China Life says profit to jump up to 185% on market rally

CHINA Life Insurance said profit for the first nine months is expected to increase as much as 185 per cent, buoyed by investment returns.

The country’s largest life insurer forecasts that net income will reach between 101.1 billion yuan (S$18.6 billion) and 108.8 billion yuan, a surge between 165 per cent and 185 per cent from a year earlier. The increase is due to improvement in investment returns underpinned by a stock rally in the third quarter, it said in an exchange filing on Wednesday (Oct 16).

China’s CSI 300 Index rose 17 per cent in the first nine months after the government’s economic stimulus package spurred a strong rally in September, bolstering the value of insurers’ stock investments.

Chinese insurers’ profits have the potential to double on average this year if their equity and fund holdings can appreciate 20 per cent, even though bond yields have fallen, according to Bloomberg Intelligence analyst Steven Lam.

China Life’s profit is set for a record high this year and expected to reach 115 billion yuan, as the company reprices savings products, Lam said. It’s among insurers that will benefit most from the stocks rally due to their higher exposure to equities, according to Lam.

Smaller competitor New China Life Insurance earlier projected a rise of as much as 115 per cent in profit for the nine months.

China’s recent policy moves benefit both liabilities and assets of insurers, as stocks rise and bond yields stabilise. Efforts to support the property market have eased concerns weighing on their valuations, CSC Financial analysts wrote in an Oct 8 report. BLOOMBERG