China Life 3q09 results

9M 2009 results highlights & Bilibala's comments (in RMB):
(Please note all items below are based on China Accounting Standard instead of Hong Kong Accounting Standard, therefore, its 1q09 & 3q09 results are not comparable with its interm nor annual results.)

1. Annualized premium $237.3B down 4.5% from $248.6B & Premium earned $287.2B up 0.8% from $284.9B

• In 2009, China Life switch its gear from single premium/short term traditional product/universal life product towards traditional product with longer terms, premium lower because new products require time on training and promotion before the sales to rise
• New products has a higher value of new business according to 2q09 press release
• 2008 premium rise 57% compare to 2007, lots of analysts at that time think the premium will not be able to substain, but looks like the life insurance market in China is huge enough

2. Investment income $49.3B up 8.8% from $45.3B and fair value & FX gains/losses $1.2B up from ($9B)

• Investment income up mainly due to asset value go up by 14.0% enough to offset the interest rate drop
• Gains consistent with the China equity market rebound

4. Surrenders $7.6B down 10.0% from $8.4B & Claims paid $12.4B down 15.1% from $14.7B

• If the mortality rate trend continue as life expectancy in China continue to improve, China Life's profit trend will improve because poor life expectancy & high mortality rate has already been priced in the previous and existing policies.
• Surrenders drop may or may not be a good sight, lesser lapse may hurt pricing, at the same time, if it is due maturity of those short term traditional product, then that's good. But we can't tell based on the press release

5. Impairment losses $0.0B down 98% from $3.1B

• Great

6. Net profit $6.0B up 155.4% from $2.4B & EPS $0.70 up 52.2% from $0.46

• In line with Bilibala's expectation

7. Total comprehensive gains $19.8B up from ($26.0B) & Shareholders' equity $149.8B up 10.2% from $135.9B

• In line with Bilibala's expectation
• Stock price above HK$38.0 or US$73.0, Bilibala thinks the price has already reflected all the rebounds, and back to normal
• Future price growth will rely on business growth, one should expect China Life's price will still rise +/- 15% per year (depends on how China equity market & interest rate), but it won't be as dramatic as the past 9 months