China Life Insurance Co. (LFC) said Thursday it will continue to look for overseas merger-and-acquisition opportunities, diversify its domestic business and remain conservative in capital markets investment this year.

Chairman Yang Chao told reporters the company is in talks over possible overseas acquisitions while it also looks for a foreign strategic investor.

The comment came after Yang said earlier this month China Life had decided not to bid for American International Assurance Co., the Asian unit of American International Group Inc. (AIG), because of big changes to AIA's operations and damage to the perception of the brand.

From the second half of 2007 until the first half of 2008, China Life carried out extensive research on investment opportunities in the U.S., Europe, Southeast Asia and the Middle East, Yang said. He didn't say whether the company had continued to study overseas opportunities since then.

On potential overseas investments and introducing foreign strategic investors, he said only that any decision would "need time and prudence."

"Our top priority is to develop the domestic market," Yang said.

The company said in a statement it would actively seek to invest in infrastructure projects, unsecured bonds, real estate, and private placements this year.

China Life reported Wednesday a 45% slide in 2008 net profit to CNY21.28 billion (US$3.1 billion), from CNY38.88 billion a year earlier, because of investment losses resulting from the slump in the local capital market.

China's benchmark Shanghai Composite Index lost nearly two-thirds of its value last year, making China's stock market one of the worst performers worldwide.

The insurer recorded a fair value loss of CNY7.30 billion on its traded financial assets in 2008, compared with a fair value gain of CNY18.84 billion in 2007.

Nonetheless, Yang said the board of directors is "very satisfied" with the insurer's performance during the global financial crisis.

President Wan Feng said in a statement that during 2008 "the company correctly assessed the situation in the international financial markets and effectively controlled its investment risk during the market turmoil."

China Life didn't invest in any foreign debt, stocks or derivatives directly related to the subprime crisis, Wan said. He didn't say whether the company has any indirect exposure to subprime assets.

China Life said it aims to maintain stable insurance premium growth, while optimizing its business mix to improve profitability by introducing new long-term insurance products with better returns.

Premium income rose 21% last year to CNY135.33 billion from CNY111.89 billion in 2007.

China Life said it will remain conservative in investing in the capital market, after it cut the proportion of its investments in equities to 8.0% at end of 2008 from 23.0% a year earlier, and increased the proportion of its investments in fixed-income securities to 61.4% from 52.1% over the same period.

China Life Vice President Liu Jiade said it is difficult to assess when the stock market will bottom out, but many Chinese stocks now offer high investment value. He said, however, China Life would continue to invest primarily in the bond market.

Yang also told reporters China Life remains interested in taking a stake in Agricultural Bank Of China, the last of China's Big Four state-owned banks that has yet to list. He didn't elaborate.

-Victoria Ruan and Chen Juan in Beijing, and Aries Poon in Hong Kong contributed to this story; Dow Jones Newswires; 8610 6588 5848; victoria.ruan@dowjones.com