Why Did Soochow Life and China Taiping Global Life's 2025 Net Profit Skyrocket Over 30 Times?

As of March 19, a total of 58 life insurance companies have released their 2025 Q4 solvency reports, with over 80% of these insurers achieving net profit growth in 2025.

Ji Mian News reporters noted that Dongwu Life and Tongfang Global Life saw their net profits increase by 3813.67% and 3448.83% year-on-year in 2025, making them the two insurers with the largest net profit growth among the 58 companies.

Industry analysts believe that the rapid growth in net profits for both companies is related to factors such as switching accounting standards, reduced impact of impairment provisions, and phased operational improvements.

“During the transition to new accounting standards, the comparability and interpretability of net profit as a single indicator decline, especially when comparing across years or standards, as changes in accounting treatment can have a significant impact,” Professor Zhu Junsheng, a postdoctoral researcher in applied economics at Peking University, told Ji Mian News. Overall, it is advisable to shift from a “profit result-oriented” approach to a comprehensive evaluation framework that emphasizes both value creation and risk management to better reflect the true operational status of insurers.

Tongfang Global Life Switches to New Accounting Standards in 2025

The solvency report shows that Tongfang Global Life’s net profit in 2025 was 1.269 billion yuan, a 3448.83% increase year-on-year.

From 2022 to 2025, Tongfang Global Life’s net profits were 57.68 million yuan, 29.25 million yuan, 35.76 million yuan, and 1.269 billion yuan. The fluctuations in net profit in 2025 are significantly more pronounced than in previous years, coinciding with the company’s switch to new accounting standards in 2025.

“Tongfang Global Life’s substantial profit increase in 2025 is strongly related to the switch to new accounting standards,” Zhu Junsheng told Ji Mian News. “Under the new standards, the measurement of insurance contract liabilities, profit recognition timing, and mechanisms for reflecting investment income have all changed. Some profits that were previously recognized gradually over time may now be concentrated in the current period, amplifying annual net profit.”

“Simply put, under the old accounting standards, stock price gains were not included in net profit but were reflected in changes in net assets,” said Xu Yuchen, a founding member and senior actuary of the Chinese Actuaries Association. “Previously, if a stock asset appreciated by 20% from 1 billion yuan to 1.2 billion yuan, that 200 million yuan would not be included in current profit and loss but only in net asset changes. Under the new standards, if the stock is classified as FVTPL (measured at fair value with changes recognized in profit or loss), the appreciation will be included in net profit, significantly impacting it.”

“Additionally, the company’s insurance business income has been steadily growing in recent years, and the business structure and investment performance may also support profit growth,” Zhu Junsheng explained.

According to the Enterprise Early Warning System, Tongfang Global Life’s insurance business income from 2022 to 2025 was 7.074 billion yuan, 8.175 billion yuan, 8.737 billion yuan, and 9.033 billion yuan, showing steady growth. During the same period, its comprehensive yield rates were 4.30%, 5.71%, 17.93%, and -1.13%.

However, industry expectations suggest that the 34-fold net profit increase in 2025 is unlikely to be sustained.

“This extraordinary increase in net profit in 2025 is a one-time effect caused by the change in accounting standards,” Xu Yuchen said.

Zhu Junsheng analyzed that this high growth rate under the “cross-standard” context has certain phase-specific and accounting scope influences and does not fully represent a year-over-year improvement in the company’s fundamental operations. Future performance will still depend on new business value creation, investment income stability, and liability cost management.

Dongwu Life’s “Surge” Influenced by Multiple Factors

According to the solvency report, Dongwu Life achieved a net profit of 846 million yuan in 2025, a 3813.67% increase year-on-year.

Dongwu Life also switched to new accounting standards in 2025. Unlike Tongfang Global Life, Dongwu Life experienced large fluctuations in net profit in the years prior to 2025.

Data from the Enterprise Early Warning System shows that from 2022 to 2025, Dongwu Life’s net profits were 41.16 million yuan, -1.785 billion yuan, 21.60 million yuan, and 846 million yuan. The 38-fold increase in 2025 is based on a small base of 21.60 million yuan in 2024. During the same period, its insurance business income was 7.995 billion yuan, 9.538 billion yuan, 9.957 billion yuan, and 9.653 billion yuan; its comprehensive yield rates were 1.56%, 2.78%, 7.47%, and 3.41%, with slight declines in both metrics in 2025 compared to 2024.

Specifically, the large loss in 2023 was due to pressure on both liabilities and assets: on one hand, asset-side pressures stemmed from low bond yields and sluggish equity markets; on the other hand, the continuous decline in the 750-day government bond yield curve led to increased reserve provisions, significantly raising costs on the financial statements and impacting accounting profits.

In 2024, Dongwu Life turned losses into profits, but the impact of declining government bond yields on reserve provisions persisted. An internal meeting at Dongwu Life early in 2025 revealed that in 2024, the decline in government bond yields led to approximately 900 million yuan in increased reserve provisions.

“Under the old accounting standards, the discount rate assumptions for traditional insurance reserves were partly based on the 750-day government bond yield curve; under the new standards, they are based on the latest 10-year government bond yields, which increased in 2025 and at least halted the previous downward trend,” Xu Yuchen explained.

“The significant net profit growth in Dongwu Life in 2025 is likely due to multiple factors,” Zhu Junsheng told Ji Mian News. “First, the low base effect from previous years’ low profits amplified the year-over-year growth; second, the phased easing of reserve provisioning pressures may have positively impacted profit realization; third, changes in measurement and recognition methods due to the new accounting standards may have caused some profits to be recognized in the current period.”

“Additionally, improvements in investment returns, cost control, and business restructuring may also support profit growth,” Zhu added. “Therefore, this high increase more likely reflects a combination of ‘base effect + accounting adjustments + phased operational improvements.’”

Emphasizing Multi-Dimensional Analysis

In 2026, insurers will fully adopt new accounting standards, and fluctuations in net profit and net assets will be magnified. Under this context, which indicators should be prioritized when analyzing life insurance companies?

“Because of the unique nature of life insurance operations, especially for life insurers, they generally do not focus heavily on net profit performance,” Xu Yuchen told Ji Mian News. “Compared to net profit, I pay more attention to the New Business Value (NBV), which estimates how much future profit the new policies signed in the past year will generate over the next 20-30 years. Similarly, embedded value (EV) is a more rational way to view an insurance company, as it adjusts the current business value over net assets.”

“When evaluating insurer operations, a multi-dimensional analysis is essential,” Zhu Junsheng advised. “First, focus on the value creation ability of the insurance business itself, such as NBV and its growth trend; second, assess liability quality, including reserve adequacy, product mix, and cost levels; third, evaluate investment performance and volatility, using comprehensive yield rates; fourth, monitor solvency, capital adequacy, and risk management; fifth, consider long-term profitability indicators like embedded value and its growth.”

According to the Enterprise Early Warning System, in 2025, Tongfang Global Life’s new business value was 528 million yuan, with a new business profit margin of 10.04%. Its core solvency ratio was 121%, down 56 percentage points from 2024; the comprehensive solvency ratio was 164%, down 64 percentage points; and its investment yield was 4.45%, up 0.64 percentage points year-on-year.

Meanwhile, Dongwu Life’s new business value was 733 million yuan, with a profit margin of 11.46%. Its core solvency ratio was 105.56%, down 85.17 percentage points from 2024; the comprehensive solvency ratio was 205.78%, down 11.89 percentage points; and its investment yield was 3.79%, decreasing by 1.26 percentage points.