China Life profit slumps as stock market rout hurts returns

CHINA Life Insurance, the nation's largest life insurer, said profit slumped 47 per cent in the first quarter as a stock market rout hurt investment returns and sales were hampered by the pandemic.

Net income dropped to 15.2 billion yuan (S$3.2 billion), from 28.6 billion yuan a year earlier, the Beijing-based company said in a filing to the Hong Kong stock exchange on Wednesday (Apr 27), adding that recent "sporadic outbreaks" of the virus are contributing to a further slowdown in business for the industry.

Chinese insurers are facing weaker economic growth while a slump in the benchmark CSI 300 Index weighed on investment returns in the first quarter. Meanwhile, a virus incursion into Beijing and Shanghai is posing an unprecedented challenge for the Covid Zero measures the country deploys to stamp out infections.

At China Life, a probe of former Chairman Wang Bin, who resigned in February just 6 weeks after being placed under investigation by the nation's top anti-graft watchdog, has added to headwinds.

Bai Tao was elected as his replacement, subject to regulatory approval, the company said in a separate filing on Wednesday.

Insurance companies' profit may have fallen by at least 10 per cent in the period, reversing a 32 per cent average gain a year earlier, according to Bloomberg Intelligence analyst Steven Lam.

Investment income fell 27 per cent to 54 billion yuan for the period, according to the statement, while impairment losses more than doubled to 2.5 billion yuan.

New business value, which measures the future profitability of life policies sold, fell 14.3 per cent, the company said.

China Life fell 0.2 per cent to HKUS$11.10 in Hong Kong trading, extending this year's decline to 14 per cent. BLOOMBERG