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China Life Bolsters Revenue Base Despite Headwinds

LFC Y ACGL NMIH

Trades from $3

On Nov 23, we issued an updated research report on China Life Insurance Co. Ltd. (LFC - Free Report) .

Headquartered in Beijing, the company enjoys competitive leverage and strong enterprise value as the first Chinese insurance company to be listed in the New York Stock Exchange, the Hong Kong Stock Exchange and the Shanghai Stock Exchange.

The company’s strong fundamentals have also helped it carve out a niche in the global insurance market. The company’s financial flexibility, backed by its solid liquidity and commendable solvency, has not only made strategic investments possible but also retained the shareholders’ confidence on this stock.

Robust growth in premiums over the last few years has boosted the company’s revenue base substantially China Life further plans to invest more in business development initiatives in order to utilize the untapped opportunities of the insurance market. It intends to take corrective actions for better implementation of strategies on its sales force in order to accelerate business.

However, the persistently low interest rate has been adversely affecting the investment income of insurance players like Alleghany Corporation (Y - Free Report) , NMI Holdings, Inc. (NMIH - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) to name a few. China Life is no exception to this trend as it has also witnessed a decline of 43% in its net investment income in the first nine months of 2016.

Moreover, the slowdown in Chinese economy is a major headwind for the company as most its operations are confined to the nation itself. It also needs to strengthen its cost-management initiatives to avoid capital erosion. Persistently weak cash inflow further indicates the company’s waning operating efficiency.

China Life presently carries Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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