China Life Insurance Co. (2628), the nation’s biggest insurer, said profit for the first nine months of this year may fall about 55 percent because of lower investment yields and bigger impairment losses.
The estimated decline in net income, based on unaudited numbers, is a result of “continued weakness in the capital markets,” the Beijing-based company said in a statement to the Hong Kong stock exchange today. Profit for the same period in 2011 was 16.7 billion yuan ($2.7 billion), it said.
China Life in August reported a 26 percent profit decline for the first half year after an almost 20 percent slump in the benchmark Shanghai Composite Index (SHCOMP) in the year ended June 30 crimped investment returns and premiums income dropped. The equity gauge slid a further 6 percent in the third quarter as the nation’s economic expansion cooled.
“That’s below market consensus,” said Olive Xia, a Shanghai-based analyst at Core Pacific Yamaichi International Ltd., citing a third-quarter loss of about 3 billion yuan based on her calculations. “The stock market really did poorly last quarter and insurers’ profitability remains quite sensitive to investment returns.”
China Life fell 1.7 percent to HK$23.00 today in Hong Kong trading, trimming this year’s gain to 20 percent. The Hang Seng Index rose 1 percent today. The company’s Shanghai-traded shares slumped 4 percent, the most in more than two months.
China Life is scheduled to report nine-month results on Oct. 26.
--Zhang Dingmin. Editors: Andreea Papuc
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