Nov. 28 (Bloomberg) -- China Life Insurance Co., with about $26 billion of assets under management, will trim share investments to reduce risk after the stock market tumbled 20 percent since tripling in the first 10 months of the year.

``Other Chinese insurers may be happy living with rollercoaster ups and downs in their performance, but China Life will not be,'' President Wan Feng said at a presentation in Nanjing, a city on the Yangtze River northwest of Shanghai, today. ``For us, stability is key.''

The company will cut its investments in stocks and mutual funds, and aims for strategic equity stakes to make up 5 percent to 10 percent of its portfolio, Chief Investment Officer Liu Lefei said. China Life will look for infrastructure and financial acquisitions, he said.

The insurer may buy foreign financial companies as it expands, Chairman Yang Chao said at the briefing.

``Our investments are focused on stocks and funds right now, and we're looking to trim these, especially funds, to move more into long-term strategic equity stakes,'' Liu said. ``Infrastructure deals look attractive because they offer stable returns, while buying into other financial institutions would offer synergies with our business.''

The world's largest insurer by market value joined investor Warren Buffett and former Federal Reserve Chairman Alan Greenspan in casting doubt on the sustainability of China's stock market rally. The nation's stocks, on average, remain the most expensive among the world's largest markets even after the key CSI 300 Index slumped from October's peak.

Making Money

``China Life will still be earning money even if the stock market tanks to 2000 points,'' said Yang today. ``We bought into the stocks very early at cheap prices.''

China's insurance regulator wants firms to spread risk on their more than $300 billion of assets. In July, China allowed the nation's insurers to invest 15 percent of their assets in overseas stocks and bonds, up from 5 percent.

China Life has more than $1 billion in Hong Kong stocks among its 194 billion ($26 billion) of total assets under management.

The insurer is seeking stakes in ports, energy firms and airports, Liu said. It also may invest in the restructuring of large state firms, he said. The company added that it may pursue acquisitions to expand its pension and property insurance business.

The company is ``very interested'' in buying foreign banks, Board Secretary Liu Ting said at the presentation.

Overseas Takeovers

``Overseas banks are looking very attractive after the subprime crisis brought their share prices down,'' said Liu Ting on the sidelines of today's briefing. ``This provides great opportunities for China Life and is a very worthwhile option for us to consider.''

The insurer is awaiting regulatory approval to buy 20 percent of Huishang Bank Co., said Yang. Huishang Bank was formed in December 2005 through the merger of six city commercial lenders and seven credit cooperatives in eastern Anhui province. The bank has 180 outlets in the region and plans to triple its assets to 150 billion yuan in 2010 from 49.6 billion yuan in 2005.

China Life will apply to set up a fund-management company and is considering foreign partners for the venture, Yang said.

Third-quarter investment income at China Life was 20 billion yuan ($2.7 billion), or 82 percent of first-half investment income, the company said last month. It didn't provide year-earlier numbers, reporting third-quarter figures for the first time since selling shares in Shanghai in December.

To contact the reporters on this story: Josephine Lau in Beijing at jlau22@bloomberg.net;

Last Updated: November 28, 2007 02:58 EST