China Life earnings surge 72.2pc on sharp premium growth
First-half profit beats forecasts as sales growth enables insurer to expand investment assets and returns
China Life Insurance, the mainland's largest life insurer, posted a 72.2 per cent surge in first-half earnings, powered by rapid premium growth and strong investment returns.
Net profit rose to 8.97 billion yuan or 33 fen per share in the first six months from 5.21 billion yuan or 19 fen per share a year earlier, the company reported yesterday, beating the market consensus estimate of 8.5 billion yuan.
Revenue grew 47 per cent to 72.67 billion yuan, buoyed in part by a 28.1 per cent rise in premium collection to 54.58 billion yuan.
Its share of mainland life insurance premium sales recovered 5.33 percentage points since the end of last year, to 49.4 per cent in the first half, helped by accelerated sales of lower-margin products at banks, analysts said.
Strong premium growth also drove the 20.33 per cent expansion of investment assets to 594.88 billion yuan at the end of June, laying the foundation for sharp investment income increases. 'Investment performance is the key swing factor,' JP Morgan said in a research note last Thursday.
Riding a rally on the domestic stock market just as Beijing relaxed asset restrictions for insurers, China Life's investment income increased 2.7 times to 17.6 billion yuan, with interim investment yield strengthening to 4.24 per cent from 1.92 a year ago. Of that, net investment income excluding capital gains strengthened 45.5 per cent to 11.34 billion yuan.
It realised 497 million yuan of trading gains, compared with 383 million yuan of losses a year ago.
The income statement portion of mark-to-market gains of securities still in its portfolio was 5.76 billion yuan, against the 888 million yuan loss a year earlier.
China Life's closest rival, Ping An Insurance, earlier reported an 83 per cent gain in interim earnings.
Equities accounted for 8.86 per cent of China Life's investment assets at the end of June, edging up 0.86 percentage point, while debt securities' share of the investment assets gained 2.37 percentage points to 54.06 per cent.
Contributing to realised and unrealised gains were the sale of part of its investment in China Construction Bank Corp's H-share initial public offering at the height of the stock's price earlier this year and paper gains on IPO shares of another state bank, Bank of China.
China Life's 3.25 billion yuan acquisition in June of an 11.89 per cent stake in Citic Securities - the largest single equity investment in the mainland securities industry to date - appreciated 69.3 per cent by the end of June.
Top-line growth and strong investment results offset a 29 per cent year-on-year increase of staff-related expenses to 2.05 billion yuan in the first half, a 208 million yuan exchange rate loss and a 69.9 per cent surge in the current period income tax bill to 965 million yuan.
No interim dividend was declared.
