Since December, the insurance sector has seen a sustained rally in valuation recovery, with stocks like China Pacific Insurance, New China Life Insurance, and PICC Group rising. Notably, Ping An Insurance (Group) Company of China, Ltd. hit a four-year high in share price.
Industry experts predict that with the release of hundreds of billions in incremental capital and growing consumer demand for health and wealth protection, leading insurers are optimizing both their assets and liabilities, signaling the start of a value reassessment cycle for insurance stocks.
**Policy Support Drives Momentum** The sector's strong rebound stems from supportive policies. The National Financial Regulatory Administration recently issued a notice adjusting risk factors for insurers' equity investments. Lower risk factors reduce capital occupancy for insurers, thereby improving solvency adequacy ratios and expanding investment limits.
Chen Wenzhi, founder of insurance tech platform ZuiHuiBao, noted that the policy encourages insurers to invest in large, high-quality, and long-term assets rather than short-term trades. The emphasis on holding periods exceeding three years aims to foster stable, rational, and long-term value investing in equities.
This policy has been hailed as a "timely boost." CICC estimates that if insurers allocate all freed-up capital to equities, it could channel RMB 550–600 billion into the market by 2026. The ripple effect of policy incentives is evident, with multiple foreign institutions raising target prices for Ping An Insurance (Group) Company of China, Ltd. Morgan Stanley named it a top pick in the sector.
CITIC Securities highlighted in its 2026 investment strategy that regulatory efforts to optimize insurers' investment environment have removed key hurdles to sector valuation recovery.
**"Health + Wealth" Dual Drivers Unlock Growth** Accenture’s *2025 China Consumer Insights* report underscores the sector’s growth potential, revealing a structural shift in consumer priorities toward health (87% in 2025 vs. 78% in 2021) and wealth (61% vs. 47%). This fuels demand for protection-focused products like dividend, health, and critical illness insurance.
Ping An Insurance (Group) Company of China, Ltd. has led peers in new business value growth for consecutive quarters. Its P&C unit saw underwriting profits surge over 130% YoY as of Q3, with a 2-percentage-point improvement in combined ratio, showcasing synergy between life and non-life segments.
China Pacific Insurance also adapted, with bancassurance premiums up 15% YoY and health insurance new premiums maintaining double-digit growth via its "Taiping Blue" medical service ecosystem.
CITIC Securities noted that the shift from "aspirational" to "safety-first" consumption provides sustained momentum for insurers, a key variable in sector revaluation.
In the first three quarters of 2025, listed insurers’ combined net profits attributable to parents exceeded RMB 420 billion, up 33.5% YoY—surpassing 2024’s total—led by China Life, Ping An, and China Pacific.
**Revaluation Thesis Strengthens** CICC’s 2026 outlook suggests life insurance may re-enter a golden era, with investment logic shifting from "legacy business reassessment" to "growth premium." Leading firms’ valuation advantages are expected to widen.
CICC forecasts industry assets will surpass RMB 45 trillion by 2026, with equity investments potentially reaching RMB 6 trillion, making insurers a major long-term capital source for A-shares. Ping An Insurance (Group) Company of China, Ltd., with its full-industry-chain presence, innovation, and tech edge, is poised to lead any "Davis Double Play" rally. Its target price was raised to over RMB 80 by several brokers.
Morgan Stanley data shows Ping An trades at just 0.8x P/B, below peers, while maintaining industry-leading ROE above 15%. As RMB 550–600 billion in fixed deposits mature and seek low-risk allocations, high-dividend insurers like Ping An may attract significant inflows.
CITIC Securities cautioned that steep declines in long-term rates or equity market volatility could weigh on the sector, but fundamentals have fundamentally improved. For 2026, insurers’ beta attributes may have largely played out, while alpha factors continue accumulating slowly. Focus remains on firms with high policy value rates and robust new business value growth.
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