The investment sector is poised to play a pivotal role in the resurgence of profitability among personal insurance companies in 2024. With a projected spike in net profits ranging from 175% to 195%, companies like Xinhua Insurance highlight this optimistic outlook as influenced by a series of favorable national policies and a recovering capital market. This resurgence is expected to lead to a notable increase in investment income, complemented by an optimization of the insurance business structure and overall growth in scale.

Recent reports and analyses from the Securities Times have painted a picture of positive recovery among the non-listed personal insurance companies, which are anticipating an average investment return rate of 4.30% in 2024, a significant improvement compared to the previous year's figures. This robust performance underscores the critical linkage between market dynamics and financial outcomes in the insurance sector.

Specifically, the landscape of the capital market provided three notable waves of advantageous investment opportunities throughout the year 2024. Notably, the decline in market interest rates propelled the bond market into a bull phase, allowing investments to flourish. Furthermore, the A-shares market experienced a dramatic rebound from early February to the end of May, essentially signaling an end to the bear market that had lingered since 2021. Finally, the implementation of substantial economic stimulus policies on September 24, 2024, coupled with shifted macroeconomic predictions, led to a remarkable surge in the A-share market, boosting the Shanghai Composite Index by 500 points within a fortnight.

Statistics reveal that the peak investment return rate among non-listed personal insurance companies reached an impressive 8.86% in 2024. A total of five insurance firms documented investment returns exceeding 6%, while 13 companies reported returns in the 5% to 6% range. Additionally, 21 companies achieved returns between 4% and 5%, demonstrating a healthy posture within the industry, while only seven companies fell below the 3% threshold. This marks a significant shift from the previous year, where the majority struggled to surpass a 4% investment return.

Highlighting the successful players, Xiaokang Life topped the investment return rankings with an impressive 8.86%. Even amid a staggering 66.07% decline in premium income, Xiaokang Life managed to chart a turn-around, posting a net profit of 514 million yuan. Following closely behind was Zhongying Life, boasting a solid investment return rate of 7.54%. Companies like Fosun United, Changsheng Life, and Heng'an Standard Life also showed strong performances with rates of 6.54%, 6.27%, and 6.14%, respectively. Furthermore, 13 other firms, including Zhonghe Life and Xingfu Life, achieved investment returns of over 5% in 2024.

However, not all firms fared well; Huahui Life found itself at the bottom of the investment return list with a troubling -0.86%. The company has struggled due to ongoing governance issues, which led regulators to downgrade its risk rating in January 2022. The consequences have been severe, sparking disruptions in board operations and new product approvals, contributing to significant financial setbacks. In fact, Huahui Life reported a decline of more than 50% in insurance revenue, generating only 203,000 yuan, alongside losses exceeding 70 million yuan.

Turning attention to comprehensive investment return rates, it’s noteworthy that 20 personal insurance companies reported figures above 10%. Tongfang Global Life led the pack with a remarkable 17.93% return. Other notable firms like Fosun United Health and Zhongying Life, among others, also maintained solid performances with comprehensive investment returns exceeding 13%. Moreover, a promising group of five companies registered comprehensive returns between 10% and 11%, while four achieved returns in the 9% to 10% range.

In stark contrast, Huahui Life’s comprehensive investment return was likewise negative, reflecting its financial difficulties. The rapid increase in comprehensive investment return is attributed to a revival in capital market conditions during the fourth quarter of the previous year, as well as the reallocating of bond assets in correspondence with new accounting standards.

This reclassification, shifting from "held-to-maturity" (HTM) to "available-for-sale" (AFS), is critical; the former is recorded at amortized cost while the latter permits fair value fluctuations to impact comprehensive income, thus enhancing overall investment returns. Such strategic advancements have positively influenced insurers' capability to meet obligations and maintain financial health.

However, if we evaluate over a longer timeframe, the average comprehensive investment returns of these insurers over the past three years still fall short of 6%. Among those assessed, nine non-listed companies surpassed a 5% average, while a significant portion—26 companies—report returns between 4% and 5%. A number of firms also fell into lower brackets of 3% to 4% and lower, indicating a mixed performance landscape.

For instance, Guolian Life emerged as the highest performer over three years with an average comprehensive investment return of 5.94%. Other names like Caixin Life and Lujiazui Guotai Life reported performance exceeding 5%. Conversely, companies like Xintai Life did not report their 2024 returns but indicated an average of 2.46% over three years.

As 2025 approaches, there’s anticipation within the investment community for a redefined strategy. Analysts like Zheng Jisha from CHINA MERCHANTS SECURITIES CO., LTD. underscore the importance of both trading strategies and asset allocation adjustments. In equity investments, the focus on high-dividend stocks is seen as a fruitful avenue, indicating sustained demand for strategic positioning within this segment. Furthermore, the insurance sector is likely to enhance its asset allocation precision, aiming for excess yields through strategic bond placements, while tapping into emerging opportunities within alternative investments such as REITs.

This evolving narrative not only highlights the dynamic nature of the insurance industry in China but also illustrates the broader implications of market conditions on financial performance. The path forward will undoubtedly be shaped by strategic foresight and adaptability as firms endeavor to navigate a fluctuating economic landscape.