The markets had a strong day across almost all sectors, but Chinese oil and gas giant PetroChina (PTR) and the country’s leading insurer China Life Insurance Company (LFC) stood out with huge gains.

PetroChina Company Limited [[PTR]] shares surged more than 4.4% in normal trading today, adding some $9.2 billion in market capitalization to the Chinese oil and gas giant. The company rode a 2.77% gain in the energy sector as a whole. Competitor China Petroleum & Chemical Corp. [[SNP]] saw a 5.87% rise in its shares.

China Life Insurance Company Ltd. [[LFC]] gained more than 6.2% or $7.5 billion after on a strong day for the markets generally. China Life Insurance announced yesterday that it dominates the Chinese insurance market, taking in some 40.7% of its premiums.

China Life Insurance Company [[LFC]] is the top market gainer today by market capitalization – but this surge is curious given its unimpressive first-half performance combined with the opaqueness of its investment portfolio.

China Life Insurance’s gains today now leave it up a staggering 38% year-to-date, but its parent company, China Life Insurance Group., announced that its premium income for the first six months of the year dropped 5% from a year earlier – from $26.6 billion to $25.3 billion.

Some analysts think the optimism driving China Life Insurance’s gains is based on its investment portfolio which could see big gains in the second half of the year from IPOs, but China Life Insurance does not have the best track-record in its investment portfolio. As the Chinese government has encouraged the insurance industry to buoy the financial sector in recent years, insurers like China Life have made big investments in Chinese banks. China Life has stakes in more than 10 Chinese banks and suffered nearly a 5% loss overall on its investment portfolio last year because of it. Unfortunately, China Life Insurance
is as much a macroeconomic play on the Chinese financial sector as it is a play on the life insurance industry in China.

These facts, combined with poor disclosure, make China Life Insurance an unappealing stock right now despite trading at a discount, when accounting for growth prospects, to U.S.-based insurers.

China Life Insurance Company Ltd. (LFC) shares may be up more than 20 percent in 2009, but the stock could be a good buy now given its future prospects.

China Life Insurance Company Ltd. [[LFC]], the largest life insurance provider in China, may have already risen more than 20 percent so far in 2009, but many investors remain bullish on the company. The Chinese life insurance industry is still growing steadily, while the company’s reasonable multiple and strong growth rates make it a compelling value in today’s market.

The life insurance industry is attractive to many investors, including Warren Buffett, thanks to its strong cash flow generation. In fact, net cash provided from operating activities at China Life Insurance amounted to $12.4 billion – or 63.9 percent of its net income. Recently, this cash has been used to purchase underperforming securities, but a turnaround could be on the way.

Meanwhile, more normalized interest rates going forward should help grow profitability at China Life Insurance. After all, interest rates affect returns on safe investment assets; declining rates expose them to reinvestment risks, while rising rates can generate unrealized capital losses for debt securities designated as trading. The earlier happens to be true in today’s environment.

China Life Insurance saw its revenues jump from $7.1 billion in 2004 to more than $43.6 billion in 2007, but fell to $19.4 billion in 2008. However, the company’s balance sheet remains robust with a current ratio of 1.21 with approximately $5 billion in cash and cash equivalents on its books. These levels suggest that the company will be able to weather the economic storm.

In the end, China Life Insurance faced a temporary setback thanks to the global economic crisis and lower interest rates in China. However, these problems should be solved as interest rates normalize and the economy recovers. Investors willing to wait out the storm may find this stock quite profitable over the long-term.