China Life Insurance Co (中國人壽) saw its net income drop 25 percent to NT$1.56 billion (US$51.8 million) last quarter from a year earlier, while first-year premiums increased by 66 percent, senior executives said yesterday.
The Taipei-based life insurer, Taiwan’s fourth-largest by market share, attributed the softened showing to a lack of currency-linked investment income last quarter, whereas a weak New Taiwan dollar boosted earnings last year, company chairman Alan Wang (王銘陽) told an investors’ conference in Taipei.
The profit slowdown came even though first-year premiums (FYP) gained 66 percent year-on-year to NT$28.77 billion during the January-to-March period, thanks to increased cooperation with different banks, Wang said.
China Life will continue to focus on savings-like insurance policies this year as they enjoy higher popularity over the bancassurance sales channel though they generate lower yields, Wang said.
PREMIUM CONTRIBUTIONS
Bancassurance accounted for 76 percent of FYP last quarter, rising from 64 percent a year earlier, while sales agents and brokers contributed 8 percent and 2 percent respectively, company data showed.
Investment generated 3.88 percent yields in the first quarter, down from 4.44 percent a year earlier, China Life president Kuo Yu-ling (郭瑜玲) said, adding that the company has not had a negative interest spread for several years.
The company also updated its embedded value, which rose 24.5 percent to NT$118.07 billion as of December last year, from NT$94.82 billion at the end of 2012, Wang said.
INCREASED CIRCULATION
The reappraisal translated into NT$43.37 in earnings per share, up only 9.2 percent from NT$39.71 due to an increase of shares circulated on the market, Wang said.
Shares in China Life closed up 0.56 percent to NT$26.85 yesterday, Taiwan Stock Exchange data showed, or about 62 percent of the company’s embedded value, Wang said.
“The local bourse seems to undervalue China Life’s worth because in other countries a life insurance company’s market price is about the same as or higher than its embedded value,” Wang said.
China Life does not plan to book unrealized property gains as the accounting practice would require revaluation expense of NT$10 million a year, Kuo said.
Real-estate properties account for 3.5 percent of the portfolio and the company intends to raise the ratio to 5 to 8 percent, Wang said, adding the company is looking for investment opportunities at home and abroad.
JIAN XIN LIFE
CCB Life (建信人壽), a subsidiary of China Construction Bank Corp (中國建設銀行) in which China Life owns a 20 percent stake, plans to delay its listing pace until it generates higher return on equities, Wang said without elaborating.
Jian Xin Life is aggressively expanding its presence in China by adding four to five offices a year until it has outlets in all major Chinese cities, Kuo said, adding that the quick expansion diminishes the pace of returns.
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