China Life Performance Briefing Transcript: Detailed Explanation of Trillion-Level Equity and Bond Portfolio Operation Details

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Recently, China Life disclosed its 2025 performance: net profit attributable to shareholders of the parent company reached 154.078 billion yuan, a year-on-year increase of 44.1%. By the end of 2025, China Life's total assets had reached 7.59 trillion yuan, net assets of 608.393 billion yuan, up 16.7% year-on-year.

On March 25, China Life executives attended the annual performance meeting, responding to many issues of concern to investors. Among them, regarding the major asset allocation of insurance funds, a detailed answer was provided.

Zi Shi Tang summarized the key points of the meeting as follows (from a first-person perspective) for readers' benefit.

Combination of Long-term Bonds and High Dividend Stocks

The investment in 2025 achieved the best results in recent years, with a total investment yield of 6.09%, realizing high growth on a high base.

Such investment performance benefited from China's high-quality economic development, the recovery and warming of capital markets, the company's long-term adherence to value and prudent investment strategies, and our accurate analysis of the 2025 market and flexible tactical operations.

Specifically, first, we surged forward, firmly increased allocation to China assets to seize the era alpha of new productivity. With the unique long-term attribute and scale advantages of insurance funds, we actively promoted the entrance of mid- and long-term funds into the market, and also made counter-cyclical layouts during market downturns.

In 2025, we strategically increased the equity ratio by nearly 5 percentage points, with the total equity investment scale exceeding 1.2 trillion yuan. In particular, we focused on technology stocks representing China's new productivity direction, following historic trends, which was the primary reason for improved performance.

From a strategic layout perspective and for long-term configuration, the company has always insisted on configuration-driven strategies. For example, in recent years, taking advantage of high interest rates and large-scale issuance of long-term bonds, we cross-cyclically increased long-term bond allocation and have now accumulated 3 trillion yuan in long-term bonds, improving asset-liability duration matching to a good level.

During interest rate declines, we timely increased allocation to high-dividend stocks, built diversified dividend portfolios, and responded to rate drops with fixed-income strategies. Company investments always center around clear strategic asset allocation, never deviating from the liability mainline, forming the foundation for sustained performance.

Seizing Growth Investment Opportunities

For 2025 equity investments, we seized structural market opportunities and caught the main growth wave of growth style.

For fixed-income investments, we increased active management to thicken returns. In alternatives, we increased innovation, completed China's first insurance industry gold inquiry transaction, and also created S funds, merger funds and other new strategies to boost long-term return potential.

The company's equity deployments focus on several aspects.

First, by direct equity investments, focusing on core assets and laying out stable cash flow green dual-carbon assets.

Second, by PE funds, deploying emerging industries. In health, in 2016 we initiated large health series funds with nearly 20 billion yuan invested, cultivating 22 listed companies with a total market value over one trillion yuan, effectively supporting specialized new enterprises. In tech, in 2021 we raised 5 billion yuan for tech innovation funds, mainly targeting AI, IC and other technology tracks.

Third, through innovative tools to help industry upgrades. In 2023, we invested 11.7 billion yuan in Shanghai Integrated Circuit Industry Fund S shares, pioneering relay investment mode between insurance funds and government industry funds. In 2024, we invested 4.1 billion yuan in Beijing Tech Innovation Fund S shares, covering 1,500 tech innovation companies, some of which have been listed.

Equity investments focus mainly on several directions: first, AI and semiconductors, closely following tech iterations and domestic substitution, exploring explosive growth targets throughout the AI industry chain. Second, big health and biotechnology, focusing on aging population and health consumption upgrades, deploying innovative drugs, smart diagnosis, chronic disease management, etc. Third, green energy and new infrastructure, deepening wind and nuclear clean energy, while looking to new energy storage and computational coordination opportunities.

Slight Decline in Alternative Investment Ratio

The company has always placed high importance on alternative investments. Currently both China Life Asset Management Company and Guoshou Investment Company are capable of configuring alternative investments. Last year, the ratio of alternatives slightly declined, but overall allocation scale remained stable compared with previous two years.

Our alternative investments over these two years have mainly focused on debt-type financial products; last year, such allocation still nearly reached 100 billion yuan. We also engaged in equity and equity fund investments, as well as products like REITs, ABS, etc.

Overall, alternative investment is an important way for China Life to cope with a low-rate environment; the company will continue improving related capabilities so alternatives play a greater role in our investment portfolio.

Responding to Whether Overseas Investments Are Impacted

China Life's allocation in overseas assets is relatively small, with little impact on overall assets.

