China Life Insurance Company Limited Announces 2019 Annual Results (H Shares)

Author: China Life Insurance Company Limited / 2023-07-23 21:40 / Source: China Life Insurance Company Limited

China Life Insurance Company Limited Announces 2019 Annual Results (H Shares)

HONG KONG,March 25,2020 --China Life Insurance Company Limited (SSE: 601628,SEHK: 2628,NYSE: LFC) announces the audited consolidated results of the Company (China Life Insurance Company Limited and its subsidiaries) for the year ended 31 December 2019 (the "Reporting Period") prepared under the International Financial Reporting Standards today.

Highlights

As at the end of the Reporting Period,the Company's total assets reached RMB3,726,734 million,an increase of 14.5% from the end of 2018. The Company's embedded value was RMB942,087 million,an increase of 18.5% from the end of 2018.

During the Reporting Period,the Company's total revenue was RMB729,474 million,an increase of 16.3% year on year; the Company's gross written premiums were RMB567,086 million,an increase of 5.8% year on year,maintaining the leading position in the industry; value of one year's sales was RMB58,698 million,an increase of 18.6% year on year.

As at the end of the Reporting Period,the Company's investment assets reached RMB3,573,154 million,an increase of 15.1% from the end of 2018. During the Reporting Period,the gross investment yield was 5.24%,the net investment yield was 4.61%. The comprehensive investment yield taking into account the current net fair value changes of available-for-sale securities recognised in other comprehensive income was 7.28%.

During the Reporting Period,net profit attributable to equity holders of the Company was RMB58,287 million,an increase of 411.5% year on year.

The board of directors of the Company recommended the payment of a final dividend of RMB0.73 per share (inclusive of tax). The foregoing profit distribution plan is subject to the approval by the 2019 Annual General Meeting to be held on 29 June 2020 (Monday).

Business Overviewof 2019

In 2019,despite the complicated situation of increased risks and challenges at home and abroad,the Company concentrated on the strategic goal of "China Life Revitalization" with "Dual Centers and Dual Focuses" as its strategic core,adhered to the overall keynote of making steady progress,and upheld the operational guideline of "prioritizing business value,strengthening sales force,achieving stable growth,upgrading technology,optimizing services,and guarding against risks". The Company accelerated the establishment of a development system of "Yi Ti Duo Yuan" with strengthened individual agent channel in coordination with other channels as well as a market-oriented investment management system,strengthened technological empowerment,focused on the transformation of sales and the development of protection-oriented business,reformed its sales models,investment and services systems,constantly improved the efficiency of risk prevention and control,and achieved the coordinated growth of business scale and value.

During the Reporting Period,the Company's gross written premiums amounted to RMB567,maintaining its industry leadership position. As at 31 December 2019,embedded value of the Company reached RMB942,an increase of 18.5% from the end of 2018. Value of one year's sales was RMB58,an increase of 18.6% year on year. During the Reporting Period,the Company continued to enhance the asset-liability management,and its gross investment income reached RMB169,043 million,a significant increase of 77.7% from 2018. Due to an increase in gross investment income and the impact from the new policy on pre-tax deduction of underwriting and policy acquisition costs,an increase of 411.5% year on year. As at the end of the Reporting Period,the core solvency ratio and the comprehensive solvency ratio were 266.71% and 276.53%,respectively.

During the Reporting Period,with a commitment to high-quality development,the Company achieved a rapid growth in its business value. Value of one year's sales of the Company was RMB58,an increase of 18.6% year on year. The new business margin of one year's sales of the exclusive individual agent channel and the bancassurance channel increased by 3.2 and 5.1 percentage points year on year,respectively. As at 31 December 2019,increasing by 18.5% from the end of 2018. The surrender rate was 1.89%,a decrease of 2.80 percentage points year on year.

During the Reporting Period,the Company vigorously developed its long-term regular business and its business structure was further optimized. First-year regular premiums amounted to RMB109,416 million,which accounted for 97.89% of long-term first-year premiums,increasing by 7.73 percentage points year on year. In particular,first-year regular premiums with a payment duration of ten years or longer were RMB59,168 million (a year-on-year increase of 42.1%),which accounted for 54.08% of the first-year regular premiums (a year-on-year increase of 14.21 percentage points). Renewal premiums amounted to RMB385,797 million (a year-on-year increase of 5.8%),which accounted for 68.03% of the gross written premiums.

During the Reporting Period,the Company emphasized its due role of insurance protection,and made great efforts to develop protection-oriented business. The Company accelerated the development of protection-oriented businesses and further diversified its product mix. Out of the top ten insurance products by first-year regular premiums,six were protection-oriented products. The percentage of premiums from designated protection-oriented insurance business in the first-year regular premiums rose by 8.6 percentage points year on year,with an increase in both the number of protection-oriented insurance policies and average premiums per policy.

