Why is AI · China Life the first to lower the guaranteed minimum interest rate on dividend insurance?

At the start of 2026, China Life delivered a special report. On January 16, its parent company COFCO Capital disclosed China Life’s unaudited financial results for 2025, becoming the industry’s first pre-disclosure of annual performance, ahead of listed insurers’ quick reports.

Data shows the company’s full-year net profit was 846 million yuan, up 19.66% year-over-year, with total assets reaching 125.024 billion yuan, a 22.5% increase from the beginning of the year. Meanwhile, the “Fumanjia C (Enjoyment Version)” dividend insurance lowered its guaranteed minimum interest rate to 1.25%, a 50 basis point drop from the industry mainstream 1.75%, becoming the first dividend insurance to fall below the 1.5% psychological threshold, sparking intense industry discussion.

On one side is the “top student” with improving performance; on the other, controversy over low guaranteed minimum pricing. Profit fluctuations, capital replenishment, executive changes, and pension strategies intertwine. This joint venture between COFCO and Aviva reveals its true nature, demanding deeper scrutiny.

Strategic Breakthrough in Low-Interest Environment

China Life’s 2025 operating revenue reached 9.225 billion yuan (based on old standards), down 65.6% year-over-year; net profit was 846 million yuan, up 19.66%; owner’s equity stood at 15.694 billion yuan, a 35.2% increase from the start of the year. These figures strongly counter doubts from 2023, when the company proactively set aside 3.4 billion yuan in reserve liabilities, causing net profit to plummet from 900 million yuan to 29 million yuan.

Risk control indicators further highlight its prudent nature: core solvency adequacy ratio at 192.95%, comprehensive solvency adequacy ratio at 275.63%, both well above regulatory thresholds; in 2025, it received AAA risk rating for two consecutive quarters, and its overall risk rating has maintained A-level for 37 consecutive quarters, representing the highest regulatory endorsement for long-term compliance and risk management.

In terms of capital replenishment, from 2024 to 2025, it issued a total of 4.5 billion yuan in perpetual capital bonds, with both issuer and bond credit ratings at double AAA. This is not a sign of capital shortage but a routine industry method to supplement capital, reserving space for future equity investments and pension strategies.

What truly ignited industry attention was product innovation. The “Fumanjia C” adopts a “1.25% guaranteed + floating dividends” structure, with a demonstration interest rate of 3.9%. Guarantee income accounts for only 32%, with 68% of returns relying on investment performance, marking a shift of dividend insurance from a “fixed income substitute” to a “floating return instrument.”

Against the backdrop of long-term 10-year government bond yields hovering around 1.8%, lowering the guaranteed minimum interest rate essentially relaxes investment constraints, reduces interest spread risks, and provides more flexible investment space. This is a proactive response by the life insurance industry to the low-interest environment.

China Life’s move reflects a broader industry transformation. The dynamic adjustment mechanism for the guaranteed interest rate in 2025 has been implemented, with the upper limit of dividend insurance rates reduced from 2.5% to 1.75%. High guaranteed liabilities can no longer be covered by investment returns, and interest spread risks have become a major hidden danger.

China Life’s reduction to 1.25% is a natural response to the interest rate cycle. By lowering liability costs, it reallocates funds into high-dividend equities, REITs, and other assets, creating room for long-term dividends.

Exploring “Insurance + Elderly Community”

Strategically, China Life focuses on the demographic trend of aging populations and the construction of the third pillar of pension systems, making pension finance a key long-term development direction. In the pension sector, China Life launched the “YOUNG Plan” for health and wellness as early as 2022; on its 23rd anniversary, it created the “Yueyang Healthy in China” brand. It aims to build a full-chain ecosystem of “Insurance + Health + Pension,” seizing the second growth curve in the aging era.

On the product side, it targets core insurance types such as commercial pensions and exclusive pension annuities, tailoring products to meet diverse elderly needs, balancing guaranteed protection and wealth appreciation, while exploring “Insurance + Elderly Community” linkage models to break the limitations of single products.

On the service side, leveraging COFCO Group’s full industry chain resources, it has developed specialized customer management scenarios like “COFCO Wealth Courtyard,” implementing high-frequency value-added services such as daily health management, pension planning, and home-based elderly care, covering the entire lifecycle needs and making insurance protection more warm and practical.

In investment, it fully leverages the long-term, stable nature of insurance funds, engaging in equity investments, public REITs, and other diverse forms to deeply penetrate high-quality elderly health industries and supporting infrastructure, fostering a virtuous cycle of capital and industry.

This approach not only solidifies the foundation for pension business development but also promotes the long-term growth of the elderly industry, transforming the company from a traditional insurance service provider into a comprehensive, full-cycle elderly care service provider, carving out a differentiated competitive track amid low interest rates.

Promoting “Shared Returns” Is Key

It’s worth noting that China Life’s high solvency allows an allocation limit of up to 40% in equity assets, providing conditions to enhance yield flexibility. In a low-interest environment, with declining deposit and wealth management returns, customer demand for stable appreciation insurance surges, expanding the market space for dividend insurance and creating a favorable environment for transformation.

Despite strong performance and shareholder support, China Life’s transformation faces challenges. The biggest is the uncertainty of dividend payout rates. The “1.25% guaranteed + 3.9% demonstration” model ties returns closely to investment performance. If capital market volatility intensifies, dividend payouts could shrink, risking trust, especially since most customers still view dividend insurance as a “fixed income-like” product.

Management governance also faces growing pains. In 2024, the former chief actuary was investigated over historical issues—though not affecting current operations, it impacted reputation. With new core leadership in place in 2025, team integration and strategy execution still need time to prove.

Product transformation and sales friction are also significant. The low guaranteed minimum means customers bear more risk, and market education is still insufficient. Customers preferring guaranteed returns may turn to deposits or government bonds. How China Life communicates the “shared returns” concept to channels is crucial.

Volatility in surrender rates and product iteration pressures cannot be ignored. In Q4 2025, China Life’s overall surrender rate increased, with some universal life policies experiencing notable withdrawals. Frequent product updates may cause discomfort among channels and customers, affecting renewal quality. The risk of interest rates falling more than expected is systemic; if long-term rates drop below 1.8%, it will squeeze investment returns and pricing space, testing long-term operational resilience.

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