Big Winner! New China Insurance Industry Soars, Annual Investment Returns Exceed 100 Billion

Ask AI · What potential risks lie behind Xinhua Insurance’s investment surge?

Produced by | Damo Finance

On the occasion of its 30th anniversary, Xinhua Life Insurance has turned in a solid set of results.

On March 27, Xinhua Life Insurance (601336.HK) released its 2025 annual results report, showing that last year the company achieved premium income from original insurance policies of RMB 36.28B, up 14.9%; and realized net profit attributable to shareholders of RMB 13.73B, up 38.3%.

At present, the annual reports of the five listed insurers have been gradually disclosed in full. Ranked by the growth rate of net profit attributable to shareholders, they are China Life (44.09%), Xinhua Life (38.34%), China Taiping (19.01%), PICC (8.81%), and Ping An (6.45%).

China Life and Xinhua Life have far outpaced the others in net profit growth, mainly because the two firms have an excessively high proportion of stock investments recognized under FVTPL (measured at fair value with changes recognized in profit or loss for the period).

According to earlier statistics from Soochow Securities, in the first half of 2025, Xinhua Life’s FVTPL stock allocation ratio was 81.2%, while China Life’s was 77.4%. This structure allows the two to capture investment gains more fully when the stock market rises, amplifying their profit performance.

In all of 2025, Xinhua Life ranked first in the A-share insurance sector with a 48.17% increase, but this year the stock price trend has not looked optimistic. In January, Xinhua Life’s stock price reached a historical high of 85.85 yuan per share. However, as the insurance sector overall pulled back, Xinhua Life retreated even more sharply.

As of March 31, Xinhua Life’s stock price was 61.53 yuan per share. Over more than two months, the cumulative decline exceeded 28%.

Most voices in the market believe that the insurance sector’s fall was mainly due to the sector’s stage-specific pullback in the growth segments during the fourth quarter of last year. For insurers with a relatively high proportion of equity holdings, this created pressure on the growth rate of net profit in the fourth quarter.

By comparison, China Life and PICC were both loss-making in the fourth quarter of 2025, with losses of RMB 176M and RMB 0.176 billion respectively. And as the insurer with the highest FVTPL stock proportion—Xinhua Life—although its single-quarter net profit also declined somewhat, it still ensured a net profit contribution of RMB 3.43B.

Further adding to positions on the investment side

After making a big profit from stock trading in 2024, Xinhua Life still chose to significantly increase its holdings in 2025.

By the end of 2025, Xinhua Life’s investment asset scale exceeded RMB 1.84 trillion, up 13% from the end of the previous year. Among them, the year-on-year incremental allocation increases for stock assets and fund assets were 19.70% and 36.6%, with corresponding increments of RMB 18.4k and RMB 46.25 billion, respectively. This shows that Xinhua Life’s investment assets are continuously shifting toward stocks and publicly offered mutual funds.

As a result of this move, Xinhua Life’s investment portfolio achieved a total investment return rate of 6.6% last year, up 0.8 percentage points year over year. The total annual investment return was about RMB 104.3 billion, up 30.9% year over year.

Since September 2023, when Yang Yucheng took the helm as chairman of Xinhua Life, under this “brokerage-affiliated” chairman, Xinhua Life has gone through a series of reforms, among which “strong investment” is an important one. In recent years, Xinhua Life’s investments have become even more bold.

The surge in profit at China Life and Xinhua Life is inseparable from the Honghu Fund jointly established by the two. In Xinhua Life’s 2025 annual report, the first complete-year performance of the Honghu Fund has also been revealed.

Bearing the responsibility of being among the first pilot units for the long-term investment reform of insurance funds, the Honghu Fund has moved from an initial exploratory layout to holding positions substantially and heavily. At the end of 2025, the stock allocation in the first tranche of Honghu Zhi Yuan was close to 97%, nearly fully invested.

It is also worth noting that at the end of 2024, Honghu Zhi Yuan’s asset size was RMB 35.66B. By the end of 2025, its asset size had increased to RMB 53.38B. Based on size estimates, Honghu Zhi Yuan’s annual investment return rate in 2025 was approximately 8.96%.

In fact, judging from the figures disclosed in solvency reports, Xinhua Life’s investment return rate and comprehensive investment return rate in the fourth quarter of 2025 were 0.86% and -0.21% respectively, which are not as good as China Life’s 1.36% and 0.26%. Overall, its investment performance is not outstanding. However, its single-quarter net profit performance far outpaced China Life and PICC. For this reason, the industry has also said that an overly high FVTPL proportion cannot accurately reflect an insurer’s true level of profit.

Su Gang, chief investment officer of China Taiping, previously commented on this point: “For insurance funds, the proportion of TPL still needs to be handled with caution, because it affects the balance between annual profit and long-term returns.”

An increase in the proportion of FVOCI equity assets is still a high-probability direction in the future, because this strategy allows insurers to maintain the stability of annual performance while equity proportions keep rising and the structure becomes more diversified, obtain more long-term returns, and meet the management requirements for asset-liability matching.

Stable insurance operations

While its investment side has been impressive, Xinhua Life’s core insurance business has also delivered a relatively steady set of results.

In 2025, the company achieved premium income from original insurance policies of RMB 58.91B, up 14.9%. In terms of growth rate, it ranks in the middle-upper range among the five listed insurers. This growth mainly benefited from the “value-oriented” business transformation the company has continuously promoted in recent years, as well as its dual efforts across both the individual insurance (individual agent) channel and the bancassurance channel.

In terms of channel structure, Xinhua Life’s individual insurance channel remains the main driver of premium contributions. In 2025, premiums from the individual insurance channel maintained stable growth, reaching RMB 195.87B, up 4.0%.

Under its “improve quality and increase efficiency” strategy, the company’s per-agent productivity improved. Although the industry as a whole still faces pressure from a contraction in agent headcount, Xinhua Life achieved an initial improvement in team quality through measures such as strengthening training, optimizing the basic law framework, and promoting the building of high-performing teams.

For the bancassurance channel, the company continued its deep cooperation with key banks. Leveraging product competitiveness and service synergy, it achieved relatively rapid growth, becoming an important engine driving total premiums. In 2025, Xinhua Life’s bancassurance channel recorded premium income of RMB 120.58B, up 39.5%.

Against industry trends, Xinhua Life focused on advancing the transformation of participating dividend insurance into long-term insurance. In 2025, the first-year premium for its long-term dividend insurance reached RMB 11.9 billion, up nearly 12 times. In the fourth quarter, the proportion of single premium in the premium received for period-based payments reached 77%, becoming an important measure to optimize business structure and guard against interest spread losses. At the same time, the company improved its product matrix: throughout the year, it launched 95 new products, introduced more than 20 inclusive products specifically tailored for eligible customers, covering various target groups, and leveraged health and eldercare services to drive the sale of third-pillar commercial annuity products, with cumulative premiums exceeding RMB 60 billion.

As a core indicator used to measure a life insurer’s profitability potential, Xinhua Life’s new business value in 2025 was RMB 9.8 billion, up 57.4% year over year. The new business value rate rose to 16.2%, up 1.5 percentage points year over year. This indicates that the company’s business structure continues to be optimized and its value-creation capability has been significantly strengthened.

In its financial report, Xinhua Life said that on the new starting point of its 30th anniversary, it will move in the direction of practicing the “big insurance” philosophy, steadfastly follow an extensive yet high-quality development path, and deepen and implement the strategic main line of “customer-centric, team-based, and employees as partners.” It will also improve the “insurance + services + investment” three-way coordinated development model.