As the insurance industry deepens transformation in liability-side channels, products, and cost management, business transformation and channel quality have shown significant improvement. Despite increased investment yield volatility causing differentiation in revenue and net profit performance among listed insurers, the profit levels of listed insurance companies improved significantly in the first half of the year.

Under the new financial instruments standard (IFRS9), more assets are classified as trading financial assets measured at fair value through profit or loss (FVTPL), with their fluctuations directly reflected in profit statements, amplifying insurance companies' investment yield volatility. Combined with differences in insurers' allocation styles and investment strategies, the first half of 2025 saw differentiation in revenue and net profit performance among listed insurance companies.

In the first half, New China Life Insurance, People's Insurance Company of China, China Pacific Insurance, Ping An Insurance, and China Life Insurance achieved year-over-year revenue growth of 26%, 10.8%, 3%, 2.1%, and 1% respectively, with year-over-year attributable net profit growth of 33.5%, 16.9%, 11%, 6.9%, and -8.8% respectively. Among these, Ping An Insurance experienced short-term performance volatility due to one-time factors related to the consolidation of Ping An Good Doctor in the first quarter; New China Life Insurance benefited from high investment-side yield growth, showing significant year-over-year performance improvement.

From underwriting performance perspective, the five A-share listed insurers continued to improve underwriting profits. As of the end of June, insurance service revenue for People's Insurance Company of China, New China Life Insurance, China Pacific Insurance, Ping An Insurance, and China Life Insurance increased year-over-year by 7.1%, 5.7%, 3.5%, 1.2%, and 0.2% respectively; insurance service expenses grew year-over-year by 8.2%, 7.1%, 21.9%, 0.7%, and 5.2% respectively.

After implementing new standards, insurers' profit sources became more transparent and easier to disaggregate, mainly divided into insurance service profit, investment profit, and other profits. From profit contribution perspective, in 2025, influenced by factors such as year-over-year improvement in capital markets and underwriting structure optimization, the average contribution of underwriting profits and investment profits for listed insurers was 62% and 54% respectively.

As of the end of June, the underwriting profit contribution rates for China Life Insurance, Ping An Insurance, People's Insurance Company of China, China Pacific Insurance, and New China Life Insurance were 80%, 75%, 74%, 76%, and 89% respectively, with investment profit contribution rates of 24%, -39%, 32%, 33%, and 23% respectively.

**Rising Proportion of Floating Yield Personal Insurance Products**

Taking personal insurance as an example, in the first half of 2025, life insurance quality and product structure continued to improve. The five listed insurers collectively achieved insurance service revenue of 831.521 billion yuan, a year-over-year increase of 3.5%. Among them, People's Insurance Company of China benefited from a higher proportion of property insurance business, achieving a growth rate of 7.1%, ranking first among listed insurers. New China Life Insurance continued to advance product structure transformation, with insurance service revenue growing 5.7% year-over-year.

The industry continues to advance product structure transformation, with the proportion of floating yield products such as dividend insurance increasing. In the first half, New China Life Insurance, Ping An Insurance, China Pacific Insurance, People's Insurance Company of China, and China Life Insurance achieved significant NBV improvements, with year-over-year growth of 58.4%, 39.8%, 32.3%, 26.7%, and 20.3% respectively.

Listed insurers continued to deepen channel transformation measures, with bancassurance channels showing significant improvement in premium income and value contribution in the first half. Since 2025, the impact of "uniform reporting and implementation" in bancassurance channels has basically cleared, and combined with the increased proportion of dividend insurance, bancassurance channel premium income achieved substantial year-over-year growth.

As of the end of June, the five A-share listed insurers achieved bancassurance channel premium income of 254.997 billion yuan, a substantial year-over-year increase of 46.9%. Listed insurers increased diversified bancassurance deployment by strengthening incremental opportunities with major state-owned banks, leading joint-stock banks, and city commercial banks. China Pacific Insurance, New China Life Insurance, China Life Insurance, Ping An Insurance, and People's Insurance Company of China achieved year-over-year bancassurance channel premium income growth of 82.6%, 65.1%, 45.7%, 37.5%, and 24.1% respectively in the first half.

From product structure perspective, the proportion of floating yield products increased, with value rates significantly improving. Since 2025, the industry has been constrained by factors such as insurance demand overdraft, predetermined interest rate reductions, and lack of blockbuster products, resulting in sluggish premium income growth. Against this backdrop, institutions represented by listed insurers continued to increase diversified product supply, adding floating yield products such as dividend insurance, achieving breakthrough progress in business structure transformation.

