"Our latest pick is an old friend of the Cabot China & Emerging Markets Report, China Life Insurance, the biggest insurer in China and the largest in the world by market value. It's also one of the biggest companies in China, with a market cap of $105 billion and sales of $24.4 billion a year.

"The insurance story in China is an interesting one, an industry that's still getting a huge boost from the rapid transition of China from a village- and family-based society to an urban individualist society.

"The people who leave their villages also leave behind the traditional family roles that call for the family to stay together and the young to care for the aged. Once that tradition is broken, people who have left the village need to find new ways to fulfill their obligations, and insurance is one popular answer.

"China Life Insurance, like most Chinese companies that have been around since Mao was in power, has an interesting history.

"The company began life in 1949 as the People's Insurance Company of China (PICC), a state-owned enterprise that functioned as a virtual monopoly through the 1950s as the Revolution ran its capitalist competitors out of town.

"In 1958, the paradox of having an insurance business in a cradle-to-grave welfare state finally impressed itself on China's rulers and the company went into suspended animation until economic reforms revived it in the late 1970s. PICC began selling property and casualty insurance in 1979 and life insurance in 1982.

"In the late 1980s, China actually allowed competitors to spring up, and PICC began to act like a real company, not a state service.

"As a real company, China Life Insurance (the new name was part of its transformation into a for-profit entity) emerged as a joint stock company, established an asset management division (both in 2003) and worked hard to make itself attractive to investors.

"It had a huge head start in infrastructure, and is adapting well to a world in which PingAn Insurance and China Pacific Insurance present increasingly competent competition. In 2008, the company had 102 million individual and group life, annuity and long-term health policies in force.

"Through its 638,000 exclusive agents, 13,000 direct sales reps and more than 18,000 client service managers at more than 90,000 outlets, it also offers individual and group accident policies and short-term health insurance policies and services.

"There is no doubt that increasing competition and the economic slowdown in China has affected China Life's business. The company only reports earnings twice a year, and its last two semi-annual reports have shown declines-25% in the fi rst half of 2008 and 63% in the second.

"But revenue declines have been much more muted, and the company still pays a 2.4% dividend. The company has also announced- after taking a beating on its 2008 investment earnings-that it will take a more cautious stance with its investment strategy.

"Earnings estimates for 2009 point to a big rebound, and when the Chinese economy heats up, so will China Life.

"The big story behind China Life is still the demographic one. Not only is China still urbanizing and individualizing, it's also aging fast.

"The single-child policy in place for years has reduced the youth cohort significantly and left a proportionally larger group of aging parents with only one child to support them. Insurance will have to fill the gap that would have been ?lled by ?lial obligation.

"The stock made a huge run from 2005 to 2007. From its peak at 107 in October 2007, the stock took exactly one year to hit its bottom at 33 in October 2008.

"After some ups and downs on moderate volume, LFC put in a nice ?ve-week run beginning in mid-March, soaring from 40 to 56 before pulling back to support at 54.

"Ideally, the stock will spend a little time between 54 and 56 while its 25-day moving average catches up. We think it can be bought anywhere under 55."

Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.