New China Life's Q3 Growth Pressured by Decreasing Agent Headcount Following 2020 Expansion

No-moat New China Life Insurance, or NCI’s, first-three quarter net profit growth slowed to 7.6% year on year from 28% in the first half. This was due to a 4% year-on-year premium contraction and a CNY 6.4 billion increase in insurance liability reserve as a result of a lower 750-day moving average of the 10-year government bond yield, versus the CNY 2.5 billion in the first half. This resulted in a 51% year-on-year decline in third-quarter net profits. NCI’s agent regular new premium declined by 5% year on year to CNY 6 billion, faring better than China Life’s 14% premium contraction during the same period. However, it also reported a 38% decline in agent single premium, which we suspect was attributable to a sharp shrinkage in agent force during the past quarter. As a result, agent new premium posted higher-than-peers decline of 12% year on year, versus 8% and 2% contractions for China Life and Ping An.