This is a financial reporting season full of illusions and divergence.
In 2025, driven by the recovery of the equity market, some life insurance companies reached new profit highs. However, due to the resonance of declining long-term interest rates and new accounting standards, the industry generally faced a &#34;profit growth without capital growth&#34; predicament, characterized by a sharp drop in comprehensive investment yields and a shrinkage of net assets.
But on the other side of the coin, China Life, as the industry leader, delivered a composed performance.
This largest life insurance company in China recorded a net profit attributable to the parent company of 154.078 billion yuan, a year-on-year increase of 44.1% on a high base; meanwhile, equity attributable to shareholders of the parent company reached 595.205 billion yuan, a year-on-year increase of 16.8%.
**At the earnings conference, China Life Chairman Cai Xiliang used &#34;Comprehensive Success&#34; to summarize this report card of dual growth in scale and value, emphasizing that the company had &#34;continued its strong growth momentum on a high platform and with a large volume.&#34;
Financial indicators indeed verify the strength of a leading player, but what is more worth exploring is the underlying logic behind the surface:
Is this 154 billion yuan profit derived from the phased Alpha created by China Life's reliance on its main business operations to resist the negative interest margin cycle, or is it Beta returns obtained by a massive equity exposure following the concentrated release of capital market dividends?
Has the drastic transformation toward participating insurance on the liability side truly mitigated long-term interest rate risks?
Piercing through the financial data, the market sees a reconstruction and balancing of the balance sheet executed by a giant ship across the three ends of liabilities, assets, and channels.
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<h2>Reshaping the Liability Side: Participating Insurance Continues to Surge</h2>
Against the macroeconomic backdrop of a trending downward central tendency in long-term interest rates, reducing rigid costs has become a consensus in the insurance industry.
In 2025, China Life fully promoted participating insurance as a core tool to traverse cycles, demonstrating extremely strong execution in the strategy shift:
During the reporting period, China Life's floating-yield business accounted for nearly 50% of first-year regular premiums. In the core individual insurance channel, this proportion jumped to nearly 60%, becoming the absolute mainstay of new policy premiums.
This means that the traditional insurance products with high guaranteed interest rates, which were relied upon in the past, are accelerating their exit from the stage, and risk-sharing has become the mainstream.
The essence of participating insurance is a &#34;guaranteed minimum + floating&#34; structure. In a cycle where asset scarcity and low interest rates are intertwined, insurance companies can no longer maintain high-interest guaranteed payments over the long term. Shifting to participating insurance effectively reduces the insurance company's own liability costs while retaining flexible space for consumers to share in future economic recovery and investment returns.
However, moving from guaranteed payments to floating returns means breaking long-standing expectations of principal protection. Due to a lack of brand endorsement, historical performance accumulation, and shareholder-level support, a significant portion of insurance companies in the industry have struggled to advance their transformation toward participating insurance.
China Life's ability to smoothly complete a large-scale switch is a concentrated manifestation of its underlying strategic determination and comprehensive strength. Relying on the credit premium built by 7.59 trillion yuan in total assets and a sales network deeply rooted across the country, China Life successfully guided customers to accept the setting of floating returns.
Objectively speaking, in the face of a massive existing base, the driving effect of new policy optimization is often a slow variable.
In 2025, China Life's first-year regular premiums for ten-year and longer terms reached 52.197 billion yuan, showing strong incremental growth; however, at the end of the reporting period, the company still had 327 million valid long-term policies, with a large volume of traditional guaranteed products sold during past high-interest rate periods remaining.
Although the dilution of overall rigid costs requires a long cycle, from the perspective of asset-liability management effectiveness, the marginal improvements brought by this switch have begun to yield results.
Since the life insurance rate reform in 2013, the life insurance industry has accumulated a large volume of traditional insurance reserve liabilities with durations exceeding 20 years. The industry's asset-liability duration gap expanded from 6.57 years to 9.1 years by the end of the third quarter of 2024, with high mismatch risks.
China Life's management provided data showing that the effective asset-liability duration gap for the company's new business has been shortened to about 1.5 years, effectively broadening the expected interest margin space while accumulating a safety cushion for cross-cycle operations.
However, the real test is hidden within future investment realizations.
The absolute dominance of participating insurance means that insurance companies have partially converted the interest rate risk, which they originally bore unilaterally, into customers' expectations for investment returns;
When nearly 60% of new policy customers are drawn by dividend demonstrations, their sensitivity to the dividend fulfillment rate will increase exponentially.
This pressure is not unfounded.
For instance, during 2022-2023, when domestic stock and bond markets saw increased volatility, the downward trend in long-term interest rates combined with pullbacks in core A-share broad-based indices put general pressure on the investment end of insurance funds;
During the same period, the proportion of China Life's participating insurance products with a dividend fulfillment rate exceeding 100% saw a significant phased contraction. By 2024, among 112 products, the number of products with a fulfillment rate over 100% rebounded to 12 (about 11%). Although the highest fulfillment rate reached 138%, some products remained at low levels.
