New China Life Placement - Clean-Up Helps, past Deal Did Well

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

New China Life Insurance / Equity Bottom-Up

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<li class="MsoNormal">
VONB Weakness Suggest Long-term Vulnerability: New China Life (1336.HK) [NCL] posted net profit of CNY 14.6 bn - increasing 84% YOY and in line with pre-announcement – reflecting a combination of in-force business expansion, a one-time tax refund of CNY 2 bn, and a six-fold YOY increase in trading gains to CNY 2.7 bn;   </li>
<li class="MsoNormal">
Value Challenges Ahead: With value challenges ahead in NCL’s illiquid securities portfolio (Challenged Tier 2/3 bank negotiable CDs and alternatives) and the CBIRC’s enabling of insurers to increase their concentration in equities during the January/February market sell-offs, we not only question solvency margins but the viability of China Life’s full-year dividend per share – not to mention the impact of lower gross yields; and</li>
<li class="MsoNormal">
Conference Call:New China Life will have its conference call on 3/26. Expect discussion on a more balanced product and channel mix, VONB margins in this declining rate environment, and agent retention.</li>
</ul>



VONB Weakness Suggest Long-term Vulnerability: New China Life (1336.HK) [NCL] posted net profit of CNY 14.6 bn - increasing 84% YOY and in line with pre-announcement – reflecting a combination of in-force business expansion, a one-time tax refund of CNY 2 bn, and a six-fold YOY increase in trading gains to CNY 2.7 bn;   

Value Challenges Ahead: With value challenges ahead in NCL’s illiquid securities portfolio (Challenged Tier 2/3 bank negotiable CDs and alternatives) and the CBIRC’s enabling of insurers to increase their concentration in equities during the January/February market sell-offs, we not only question solvency margins but the viability of China Life’s full-year dividend per share – not to mention the impact of lower gross yields; and

Conference Call:New China Life will have its conference call on 3/26. Expect discussion on a more balanced product and channel mix, VONB margins in this declining rate environment, and agent retention.


New China Life – VONB Is a True Challenge