As New China Life Insurance officially distributed its final cash dividend for 2025 on August 7, the full-year dividend payout season for China's five major A-share listed insurers drew to a close. The collective cash dividends from PICC Group, China Life Insurance, Ping An Insurance, China Pacific Insurance, and New China Life Insurance reached a historic 102.394 billion yuan for the year. This marked the first time total payouts surpassed the 100 billion yuan threshold, representing an increase of 11.605 billion yuan, or 12.78%, compared to the 90.789 billion yuan distributed in 2024.
Despite this record-breaking distribution to shareholders, the valuation of insurance stocks remains stubbornly low. According to Soochow Securities, the projected P/EV ratios for the five major listed insurers in 2026 range between 0.43 and 0.70 times, with the P/B ratio spanning 0.86 to 1.55 times. Guotai Junan Securities also highlighted concentrated low valuations for 2026, with projected P/EV ratios of 0.60 times for Ping An, 0.66 times for China Life, 0.57 times for New China Life, and 0.43 times for China Pacific Insurance.
Data from East Money Choice indicates that the overall valuation of the insurance sector continued to decline during the first half of this year. The trailing twelve-month P/E ratio bottomed out at just 6.347 times on June 18. While the sector saw some upward momentum starting in July, with the rolling P/E ratio briefly climbing to 7.346 times, it has since settled at 6.687 times as of August 18.
Recently, both China Life Insurance and New China Life Insurance released profit alerts projecting significant gains. Combined, the two companies anticipate attributable net profits of between 149.652 billion and 160.797 billion yuan, an increase of 93.922 billion to 105.067 billion yuan compared to the same period in 2025. China Life is expected to lead the pack with the highest growth, projecting non-recurring profit of 137.3 billion yuan, while New China Life anticipates a 40% to 60% increase.
With dividends secured and profitability improving, the pressing question remains: when will these fundamentals be fully reflected in the share prices and valuations of insurance companies? Brokerages are optimistic about a valuation recovery, with the liability side of the business serving as a key driver. As the proportion of participating insurance products increases, customer returns become more closely tied to investment performance. This forces insurers to rely on long-term investment returns to support dividend levels, creating a tighter link between liability and asset management.
Guolian Minsheng Securities believes participating insurance products will continue to absorb a portion of household savings being shifted from bank deposits. Strong sales are expected to bolster the growth of new business value in the life insurance sector. Scale data from the liability side supports this view. In a July 1 review of listed insurers' Q1 2026 performance, Soochow Securities noted that China Life's NBV surged 75.5% year-on-year. New China Life, Ping An, and PICC Life also maintained rapid NBV growth, while China Pacific Insurance saw a 9.6% increase.
At the company level, CMB International's outlook for Ping An Insurance focuses on operating profit and long-term value. The firm projects a 7.2% year-on-year growth in group operating profit for H1 2026, with a 6.8% increase in Q2. H1 NBV is expected to reach 25 billion yuan, up 12% year-on-year. The property & casualty comprehensive cost ratio is projected to improve slightly from 95.2% to 95.1%. The report suggests that growth in life insurance CSM, improvements in the banking business, and a recovery in asset management operations will support continued core earnings improvement. However, CMB International also cautions that as the share of participating and savings-type products rises, the pace of CSM release could be affected by the business mix, potentially leading to a stabilization in Q2 new business value.
On the property & casualty front, premium income is expected to maintain low-speed growth in H1 2026. The implementation of "reporting and pricing alignment" across all product lines, coupled with business structure optimization, is likely to drive the comprehensive cost ratio towards a stable and improving trend. Both underwriting profitability and investment returns are set to support overall profit performance.
In its preview of PICC Group's interim results, Soochow Securities anticipates improvements in both property underwriting profitability and investment income. The firm forecasts attributable net profits of 50.708 billion yuan, 55.5 billion yuan, and 60.916 billion yuan for 2026, 2027, and 2028 respectively. The projected P/B ratio for 2026 is 0.92 times, with a P/EV of 0.74 times. The report also expects PICC Life's NBV to grow 22.0% in 2026, with the P&C comprehensive cost ratio at 97.52%.
