China Life’s net profit for 2016 takes a tumble of almost 45%

Declining investment returns and tighter regulations tagged as causes for the profit drop

China Life’s net profit for 2016 takes a tumble of almost 45%

Insurance News

By Gabriel Olano

China Life Insurance Co., the largest life insurer in the country, has reported that its net profit for 2016 fell by 44.9% year-on-year to RMB19.3 billion (US$2.78 billion).
According to the insurer’s filing to the Hong Kong stock exchange, the decline in profit was mainly due to decreased returns from investments affected by falling interest rate and volatile capital markets.
“We have indeed been affected by China’s tightening capital controls in the short term,” China Life vice-president Zhao Lijun said at the company’s annual results press briefing on Friday.
“But we also believe that opening up is still the country’s national policy and we will continue to invest overseas in the long run.”

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In order to counteract this trend in 2017, Zhao said that the company will increase its alternative investments, such as commercial property and financials.
However, the insurer also expressed optimism about its market share in the wake of the China Insurance Regulatory Commission’s (CIRC) tightening of restrictions over short and mid-term life insurance products, which could potentially eat into smaller insurers’ profits, said Lin Dairen, China Life’s president.

According to Lin, China Life and the rest of the big six mainland China-based insurers had a market share of 80% three years ago, but this declined to 60% due to aggressive competition from smaller market players.

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