The five major listed insurers reported a present value of over 310 billion yuan in loss-making contracts for new policies issued in 2025, representing a 20.9% increase. PICC Life accounted for more than 40% of these loss-making contracts, significantly higher than its peers. Recently, two major institutions lowered their target price for PICC's H-shares, citing underperformance in its life insurance segment.
With 2025 financial results now disclosed, the five A-listed insurers demonstrated strong overall performance, with new business value in the life insurance sector achieving double-digit growth. China Life Insurance even surpassed 700 billion yuan in premium income.
PICC Life recorded the fastest growth in both one-year new business value and life insurance premiums—increasing by 64.5% and 18.8%, respectively, leading the five companies. PICC Health also saw new business value rise by 22.5%, with premiums growing 15.5%.
According to annual reports, the present value of loss-making contracts from new policies signed in 2025 reached 313.283 billion yuan, an increase of 54.161 billion yuan from 2024, up 20.9%.
Among them, loss-making policies accounted for over 40% of PICC’s life insurance new business, the highest proportion.
Recently, Morgan Stanley and Citigroup both issued research reports simultaneously lowering their target price for PICC's H-shares (stock code: 01339), primarily due to weaker-than-expected life insurance performance.
The five major A-share insurers all achieved double-digit growth in one-year new business value in 2025. PICC Life’s one-year new business value reached 8.229 billion yuan, up 64.5%. New China Life Insurance saw a 57.4% increase, while Ping An Life and Health Insurance recorded the smallest rise at 29.3%.
This contributed to robust growth in the insurers’ overall operations.
However, the composition of full-year new policies shows a significant rise in the value of loss-making contracts compared to 2024. This reflects intensified market competition, where insurers have had to lower premiums to capture market share, resulting in premium income that fails to cover expected costs and risks. Such policies not only fail to contribute to new business value but instead become a drag.
China Life Insurance had the largest amount of loss-making contracts by value, with an expected premium present value of 104.748 billion yuan, leading to a loss of 275 million yuan. PICC Life followed, with loss-making contracts valued at 91.152 billion yuan, resulting in a loss of 3.254 billion yuan.
They were followed by China Pacific Insurance, Ping An Insurance, and New China Life Insurance, with loss-making contract values of 52.77 billion yuan, 39.804 billion yuan, and 24.809 billion yuan, respectively, causing losses of 1.398 billion yuan, 1.297 billion yuan, and 530 million yuan.
Combined, the five insurers reported 313.283 billion yuan in loss-making contracts, up 54.161 billion yuan from 2024, a 20.9% increase. Total losses amounted to 6.754 billion yuan, up 5.66% year-on-year.
In 2025, the contractual service margin for the five insurers totaled 153.255 billion yuan, an increase of 3.821 billion yuan from 2024, up 2.56%.
Note: Unlike non-loss-making contracts, where the contractual service margin is amortized over future periods, losses from loss-making contracts are recognized in full in the current period’s profit and loss statement.
One-year new business value ≈ (Contractual Service Margin – Loss from Loss-Making Contracts) × (1 – Income Tax Rate) ± Other Adjustments.
PICC Life’s loss-making policies accounted for over 40% of its new business, the highest among peers.
According to PICC’s 2025 annual report, the present value of expected future premium income from new life insurance business totaled 225.056 billion yuan, of which 91.152 billion yuan came from loss-making contracts, representing 40.5%. This ratio increased by 8 percentage points from 32.08% in 2024.
The present value of expected future premium income refers to the discounted value of premiums from newly issued policies in the current year, categorized into non-loss-making and loss-making contracts.
PICC’s proportion of loss-making contracts was significantly higher than that of other insurers.
Losses from PICC’s loss-making policies reached 3.254 billion yuan in 2025, up 88.31% from the previous year.
Both the proportion and absolute value of loss-making contracts far exceeded those of the other four A-share insurers.
Among the five A-share insurers, Ping An Insurance had the lowest proportion of loss-making policies in its life and health insurance new business. The present value of future premium income from new business was 444.108 billion yuan, with loss-making contracts accounting for 8.96%. Losses from these policies were 1.297 billion yuan, down 44.17% from 2024.
China Life Insurance had the smallest loss amount from loss-making policies at 275 million yuan, down 74.51% from 2024. Loss-making contracts in its new business amounted to 104.748 billion yuan, accounting for 13.44%.
Both Ping An and China Life maintained a stable proportion of loss-making contracts compared to 2024, while significantly reducing associated losses.
In contrast, PICC Life moved in the opposite direction.
Historical data shows that PICC Life has consistently maintained a high proportion of loss-making contracts. To gain market share, the company has lowered premiums while incurring costs and expenses higher than initially assumed in pricing.
According to its 2025 annual report, three of the top five premium-generating products for PICC Life were endowment insurance policies, with total premiums of 34.192 billion yuan, accounting for 27.14% of annual premiums.
Approximately 70% of premiums from endowment insurance are allocated to savings accounts for investment growth, with only a small portion covering risks such as death benefits. This “savings-heavy, protection-light” structure offers minimal death compensation, functioning more like a long-term savings product with low profit margins.
In comparison, Ping An Life’s top five premium products were life insurance and annuity policies. China Life’s top five included two endowment insurance products, with combined premiums of 73.152 billion yuan, accounting for 10.02% of total premiums.
The sustainability of PICC’s growth-at-the-cost-of-losses strategy remains in question.
Morgan Stanley and Citigroup recently simultaneously lowered their target price for PICC’s H-shares, citing underperformance in its life insurance business as the primary reason.
Morgan Stanley reduced its target price from HK$8.4 per share to HK$7.7, a decrease of approximately 8.3%. Citigroup cut its target from HK$7.9 to HK$6.8, down about 13.9%.
Both institutions highlighted structural issues in PICC’s life insurance operations, pointing to rising projected financial expenses from insurance contracts and the negative impact of weak life insurance performance.
Morgan Stanley noted that PICC’s life insurance segment underperformed in fiscal 2025, with bancassurance channels accounting for 54.2% of premiums—surpassing individual agent channels for the first time. Meanwhile, the number of individual agents declined by 7% year-on-year, indicating a channel imbalance affecting business quality and profit stability.
In 2025, PICC Life’s premium income reached 125.97 billion yuan, with bancassurance contributing 68.278 billion yuan, or 54.2%, up nearly 6 percentage points from 2024. By year-end, the number of insurance agents stood at 77,000, a decrease of 5,800 from 2024.
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