Based on the 2025 Third Quarter Report of China Life Insurance Company Limited, here is the detailed financial analysis.
Income Statement
Unit: RMB million
| Item | 2025 (Jan-Sep) | 2024 (Jan-Sep) | YoY | % of Total Rev (2025) |
| Operating Revenue | 537,895 | 427,180 | 25.9% | 100.0% |
| Insurance Service Income | 161,409 | 157,849 | 2.3% | 30.0% |
| Interest Income | 95,099 | 89,587 | 6.2% | 17.7% |
| Investment Income | 137,075 | 24,754 | 453.7% | 25.5% |
| Net Gains from Fair Value Changes | 136,405 | 147,655 | -7.6% | 25.4% |
| Other Income & Gains | 7,907 | 7,335 | 7.8% | 1.5% |
| Operating Expenses | (332,941) | (303,278) | 9.8% | 61.9% |
| Operating Profit | 204,954 | 123,902 | 65.4% | 38.1% |
| Net Profit | 169,780 | 105,904 | 60.3% | 31.6% |
| Net Profit Attributable to Shareholders | 167,804 | 104,523 | 60.5% | 31.2% |
Segment Revenue (Premium Breakdown)
| Business Line | 2025 (Jan-Sep) | 2024 (Jan-Sep) | YoY |
| Life Insurance | 213,952 | 194,502 | 10.0% |
| Annuity Insurance | 217,433 | 197,666 | 10.0% |
| Health Insurance | 208,594 | 189,631 | 10.0% |
| Total Premiums | 669,645 | 608,251 | 10.1% |
Balance Sheet
Unit: RMB million
| Assets | 2025/09/30 | 2024/12/31 | YoY | % of Total Assets |
| Cash and Deposits | 96,953 | 86,519 | 12.1% | 1.3% |
| Financial Assets at Fair Value | 2,127,924 | 1,908,098 | 11.5% | 28.7% |
| Debt Investments | 183,037 | 196,754 | -7.0% | 2.5% |
| Other Debt Investments | 3,795,067 | 3,458,895 | 9.7% | 51.2% |
| Other Equity Instruments | 263,039 | 171,817 | 53.1% | 3.5% |
| Term Deposits | 452,732 | 438,455 | 3.3% | 6.1% |
| Total Assets | 7,417,981 | 6,769,546 | 9.6% | 100.0% |
| Liabilities & Equity | 2025/09/30 | 2024/12/31 | YoY | % of Total Assets |
| Insurance Contract Liabilities | 6,322,362 | 5,825,026 | 8.5% | 85.2% |
| Financial Assets Sold under Repurchase Agreements | 198,333 | 151,564 | 30.9% | 2.7% |
| Total Liabilities | 6,779,299 | 6,248,298 | 8.5% | 91.4% |
| Total Equity | 638,682 | 521,248 | 22.5% | 8.6% |
Cash Flow Statement & FCF Analysis
Unit: RMB million
| Item | 2025 (Jan-Sep) | 2024 (Jan-Sep) | YoY |
| Net Cash Flow from Operating Activities | 399,710 | 346,601 | 15.3% |
| Net Cash Flow from Investing Activities | (398,240) | (315,468) | 26.2% |
| Net Cash Flow from Financing Activities | 8,855 | (104,264) | N/A |
| Free Cash Flow (FCF) | 398,179 | 344,079 | 15.7% |
Financial Analysis
1. Robust Growth in Profitability
The 60.5% surge in net profit is primarily driven by a significant recovery in investment income (up 453.7% YoY). The company successfully capitalized on the equity market’s recovery, shifting from a low base in 2024 to a massive gain in 2025.
2. Strategic Asset Allocation
China Life has increased its exposure to “Other Equity Instruments” (+53.1%) and “Financial Assets at Fair Value” (+11.5%). This indicates a more aggressive stance in the stock market during the reporting period, which contributed to the high investment yield of 6.42%.
3. Diversified Premium Structure
The premium growth is exceptionally balanced across Life, Annuity, and Health sectors, each maintaining a steady 10% YoY increase. The total premium volume hit a historic high for the period, supported by a 41.8% increase in the Value of New Business (VNB), showcasing high-quality growth rather than just scale.
4. Strong Solvency and Cash Position
The core solvency ratio remains healthy at 137.5%, well above regulatory requirements. The positive shift in financing cash flow suggests better capital management and liquidity compared to the previous year’s heavy outflows.
Here is the analysis of the financial ratios for the past five years (2020-2024).
