Results for the first quarter
of 2011 from China’s two largest life insurers were very much a
case of contrasts, with China Life reporting a sharp fall in profit
and Ping An robust growth.
Riding high, Ping An’s net
profit came in at CNY5.814bn ($890m), up 27.8% compared with the
first quarter of 2010. But for China Life shareholders it was bad
news, its net profit down 22.3% to CNY7.971bn.
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Ping An’s performance was
driven by all three core operations: life insurance, general
insurance and banking. In the life business, total premium income
rose 25.7% compared with the first quarter of 2010 to CNY65.793bn,
with Ping An noting that premiums in the more profitable individual
life sector rose 37.2% to CNY54.2bn.
General insurance premium
income lifted 33.8% to CNY20.305bn while Ping An Bank’s net profit
was up 66.4% at CNY669m.
China Life’s underperformance
was partly reflected in a 10.9% increase in premium income to
CNY122.024bn. But the major setback to its bottom line resulted
from other factors, including a 6.4% fall in investment income to
CNY17.2bn. Ping An lifted investment income 1.4% to
CNY6.3bn.
Also taking a toll on China
Life was a 54% rise in claims expenses to CNY23bn and a 34% rise in
surrenders to CNY8.18bn.
From a share price
perspective, neither insurer has given investors much to smile
about since reaching 12-month highs in November 2010.
China Life’s share price has
fallen almost 30% from a peak of HK$41 ($5.30) while Ping An’s
share price is down almost 10%.
Both share prices are also below all-time highs seen in
October 2007. Faring worst is China Life’s share price which is
almost 50% below its HK$51.45 peak while Ping An’s share price is
just over 20% below its HK$109 all-time high.
