Decoding the "Giant Wheel" of Insurance Capital: Taikang's Active Contraction

For many years, Taikang Insurance has firmly held the "top seat" among unlisted insurance companies, and it is now entering a period of transformation and adjustment.

In 2024, Taikang recorded revenue and net profit of 327.063 billion yuan and 15.16 billion yuan, with growth rates of 17.23% and 20.63%, respectively.

Behind the upward performance are numerous personnel adjustments and preparations since 2023.

At that time, several branches of Taikang underwent personnel changes, with founder Chen Dongsheng personally taking on the role of Chairman of Taikang Pension, and his son Chen Yilun taking over the Taikang Fund business;

After Chen Dongsheng took office, he embedded the model of health and wellness services into the dual structure of liabilities and investments, refining it into "new life insurance," which he views as key to breaking through industry challenges such as declining interest rates and "asset shortages."

Taikang's current business can be divided into three major sectors: insurance, asset management, and medical care;

Although the overall performance under reform has stabilized, the life insurance, pension, and internet property insurance companies within the insurance sector have shown lackluster performance.

Among them, Taikang Life's revenue and net profit growth rates were 17.83% and 8.88%, respectively, with profit growth shrinking by 10 percentage points compared to the same period last year, significantly lagging behind peers in the context of a "dual bull" market for stocks and bonds;

Taikang Pension's losses have narrowed but still amount to 1.4 billion yuan;

Taikang Online's profit has increased by nearly 60%, but the overall profit is only 77 million yuan, contributing little to the group.

The fatigue in profits within the insurance sector is the result of multiple factors, including poor investments, business transformation, and strategic adjustments.

Perhaps under performance pressure, Taikang's marketing branches, as "capillaries," are quietly shrinking.

According to statistics from Xinfeng, data from 2024 to April 2025 shows that Taikang Life has canceled a total of 359 branches;

Among them, 144 branches were closed in the first four months of this year, exceeding 40% of last year's total, making it the fastest shrinking major life insurance institution in terms of outlets.

Whether it is proactive defense during a downturn or passive closures during a decline, the still-decreasing number of branches may indicate that Taikang's adjustments are far from over.

"Capillary" Major Shrinkage

Although there are more than a dozen companies in life insurance, pension, internet property insurance, health investment, and asset management, life insurance has always been the core of Taikang.

In 2024, Taikang Life's revenue and profit accounted for 86.04% and 93.74% of Taikang's overall figures, respectively, making it the main source of performance;

The life insurance business is also the most critical part of Taikang's "new life insurance" strategy.

For a long time, the main contributor to the life insurance value chain has always been the interest spread loss on the asset side. Chen Dongsheng's proposal for the new life insurance model lies in introducing value-added services such as retirement communities beyond traditional insurance rights:

First, by enhancing customers' ability to pay for retirement services through insurance products;

Second, by promoting insurance sales through medical and wellness services;

Third, by alleviating "asset shortages" with high-return assets such as retirement communities, providing good investment returns to stabilize interest spreads.

Taikang has built insurance products like "Happiness Appointment" and retirement communities like "Taikang Home," binding specific insurance with eligibility for residency in retirement communities; HWP (Health Wealth Planner), a brand of high-performing agents specifically trained to have a comprehensive understanding of the company's business model and health care system, is responsible for connecting, marketing, and maintaining high-net-worth clients.

Both "Happiness Appointment" and HWP are operated by Taikang Life Insurance.

Since 2017, Taikang Life Insurance has consistently ranked first among non-listed peers in terms of revenue; starting in 2022, it began to surpass listed peers such as New China Life Insurance and Taikang Life Insurance, and has now entered the top three in the life insurance sector.

In recent years, the once vigorous momentum seems to have encountered a growth bottleneck—in 2024, Taikang Life Insurance's profit growth rate significantly declined by more than 10 percentage points to 8.88%;

During the same period, the top ten life insurance institutions in terms of revenue scale saw profit growth generally exceeding 30%, with New China Life Insurance, PICC Life Insurance, China Life Insurance, and AIA Life Insurance all surpassing 100%.

The profit differentiation among listed insurance companies may stem from differences under various accounting standards; however, among non-listed peers, its profit growth rate also ranks in the middle to lower tier.

In the face of performance deceleration, Taikang Life Insurance's branches have begun a continuous contraction.

According to statistics from Xinfeng, among the six leading life insurance institutions primarily using agents as their main sales channel, including China Life Insurance, Ping An Life Insurance, and Taikang Life Insurance, it was found that all companies are significantly cutting back on branch offices in 2024, with very few new establishments, showing a net outflow trend.

From January to April 2025, the contraction process of Taikang Life Insurance's branches intensified, with the number of branch closures surpassing that of other leading insurance companies during the same period, making it the leading life insurance company currently experiencing the most severe "shrinkage" of branches.

Contraction may also become a proactive defensive strategy.

The expansion of branches with excessive density has obvious diminishing marginal returns, and the costs saved by actively reducing can be better used for optimizing resource allocation.

During the difficult period of the American banking industry in the late 1980s, Seico Financial, in which Berkshire Hathaway invested, had already shown signs of contraction.

At that time, although Seico Financial held a large amount of cash, it did not exhibit an aggressive expansion posture.

In response to this action, Charlie Munger emphasized in his 1988 letter to shareholders, "Seico does not have a large number of branches. We realized earlier than our peers that opening more branches is not beneficial."

In Munger's view, the spread and cost control are more important than scale.

This may also reflect Taikang Life Insurance's current adjustments.

