‘Big Four’ insurance firms report net profits for 2013

China's "Big Four" insurance companies reported significant rises in their year-on-year net profits in the first three quarters, thanks to climbing investment returns from the stock market, which saw a better-than-expected performance.

New China Life Insurance Co, the country's leading life insurer, said in a report filed to the Shanghai Stock Exchange Thursday that its net profits in the first nine months hit 3.95 billion yuan ($647,8 million), up 70.3 percent year-on-year.

On the same day, China Pacific Insurance (Group) Co reported a 157.8 percent year-on-year growth in net profit in the first three quarters, with its total value reaching 8.08 billion yuan.

Another two leading insurers, China Life Insurance Co and Ping An Insurance (Group) Company of China said in earlier reports that their first three quarters' net profits saw a 218.9 percent year-on-year rise hitting 23.59 billion yuan, and 45.1 percent rise to 23.34 billion yuan, respectively.

"The strong rise in net profits owes to those insurers' climbing investment returns from the capital market, which performed quite well in the third quarter," Lu Junting, a senior insurance expert who asked that his company's name remain anonymous, told the Global Times Thursday.

China's benchmark Shanghai Composite Index rose by around 10 percent from 1,979.21 points at the end of June to 2,174.66 points on September 30.

The investment returns in the first nine months for China Ping An, China Pacific, New China Life and China Life grew by 72.8 percent, 42.6 percent, 33.3 percent, and 23.7 percent year-on-year, respectively, according to their quarterly reports.

Despite the growth in profits, the insurers are still facing a challenge of rising surrender values.

The surrender rate for New China Life reached 4.9 percent in the first three quarters, 1.4 percentage points higher compared with last year. Its total premium income in the first nine months slumped by 7 percent year-on-year, hitting 72.3 billion yuan.

Hu Bo, a professor at Renmin University of China, ascribed this to the increasing number of financing products, which has made many investors transfer their money to these products.

"But this issue could be eased if the companies diversify their products and raise their return rates, following the regulator's relaxed controls on return rates," Hu told the Global Times Thursday.

The China Insurance Regulatory Commission removed the 2.5 percent limit on pre-fixed return rates of standard life insurance products, starting from August 5, allowing insurers to set their rates.