By Xie Heng and Sui-Lee Wee
BEIJING/HONG KONG, March 26 (Reuters) - China Life Insurance Co <2628.HK>, the world's top life insurer by market value, said on Thursday it will be conservative in its investment strategy this year, after seeing its 2008 profit plunge during the global market turmoil.
China Life <601628.SS> said it will invest mostly in fixed income products this year, while taking a conservative stance toward equities, according to a written announcement handed out at a briefing to discuss its 2008 results.
Fixed income products include bonds and certificates of deposits, and are typically less volatile but offer lower rates of return over the long term compared with stocks.
Many insurance companies posted major losses from their stock investments over the last year, as major global stock markets lost about half of their value from their 2008 highs during the global financial crisis. On Wednesday, China Life posted a 42 percent drop in fourth-quarter net profit on a slump in the stock market and a large number of claims due to disasters. For a story on the company's results, click: [ID:nSHA339058].
China Life also said it will actively seek overseas acquisition and investment opportunities this year, but will take a proactive and prudent approach to such purchases. Alex Tang, research director with Core Pacific-Yamaichi International, called the company's broader investment strategy too conservative.
"As a major Chinese company with strong financial backing, it should take the opportunity and to take a more aggressive approach in looking for M&A opportunities in a bear market," he said. "The company should put more effort in reviewing its investment strategy and should put more effort in identifying market trends."
China Life and smaller rival China Ping An Insurance (Group) Co <2318.HK><601318.SS> suffered from a collapse in investment returns last year as the country's benchmark Shanghai Composite Index <.SSEC> tumbled nearly 70 percent.
Chinese stocks have rebounded 24 percent this year, fuelled by the government's 4 trillion yuan ($585.6 billion) stimulus plan, monetary easing policies and signs of an economic recovery.
However, China Life and other domestic insurers face pressure on their bond investments, after China's five rate cuts in the second half of last year pushed down fixed-income yields, analysts have said.
Combined insurance premiums at China's big three life insurers in February continued to grow, but at a slower pace compared with the previous month, the official Shanghai Securities News reported on March 10.
Total premiums at China Life Insurance <601628.SS>, the life insurance arm of Ping An Insurance (Group) Co and China Pacific Insurance (Group) Co <601601.SS> rose 5 percent on the year to 46.7 billion yuan ($6.8 billion), the paper quoted unnamed sources as saying.
