China Life Insurance and China Pacific Insurance (Group) saw sharp declines in investment income year over year through the first nine months of 2023, according to an S&P Global Market Intelligence.
Investment income for China Life, the country’s largest life insurer by reserves, fell to 22.58 billion yuan from 156.92 billion yuan.
The company also reported a net profit of 36.56 billion yuan, much lower than the 56.67 billion yuan recorded in the first nine months of 2022.
Total expenses dropped year over year to 208.43 billion yuan from 236.3 billion yuan, while total revenue — which includes investment income — slid to 244.99 billion yuan from 292.97 billion yuan.
Third-quarter investment losses dragged down total revenue by 44% year over year under new accounting standards, CGS-CIMB analyst Michael Chang wrote in a note.
Impairment losses accounting for 61% of investment losses were led by overall equity investments made in 2022 instead of a single stock.
In the property and casualty space, China Pacific saw its 9M investment income drop significantly to 6 billion from 59 billion in the year-ago period.
Net profit dropped year over year to 23.68 billion yuan from 31.28 billion yuan. Total expenses climbed to 232.25 billion yuan from 222.22 billion yuan while total revenue edged up to 255.93 billion yuan from 253.49 billion yuan.
China Pacific, whose allocation to high-risk assets — including speculative-grade bonds, equity, property and alternative investments — will likely remain elevated, also faces investment challenges, S&P Global Ratings analyst WenWen Chen wrote in a note.
These investments accounted for about 39.2% of the group’s total invested assets as of June 30.
by Yana Keller