Company Reports

China Pacific Insurance's, or CPIC's, interim net profit and operating profit after tax, or OPAT, grew 10% and 6%, respectively. Its property-casualty insurance combined ratio fell 1.3 percentage points to 95%, reflecting improved underwriting profitability.

China Pacific Insurance's first-quarter revenue fell 1% while net profit grew 4%. Its property-casualty insurance combined ratio improved 1 percentage point to 96.4%.

China Pacific Insurance's 19% net profit growth in 2025 was boosted by fourth-quarter 17% year-on-year growth. In contrast, its peers saw a sharp contraction. New business value also led peers at 40% growth.

H-shares of China's life insurers rallied 6%-21% year to date following robust insurance sales in the new year and alongside strong performances of the A-shares.

China Pacific Insurance’s trusted brand and extensive distribution network establish a strong foundation for steady long-term growth, thanks to continuing improvements in agent productivity and the company's stronger-than-peer capital position. But challenges remain in the no-moat firm's near-term prospects.

China Life and China Pacific Insurance (CPIC)'s first-nine-month net profits accelerated to 61% and 19%, respectively, year on year thanks to surging investment return and solid new business growth.

China Pacific Insurance’s trusted brand and extensive distribution network establish a strong foundation for steady long-term growth, thanks to continuing improvements in agent productivity and the company's stronger-than-peer capital position. However, challenges remain in the no-moat firm's near-term prospects.

China Pacific Insurance, or CPIC, reported an 11% year-on-year rise in interim net profit. Investment income grew 43% sequentially, while insurance premium growth was steady at 3.5%.

China Pacific Insurance’s trusted brand and extensive distribution network establish a strong foundation for steady long-term growth, thanks to continuing improvements in agent productivity and the company's stronger-than-peer capital position. However, challenges remain in the no-moat firm's near-term prospects.

China Pacific Insurance’s, or CPIC's, trusted brand and extensive distribution network establish a strong foundation for steady long-term growth, thanks to continuing improvements in agent productivity and the company's stronger-than-peer capital position. However, challenges remain in the no-moat firm's near-term prospects.

China Pacific Insurance's, or CPIC's, first-quarter net profit declined 18% year on year, primarily driven by 11% and 15% declines in insurance service performance and investment income.

We maintain our fair value estimates for China Life at HKD 20 per share, China Pacific, or CPIC, at HKD 30, and New China Life, or NCI, at HKD 22. These companies reported strong 2024 net profit growth of 109%, 65%, and 201% respectively, driven by solid investment gains. China Life and CPIC are undervalued at 0.3 to 0.4 times 2025 embedded value, while NCI is overvalued. Ping An and CPIC remain our top picks among Chinese insurers due to better dividend visibility, lower policy costs, and substantial improvements in agent productivity. We believe the rebound in government bond yields and insurers’ downward adjustment to key economic assumptions should ease concerns about spread loss risks. However, further rerating will likely require greater dividend visibility and more insight into 2025 new business growth.

We retain our fair value estimates for Chinese insurers after a recent regulatory announcement that establishes a dynamic adjustment mechanism for the pricing rate on life insurance products. The current pricing rate remains unchanged, as the latest published reference rate did not trigger the adjustment mechanism. While market concerns over insurers’ spread loss risks are likely to persist, the pricing adjustment mechanism, coupled with recent central bank warnings about risks in China’s overheated bond market—where long-term yields have reached record lows—should help support long-term rates and enhance insurers’ liability cost management.

China Pacific Insurance’s, or CPIC's, trusted brand and extensive distribution network establish a strong foundation for steady long-term growth, thanks to continuing improvements in agent productivity and the company's stronger-than-peer capital position. However, challenges remain in the no-moat firm's near-term prospects.

We maintain our fair value estimates for China Life at HKD 20 per share, China Pacific Insurance at HKD 30, and New China Life at HKD 22 following third-quarter results, which showed robust year-over-year net profit growth of 174%, 65%, and 117%, respectively. These results were largely in line, with strong growth driven by investment returns amid a 17% rise in the CSI 300 Index during the quarter following a lackluster market environment in the first half of the year. Trading at 0.3-0.4 times their 2024 embedded value, China Life and China Pacific remain undervalued, while New China Life is fairly valued. New China Life and China Life led earnings growth among Chinese life insurers due to their high sensitivity to stock market movements. Mark-to-market equity investments represent 141% of New China Life’s and 81% of China Life’s net assets, significantly above the 8%-60% of their peers. As both companies base dividends on net profit, we anticipate strong dividend growth per share versus 2023, though we are skeptical the higher payments can be maintained longer-term. China Pacific's dividend outlook is less certain, as its policy is based on factors including net profit, post-tax operating profit, and solvency ratio.

