PICC Property and Casualty, the mainland's largest non-life insurer, said half-year net income jumped 140 per cent on a surge in investment gain and higher underwriting profit.

Net profit rose to 3.19 billion yuan or 28.6 fen a share for the six months to June from 1.33 billion yuan or 12 fen a share a year ago, according to a statement filed with the stock exchange yesterday.

Mainland insurers are benefiting from the surging domestic stock market instead of their core business, and impressive earnings growth will be hard to repeat if the market turns bearish.

PICC's first-half net investment income rose 111 per cent to 1.65 billion yuan, fuelled by dividends from stocks and interest payments from debt securities. Net realised and unrealised gains on investments, which reflected the change in market value of its portfolio, soared 205 per cent to 2.68 billion yuan.

Net insurance premiums rose 23 per cent to 33 billion yuan, mainly fuelled by a jump in motor vehicle third-party liability insurance, the company said. Net underwriting profit grew 39.5 per cent to 1.22 billion yuan.

PICC, which said it had 43.8 per cent of the mainland's non-life insurance market, is tapping into the lucrative life insurance sector.

Motor vehicle business accounts for 77 per cent of the insurer's premiums and commercial property 9 per cent.

The company in April said it planned to spend 841 million yuan for a 29 per cent stake in sister firm PICC Life. PICC said there was no agreement on the deal yet.

Chairman Wu Yan has said that the company plans to use its nationwide general insurance network and brand name to cross-sell life insurance products.

The company will also open life insurance offices across the country this year.

PICC was also reported to be in talks to buy part of New China Life Insurance, the nation's fourth-largest life insurer. The China Insurance Regulatory Commission is selling a 22.5 per cent stake in New China Life.

"Given PICC's high cost base in distributing a commoditised product - motor insurance - PICC Group's expansion in the life business is inevitable," Citigroup said in a recent report.

In life insurance, PICC will face intensifying competition from domestic giants including China Life Insurance and Ping An Insurance, and from fast-expanding foreign players in the mainland including Canadian insurers Sun Life Financial and Manulife Financial Corp and AXA of France.

Shares of PICC, which have risen 131 per cent this year, closed 2.78 per cent higher at HK$9.23 yesterday before the earnings announcement.