China Life Insurance Company Ltd. ADRLFC

Morningstar Rating

Stock Research and Analysis

by Peter Liu, CFA

The huge potential of China's life insurance industry provides a solid platform for players to grow. By leveraging its massive salesforce of exclusive agents and geographically extensive distribution network, China Life--the country's largest life insurance Read more

Bulls Say

The government exerts control over new entrants and regulates competition, which will prevent excess profits from disappearing too quickly.

China Life's extensive exclusive distribution network and well-recognized brand name help the company maintain profit margins and ward off competition in big cities.

The development of China's capital market enables China Life to enrich its investment portfolio and increase the investment yield benefiting from China's strong economic growth. Read more

Bears Say

Although foreign insurance companies have not achieved meaningful success, they may become formidable competitors when they build up brand reputations over time and get more familiar with the Chinese market.

Banks may aggressively expand into the insurance market if the regulation separating insurance business and commercial banking business is relaxed in the future.

Banks may become a more important distribution channel for insurance products as customers become more knowledgeable about insurance products, and China Life would have to share a larger portion of its proceeds with this distribution channel.

The potential increase or even deregulation of the assumed interest rate on life insurance policies will heighten competition and squeeze China Life's profit margin. Read more

Strategy

China Life's overall strategy is to focus on the core business of life insurance and pursue modest diversification in other financial areas, such as banking, securities, pension, property insurance, Read more

Management

China Life is controlled by China Life Insurance (Group) Company (CLIC), which owns 68% of the outstanding shares. Since China Life's inception, most of senior management and board members have been appointed by CLIC or have come from CLIC. Chao Yang Read more

Profile

China Life is China's largest life insurance company, with about 40% market share in 2008. China Life was spun off in 2003 after a restructuring of China Life Insurance Read more

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