小諧中國
Address: 22/F, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong
International Auditor: Ernst & Young
Name of the Signing Auditors: Zhang Xiaodong, Huang Yuedong
Dongcheng District, Beijing, P.R. China
Address: Level 16, Ernst & Young Tower, Oriental Plaza, No.1 East Changan Avenue,
Domestic Auditor: Ernst & Young Hua Ming LLP
Auditors of the Company:
Debevoise & Plimpton LLP
Latham & Watkins
International Legal Advisers:
King & Wood Mallesons
Domestic Legal Adviser:
60 Wall Street, New York, NY 10005
4
Deutsche Bank
Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong
Computershare Hong Kong Investor Services Limited
H Share Registrar and Transfer Office:
LFC
2628
Exchange
New York Stock
The Stock Exchange of
Hong Kong Limited
China Life
China Life
601628
Shanghai Stock Exchange
ADR
H Share
A Share
Depositary of ADR:
Stock Code
China Life Insurance Company Limited Annual Report 2015
RMB million
14.6%
404,275
463,492
Benefits, claims and expenses
318,276
322,126
324,813
9.8%
330,105
362,301
370,899
371,485
417,883
Financial Summary
15.1%
507,449
Net premiums earned
Total revenues
For the year ended
2011
2012
2013
Change
2014
2015
Major Financial Data¹
Reporting Standards (IFRS)
Under International Financial
440,766
391,557
Stock Short Name
Exchanges on which the
Email: ir@e-chinalife.com
Fax: 86-10-66575112
Office Address: 16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Telephone: 86-10-63631191
Board Secretary: Zheng Yong
Legal Representative: Yang Mingsheng
China Life Insurance Company Limited (“China Life")
Registered Name in English:
中國人壽保險股份有限公司(簡稱「中國人壽」)
Registered Name in Chinese:
Company Profile
China Life Insurance Company Limited Annual Report 2015
2
Except for "the Company" referred to in the Consolidated Financial Statements.
Securities Representative: Lan Yuxi
The Company has stated in this report the details of its existing risks including risks relating to macro trends, risks
relating to business and risks relating to investments. Please refer to the analysis of the risks which the Company may
face in its future development in the section headed “Management Discussion and Analysis”.
Renminbi Yuan
for the purpose of this report, "China" or "PRC" refers to the People's
Republic of China, excluding the Hong Kong Special Administrative
Region, Macau Special Administrative Region and Taiwan region
Articles of Association of China Life Insurance Company Limited
Securities Law of the People's Republic of China
Company Law of the People's Republic of China
Insurance Law of the People's Republic of China
China Securities Regulatory Commission
The Stock Exchange of Hong Kong Limited
Shanghai Stock Exchange
RMB
China or PRC
Articles of Association
Securities Law
Insurance Law
Company Law
SSE
Material Risk Alert:
Stocks are Listed
Office Address: 16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Fax: 86-10-66575112
Stock Type
Stock Information:
12/F, China Life Plaza, 16 Financial Street, Xicheng District, Beijing, P.R. China
The Company's Annual Reports may be obtained at:
The Company's website at www.e-chinalife.com
The Company's H Share Disclosure Websites:
HKExnews website at www.hkexnews.hk
Company Profile
China Life Insurance Company Limited Annual Report 2015
3
www.sse.com.cn
CSRC's Designated Website for the Company's Annual Report Disclosure:
Securities Times
Shanghai Securities News
Telephone: 86-10-63631068
China Securities Journal
Fax: 852-29192638
Office Address: 1403, 14/F., C.L.I. Building, 313 Hennessy Road, Wanchai, Hong Kong
Telephone: 852-29192628
Hong Kong Office:
Email: ir@e-chinalife.com
Website: www.e-chinalife.com
Fax: 86-10-66575722
Telephone: 86-10-63633333
16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Current Office Address:
16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Registered Office Address:
* Mr. Lan Yuxi, Securities Representative of the Company, is also the main contact person of the external Company
Secretary engaged by the Company
Email: lanyuxi@e-chinalife.com
Media for the Company's A Share Disclosure:
HKSE
363,554 352,599
352,219
2.
1.
