New China Life Signals Strong Turnaround in Earnings Call

New China Life Insurance Co., Ltd. Class H ((HK:1336)) has held its Q4 earnings call. Read on for the main highlights of the call.

New China Life Insurance Co., Ltd. used its latest earnings call to deliver a confident, growth-focused message underpinned by record highs in assets, premiums, profits, embedded value and new business value. Management acknowledged ongoing headwinds from low interest rates, market volatility and tighter regulation, but outlined clear strategies to manage solvency, protect margins and sustain momentum.

Record Asset Expansion and Market Re‑Rating

Total assets climbed close to RMB 1.9 trillion, up 12.2% year on year, underscoring the company’s growing scale and balance-sheet strength. Management also highlighted that total market value has now exceeded RMB 200 billion and that the share price has recorded double‑digit gains, suggesting improved investor confidence in the turnaround.

Premium Growth and Revenue Scale-Up

The company reported gross written premiums of RMB 195.9 billion, a robust 14.9% increase that points to solid underlying demand for protection and savings products. Operating revenue reached RMB 157.8 billion, up 19% year on year, supported by strong gains in new production as FYRP grew 36.7% and first-year premiums from long-term business surged 48.9%.

Profitability, Embedded Value and NBV Surge

Net profit jumped to RMB 36.3 billion, an impressive 38.3% rise that reflects both strong underwriting and investment performance. Embedded value rose 11.4% to RMB 287.8 billion while new business value soared 57.4% to RMB 9.8 billion, lifting the NBV margin to 16.2% and signaling healthier product mix and improved economics of new sales.

Investment Returns Among Industry Leaders

Total investment income reached RMB 104.3 billion, representing roughly 31% growth and delivering a total investment yield of 6.6%, up 0.8 percentage points from the prior year. Management also cited an adjusted investment return of about 6.9%, placing the company among the top performers in the sector and illustrating the payoff from diversified asset allocation.

Improved Persistency and Lower Surrenders

Policy quality indicators strengthened meaningfully, with the 13‑month persistency ratio improving to 97.1% and the 25‑month ratio climbing to 93.3%, a 7.1 percentage-point increase. At the same time the surrender rate dropped to just 1.5%, supporting more stable long-term cash flows and enhancing the sustainability of the company’s new business value.

Breakthrough in Participating Product Transition

The pivot toward participating products gathered real momentum, with participating first-year premiums reaching RMB 11.9 billion in 2025, nearly 12 times last year’s level. The share of par products in regular-pay business continued to rise quarter by quarter and reached around 77% in the fourth quarter, marking a structural shift in product strategy toward more flexible, with-profits offerings.

Bancassurance Emerges as Key Growth Engine

The bancassurance channel delivered standout results as first-year premiums through banks climbed to RMB 37.9 billion, up about 52%, and total bank premiums hit RMB 72.1 billion, a 40% increase. New business value from bancassurance jumped roughly 110% to RMB 5.27 billion, and the bank channel’s contribution to NBV surpassed that of the traditional individual agent channel, reshaping the company’s distribution mix.

Advances in Service, Technology and ESG

Management emphasized ongoing investment in service and digital capabilities, noting that its service ecosystem now covers more than four million individuals and that 96% of policy service requests are completed within one minute. The company is rolling out 11 AI large‑model agents and digital human ambassadors while continuing to expand green finance investments, which total about RMB 75.1 billion, and has been recognized with an outstanding ESG case award.

Solvency Management in a Low-Rate Environment

While the comprehensive solvency margin ratio remains safely above 200%, the company faces structural pressure from persistently low long-term government bond yields used in regulatory calculations. Management outlined a toolkit that includes stronger internal capital generation, potential external capital replenishment and more precise asset-allocation optimization to keep solvency robust without sacrificing growth.

NBV Margin Risks from Participating Shift

The strategic move toward participating products carries the risk of compressing NBV margins because such products typically have different profit profiles compared with traditional guaranteed savings. Management acknowledged this potential drag but stressed ongoing mitigation efforts through disciplined product design, careful pricing and active management of the participating business to balance volume growth with value preservation.

Exposure to Interest-Rate and Equity Volatility

The company remains exposed to short-term swings in interest rates and equity markets, especially as it increases allocations to equities and other active asset classes to enhance returns. Management voiced confidence in the medium- to long-term outlook and highlighted rigorous asset-liability matching and diversified portfolios as key tools to manage the higher sensitivity that comes with more market-facing investments.

High Base Effects for 2026 Growth

After achieving high single- to double-digit increases across most indicators in 2024–2025, the company expects the elevated base to make headline percentage growth harder to sustain in 2026. As a result, management is guiding investors to focus on the quality and value of growth rather than simply chasing volume, signaling a more disciplined approach to expansion after a strong catch-up phase.

Regulatory Tightening and Consumer Protection

The operating environment is being reshaped by stricter rules around policy consistency, bancassurance practices and product standards, with a particular emphasis on consumer protection. Management noted that these changes will increase compliance demands and may limit certain aggressive sales or product strategies, but they also see alignment with the company’s push for higher-quality, more transparent business.

Managing Reinvestment and Spread Risks

Historically the company has faced negative interest spread and reinvestment risks in the low-rate era, and these remain important areas of focus. To mitigate them, New China Life is diversifying more into alternative assets such as other comprehensive income investments, private equity and equities, and is structuring portfolios to reduce duration mismatches and smooth future reinvestment needs.

Guidance: Steady, High-Quality Growth in 2026

For 2026 management is targeting steady, high-quality growth built on the strong 2025 baseline of roughly RMB 1.9 trillion in assets, RMB 195.9 billion in premiums, RMB 287.8 billion in EV and RMB 36.3 billion in net profit. Strategic priorities include scaling participating whole‑life, annuity and health products, deepening bancassurance and Internet channels, tightening asset‑liability matching, maintaining capital adequacy and accelerating AI‑driven productivity gains while keeping service standards and persistency high.

New China Life’s earnings call painted the picture of an insurer that has moved decisively back onto a growth and value-creation track while remaining transparent about the macro, regulatory and product-mix risks ahead. For investors, the combination of strong current metrics, disciplined capital and risk management, and a clear strategy around par products and bancassurance offers a compelling—but not risk-free—long-term story.