China Life profit plunges 45% on stock losses

China Life Insurance (LFC.NYSE, 601628.SH, 2628.HKG) said its net profit slumped 45% in 2011 due to losses from its investments in the domestic stock market, The Wall Street Journal reported. China Life, which has 40% share of the domestic life insurance market, reported 2011 net profit was US$2.91 billion (RMB18.33 billion), down from US$5.3 billion (RMB33.63 billion) in 2010. Net premiums rose only 0.1% to US$50.5 billion, compared with 16% growth the previous year. The company’s investment return ratio dropped to 3.51% from 5.11% one year earlier as the Shanghai Composite Index plunged 22%. China Life’s premum growth fell sharply due to competition from high-yielding wealth-management products at banks. But analysts expect the insurance sector to recover this year. Liu Jun, an analyst at Changjiang Securities (000783.SHE), predicted that China will launch more policy-loosening measures to stabilize growth in coming months. “As such, bond and stock prices will continue to rise, enabling insurers to reap higher investment income.”