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China Life's Premium Growth Strong Amid Economic Downturn
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On Dec 29, we issued an updated research report on China Life Insurance Co. Ltd. .
Shares of China Life have been underperforming since the beginning of this year. Year to date, the stock as lost 19.7% compared with the Zacks categorized Life Insurance industry’s that has gained 3.4%. The share price depreciation is reflective of the challenges faced by the company, such as sustained soft interest rate environment, rising costs and the economic downturn.
YTD PRICE CHART
Despite these challenges, China Life has gained popularity among shareholders on the back of certain positives.
The Beijing-based insurance company has a competitive advantage and strong enterprise value as the first Chinese insurance company listed in the New York Stock Exchange, the Hong Kong Stock Exchange and the Shanghai Stock Exchange. It has further enhanced its customer base and CRM (Customer Relationship Management) through innovative customer development models and mechanism that have added new customers. Optimizing the quality of services for existing customers has also been a major strategy of China Life.
China Life has been continuously capitalizing on its “State of Art” technology by enhancing IT infrastructure and strengthening development and application of electronic tools.
Improving the productivity of sales force has been another major area of focus for the company over last few years. By enhancing efforts toward sales force recruitment, standardizing and upgrading field offices and promoting management specialization of individual agent channel, China Life has substantially increased the efficiency and productivity of its sales force.
China Life’s steady growth is backed by its strong fundamentals that have helped it carve out a niche in the global insurance market. Solid liquidity and commendable solvency has made the company financially flexible to make strategic investments. The company’s strong revenue base is supported by robust growth in premiums over the last few years. China Life plans to invest more in business development initiatives to utilize the untapped opportunities of the insurance market.
However, despite all these tailwinds, the persistently low interest rate has been adversely affecting the investment income of insurance players like Alleghany Corporation , 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.
In addition, the slowdown in Chinese economy is a negative as most of the company’s operations are confined to the nation itself. The company requires to improve its cost-management initiatives to avoid capital erosion. Persistently weak cash inflow further indicates the company’s waning operating efficiency. These factors are likely have resulted in the company’s share price depreciation.
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China Life's Premium Growth Strong Amid Economic Downturn
On Dec 29, we issued an updated research report on China Life Insurance Co. Ltd. .
Shares of China Life have been underperforming since the beginning of this year. Year to date, the stock as lost 19.7% compared with the Zacks categorized Life Insurance industry’s that has gained 3.4%. The share price depreciation is reflective of the challenges faced by the company, such as sustained soft interest rate environment, rising costs and the economic downturn.
YTD PRICE CHART
Despite these challenges, China Life has gained popularity among shareholders on the back of certain positives.
The Beijing-based insurance company has a competitive advantage and strong enterprise value as the first Chinese insurance company listed in the New York Stock Exchange, the Hong Kong Stock Exchange and the Shanghai Stock Exchange. It has further enhanced its customer base and CRM (Customer Relationship Management) through innovative customer development models and mechanism that have added new customers. Optimizing the quality of services for existing customers has also been a major strategy of China Life.
China Life has been continuously capitalizing on its “State of Art” technology by enhancing IT infrastructure and strengthening development and application of electronic tools.
Improving the productivity of sales force has been another major area of focus for the company over last few years. By enhancing efforts toward sales force recruitment, standardizing and upgrading field offices and promoting management specialization of individual agent channel, China Life has substantially increased the efficiency and productivity of its sales force.
China Life’s steady growth is backed by its strong fundamentals that have helped it carve out a niche in the global insurance market. Solid liquidity and commendable solvency has made the company financially flexible to make strategic investments. The company’s strong revenue base is supported by robust growth in premiums over the last few years. China Life plans to invest more in business development initiatives to utilize the untapped opportunities of the insurance market.
However, despite all these tailwinds, the persistently low interest rate has been adversely affecting the investment income of insurance players like Alleghany Corporation , 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.
In addition, the slowdown in Chinese economy is a negative as most of the company’s operations are confined to the nation itself. The company requires to improve its cost-management initiatives to avoid capital erosion. Persistently weak cash inflow further indicates the company’s waning operating efficiency. These factors are likely have resulted in the company’s share price depreciation.
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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How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>