China Life Insurance Co, the country's top life insurer, said yesterday its first-half profit more than doubled, topping forecasts, thanks to investment gains in a strong stock market and rising premiums in the fast-growing mainland economy.

China Life and number-two rival Ping An Insurance (Group) Co have benefited on two fronts, as the mainland's emerging wealthy buy more insurance policies and the mainland has relaxed investment rules to allow them to invest more in domestic stocks and higher-yielding securities.

China Life, which leads rival Ping An Insurance (Group) Co in the mainland market, said it earned 23.29 billion yuan (US$3.08 billion) in the first half, compared with 8.97 billion yuan in the year-earlier period.

On average, four analysts polled by Reuters were expecting first-half profits of 16.7 billion yuan for China Life.

Michael Chung, a fund manager at Iventure Investment Management Ltd, said China Life's premium growth was in line with industry trends, so the key for future earnings would be its investment income, which is closely linked with the performance of China's stock markets.

"It is difficult for China Life to repeat such strong investment gains in the second half," Chung said. "Because the Shanghai stock market has soared since June last year, the comparison base is high."

The insurer said last month it expected its first-half profit to more than double based on domestic accounting standards, due to steady growth in its insurance business and a substantial increase in investment income.

Rival Ping An this month posted a 140 percent gain in first-half profit, driven by its fledgling banking operations and strong investment returns.

China Life's net investment income more than doubled to 24 billion yuan from 11.3 billion yuan a year earlier. Its gross written premiums and policy fees rose 17 percent to 63.7 billion yuan in the first half.

The company lifted its share of the mainland life insurance market by 1.59 percentage point from the end of 2006 to 46.86 percent.

The Shanghai composite index has risen 92 percent so far this year, good news for mainland insurers previously limited to low-yielding bank deposits and government bonds.

Reuters

(HK Edition 08/28/2007 page6)