VP, CIO and CFO of CPIC Group and Mr. Li Jinsong, General Manager of CPIC Life. First of all, Mr. Su Gang will give you introduction of the results in the first three quarters. We'll have a Q&A session. I'll give the floor to Mr. Su Gang.
Good afternoon, ladies and gentlemen. I'm the CFO of China Pacific Insurance Group, Su Gang. I'll give you a brief introduction of the results of our first three quarters. Guided by China's new term measures for insurance industry, we played our role as a social stabilizer and safety net while focusing on core businesses. We deepened our reforms to risk switch from old to new growth drivers and we have seen steady progress. In the first three quarters, our insurance revenue was RMB 216 billion, up 3.6% YoY.
Supported by insurance performance and investment gains, our net profit reached RMB 45.7 billion, up 19.3%, and our OPAT stood at RMB 28.4 billion, up 7.4%. In terms of our business lines for the life insurance, our CPIC Life company deepened its Changhang Transformation program while focusing on customer centricity, product service integration and agent empowerment. In the first three quarters, CPIC Life's total premium income was RMB 263.8 billion, up 14.2%. Its new business value was RMB 15.3 billion, up 31.2% YoY. CPIC Life continued to deepen its diversified channel development. The agency channel focused on customer centricity for differentiated customer development and improved the capability to sell par life insurance. It strengthened team building with initiatives such as the CPIC Elderly Care and the Wealth Planner program to recruit high quality new agents. Agency also focused on empowering high performing agents and teams.
In the first three quarters, the agency premium income was RMB 184.3 billion, up 2.9% YoY. The share of the mid to high end customers grew by 4.8% compared to last year. The business mix also improved. The par life insurance made up 58.6% of total regular premium new business. Moreover, agency stabilized its total headcount with 181,000 agents on a monthly basis on par with last year. The monthly average FYP per agent per core agent was RMB 71,000, up 15.6% YoY. For the bancassurance channel, it focused on customers' need, bank customers' need for wealth management and health and retirement. It continued to improve product offering, customer operation and team capacity building empowered by digitization. In the first three quarters of this year, bancassurance channel delivered RMB 58.3 billion in GWP, up 63.3% year on year, of which regular premium new business reached RMB 15.9 billion, up 43.6% year on year.
For the group channel, he played up his strength to boost the business back employee marketing or the BBE channel and the coverage of the inclusive insurance. In the first three quarters, its GWP was RMB 16.29 billion, up 12.2% year on year, of which the regular premium new business from the BBE module reached RMB 1 billion, up 15.6% year on year. For CPIC P&C, it continued to improve its business mix and customer operation while boosting technology empowerment and AI application. It also made great efforts for disaster prevention to reduce risks and safeguard its progress. For the auto insurance, we can continue to improve the big business mix, improve business quality control and innovate NEV new energy vehicle products and services for non-auto business. Guided by national strategy, we strengthened basic management and business development, improved the business mix and risk management.
For the agricultural insurance, more products were offered to cover the total cost of China's staple food and the major agricultural products. We also launched innovative products to refine the models and effectiveness of agricultural insurance. In the first three quarters, CPIC P&C recorded RMB 160.2 billion in GWP, up 0.1%, of which auto insurance accounted for RMB 80.46 billion, up 2.9%, and due to our proactive adjustment of business mix, non-auto GWP was RMB 79.74 billion, down 2.6% year on year. The combined ratio was 97.6%, down 1 percentage point year on year. On asset management, we pursued disciplined and yet flexible TAA under the framework of long-term SAA based on long-term asset-liability matching. We effectively allocate long-term fixed income assets to extend asset duration and actively managed equity investment by focusing on low valuation, high-dividend stocks and delivered solid returns thanks to our diversified investment strategy.
By the end of Q3, the group's investment assets approached RMB 3 trillion, up 8.8% year on year. In the first three quarters, unannualized net investment yield was 2.6%, down 0.3 percentage points, and the unannualized total investment yield was 5.2%, up 0.5 percentage points. Looking ahead, we will continue to pursue high quality growth, enhance our capabilities to create value, focus on the five financial priorities of China's financial market, and strive to build CPIC into a world class insurer with international competitiveness. That ends my presentation. Thank you.
Now let's start the Q&A session. Please listen carefully to how you can ask the questions. If you want to ask a question, please press star and one, star one, to queue for question. Please identify yourself and your employer before asking questions. You may ask no more than two questions. We have number one question from Dongwu Securities.
