the enhanced appeal of dividend-type policies against the backdrop of "deposit migration," which fueled a strong first-quarter performance. This drove rapid overall growth in new policy premiums for listed insurers, with new single-premium policies generally growing by double digits, alongside the impact of a low comparison base from the prior year.

However, entering the second quarter, as the base effect from the previous year quickly escalated, the pace of new policy premium growth slowed markedly. Most insurers experienced year-on-year declines in quarterly new policy premiums, except for China Pacific Insurance Co., Ltd. (SSE: 601601.SH). Consequently, compared to the first quarter when most listed insurers achieved new business value growth of over 20%, the half-year figures reflect a noticeable slowdown.

Even with the slower overall new policy premium growth, dividend-type premium continued its robust ascent. Following the asymmetric reduction in guaranteed interest rates, the relative appeal of "guaranteed income plus variable returns" in dividend-type policies improved significantly. Dividend-type products have become the dominant force in new policy premiums among listed insurers, accounting for roughly 90% of new business in H1. For instance, Ping An Insurance (Group) Company of China, Ltd. (SSE: 601318.SH) saw dividend-type policies exceed 90% of its new life insurance business value during the period. China Pacific Insurance reported dividend-type new single-premium scale premiums of RMB 27.14 billion, up 168% year on year, representing 88.5% of total new single-premium business. New China Life Insurance Co., Ltd. (SSE: 601336.SH) saw first-year premiums for long-term dividend-type policies surge by 645.7% to RMB 34.5 billion, lifting their share of total long-term first-year premiums to 90.1%.

Several insurer executives also expressed optimism about dividend-type products at earnings briefings. Guo Xiaotao, co-CEO of Ping An Insurance, stated at the company's results conference that as guaranteed interest rates continue to decline, the share of dividend-type products in Ping An's overall product strategy will keep increasing. Across the industry, expectations point to dividend-type products averaging more than 50% of the product mix, and current developments align with these projections.

Industry participants believe that as dividend-type policies account for an ever-larger share of new business, their proportion of total premiums is poised to climb further, leading to a more optimized liability cost structure for listed insurers. Nonetheless, dividend-type policies typically carry slightly lower value rates compared to traditional policies of similar duration, which could exert downward pressure on life insurance new business value margins. In response, Sun Ting's team noted that the impact of a rising dividend-type share has been offset by lower guaranteed interest rates, deeper implementation of the "report-act-consistency" (baoxing heyi) requirement, and efforts by individual companies to refine product structures and payment terms, keeping overall new business value margins relatively stable in H1. Apart from Ping An Insurance, which saw a slight decline, all other listed insurers recorded year-on-year improvements in this metric.

P&C insurance: combined ratios fall industry-wide, non-auto business share continues to rise

During H1, the P&C operations of listed insurers continued the trend of "universally lower combined ratios and full underwriting profitability." Half-year results show that the three listed insurers active in P&C business — commonly referred to as the "big three" — namely Ping An Insurance, People's Insurance Company of China, and China Pacific Insurance, saw their combined ratios decline by 0.1, 0.8, and 1.3 percentage points, respectively, to 95.1%, 94.5%, and 95%. Among them, People's Insurance Company of China recorded the lowest combined ratio, while China Pacific Insurance achieved the largest reduction.

The combined ratio serves as a key indicator of underwriting profitability in the P&C sector, with readings below 100% denoting underwriting profits and figures above that threshold signaling losses. With lower combined ratios in H1, the "big three" all reported year-on-year improvements in underwriting earnings. According to Yicai's calculations, the three P&C insurers generated combined underwriting profits of RMB 27.247 billion in H1, representing year-on-year growth of 17.31%.

Chen Hui, general manager of P&C operations at China Pacific Insurance — which posted the most notable improvement in its combined ratio — attributed the better underwriting quality to several factors at the company's interim results press conference: a near-complete clearing of risk exposure, a shift in risk control focus from post-disaster claims to pre-event prevention, and the establishment of long-term safeguard mechanisms backed by stronger talent support.