Notes:
3.51
2.79
4.86
increase of 0.88
percentage point
5.36
6.24
Gross investment yield (%)
percentage point
87.79
88.25
Net profit refers to net profit attributable to equity holders of the Company, while equity holders' equity refers to equity
attributable to equity holders of the Company.
88.72
87.21
86.68
Ratio of assets and liabilities³ (%)
percentage points
9.16
5.38
11.22
decrease of 1.27
12.83
11.56
Weighted average ROE (%)
Major financial ratio
4.74
decrease of 0.53
4.68
Investment assets = Cash and cash equivalents + Securities at fair value through profit or loss + Available-for-sale securities +
Held-to-maturity securities + Term deposits + Securities purchased under agreements to resell + Loans + Statutory deposits
restricted + Investment properties
3.
Beijing, China
Chairman
By Order of the Board
Yang Mingsheng
8
In retrospect, the development experiences accumulated during the “12th Five-Year Plan” period are valuable; looking
forward, the "13th Five-Year Plan" period will present important opportunities for the Company to accelerate its
development. The Company will stick to the general strategy of innovation-driven development and the main theme of
transformation and upgrading, follow the operation ideas of “emphasizing value, strengthening sales force, optimizing
structure, achieving stable growth and guarding against risks", strengthen benchmarking practice and focus on making
breakthroughs. The Company will also put more efforts in accelerating business development, transforming business
model, deepening reforms and laying strong basis and solid foundation, so as to enable everyone to enjoy the high-
quality services provided by the Company, to create greater value for investors, and to strive for building a world-class
life insurance company.
The year 2016 is the beginning of the “13th Five-Year Plan" and also a critical year for the Company to comprehensively
deepen the reforms and push forward the “innovation-driven development strategy" in great depth. Facing new
challenges and development opportunities, the Company will concentrate efforts and resources, reinforce execution in
accordance with the general requirements of the “13th Five-Year Plan”, and strive to create a good beginning for its
development during the “13th Five-Year Plan” period. The Company will seek to accelerate the development of core
businesses, push forward sales transformation, boost the development of comprehensive sales and interactive businesses,
and actively expand policy-oriented businesses. The exclusive individual agent channel will focus on developing
businesses of regular premiums with 10 years or longer payment duration as well as the distributed short-term insurance
businesses. The group insurance channel will seek to maintain its current profitability while further expanding its
business scale and improving the profits. The bancassurance channel will make more efforts in transformation and
development of regular premium businesses with long payment duration, good value and high quality. Meanwhile, the
development of new business channels will be enhanced by adhering to the combination of online and offline sales,
integration of online, tele and mobile sales, and the direct sales over the counter will be continually promoted. The
Company will continue to make strategic investment in the development of its sales force with an aim to improve the
quantity and quality of the sales team and enhance the hard power. While reinforcing and improving its competitive
advantages in county-level markets, the Company will further accelerate its business development in key cities, thus
firmly maintaining its leading position in the market. As to the Company's investment level, we will focus on enhancing
the investment capabilities, improving the asset allocation management system and investment management framework,
and optimizing the asset allocation structure, so as to improve the level of investment income. The Company will
further implement the “innovation-driven development strategy", actively facilitate innovation in various fields, and
push forward the construction of a “new generation” comprehensive business processing system with great efforts. By
deepening its reforming progress, the Company will continue to enhance its development momentum. Moreover, the
Company will be in full compliance with the requirements of China Risk Oriented Solvency System (C-ROSS), improve
its effectiveness in risk control, strictly stick to the risk bottom line and steadily push forward the healthy and rapid
development of the Company.
Chairman's Statement
China Life Insurance Company Limited Annual Report 2015
7
Calculated according to the premium data of life insurance companies in 2015 released by the CIRC.
2
During the period of “12th Five-Year Plan”, although the Company was confronted with the most complicated situation
and the most challenges, it managed to overcome the difficulties and made progress in adjustment and transformation,
laying a solid foundation for building a world-class life insurance company. The past five years helped us better recognize
that the golden keys for opening up a new dimension of the Company's development were accelerating development
by adhering to market orientation, optimizing structure by adhering to value guidance, improving service quality
by emphasizing customer experience, enhancing information technology level by equipping the Company with high
technologies, and strengthening local branches by building strong basis and solid foundation.
