China Life Insurance Company Limited Announces 2021 Interim Results (H Shares)

HONG KONG,Aug. 25,2021 -- China Life Insurance Company Limited (SSE: 601628,SEHK: 2628,NYSE: LFC) announces the unaudited consolidated results of the Company (China Life Insurance Company Limited and its subsidiaries) for the six months ended 30 June 2021 (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 RMB4,652,793 million,an increase of 9.4% from the end of 2020. The Company's embedded value was RMB1,142,811 million,an increase of 6.6% from the end of 2020.

During the Reporting Period,the Company's total revenue was RMB537,105 million,an increase of 6.5% year on year; the Company's gross written premiums were RMB442,299million,an increase of 3.5% year on year on the high base,further consolidating its industry leadership; the value of half year's sales for the six months ended 30 June 2021 was RMB29,867 million.

As at the end of the Reporting Period,the Company's investment assets reached RMB4,457,269 million,an increase of 8.8% from the end of 2020. During the Reporting Period,the gross investment yield was 5.69%,the net investment yield was 4.33%. The comprehensive investment yield taking into account the current net fair value changes of available-for-sale securities recognised in other comprehensive income was 5.61%.

During the Reporting Period,net profit attributable to equity holders of the Company was RMB40,975 million,an increase of 34.2% year on year.

The Company will not declare an interim dividend of ordinary shares for the Reporting Period.

Review of Business Operations in the First Half of 2021

In the first half of 2021,with the worldwide COVID-19 pandemic continuing to evolve and the domestic economy recovery remaining unsteady and imbalanced,the demands for insurance consumption were difficult to be fully released and the scale of insurance sales force declined,which resulted in new premiums growth pressure for the life insurance industry. Despite a challenging and complicated external environment,the Company adhered to high-quality development and the strategic core of "Three Major Transformations,Dual Centers and Dual Focuses,Asset-liability Interaction",and upheld the operational guideline of "prioritizing business value,strengthening sales force,achieving stable growth,upgrading technology,optimizing customer services and guarding against risks". By vigorously pushing forward the reforms for development while proceeding with regular pandemic prevention and control,the Company forged ahead with steady progress in all aspects,and further solidified its comprehensive strengths and competitive advantages.

With a focus on the "China Life Revitalization" initiative,the Company consolidated the achievements of reforms under the "Dingxin Project" and advanced the optimization and implementation of new business models and operation mechanisms. The customer-centric sales deployment of "Yi Ti Duo Yuan" moved from an adjustment period to a period of coordinated advancement,and continued progress was made in transformation and upgrade. The market-oriented investment management system was pushed forward consistently,and the investment value chain operated smoothly,which further enhanced the Company's capability in deploying and allocating assets. Operations and services of the Company became more automated and internet-based,and the Shared Service Center was put into operation in phases. The Company constantly strengthened its technologies in terms of the support capability,responsiveness and stability,which kept on empowering its business development. Intelligent risk management was developed at a faster speed,and the Company's capacity and efficiency of management and control over key risks were further enhanced. The classified and hierarchical management system for its branches was performed with greater efficiency,enhancing effectiveness in resource allocation as well as the guiding role of the system.

During the Reporting Period,in the circumstances where new premiums of the life insurance industry was under pressure and the growth of total premiums slowed down,the Company firmly pushed forward transformation and upgrade,prioritized business value,and achieved stable development in terms of its key business indicators. In the first half of 2021,the Company's gross written premiums amounted to RMB442,299 million,further consolidating its industry leadership. Due to the impact of the COVID-19 pandemic and the slowdown in the release of demands for insurance consumption,premiums from new policies were RMB133,914 million,a decrease of 8.4% year on year. First-year regular premiums were RMB80,674 million,a decrease of 14.3% year on year,which accounted for 98.91% of long-term first-year premiums. In particular,first-year regular premiums with a payment duration of ten years or longer were RMB28,940 million,a decrease of 26.7% year on year. Renewal premiums amounted to RMB308,385 million,an increase of 9.7% year on year,which accounted for 69.72% of the gross written premiums,rising by 3.93 percentage points year on year. In the first half of 2021,the value of half year's sales of the Company was RMB29,867 million,a decrease of 19.0% year on year. As at the end of the Reporting Period,the embedded value of the Company increased by 6.6% from the end of 2020 to RMB1,maintaining the leading market position. The number of long-term in-force policies was 322 million,an increase of 1.6% from the end of 2020. During the Reporting Period,surrender rate was 0.67%,rising by 0.06 percentage point year on year.

