Kaiyuan Securities released a research report indicating that listed insurers achieved rapid year-on-year growth in net profit attributable to shareholders in 2025. The growth rate of Embedded Value (EV) expanded for most companies, with long-term interest rates stabilizing at a bottom level. Participating insurance products are expected to be major beneficiaries of deposit migration. The report forecasts that the New Business Value (NBV) of listed insurers in 2026 is likely to continue the strong growth trend seen in 2025. The expectation of double-digit growth in asset scale, driven by premium income, is set to continue, supporting steady improvements in annual profits and dividends for insurers. Following the insurance sector's adjustment in March, listed insurers currently offer high dividend yields, and their Price-to-Embedded-Value (PEV) ratios have returned to historically low levels. Better-than-expected NBV in the first-quarter reports may provide a positive catalyst. The report recommends
Driven by favorable equity market conditions and asset scale expansion, earnings, net assets, and dividends all showed solid growth. (1) Net Profit Attributable to Shareholders and Profit Source Breakdown: Listed insurers saw rapid year-on-year growth in net profit attributable to shareholders in 2025, primarily benefiting from continuous asset growth and strong investment performance fueled by rising stock markets. Additionally, the underwriting performance of property and casualty insurance was a significant contributor. (2) Net Assets Attributable to Shareholders: In 2025, both the net assets attributable to shareholders and the net assets after adding back dividends increased year-on-year for listed insurers. This was due to profit releases and growth in net profit and net assets driven by the rising stock market. The stabilization of interest rates at a bottom level in 2025 also provided a foundation for steady net assets. (3) Contractual Service Margin (CSM): In 2025, the CSM balance of listed insurers increased slightly. Except for China Life, new business CSM showed positive growth for other insurers; China Life was mainly affected by changes in market interest rates. (4) Embedded Value (EV): The growth rate of EV for most listed insurers expanded year-on-year in 2025. With long-term interest rates stabilizing at a bottom level and no further adjustments to investment return assumptions as seen at the end of 2024, EV growth recovered noticeably.
Life insurance saw high growth in new policies via bancassurance, participating insurance transformation showed results, property and casualty insurance Combined Ratio (COR) improved, and there was a significant increase in equity allocation on the investment side. (1) Life Insurance: Listed insurers achieved high year-on-year growth in New Business Value (NBV) in 2025, benefiting from increases in both new policy sales and new business value. New policy growth was mainly driven by full-year growth in bancassurance channel sales, while NBV growth was aided by reductions in guaranteed interest rates and ongoing optimization of product structures. Meanwhile, the proportion of participating insurance products rose significantly for listed insurers, indicating initial success in their transformation. (2) Property and Casualty Insurance: The overall property and casualty insurance industry and three leading insurers achieved steady premium growth in 2025. The three leading insurers saw high year-on-year growth in underwriting profits, thanks to declines in both loss ratios and expense ratios, leading to significant year-on-year improvement in COR. By line of business, auto insurance growth rates declined slightly for the full year, while non-auto insurance growth mostly outpaced auto insurance, becoming a key driver of premium growth. (3) Investments: In 2025, investment assets of listed insurers grew at double-digit rates. There was a notable increase in allocations to equity assets under both Trading Portfolio and Other Comprehensive Income. Rising stock markets led to year-on-year improvements in total/comprehensive investment returns for most insurers, although net investment yields continued a declining trend. (4) Solvency: Solvency indicators for most listed insurers declined year-on-year but remained above regulatory requirements.
Outlook for 2026: High-quality growth is expected to continue on the liability side, while insurer valuations have returned to low levels. (1) On the liability side, given substantial household deposit potential and robust demand for pension and health insurance, participating insurance products, with their "guaranteed plus floating" return features, are poised to be key beneficiaries of deposit migration. The agency channel is expected to recover, and the bancassurance channel should maintain high growth. NBV for listed insurers in 2026 is projected to continue the strong growth trend of 2025. (2) On the asset side, with the 10-year government bond yield still below 2%, net investment yields are expected to continue a slight declining trend under reinvestment pressure. However, stabilized bottom-level interest rates and reductions in guaranteed rates help stabilize spreads on new policies. The Iran-US conflict may suppress A-share and H-share returns in the first quarter of 2026, putting temporary pressure on equity assets and posing challenges to first-quarter earnings growth for insurers. Nevertheless, the expectation of double-digit asset growth driven by premiums should continue, supporting steady improvements in full-year profits and dividends. (3) Following the insurance sector's adjustment in March, listed insurers currently offer high dividend yields, and PEV valuations are at historically low levels. Better-than-expected NBV in first-quarter reports could provide positive catalysts. The report recommends
Risk warnings include downside risks from declining long-term interest rates and volatility in capital markets.