Total investment returns increased by 25.8% year-on-year. China Life Insurance details the next steps for trillion-yuan funds.

The annual reports of A-share listed insurance companies for 2025 have been successively released. China Life Insurance Company Limited (hereinafter referred to as “China Life”) has reported that its net profit attributable to shareholders reached 154.078 billion yuan last year, a year-on-year increase of 44.1%; total premiums exceeded 700 billion yuan for the first time, reaching 729.887 billion yuan. Behind this impressive report, strong investment returns became a key support.

According to data, in 2025, China Life achieved total investment income of 387.694 billion yuan, a year-on-year increase of 25.8%; the total investment yield reached 6.09%, marking the “third highest” annual investment performance since the company’s listing in 2007, only behind 6.24% in 2015 and 11.07% in 2007. At the performance press conference held on March 26, Liu Hui, vice president and chief investment officer of China Life, attributed the growth in profits primarily to this.

Regarding this investment performance, Liu Hui attributed it to three factors: a firm commitment to increasing investments in Chinese assets, strategically increasing the equity ratio by nearly 5 percentage points, with equity investments exceeding 1.2 trillion yuan; capitalizing on the high interest rate window in previous years, accumulating long-term bonds exceeding 3 trillion yuan across cycles; and seizing structural market opportunities to capture the main upward trend of growth-style equity investments.

From the perspective of asset allocation structure, by the end of 2025, China Life’s investment assets reached 7.4 trillion yuan, a growth of 12.3% from the end of the previous year. Among these, the allocation ratio of stocks and funds (excluding money market funds) increased from 12.18% at the end of 2024 to 16.89%, while the proportion of fixed-income financial assets was 70.51%, primarily consisting of bonds, time deposits, and debt-type financial products.

After achieving the best investment performance in recent years, the next steps for this insurance giant managing over 7 trillion in investment assets have become a focal point for the market. Liu Hui provided clear allocation strategies at the press conference.

In terms of equity investments, Liu Hui stated that China Life will continue to promote medium and long-term funds entering the market, focusing on two main types of assets: first, investments in technology stocks representing China’s new productive forces, closely following the themes of technological iteration and domestic substitution, seeking investment targets with explosive growth opportunities along the entire artificial intelligence industry chain; second, the allocation of high-quality, high-dividend stocks to build a diversified dividend portfolio to cope with declining interest rates.

Regarding fixed income, Liu Hui analyzed that the current Chinese bond market is showing a low-level fluctuation with an upward shift in the central level, with the yield on 10-year government bonds operating between 1.75% and 1.9%, reflecting a slight rebound from last year’s central yield. The company will pay attention to allocation opportunities arising from the rise in long-term bond yields while employing a diversified fixed income strategy to seek reasonably priced investment varieties, including perpetual bonds, relatively good fixed income varieties, and alternative debt plans.

It is noteworthy that although 2025’s overall performance was remarkable, China Life experienced a profit loss in the fourth quarter. In response, China Life’s chairman Li Mingguang stated that this was mainly due to structural adjustments in the capital market, with some stocks and funds held by the company experiencing a pullback in the fourth quarter. He emphasized that such fluctuations are mostly temporary, reflecting changes in the capital market and are normal phenomena. Life insurance companies have long-cycle and cross-cycle operational characteristics, and it is advisable to reduce excessive interpretation of single-quarter profits.

In a low-interest-rate environment, the true test for insurance companies is their long-term asset-liability management capability. According to China Life’s chief actuary Hou Jin, the company has scientifically managed the duration of liabilities while flexibly adjusting the duration of assets, resulting in an effective duration gap of less than 1.5 years; the dynamic adjustment of product guaranteed interest rates and the timing and quality selection of fixed income assets are working synergistically, with the cost rate of new business liabilities reduced by over 60 basis points.

For the equity investment direction during the “14th Five-Year Plan” period, Liu Hui revealed that the company will focus on the national strategy to nurture and grow emerging industries and proactively layout future industries, continuing to use diversified tools such as merger and acquisition funds, private equity funds, and S funds, focusing on three major directions: first, artificial intelligence and semiconductors, closely aligning with technological iteration and domestic substitution themes; second, health and biotechnology, investing in innovative pharmaceuticals, intelligent diagnostics, chronic disease management, and other fields; third, green energy and new infrastructure, deeply engaging in the renewable energy sectors such as wind power and nuclear power, paying attention to investment opportunities in new energy storage and computing power collaboration.

In response to overseas asset allocation, Liu Hui stated that the company’s overseas asset allocation scale is relatively small and does not significantly impact the overall assets, but they will closely monitor the global geopolitical risks brought by relevant policies.

“Insurance investment needs to span the dimensions of 20, 30, or even 50 years.” Liu Hui summarized the essence of insurance capital investment at the press conference, “Flow does not compete for speed, but rather for persistence. Long-term funds and patient capital need to navigate the cycles through deep and steady currents.”

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