Analysis of Equity Investment Risk Control Strategy of New China Life Insurance: Investment Management Practice with 8.6% Total Investment Return Rate

According to the latest financial data, New China Life Insurance achieved an annualized total investment return rate of 8.6% in the first three quarters of 2025, a significant increase of 1.8 percentage points year-on-year, which is significantly better than the industry average [1]. The annualized comprehensive investment return rate was 6.7%, demonstrating the company’s excellent investment management capabilities. As of the end of June 2025, the company’s investment scale had exceeded 1.7 trillion yuan, an increase of 5.1% compared with the end of the previous year, and the annualized total investment return rate in the first half of the year reached 5.9%, an increase of 1.1 percentage points year-on-year [2].

In terms of asset allocation structure, as of the end of 2024, the company’s investment assets reached 1629.361 billion yuan, of which bonds accounted for 52.1%, time deposits 17.3%, stocks 11.1% (a significant increase from 7.9% in 2023), and equity plans 1.2% [3]. It is worth noting that the investment in OCI-class equity instruments increased significantly from 5.370 billion yuan at the beginning of the year to 30.640 billion yuan, a growth rate of 470.6%, reflecting the company’s strategic layout adjustment in equity investment [3].

The implementation of new accounting standards has significantly amplified the impact of the capital market on the performance of insurance companies. According to Soochow Securities data, in the first half of 2025, FVTPL (financial assets measured at fair value through profit or loss) accounted for 81.2% of New China Life Insurance’s stock investments, which is at a relatively high level among the five major listed insurance companies [1]. This structural feature means that higher net profit growth can be obtained during the upward period of the stock market, but conversely, when the stock market fluctuates, the net profit will also fluctuate more significantly, and equity investment faces greater fair value change risk.

In a low-interest rate environment where long-term interest rates remain below 2% overall, the management of New China Life Insurance admits that the safety cushion of traditional fixed-income investments is obviously thinning, while the cost of the liability side is relatively rigid, and the industry faces huge pressure of interest margin loss [2]. This background requires the company to take more responsibility in equity investment and obtain long-term stable excess returns under the premise of risk control.

New China Life Insurance has built a systematic asset-liability linkage management framework, which is reflected in the following aspects:

• Differentiated assessment system
  : Set refined and personalized assessment indicators for insurance accounts with different liability characteristics to ensure that investment behaviors accurately match liability characteristics and balance the relationship between short-term fluctuations and long-term value investment [4]
• Extend assessment cycle
  : By reducing the weight of the current year’s assessment, guide the investment team to focus on long-term returns and avoid taking aggressive investment strategies due to short-term performance pressure [4]
• “Insurance + Service + Investment” synergy
  : Three ends work together to achieve dynamic balance between the asset side and the liability side, and obtain long-term stable excess returns under the premise of effective risk control [2]

The company adopts diversified equity investment strategies to diversify risks and improve income stability:

• High-dividend stock allocation
  : By transferring high-quality assets to OCI accounts, effectively smooth profit fluctuations, and balance short-term performance stability and long-term income growth [2]
• Enrichment of underlying position assets
  : Rapidly enrich the underlying positions of equity assets such as OCI, long-term stock investments, and unlisted equity, to respond to the challenge of interest margin loss with high-quality equity underlying positions and make strategic arrangements for stable returns [2]
• Timely shareholding increase strategy
  : Successively increased shareholdings in high-quality listed companies such as Shanghai Pharmaceuticals, Bank of Hangzhou, and Beijing Holdings H-shares, laying the foundation for converting to long-term equity investments and stabilizing long-term investment returns in the future [4]

• Layout of private securities investment funds
  : The company jointly funded and invested in three pilot funds with China Life, with a cumulative scale of nearly 100 billion yuan. The fund focuses on investing in high-quality listed companies in the secondary market, which not only optimizes asset-liability matching management, effectively solves the problem of “long-term funds being allocated to short-term assets”, but also strongly supports the long-term healthy development of the capital market [2][5]
• Industry-first fund model
  : In 2024, the company jointly funded the establishment of a fund with a total scale of 50 billion yuan with peers, which is the first private securities investment fund established by an insurance company, creating a precedent in the industry [3]

In the selection of equity investment targets, the company follows three core main lines:

• High-dividend strategy
  : Allocate high-quality assets that can resist the challenge of low interest rates, and use stable dividend income to hedge against the pressure of falling interest rates [2]
• New productive forces direction
  : Increase support for new infrastructure and strategic emerging industries, and seize investment opportunities brought by China’s economic transformation and upgrading [2]
• Concentration on industry leaders
  : Concentrate on leading companies in first-tier sub-sectors that focus on their main businesses, select individual stocks to create excess returns, and avoid income dilution caused by scattered investments [5]

From the perspective of sub-sectors, the company focuses on the following directions:

• Military industry sector
  : Optimistic about sub-sectors such as satellite internet, drones and aero-engines; the India-Pakistan conflict has further expanded the external demand market for military industry [5]
• Securities sector
  : The current market position combined with the increased importance of the capital market makes it a high-quality allocation choice [5]
• Made in China
  : Covering fields such as automobiles and home appliances; from domestic competition to expanding international markets, the manufacturing industry has long-term growth potential [5]
• Real estate chain sector
  : After rapid supply-side reforms, industry concentration will accelerate, and profit margins are expected to return to normal levels [5]

However, investors need to pay attention to the following risk factors: fluctuations in the equity market may lead to large fluctuations in the company’s short-term performance; the high proportion of FVTPL structure may have a greater negative impact on net profit when the market is down; the continued low-interest rate environment may compress fixed-income investment returns and put pressure on overall investment returns.

Overall, through diversified measures such as building a sound asset-liability linkage mechanism, optimizing the allocation structure of equity assets, deploying long-term underlying position assets, and cooperating with industry leaders to establish private equity funds, New China Life Insurance has effectively controlled equity investment risks while pursuing investment returns. The company adheres to the concept of “long-term investment, value investment, and prudent investment”, and gives full play to the advantages of insurance funds as “long-term capital, patient capital, and strategic capital”, laying a solid foundation for achieving stable returns across cycles.

[1] International Finance News - “Earned 426 billion yuan! Five major listed insurance companies’ net profit hit a new high in the first three quarters” (https://www.ifnews.com/news.html?aid=777885&cid=49)

[2] Caijing.com - “The ‘high-quality development’ code of New China Life Insurance: strong dividend insurance, effective channel reform” (https://m.caijing.com.cn/article/202509/381806)

[3] New China Life Insurance Co., Ltd. - “2024 Annual Report” (https://static-cdn.newchinalife.com/ncl/pdf/20250327/018db10f-6df1-4a75-a62e-39653f4cb054.pdf)

[4] Xinhuanet - “New China Life Insurance’s strong growth in 2025, dividend insurance leads new trends” (http://jjckb.xinhuanet.com/20250609/857103c3f2f24e8abdcc45cc88e41466/c.html)

[5] New China Life Insurance Co., Ltd. - “2025 First Half Annual Report of Investment-Linked Insurance Investment Accounts” (https://static-cdn.newchinalife.com/ncl/pdf/20250930/fd059bf8-d6a2-4a28-ad91-2f8404ea8c68.pdf)