China Life Insurance (02628) said it expects the net profit attributable to equity holders for the first quarter of 2018 will increase by a range between about Rmb6,764 million and Rmb7,994 million as compared to the same period of 2017 (representing an increase of about 110% to 130%).
The estimated increase in the results for the first quarter of 2018 is mainly attributable to the impact of the update of discount rate assumption of reserves of the company's traditional insurance contracts. China Life determines the assumption in relation to the reserves of insurance contracts based on the current information available as at the date of balance sheet. For the traditional insurance, China Life determines the assumption of discount rate based on the "Yield curve of reserve computation benchmark for insurance contracts" published on the "China Bond" website. The update of discount rate assumption of reserves of traditional insurance contracts caused an increase in the reserves of insurance contracts in the first quarter of 2017 while the update of such assumption led to a decrease in the reserves of insurance contracts in the first quarter of 2018.
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