China Life Insurance reports a quarterly loss of 13.7 billion yuan, yet maintains its leading position in the industry

Source: Yan Shu Master Institute

Author: Yan Qinghuan

In the final year of the 14th Five-Year Plan, China Life Insurance achieved a comprehensive “full house” success with total premiums exceeding 700 billion yuan and net profit attributable to the parent company of 154 billion yuan. However, beneath the glow, concerns also arise—despite achieving annual profitability, a loss of 13.7 billion yuan in the fourth quarter broke the positive trend of the year’s profits; since 2026, the company and its branches have received consecutive fines, still unable to escape the compliance quagmire.

Nevertheless, as a leader in the life insurance industry, China Life Insurance remains firmly at the top of the industry rankings, ranking first among the world’s largest life insurers in 2025. This naturally raises curiosity: why can the “leading goose” still soar high despite the dual pressures of short-term losses and compliance challenges?

Q4 Loss of 13.7 Billion Yuan

On March 26, China Life Insurance disclosed its 2025 annual report. By the end of 2025, the company achieved total premium income of 729.89B yuan, an 8.7% increase year-on-year; total assets reached 7.6 trillion yuan; total investment income was 76k yuan, with an investment yield of 6.09%, hitting a recent high.

Source: Company’s 2025 Annual Report

“This year, China Life once again achieved a ‘full house’ across multiple dimensions—scale, value, speed, and quality—with several core indicators setting new historical records,” said Chairman Cai Xiliang at the earnings release.

In terms of premium business, the company’s business structure has been significantly optimized. The proportion of first-year premiums with a ten-year or longer payment period further increased to 58.5%. Among them, dividend insurance accounts for nearly 60% of first-year premiums in individual channels, becoming an important engine supporting new policy premiums. Meanwhile, floating-yield products now account for nearly 50% of first-year premiums, with this proportion in individual channels reaching nearly 60%.

Industry insiders believe that China Life’s vigorous development of floating-yield products effectively improves the quality of new business. Against this backdrop, the value of new business saw a 10% decline in investment yield, with a sensitivity improvement of 9.1 percentage points year-on-year, down to -16.4%. At the same time, the duration gap further narrowed, enhancing resilience against interest rate fluctuations.

“Flow does not compete to be first; it competes to flow endlessly.” On the investment side, the company closely follows policy trends and actively plays the role of “patient capital.” In 2025, China Life achieved a total investment income of 387.69B yuan, a significant increase of 25.8% year-on-year; the investment yield was 6.09%, up 59 basis points from the previous year. However, affected by the downward shift of the interest rate center and the scarcity of high-quality assets, net investment income decreased by 1.0% year-on-year to 387.69B yuan. Vice President and Chief Investment Officer Liu Hui explained, “Insurance investment is a long-duration allocation; patient capital will traverse cycles in calm waters.”

Source: Company’s 2025 Annual Report

Regarding net profit, by the end of 2025, the company achieved a full-year net profit attributable to the parent of 193.8B yuan, a substantial increase of over 44% year-on-year, demonstrating strong overall performance. However, according to “Yan Shu Master Institute,” the company’s net profit attributable to the parent in the first three quarters was 167.8 billion yuan. This means that in the fourth quarter, the company not only failed to turn a profit but also incurred a loss of about 13.7 billion yuan.

Regarding the “turnaround” in quarterly performance, President Li Mingguang explained that the main reason was structural adjustments in the capital market in the fourth quarter, causing some stocks and funds held by the company to decline in value. Such fluctuations are mostly temporary and reflect changes in the capital market, not the company’s long-term operational trend. In other words, it can be understood that the company “lost money on stocks,” mainly influenced by macro market conditions, unrelated to its underwriting business.

Although quarterly losses are relatively rare among the five major listed insurance companies, they are not unique.

According to incomplete statistics, China PICC also experienced a similar loss in the fourth quarter of 2025, but the loss was smaller, only 176 million yuan. Historically, China Pacific Insurance experienced a single-quarter loss in 2008; Ping An Insurance had two such instances; New China Insurance experienced three, in 2008, 2015, and 2023; China Life itself had similar situations in 2012 and 2018, making this the third occurrence.

In 2025, under the policy encouragement of “long-term funds for long-term investments,” insurance funds generally increased their equity allocations to an unprecedented level. Specifically, stock purchases reached 154.08B yuan, an increase of nearly 334.3 billion yuan year-on-year; fund purchases totaled 835.34B yuan, up 115.3 billion yuan. In other words, China Life’s stock and fund purchases increased by approximately 449.6 billion yuan compared to the previous year.

From the asset allocation structure, the proportions of bonds, fixed deposits, and debt-type financial products remained relatively stable, while the allocation to stocks and funds (excluding money market funds) rose from 12.18% at the end of 2024 to 16.89%.

Source: Company’s 2025 Annual Report

Due to a significant correction in the A-share market in the fourth quarter of 2025, coupled with the company’s aggressive high-equity positioning, market volatility directly impacted China Life’s investment performance, thereby affecting overall net profit.

However, in the long term, China Life’s total assets of 7.6 trillion yuan, a solid base of 3 trillion yuan in long-term high-quality fixed income assets, and its long-term layout in new productive forces and the health sector continue to provide a strong foundation for profit stability.

Repeated Violations and Penalties

Operational resilience is evident, but compliance shortcomings are exposed. Since 2026, the company and its branches have received numerous regulatory fines, starkly contrasting with its “leading goose” status.

A review of the March fines shows they are concentrated and typical. For example, China Life Tonghua Branch was fined 74k yuan for “insufficient training of personal insurance agents and providing benefits beyond the insurance contract terms”; China Life Shenzhen Branch was fined 260k yuan for “false advertising, offering and promising benefits beyond the contract.”

China Life Le Du Branch was ordered to correct “sales inducement” behaviors and fined 55k yuan; China Life Wanquing Branch was fined 421.84B yuan for “deceiving policyholders and providing benefits outside the contract”; China Life was fined 71k yuan for “insufficient education review of personal agents and inadequate management of product explanation meetings.”

Additionally, the State Administration of Foreign Exchange also issued warnings and a fine of 350k yuan for violations of foreign exchange account and registration regulations.

Source: State Administration of Foreign Exchange

It is evident that most fines are concentrated at the city and county-level grassroots agencies, reflecting issues in the implementation of China Life’s “group headquarters coordination and subsidiary collaboration” organizational structure at the grassroots level, revealing lagging supervision and delayed penalties.

As a leading life insurer, “compliance operation” is a fundamental bottom line that must be upheld. Only by doing so can the company freely soar in the insurance sky and spread its wings high.