Since the market reopened after the 2026 Spring Festival, insurance stocks have continued to decline, extending losses in today's session. As of March 9, the insurance index (882246.WI) closed down 2.06%, bringing its year-to-date decline to 9.02%.
In the A-share market, all five major listed insurers closed lower. China Life Insurance (601628.SH) fell 1.15% to 42.2 yuan; The People'S Insurance Company (Group) Of China Limited (601319.SH) dropped 1.75% to 8.44 yuan; Ping An Insurance (Group) Company Of China, Ltd. (601318.SH) declined 2.03% to 61.4 yuan; New China Life Insurance Company Ltd. (601336.SH) decreased 2.45% to 71.6 yuan; China Pacific Insurance (Group) Co., Ltd. (601601.SH) slid 2.65% to 38.2 yuan.
Hong Kong-listed insurers also closed lower. China Life Insurance (2628.HK) fell 0.76% to HK$28.58; The People'S Insurance Company (Group) Of China Limited (1339.HK) dropped 2.03% to HK$6.26; New China Life Insurance Company Ltd. (1336.HK) declined 1.88% to HK$52.15; China Pacific Insurance (Group) Co., Ltd. (2601.HK) decreased 2.18% to HK$33.24; Ping An Insurance (Group) Company Of China, Ltd. (2318.HK) fell 3.09% to HK$62.65.
Why are insurance stocks declining despite solid industry fundamentals? Special researcher Wu Zewei noted market concerns that the Q4 2025 stock market correction might negatively impact insurers' annual results, creating short-term profit pressure. Additional factors include major insurers not issuing positive profit forecasts and escalating Middle East geopolitical conflicts.
Despite the continuous decline, many institutions remain optimistic about valuation recovery opportunities for undervalued insurance stocks.
Multiple factors are pressuring insurance shares, including capital market corrections and geopolitical conflicts. Insurance stocks started 2026 strongly, with several hitting record highs in early January. For instance, on January 6, Ping An's A-shares and both A-shares and H-shares of New China Life and China Pacific Insurance reached historical peaks, with the latter two setting new records for two consecutive sessions.
However, after the Spring Festival reopening, both A-share and H-share insurance stocks showed significant adjustments, continuing their downward trend. By March 9, the insurance index had declined 2.06%, with a cumulative 9.02% drop year-to-date.
Wu Zewei identified several contributing factors. First, concerns about Q4 2025 market volatility potentially affecting insurers' annual results are suppressing short-term profit expectations. Insurance institutions' stock allocations have reached multi-year highs. According to regulatory data, by end-2025, insurers' stock holdings reached approximately 3.73 trillion yuan, with full-year net increases of 1.31 trillion yuan, representing 9.68% of total fund utilization - the highest level since Q2 2022.
Although the industry maintained good full-year profitability, Q4 2025 saw increased capital market volatility. The CSI 300 Index fell 0.23% and the ChiNext Index declined 1.08%, while the Hang Seng Index dropped 4.56% and the HSCEI decreased 6.72% during the quarter.
Capital market corrections impact insurers' current income statements. Due to new accounting standards, the high proportion of fair-value-through-profit-or-loss investments magnifies both gains and losses, increasing earnings volatility during market fluctuations.
Secondly, Wu noted that broad-based ETF expansions are creating significant selling pressure on financial heavyweights, dragging down insurance, securities, and banking sectors simultaneously. Post-holiday macroeconomic data gaps, lacking key metrics like premium income, combined with Middle East geopolitical risks, are further suppressing sector performance.
Kaiyuan Securities analysis suggests the correction stems from high baselines after early-year rallies and concerns about AI disrupting traditional sales channels and potentially impacting white-collar employment and economic stability.
Despite the downturn, institutional optimism remains for undervalued insurance stocks' recovery potential. J.P. Morgan recently indicated that approaching earnings season should reinvigorate the sector, citing five key catalysts: enhanced shareholder return discussions, optimistic 2026 life insurance sales guidance, robust Q4 2025 solvency ratios, declining funding costs, and confidence in life insurance reserve contract service margin recovery.
Beyond policy support, fundamental improvements are driving insurance sector strength. Liability-side improvements include ongoing cost optimization through reduced guaranteed rates and dividend insurance transitions, alleviating spread pressure. Deposit shifts are expected to drive new policy and NBV growth, with analysts noting strong household savings demand amid scarce long-term deposit options and maturing time deposits in 2026 creating migration opportunities for insurance products.
Regulatory data shows 2025 full-year premium income reached 6.1 trillion yuan, up 7.4%, with claims payments growing 6.2% to 2.4 trillion yuan and new policies increasing 12.6% to 116.8 billion.
On the asset side, equity market recovery combined with high-dividend allocations is boosting investment returns. Insurance fund utilization exceeded 38 trillion yuan by Q4 2025, growing 15.7% annually - the fastest pace since 2021.
Valuation recovery logic remains clear, with current P/EV ratios at historical lows despite stable profitability and ROE levels, indicating significant upside potential.
Regarding 2026 prospects, analysis suggests the insurance sector maintains upward momentum foundations but requires balanced perspective. Supporting factors include sustained liability-side strength from ongoing protection needs and savings substitution trends, potential asset-side growth from insurance fund market participation, and continued policy support for long-term investments. However, attention is needed on valuation recovery pace to avoid profit-taking pressure and liability-side sustainability through product structure optimization and agent channel reforms.
Long-term industry transition from scale-driven to value-growth models favors leading insurers with superior asset-liability matching capabilities.
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