We retain our fair value estimate for China Life Insurance at HKD 20 per share, China Pacific Insurance, or CPIC, at HKD 30 per share, and New China Life, or NCI, at HKD 22 per share, following their interim results that reported strong recovery in respective net profit growth at 11%, 37%, and 11% year on year. We expect upside risk to our current 15% to 30% year-on-year net profit growth forecast in 2024 given a low base in the second half of 2023. The stronger-than-expected net profit growth was primarily boosted by strong investment return, and we’ve factored in a gradual pickup in investment return over our forecast period. We leave our major assumptions unchanged.

We expect China’s life insurers under our coverage to report a double-digit increase in second-quarter net profits versus the year-on-year contraction in the first quarter. While we expect their new business value growth in the first half will slow from 20%-50% in the first quarter, growth should stay healthy at 10% to 25% thanks to margin improvement and resilient demand for savings products as the deposit rate continues to trend down. We also expect property-casualty underwriting margin to improve from the first quarter, helped by reduced catastrophe losses. Despite the earnings improvement, we expect industrywide headwinds, including falling asset yield, potential commission rate cut in the agent channel, and uncertainty in catastrophe losses, will continue to weigh on investor sentiment.

We retain our fair value estimate for China Life at HKD 20 per H-share (CNY 19 per China A-share) and China Pacific Insurance, or CPIC at HKD 30 per H share (CNY 26 per China A-share), following their first-quarter results, which reported new business value, or NBV, growth at 26% and 31%, respectively, year on year on a like-for-like basis. We leave our major assumption largely unchanged, as we expect full-year NBV growth to moderate to mid- to high-teen level, as a result of high base in the second and third quarters created by the strong sales of 3.5% pricing products in the year-ago period. The stronger-than-expected growth was attributable to lower product pricing rate after the regulatory cut starting from August 2023; longer payment duration of insurance policies; and double-digit growth in agent first-year premium. Bancassurance NBV also reported strong growth on lower commission rate despite falling first-year premium. We expect China Life will see less negative base effect in coming quarters as the company did not actively sell the 3.5% pricing rate products in 2023, when compared with CPIC which reported over 50% year-on-year NBV growth in the second and third quarters of 2023. As China Life started to put more strategic focus to bancassurance sales after margin improvement on lower commission rates in 2024, we expect the company should have more room to expand its bancassurance business.

China Pacific Insurance's, or CPIC’s, 2023 net profit contraction widened to 27% year on year from 24% in the first nine months, due to slowing premium growth on suspension of bancassurance sales and weaker investment return on marked-to-market losses of equity investments. We retain our fair value estimate at CNY 26 per A share (HKD 30 per H share). Full-year new business value, or NBV, increased 30% before the economic assumption changes. The P&C combined ratio, or COR, improved 1 percentage point to 97.7% from 2022, attributable to mitigated expense competition and lower catastrophe loss in the fourth quarter. While NBV and COR beat our expectations, we leave our assumptions largely unchanged. We expect NBV to normalize to high-single-digit growth in 2024, off a high base driven by the buying spree of 3.5% traditional life insurance products in 2023. P&C COR is likely to face increasing claim pressures from fast-growing new energy vehicle policies.

According to media reports, China Pacific Insurance Co., New China Life Insurance, and other Chinese life insurers were recently in talks with property developer Vanke to restructure their debt investments. These debt investments are long-term nonstandard investments that usually last for 6-10 years. We believe the short-term financial impacts to CPIC and NCI are limited, since these investments are booked as financial assets at amortized cost and not marked to market. It was reported that these investments have yet to reach maturity, but insurers can exercise their early redemption rights under certain circumstances, including a credit rating downgrade. Moody’s downgraded Vanke’s credit rating on March 11. These insurers were reported to have exposure of several billions each. If we assume CPIC’s and NCI’s exposure is about CNY 5 billion each, this represents 0.2% and 0.4% of their respective total investment assets, or 2% and 4% of shareholders’ equity as of mid-2023. As such, even in the bear case where we assume 100% write-offs, CPIC’s and NCI’s core solvency ratios will decline by 3 and 5 percentage points to 157% and 142%, respectively, but will still be well above the minimum regulatory requirement of 50%.