Regarding premiums, H1 growth in P&C premium income for listed insurers remained subdued. The "big three" posted combined premiums of RMB 620.6 billion, up 2.1% year on year. Sun Ting's team attributed the weak growth primarily to declining automobile production and sales, which slowed the expansion of auto insurance premiums. That said, new energy vehicle (NEV) insurance premiums maintained rapid momentum. In H1, NEV insurance premiums across the insurers continued their swift growth trajectory. Data from Sun Ting's team revealed that People's Insurance Company of China saw the number of insured NEVs rise 30.9% year on year, while Ping An Insurance and China Pacific Insurance posted NEV insurance scales of RMB 26.4 billion and RMB 12.8 billion, respectively, up 21.5% and 20.9% year on year, accounting for 24.3% and 23.9% of total auto insurance premiums, respectively.

A further common thread among the "big three" was the continued rise in the share of non-auto insurance during H1. Ping An Insurance had the lowest non-auto proportion at 39.3%, but recorded the largest improvement of 2.5 percentage points. People's Insurance Company of China and China Pacific Insurance saw non-auto shares of 56% and 53%, respectively, up 0.5 and 0.6 percentage points from a year earlier. Supported by comprehensive governance efforts in the non-auto segment, most major non-auto lines at the three insurers achieved underwriting profitability in H1.

Recently, the National Financial Regulatory Administration issued an action plan for comprehensive non-auto insurance governance, marking a significant institutional step toward addressing market discipline in that segment. Zhang Daoming, vice president of People's Insurance Company of China and president of PICC P&C, remarked at the results briefing: "Non-auto insurance governance is a concrete measure to implement the 'anti-involution' requirement and a rational choice for high-quality industry development. We believe the industry has entered a stage of high-quality growth, and the governance of non-auto insurance, akin to the 'report-act-consistency' policy for auto insurance, will provide a solid foundation for the long-term healthy and stable development of the entire industry." He added that as the scope of governance expands and various initiatives take effect, the combined expense ratio is expected to continue trending favorably.

Short-term base-effect turbulence in Q3 does not alter the long-term trajectory

Notwithstanding the strong half-year results, several industry analysts anticipate that listed insurers may face short-term performance pressures in Q3, driven by a high comparison base from the prior year and recent market volatility. Sun Ting's team pointed out that on the liability side, the same period last year witnessed a "policy rush-buying" window following the reduction in guaranteed interest rates, which pushed single-quarter new policy sales to a yearly peak, creating a high base. By contrast, this year's first two quarters saw the research values of guaranteed interest rates for life insurance products rebound on a sequential basis, with no further rate adjustments expected for the remainder of the year. Combined with the deepening of the "report-act-consistency" policy in the bancassurance channel in July, new policy premium growth across the industry faces near-term headwinds.

On the asset side, the prior-year period saw a sharp equity market rally, resulting in significantly higher single-quarter net profits for insurers, with some reaching record levels. However, since the start of Q3, domestic equity markets have been volatile amid shifting overseas geopolitical conditions and market sentiment. According to Choice data, the CSI 300 Index declined 8.67% between July 1 and September 2, placing investment returns under pressure.

That said, industry analysts broadly maintain an optimistic outlook on long-term growth despite short-term fluctuations. While base effects weigh on near-term figures, they do not reflect underlying fundamental trends. The fourth quarter is expected to usher in another period of low comparison bases for both new business value and net profit. Over the medium to long term, the "guaranteed income plus variable returns" design of dividend-type policies retains its relative attractiveness, while regulatory policies are favorable to the industry's stable development and orderly competition in the long run. On the investment front, the nature of insurance funds, strategic allocation, and regulatory guidance toward long-cycle assessment all point to insurers' capacity to navigate cyclical volatility.

Furthermore, with the release of the "Measures for the Management of Assets and Liabilities of Insurance Companies" at the end of August, the insurance industry is seen as entering a new phase of asset-liability management, with leading listed insurers generally regarded as holding a competitive advantage in this domain. "We believe that after several years of proactive adjustment, the rigid liability costs for both new and in-force business at listed insurers have improved, with new business cost reductions particularly pronounced. The risk of long-term spread losses is gradually easing, operational fundamentals are steadily improving, and there is considerable room for a long-term upward revision in valuation benchmarks," Sun Ting's team stated.