(Yicai) Nov. 2 -- China Life Insurance Group, People's Insurance Company of China, and New China Life Insurance reported third-quarter losses mainly due to a decline in the domestic stock market, with all five Chinese listed insurers having increased equity investments in recent years.

China Life Insurance posted a net loss of CNY45.1 billion (USD6.8 billion) in the three months ended Sept. 30, PICC a loss of CNY4.9 billion (USD737 million), and NCI a loss of CNY511 million (USD76.9 million). Ping An Insurance and China Pacific Insurance Group, the other two of China's biggest insurers, remained in the black, but their profits plunged 94 percent and 68 percent to CNY4.1 billion and CNY5.6 billion, respectively, from a year earlier.

In comparison, all five posted year-on-year profit growth in the first half of this year, with that of China Life Insurance surging the most at 229 percent and of CPIC the least at 10 percent.

The five insurers' fair value through profit and loss fell to CNY355 billion (USD53.2 billion), with China Life Insurance posting the largest decline at CNY187 billion, making it the biggest drag on their third-quarter performance, according to their financial reports. FVTPL records unrealized market price fluctuations through profit or loss during the holding period, covering book gains and losses on stocks, equity funds, tradable bonds, and derivatives holdings.

The five firms' net loss or significant profit declines stemmed from large capital market fluctuations in the third quarter and high bases a year ago, several insiders told Yicai.

The CSI 300 Index fell 12.5 percent in the third quarter, while Shenzhen's tech-focused ChiNext Index plunged 28 percent. In comparison, the former gained 18 percent and the latter 50 percent in the same period last year.

In addition, the five insurers posted a combined net profit of CNY247.9 billion in the third quarter last year, up 68 percent from a year ago.

Amid the continued decline in fixed income yields, life insurers that rely solely on bond interest income can no longer cover their debt costs and need to increase equity asset allocations to boost returns, industry insiders pointed out. However, this has raised the industry's overall equity exposure, making firms' performance more susceptible to stock market fluctuations, they added.

Against the backdrop of long-term low interest rates, insurers' fixed income investments remain under pressure, Su Gang, vice president and financial head of CPIC, said at an earnings conference call. "Moderately increasing equity allocation to improve net investment returns and hedge against fixed income pressure is an inevitable choice," he noted, adding that controlling volatility and avoiding excessive impact on short-term performance remain highly challenging for insurers.

Editors: Tang Shihua, Martin Kadiev