Listed insurance companies' first-quarter net profit drops nearly 17%, and a subsequent recovery in the insurance sector is expected.

The capital markets experienced volatility in the first quarter, delivering a mixed “report card” for listed insurance companies. Five A-share listed insurance firms achieved a total net profit attributable to shareholders of 69.88B yuan, down 16.98% year-on-year, showing a “two-up, three-down” differentiated pattern. Despite profit pressures, new business value in life insurance soared across the board, comprehensive cost ratios in property insurance continued to improve, and the high prosperity on the liability side contrasted sharply with short-term fluctuations on the asset side.

Industry analysts generally believe that short-term profit fluctuations do not affect the actual value of insurance companies. Since April, the stock market has clearly rebounded, and combined with the long-term logic of residents reallocating assets on the liability side, the insurance sector’s subsequent recovery is expected.

Disturbances in the investment side have intensified profit performance differentiation

In the first quarter of 2026, five A-share listed insurance companies achieved a total net profit attributable to shareholders of 69.88B yuan, a year-on-year decrease of 16.98% from 84.18B yuan last year. According to a research report from Huaxi Securities, the Shanghai Composite Index declined 1.9% cumulatively in the first quarter, the CSI 300 declined 3.9%, and the Hang Seng Index declined 3.3%, all weaker than the same period last year, directly suppressing insurers’ investment income and current period profit recognition. From the quarterly reports disclosed by listed insurers, the fair value change of proprietary trading turned from profit to loss, which is a major factor dragging down net profit: the total investment income of the five insurers increased by 58.5 billion yuan year-on-year, but fair value change of financial assets decreased significantly by 120.37B yuan, offsetting each other and resulting in a negative impact of about 61.8 billion yuan on total profit.

Under the new accounting standards, this impact was further magnified. Industry analysts pointed out that at the end of last year, insurers generally increased their equity asset positions, and insurers with a high proportion of FVTPL (measured at fair value with changes recognized in profit or loss) stocks are more sensitive to capital market fluctuations. Zhongtai Securities estimates that the return on equity investments in the insurance fund portfolio in the first quarter was about -2.7%, compared to approximately 4.2% in the same period last year. Data from Orient Securities show that the proportion of FVTPL stocks in the investment portfolios of New China Life and China Life was relatively high—despite both having high positions, their profit performances diverged: China Life’s net profit attributable to shareholders fell by over 30%, while New China Life grew by 10.5%, making it the top gainer among the five insurers.

New China Life’s “unexpected” performance also reflects deeper strategic differences beyond accounting classifications. Ge Yuxiang, chief analyst of non-bank financials at Zhongtai Securities, explained that the one-time gains from the termination of amortized cost financial assets (AC) under the profit statement for New China Life amounted to 7.8B yuan, directly boosting pre-tax profits and net assets; the significant decline in underwriting financial gains and losses also contributed positively to profits. This reveals a dual game in current insurance asset financial management: not only must they cope with market fluctuations but also flexibly manage asset classifications within the accounting standards framework to smooth profit volatility.

From the perspective of investment yield, most insurers faced pressure. China Ping An and China Taibao disclosed unannualized net investment yields of 0.8% and 0.7%, respectively, both down 0.1 percentage points year-on-year.

China Reinsurance also admitted in its quarterly report that, affected by geopolitical conflicts and market turbulence, the yield on equity assets under the new accounting standards was temporarily under pressure. However, the company explicitly stated, “Since April, the capital market has stabilized and rebounded, and investment income is expected to improve significantly.” This statement aligns with the judgment of Sun Ting’s team, whose research report noted that since April, the stock market has rebounded sharply, with the CSI 300, Wind All A, and SSE Composite Index rising 8.1%, 8.4%, and 5.5% respectively in April, and expects insurers’ investment income to improve markedly.

New business value soars across the board, the recovery logic remains unchanged

While profits are under pressure, data on liabilities is even more encouraging for the market. In the first quarter, all five A-share listed insurers saw year-on-year growth in new business value in life insurance. Except for China Taibao, which grew 9.6%, the other four insurers achieved over 20% growth, with China Life surging by 75.5%. Sun Ting’s team believes that the rapid growth in new business value is mainly driven by increases in new single premium payments, with China Life’s new business value rate significantly improving, benefiting from optimized business structure and cost control of liabilities.

Regarding new single premiums, Dongwu Securities data shows that China Ping An’s new single premiums used to calculate new business value increased by 45.5% year-on-year. The other companies also reported high growth in new single premiums, with strong performance in individual and bancassurance channels. Business structure optimization is also notable: in the first quarter, China Life’s ten-year and longer premium proportion increased by 4.4 percentage points year-on-year, and New China Life’s ten-year and longer premiums grew by 113%. Amid the continued decline in the guaranteed interest rate, the gap between traditional insurance guaranteed returns and participating insurance guaranteed interest rates has narrowed to 25 basis points, with the “guaranteed + floating” feature of participating insurance becoming an important vehicle for savings transfer.

In property insurance, there are also bright spots. Three A-share listed property insurers reported a 0.3 to 1 percentage point improvement in their combined cost ratios in the first quarter, with Taiping Property & Casualty leading at a 1 percentage point improvement, and PICC Property & Casualty maintaining the lowest absolute cost ratio at 94.2%. Sun Ting’s team believes this is mainly due to ongoing cost reduction and efficiency enhancement, as well as relatively fewer natural disasters in the first quarter.

Looking at operating profit excluding short-term fluctuations in investment income, China Ping An and China Taibao reported year-on-year increases of 7.6% and 3.6%, respectively, in their first-quarter attributable operating profits. This indicates that, despite short-term market volatility affecting apparent profits, the core business fundamentals of insurers remain intact.

Looking ahead, Sun Ting’s team believes that market demand remains strong, and the decline in guaranteed interest rates and the transformation of participating insurance will continue to drive liabilities’ cost optimization, easing pressure from interest spread losses. Recently, the yield on ten-year government bonds has fallen, and with the recovery of the domestic economy, if long-term interest rates continue to rise, the pressure on insurers’ new fixed-income investments’ yields will ease.

The non-bank team at Western Securities further pointed out that under the new standards, the market value fluctuations of FVOCI high-dividend assets are not fully reflected in the profit and loss statement, leading to an underestimation of insurers’ investment income; in the medium to long term, the appreciation of the RMB and cross-border capital inflows will effectively boost insurers’ investment returns. From the perspective of insurance capital dynamics, even though equity markets fluctuated significantly in the first quarter, industry holdings did not shrink—Wind data shows that in the first quarter, insurers held a total of 909 stocks, an increase of 57 compared to the 2025 annual report, mainly adding positions in banks, non-bank financials, and other sectors characterized by high dividends and stable cash flows, reflecting the “patient capital” resilience of insurance funds.

(Edited by: Qian Xiaorui)

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