During the Reporting Period,the Company accumulated assets with long durations by effectively seizing the opportunity of allocating to the fixed income assets,and kept close pace with fluctuations in the equity market so as to realize investment gains flexibly. In the first half of 2021,the Company registered a gross investment income of RMB117,638 million,an increase of 22.4% year on year. The gross investment yield was 5.69%,rising by 35 basis points from the corresponding period of 2020.

During the Reporting Period,the Company continued to strengthen the asset-liability interaction and the profitability was effectively enhanced. Due to the combined impact of the change in gross investment income and the update of discount rate assumptions for reserves of traditional insurance contracts,an increase of 34.2% year on year.

Insurance Business

During the Reporting Period,gross written premiums from the life insurance business of the Company amounted to RMB356,897 million,a year-on-year increase of 3.1%. Gross written premiums from the health insurance business amounted to RMB76,372 million,a year-on-year increase of 5.7%. Gross written premiums from the accident insurance business amounted to RMB9,030 million,a year-on-year increase of 0.7%.

In the first half of 2021,the Company prioritized business value and further implemented the customer-centric sales deployment of "Yi Ti Duo Yuan". With the in-depth transformation as the main objective,the individual agent business sector focused on the individual customer market and frontline operational units,and proceeded with the standardized and professional business management and market-oriented incentive mechanism on an ongoing basis. The diversified business sector concentrated on professional operation and efficiency improvement and made coordinated advancement with the individual agent business sector,which saw steady progress in various business lines. As at the end of the Reporting Period,the Company's total sales force was approximately 1.223 million.

Individual Agent Business Sector

In the first half of 2021,despite the continued impacts of the COVID-19 pandemic and the challenging and complicated market situations,the individual agent business sector emphasized business value,deepened the reforms under the "Dingxin Project",and achieved a relatively stable development. During the Reporting Period,the gross written premiums from the sector amounted to RMB363,822 million,an increase of 2.2% year on year. First-year regular premiums were RMB68,648 million,a decrease of 16.5% year on year. In particular,866 million,a decrease of 26.7% year on year. Renewal premiums amounted to RMB285,006 million,an increase of 8.2% year on year. In the first half of 2021,the value of half year's sales of the sector was RMB28,969 million,a decrease of 20.8% year on year. New business margin of half year's sales of the sector was 36.2%,a decline of 3.1 percentage points year on year.

In the first half of 2021,as the life insurance industry saw fluctuation in the size of sales force to a certain extent,the Company firmly adhered to the team development strategy of enhancing quality while stabilizing quantity and further tightened the agent recruitment and retention. As at the end of the Reporting Period,the number of agents of the sector was 1.15 million,including 0.719 million agents from the general sales team and 0.431 million agents from the upsales team. Although the number of monthly average productive agents of the sector decreased on a year-on-year basis,the number of high-performance agents was stable,and the foundation of the sales force generally remained solid. The Company pursued high-quality development and the strategy of business development driven by productive sales force,and rolled out the 4.0 version of the regular agent management system,aiming for higher specialization and professionalism of the sales force,so as to provide a long-lasting impetus to the new paradigm for high-quality development of the Company.

Diversified Business Sector

The transformation and upgrade under "Dingxin Project" was carried out in the diversified business sector in great depth. By concentrating on the development philosophy of "professional operation,enhancement of quality and efficiency,transformation and innovation,and regulatory compliance",the diversified business sector coordinated well with the individual agent business sector,and focused on the development of bancassurance,group insurance and health insurance. During the Reporting Period,gross written premiums from the diversified business sector amounted to RMB78,477 million,an increase of 10.1% year on year.