During the Reporting Period,the Company achieved significant increase in investment income by constantly enhancing the asset-liability management and optimizing its asset allocation strategies. The Company recorded a gross investment income of RMB169,a year-on- year increase of 77.7% from 2018.

In 2019,the Company kicked off the "Dingxin Project" under the guidance of "China Life Revitalization" strategy with "Dual Centers and Dual Focuses" as its strategic core. As at the end of the Reporting Period,the Company completed the optimization of its organizational structure and personnel adjustments and actively explored and established an organizational model and mechanism in line with the Company's strategy. In terms of sales function,a development system of "Yi Ti Duo Yuan" was initially formed,which featured a strengthened individual agent channel at the core of value creation. The Company integrated all sales resources for individual insurance business and consolidated the bancassurance channel's insurance planners,tele-sales and agent channel's upsales teams. By separately managing and operating the general agent team and the new upsales team,which were both supported by the four functions of individual insurance planning,individual insurance operation,training and integrated finance functions,the Company deepened the transformation and upgrade of individual insurance business. In the development of the diversification ("Duo Yuan") system,the Company reinforced and improved the existing advantages of the other channels. The group insurance channel focused on the development of its professional operation capacity. The bancassurance channel would generate business through bank outlets,properly coordinate growth in business scale and value,and optimize its business structure. The health insurance channel focused on professional development. In terms of the investment function,the Company further improved its top-down investment management system in line with the investment value creation chain,including strategic asset allocation,tactical asset allocation,investment management,strengthened risk management in all aspects and investment operation support. In terms of operations,the Company accelerated the integration of front,middle,and back offices,gradually established an integrated intelligent operational system and a precise financial resource allocation system,and started to set up an operation and financial sharing service center. Based on the completion of its organizational restructuring in 2019,the Company will continue to push forward the "Dingxin Project" reforms,further improve its operational and management capabilities,and further promote reform and transformation in sales,investment,product,operations,technology,and human resources.

During the Reporting Period,by further improving its business structure,gross written premiums from the life insurance business of the Company amounted to RMB446,562 million,rising by 2.1% year on year; gross written premiums from the health insurance business reached RMB105,581 million,rising by 26.3% year on year; and gross written premiums from the accident insurance business were RMB14,943 million,a year-on-year increase of 1.8%.

In 2019,by consistently focusing on business value growth and accelerating reform and transformation,the Company's core businesses developed at a faster speed with its value of one year's sales rising significantly. With its sales force expanding steadily,quality of the sales force improved constantly. As at the end of 2019,the total number of the Company's sales force reached 1.848 million.

Exclusive Individual Agent Channel. In 2019,focusing on business value growth,the exclusive individual agent channel deepened transformation and upgrade in its sales management,prioritized the growth of protection-oriented business,reinforced coordinated development of business,sales force and day-to-day management,and achieved coordinated growth of business scale and value,with its new business margin of one year's sales increasing significantly. During the Reporting Period,gross written premiums from the exclusive individual agent channel amounted to RMB436,621 million,an increase of 6.9% year on year. First-year regular premiums from the channel were RMB83,865 million,which accounted for 99.67% of first-year premiums of long-term insurance. In particular,the percentage of first-year regular premiums with a payment duration of ten years or longer in first-year regular premiums was 62.24%,an increase of 15.89 percentage points year on year. Renewal premiums amounted to RMB336,676 million,an increase of 6.2% year on year. New business margin of one year's sales of the channel reached 45.3%,a year-on-year increase of 3.2 percentage points. In 2019,the sales force of the channel was improved in both quantity and quality,which substantially drove business growth. As at the end of 2019,the number of exclusive individual agents was 1.613 million,an increase of 12.1% from the end of 2018. The quality of the sales force was improved constantly,with the number of monthly average productive agents increasing by 34.9% year on year and the monthly average number of agents selling designated protection-oriented products increasing by 43.8% year on year. As at the end of 2019,the number of upsales agents which were included in the exclusive individual agents reached 577,000,an increase of 42.1% from the end of 2018,outpacing the growth of the exclusive individual agent force as a whole. In 2019,the day-to-day management of the channel was strengthened significantly,with various day-to-day management indicators being improved.