Sinolink Securities offers a similar perspective, predicting PICC Group's H1 profit growth will exceed 30%. This is attributed to the CSI 300 index rising approximately 12% in Q2, the company's substantial growth-oriented holdings, and an improved P&C comprehensive cost ratio. The report also notes that PICC Group's projected 2026 P/B ratios for A-shares and H-shares are 0.98 times and 0.59 times, respectively.
While the liability side undergoes recovery, the asset side is experiencing structural adjustments. As of the end of Q2 2026, insurance companies' total funds under management reached 40.8 trillion yuan, a 12.7% year-on-year increase and a 3.5% rise from the end of Q1. Investments in stocks and securities investment funds totaled 6.4 trillion yuan, a quarter-on-quarter increase of 489.7 billion yuan (8.3%), representing 16.2% of total funds. Equity investments specifically rose by 263.4 billion yuan quarter-on-quarter to 4.1 trillion yuan, while fund holdings increased by 226.3 billion yuan to 2.3 trillion yuan. Bond allocations grew by 698.6 billion yuan quarter-on-quarter to 19.9 trillion yuan, accounting for 50.5% of total funds, underscoring bonds' continued role in providing stable coupon income and asset-liability matching. In summary, equity allocations have hit a four-year high, bond holdings remain elevated, and allocations to deposits and non-standard assets continue to be reduced.
Looking ahead to the full year, equity allocation is expected to increase further, providing profit elasticity. Zhongtai Securities estimates that under a neutral scenario, insurance funds will add approximately 624.8 billion yuan to stock and fund holdings in 2026. From January to June 2026, the simulated annualized total investment return rate for insurance funds was 4.79%, up from 4.67% in the previous period and 4.33% in the same period last year.
Interestingly, the shift towards participating insurance products is also driving insurers to increase equity allocations. In a special report on participating insurance, Pacific Securities suggests that equity investment in the participating insurance era may form a dual-layer structure: "OCI high-dividend stocks as a foundation, and TPL growth stocks for enhancement." High-dividend assets provide stable cash flow and support dividend payouts, growth assets offer long-term return elasticity, and bonds continue to manage duration matching and liquidity.
The low valuation of insurance stocks is partly attributed to the absence of significant institutional capital inflows. Data shows that in Q2 2026, active equity funds' allocation to insurance stocks fell to a recent low. The proportion of insurance stocks in public fund heavyweight positions dropped from 1.61% in Q1 to 0.81% in Q2, with the allocation multiple declining to approximately 0.47 times, placing the sector in a deeply underweighted position.
Orient Securities believes that with institutional holdings at historical lows, the marginal capital constraints on insurance stocks have weakened. The growth in liability-side value, optimization of business structure, and improvement in liability costs continue to support the valuation recovery of low-valuation leaders. However, the firm maintains a more cautious stance on Q3, noting that the strong equity market performance in Q3 2025 created a high base for investment returns. Additionally, the liability side faces high base effects from product switches in the previous year, suggesting that growth on both the asset and liability sides may decelerate marginally in Q3 2026, limiting short-term catalysts.
Despite these headwinds, the sector's valuation has become attractive following recent price corrections. The medium-to-long-term logic of improved liability quality and enhanced asset allocation capabilities among leading insurers remains intact. As of the close on August 19, the five major A-share listed insurers showed mixed results: Ping An Insurance closed at 52.08 yuan, up 1.48%; China Pacific Insurance closed at 30.20 yuan, up 0.73%; New China Life Insurance closed at 57.66 yuan, down 0.48%; China Life Insurance closed at 36.84 yuan, down 0.30%; and PICC Group closed at 6.88 yuan, down 0.43%. The sector showed internal divergence on the day, with Ping An and China Pacific closing in positive territory while New China Life, China Life, and PICC experienced slight declines, all within a 2% range.
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