China Life profit rises on gains from first-half stock rally

(Bloomberg) — China Life Insurance Co., the nation’s largest insurer, said profit rose 7.7 percent last year as investment returns benefited from a rally in the nation’s stock market in the first half.

Net income climbed to 34.7 billion yuan ($5.3 billion), or 1.22 yuan a share, from 32.2 billion yuan, or 1.14 yuan a share, a year earlier, the company said in a statement to the Shanghai stock exchange. That compares to the median estimate of 35.4 billion yuan by 19 analysts surveyed by Bloomberg. The company said in January that profit rose about 5 percent to 10 percent.

The 60 percent surge in the benchmark Shanghai Composite Index through its peak in June helped China Life secure an increase in full-year profit, even as ensuing market declines partly wiped off gains and dragged net income growth from 71 percent in the first half.

The Beijing-based insurer has spent about 36 billion yuan since December buying stakes in banks, diversifying its profit mix to limit the impact of China’s volatile financial markets. The business took a hit in the final three months of 2015: fourth-quarter profit slumped 81.5 percent in the period from a year earlier, according to Bloomberg calculations based on today’s and historical data. Net income had fallen 74 percent in the third quarter, the company said earlier.

A Reversal

Investment income jumped 35 percent to 145.5 billion yuan in 2015, according to the statement. The company recorded 2.2 billion yuan in fair-value losses on investments, reversing 3.7 billion yuan of gains in 2014. Net premiums rose 10 percent, according to the statement. New business value, which gauges the profitability of new life policies sold, surged 36 percent.

China Life, which doesn’t have a banking arm, last month boosted its holdings in China Guangfa Bank Co. to 43.7 percent from 20 percent by acquiring stakes from Citigroup Inc. and International Business Machines Corp. That followed its 13 billion yuan investment in Postal Savings Bank of China Co. in December.

Ping An Insurance (Group) Co., China’s second biggest insurer, reported a 38 percent jump in net income last year, thanks partly to a 10 percent profit increase at its banking unit.