China Life’s Profit Falls as Slowing Economy Weighs on Insurer

(Bloomberg) -- China Life Insurance Co. posted a drop in third-quarter profit as a slowing economy weighed on the nation’s largest life insurer. 

Net income fell 54% from a year earlier to 7.5 billion yuan ($1.2 billion) in the three months ended Sept. 30, the Beijing-based insurer said in a statement Thursday. That compared with a 34% surge in the first half.  

An economic slowdown and shrinking agent forces this year have posed challenges for Chairman Wang Bin as he tries to refocus on longer-term, wider-margin products to boost profitability. In addition, a decline in long-term government bond yields has required more reserves to settle claims. 

New business value, which measures the profitability of life policies sold, fell 19.6% for the first nine months, in line with a 19% decline in the first half. Rival Ping An Insurance (Group) Co. reported an 18% drop in the gauge on Wednesday, along with a 31% decrease in third-quarter profit. 

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Chinese life insurers’ shares have fallen this year as low bond yields and their property exposure deepened investor concerns on investment returns. The sector’s valuations could recover in the next three to six months, thanks to a rebound in longer-term interest rates and easing concerns on real estate risks, while any turning point in insurers’ liabilities has yet to come, China International Capital Corp. analysts led by Qingqing Mao wrote in a note Oct. 15. 

China Life closed 0.7% lower in Hong Kong, extending this year’s decline to 18%. 

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With assistance from Bloomberg