Oct. 21 -- Three Chinese insurers, including New China Life Insurance, expect their third-quarter net profits to jump between 40 percent and 70 percent, driven by strong investment income, signaling that China’s top five listed insurers are on track to post record-high earnings.

New China Life was the first to announce that it expects net profit attributable to shareholders for the first nine months of this year to rise between 45 percent and 65 percent to CNY30 billion to CNY34.1 billion (USD4.2 billion to USD4.8 billion).

If realized, New China Life will achieve record cumulative and quarterly profits, with its nine-month profit surpassing last year’s full-year earnings, according to Founder Securities.

PICC Property and Casualty forecast a 40 percent to 60 percent increase in net profit, while China Life Insurance projected a rise of 50 percent to 70 percent to between CNY156.8 billion and CNY177.7 billion (USD22 billion to USD25 billion). Both projections are well above previous institutional estimates.

The main driver of the profit surge is higher investment income. China Life Insurance said the stock market has stabilized and gained momentum this year, and the company has stepped up its equity investments by actively channeling medium- and long-term funds into the market, leading to a sharp increase in investment income. New China Life Insurance and PICC Property and Casualty cited similar reasons in their statements.

Analysts said the insurers’ performance “far exceeded expectations.” Founder Securities had earlier forecast net profit growth of 36.7 percent for PICC Property and Casualty and 25.6 percent for China Life Insurance from a year earlier.

Five Insurers’ Record-High Outlooks

The strong earnings come off high bases set last year. The five major Chinese insurers listed on the mainland reported a combined net profit attributable to shareholders of CNY319 billion in the first three quarters of last year, up 78 percent from a year earlier and the highest level on record for the same period, Yicai’s statistics showed. If this year’s forecasts hold true, the insurers’ combined net profit for the first three quarters will reach another historical high.

China’s stock market has strengthened since hitting a low in April, with the CSI 300 Index climbing 18 percent in the first three quarters, said Ge Yuxiang, chief analyst for non-banking finance at Zhongtai Securities. He noted that the moderate upward trend and alternating gains in dividend and growth sectors have continued to boost market returns.

“We expect listed insurers to maintain strong net profit growth in the third quarter despite high comparison bases,” said the team led by Sun Ting, chief strategy officer and chief non-banking finance analyst at Soochow Securities.

Analysts also attributed the insurers’ profit growth to effective cost control. Founder Securities noted that their combined cost ratio continued to improve in the first three quarters, supported by fewer major disasters such as typhoons and heavy rains compared with last year.

Moreover, the gradual implementation of the “Report and Action Consistency” policy for non-auto insurance is also helping insurers manage expenses more effectively. According to Huatai Securities, the policy, which will be enforced on Nov. 1, could reduce property insurers’ combined cost ratio by 0.2 to 0.9 percentage points.

The “Report and Action Consistency” policy requires insurers to strictly adhere to the terms and rates filed with regulators to ensure consistency with actual business operations, aiming to standardize the market, curb unfair competition, and enhance efficiency in the industry.

Editor: Emmi Laine