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In the first quarter, the combined profits of five major insurance companies listed on the mainland China stock exchange declined by 17% year-over-year, primarily due to a drop in stock markets that reduced the estimated value of their financial assets.
Collectively, these five insurers reported a net profit of approximately 68.9 billion yuan (around 10.3 billion USD) for the three months ending March 31. The performance was mixed: profits at three firms decreased, with China Life Insurance experiencing a decline of over 30%. Conversely, New China Life Insurance and China Pacific Insurance showed modest gains of 11% and 4.3%, respectively.
Prior to these results, a securities firm had forecasted that profits might contract by about 20% in the first quarter compared to the previous year.
While their total investment income increased by 58.5 billion yuan, their fair-value gains and losses plummeted by 120.4 billion yuan (approximately 17.7 billion USD), resulting in a negative impact of 61.9 billion yuan on profits.
According to a report from Huaxi Securities, the declines in major stock indices during the quarter—compared to the previous year—adversely affected both investment returns and fair-value performance. The Shanghai Composite Index fell 1.9%, the China Securities Index 300 dropped 3.9%, and the Hang Seng Index decreased by 3.3%.
Despite these fluctuations, industry analysts view the profit downturn as mainly driven by short-term stock market volatility and do not see it reflecting a fundamental change in the companies’ intrinsic value.
The report highlights that their property and life insurance liabilities saw significant improvement during the quarter, and funding costs are expected to continue easing. Additionally, pressures on yields from new fixed-income investments could lessen further if long-term interest rates recover, according to insights from Sun Ting, chief strategy officer and lead analyst of non-banking finance at Dongwu Securities.
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