From "Winning Licenses" to "Focusing on Profitability" Insurance company's equity valuation returns to rationality

Our reporter, Leng Cuihua

Recently, the results of equity auctions for two insurance companies have attracted industry attention. Among them, Ancheng Property & Casualty Insurance Co., Ltd. (hereinafter referred to as “Ancheng P&C”) had two equity stakes auctioned on Alibaba Asset Platform in its fifth auction attempt, which ended without bidders; China Three Gorges Life Insurance Co., Ltd. (hereinafter “Three Gorges Life”) had one equity stake that was initially unsold and will be re-auctioned at a lower price on February 27.

Industry insiders believe that these two cases of insurance company equity auctions reflect a shift in the capital market’s valuation standards for insurance companies—from focusing on license scarcity to emphasizing sustainable profitability and professional capabilities, driving insurance equity valuations back toward rationality.

Specifically, on February 10, the 200 million shares of Three Gorges Life held by Xinhuanet Holdings Co., Ltd. ended their first auction. Although the auction attracted 4,601 viewers, no bids were placed, and it was unsuccessful. On February 27, this equity stake will be re-auctioned with a starting price reduced from 202 million yuan to 161.6 million yuan.

Additionally, Ancheng P&C’s 181.5 million shares recently failed to sell in its fifth judicial auction on Alibaba Asset Platform. Public data shows that since its initial listing in November 2025, the starting price has been lowered from 290.4 million yuan, and the fifth auction’s starting price has been reduced to 191 million yuan, about 34% lower than the initial auction price.

In response, Zhu Junsheng, a postdoctoral fellow and professor of applied economics at Peking University, told Securities Daily that the repeated price reductions for some small- and medium-sized insurance companies’ equity, yet still failing to sell, reflect a change in the valuation logic of insurance equities. In the past, insurance licenses carried high premium expectations, but under current market conditions, investors are more focused on the sustainability of profits over the next 3 to 5 years, capital consumption, the quality of risk assets, and strategic synergy potential. The pricing of insurance equities is shifting from license-based valuation back to asset and cash flow valuation. If an insurer lacks a clear and stable profit path, the market’s valuation of its equity will tend to be conservative.

Looking at the operational status of these two insurers, Three Gorges Life has yet to turn a profit, with a net loss of 197 million yuan last year, and its insurance business income has been declining continuously in recent years. Ancheng P&C achieved insurance business income of 5.183 billion yuan last year, but net profit was only 29.8 million yuan.

In fact, from an industry perspective, the liquidity of equity for small- and medium-sized insurers has been generally limited in recent years.

Zhu Junsheng believes that the cooling of equity transactions for small- and medium-sized insurers is not only due to profit pressures but also reflects changes in the development stage of the insurance industry. Recently, the industry has shifted from scale expansion to high-quality development. The evaluation standards for insurance companies in capital markets have also moved from license scarcity to sustainable profitability and professionalism. Under stricter solvency regulation and increased capital constraints, equity investments in insurers often require ongoing capital injections, making investors more cautious. Additionally, some insurers have complex historical business structures and incomplete risk cleanup, increasing transaction uncertainties.

Guo Yinlong, Operations Director of AiShouPai (Shanghai) Business Consulting Services Co., Ltd., believes that as the insurance industry enters a deep transformation phase, investors are becoming more rational, focusing more on the insurer’s actual operations, asset quality, and profitability rather than just license value. For investors, acquiring an insurer’s equity means obtaining a license but also entails risks and costs associated with subsequent capital injections and helping the insurer turn losses into profits.

It is worth noting that the difficulty in transferring some insurance equities does not mean that capital interest in insurance equities has declined. Last year, several insurance equity transactions were successfully completed. Zhu Junsheng believes that future liquidity of insurance equities will show a structural differentiation: insurers with clear strategic positioning, sound governance, and competitive advantages in professionalism will remain attractive, while those lacking differentiation may see lower transaction activity.

Zhu Junsheng states that for insurance equities that frequently fail to sell, simply lowering prices is not the only solution. More importantly, insurers should optimize their business structure, clean up risks, improve governance transparency, or introduce long-term investors with industry synergy capabilities to enhance future certainty. If an insurer’s equity remains unstable for a long time, it could affect market confidence, management stability, and capital replenishment pace, thereby exerting pressure on its operations.

(Edited by: Qian Xiaorui)

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