China Life, one of the largest life insurers in China, has increased its equities holdings in its investment portfolio during the first quarter of 2009, as the stock market rebounded and it sees weak industry premiums in this year.

The insurer has also raised holdings of higher-yielding bonds and term deposits.  It has confirmed that fixed-income would remain the core of its investment portfolio in spite of the surge in stock markets.

The company’s unaudited premium income during the first four months of this year totaled RMB 126 billion, down 1.56% year on year. According to the company, Chinese industry-wide life assurance premiums would grow marginally or even fall this year, owing to a change in government regulations. 

Wan Feng, President, China Life, said that the reason for the subdued outlook was new Ministry of Finance rules coming into force in 2009 that bar insurers from counting income from investment-linked or universal insurance products as premiums.

Consequently, the competitive landscape of the insurance industry may witness a major change in future.