China Merchants Securities has maintained its "recommended" rating for the insurance industry. The increasingly defined "slow bull" trend in the stock market is seen as beneficial not only for insurers' investment returns but also as a solid foundation for the sales of participating insurance products with floating returns. Driven by positive dynamics on both asset and liability sides, the sector's valuation is expected to undergo sustained recovery. The key viewpoints from the analysis are outlined below.
Recent data released by the National Financial Regulatory Administration for January-December 2025 shows that life insurers achieved nearly double-digit full-year premium growth, with a robust start anticipated for 2026. Meanwhile, property and casualty insurers recorded low to mid-single-digit premium growth for the year, and the implementation of the "unified reporting and operation" policy for non-auto lines is expected to further enhance profitability.
For life insurers, cumulative premium income from January to December reached 4.3624 trillion yuan, up 8.9% year-on-year, though slightly lower than the previous reading of 9.1%. In December alone, life insurers reported premium income of 215.2 billion yuan, a 6.0% increase year-on-year, rebounding from a 2.4% decline in the prior month. Life insurance premiums totaled 168.3 billion yuan, rising 10.1% and remaining the primary driver of overall growth. Health insurance premiums fell 5.8% to 44.7 billion yuan, while accident insurance premiums dropped 14.4% to 2.2 billion yuan, indicating continued pressure on these segments.
Due to the operational rhythm of the life insurance sector, the fourth quarter is typically dedicated to preparing for the following year's strong start. Supported by long-term demand for wealth reallocation from deposits amid a declining interest rate environment, listed insurers are projected to achieve a vigorous start in 2026. Notably, new premium income via bancassurance channels is expected to double, and the transition toward participating products has exceeded expectations, establishing them as a mainstream offering and setting a positive tone for full-year 2026 performance.
Property and casualty insurers reported cumulative premium income of 1.757 trillion yuan for January-December, up 3.9% year-on-year, consistent with prior growth. December premiums reached 141.3 billion yuan, increasing 4.4% year-on-year, with auto insurance contributing 97.7 billion yuan, up 2.2%. According to data from the China Passenger Car Association, retail sales of passenger vehicles in December fell 14.0% year-on-year to 2.261 million units, largely due to significant adjustments in replacement and trade-in subsidies across most provinces, which heightened consumer caution and contributed to a slowdown in the auto market.
Non-auto insurance premiums in December rose 9.6% to 43.7 billion yuan. Agricultural insurance surged nearly 200% due to a low base in the same period last year, while other segments such as liability, health, and accident insurance also posted growth. As industry-specific rules for the "unified reporting and operation" policy for non-auto lines become clearer, underwriting profitability, risk control, and service quality in the property and casualty sector are expected to improve significantly.
For the insurance industry as a whole, cumulative premium income from January to December totaled 6.1194 trillion yuan, up 7.4% year-on-year, maintaining stable growth. December premiums reached 356.5 billion yuan, increasing 5.4% year-on-year. Total assets of the industry stood at 41.3145 trillion yuan as of end-December, up 15.1% since the beginning of the year, while net assets reached 3.664 trillion yuan, rising 10.2%.
Investment recommendations include Ping An Insurance, New China Life Insurance, China Life Insurance, and China Taiping. Investors are also advised to monitor China Pacific Insurance and PICC Group, and recognize the long-term investment value of China Reinsurance. Risks include potential declines in product appeal, capital market volatility, tighter regulations, and slower-than-expected economic growth.