We have recently been closely watching the global geopolitical risks caused by the US-Iran conflict; current trends and impacts remain uncertain and need continued assessment. But long-term, we will continue to pay attention to how geopolitics may affect energy prices, inflation expectations and global asset pricing.

As insurance funds, we will fully leverage the stability advantage of long-term funds, dynamically adjust asset allocation, seize opportunities in market fluctuations, layout high-quality core assets, and achieve stable long-term investment results.

Cumulative Dividend Distribution Has Reached over 245 Billion Yuan

Regarding dividends, the company always highly values sharing its development results with shareholders. For the whole of 2025, it plans to distribute 8.56 yuan per 10 shares, with a total dividend payout of about 24.2 billion yuan, up 32% year-on-year. The company's dividend goal is for a relatively stable and upward trend so shareholders fully share in sustained growth.

Since listing, the company has cumulatively distributed over 245 billion yuan in dividends. The company attaches great importance to market value management, optimizing fundamentals to enhance intrinsic value, strengthening communication with capital markets, improving transparency and effectiveness of information disclosure, and showcasing company value through multiple channels.

In 2025, the company focused on building a health and elderly care ecosystem, enriching diversified supply. From China Life's featured health and elderly care services: first, in insurance plus pension, leveraging the long-term financial stability of insurance funds, advancing CCRC pension and travel pension services; currently, 20 institutional pension projects are deployed in 16 cities, plus a flexible travel pension product, and exploring home-based care service system.

Second, in insurance plus health, integrating internal and external resources to enrich health service supply, gradually establishing a health service system covering pre-prevention, mid-management and post-guarantee, offering diversified services such as physical exams and rehabilitation around customer needs.

Overall, our advantages can be summarized in four aspects: wide network and team coverage, long-term scale advantage of insurance funds, brand and prudent operation advantage, and synergy from multiple licenses within the group (insurance, banking, asset management).

Analysis of Single Quarter Net Loss

On the issue of single quarter net losses in the third and fourth quarters, which is of concern to everyone, this reflects how people read the profit and balance sheets of life insurance companies.

Currently, most investment assets and insurance contract liabilities of life insurance companies are measured at current market value, with changes reflected in the profit and loss or balance sheet; thus, net profit and net assets fluctuate with market value, which is normal and common.

The company had negative profits in the fourth quarter of 2025, actually representing the difference between annual results and the first three quarters, mainly due to structural adjustments in capital markets and partial stock and fund pullbacks held by the company in the fourth quarter.

We believe such volatility is mostly cyclical, reflecting market changes and is normal. Unlike other industries, life insurance companies operate cross-cycle and long cycle, which is very particular to life insurance.

Our asset-liability management needs cross-cycle and long-cycle approaches; investments are value, long-term investments, so we suggest reducing over-interpretation of single quarter profits. We stick to long-termism and asset-liability linkage in operations, continuously improving cross-cycle and long-cycle management capabilities, striving to create sustainable value for investors.

In summary, we suggest analyzing life insurance company profit and balance sheets by extending the cycle and term. Only over a longer cycle will operation and management results become more evident; the shorter the cycle, the more affected by volatility, which is common in our operations.

Deployment in Bancassurance and Individual Insurance Channels

First, individual insurance is the core channel of the company, contributing 85% of new business value and forming the fundamental business base.

Bancassurance is a key strategic development channel. Under current low interest rate and aging background, customers seek more diversified and stable household wealth allocation. The company leverages life insurance's long cycle to offer more options in pension finance, and more risk protection in insurance security.

Furthermore, the company will fully use brand advantages, wide network coverage, team and long-term bank cooperation, as well as risk control and service strengths, to seize current development opportunities for better growth.

The second aspect is individual insurance reform. Last year, company reforms delivered good expected results. First, in team development. The individual insurance team is the foundation; the company's quality improvement is significant, capacity jumped 40% year-on-year in 2025, new recruits’ productivity improved, 13-month retention rate improved 2.2 percentage points year-on-year, core population share increased steadily, and age/education structure improved with under-45 population up 2.3 percentage points.

Second, in business performance. New business structure improved, with rapid growth in dividend insurance, high share of ten-year and above business, fast growth in new business value, marking good results from last year.

In 2026, the company's individual insurance channel will continue to push marketing system reform, insist on high-quality development, focus on value creation, continuously optimize business structure, and drive effective qualitative improvement and solid quantitative growth throughout the year.

Risk Warning and DisclaimerThe market carries risks, invest cautiously. This article does not constitute personal investment advice, nor does it consider individual users' special investment goals, financial situation, or needs. Users should consider whether any opinion, viewpoint, or conclusion in this article suits their specific circumstances. Investing accordingly will be at your own risk. ```