Taikang Life Insurance stated that as the consumption capacity and willingness in county and township regions decline, optimizing the branch network layout has become a choice for many insurance companies to improve quality and efficiency in third- and fourth-tier cities and below, where market capacity is limited; "As the strategy becomes more focused on core customer groups, Taikang Life has optimized and adjusted some branches in third-tier cities and below," Taikang Life stated.

For Taikang, which primarily targets high-net-worth individuals, such a choice is not surprising.

Just to obtain the qualification for residence in "Taikang Home," one needs to purchase the "Happiness Appointment" product with an insurance amount exceeding 2 million yuan; after moving into "Taikang Home," the total monthly rent and meal expenses are generally over 10,000 yuan.

The high insurance and service thresholds make it difficult to open up growth in lower-tier areas.

The improvement in financial technology levels has also driven the continuous enhancement of online service levels, complementing offline services.

Taikang pointed out that the company's online services are continuously upgraded, allowing customers to receive 24/7 online consultations, policy inquiries, and other services through channels such as the "Tai Life APP," Taikang Life's official website, official WeChat, and customer service;

Within the service network, nearby institutions can also take over the business of the withdrawn branches to meet the demand for timely service responses.

However, the short-term impact of branch closures is also significant.

In the first quarter of 2025, although Taikang Life led with a profit growth rate of over 200% among non-listed insurance companies, its revenue scale was surpassed by the continuously growing China Post Life;

Under the backdrop of transformation, Taikang Life seems to have made trade-offs between maintaining scale and ensuring profits.

Turning Losses into Profits in Pension Insurance

The challenges faced by Taikang Pension may be even greater.

In its past payment layout, Taikang Pension focused more on corporate services;

The service targets expanded from enterprises to employees and their families, providing full lifecycle pension, health, and medical insurance services while establishing public-to-public cooperation.

From 2013 to 2024, Taikang Pension's revenue has seen positive growth for 12 consecutive years, but the growth rate for 2024 sharply decreased by more than 20 percentage points to 0.5%.

The decline in revenue may be related to the transformation of core business.

At the end of 2023, the Financial Regulatory Administration issued a transitional policy with a three-year period, clearly stating that pension insurance companies can only operate four types of businesses: "insurance with pension attributes (annuity insurance, life insurance, long-term health and accident insurance), commercial pensions, pension fund management, and insurance fund utilization."

The short-term health insurance that once supported the rapid expansion of pension insurance companies has been phased out by policy.

Among the 10 pension insurance companies in 2024, four reported losses, with Taikang Pension's loss amounting to 1.4 billion yuan, second only to Ping An Pension.

Taikang stated, "Transformation will inevitably bring growing pains. The company has firmly focused on the main pension business and is gradually divesting non-core businesses such as short-term health insurance."

Now, Taikang Pension has begun to gradually stop selling separately underwritten Huimin Insurance and has exited from jointly underwritten Huimin Insurance.

Although the halt of multiple businesses has led to a certain degree of deceleration, Taikang still places a high emphasis on the pension insurance business. Starting at the end of 2023, Chen Dongsheng not only personally took charge as chairman of Taikang Pension; Taikang also injected 4 billion yuan into Taikang Pension in three phases in April and August 2023, and in April 2024 In the first quarter of 2025, Taikang Pension's premium decline narrowed, new business value increased, and net profit turned from loss to profit at 346 million yuan, showing significant growth.

Despite the performance recovery, Taikang Pension still faces potential threats from interest spread, expense spread, and mortality spread:

First, the investment performance is poor, with investment returns of only 1.38% and 2.18% for 2023-2024;

Second, costs remain high, with revenue expenditures increasing significantly by nearly 8 billion yuan in 2023, and still maintaining a high level the following year;

Third, as life expectancy continues to rise, the compensation amounts, scope, and duration of many insurance products may exceed the initial actuarial expectations.

All of these pose considerable challenges to Taikang Pension, which is currently focused on long-term business.

"New Life Insurance" A and B sides

Although the performance of various insurance subsidiaries has fluctuated, this cannot piece together the overall performance of Taikang.

The innovation of "new life insurance" lies precisely in embedding a new cycle achieved by service entities at both ends of insurance assets and liabilities.

Currently, the operational status of health investment industries and pension communities under Taikang has not been reflected in the financial reports of its insurance subsidiaries.

Although there are many life insurance companies laying out pension communities, due to the long investment return cycle and large investment amounts in the pension industry, there are not many players who can strategically allocate resources heavily.

In the longer term, a heavy layout in pension communities and health care strategies may become a comparative advantage for Taikang to lead its peers. Chen Dongsheng reiterated his firm belief in the blue ocean of pension in his 2024 publication "Strategy Determines Everything."

However, the biggest challenge also comes from this.

The "Taikang Home" reference to the "Continuing Care Retirement Community (CCRC)" model for pension communities has indeed been successfully validated in the aging process in the United States;

Whether it can be replicated in future China still requires a longer time for verification.

On one hand, the stronger cultural inertia of settling down and returning to one's roots in China has become a potential reason for the current "9073 pattern" in the pension market (90% home-based care, 7% community care, 3% institutional care);

Whether the market demand for institutional care can be exponentially released in the future, and whether the existing pension enterprises can withstand the temporary vacancy pressure, remains unknown.

On the other hand, insurance companies entering the market to build hospitals and train teams need to overcome significant barriers;

For example, previous conflicts between residents and service teams have occurred in "Taikang Home" communities in Shenzhen, Ningbo, and other places.

All of these require Taikang to innovate and control more product details of health care services while maintaining strategic stability.