Citi has released a research report noting that Chinese life insurers posted modest new business value growth in the first nine months of 2026, in line with expectations, reflecting a high comparative base and regulatory disruptions in the bancassurance channel.

The bank maintains a cautiously optimistic view on life insurance industry growth through 2027, believing that the ongoing structural shift in household wealth allocation and the restructuring of bancassurance channels could provide support.

Given economic uncertainties, the bank continues to favor defensive stocks with high dividend yields and progressive dividend policies, including Ping An Insurance (Group) Company of China Ltd (ASX: 02318), China Pacific Insurance (Group) Co., Ltd. (ASX: 02601), and PICC P&C (ASX: 02328).

On the property and casualty side, despite elevated natural disaster losses, Ping An Insurance (Group) Company of China Ltd, China Pacific Insurance (Group) Co., Ltd., and PICC Group (ASX: 01339) each improved their combined ratios year-on-year by 1.4 percentage points, 1.4 percentage points, and 0.3 percentage points respectively in the first nine months of this year, reaching 95.6%, 96.2%, and 95.8%.

The bank expects the regulatory-driven upcycle in the P&C industry to continue, with combined ratios potentially improving further in 2027.

On profitability, insurers' net profits fell between 20% and 47% year-on-year in the first nine months of 2026, with overall performance relatively weak, but operating profits still achieved resilient growth of 6% to 16% year-on-year, while book value and solvency levels remained broadly stable quarter-on-quarter in the third quarter.