The Company actively pushed forward the development of policy-oriented businesses. Relying on its competitive
advantages in professionalism and business scale, the Company continued to develop policy-oriented businesses
including Supplementary Major Medical Insurance for Urban and Township Residents, New Village Cooperative
Medical Insurance and New Rural Pension Insurance. The Company's inclusive businesses such as micro-insurance
business realized nationwide coverage, and the insurance products designed for particular population groups such
as senior citizens benefited over 10 million people. In addition, the Company provided insurance coverage for over
120,000 college-graduate village officials, and actively offered a career development platform for college-graduate village
officials, with the number of the retired college-graduate village officials introduced to the Company's local branches
amounting to over 1,000. The Company was constantly committed to the participation of public welfare and charitable
undertakings. During the Reporting Period, the Company donated over RMB36 million through the China Life
Foundation to provide support for several poverty alleviation projects and purchasing of medical vehicles in poverty-
stricken areas. The Company also continually provided assistance for orphans from major disasters.
Ratio of assets and liabilities = Total liabilities/Total assets
tenure.
The Board of Directors of the Company proposes the payment of a final dividend of RMB0.42 per share (inclusive of
tax), subject to the shareholders' approval at the 2015 Annual General Meeting to be held on Monday, 30 May 2016.
During the Reporting Period, the Company's total revenue was RMB507,449 million, a 15.1% increase year-on-
year; net profit attributable to equity holders of the Company was RMB34,699 million, a 7.7% increase year-on-year;
earnings per share (basic and diluted) were RMB1.22, a 7.1% increase year-on-year. One-year new business value was
RMB31,528 million, a 35.6% increase year-on-year. The Company's market share² in 2015 was approximately 23.0%,
maintaining a leading position in the life insurance market. As at the end of the Reporting Period, the Company's total
assets reached RMB2,448,315 million, an increase of 9.0% from the end of 2014; embedded value was RMB560,277
million, an increase of 23.2% from 2014. As at 31 December 2015, the Company's solvency ratio was 330.10%.
China Life Insurance Company Limited Annual Report 2015
Chairman's Statement
6
In 2015, faced with the complicated international environment and the challenging tasks of carrying out reform and
development and maintaining stability at home, China experienced stable economic development as a whole together
with progress being achieved and stability ensured, which provided a favorable environment for the sound and fast
development of insurance industry. In this year, the Company proactively adapted to the new normal state of economic
development by firmly adhering to the operation ideas of “emphasizing value, strengthening sales force, optimizing
structure and achieving stable growth”, implementing the “innovation-driven development strategy” in great depth,
capturing opportunities, responding calmly and confidently, staying realistic and pragmatic and forging ahead with
determination, and thus achieved the best operation results since the “12th Five-Year Plan”. The Company achieved
new heights in its business development, with the growth rate of first-year regular premiums achieving a new high record
since the share restructuring and listing of the Company, and the growth rates of both gross written premiums and
first-year regular premiums with 10 years or longer payment duration being the highest over the past seven years. The
Company's efficiency was continuously improved due to structure optimization, with the one-year new business value
hitting a record high. The Company's sales force reached a new high level with its number surpassing one million for the
first time in the Company's history. The Company's development achieved the balance between speed and efficiency,
size and structure, and short-term and long-term operation, bringing a successful close to the Company's “12th
Five-Year Plan".
Yang Mingsheng, Chairman
Chairman's Statement
China Life Insurance Company Limited Annual Report 2015
5
(Investment income + Net realised gains/(losses) on financial assets + Net fair value gains/(losses)
through profit or loss + Total income from investment properties - Business tax and extra charges for investment)/((Investment
assets at the beginning of the period + Investment assets at the end of the period)/2)
=
Gross investment yield
4.
