China Life Insurance Co Ltd (中國人壽保險) yesterday said its embedded value jumped 35.1 percent to NT$159.5 billion (US$5.22 billion) as of the end of last year, from NT$118.1 billion a year earlier, adding that it is looking for opportunities to expand overseas.
The updated figures translated into an industry-leading embedded value per share of NT$52.52, up 21.1 percent from a year ago, company senior vice president Winnie Huang (黃之寧) said.
Embedded value represents the value of a life insurance company’s future profitability in addition to its adjusted net asset value.
Since insurance policies are long-term contracts in which policyholders pay a premium to be covered against a possible future event, such as death, embedded value is an important indicator of a life insurer’s future profitability and financial standing.
Although the company saw its first-year premiums drop by 26.66 percent to NT$83.9 billion last year from a year earlier, its strategy of focusing on highly profitable policies paid by installment helped raise its value of new business to NT$17.8 billion last year, from NT$16.3 billion recorded in 2013, contributing to the rise of its embedded value, Huang said.
In the first quarter, the company posted a record-high NT$3.3 billion in net income, or earnings per share of NT$1.09, from NT$1.85 billion recorded in the same period last year, China Life said in a statement.
Gross premiums totaled NT$31.21 billion in the first three months of the year, with first-year premiums standing at NT$15.36 billion, the statement’s data showed.
China Life’s reinvestment in CCB Life Insurance Co Ltd (建信人壽保險) also contributed to the company’s income, with the Chinese life insurer posting 170 million Chinese yuan (NT$835.81 million) in net profit in the first quarter of this year, reaching its total posted for the whole of last year.
China Life chairman Alan Wang (王銘陽) said the company is still searching for opportunities for overseas expansion, adding that he does not currently see any viable options for domestic expansion.
Asked about the possibility of a merger between China Life and China Development Financial Holding Corp (中華開發金控), which shares a shareholder with the life insurer, Wang said: “The two sides have not been through a dialogue yet.”
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