China Life H1 2021 profit soars to 34.2%
This is despite the sluggish growth of GWP due to the impact of COVID-19.
China Life Insurance Company Limited reported a 34.2% net profit growth to CN¥40.9b ($6.31b) for the six-month ended 30 June.
During the first half of 2021, China Life saw its total revenue grow by 6.5% year-on-year YoY to $82.87b whilst gross written premiums saw a slight rise of 3.5% YoY on a high base to $68.24b.
According to the company, during the reporting period, the circumstances for new premiums of the life insurance industry were under pressure and the growth of total premiums slowed down.
China Life attributed this slow down to the impact of the COVID-19 pandemic, as well as the sluggish release of demands for insurance consumption, premiums from new policies estimated at $20.66b, a decrease of 8.4% YoY. First-year regular premiums were $12.45b, a decrease of 14.3% YoY, which accounted for 98.91% of long-term first-year premiums.
In particular, first-year regular premiums with a payment duration of ten years or longer were $4.47b, a decrease of 26.7% YoY.
Meanwhile, China Life’s renewal premiums amounted to $47.58b, an increase of 9.7% YoY, which accounted for 69.72% of the gross written premiums, rising by 3.93 percentage points YoY.
“In the first half of 2021, the value of half year's sales of the company was $4.61b, a decrease of 19% YoY. As at the end of the reporting period, the embedded value of the Company increased by 6.6% from the end of 2020 to $176b, maintaining the leading market position. The number of long-term in-force policies was 322 million, an increase of 1.6% from the end of 2020. During the reporting period, the surrender rate was 0.67%, rising by 0.06 percentage point YoY,” China Life said.
According to a report by OCBC, despite the value of new business and agency size shrinking, which reflects ongoing industry-wide pain and continued challenges from the pandemic, China Life’s net profit growth is driven by its strong investment income.
S&P Global said that the insurance firm’s ability to successfully execute product reform will continue to drive its insurance profit over the next two years.
The company said it will not declare an interim dividend of ordinary shares for the reporting period.