(Yicai Global) Aug. 31 -- China’s five largest insurance companies saw their net profit in the first half drop 24.4 percent year on year due to falling investment yields and growing reserves as interest rates continued to slide.

Net profit at the five firms, Ping An Insurance, New China Life Insurance, China Life Insurance, People’s Insurance Company of China and China Pacific Insurance, came to CNY134.4 billion (USD19.6 billion) in the first six months of the year, according to their latest financial reports.

Shenzhen-based Ping An suffered the biggest fall with net profit down 29.7 percent. Beijing-based New China Life’s profit slipped 22.1 percent, both China Life Insurance and PICC slid 18.8 percent while China Pacific Insurance declined 12 percent.

Investment yields, such as the three-year average return on a 10-year treasury bond, dropped as a result of the Covid-19 pandemic. Investment returns at all the insurers fell by between 0.2 percentage point and 0.4 percentage point, according to their reports.

The resulting increase in reserves caused the pre-tax profit of these five insurance companies to drop to CNY25.5 billion (USD3.7 million), according to Yicai Global’s calculations.

Last year’s strong performance was another reason for the slide in profits. New regulations issued in May last year increased the pre-tax deductibles for the handling fees and commissions on property insurance and personal insurance. This caused net profit among insurers to surge over 50 percent in the first half last year, making it difficult for the firms to register growth this year.

If the above indicators are excluded, the operating profit at Ping An Insurance and China Pacific Insurance jumped by 1.2 percent and 28.1 percent respectively in the first half.

Editor: Kim Taylor