Thank you. Thank you for the presentation. It's a very timely result announcement and congratulations on your good performance. I have two questions actually. Number one is on the liability side. As we can see, many insurance relied on bancassurance for fast growth, and many of them have completed their targets for 2025. What about the liability side for next year, given the high benchmark or the high basis for this year? You also mentioned on the agency side, you mentioned that your par life accounted for close to 59% for the agency channel new business sales. How about the percentage for bank channel? The second question on the investment side, for the first three quarters, as we see the total investment yield is 5.2%, quite high. What about the future for SAA and for SAA, what's your view on the equity side? What's your strategy and what's your judgment? How about your movement for the bond investment? What's your TAA or what's your SAA regarding your allocation for the equity side?
Thank you.
I'm Li Jinsong from the CPIC Life company. I'll answer your first question. First of all, on the outlook for 2026, two points. Number one, for the agency channel or the individual business, compared to our peers, our judgment is pretty much the same. We talk to them on a regular basis. First of all, the regular premium business will give us positive growth. We agree on this. In terms of the percentage, I believe it might grow by 5 %- 10% next year. Regular premium business growth next year, maybe Q1 will grow faster than Q2, and Q3 will be a low point next year for the agency new business value. We also want positive growth. In terms of the bank channel, bancassurance channel.
Currently, as we talk to peers and as we talk to bank partners, based on our own situations, we believe the total next year, I mean the next year, the regular premium business will grow at the same pace as this year, maybe at 10%. We believe CPIC Life will grow faster at 20 %- 30% and NPV will grow even faster than the 20%- 30% range. In terms of our main products for life company as a whole, if you look at the par life and the variable products, we believe traditional insurance will be, I mean as a percentage, will be smaller than 50% of the total. Of course, if we look at the customer needs and product diversification, I wouldn't say that. I wouldn't want. I wouldn't say that arbitrary percentage would be good or bad for the company.
This is so much about the business or product mix. We will look at the overall situation and customer needs. To be more specific, the business or product mix will be more diversified. For CPIC, maybe we are the only company that are going to launch unit-linked products for high net wealth customers and it will be combined with traditional incremental whole life plus whole life annuity products. We will sell them as kind of a sort of bundles. For bank channel, product offering will be more diversified. For example, we have different segments of customers, for example including private bank customers and mass bank customers. For private bank, we will want higher end products. On the whole, participating insurance will be the main within the main products to be coupled with traditional annuity and incremental whole life.
Now in terms of the share of regular premium, share of par insurance in the bank channel. In the bank channel, no, actually the. Our share is 27.7% for the par insurance products and actually you see we rank number two among our listed peers. 70%. I mean in October, 70% of our products are par life for the year for the single month. Now the second question on investment, I believe the market is having a lot of uncertainty at the moment. We see a lot of high level talks both inside and outside China. A lot of factors affecting the market and also giving us a hint of the future directions for China in the next five years. Of course, giving all these kind of very well complex situation and the long term issues, for example aging society.
The company need to look at our own situation, the profile of our own liabilities. For example, we need to study well, keep doing the research to have a mechanism to match liabilities with assets on a long-term basis. Given our profile of our liability, we would say different insurers will have different mechanisms to match assets with liabilities, hence different SAA and the TAA. For China Pacific Insurance (Group) Co Ltd, we have a so-called net investment yield plus model. We look at SAA and the macro economy and the long-term judgment to come up with our specific investment strategy for fixed income assets. Fixed income assets, we would want to be prudent and be the long term. For example, 10-year treasury bond will be running at a certain range. We believe it will go down at a slower pace. Going forward, we will be more active.
We will seize upon the opportunities when the bond, when the credit bond recover. We look at this kind of innovative, innovative fixed income assets, for example ABS and REITs. These will help us to drive up our investment yield so they can offer a sort of a buffer for our net investment yield. For equity side, we need to be prudent, we need to maintain our strategy that is to seek high-dividend equities because this strategy allows us to capture long-term high return from this kind of high-dividend payout stocks with promising potential. In this way, we can not only get the dividend payment but also share with the growth potential of those companies. If we look at the last 10 years, this strategy gives us a return much higher than the market benchmark. We are going to have this kind of a satellite strategy.
For example, we are going to utilize our CSI style indexes, for example the CSI CPIC Active Stock Index Fund. Using this kind of tools, we can generate positive growth, positive investment yield contribution. We need to also flexibly adjust our exposure, style exposure, and we need to frequently adjust this kind of active and passive strategy. We need to balance domestic and international strategy and allocation so as to achieve higher yields on the long term. Thank you.
Now let's welcome the next question. Next question comes from Guotai Haitong Securities.
