New China Life Insurance Company Ltd (NCI) has issued an earnings forecast for the period from Jan. 1 to Sept. 30, 2024.
According to the company’s initial estimates, it expects net profit attributable to shareholders to range between RMB 18.6 billion and RMB 20.5 billion for the first three quarters of the year. This represents an increase of RMB 9.1 billion to RMB 11 billion, or 95% to 115%, when compared to the same period in 2023.
Excluding non-recurring items, the net profit is forecasted to be between RMB 18.6 billion and RMB 20.6 billion, reflecting a similar rise of 95% to 115%.
NCI attributes this anticipated profit growth to several strategic initiatives. The company has placed a strong emphasis on key areas, including technology-driven finance, green finance, inclusive finance, pension services, and digital finance.
It has also worked to enhance its investment strategies by increasing its equity investments during the first three quarters and rebalancing its asset allocations. Additionally, the company has focused on improving insurance business quality and refining its overall business structure.
NCI further noted that the capital markets have performed well recently – and this, combined with a significant increase in investment returns, has driven the overall growth in net profit during the first three quarters of 2024.
The company issued its profit forecast amid rising mortality resilience in China.
A study by Swiss Re highlighted improving mortality resilience across China, indicating a recovery from previous years of decline.
Using its Resilience Index methodology, Swiss Re examined data from 31 provinces, finding that China’s mortality protection gap narrowed by 6% in 2023. At the same time, the national resilience index increased by 2.3 percentage points, reaching 38.3%.
Swiss Re attributed the rise in mortality resilience to favourable economic conditions in 2023, with life insurance playing a significant role. It estimates that an increase in life insurance coverage contributed 1.2 percentage points to the overall resilience index improvement.
However, despite these gains, Swiss Re also noted that the mortality protection gap has more than doubled over the past decade, reaching $73.6 billion (CNY 521 billion) by the end of 2023.
Household debt levels in China have surged dramatically in recent years, rising more than sevenfold since 2010 to reach CNY 78.3 trillion ($11 trillion). This has led to an increase in household leverage, which now stands at 62%, surpassing the average ratios in the euro area and other emerging markets.
Swiss Re’s analysis supports the global “S-curve” model, which suggests that life insurance premiums tend to grow faster than economic output in regions where GDP per capita is between $5,000 and $35,000.
All of China’s provinces currently fall within this range. As a result, Swiss Re expects life insurance penetration to outpace economic growth in less-developed areas such as Southwest and Northwest China, while growth in more developed regions like Beijing and Shanghai is likely to stabilise.
Over the long term, Swiss Re anticipates that mortality resilience will continue to improve across China, with regional gaps expected to narrow. The firm’s analysis indicates that a 1% increase in life insurance penetration could lead to a 6 percentage point rise in the mortality resilience index, assuming other factors remain constant.
