China Life made $26 billion in the first quarter, why do insurance companies make so much money? (Does China Life make money running insurance)

There are three pieces to an insurance company's bottom line:

The mortality spread, the difference between assumed and actual mortality rates.

Fee spread, the difference between projected operating expenses and actual operating expenses,

Interest spread, the difference between actual earnings and financing costs.

Dead and fee spreads, with very little earnings.

Financial institutions make their profits mainly on spreads.

China Life has more than $3 trillion in assets under management,

with that much volume,

do you think a few tens of billions of dollars of profit a quarter is still a lot?

Not only China Life, many insurance companies are very profitable, except for individual one or two may lose money because of poor management, most of the insurance companies are making a lot of money.

First of all, a little knowledge: the insurance company compensation is based on the law of large numbers, that is, the death rate of three thousandths of a person, every day 1,000 people insured usually only three or so people will get the death benefit, the next day there will be another 1,000 people insured, and so the cycle repeats itself, so the principal insurance company is less likely to lose money

Of course, just said just don't lose money, the insurance company can make money in many more ways, especially in the case of a large number of people. Insurance companies to make money in more ways, especially like China Life, such as vice-ministerial-level central enterprises, the root of itself is red, the general capital preservation of high returns like the country's large infrastructure investment, as well as trusts and other large amounts of risky investments

The following to show you China Life invested in 10 large-scale projects as well as the rate of return:

1, West-East Natural Gas Pipeline Project: has been in the end of 2002 to start Delivering gas, the company invested a total of about 5.3 billion yuan. The annual rate of return is 8.5%.

2. Three Gorges Project: entered by purchasing bonds for the construction of the Three Gorges, with a total investment of more than 19 billion yuan over eight years. From 2001 onwards the bonds pay an annual interest rate of 11.5%.

3, the Yellow River Xiaolangdi Water Conservancy Project: the project is currently under construction, some projects have begun operations, with an investment of about 1.1 billion yuan. The annual yield is 11.36%.

4, Daya Bay Nuclear Power Station: to be completed and put into operation in 2001. The company invested about 900 million dollars and can get 12.8% annual return from 2000 to 2020.

5. East and South China Power Grid Rehabilitation Project: the company invested 3.7 billion yuan, with an annual return of 14.05 percent.

6, China Life spent 5.670588234 billion yuan to subscribe 20% stake in Guangfa Bank. It is expected to earn 8% this year and 15% in the next five years.

7, China Life *** spent 35 billion yuan, 19.2 billion shares of the Southern Power Grid, accounting for 31.94% of the total share capital of the Southern Power Grid, jumped to become the second largest shareholder of the Southern Power Grid. It is expected to return 5% this year and 8% in the future.

8, China Life subscribed to the Bank of China shares 788.42 million H shares, totaling 2.35 billion Hong Kong dollars,

9, China Life invested in the construction of the Bank of 400 million H shares, accounting for the Bank's total share capital of 0.19%.

10, China Life invested in Bank of China twice, totaling more than 500 million shares, accounting for 0.21 percent of the bank's total share capital.

Don't look at how much money to invest, just look at this rate of return, is that many of us ordinary people do not dare to imagine, this rate of return and we are not the same as loan sharks, because this is all a stable income ~ unlike the loan sharks are not stable ~

This is considered to be much? China's top 10 insurance companies, the second 10th together do not have as much net profit as the first. Life is second place. You do the math on how much money the first place has, Ali Tencent's net profit is only about as little as the first place.