(Bloomberg) — China Life Insurance Co., the nation’s largest life insurer by market share, said profit rose 11% in the first half as an improving stock market boosted investment returns.
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Net income climbed to 38.3 billion yuan ($5.4 billion), from 34.6 billion yuan a year earlier, the Beijing-based company said in a filing to the Shanghai stock exchange Thursday.
China Life joined competitor Ping An Insurance (Group) Co. in reporting bigger profits for the period as a recovery in the nation’s equity market underpinned their investments even as bond yields fell. Demand for savings products and lower distribution costs helped boost policy sales and profitability.
The company booked 47.8 billion yuan in fair-value gains on financial assets, almost 15 times the gain a year earlier, while net investment income rose about 2% to 92.4 billion yuan, according to the statement. The CSI 300 gauge rose 0.9% in the first half after recovering from a meltdown earlier in the year.
New business value, which gauges the profitability of new life policies sold, expanded about 19% for the period, slowing from a 26.3% jump in the first quarter.
What Bloomberg Intelligence says:
“China Life’s new-business value is poised to rise 15-20% in 2024, we calculate, above consensus’ 10% after a 19% gain in 1H. Pricing adjustments and commission controls in bancassurance will boost new-business margin, along with a better product mix in 2H.”
-Analyst Steven Lam
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China Life will “pro-actively” buy stocks that are undervalue as part of its bid to be a long-term investor, Vice President Liu Hui said during a briefing on Friday. The firm sees opportunities in technology innovation, advanced manufacturing and green development, she added.
Ping An last week reported a nearly 7% increase in net income and 11% growth in new business value. A recent regulatory move to lower assumed interest rates used in pricing life policies will have a “positive” impact on the business by lowering liability costs, Co-CEO Michael Guo said.
China Life rose as much as 7.5% in Hong Kong on Friday, outperforming the benchmark Hang Seng Index’s 2.3% rise.
(Updates with executive comments from sixth paragraph.)
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