China Life Insurance Co, the country's largest insurer, will increase the proportion of bonds in its overall investment basket and actively seek strategic equity investment opportunities this year, the company's top management said on Thursday.

"With the market expectations strengthening of an interest rate hike, interest in bonds is likely to pick up later this year. So we will purchase more high-grade bonds," China Life Vice-President Liu Jiade told reporters at a news conference following the release of its 2009 results. He added there are already signs of rising yields on short-term debt.

The insurer had about half of its investment portfolio in bonds at the end of 2009, down from 61 percent at the end of 2008. And it lifted stocks to 15.3 percent of its portfolio as of Dec 31, up from 8 percent a year earlier, according to its statement to the Hong Kong bourse. Such a change resulted in a 95.6 percent increase in China Life's investment return last year, thanks to the country's bullish stock market last year.

However, Liu said A shares this year face relatively higher risks and volatility as the government considers an exit from stimulus policies while the economic recovery continues.

"While sticking to our long-term, value-based stock investment strategy, we will also watch for any opportunities in the market, and be more flexible and active," Liu said.

Industry analysts held a similar viewpoint. According to Wang Xiaogang, a senior analyst with Shanghai-based Orient Securities, returns from equity investments this year will be lower than in 2009, given the market fluctuations and uncertainties. But bond yields will be higher.

With investible assets totaling 1.1 trillion yuan, China Life is also looking for strategic equity investment opportunities.

China Life Chairman Yang Chao added that the insurer will promote the "strategic cooperation with the Agricultural Bank of China and China Development Bank, but this still depends on their listing process and relevant policies".

The insurer owns a minority stake in Guangdong Development Bank, and wants to buy a controlling stake in another bank, Yang said earlier.

China Life's profit in 2009 rose 71.8 percent, boosted by higher investment returns. Net income climbed to 32.9 billion yuan, or 1.16 yuan a share, from a restated 19.1 billion yuan, or 0.68 yuan a share, according to the statement.