New China Life Insurance Company Ltd has completed the acquisition of a 5.45% equity interest in Bank of Hangzhou Co Ltd, marking a strategic shift in its investment portfolio.
The transaction involved the purchase of 329.6 million shares at a unit price of CNY 13.095, amounting to a total consideration of approximately CNY 4.32 billion.
The stake was acquired from Commonwealth Bank of Australia and finalised on June 10, following regulatory clearance.
Initial terms were agreed in January, with the transaction subject to approvals from the National Financial Regulatory Administration and the Shanghai Stock Exchange, as well as share registration by the China Securities Depository and Clearing Corporation.
The Zhejiang Regulatory Administration granted approval in April.
The share purchase comes at a time of regulatory change affecting capital requirements for insurance companies investing in equities.
In May, China announced a reduction in equity capital charges under the China Risk-Oriented Solvency System (C-ROSS), a framework introduced in 2021.
The adjustment cuts the capital requirement for equity holdings by 10%, encouraging long-term participation in domestic capital markets by institutional investors.
Fitch Ratings said the move could ease capital pressure on insurers but may not lead to a significant shift in investment strategies.
By the end of 2024, equity assets made up 15.3% of the total investment portfolios of Chinese life insurers, while non-life insurers allocated 13.5% to equities. Fitch noted that life insurers already exposed to the equity market may proceed cautiously despite the regulatory relief.
In April, Fitch revised the credit ratings of several Chinese insurers in response to a sovereign downgrade from A+ to A.
Affected firms included SINOSURE and Taiping Life Insurance, while China Life Insurance maintained its rating due to a strong capital base and lower dependence on state support.
Fitch said that China Life’s sovereign bond exposure, representing 64% of its capital, was not deemed a credit risk under current evaluation criteria.
The insurance industry in China is also navigating increased risks from international trade tensions.
In April, the US imposed new tariffs on Chinese exports such as electric vehicles and semiconductor products. Analysts expect potential impacts on investment outcomes, claim frequencies, and future premium growth, particularly for motor and export-related insurance lines.
In response to these challenges, Chinese regulators have allowed greater equity exposure in insurance investment strategies. State-backed insurers have been instructed to channel as much as 30% of new premium income into A-share markets to enhance domestic market liquidity.
Rising shipping costs and geopolitical uncertainties are also leading to premium increases in marine, aviation, and cargo insurance. Sector analysts expect the general insurance loss ratio, which reached 68.4% in 2024, to continue climbing, with annual loss growth projected at 4.8% through 2029.
Despite these headwinds, Fitch maintained a neutral outlook for the Asia-Pacific insurance industry in its mid-2025 update. The agency pointed to sustained earnings and capital strength across markets, even as some segments experience increased risk exposure.
The outlook for life insurers in China and Taiwan was revised to “deteriorating,” reflecting the impact of both domestic policy shifts and external economic pressures.
Meanwhile, general insurers are expected to prioritise underwriting efficiency and operational cost management in the near term.
