NATIONAL Mutual is the second-largest life insurer in Hong Kong and accounts for 30 per cent of market share after AIA International. In the first quarter of 1994, former chief executive officer Andrew Yang left to join leading competitor Top Glory. About 650 agents followed him, prompting a plunge in National Mutual's share price from $7 to $3.66. However, investors' concern about the loss was overdone. Although insurance business depends largely upon the size of the sales force, agent numbers do not reflect the company's productivity and quality. It is difficult to compare National Mutual with its competitors as it is the only listed insurance company in Hong Kong. But relatively high transparency provides a clear picture of the company. Full-year 1995 interim results affirmed its recovery from the Top Glory episode. New written business grew steadily and productivity of agents surged in the first half. On the investment side, the company has suffered from the poor performance of Asian stockmarkets and the fall in property prices. But its investment reserve stands to eliminate significant profit fluctuations. Despite the loss in its investment portfolio, the company is back on track. Its steady earnings growth, good quality staff and high transparency are appealing. Seapower Research recommends the stock as a long-term buy.