Jinwu Financial News | According to BOC International Development Research Report, China Life (02628) 1Q24 net profit fell 9.3% year on year. The decline in profit was mainly due to the 20.4% year-on-year decline in insurance service performance due to increased compensation payments. According to the bank, premium income increased by 3.2% year on year. The increase was mainly due to renewed premiums. The significant year-on-year decline in premium payments reduced the premium growth rate. The premium structure has been optimized, and the proportion of premiums paid over a ten-year term has increased significantly. The value of new business increased significantly, and the value rate of new business increased year-on-year. The return on investment declined year over year.
The bank continued that by the end of 1Q24, the company's core solvency ratio had declined by 3 percentage points, mainly due to an increase in minimum market risk capital due to increased equity allocation. In the past 3 years, the company has increased its long-term debt allocation efforts to reduce the long-term debt period. The long-term gap has been reduced to 4.4 years, which is at a low level in the industry, which is conducive to mitigating the risk of interest spreads and losses. The bank expects net profit to be 46.6 billion yuan under the company's new standards in 2024. Since the share of the company's transactional financial assets in investment assets is relatively higher than that of peers, it is expected to cause profit volatility. Based on a net market ratio of 0.7 times, the bank lowered the target price from HK$17 to HK$14. Currently, the valuation is still attractive, and the purchase rating is maintained.