New China Life Insurance Expands into Banking Sector
New China Life Insurance Company Ltd has completed the acquisition of a 5.45% equity interest in Bank of Hangzhou Co Ltd, marking a significant strategic shift in its investment portfolio. The transaction involved purchasing 329.6 million shares at CNY 13.095 per share, totaling approximately CNY 4.32 billion. The stake was acquired from Commonwealth Bank of Australia and finalized on June 10, 2025, following regulatory clearance.
The deal was initially agreed upon in January, pending approvals from the National Financial Regulatory Administration, the Shanghai Stock Exchange, and share registration by the China Securities Depository and Clearing Corporation. The Zhejiang Regulatory Administration granted approval in April 2025.
Regulatory Changes Drive Strategic Rebalancing
This acquisition comes at a time of significant regulatory change affecting capital requirements for insurance companies investing in equities. In May 2025, China announced a reduction in equity capital charges under the China Risk-Oriented Solvency System (C-ROSS), a framework introduced in 2021. The adjustment cuts the capital requirement for equity holdings by 10%, encouraging long-term participation in domestic capital markets by institutional investors.
Fitch Ratings noted that while this move could ease capital pressure on insurers, it may not lead to a significant shift in investment strategies. As of the end of 2024, equity assets made up 15.3% of the total investment portfolios of Chinese life insurers, while non-life insurers allocated 13.5% to equities. Fitch observed that life insurers already exposed to the equity market may proceed cautiously despite the regulatory relief.
Credit Ratings Reflect Broader Market Adjustments
In April 2025, Fitch revised the credit ratings of several Chinese insurers in response to a sovereign downgrade from A+ to A. Affected firms included SINOSURE and Taiping Life Insurance, while China Life Insurance maintained its rating due to a strong capital base and lower dependence on state support. Fitch noted that China Life’s sovereign bond exposure, representing 64% of its capital, was not deemed a credit risk under current evaluation criteria.
Trade Disputes Influence Sector Performance
The Chinese insurance industry is navigating increased risks from international trade tensions. In April 2025, the US imposed new tariffs on Chinese exports such as electric vehicles and semiconductor products. Analysts expect potential impacts on investment outcomes, claim frequencies, and future premium growth, particularly for motor and export-related insurance lines.
In response to these challenges, Chinese regulators have allowed greater equity exposure in insurance investment strategies. State-backed insurers have been instructed to channel as much as 30% of new premium income into A-share markets to enhance domestic market liquidity. Rising shipping costs and geopolitical uncertainties are leading to premium increases in marine, aviation, and cargo insurance.
Regional Outlook Maintains Cautious Optimism
Despite these headwinds, Fitch maintained a neutral outlook for the Asia-Pacific insurance industry in its mid-2025 update. The agency pointed to sustained earnings and capital strength across markets, even as some segments experience increased risk exposure. The outlook for life insurers in China and Taiwan was revised to “deteriorating,” reflecting the impact of both domestic policy shifts and external economic pressures. General insurers are expected to prioritize underwriting efficiency and operational cost management in the near term.
