China Life Insurance Co, the country's top life insurer, posted a 32 percent fall in first-half profits, as a drop in China's equity market hurt the company's investment income, but the result beat forecast.

After huge profits in 2007, Chinese insurers are battling with slower earnings growth this year.

Investment income has dropped along with Chinese stocks, competition has intensified, and claims in the first half rose on heavy snowstorms and the devastating Sichuan earthquake.

China Life, which leads rival Ping An Insurance (Group) Co on the market, said it earned 15.8 billion yuan in the first half, compared with 23.3 billion yuan a year ago.

By comparison, Ping An's first-half profits fell 2 percent to 9.49 billion yuan, as growth in premiums was offset by a drop in investment income.

On average, four analysts polled by Reuters were expecting China Life's first-half profits to total 11.7 billion yuan.

China Life's first-half investment performance was better than the market had expected, probably because of dividend returns on mutual fund investments, said Ben Lin, an analyst at Nomura.

Shanghai's stock market, on which China Life depends for a sizeable portion of its investment income, lost 48 percent in the first half amid a global market selloff and China's tightening efforts to cool inflation.

Due to increasing fixed-income investment assets, China Life reported 25.3 billion yuan in net investment income in the first half of 2008, up 5 percent from the same period last year, but its net realized gains on financial assets dropped 67 percent to 742 million yuan.

Reuters

(HK Edition 08/26/2008 page2)