From product logic perspective, dividend insurance has characteristics of "low guaranteed + high floating." For insurers, it reduces rigid payment costs by sharing investment risks with policyholders. Against the backdrop of "asset shortage," reducing rigid costs on the liability side and asset-liability matching pressure provides certain flexibility for insurance fund asset allocation.

Under new standards, because dividend insurance adopts variable fee approach measurement, asset-side volatility is absorbed by contractual service margins and released periodically, meaning dividend insurance profits directly come from contractual service margin amortization, with high certainty and stability in profits.

From investment perspective, after IFRS9 implementation, for relatively high-volatility equity assets, insurance companies tend to strengthen allocation of high-dividend assets, with dividend income largely meeting dividend insurance yield requirements. With future growth in dividend insurance premium income, combined with new accounting standards implementation, this will help enhance insurers' demand for equity asset allocation.

**Insurance Fund Asset Allocation Structure Optimization**

The impact of new financial instruments standard adjustments on insurer profit statement volatility is mainly reflected in two aspects: First, large amounts of equity assets are designated as FVTPL measurement, directly increasing profit statement volatility. According to new financial instruments standard provisions, after equity assets are designated as FVOCI, this decision is irrevocable, with only dividends included in profit and loss, and disposal price differences not included in profit and loss but only in retained earnings. Therefore, insurance companies classify large amounts of equity assets as financial assets measured at fair value with changes included in current profit and loss (FVTPL), increasing the impact of financial asset fair value changes caused by capital market movements on profit statements.

Second, subjects related to investment income accounting in profit statements have changed. Under old standards, main subjects related to investment income accounting were investment gains, fair value change gains and losses, and asset impairment losses; under new standards, main related subjects are interest income, investment gains, fair value change gains and losses, and credit impairment losses. Among these, "interest income" reflects interest income calculated using effective interest method for financial assets classified as measured at amortized cost and classified as measured at fair value with changes included in other comprehensive income under new financial instruments standards.

Influenced by capital market volatility and asset allocation structure differences, the five listed insurers showed differentiated investment-type income performance. As of the end of the first half of 2025, total investment yields for New China Life Insurance, People's Insurance Company of China, China Life Insurance, and China Pacific Insurance were 5.9%, 5.1%, 3.3%, and 2.3%, with year-over-year changes of +1.1%, +1%, -0.3%, and -0.4% respectively.

This shows that insurers' investment income performance was differentiated in the first half, requiring medium to long-term attention to net asset trends. In 2025, insurance funds continued to increase FVOCI equity asset allocation, with listed insurers represented by the Ping An system increasing investment in quality listed companies such as Hong Kong stocks through strategic holdings.

As of the end of the first half of 2025, the proportions of FVOCI equity assets (high-dividend stocks) to financial assets for China Life Insurance, Ping An Insurance, People's Insurance Company of China, China Pacific Insurance, and New China Life Insurance were 4%, 7%, 10%, 6%, and 3% respectively, all showing substantial year-over-year increases.

According to the "Notice on Adjusting Insurance Fund Equity Asset Regulatory Proportion Related Matters" issued by the National Financial Regulatory Administration, insurance company equity asset allocation proportion limits are divided into five tiers based on solvency adequacy ratios, with the highest tier (comprehensive solvency adequacy ratio exceeding 350%) having equity asset proportion limits raised to 50% of total assets, and some tiers above comprehensive solvency adequacy ratio minimum requirements having corresponding equity asset proportions increased by 5%.

This adjustment simplifies previous tiered standards from seven to five tiers, focusing on dividing investment proportion limits based on insurance companies' comprehensive solvency adequacy ratios. Through simplifying tiers and raising proportions, leading insurers with strong solvency gain greater investment space, while institutions with lower solvency remain strictly limited, reflecting "supporting excellence while limiting poor performers" regulatory orientation, helping strengthen industry risk control while enhancing insurance fund market entry enthusiasm, injecting more long-term stable funds into capital markets.

In the second quarter of 2025, influenced by factors such as slowing premium growth on the liability side, short-term channel adjustments, and short-term consolidation after "door-opening promotions," insurance fund asset allocation efficiency somewhat declined. Entering the third quarter, with predetermined interest rate reductions and short-term "speculation on discontinuation" behavior, this is expected to drive short-term industry premium scale expansion, potentially increasing corresponding insurance fund asset allocation demands.