China Life Insurance Co, the largest insurer in China by market capitalisation, reported that its 2024 net profit may have more than doubled, supported by strong returns on equity investments amid a stock market rally.
In a disclosure to the Hong Kong stock exchange, the Beijing-based insurer projected its net income to rise between 122% and 144%, estimating profits to reach between 102.4 billion yuan and 112.6 billion yuan.
The company noted that it adjusted its investment strategy to capitalise on market conditions, reallocating its equity holdings to optimise returns.
According to Blomberg, the insurer’s performance benefited from a 15% increase in the CSI 300 Index last year, attributed to government stimulus policies aimed at supporting economic recovery. With a significant portion of its portfolio in equities, China Life outpaced other insurers.
Bloomberg intelligence analyst Steven Lam said insurers’ profits could double if their equity portfolios increased by 25% or more in 2024.
China’s government recently mandated that state-owned insurers allocate at least 30% of new premiums to equity investments and eased regulations to encourage longer-term market participation. Analysts believe such policies may particularly benefit life insurers like China Life, which favour high-dividend stocks over fixed-income securities.
China Life’s shares closed 3% higher at HK$14.48 in Hong Kong on Friday, narrowing its year-to-date loss to 1.4%. The company’s stock value had climbed 45% in 2024.
Globally, life insurance premiums are expected to grow by 3% annually in 2025 and 2026, according to a report by Swiss Re. This represents a faster pace than the average growth rate over the past decade.
The reinsurer attributed the increase to factors including rising wages, demographic shifts, and a growing middle class in emerging markets like China.
In the US, high interest rates have bolstered demand for savings-oriented insurance products, with annuity sales projected to exceed $400 billion in 2024, a sharp rise from the average of $234 billion over the past decade.
In China, insurers have experienced a surge in demand for savings products as declining guaranteed interest rates have incentivised consumers to seek longer-term solutions. Swiss Re also noted that in developed markets, consumer preferences are shifting from fixed-rate annuities to index-linked policies as central banks move toward rate reductions.
The non-life insurance sector is also expected to see gains, with global premiums forecast to grow by 4.3% in 2024, slowing to an average of 2.3% annually in the following two years. While growth rates are moderating, profitability may improve as insurers benefit from risk repricing and higher investment returns due to elevated interest rates.
Swiss Re’s chief economist, Jérôme Jean Haegeli, stressed the need for insurers to closely monitor economic and geopolitical risks, which could challenge market stability despite the positive outlook for primary insurance markets.
