HONG KONG, March 25 Insurer China Life's annual
profit more than doubled in 2013 as investment income surged on
the back of a recovery in the Chinese stock market, but it still
missed analysts' forecasts.
China Life Insurance Co Ltd - the
country's largest insurer by market value - said net profit rose
124 percent to 24.77 billion yuan ($4.00 billion) in the year
ended Dec. 31.
That was less than the average forecast of 28.5 billion yuan
from analysts, according to Thomson Reuters data.
With large investment portfolios, China's insurers are prone
to big swings in reported profits. In 2011 and 2012, annual
earnings were dented by losses on their equity investments.
China Life and its peers New China Life Insurance Co Ltd and
China Pacific Insurance Group Co have all told
investors that they expected higher profits for 2013 as those
Portfolio returns in 2013 were also bolstered by a rule
change in October 2012, which allowed insurers to invest in
riskier but higher-yielding products.
While China's insurers have improved returns on their
investments, they have found it tough to increase sales amid
tighter regulation and intensifying competition.
Wealth management products (WMPs) sold by banks offer
investors returns of 5 to 6 percent, compared with just 2.5
percent for life insurance products.
Investors had until this year perceived those WMPs to be
almost risk-free, because they assumed the government would bail
out any product that looked like failing.
However, a landmark bond default by Shanghai Chaori Solar
Energy Science & Technology Co. Ltd in early March
could trigger the start of a flight to quality back to insurance
products as investors reassess those risks, according to
($1 = 6.1888 Chinese yuan)
(Reporting by Lawrence White; Editing by Ryan Woo and Pravin