Despite selling more insurance products, insurers are earning less—this seemingly contradictory phenomenon accurately reflects the first-quarter 2026 financial reports of listed insurance companies.
With the conclusion of the Q1 2026 earnings season, the results of the five major A-share listed insurers—China Life Insurance (601628.SH), Ping An Insurance (601318.SH), The People's Insurance Company (Group) of China (601319.SH), China Pacific Insurance (601601.SH), and New China Life Insurance (601336.SH)—have all been disclosed.
On one hand, household savings are flowing into insurance, driving significant growth in the new business value of life insurance and increasing the proportion of dividend-paying policies. On the other hand, short-term stock market volatility has dragged down investment returns, resulting in a combined decline of nearly 17% in the net profit attributable to parent company shareholders for the five insurers.
Although insurance industry executives have repeatedly emphasized that, unlike other sectors, insurance is characterized by its long-term, cyclical, and complex nature—suggesting that insurer performance should be evaluated over a longer timeframe—the implementation of the new accounting standard (IFRS 9) and the rising proportion of equity investments have introduced new challenges to the stability of life insurers' investment returns and overall performance.
Stock market fluctuations significantly impacted earnings. During Q1 2026, the insurance index fell for 34 consecutive days, dropping 16.25%, while the Shanghai Composite Index declined only 1.94% over the same period. This may indicate that capital markets had already anticipated the weak performance of these insurers.
According to Q1 data, the combined net profit attributable to parent company shareholders of the five insurers was RMB 69.883 billion, a decrease of 16.98% year-over-year.
Specifically, New China Life Insurance and China Pacific Insurance achieved positive growth, with net profits of RMB 6.501 billion and RMB 10.041 billion, up 10.5% and 4.3% respectively. In contrast, Ping An Insurance, China Life Insurance, and The People's Insurance Company (Group) of China reported net profits of RMB 25.022 billion, RMB 19.505 billion, and RMB 8.814 billion, down 7.4%, 32.3%, and 31.4% respectively.
The profit decline was primarily due to short-term stock market volatility, especially under the new accounting standard, which requires a significant portion of equity assets to be measured at fair value through profit or loss (FVTPL). This means market value fluctuations directly affect the income statement.
In Q1, the Shanghai Composite Index fell 1.94%, the CSI 300 declined 3.9%, and the Hang Seng Index dropped 3.3%, all performing weaker than the same period last year. Many insurers noted in their 2025 annual reports that they had significantly increased their allocation to secondary market equity assets, making profits more susceptible to market swings. China Life Insurance stated that, despite efforts to deepen asset-liability management and balance long-term value with short-term gains, Q1 2026 profits were impacted by a high base in Q1 2025 and market value fluctuations of equity investments at the end of the reporting period.
Why was New China Life Insurance unaffected? Analyst reports suggest its rapid profit growth stemmed from two key factors: first, the derecognition of financial assets measured at amortized cost generated approximately RMB 7.8 billion in related gains; second, underwriting financial losses narrowed significantly by RMB 11.7 billion year-over-year amid Q1 investment return volatility.
However, New China Life Insurance also noted in its Q1 report that fair value changes in trading financial assets declined due to capital market fluctuations.
Meanwhile, equity market volatility directly affected the investment returns of several insurers. According to Soochow Securities, the net investment return rates for Ping An Insurance and China Pacific Insurance were 0.8% and 0.7% respectively, both down 0.1 percentage points year-over-year. Total investment return rates and comprehensive investment return rates also declined across companies. Since April, stock markets have rebounded noticeably; as of April 29, the CSI 300, the Wind All-A Index, and the Shanghai Composite Index rose 8.1%, 8.4%, and 5.5% month-over-month, indicating potential improvement in insurers' investment returns.
Huang Ming, Vice President of The People's Insurance Company (Group) of China Asset Management, previously stated that declining government bond yields and fixed-income asset returns have weakened the safety cushion and stability foundation for insurance funds, while the supply of traditional high-quality yield assets has significantly contracted. In this context, insurance funds generally face a shortage of stable asset allocations, necessitating increased equity allocations to boost overall returns. However, the high volatility of equity assets conflicts with insurance funds' requirements for safety and stability, presenting a major challenge for current asset allocation strategies.
In contrast to short-term profit volatility, premium growth on the liability side was robust. Against a backdrop of low interest rates, strong demand for insurance savings products drove rapid growth in new premium income and new business value, though growth was primarily fueled by dividend-paying and other wealth management products.
China Life Insurance reported that long-term insurance new premium income reached RMB 85.66 billion in Q1 2026, up 29.9% year-over-year, marking the highest growth rate for the period since 2017.
Q1 data showed that China Life Insurance's new business value surged 75.5% year-over-year. New China Life Insurance, PICC Life, Ping An Life and Health Insurance, and CPIC Life saw their new business values grow 24.7%, 21%, 20.8%, and 9.6% respectively. Guotai Junan Securities noted that the rapid NBV growth was mainly driven by increased new periodic premium income, with China Life's significant improvement likely benefiting from business structure optimization and liability cost control.
Beyond new business value, new periodic premium growth was also notable. PICC Life, China Life Insurance, China Pacific Insurance, and New China Life Insurance reported growth rates of 84.5%, 41.4%, 41.4%, and 25.6% respectively.
Due to liability-side performance, operating profit and net profit diverged after excluding volatile income statement items.
Ping An Insurance explained that, as most of its life and health insurance business is long-term, operating profit is a better metric for evaluating performance. In Q1, Ping An's operating profit attributable to parent company shareholders was RMB 40.78 billion, up 7.6% year-over-year, while China Pacific Insurance's operating profit reached RMB 10.523 billion, growing 3.6%. China Life Insurance and New China Life Insurance did not disclose operating profit figures in their Q1 reports.
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