This also illustrates that in a volatile market environment, the difficulty of maintaining high dividend levels will increase dramatically, and misaligned expectations can easily become a fuse for surrender waves.
Hubian noted that in 2024, under the investment yield fluctuations caused by the oscillations of both stock and bond markets, concentrated surrender events for participating insurance products occurred frequently within the industry;
In 2025, one popular participating product from a leading insurance company had a surrender rate as high as 20%, which mostly originated from excessive demonstrations during channel sales, coupled with actual dividends falling due to capital market volatility, leading to unmet psychological expectations of customers.
This also means that with participating insurance as the mainstay, insurance companies must walk a balance beam: on one end is restrained expectation management by sales channels, and on the other is actual investment delivery with real money.
The demand for returns from the liability side eventually transmits directly to the asset side. When yields on fixed-income assets generally decline, if the massive insurance funds are to meet customer expectations and maintain stable dividends, they must step out of their traditional comfort zones to find higher-return targets.
This underlying asset-liability linkage logic is also reshaping China Life's investment map in 2025.
<h2>Asset &#34;Balancing Act&#34;: The Spear of Equities and the Shield of OCI</h2>
The core of asset-liability matching lies in dynamic balance.
While liability costs are being orderly reduced, China Life has adopted a more aggressive strategy on the asset side:
By the end of 2025, China Life's investment assets reached 7.42 trillion yuan. Among these, fixed-income varieties such as bonds and fixed deposits remained stable, acting as a &#34;ballast stone&#34;; meanwhile, the allocation ratio of stocks and funds jumped significantly from 12.18% at the end of 2024 to 16.89%.
During the period, China Life's public market equity investment scale exceeded 1.2 trillion yuan, an increase of over 450 billion yuan from the beginning of the year.
This new equity exposure of hundreds of billions became the direct engine driving the profit explosion. In 2025, China Life realized a total investment income of 387.694 billion yuan, a year-on-year increase of 25.8%; the total investment yield reached 6.09%, up 59 basis points year-on-year.
At the earnings conference, Liu Hui, Vice President of China Life in charge of investment business, attributed this to a combination of &#34;riding the momentum&#34; and &#34;strategic planning.&#34;
On one hand, the company strategically increased its equity asset holdings by nearly 5 percentage points at market lows, firmly going long on China's core assets and focusing on technology stocks representing the direction of new quality productive forces. On the other hand, it seized high-interest-rate windows for cross-cycle allocation of long-term bonds and simultaneously increased investment in high-dividend stocks to build a diversified dividend portfolio.
Beyond stabilizing the basic portfolio, China Life's tactical operations have become more diversified and agile.
Liu Hui revealed that in the alternative investment field, China Life created new strategies such as S-funds and M&amp;A funds, and even conducted the insurance industry's first gold price inquiry transaction, further broadening income sources.
The sharp &#34;spear&#34; pierced through the gloom of low interest rates for a period, but structural concerns remain.
A 44.1% surge in annual net profit objectively means that under a massive 1.2 trillion yuan equity exposure, the sensitivity of the company's profit structure to capital market volatility has reached a historical high;
While this allocation strategy with high Beta attributes can create staggering returns in a unilaterally rising structural market, once market expectations adjust slightly or a systemic pullback occurs, the movement of massive funds will face friction costs, and the test of profit drawdown will be more severe than ever before.
This concern has already appeared in the quarterly data of the financial report.
In the fourth quarter of 2025, China Life experienced a phased loss of as much as 13.7 billion yuan.
At the earnings conference, China Life President Li Mingguang admitted that this was mainly due to structural adjustments in the capital market during the fourth quarter and the pullback of some held stocks and funds.
He simultaneously emphasized that the asset-liability management of the life insurance industry is long-term and cross-cycle in nature. Short-term changes in market value will inevitably be reflected in reports, and only by lengthening the cycle can the operational effectiveness of an insurance company be more objectively assessed.
Facing the inherent backlash risk of high-volatility assets, how to smooth out reports under new accounting standards has become a challenge that asset-liability linkage must face directly.
In this regard, the FVOCI account has become China Life's key shield against volatility.
To thicken current performance, some insurance companies in the industry often classify large amounts of new stock into the FVTPL (Financial Assets Measured at Fair Value through Profit or Loss) account, which is directly reflected in the income statement;
While this operation allows the income statement to soar alongside a unilateral stock market rise, it also easily leads to a massive shrinkage of net assets when the market pulls back or when combined with falling long-term bond yields.
In this aspect, China Life has shown stronger strategic determination.
With its ultra-long-term fund pool, the company did not blindly pursue the release of current profits but instead settled massive high-dividend and dividend-type quality assets into the FVOCI (Financial Assets Measured at Fair Value through Other Comprehensive Income) account, which is not included in the income statement.
