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Case Title:

China Life, the World’s Largest Insurer: Growing Prospects and Challenges

Publication Year : 2010

Authors: S Chaudhuri, A Chakraborty, S Hussain

Industry: Banking, Insurance and Financial Services

Region: China

Case Code: GRS0201IRC

Teaching Note: Not Available

Structured Assignment: Not Available


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Abstract:
China Life, the world's largest insurer by market capitalisation, had dominated the Chinese market for over 30 years since 1978. The company had been the largest life insurer in China with a market share of 44%. Owing to improved performance of its new business product mix and the expected future income potential, China Life had recorded a 60% increase in its embedded value (EV), from RMB113,954 million in 2005 to RMB181,989 in 2006. But, of late, China Life had been losing its market share to smaller rivals like Ping An, China Pacific, Taiking Life, Xinhua Life, Tai Ping Life, Minsheng Life and Hua Tai. The booming stock market of China had lured people away from investment-linked policies and curved out a major portion of life insurance premium income of China Life. Going forward, China Life's growth prospect and movement in EV would largely depend on how well it diversifies its investments and product mix to minimise risk and regain its market share. This case is intended for MBA / PGDBM students and is designed to be part of the security analysis and strategic management curriculum.

Pedagogical Objectives:

  • To understand the developments in the Chinese insurance sector.
  • To understand the growth strategies of China Life.
  • To have a brief understanding of how the changes in basic assumptions causes change in the embedded value (EV)

Keywords : Embedded value components; Largest life insurance company; Security analysis; People's Insurance Company of China (PICC); China Insurance Regulatory Commission (CIRC); Property and casualty insurance; Enterprise value; Adjusted net worth (ANW); Value in force business; Solvency margin; Morbidity rate; Mortality rate; Valuation; Bancassurance; Embedded value movement

Contents : 
Life Insurance Industry in China
Brief History of Chinese Insurance Industry
Global Comparison of Insurance Penetration
Growth in Life Insurance Market in China
Strong Network of China Life
Financial Performance of China Life

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Case Study :
   INR 200 = USD ($)

Structured Assignment:
   INR 150 = USD ($)

Teaching Note :
   INR 400 = USD ($)
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