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Securities analyst Wu Jiangang pointed out it was the less- than-expected investment incomes that led to a decline in China Life's profits. Rate of return on investment stood at 2.31% in the reporting period, 2.88 percentage points lower than that in mid-2007. As of June 30, 2008, equity investments of the China mainland-based life insurer accounted for 13.28% of total investments, compared to 22.95% at 2007 yearend; debt investments took up 58.57% of the total, compared to 52.13% at the end of 2007; fixed deposits made up 20.97%, compared to 19.83% at the yearend of 2007.
As showed in the life insurer's interim report, primary insurance premiums in the reporting period amounted to CNY 182 billion, including CNY 160.7 billion from personal insurance business, soaring 60% from the previous year; and CNY 14.6 billion from group insurance business, down 3.14%.
As of June 30, 2008, Beijing-based China Life saw its assets total up to CNY 963.9 billion, versus CNY 933.7 billion as of end-2007. Thanks to efforts in promoting sales, the life insurer raised its market share in domestic life insurance market from less than 40% at end-2007 to 42.8% as of mid- 2008.
Earlier, another Hong Kong-listed mainland insurer PICC Property and Casualty Company Limited (PICC P&C, 2328.HK) reported losses of CNY 292 million in the first half of this year.
As China's biggest non-life insurer, PICC P&C attributed such a unsatisfying performance to high compensations for the snow storm catastrophe at the year start and the terrible earthquake that hit southwest China on May 12. Apart from those, declining investment incomes arising from correction over A-share market was another factor resulting in the poor performance of the Beijing-based property insurer.
Still, PICC P&C was confident that it can make a turnaround in the second half year. Institutions were also optimistic about its performance in the following months.
Credit Suisse in a report said that PICC P&C is likely to earn CNY 12 million for the full year and CNY 2.94 billion for 2009. Therefore, it adjusted the insurer's H-share target price up to HKD 5.5 apiece from HKD 3.8 apiece on August 19, when PICC P&C released the interim report.
(USD 1 = CNY 6.84)
From www.nanfangdaily.com.cn, Page 1, Tuesday, August 26, 2008 info@SinoCast.com
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