China Life Insurance

China Life profit up 17.8pc in first half after CIRC crackdown on small rivals pad bottom line

China Life chairman vows technology and fresh developments will offer protection in its products to customers

PUBLISHED : Friday, 25 August, 2017, 12:36am
UPDATED : Friday, 25 August, 2017, 12:36am

China Life, the country’s largest life insurer, posted an interim profit which is up 17.8 per cent in the first half of 2017 as a result of a regulatory crack down of its smaller rival which benefited the big players in the country.

The company reported net profit for the first half of this year stood at 12.24 billion yuan (US$1.84 billion), or 0.43 yuan per share, up from 10.4 billion yuan a year earlier. In the first half of 2016, profit slumped 67 per cent because of falling interest and weak market performance.

The earnings are slightly below analysts estimate of a net profit at 12.7 billion yuan for the first six months, up 21.8 per cent from a year earlier. The company will pay an interim dividend at 0.24 yuan per share.

China Life chairman Yang Mingsheng said the profit growth was “due to the combined impact of an increase in gross investment income, the optimisation of business structure and the update on the discount rate assumption for reserves of traditional insurance contracts.”

China and other mainland large insurance players have showed strong growth due to the improvement of their products as well as the mainland regulatory crack down on selling short term products which work more like wealth management products by smaller rivals such as Anbang and Foresea, HSBC analysts said in a note issued last week.

“Regulatory departments are determined to strengthen the regulation, and urge the industry to return to its due role of protecting against risks. The life insurance industry has entered into a new stage that emphasises more on service, technology, and risk control,” Yang said in a results statement as part of a stock exchange filing on Thursday.

The value of new policies sold in the first half rose 31.7 per cent to 36.895 billion yuan. Gross investment income was up 11.5 per cent to 56.66 billion yuan, compared with 50.84 billion yuan a year earlier.

Net premiums grew 18 per cent to 336.27 billion yuan, from 284.24 billion yuan a year earlier.

China Life’s share price closed 0.6 per cent higher at HK$24 on Thursday before the results were announced after the market close.

Ping An Insurance announced their results last week by reporting robust profit of 43.3 billion yuan, up 6.5 per cent year on year.