China's largest life insurer saw its shares more than double on their Shanghai debut yesterday, showing massive investor interest in the first insurance stock listed on the domestic market.

China Life's A shares opened at 37 yuan, 96 percent higher than their initial public offering price of 18.88 yuan, beating most analysts' expectations, which were around 30 yuan.

"We are encouraged by such a high opening price but also feel even more pressure, as we will have to strive to meet investors' expectations," Wu Yan, president of China Life, told China Daily, adding that the opening price was appropriate given the firm's potential for growth.

China Life raised 28.3 billion yuan by selling 1.5 billion shares on the Shanghai bourse last month, making it the largest IPO in the world's life insurance sector. It also reached a record high by attracting over 810 billion yuan in subscriptions from retail and institutional investors.

"The main reason for listing in Shanghai is to bring benefits to domestic investors and share our growth with them," said China Life's Chairman Yang Chao.

After a spectacular opening, the company's shares continued soaring with heavy trade, hitting a high of 40.2 yuan before closing up 106 percent at 38.93 yuan. That's 52 percent more than the HK$25.60 close of its H shares, which dropped 4.7 percent yesterday.

"The fall of China Life's H shares shows that some investors are worried that the insurer's stocks may have been overvalued," said an analyst with CTITC Securities.

Hang Wei, a Shanghai-based retail investor, told China Daily that he would not buy China Life shares at such a high price as China Life's price to earnings ratio (P/E) has climbed to over 200.

But according to an analyst at Everbright Securities, P/E is not a good indicator for the value of insurance stocks.

"Embedded value, an industry yardstick that reflects the future premiums customers are required to pay under existing policies, is a more appropriate indicator," he said, adding there is still growth potential for China Life and the whole insurance industry.

Despite double-digit growth in the past decade, China's insurance penetration is still low. China's total insurance premiums, which grew 14 percent to 493 billion yuan in 2005, accounted for less than 3 percent of the country's gross domestic product. That compares with more than 9 percent in the US and about 10 percent in Hong Kong, according to data from Swiss Reinsurance Co.

Meanwhile, as the China Insurance Regulatory Commission strives to broaden investment channels, life insurers' investment returns will be further boosted.

"Our expectations for China Life could be as high as 90 yuan within three years, given its improved investment returns and growth potential," said Luo Yi, an analyst with Merchants Securities.

In the first half of 2006, China Life's premium income rose 23 percent year-on-year to 111 billion yuan, pushing its net profit up 62 percent to 5.8 billion yuan.

China Life was listed in Hong Kong and New York in December 2003 at an initial public offering price of HK$3.625.