China Life Insurance Co, the country's biggest life insurer, saw
its profit more than doubled last year, fueled by premium growth
and higher investment return from the booming stock market.
Net income increased to 19.96 billion yuan, or 0.75 yuan a
share, from 9.31 billion yuan in 2005, or 0.35 yuan a share, the
Beijing-headquartered insurer said in a statement to the Hong Kong
stock exchange yesterday, citing international accounting
standards.
"The improved operating performance has contributed to the
growing sale of policies and higher investment returns," said Yang
Chao, chairman of China Life.
In 2006, the company's total gross written premiums reached
92.32 billion yuan, an increase of 23.2 percent over the previous
year.
The rapid growth in business and the improvement of business
quality enhanced the insurer's embedded value, an industry
yardstick that reflects future premiums customers are required to
pay under existing policies and an indicator of insurers' business
sustainability.
The company's embedded value hit 181.99 billion yuan at the end
of 2006, a jump of 59.7 percent from the previous year. The value
of new businesses for last year was 10.48 billion yuan, an increase
of 40 percent from 2005.
"China Life's performance is better than our expectation, and
the stronger-than-ever stock market last year was also a trigger,"
said an analyst with China CITIC Securities, adding the insurer
still has huge growth potential as it gradually extends to the
property and pension sectors.
China Life has been one of the largest institutional investors
in the country's capital market. Last year the company's asset
investment was 6.87 billion yuan, an increase of 38.9 percent
year-on-year.
Thanks to the booming stock market in 2006, China Life's
investment yield was 4.27 percent, up 41 basis points from 2005.
However, this is a bit lower than the industry average of 5.8
percent for 2006, statistics from the China Insurance Regulatory
Commission (CIRC) show.
"We are going to focus our equity investment on the
infrastructure and financial sectors this year," Liu Lefei, chief
investment officer of China Life, had earlier told China
Daily.
In 2006, China Life became CITIC's second-largest shareholder
and one of the three biggest shareholders of Guangdong Development
Bank. It also set up an overseas investment platform China Life
Franklin Asset Management Company Limited.
China's insurance market, dominated by China Life and rival Ping
An Insurance, has seen an average annual growth of 30 percent in
the past two decades.
Shares in China Life nearly quadrupled last year, outperforming
those of Ping An, and its shares now trade at around 36 times the
estimated 2007 earnings, compared with roughly 10 times the
projected earnings for American International Group, the world's
largest insurer by market value.
The company's market share last year was 45.27 percent.
(China Daily April 18, 2007)