On April 30, New China Life Insurance held its Q1 performance briefing, reporting a 26% year-on-year revenue increase and 19% growth in net profit attributable to parent company shareholders. The management team provided a detailed analysis of Q1 operations and addressed investor inquiries. Below is an excerpt from the Q&A session.
Q: How did the company’s equity and bond investments perform in Q1? Given market volatility since April, what are the expectations for Q2 investment performance? A: In Q1, the company capitalized on structural opportunities in equity investments. In A-shares, it enhanced tactical trading to capture market trends and increased holdings in high-dividend stocks. For Hong Kong stocks, the focus remained on high-dividend strategies while allocating to growth sectors. In fixed income, the company expanded allocations to long-duration bonds, purchased at low prices to boost returns, and slightly reduced repo leverage. Post-April, the company maintained stable returns by adhering to value investing and absolute return principles. Q: While first-year regular premium for long-term insurance surged, premiums for policies over 10 years declined. What caused this? How will the product strategy evolve amid the industry’s risk-oriented transformation? The disclosed non-consolidated financial value grew by 68%—what are the comparable growth and margin trends? A: The growth in first-year regular premium reflects the company’s value-centric approach, emphasizing business rhythm and sales force productivity. The decline in 10+ year premiums is due to a smaller base in 2024, with limited overall impact despite a steeper drop in 2025. In Q2, the company will prioritize 10-year premium products, accelerate dividend insurance transformation, and promote long-term protection products. Dividend insurance has shown progress, becoming the primary premium source in April. Financial value growth remains robust, albeit slower than premium or new business growth, staying within a reasonable range. Q: Q1 net assets fell ~17% quarterly. With 10-year government bond yields declining since Q2 but rising on a 60-day average, what is the recent net asset trend? What measures will mitigate volatility? For ALM, what are the asset/liability durations and current liability costs? How much have liability costs dropped amid lower pricing rates over the past two years? A: The net asset decline stems from rising liability book values due to yield curve shifts and asset classification mismatches.Despite the decline in net assets, this does not indicate operational issues but rather reflects the logic of the new accounting standards. The company is adjusting its asset allocation and may supplement net assets through financing tools such as bond issuances in the future to mitigate volatility. Regarding asset-liability matching, the duration of assets and liabilities is dynamically adjusted based on market conditions. Currently, liability costs are primarily concentrated in traditional and participating insurance products at around 2.5%, with some guaranteed products at 3.5%.
Question: The core solvency adequacy ratio showed significant improvement in Q1. Was this influenced by one-time bond conversions? Additionally, why did underwriting financial losses increase sharply in Q1—was it due to higher policy interest costs or better investment returns? Answer: The improvement in the core solvency adequacy ratio is primarily due to the reclassification of held-to-maturity assets as available-for-sale assets to better align asset-liability relationships. This adjustment led to a substantial increase in net assets compared to the end of 2024, resulting in higher actual and core capital. The rise in underwriting financial losses is mainly attributed to increased investment returns from participating insurance, which slightly raised liability-side underwriting expenses, as well as growth in traditional insurance policy liabilities, which increased system costs marginally. Question: Why did the bancassurance channel’s deployment pace in Q1 differ from last year and peers? How has the strategic deployment rhythm for bancassurance changed in a low-interest-rate environment? Can the newly increased recurring premium income be further broken down? The rapid growth in cash outflows for fees and commissions in the cash flow statement—is this due to higher income for the individual insurance channel or elevated bancassurance fees? Answer: The rapid growth in single-premium bancassurance is due to the low base in 2024. In 2025, the company adopted a dual strategy of recurring and single premiums in the bancassurance channel. The newly increased recurring premium income stems from business expansion and product结构调整 in bancassurance. The rise in cash outflows for fees and commissions is driven by business scale growth, not higher fee rates. The company strictly adheres to regulatory requirements for bancassurance fees, maintaining effective cost control. Question: What is the proportion of participating insurance in new premium income? What is the company’s target for this proportion by year-end? Answer: The share of participating insurance in new premium income is gradually increasing, reaching nearly 60% in the marketing channel in April. The company aims to achieve a participating insurance share of over 30% of total new premiums by year-end.The market involves risks, and investments should be made with caution.
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