How did Dongwu Life Insurance and Tongfang Global Life Insurance achieve over a 30-fold surge in performance by 2025?

Ask AI · Why do experts pay more attention to new business value (NBV) metrics?

Interface News reporter | Feng Lijun

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

Interface News reporters noted that Dongwu Life and Tongfang Global Life saw year-over-year net profit increases of 3813.67% and 3448.83% respectively in 2025, making them the top two among the 58 life insurers in terms of the largest net profit growth.

Industry analysts believe that their “skyrocketing” net profit growth is related to factors such as switching accounting standards, reduced impact from impairment provisions, and phased operational improvements.

“During the transition period for accounting standards, the comparability and explanatory power of net profit as a single indicator will decline, especially when comparing across years and standards, as it is more susceptible to changes in accounting treatment.” Professor Junsheng Zhu, a postdoctoral researcher in applied economics at Peking University, told Interface News that overall, the evaluation framework should shift from a “profit results-oriented” approach to a comprehensive assessment that emphasizes both “value creation and risk management,” to better reflect the true operational status of insurers.

**** Tongfang Global Life’s 2025 switch to new accounting standards****

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

From 2022 to 2025, Tongfang Global Life’s net profits were 57.6583 million yuan, 29.2514 million yuan, 35.7628 million yuan, and 1.269 billion yuan respectively. The fluctuation in net profit in 2025 compared to previous years increased significantly, and it was also in 2025 that Tongfang Global Life switched to new accounting standards.

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

“Simply put, under the old standards, stock price increases were not included in net profit but were reflected in changes in net assets.” Xu Yuchen, a founding member of the China Society of Actuaries and a senior actuary, explained to Interface News: “Previously, if a stock asset appreciated from 10 billion yuan to 12 billion yuan, that 2 billion yuan increase would not be recorded in profit or loss for the period, so it would not enter net profit; it would only affect net assets. Under the new standards, if an insurer’s stock assets are classified as FVTPL (financial assets measured at fair value with changes recognized in profit or loss), then the appreciation portion will be included in net profit. This significantly impacts net profit.”

“Additionally, in recent years, its insurance business revenue has continued to grow, and changes in business structure and investment performance may also support profit levels,” Zhu Junsheng told Interface News.

According to data from the enterprise early-warning platform, Tongfang Global Life’s insurance business revenue 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 combined yield ratios were 4.30%, 5.71%, 17.93%, and -1.13%, respectively.

However, industry expectations suggest that Tongfang Global Life’s net profit increase of 34 times in 2025 is unlikely to be sustainable.

“Tongfang Global Life’s net profit increase of over 30 times this time is a one-time change under the circumstances of shifts between old and new accounting standards,” Xu Yuchen told Interface News.

Zhu Junsheng analyzed that, under this “cross-standards” context, such high growth rates have certain phase and accounting scope effects and do not fully represent the year-over-year improvement in the company’s fundamental operations. Whether this performance can be sustained depends on the ability to create new business value, the stability of investment returns, and the level of liability cost control.

**** Dongwu Life’s “skyrocketing” performance influenced by multiple factors****

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

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

Data from the enterprise early-warning platform shows that Dongwu Life’s net profits from 2022 to 2025 were 41.1588 million yuan, -1.785 billion yuan, 2.16047 billion yuan, and 846 million yuan respectively. The 38-fold increase in 2025 was based on a small base of 21.6 million yuan in 2024. During the same period, its insurance business revenue was 7.995 billion yuan, 9.538 billion yuan, 9.957 billion yuan, and 9.653 billion yuan; its combined yield ratios were 1.56%, 2.78%, 7.47%, and 3.41%, with both indicators declining in 2025 compared to 2024.

Specifically, Dongwu Life’s large loss in 2023 was due to pressure on both liabilities and assets: on one hand, asset-side issues mainly stemmed from low bond yields and weak equity market performance; on the other hand, the 750-day government bond yield curve continued to decline, leading to increased reserve provisions, which significantly raised costs in financial statements and had a major impact on accounting profit.

In 2024, Dongwu Life returned to profit, but the impact of increased reserve provisions due to falling government bond yields persisted. A work meeting at the beginning of 2025 revealed that in 2024, the decline in government bond yields led to an increase in reserve provisions by about 900 million yuan.

“Under the old 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 yield. Since the yield rose in 2025, at least it halted the downward trend, which helps reduce the impact of increased reserve provisions,” Xu Yuchen explained to Interface News.

“Dongwu Life’s significant net profit increase in 2025 may be due to multiple overlapping factors,” Zhu Junsheng told Interface News. “First, low profits in previous periods created a low-base effect, greatly amplifying the year-over-year growth. Second, phased relief from reserve provisioning pressure may have positively contributed to profit realization. Third, changes in measurement and recognition methods due to the switch to new standards may also have caused some profits to be recognized in the current period.”

“Additionally, operational factors such as improved investment returns, expense control, and business restructuring may also support profits,” Zhu Junsheng added. “Therefore, this high growth rate more likely reflects a combined result of the ‘low-base effect + accounting adjustments + phased operational improvements.’”

**** Emphasis on multi-dimensional analysis****

In 2026, insurance companies will fully implement the new accounting standards, and fluctuations in net profit and net assets will be further magnified. Under this context, which indicators should life insurers focus on more?

“Because of the particular nature of insurance companies’ operations—especially life insurers—companies generally do not pay special attention to net profit performance,” Xu Yuchen told Interface News. “Compared to net profit, I pay more attention to new business value (NBV), which measures how much future discounted benefits the new policies signed in the past year will bring to the insurer over the next two or three decades. Similarly, embedded value is a more rational way to view an insurer than net assets: it adjusts the value of existing business above net assets to reflect the company’s true value.”

“When evaluating an insurer’s operational condition, a multi-dimensional analysis should be emphasized,” Zhu Junsheng told Interface News. “First, focus on the value-creating ability of the insurance business itself, such as NBV and its growth trend. Second, assess liability-side quality, including reserve adequacy, product mix, and cost levels. Third, evaluate investment performance and its volatility, in conjunction with the comprehensive yield ratio. Fourth, pay attention to solvency, capital adequacy, and risk management capabilities. Fifth, incorporate long-term profitability indicators, such as embedded value and its growth.”

According to data from the enterprise early-warning platform, in 2025 Tongfang Global Life’s NBV was 528 million yuan, with a new business profit margin of 10.04%; its core solvency adequacy ratio was 121%, down 56 percentage points from 2024; its comprehensive solvency adequacy ratio was 164%, down 64 percentage points from 2024; and its investment yield was 4.45%, an increase of 0.64 percentage points year over year.

During the same period, Dongwu Life’s NBV was 733 million yuan, with a new business profit margin of 11.46%; its core solvency adequacy ratio was 105.56%, down 85.17 percentage points from 2024; its comprehensive solvency adequacy ratio was 205.78%, down 11.89 percentage points from 2024; and its investment yield was 3.79%, down 1.26 percentage points year over year.