Goldman Sachs: China’s insurers face investment and sales pressures in the third quarter as Goldman Sachs turns its attention to early-year sales and dividends

How will the stock market decline affect full-year profits?

China Life, Ping An of China, China Pacific Insurance and New China Life reported a combined net loss of 36 billion yuan in the third quarter of 2026. The CSI 300 Index fell 12% in the third quarter and another 9% in October, prolonging pressure on investments.
Goldman Sachs expects its covered insurers to report an aggregate net loss in the fourth quarter if the stock market does not recover before year-end, with full-year 2026 net profit falling 15%–67% year on year. In this report, the bank cut its 2026 earnings forecasts for China Life, New China Life, PICC Group and PICC P&C by 11%–35%.
China Life’s net profit fell 47% year on year in the first three quarters, while the Visible Alpha market consensus at the time forecast a 9% decline in its full-year profit, suggesting that the full-year consensus faced downward revision pressure.

Goldman Sachs estimates that the value of new business at most life insurers fell approximately 40%–50% year on year in the third quarter, and that cumulative growth for the first three quarters declined by 11–25 percentage points from the first half. The value of new business measures the expected profit from new policies; slower growth reflects a weaker profit contribution from new business.
Third-quarter sales relied more heavily on single-premium policies: the share of single premiums in sales at China Life, CPIC Life and New China Life rose by 14–19 percentage points from the first half. Goldman Sachs believes that, in addition to competition from bank deposits, the weak macroeconomic environment may make customers less willing to commit to long-term premium payments.
PICC Life is one example: first-year premiums rose 12% year on year in the third quarter, but regular premiums fell 63%, with growth supported by single-premium business that more than tripled. The increased share of lower-margin single-premium business reduced the new business value margin from 19.5% in the second quarter to 9.5%.
Goldman Sachs is therefore cautious about growth in the value of new business in 2027 and is watching sales during the early-year campaign. The high sales and profit base in the first half of 2026 also makes year-on-year growth harder to achieve in the first half of 2027.

Despite substantial losses on equity investments, most insurers’ core solvency adequacy ratios remained stable in the third quarter. Goldman Sachs believes this was partly because the impact of lower interest rates on liabilities was recognized with a delay, while bond portfolios recorded mark-to-market gains.
Goldman Sachs therefore regards dividends for 2026 as an important indicator of balance-sheet strength and, after cutting earnings forecasts, lowered its 2026 dividend-per-share forecasts for the relevant companies by 5%–11%. China Life’s management said adjusted profit excluding short-term stock market fluctuations remains an important consideration in determining dividends.

Motor and non-motor underwriting at PICC P&C, Ping An P&C and CPIC P&C performed better than Goldman Sachs expected. The companies attributed this to stable motor claims, proactive efforts to reduce catastrophe losses and non-motor insurance reforms; Goldman Sachs believes weak investment performance could further limit price competition, allowing the trend to continue into 2027.
PICC P&C’s third-quarter combined ratio was 98.1%, below Goldman Sachs’ forecast of 99.8%, but rose 0.5 percentage points year on year because of higher natural catastrophe losses. Its total investment return over the same period was negative 5.1% on a non-annualized basis, and it ultimately reported a net loss of 5.4 billion yuan, showing that investment losses continued to weigh on improved underwriting.
Goldman Sachs continues to favor insurers that are less sensitive to stock market performance and have more resilient operations, and reiterated its Buy ratings on China Pacific Insurance H-shares, PICC P&C, PICC Group H-shares, and Ping An of China H-shares and A-shares.