China Life Insurance to see 45% YoY profit slump – Nomura

China Life is the only insurer Nomura covers that has adopted the transition plan for the new accounting standards (IFRS) for insurance contracts.

China Life Insurance’s 2023 New Business Value (NBV) is forecasted to increase by 12% year-on-year (YoY), according to a Nomura research note.

Nomura also sees the China-based insurer’s net profit to landslide 465% YoY to CNY17.8b in 2023 due to weak investment performance with an annualised return on equity (ROE) decreasing to 4.0$. Total investment yield will likely dip to 2.9%, said the research firm.

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“Note that our model and valuation for China Life remain based on Accounting Standards for Business Enterprises (ASBE), as the company is the only insurer we cover that has adopted the transition plan for the new accounting standards (IFRS) for insurance contracts, and it will continue to apply ASBE until 31 December 2025,” the note said.