China Life tips 10pc gain from bancassurance
China Life Insurance, the world's biggest life insurer, expects premium income to increase 10 per cent this year as the bancassurance business outpaces traditional channels.
Shares of China Life dropped 2.05 per cent, or 60 HK cents, to HK$28.60 yesterday after the company reported a 2.3 per cent rise in net profit to 33.6 billion yuan (HK$39.9 billion) last year.
The insurer's solvency margin ratio, an index measuring the financial health of life insurers, fell to 212 per cent from 304 per cent during the period.
Liu Jiade, a vice-president of the company, blamed the drop on fluctuations in the capital market, a dividend payout and a nationwide business expansion.
'Our current solvency margin is at a healthy level. It's adequate to support China Life's development in the next two to three years,' Liu said. 'At this moment, we don't have any plans to raise funds.'
The insurer, a rival of Ping An Insurance (Group) and China Pacific Insurance (Group), saw its total premium income jump 15.3 per cent to 318.2 billion yuan last year.
Regular premiums generated from bancassurance - the sale of insurance and bank products through the bank's distribution networks - recorded an increase of 82 per cent year on year, accounting for more than half of total premiums.
Liu said recent rules introduced by the China Banking Regulatory Commission to regulate the bancassurance market would favour bigger players and drive out smaller firms.
As of December, the investment assets of China Life were valued at 1.33 trillion yuan.
The company said the insurance sector would continue to benefit from the country's economic growth, rising income levels and consumption, and ageing, but inflation posed new challenges to its asset management and risks.
China Life declared a final dividend of 40 fen per share.