China Life Profit Plunges 74% as Market Rout Hurts Investments

Updated on
  • Posts 5 billion yuan fair-value losses on investments
  • Plans to sell $3 billion in bonds to fund overseas investments

China Life Insurance Co., the nation’s largest insurer, said its third-quarter profit fell 74 percent as a stock-market rout hurt investment returns.

Net income dropped to 2.35 billion yuan ($370 million), or 0.09 yuan a share, from 9.15 billion yuan, or 0.32 yuan, a year earlier, the company said in a statement to the Hong Kong stock exchange on Wednesday.

China’s benchmark Shanghai Composite Index of stocks slumped almost 30 percent in the three months ended Sept. 30 as investors unwound leveraged bets amid concern valuations were excessive. Chinese insurers’ profits fell 71 percent in the third quarter, after a 204 percent surge in the first half, according to Hong Kong-based Bloomberg Intelligence analyst Steven Lam’s calculations based on industry data.

China Life’s net premiums rose 2.7 percent to 75.7 billion yuan in the three months through September as the company boosted sales of long-term products. Fair-value losses on investments were 5 billion yuan, compared with a gain of 394 million yuan a year earlier, according to the company. Investment income dropped 37 percent to 18.2 billion yuan, the Beijing-based insurer said.

The company plans also to sell as much as $3 billion or the equivalent in overseas bonds, it said in a separate statement to the Shanghai stock exchange. The proceeds will be used for investment abroad, it added.

China Life shares fell 1.5 percent in Hong Kong to HK$30.35 on Wednesday, turning this year’s gain into a 0.3 percent loss.

— With assistance by Dingmin Zhang

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