The proportion of new dividend insurance policies has increased significantly, effectively alleviating the pressure on insurance companies' interest margin losses.

Securities Times reporters Deng Xiongying and Liu Jingyuan

The investment sector has become the core engine driving significant profit growth for listed insurance companies, while the stabilization of the insurance business transformation further solidifies the operational foundation.

Against the backdrop of a reduction in the scheduled interest rate and the implementation of the “unified reporting” policy, the premium income of listed insurance companies has shown steady growth, with the cost on the liability side continuing to decline, laying a solid foundation for a substantial increase in net profit by 2025. In terms of product transformation, various listed insurance companies are actively promoting the optimization of their business structure, continuously increasing the layout of dividend-type and other floating income products to cope with the low-interest-rate market environment.

Taking China Life as an example, last year, total premium income exceeded 700 billion yuan for the first time, reaching 729.887 billion yuan, a year-on-year increase of 8.7%. The new business value for the year was 45.752 billion yuan, significantly up by 35.7% year-on-year.

In terms of products, China Life achieved strong growth in floating income-type businesses last year, with nearly 50% of first-year premiums coming from this category. The proportion of dividend insurance business in the individual insurance channel’s first-year premiums surged to nearly 60%, becoming an important support for new single premiums. The main sales products are gradually strengthening their focus on medium to long-term sales, with insurance terms becoming more diversified.

By 2025, China Ping An’s life and health insurance dividend insurance premium scale will reach 91.887 billion yuan, an increase of 41.28%.

As for China Pacific Insurance, its life insurance company continues to improve the supply system for products and services, strengthening the development of floating income-type products and optimizing the product structure through various measures. By 2025, the new premium income of dividend insurance will significantly increase, with its proportion in new premiums rising to 50%, and the proportion of dividend insurance in new premiums through agent channels reaching 61.4%.

New China Life Insurance stated that the transformation of dividend insurance products has achieved phased results. By 2025, the proportion of dividend insurance in the company’s overall premium income will increase each quarter, reaching 77% in the fourth quarter.

The increase in the proportion of floating income-type products, represented by dividend insurance, has multiple positive implications. On one hand, this helps insurance companies reduce rigid liability costs and effectively alleviate interest spread loss risks; on the other hand, the reduction in cost pressure on the liability side also provides greater space for insurance companies to increase equity assets on the asset side to obtain excess returns. As a result, it is expected to achieve a win-win situation for both insurance companies and clients, while also providing an important window for the capital market to release more long-term funds.

From the perspective of pricing life insurance products, in recent years, the upper limit of scheduled interest rates for ordinary personal insurance products in China has decreased from 4.025% to 2%, while the upper limit for dividend insurance products has dropped from 3% to 1.75%, and the guaranteed interest rate upper limit for universal insurance products has fallen to 1%.

Dongwu Securities analysis indicates that the liability side continues to improve, market savings demand remains strong, and with ongoing regulatory guidance and proactive transformation by insurance companies, liability costs are expected to gradually decline, alleviating the pressure from interest spread losses. Additionally, the recent yield on ten-year government bonds has stabilized at around 1.82%, and it is expected that as the domestic economy recovers, if long-term interest rates continue to rise, the pressure on insurance companies’ new fixed-income investment yields will be alleviated.