Select Language:
Three major Chinese insurance companies, including China’s leading life insurer, are projecting their third-quarter net profits to increase between 40% and 70%. The growth is largely attributed to robust investment income, indicating that China’s top five publicly traded insurers are poised to achieve record-breaking earnings.
The life insurer announced that its net profit attributable to shareholders for the first nine months is expected to rise approximately 45% to 65%, reaching between CNY30 billion and CNY34.1 billion (roughly USD4.2 billion to USD4.8 billion). If these projections are met, it would mark a new high for both cumulative and quarterly profits, with the nine-month earnings surpassing last year’s entire annual profits, according to financial analysts.
Another leading insurer, a major property and casualty provider, anticipates its net profit will grow by 40% to 60%. Meanwhile, China’s largest life insurance company forecasts a 50% to 70% increase, with net profits expected to be between CNY156.8 billion and CNY177.7 billion (USD22 billion to USD25 billion). Both companies’ projections significantly exceed prior industry estimates.
The primary reason for the profit boosts is higher investment income. The life insurer noted that the stock market has stabilized and gained momentum this year, prompting them to scale up equity investments by actively allocating medium- and long-term funds into the market, leading to a sharp rise in investment returns. Similar reasons were cited by the other two companies.
Market analysts commented that the performance of these insurers “far exceeds expectations.” Earlier forecasts by financial firms predicted net profit growth of around 36.7% for the property and casualty company and 25.6% for the life insurer compared to the previous year.
### Record-High Earnings Outlooks for Leading Insurers
These strong earnings are coming off high bases set last year. In the first three quarters of 2022, China’s five largest listed insurers reported combined net profits attributable to shareholders of CNY319 billion. This represented a 78% rise from the previous year and was the highest on record for that period. If this year’s forecasts hold, the combined net profits for the same period would reach another all-time high.
Since hitting a low in April, China’s stock market has grown stronger, with the CSI 300 Index rising 18% in the first three quarters. Market analyst Ge Yuxiang from Zhongtai Securities noted that the moderate upward trend and alternating gains in dividend-yielding and growth sectors continue to support market returns.
Despite high comparison bases, analysts expect these insurers to sustain strong net profit growth into the third quarter. The team at Soochow Securities, led by Sun Ting, highlighted that they anticipate continued growth despite lofty past results.
Cost control measures also played a significant role. According to Founder Securities, the combined cost ratios for these companies improved during the first nine months, helped by a decrease in large-scale disasters like typhoons and heavy rains compared to the previous year.
Furthermore, the phased rollout of the “Report and Action Consistency” policy for non-auto insurance is expected to help insurers manage expenses more effectively. Set to be enforced starting Nov. 1, the policy could reduce property insurers’ combined cost ratio by approximately 0.2 to 0.9 percentage points, helping streamline the industry.
This policy mandates insurers to strictly follow the terms and rates registered with regulators, aiming to promote market standardization, curb unfair competitive practices, and improve operational efficiency across the industry.
ChatGPT
Perplexity
Gemini AI
Grok AI
