Goldman Sachs: China Pacific Insurance’s third-quarter value of new business fell 38% as bancassurance growth failed to offset margin pressure

Why was the sharp profit decline still in line with Goldman Sachs’ expectations?

China Pacific Insurance’s net profit attributable to shareholders for the third quarter of 2026 was RMB 5.6 billion, down 68% year on year and broadly in line with Goldman Sachs’ previous forecast of RMB 5.8 billion. Attributable net profit for the first three quarters was RMB 36.4 billion, down 20% year on year.
Goldman Sachs believes weaker third-quarter earnings were mainly dragged down by the stock market: the CSI 300 Index fell 12% during the quarter, while life and property insurance net profits fell 60% and 72% year on year, respectively.
However, after-tax operating profit for the first three quarters rose 6% year on year to RMB 30 billion, implying third-quarter profit of RMB 9 billion, up 4% year on year.

Third-quarter life insurance value of new business was RMB 3.6 billion, down 38% year on year and 33% below Goldman Sachs’ forecast. By comparison, the metric grew 13% year on year in the first half.
Value of new business depends on new policy volumes and margins. Third-quarter first-year premiums fell 3% year on year to RMB 24.7 billion, while the value of new business margin was 14.5%, down about 8 percentage points year on year and about 3 percentage points from the first half.
Channel divergence was an important reason: first-year premiums in the agency channel fell 14% year on year, while bancassurance first-year premiums grew 17%, partly offsetting the former’s decline. Bancassurance growth was driven by increased sales of single-premium products, while changes in the channel and product mix reduced the value of new business margin.

Amid channel adjustments across the industry, bancassurance new policy sales remain under pressure. China Pacific Insurance expects the channel to recover in 2027, with growth potentially exceeding that of the agency channel.
The company has begun preparing for its next start-of-year sales campaign, focusing on strengthening cooperation with state-owned banks and promoting products with longer premium payment terms.

Given that bancassurance-driven new policy sales in the third quarter were better than expected, Goldman Sachs raised its 2026–2028 first-year premium forecasts by 4%–5%. At the same time, it lowered its value of new business forecasts for the same period by 2%–3% due to further margin contraction.
Goldman Sachs slightly lowered its net profit forecasts for the same period and maintained its buy rating on the H shares and neutral rating on the A shares, with 12-month price targets of HK$36 and RMB 37, respectively.
In property insurance, the third-quarter combined ratio was 98.4%, down about 1 percentage point year on year. The company expects full-year underwriting profitability to improve further in the absence of major catastrophe losses.