China Life Reports Significant Growth in Q3 2024
China Life Insurance Co. Ltd. (LFC) reported a significant increase in the third quarter of 2024, with gross premium income reaching 600 billion RMB, reflecting a 5.1% year-over-year growth. The net profit attributable to shareholders saw a remarkable increase of 174%, rising to 104.5 billion RMB. Thanks to its strategy of focusing on long-term regular premiums, the new business value, constituting 46% of the first-year regular premiums, grew by 25.1%. The company's sales force efficiency increased by 17.7%, with a total of 694,000 agents. Additionally, its investment income rose significantly, with gross investment income climbing by 152% to reach 261.4 billion RMB, while total assets increased to 6.48 trillion RMB.
Key Points
- Gross premium income rose by 5.1% year over year, reaching 600 billion RMB.
- Net profit attributable to shareholders increased by 174% to 104.5 billion RMB.
- New business value grew by 25.1%, with long-term regular premiums contributing significantly.
- Sales force efficiency improved by 17.7, with a total of 694,000 agents.
- Gross investment income increased by 152% to 261.4 billion RMB.
- Total assets reached 6.48 trillion RMB.
Company Outlook Management plans to diversify products with a customer-centric approach and to maintain high-quality development. The company is committed to adapting to market volatility and improving dividend management, currently maintaining a payout ratio of 35%. China Life aims to enhance expense management and increase efficiency.
Negative Highlights Net investment returns dropped to 3.26% in the first three quarters of 2023 due to declining market interest rates and a cautious credit risk approach, a decrease of 0.27 percentage points compared to the previous year. Management expects to reassess the long-term investment return assumption of 4.5% depending on market conditions by year-end.
Positive Highlights The Seed Program is expanding to 24 pilot cities, focusing on high-quality candidates, which is expected to improve recruitment and sales models. The company is prioritizing long-term equity investments in high-quality, high-dividend stocks to seize opportunities in sectors such as scientific innovation and green development.
Below Expectations Despite the increase in net profit, net investment returns declined due to falling treasury yields.
Q&A Section Highlights Discussions included dividend payment policies and payment capability, focusing on business needs, profitability, and regulatory compliance. Questions regarding product mix and dividend policies were addressed, and ongoing adjustments and assessments for future profitability under new accounting standards were noted. Analysts raised questions about the impact of declining market interest rates on net investment returns.
In summary, China Life Insurance Co. Ltd. demonstrated strategic initiatives aimed at sustaining strong performance and growth. The company is adapting to the changing regulatory environment while focusing on long-term value creation and prudent financial management.
InvestingPro Forecasts The impressive third-quarter results of China Life Insurance Co. Ltd. are also supported by InvestingPro data. The company's market capitalization has reached a significant figure of 140.13 billion USD, reflecting its prominent position in the insurance sector. This aligns with the reported total assets of 6.48 trillion RMB and underscores its substantial market presence.
InvestingPro data shows a P/E ratio of 4.86, suggesting that the stock may be undervalued relative to its earnings. This low P/E ratio is particularly noteworthy in light of the reported 174% increase in net profit attributable to shareholders. Moreover, the 199.63% income growth over the last twelve months as of the third quarter of 2024 confirms the company's strong financial performance mentioned in the article.
An InvestingPro tip highlights that China Life has maintained uninterrupted dividend payments for 19 years, aligning with the company's commitment to dividend management. This stable dividend history may be appealing to income-focused investors.
Another relevant InvestingPro tip notes that the company's net income is expected to increase this year. This projection supports the positive outlook presented in the article and indicates ongoing financial strength.
For readers interested in a more comprehensive analysis, InvestingPro offers 11 additional tips on China Life Insurance Co. Ltd., providing deeper insights into the company's financial health and market position.
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