China Life Insurance, the mainland's biggest insurer, said profit slumped for a second consecutive year, with net income falling 40 per cent to 11.06 billion yuan (HK$13.68 billion), or 0.39 yuan a share.
This compared to 18.3 billion yuan, or 0.65 yuan a share a year earlier, the company said in a statement to the Shanghai stock exchange.
The Shanghai Composite Index dropped about 20 per cent over the past two years as the mainland's economic expansion cooled, eroding insurers' investment returns and forcing them to write down some equity holdings. Smaller competitor Ping An Insurance reported a 3 per cent profit increase this month as bigger banking revenue helped offset an almost tenfold jump in net realised and unrealised investment losses last year.
China Life's investment performance "hasn't been particularly desirable and lags far behind investor expectations," said Xie Jiyong, a Shanghai-based analyst at Capital Securities Corp before the earnings were announced. "They should have digested almost all the unrealised losses by the end of last year though, and are very likely to record an increase in profit this year."
Impairment losses from equity investments jumped 140 per cent to 31.1 billion yuan last year, the firm said. Investment income, mainly interest earned from bond holdings and bank deposits, rose 23 per cent to 80 billion yuan, according to the statement. The firm said on February 28 that profit probably dropped about 40 per cent in 2012 on lower investment yields and increased impairment losses because of weakness in capital markets.
Net premiums earned climbed 1.2 per cent to 322 billion yuan, China Life said. The value of new business, which gauges profitability of new policies sold, expanded 3.1 per cent, according to the statement.
China Life fell 0.2 per cent to HK20.70 in Hong Kong trading.