By the end of 2025, the proportion of assets in China Life's FVOCI account to total investment assets had reached 4.28%, with the absolute amount increasing by 85.0% from the beginning of the year and the proportion increasing by 1.68 percentage points.
From a long-term asset-liability matching perspective, tapping into OCI equity high-dividend opportunities and the long-term bond base is becoming the core lever for insurance funds to open up allocation space—providing a steady stream of cash dividends to match the rigid liquidity and yield demands of participating insurance, while effectively converting the fair value appreciation of dividend assets into asset thickening, avoiding impacts on the income statement.
Furthermore, the synchronized growth of profit and net assets means that within China Life's OCI account, there may still be considerable unreleased floating profits hidden.
<h2>Capacity Folding: Manpower Ice Point and Value Breakthrough</h2>
The maneuvering at the investment end has won space for the insurance company to cross cycles, but complex asset-side operations and the functioning of a massive fund pool ultimately require a continuous stream of premium cash flow from the front end for support.
This precisely coincides with the most profound structural pain point in the life insurance industry in recent years—the continuous shrinkage of the traditional agent force.
Looking back, China Life's individual insurance sales force once exceeded one million at its peak, but by the end of 2025, this number had settled at 587,000 and still shows a downward trend.
The traditional human-wave tactics and extensive expansion have completely become history.
However, it is noteworthy that against the backdrop of a significant clearing of total manpower, China Life's one-year new business value in 2025 reached 45.752 billion yuan, a year-on-year surge of 35.7%, reaching a record growth rate in recent years.
While manpower has dropped to an ice point, value has achieved a strong counterattack. This sharply contrasting &#34;scissors gap&#34; announces the preliminary completion of capacity reconstruction; the scale gap brought by the loss of manpower is being forcibly filled by the leap in individual agent capacity, new channel ecosystems, and underlying technology.
In the most core individual insurance channel, China Life achieved a breakthrough in per-agent capacity through &#34;excellent recruitment and cultivation&#34; of the team. In 2025, the number of newly recruited excellent individual insurance agents grew by 40% year-on-year, effectively offsetting the decline in total manpower and stabilizing the base of high-value policies.
In the bancassurance channel, with the strict implementation of &#34;consistency of reported and actual expenses&#34; by regulators, the past padding of commissions in the industry has been thoroughly squeezed out, and vicious competition relying purely on expenses has come to an end;
At this time, China Life, relying on its brand and comprehensive service advantages, capitalized on the trend to complete deep integration of channel resources. Its total bancassurance premiums in 2025 surpassed the 100-billion-yuan mark, with new policy issuance outlets reaching 77,000 and first-year regular premiums increasing by 41.0% year-on-year.
In the operational back-end, technology empowerment has become a sharp tool for reducing costs.
Financial reports show that China Life's AI-assisted programming code accounts for 30%, the operation rate of digital underwriters exceeds 24%, and in some regions, the full-process non-manual processing rate exceeds 60%.
The comprehensive takeover by digital employees has diluted the management and operating expenses of this large insurance company, becoming the underlying infrastructure supporting profit release.
However, the leap in the quality of the sales force still faces an insurmountable deep-water zone.
Analyzing the structure of this 587,000-person force reveals that the marketing team accounts for 371,000, while the service and expansion team is as high as 216,000;
The massive service and expansion team verifies the company's emphasis on policy service and secondary development for existing customers. It also means that at a time when product lines are fully switching toward participating insurance, health care, and other complex financial services, the pressure for professional transformation of the team is unprecedentedly high.
Furthermore, the clearing dividend of extensive manpower has a clear diminishing marginal effect.
AI can efficiently complete underwriting reviews and code writing, but it cannot replace the deep bonds of trust established between people in wealth management planning;
Requiring agents accustomed to selling simple savings-type insurance to possess the ability to explain complex participation logic and asset allocation to high-net-worth clients in a short period of time involves a massive professional competence gap.
The reshaping of the underlying genes of the sales force will be a long battle that large insurance companies must face in the coming years.
As the scale dividends of the old era gradually fade, a profound internal revolution is occurring within insurance companies.
For China Life, a profit of 154 billion yuan is not the end of traversing the cycle, but the starting point of a new round of competition;
In a macro environment full of uncertainty, how to maintain this balance between assets and liabilities, promises and fulfillment, amid the violent fluctuations of the capital market and the rigid demands of customers for long-term returns, will be its ultimate proposition over the long future cycle.

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How was "Comprehensive Success" achieved?

- In 2025, China Life Insurance achieved a net profit of 154.1 billion yuan, up 44.1% year-on-year, amidst a challenging insurance market.  
- The company is transitioning to dividend insurance to mitigate long-term interest rate risks while restructuring its asset-liability management, striving to meet client return expectations.  
- However, maintaining a balance between market volatility and customer obligations poses ongoing challenges for the insurer, emphasizing the need for strategic operational transformation.

China Life Re-walks the Trillion-Asset Balance Beam