China Life Insurance Co., the nation’s largest life insurer by market share, said first-quarter profit rose 18% as the industry recovered from woes brought by the Covid pandemic.
(Bloomberg) — China Life Insurance Co., the nation’s largest life insurer by market share, said first-quarter profit rose 18% as the industry recovered from woes brought by the Covid pandemic.
Net income climbed to 17.9 billion yuan ($2.6 billion) in the three months ended March 31, from 15.2 billion yuan a year earlier, the Beijing-based company said in a filing to the Hong Kong stock exchange Thursday.
China’s economy expanded at the fastest pace in a year during the quarter after authorities dismantled Covid curbs, bolstering insurance sales and financial markets. The life insurance industry is embracing a “rapid recovery” this year, with total premiums accelerating every month and new policy sales reversing declines, China Life President Zhao Peng told a forum this week.
New business value, which gauges the profitability of new life policies sold, climbed 7.7%, China Life said. That compares with a 20% decline last year.
China Life and its listed peers this year started adopting new accounting rules in line with global practices and restated some financial results for a year earlier. Premiums are no longer immediately recorded as income but only recognized gradually over the course of the contracts. Insurance profit is separated from investment returns, providing more clarity on drivers of profitability.
Smaller rival New China Life Insurance Co. said its first-quarter profit will rise as much as 120% mainly due to the new accounting rules and capital market changes. The 10 insurers that adopted new accounting standards this year recorded an increase in combined profits in the quarter, although the impact on their revenue has been “relatively large,” the China Banking and Insurance Regulatory Commission said Wednesday without providing details.
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China Life said it will use a transitional plan until 2025 to adopt the new accounting standards in a gradual manner to help investors better understand the changes. The company will start disclosing numbers under new rules in Hong Kong from this year’s first-half results, but will continue to report under old rule in the mainland market with additional disclosure under the new standards.
Investment income rose 6% to 57.4 billion yuan, and the company booked 2.2 billion yuan in fair-value gains, switching from a 7 billion yuan loss a year earlier, according to the statement. The CSI 300 Index stock benchmark gained 4.6% in the quarter, reversing steep declines last year.
China Life rose 5.1% to HK$14.72 in Hong Kong trading before the earnings. The shares have rallied about 10% this year.
(Updates with details and background from the fourth paragraph)
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