Bancassurance Channel. With equal emphasis on business scale and value as its long-term goal,the bancassurance channel focused on bank agency business and steadily pushed forward the business transformation. During the Reporting Period,gross written premiums from the channel amounted to RMB34,441 million,an increase of 20.7% year on year. First-year regular premiums were RMB11,993 million,an increase of 1.1% year on year. Renewal premiums amounted to RMB22,261 million (a year-on-year increase of 35.2%),accounting for 64.64% of the gross written premiums from the channel (a year-on-year increase of 6.96 percentage points). The bancassurance channel constantly strengthened the professional level of sales team,and its quality was improved steadily. As at the end of the Reporting Period,the number of the channel's account managers was 26,000,the quarterly average active managers remained stable,and the production capacity per manager increased substantially.

Group Insurance Channel. The group insurance channel continued to deepen diversified development,reinforced the expansion of key business sectors,and achieved steady development in various business fields. During the Reporting Period,gross written premiums from the channel were RMB16,690 million,an increase of 1.2% year on year. Short-term insurance premiums from the channel were RMB14,821 million,an increase of 3.0% year on year. As at the end of the Reporting Period,the number of direct sales representatives was 47,among which the number of high-performance personnels increased by 14.7% from the end of 2020.

Other Channels. In the first half of 2021,gross written premiums from other channels reached RMB27,346 million,an increase of 4.2% year on year. The Company actively developed government-sponsored health insurance businesses. As at the end of the Reporting Period,the Company carried out over 220 supplementary major medical expenses insurance programs,providing services to nearly 360 million people. It also undertook over 300 health care entrusted programs,covering more than 100 million people; 57 long-term care insurance programs in 16 provinces and cities,covering 19 million people; and 88 supplementary medical insurance programs in 19 provinces and cities,covering 50 million people.

In the first half of 2021,the Company fully complied with the new regulations of the China Banking and Insurance Regulatory Commission with respect to the Internet insurance business,and its Internet insurance business witnessed steady development. The Company consistently optimized the Internet insurance product system,stepped up its efforts in launching new products,satisfying demands from more online scenarios and diversified customer needs through continuous product segmentation,and it saw a rapid growth in premiums from the Internet insurance business.

"Inclusive Healthcare","Integrated Aged-care" and Integrated Financial Sector

The Company consistently pursued the strategy of "Inclusive Healthcare" and "Integrated Aged-care",actively participated in the Healthy China program,and established a healthcare ecosystem covering full life cycles by integrating resources of healthcare and medical services,which constantly improved its health service capability,strengthened the health service management and explored the way of boosting the development of the Company's principal business through health services. China Life Inclusive Healthcare Service Platform continued to diversify its services while upgrading its system functions on an ongoing basis. As at the end of the Reporting Period,more than a hundred types of services were available on the platform,and the size of the accumulated registered users of the platform led the industry. The Company continued to extend the deployment of China Life aged care,and invested in the construction of several large retirement communities in Suzhou,Hainan and Chengdu,etc. The Company set up the China Life Integrated Aged Care Fund,focused on real assets such as continuing care retirement communities,medical care complexes in urban core areas and boutique retirement apartments,and deployed high-quality resources in the aged care industry such as rehabilitation,medical care,hospital,health care big data and health industrial parks. In the first half of 2021,the China Life Integrated Aged Care Fund reserved a batch of pension and retirement projects that could meet the diversified and multi-level demands of customers in the strategic regions such as Beijing-Tianjin-Hebei,the Yangtze River Economic Belt and Guangdong-Hong Kong-Macao Greater Bay Area.

