China Life Insurance Earnings: Profit Slumps on Investment Losses, NBV Growth Slowdown In Line

With new business value, or NBV, growth tracking our assumptions, we retain our fair value estimate for China Life at CNY 19 per A-share and HKD 20 per H-share. The H-shares are attractive, trading at a sharp discount to our fair value estimate and the A-shares. We stick to our full-year NBV growth projection of 14%, which implies second-half NBV declines by two thirds from the first half. This would be due to the weaker sales momentum after the guaranteed rate was cut to 3% from 3.5% starting August, as well as curbed bancassurance sales. Both measures are the result of greater regulatory scrutiny as policymakers continue to focus on improving industry health.