Thank you for the opportunity. I'm from Guotai Haitong Securities. I have two questions. Number one about asset and the other on liability. You have given us a very detailed sharing. In terms of bank, you had a lot of newly opened outlets. Could you give us more details? I mean regular premium grew fast and this year.
How much of it come from new outlets and how much come from existing outlets? This for 2025 and what about your future prospect on 2026 in terms of opening new outlets, bank outlets? Second question on investment side. As we know a lot of insurance companies have increased their allocation on equities. My question is going forward, what's your strategy specifically about this kind of high growth stocks? The share of TPL, is it going to increase? Thank you.
Thank you for your questions. Let me answer your questions. First of all, the bank channel question. In 2025 in terms of the growth, I believe it is a multi-pronged effort. The channel is making a great effort as we can see in 2025 in terms of regular premium business. This kind of state-owned big banks have made great contribution.
The share of those banks grew by 22% last year to 33% this year. I would say the growth of outlets mainly come from state-owned banks, especially ICBC, CCB for example. That's the outlet. Secondly, the growth comes from the teams, the bank team sales team which grew by 20%. Productivity of those team also grew by 20% per sales agent, per salesperson. These kind of factors combined gave us quite rapid growth in terms of the NPV from bank channel which almost doubled in the first nine months. What about next year? The growth of bank outlets for 2026, I would believe that will still be our strategic focus for next year. If we look at the pathway for growth, the growth of a case size, of course we want that to maintain. The growth of outlets would still come from state-owned banks.
There's a lot of room for growth. For example, for ICBC in our outlet, the total number of our ICBC outlet only accounted for 5% of ICBC's total outlets. We would want the 5% number to go up to maybe 7% - 8%. I would believe there's still a huge room for growth, maybe a growth of 30% - 40% in terms of new outlets. Of course for the state-owned banks the case size is relatively lower. In this regard we would want the case size of the joint stock banks to go up. Case size will remain flat but the number of outlets will go up definitely. In terms of team growth, we believe next year will grow by 30%. That is to say the total headcount will grow to 6,200 from the 4,600 this year.
The second question about the investment side, first of all the view on growth stocks, high growth stocks, I believe we need high quality growth. China's growth would rely on the growth of high technology. We need to balance, we need to have a balance not for CPIC, as I mentioned, we have a CSI CPIC Active Stock Index Fund. That is a good tool for us to gauge the different styles so that we can better identify the change of Asia market, the different styles, what is working, what is not working, etc. We believe we're going to look at opportunities especially in terms of science and technology, innovation, energy transition, health and medicine and rare resources, etc. You see our comprehensive investment yield was 5.4%, up by 0.4 percentage point.
I would say CPIC has already seized upon the high growth stocks so that our investment return was better than our peers. Going forward, we need to, for example, look at a more prudent way in terms of accounting treatment. As you mentioned, the share of TPL now TPL share TPL will impact our yearly profit. Now we have a quite good total investment yield and we have got the trading gains and also the fair value change gains. I mean this kind of changing gains and the fair value changes made positive contribution to our 5.2% total investment yield. For insurance companies, the share of TPL need to be prudent. The share of OCI. The increase of the share of OCI is going to be very likely.
We need to have a very balanced strategy between TPL and OCI so that we can in the long term better match liability and assets. Thank you.
Let's welcome the next question. The next question comes from Morgan Stanley.
Thank you. I'm Zhao Yao from Morgan Stanley. I have two questions, number one on life and the other on P&C. As you mentioned for 2026, your share of health products will improve, will increase. Could you give us some more details on what drives the growth in health products? Are you going to have more new products? For example, previously you sold a lot of critical illness products. Second question for P&C, combined ratio is close to 100% in Q3, could you give us a breakdown how much of it is because of the catastrophe and what about other kind of risks and losses? Thank you.
Let me answer your questions. For health insurance products, the share will go up in 2026. That is because we look at the customer needs for health insurance. A lot of big demand in China for health insurance. Also in terms of Chinese policy, we look at a lot of high level policies issued from the Chinese government. A lot of it about the health insurance, about long term care insurance, etc. All these policy support give us more opportunity to further develop health insurance business. Number one, the release of recent documents gives a lot of big support to the growth of a health insurance business because as you can see over the past 20 years. I would say this year's policy support is the biggest in the last 20 years or so. Secondly, apart from government support, we also have this kind of demand from customer needs.