Being customer-centric,the Company fully leveraged the collaborative advantages of the fellow members of China Life Insurance (Group) Company and actively provided customers with a series of quality financial and insurance service solutions. In the first half of 2021,due to the impact of the comprehensive reform on auto insurance and the restriction on its growth,premiums from property insurance cross-sold by the Company were RMB10,080 million and the number of insurance policies increased by 11.1% year on year. Additional first-year receipts of enterprise annuity funds and pension security products of China Life Pension Company Limited cross-sold by the Company were RMB19,620 million. The number of new debit cards and credit cards jointly issued by the Company and China Guangfa Bank Co.,Ltd. ("CGB") reached 596,000. The Company entrusted CGB to sell its bancassurance products,with the first-year regular premiums recording a relatively stable growth. Meanwhile,the Company gave full play to the brand advantages on the comprehensive financial strength,and worked with CGB and China Life Property and Casualty Insurance Company Limited to carry out various customer access activities to provide customers with diversified and personalized services,thus fostering a sound synergy and mutual benefits.

Investment Business

In the first half of 2021,the external environment was complicated and challenging and the recovery of domestic economy remained unsteady and imbalanced. The interest rate of the bond market trended downwards after a slight increase at the beginning of 2021,whereas the stock market sustained with structural features. The Company adhered to the implementation of the medium- and long-term asset strategic allocation plan and adjusted tactics in response to the market changes. Firstly,the Company made allocation to government bonds with long durations by taking advantage of interest rate hikes,and selected experienced managers to invest in senior credit bonds; secondly,the Company closely kept pace with equity market fluctuations,optimized its investment strategies and position structure,and seized the opportunity to realize investment gains; thirdly,according to the decline in the supply of appropriate non-standard assets,the Company explored the new strategy for alternative investments and optimized the entrustment mode of alternative investment management for creating an alternative investment portfolio with prime prospects.

As at the end of the Reporting Period,an increase of 8.8% from the end of 2020. Among the major types of investments,the percentage of investment in bonds rose to 44.23% from 41.97% as at the end of 2020,the percentage of term deposits changed to 12.45% from 13.32% as at the end of 2020,the percentage of investment in debt-type financial products changed to 10.44% from 11.08% as at the end of 2020,and the percentage of investment in stocks and funds (excluding money market funds) changed to 9.88% from 11.31% as at the end of 2020.

In the first half of 2021,the Company's net investment income was RMB89,764 million,an increase of RMB12,373 million from the corresponding period of 2020,rising by 16.0% year on year. Since the Company consistently increased its allocation in bonds with long durations in recent years and continued to diversify the type of fixed income products,net investment yield was 4.33% for the first half of 2021,up by 4 basis points from the corresponding period of 2020,remaining relatively stable. The Company seized the market opportunities to flexibly adjust the pace of realizing gains from equity products,so as to achieve steady contribution to the profits. Gross investment income of the Company reached RMB117,an increase of RMB21,504 million from the corresponding period of 2020. The gross investment yield was 5.69%,up by 35 basis points from the corresponding period of 2020. The comprehensive investment yield taking into account the current net fair value changes of available-for-sale securities recognised in other comprehensive income was 5.61%,up by 21 basis points from the corresponding period of 2020.

Outlook

2021 is the beginning of the 14th Five-Year Plan period and also the first year of China's new journey toward fully building a modern socialist country. High-quality development is the theme of China's economic and social development for the 14th Five-Year Plan or even a longer period of time. Based on the new stage of development,along with the progress of the Healthy China program and the national strategy of actively coping with the aging population,we firmly believe that a vast "blue sea" will be opened up for the life insurance industry. In the meanwhile,industry restructuring is taking place at a faster speed,new development modes are taking shape,and new growth drivers are evolving rapidly,which further demonstrate the importance and urgency of transformation and upgrade.

All good principles should adapt to changing time to remain relevant,so we should keep abreast of the new development trend of times. Being customer-centric,the Company will stick to the protection role of insurance,resolutely push forward the update of business model,accelerate digital transformation,optimize the product and service system,deeply implement the strategy of "Inclusive Healthcare" and "Integrated Aged-care",consistently optimize the market-oriented system and mechanism,and improve the long-term risk prevention and control mechanism,with a view to making a greater achievement in high-quality development and rewarding the shareholders and people from all walks of life with satisfactory operating performances.

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 30 June 2021,the Company had approximately 322 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 2020 filed with the U.S. Securities and Exchange Commission,or SEC,on 29 April 2021; 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.

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