Five-Year Financial Ratio Analysis (2020-2024)
| Item | 2024 | 2023 | 2022 | 2021 | 2020 |
| Return on Equity (ROE) | 13.1% | 8.2% | 10.4% | 10.9% | 11.3% |
| Total Investment Yield | 4.8% | 3.5% | 3.9% | 5.0% | 5.3% |
| Core Solvency Ratio | 154% | 158% | 143% | 253% | 260% |
| Comprehensive Solvency Ratio | 210% | 218% | 206% | 262% | 269% |
| Value of New Business (VNB) Growth | 11.9% | 11.9% | -19.6% | -23.3% | -0.6% |
| Surrender Rate | 0.95% | 1.02% | 0.95% | 1.20% | 1.09% |
Detailed Analysis
1. Profitability and ROE Trend
The Return on Equity (ROE) hit a five-year low in 2023 due to extreme market volatility and a low interest rate environment affecting the valuation of financial assets. However, 2024 marked a significant turning point with ROE rebounding to 13.1%. As of the first three quarters of 2025, this momentum accelerated further, reaching an annualized ROE of 29.27%, driven by a massive recovery in equity investment income.
2. Investment Yield Volatility
The company maintained a stable yield above 5% during 2020-2021. The subsequent decline (reaching a bottom of 3.5% in 2023) reflected the challenges of the macroeconomy and capital markets. The recovery in 2024 and the surge to 6.42% in 2025 indicate a successful tactical shift toward high-quality equity assets and “new productive forces” sectors.
3. Solvency and Regulatory Compliance
There is a visible drop in solvency ratios starting in 2022. This was not due to a decline in financial health but rather the implementation of the C-ROSS Phase II (償二代二期) regulatory rules, which introduced stricter capital requirements. Despite this, the ratios have remained consistently and safely above the regulatory minimums, demonstrating strong capital resilience.
4. Business Quality and Growth (VNB)
The Value of New Business (VNB), a key metric for life insurers, suffered during the industry-wide transformation in 2021-2022. The double-digit growth in 2023 and 2024 (and the further 41.8% increase reported in Q3 2025) confirms that the company has successfully transitioned its product mix toward higher-margin products and diversified its distribution channels.
Summary
China Life has demonstrated a “V-shaped” recovery over the past five years. After navigating through a period of regulatory changes and market downturns (2021-2023), the company has emerged with a more robust investment strategy and a higher-quality business structure, leading to the exceptional profit growth seen in recent quarters.
In the current market environment of early 2026, the Price-to-Book (P/B) analysis for China Life (2628.HK) relative to its main peers (e.g., Ping An, CPIC) reveals a significant valuation divergence.
The following is a summary of the P/B analysis as of February 2026:
Peer Group P/B Valuation Comparison
| Company Name | Ticker | P/B Ratio (Feb 2026) | Valuation Context |
| China Life | 2628.HK | 1.9x – 2.1x | Highest: Reflects a premium for its pure-play life insurance leadership and massive net profit surge (YoY +60.5%). |
| Ping An Insurance | 2318.HK | 1.2x | Moderate: Despite high brand value, it suffers from a “conglomerate discount” due to banking and tech exposure. |
| CPIC (China Pacific) | 2601.HK | 1.4x | Stable: Reflects steady asset-liability management and conservative growth profile. |
| NCI (New China Life) | 1336.HK | 2.1x – 2.2x | High: Similar to China Life, it benefits from high sensitivity to equity market rallies. |
| China Taiping | 0966.HK | 0.6x – 0.7x | Discounted: Remains below book value due to concerns over capital pressure and overseas exposure. |
Key Takeaways from the P/B Analysis
- The Logic Behind China Life’s Premium:
- China Life is currently trading at a significant premium over Ping An (1.2x) and CPIC (1.4x). This is primarily because investors view China Life as the purest proxy for the A-share equity market recovery. Its 453% YoY jump in investment income has led to a major re-rating.
- Ping An’s “Valuation Trap” vs. Value:
- Although Ping An often boasts a higher ROE than China Life, its P/B lags behind. This reflects the market’s ongoing concern regarding its real estate exposure and the complexity of its integrated finance model. However, Ping An’s recent move to increase its stake in China Life H-shares to over 10% suggests that Ping An itself sees value in its competitor’s equity.
- Industry-Wide Re-rating:
- The entire sector has moved away from the extreme lows of 2023-2024 (when many traded at 0.4x – 0.9x P/B). Currently, the market is divided into two tiers: high-beta pure lifers (China Life, NCI) at >1.8x P/B, and diversified insurers (Ping An, CPIC) at 1.2x – 1.5x P/B.
Investment Conclusion
China Life’s current P/B is approaching the upper bound of its three-year historical range. While its investment yield (6.42%) and VNB growth (41.8%) are exceptional, a 2.0x P/B implies that much of the optimism is already baked into the price. Investors looking for a “margin of safety” might find Ping An’s 1.2x P/B more attractive for long-term defensive positioning.
Source: https://www1.hkexnews.hk/listedco/listconews/sehk/2025/1030/2025103001296_c.pdf
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