China Insurers’ Investment Yield Falls on Stock Slump
Chinese insurers’ investment returns dropped in the third quarter as they boosted fixed-income holdings and trimmed equities to curb losses from a stock market that has plunged almost 70 percent this year.
Investments averaged a 2.1 percent yield for the first nine months, down from 2.4 percent in the first half, China Insurance Regulatory Commission Assistant Chairman Yuan Li said today in Beijing. That compares with a historic high of 10.9 percent in 2007, when the stock market surged.
China’s slumping stock market has eroded insurers’ investment returns and crimped profit growth even as premiums kept expanding. Third-quarter profit at China Life Insurance Co., the nation’s biggest insurer, fell by 70 percent, while Ping An Insurance (Group) Co. reported a 7.8 billion yuan ($1.1 billion) loss for the three months.
“The drop was no surprise, and it could have been negative if all the unrealized losses on the companies’ balance sheets were also calculated,” said Liu Peng, a Nanjing-based analyst at Huatai Securities Co.
Insurers held 407.6 billion yuan in equities and stock funds at the end of September, 14.2 percent of total investments, compared with 17.6 percent three months earlier, CIRC said. Bond holdings were boosted to 1.66 trillion yuan, representing a 57.6 percent share, 4 percentage points up from the end of June.
Insurers had combined losses in stock funds, while the investment risk was “within controllable range,” Yuan said.
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