Transcript of the New China Life Insurance performance meeting! Executives respond to "pressure on net investment yield"

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As New China Life Insurance’s share price reached a record high, its third quarter report also brought “good news.”

New China Life Insurance disclosed: For the first three quarters, operating income was 137.252 billion RMB, up 28.3% year-on-year, with net profit attributable to the parent company at 32.857 billion RMB, up 58.9% year-on-year.

On the morning of October 31, New China Life Insurance executives attended the third quarter results briefing, spending an hour interacting with investors and addressing hot topics such as insurance asset allocation, equity investments, and dividend plans.

Pressure on Net Investment Yield and Coping Strategies

The management stated that pressure on net investment yield is an industry-wide phenomenon, mainly due to the decline in interest rates leading to lower returns on standard interest-rate products such as bonds, as well as a general industry contraction of non-standard allocations caused by credit risk factors.

The company is firmly making strategic adjustments:

First, sourcing high-quality assets at the origin and broadening sources of assets;

Second, extending from an investment mentality to an investment banking mentality, proactively seeking assets and structuring transactions;

Third, enhancing the ability to execute complex transactions and improving coordination between front and back offices.

In terms of implementation, allocation to interest rate bonds is primarily for asset allocation, with basic holdings adjusted by market timing according to interest rate fluctuations; structural adjustment is being made to financial products, with a reduction in incremental traditional risk assets, especially real estate, and proactive pursuit of various quasi-REITs with progress achieved.

In terms of asset management plans and fixed income plus products, the company is steadily focusing on two main lines: first, dividend-oriented alternative assets represented by infrastructure; second, growth opportunities in digital economy and healthcare sectors, aiming to stabilize net investment yield with an absolute return orientation.

Emphasizing Both High-Dividend and Growth Stocks

In terms of equity investment, since 2024, New China Life Insurance has continued to steadily increase the proportion of equity asset allocation, continuing this strategy through the first three quarters of 2025.

With the overall exposure steadily rising, the company comprehensively considers market conditions, volatility, ROE, and long-term value, allocating both high-dividend and growth stocks in parallel, selecting high-quality targets through a combination of top-down and bottom-up approaches, not pursuing a fixed ratio but dynamically adjusting the structure.

The diversification of investment portfolios has improved, the contribution of equity assets to raising return levels has strengthened, and stability and resilience continue to improve.

Future Dividend Plans

New China Life Insurance executives stated: The company has always attached great importance to shareholder returns. Historically, the company has actively rewarded shareholders according to profit performance, and interim dividends have also received positive market feedback.

Profits hit a new high in 2025, mainly benefiting from good capital market performance. Looking ahead, the company will comprehensively consider full-year profits, capital position, risk indicators, trends in investment returns and risk-free rates over the next 2-3 years, and refer to industry dividend levels, while soliciting shareholder opinions, seeking a balance between short-term and long-term development, and studying dividend plans.

Slight Decrease in Solvency Margins Quarter-over-Quarter

On solvency, the company pointed out that compared with the end of 2024, the overall level is still improving, although the third quarter of 2025 saw a decrease compared to the second quarter. The third-quarter change was mainly due to an increase in reserves caused by the 750-day moving average government bond yield curve falling, while spot interest rates rose causing the market value of available-for-sale bonds to decline, together with equity market rises increasing minimum capital requirements, all impacting solvency indicators.

The company has improved solvency through asset reclassification, optimizing asset-liability matching, and relying on profit growth to enhance endogenous capital capacity. Net assets increased by 18 billion RMB quarter-on-quarter in the third quarter of 2025. The company is advancing the issuance of capital supplementation tools, with the board having approved a total of 20 billion RMB in capital-raising debt, which will enhance core and comprehensive capital adequacy ratios, giving the company strong risk resistance capability.

Participating Policy Transition

Regarding new policies and transitioning to participating policies, the company said that in the first three quarters of 2025, first-year regular premium performance was outstanding, with long-term insurance first-year regular premium reaching 34.9 billion RMB, a record high with significant growth.

In the first quarter, the company achieved a leading position through differentiated strategies, and from the second quarter proactively began transitioning participating policies. The company had not sold participating policies for many years, so before introducing them, system analysis was undertaken to ensure product, training, and team readiness.

From April, participating policies were comprehensively introduced, with marketing channels focused on improving team understanding and communication skills. The bancassurance channel provided differentiated supply based on bank branch needs. From April to August, participating policies accounted for over 70% of new individual policies, further increasing in September; the proportion in bancassurance channels also rose month by month.

Growth in New Business Value

The management pointed out that new business value grew by 50.8% year-on-year in the first three quarters of 2025, driven by factors such as enhanced product competitiveness, improved sales skills of the marketing team, upgraded service ecosystem, progress in management team building and business quality control; and the bancassurance channel elevated product value contribution through coordination between insurance and banking.

As for value tracking, the company has not undertaken specific work yet; if there is market demand, it may study it further at year-end. Faced with pressure on value ratios as participating policies become mainstream, the company will target stable value ratios by optimizing business structure, adjusting payment durations and coverage periods, promoting cost reduction and efficiency, and strengthening business quality to hedge the pressure.

Measures to Enhance Workforce Productivity

The management emphasized that human resources are the foundation and core competitiveness of marketing channels’ development.

The company systematically promotes enhancement of both the foundation and quality of the team, reshaping team development models through institutional operations and ecosystem integration, proposing a new team development path focused on self-management, leadership by example, and efficiency. This aims to reverse the past high-turnover, low-efficiency situation, and incorporate increases in new staff, conversions to regular contracts, and high-performing teams into core 2025 KPIs.

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