Bancassurance Channel. In 2019,with an emphasis on regular premium business,the bancassurance channel furthered its business restructuring,with its new business margin of one year's sales of the channel rising constantly. During the Reporting Period,gross written premiums from the bancassurance channel amounted to RMB70,060 million,a decrease of 8.8% year on year. First-year regular premiums were RMB23,820 million,an increase of 2.5% year on year. In particular,first-year regular premiums with a payment duration of ten years or longer were RMB5,925 million (a year-on-year increase of 47.2%),accounting for 24.87% of the first-year regular premiums,a year-on-year increase of 7.55 percentage points. New business margin of one year's sales of the channel reached 23.8%,increasing by 5.1 percentage points year on year. Renewal premiums amounted to RMB44,623 million (a year-on-year increase of 1.9%),accounting for 63.69% of the gross written premiums from this channel,a year-on-year increase of 6.71 percentage points. As at the end of 2019,as a result of strengthening its sales team management and improving sales force quality,the number of sales representatives of the bancassurance channel was 166,with the monthly average active insurance planners for long-term business increasing by 36.1% year on year.

Group Insurance Channel. In 2019,the group insurance channel consistently deepened business diversification,stepped up efforts to expand key business segments,and achieved rapid development of various businesses. During the Reporting Period,gross written premiums from the group insurance channel were RMB28,846 million,an increase of 9.2% year on year. Short-term insurance premiums from the channel were RMB23,833 million,an increase of 12.1% year on year. The Company actively carried out the pilot program of tax deferred pension insurance business and consistently promoted the tax- advantaged health insurance business. With stricter performance appraisal and seeking for quality enhancement of its sales team,the number of direct sales representatives was 65,500 as at the end of 2019,among which,the number of high-performance representatives reached 45,000.

Other Channels. In 2019,gross written premiums from other channels reached RMB31,559 million,an increase of 29.9% year on year. The Company actively developed policy-oriented health insurance businesses,including supplementary major medical expenses insurance,long-term care insurance and supplementary medical insurance for social security,which consistently led the market. As at the end of the Reporting Period,the Company carried out over 230 supplementary major medical expenses insurance programs,providing services to nearly 400 million people in 31 provinces and cities. It also provided supplementary medical insurance protection for social security in 15 provinces,serving 38 million people,undertook over 600 medical insurance administration projects,covering more than 100 million people,and offered long-term care insurance protection for more than 13 million people. In 2019,the Company saw a faster growth in its online sales business. The Company emphasized product innovation,reinforced quality management and guarded against business risk. To optimize customer experience,the Company provided quick and convenient ways for online insurance application and diversified online services to insurance customers via various models,including direct sales on the Company's official website,integration of both online and offline sales,and collaboration with platform resources.

The Company actively consolidated internal and external ecological resources,steadily pushed forward its coordinated business development with other subsidiaries of China Life Insurance (Group) Company,carried out market expansion and widened customer base through the strategy of "One Customer,One-stop Service". In 2019,premiums from property insurance cross-sold by the Company increased by 9.4% year on year,whereas new bids of enterprise annuity funds and pension security products of China Life Pension Company Limited cross-sold by the Company grew by 26.7% year on year. Meanwhile,the Company entrusted China Guangfa Bank Co.,Ltd. ("CGB") to sell bancassurance products,with first-year regular premiums for 2019 increasing by 52.8% year on year. The number of new debit cards and credit cards jointly issued by the Company and CGB during the year exceeded one million,which demonstrated the synergy effects of platform operation,positive interaction and mutual benefits to both companies.

In 2019,the global economic growth slowed down synchronously,with repeated trade frictions becoming the biggest disturbance factor. The growth of domestic economy slightly slowed down but generally remained stable. The interest rate of the domestic bond market fluctuated and declined within a narrow range,and the stock market saw a significant rise compared to the beginning of 2019. The Company constantly reinforced its asset-liability management and increased the allocation in yield seeking assets and strategic assets. In respect of fixed-income investment,the Company optimized the portfolio structure and accumulated assets with long duration. While grasping opportunities to allocate to traditional fixed-income assets with long duration,it increased allocation to non-standard financial assets and bank capital replenishment instruments,etc. As a result,the Company's investment yields were increased while the credit risk was strictly controlled. In respect of its open market equity investment,the Company achieved satisfactory investment returns through effectively implementing tactical allocations,carrying out rebalancing as appropriate and optimizing the structure of equity holdings. As at the end of the Reporting Period,an increase of 15.1% from the end of 2018.

As at the end of the Reporting Period,among the major types of investments,the percentage of investment in bonds changed to 39.48% from 42.20% as at the end of 2018,the percentage of term deposits changed to 14.98% from 18.02% as at the end of 2018,the percentage of investment in debt-type financial products increased to 11.62% from 11.32% as at the end of 2018,and the percentage of investment in stocks and funds (excluding money market funds) increased to 11.00% from 9.03% as at the end of 2018.

The Company's debt-type financial products mainly concentrated on sectors such as transportation,public utilities and energy,and the financing entities were primarily large central-owned enterprises and state-owned enterprises. As at the end of the Reporting Period,over 99% of the debt-type financial products held by the Company had ratings of AAA or above by external rating institutions. In general,the quality of the debt-type financial products invested by the Company was in good condition and the risks were well controlled.

