China’s Insurance Sector Reports Surging Profits, but Concerns Linger
Beijing, March 7, 2025 – China’s insurance companies saw a remarkably profitable year in 2024, driven by a rebounding stock market and favorable accounting adjustments. However, industry analysts caution that the impressive gains may mask underlying challenges to the solvency of some firms.
Profit Surge Driven by Market Recovery and Accounting Changes
In 2024, the average annualized total returns for non-listed life insurance companies jumped to 8.82% from 3.85% in 2023. Non-listed general insurers, also known as property and casualty insurers, saw their returns rise to 3.87% from 2.43%. Reinsurance companies’ returns edged up to 3.03% from 2.65%, according to data from the National Financial Regulatory Administration (NFRA).
The growth was significantly boosted by improved investment returns, particularly in the fourth quarter, and a change in accounting rules. The new rules allowed insurers to recognize gains from rising bond prices in their earnings reports, contributing to higher profits.
Disconnect Between Profits and Net Assets
While the profit figures are undoubtedly positive, the new accounting standards also created a disconnect between profit growth and net assets. Around 25% of non-listed life insurance companies reported a decline in net assets by the end of 2024, despite achieving increased profits.
Analysts warn that the data may not accurately reflect the true operational capabilities of insurers. Some companies reported asset declines even as profits rose.
Key Players and Performance
Of the 60 non-listed life insurers, 59 shared their 2024 annual data, with only one reporting a negative return. Shenzhen-based Aegon THTF Life Insurance Co. Ltd. led the pack with a total return of 17.9%.
Collectively, the non-listed life insurers reversed a loss of 10.1 billion yuan in 2023, achieving a net profit of 24.7 billion yuan. Taikang Life Insurance Co. Ltd. recorded the highest profitability, with a net profit of 14.6 billion yuan. Additionally, China Post Life Insurance Co. Ltd. reported a significant recovery, from a loss of 12 billion yuan in 2023, realizing a substantial profit in 2024.
In the general insurance sector, 75 unlisted firms saw a combined net profit increase of 60% from the previous year, totaling 7.7 billion yuan.
Regulatory Pressures and Capital Requirements
An updated regulatory framework, C-ROSS II, placed greater emphasis on capital resilience and risk management. Meeting the stringent capital requirements proved challenging as interest rate declines adversely affected the sector. Many companies issued bonds to meet these requirements, with a reported 117.5 billion yuan raised through bond issues. China Life Insurance Co. Ltd. and Ping An Life Insurance Co. notably contributed to this with significant bond offerings.
Small to mid-sized insurers often turned to shareholder capital injections. Due to economic pressures, the transition period for complying with C-ROSS II was extended until the end of 2025.
These developments highlight the complexities facing China’s insurance sector in balancing regulatory demands with operational realities, particularly in a shifting economic landscape.
