China Life profit misses estimates as economy drags on sales

[BEIJING] China Life Insurance, the nation's largest life insurer, posted annual profit that missed estimates as an economic slowdown and its agent reshuffle weighed on sales.

Net income rose 1.3 per cent to 50.9 billion yuan (S$10.8 billion), the Beijing-based insurer said on Thursday (Mar 24) in a filing to the Hong Kong stock exchange. That trailed the 57.5 billion yuan average estimate of analysts surveyed by Bloomberg.

China's cooling economy and lower interest rates have eroded demand for life insurance and hampered investment returns. China Life this year also needs to limit any impact from a probe of former Chairman Wang Bin, just as surging new Covid cases threaten to again disrupt its efforts since 2018 to refocus on higher-margin, long-term policies.

Premiums from new policies fell 9 per cent to 176 billion yuan. As a result, new business value, which gauges the future profitability of such policies, dropped 23 per cent for the full year, deepening from a 20 per cent slump in the first 9 months.

"The decline was within a reasonable range, which was a hard-won result," the company said, citing the industry's "unprecedented pressures" from weakened demand and a shrinking agent force.

Investment income rose 15 per cent to 178 billion yuan, according to the statement. Net realised gains on financial assets climbed 40 per cent, while fair-value gains slumped 77 per cent.

The benchmark Shanghai Composite Index rallied 4.8 per cent last year. It's down more than 10 per cent this year.

Rival Ping An Insurance (Group) Co. reported a 29 per cent drop in net income last week, after booking impairments from troubled property investments.

China Life shares fell 0.5 per cent in Hong Kong, widening this year's loss to 5.1 per cent. Wang resigned in February.

He is "suspected of serious violations of discipline and law, and is currently undergoing disciplinary review and investigation," the China Central Commission for Discipline Inspection said in January, without elaborating. BLOOMBERG