In 2019,the Company's net investment income was RMB149,109 million,an increase of RMB16,092 million from 2018 and a year-on-year increase of 12.1%. As the Company increased its allocation in interest-bearing assets such as bonds with long duration,stocks with high dividends and non-standard assets in recent years,although the interest rate fluctuated and trended downwards,the Company's net investment yield remained stable at 4.61%. In the meantime,in respect of the equity investments,the Company followed the long-term investment direction and effectively implemented tactical allocations under the established strategic asset allocation guidance,and the Company's investment income rose significantly. The gross investment income of the Company reached RMB169,an increase of RMB73,895 million from 2018,and the gross investment yield was 5.24%,an increase of 195 BPs from the end of 2018. The comprehensive investment yield taking into account the current net fair value changes of available-for-sale securities recognised in other comprehensive income was 7.28%,an increase of 418 BPs from the end of 2018.

2020 Outlook

Looking ahead,we firmly believe that the Chinese economy will maintain its long-term sound development and its high-quality growth fundamentals remain unchanged,and that the domestic insurance industry is still at an important stage full of strategic opportunities. In 2020,we will continue to pursue high-quality development,stick to value creation during the whole process of the Company's reform and development,and make concrete progress with "China Life Revitalization". We will vigorously push forward the market-oriented reforms,accelerate the implementation of the "Dingxin Project",speed up the digitalization process in business operation,enhance the application of digital technologies in sales,services and management,and strengthen the application of technological empowerment in sales,services and business operation. We will speed up the integration of service platforms,and shape the Company's operation and services to be more integrated,intelligent and ecological. We will also strengthen risk management and control,strive to prevent major risks,enhance asset-liability management,implement "Environmental,Social and Governance (ESG)" concept,and advance our corporate governance.

"Many a little makes a mickle." The Company will continue to uphold its original aspiration of "Protecting People's Good Life",revitalize China Life,forge ahead with the reform initiatives,and strive to create value for our shareholders,customers and society,making unremitting efforts to promote the high-quality development of the Chinese insurance industry,build a moderately prosperous society in all respects,and realize the first centenary goal of the country.

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About China Life Insurance Company Limited

China Life Insurance Company Limited is a life insurance company established in Beijing,China on 30 June 2003 according to the "Company Law of the People's Republic of China" and the "Insurance Law of the People's Republic of China". The Company was successfully listed on the New York Stock Exchange,the Hong Kong Stock Exchange and the Shanghai Stock Exchange on 17 and 18 December 2003,and 9 January 2007,respectively. The Company's registered capital is RMB28,264,705,000.

The Company is a leading life insurance company in China and possesses an extensive distribution network comprising exclusive agents,direct sales representatives,and dedicated and non-dedicated agencies. The Company is one of the largest institutional investors in China,and becomes one of the largest insurance asset management companies in China through its controlling shareholding in China Life Asset Management Company Limited. The Company also has controlling shareholding in China Life Pension Company Limited.

Our products and services include individual life insurance,group life insurance,and accident and health insurance. The Company is a leading provider of individual and group life insurance,annuity products and accident and health insurance in China. As at 31 December 2019,the Company had approximately 303 million long-term individual and group life insurance policies,annuity contracts,and long-term health insurance policies in force. We also provide both individual and group accident and short-term health insurance policies and services.

Forward-looking statements

Certain statements contained in this press release may be viewed as "forward-looking statements" as defined by Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934,as amended. Such forward-looking statements involve known and unknown risks,uncertainties and other factors,which may mean that the actual performance,financial condition or results of operations of the Company could be materially different from any future performance,financial condition or results of operations implied by such forward-looking statements. Further information regarding these risks,uncertainties and other factors is included in the Company's Annual Report on Form 20-F for the fiscal year ended 31 December 2018 filed with the U.S. Securities and Exchange Commission,or SEC,on 24 April 2019; and in the Company's other filings with the SEC. You should not place undue reliance on these forward-looking statements. Unless otherwise stated,all information provided in this press release is as of the date of this press release,and the Company undertakes no duty to update such information,except as required under applicable law.

Unless otherwise indicated,the Chinese insurance market information set forth in this press release is based on public information released by China Banking and Insurance Regulatory Commission.

For further information,please contact:

Media enquiries

Ms. Yinghui Li

China Life Insurance Company Limited

Tel: +86 10 6363 1191

Fax: +8610 6657 5112

E-mail:liyh@e-chinalife.com

Mr. Isaac Yau (Hong Kong)

Citigate Dewe Rogerson

Mobile: +852 6337 1723

Tel: +852 3103 0112

Fax: +852 2524 5599