As of now we have already products for disease, medical compensation, disability, long term care and we also have this kind of differentiated customer development. We have two focus number one on critical, this kind of a whole life critical illness for both adults and the juveniles. We also have this kind of a term critical illness products. For medical products we have this kind of mid end, high end medical products and also this kind of medical insurance for clinical diseases, etc. I would say we have a quite rich product offering in terms of health insurance. Moreover, in terms of our distribution channels, previously health insurance was sold by agents and they mainly sold CI products, critical illness products. They sell this kind of CI products to mass market. To change that, we were going to make some adjustment for the channel.
First of all, for 2026 we're going to do more promotion for CI products. We hope to drive the share of CI sold by agents to 10%. Secondly, we're going to start selling participating CI products as long as government policy is finalized. Also, we are going to focus on group health insurance products in 2026. That will be another area of focus for CPIC because Chinese government has also made a policy encouragement in terms of long term care health insurance products. This will have also some influence on the selling of health insurance from the group channel. Thirdly, we are going to promote sales of health insurance through the Internet. I mean the Internet can reach out to a lot of people. Fourthly, the bank channel will also be utilized to sell health insurance because we have a lot of private bank outlets.
These customers, they have a big demand for high end health insurance products. Thank you. I hope that answers your question.
Now what about Q3's combined ratio?
Now some challenges. Number one, new energy vehicle, there's still some uncertainty on that in terms of combined ratio. Of course, we are making some innovations to reduce the combined ratio of new energy vehicle business. If we look at the results, we have profitability for the new energy vehicles owned by households, but on the whole we are still making a small loss and credit guarantee. Credit guarantee business also gave us a negative impact at around 2% - 2.5% in terms of combined ratio. Going forward, we will continue to better manage this kind of business quality, but if we look at the whole year, we believe the whole year combined ratio can continue to improve.
Let's welcome the next question.
Thank you for your presentation.
I have two questions. As you mentioned, next year health insurance business will be sold by agency, but what about your agency headcount and the productivity? Because we know the rate filing integrity regulation is having a big impact, so we would like to know more about your agency channel. That's number one. As you mentioned, our 10-year interest rate is still going down slowly. What's your bond investment strategy? What's your allocation? Are you going to extend your asset duration to narrow the gap now? You also mentioned that you're using the trading of bonds to increase the investment yield. How are you doing on that front?
Let me answer your first question. I would say on the whole for this year, for the agency channel, in terms of the overall growth, in terms of total headcount, it's on par with last year.
Compared to last year, pretty much the same, that's on the total headcount. If we look at the structure of agency this year, our core agents, the productivity and also income, I mean in terms of the income, that is 71,000, up by 16%, and the quality of our new agents also improved in the first three quarters. If we look at the new agents, we see a growth of a number of new recruits. We believe going forward the total headcount would stabilize and remain at a reasonable level. Let me share with you some more specific numbers. As I mentioned, if we look at the core agents for the first nine months, the average FY first year premium is growing quarter by quarter. For example, for Q3, the per agent first year premium for new business grew by 11%.
I would say on the whole the per agent productivity is improving. I believe we buck the trend compared to our peers because in Q1 they are experiencing a lot of negative growth. We grew quarter by quarter, but it's not the same for our peers. In Q3 we actually recorded a double-digit growth in terms of core agents. The mid-tier agents also demonstrate the same trend. Going forward, next year I believe it will stabilize in terms of total headcount and production, and the share of core agents and the productivity of core agents will both go up.
Thank you. Let me answer your bond investment strategy. First of all, how should we view the duration gap? Of course, duration gap is a core issue, a core KPI for asset-liability matching. Previously we pursued a dumbbell investment strategy. Our duration gap is already at a reasonable level.
Be it adjusted duration gap and effective duration gap, we should mainly look at the effective duration gap. Why should I say that it's a reasonable level? If we pursue a zero duration gap, it's not necessarily the best policy to fend off long-term duration risks, because it basically eliminates the possibility of getting higher yield from duration gap. As I mentioned, given the level of interest rate in China, when it goes down, invariably there will be some kind of uptick or recovery. We believe these are opportunities, pockets of opportunities for us to conduct TAA, be it credit bonds or interest rate bond. We would seize upon this kind of phase of opportunities. We are trying to explore the various trading policies, trading strategies for bond assets so as to seize upon this kind of vital opportunities.
As we mentioned in terms of ETF funds, it might be a good direction for investment so that we can utilize this kind of very good bond investment capabilities on the market to make up for our own shortcomings.
Thank you. Let's welcome the next question.
Thank you. Thank you for the opportunity. I have two questions now. The OPAT for the first nine months, is there any changes for OPAT? Secondly, about the whole year's dividend payout ratio, what's your take on that? You have very good net profit and for your core solvency ratio for CPIC Life, it is going to go down to probably just above 110% in Q4, maybe because of the low interest rate in China. Anyway, your core solvency ratio, could you elaborate on that?
Let me answer your first question.
As of the end of Q3, OPAT grew by 7.4% year on year and actually was up by 0.3 percentage point compared to Q2, or the absolute number of OPAT is RMB 28 billion. Now, it's because we are doing very good in terms of business control and also in terms of risk reduction and for life. Given this kind of, given our efforts to control the cost and improve our business quality, our profitability is improving. We believe it will continue so that both P&C and the Life will contribute positively to OPAT. In terms of dividend for 2020, I believe the board has already announced our strategy. It will be based on OPAT. It will also look at our business performance and also our solvency and also pay attention to the capital market so that we can give investors returns which is more in line with their expectations.
Now, on the solvency issue, let me give you a brief answer. Thank you for your concern for solvency ratio. Core solvency ratio is a very important indicator for our long-term business performance. We pay close attention to the core solvency ratio number. We have already formulated the plans. We are going to not only be supported by the group, CPIC Life will also pay close attention to improve.
Let me just add the regulators are refining the planning plans for C-ROSS phase II. For CPIC Life, as of now, I believe we are on a positive trend. Now, as you have noticed, we have issued convertible bonds to the tune of RMB 15 billion, so the group solvency ratio is already still very high, but based on our judgment of the market, we believe, and also considering the need of future development, we issued this bond to replenish our capital.
Now, we issue this kind of convertible bonds, which is quite convertible securities, convertible shares, it's quite popular move for the market, and I believe this is also positive for the capital needs for our subsidiaries. In the interest of time, we can only allow for one last question.
The last question comes from the Guangdong Development Securities.
Thank you for the opportunity to ask questions. I have two questions. Number one, on asset and the other on the liability side. As you mentioned, in 2026 the regular premium business will grow by maybe 10%, and in Q3 we see a termination of old products. Now, can you maintain growth on top of the high baseline in Q3 this year? Why can it grow? Is it because of the demand from customers or is it because of the team capability? That's number one.
Secondly, as we can see, for the first three quarters, your net investment yield dropped by 0.3 percentage points. What is the reason? Is it because of a new investment, reinvestment? What about the future, the future trend for the net investment yield? Thank you.
Thank you for your question. Now let me just share with you some of our outlook and the reasons for our outlook. First of all, if we look at our business model to promote our agency channel, we are different from peers. Maybe peers are product-oriented or team-oriented, but we focus on product and channel and also customer needs. We focus on six factors. Number one, total headcount. We believe for the grand opening, the total headcount will be the same next year versus this year. I believe we will be the same for the whole industry.
Second factor is whether we can reach out to more customers. Now we believe it will, I mean our agents will be able to reach out to slightly more customers next year. Thirdly, conversion rate, conversion ratio. Of course, this will take a lot of training, long-term training and skills, a lot of skills. We believe conversion ratio will grow up slowly. It's not a quick fix. The fourth factor is the number of cases sold by agents. This will be a focus for 2026. If we look at the existing customers, we have 90 million existing customers. Upsell will be a focus for next year. Fifthly, case size. Now, priority of CPIC Life is to move up the ladder of customer development. The share of mid to high end customers is moving up from Q2 and Q3.
You can see the share and the case size of our mid and the high end customer are going up. We believe case size will grow up quite fast next year. The sixth factor is the new business margin. I believe five of the factors remain flat, stable, and the case size will go up quite considerably next year. That is why we believe we can have a 5% - 10% growth. Thank you for your question. On net investment yield, I believe given this kind of low interest rate environment, we are taking active measures so as to be able to cross economic cycles. This is a key of our efforts. CPIC pays a lot of attention to the stability of various, all kinds of investment yields. We need to, of course, maintain stable stableness of a net investment yield.
10-year treasury bond, 10-year interest rate went down a lot in the last five years. The fixed income, I mean new investment of fixed income assets is of course much lower than the yield from existing fixed income assets. To cope with this kind of negative impact, we are taking a lot of measures. First of all, we are extending our allocation into long-term bonds. Secondly, we are seizing opportunities for this kind of rebound and also utilizing ABS and REITs, this kind of innovative fixed income type assets. We are one of the few insurance companies that have a qualification for ABS and REITs license. We also have an investment arm in Hong Kong. Given this kind of diversified investment capabilities, we can maintain our leading position on the market and our dividend payout ratio is also good. We remain confident about proper management of our investment assets.
That ends the session for today. If you have any other questions, please contact our IR team after the meeting. Thank you.