The Company has continually improved its corporate governance. During the Reporting Period, the Company
successfully completed the change of sessions of the Board of Directors and the Supervisory Committee and elected the
fifth sessions of the Board of Directors and the Supervisory Committee. Mr. Xu Hengping, Mr. Xu Haifeng, Mr. Liu
Jiade, Mr. Robinson Drake Pike and Mr. Tang Xin joined the new session of the Board of Directors, and Mr. Miao
Ping, Mr. Zhan Zhong and Ms. Wang Cuifei joined the new session of the Supervisory Committee. The new sessions
of the Board of Directors and the Supervisory Committee continue to play roles of decision-making and supervision
in a variety of areas, such as strategic planning, risk management, internal control and compliance, and performance
appraisal, etc. Meanwhile, the Company would like to express its gratitude to the resigned/retired Directors, Mr. Su
Hengxuan, Mr. Miao Ping, Mr. Bruce Douglas Moore and Mr. Huang Yiping, and the retired Supervisors, Ms. Xia
Zhihua, Ms. Yang Cuilian and Mr. Li Xuejun for their contributions to the development of the Company during their
Insurance benefits and claims expenses
2.42
2.77
18,331
11,061
24,765
7.1%
32,211
34,514
of the Company
Net profit attributable to ordinary share holders
18,331
11,061
24,765
7.7%
32,211
Net cash inflow/(outflow) from operating activities
34,699
Net profit attributable to equity holders of
20,513
10,968
29,451
13.7%
40,402
45,931
Profit before income tax
290,717
300,562
312,288
11.7%
315,294
the Company
N/A
(18,811)
N/A
(0.67)
activities per share
Net cash inflow/(outflow) from operating
6.78
7.82
7.80
13.5%
10.05
11.41
share
Equity holders' equity per
0.65
0.39
78,247
0.88
1.14
1.22
Earnings per share (basic and diluted)
Per share (RMB)
9.0% 1,972,941 1,898,916 1,583,907
8.9% 1,848,681 1,790,838 1,494,969
8.3% 1,750,356 1,675,815 1,390,519
13.5% 220,331 221,085 191,530
2,448,315 2,246,567
2,287,639 2,100,870
2,122,101 1,959,236
322,492 284,121
Total equity holders' equity
Total liabilities
Investment assets
2
Total assets
As at 31 December
68,292 132,182 133,953
7.1%
23 March 2016
CSRC
CIRC
Corporate Governance
Internal Control
Honors and Awards
Independent Auditors' Report
Consolidated Statement of Financial Position
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Embedded Value
1
China Life Insurance Company Limited Annual Report 2015
Contents
2
3
Directors, Supervisors, Senior Management and Employees
5
Changes in Ordinary Shares and Shareholders Information
Report of the Supervisory Committee
中国人寿保险股份有限公司
China Life Insurance Company Limited
China Insurance Regulatory Commission
Annual Report 2015
成己为人
成人达己
The Company is a life insurance company established in Beijing, China on 30 June 2003 according to the
Company Law and 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 the largest life insurance company in China. Our distribution network, comprising exclusive
agents, direct sales representatives, and dedicated and non-dedicated agencies, is the most extensive one in China.
The Company is one of the largest institutional investors in China, and through its controlling shareholding
in China Life Asset Management Company Limited, the Company is the largest insurance asset management
company in China. 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 2015, the Company had approximately 216 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.
Definitions and Material Risk Alert
Company Profile
Financial Summary
Chairman's Statement
Management Discussion and Analysis
Report of the Board of Directors
Significant Events
6
Stock Code: 2628
28
CLIC
AMC
Pension Company
CLP&C
CLI
AMP
CLWM
China Life Insurance (Group) Company, the controlling shareholder of
the Company
China Life Asset Management Company Limited, a non-wholly owned
subsidiary of the Company
China Life Pension Company Limited, a non-wholly owned subsidiary of
the Company
China Life Property and Casualty Insurance Company Limited, a non-
wholly owned subsidiary of CLIC
China Life Investment Holding Company Limited, a wholly owned
subsidiary of CLIC
China Life Wealth Management Company Limited, an indirect non-
wholly owned subsidiary of the Company
China Life AMP Asset Management Co., Ltd., an indirect non-wholly
owned subsidiary of the Company
9
The Company'
report, unless the context otherwise requires, the following expressions have the following meanings:
China Life Insurance Company Limited and its subsidiaries
Definitions and Material Risk Alert
38
In this annual
54
58
41
97
101
102
73
103
105
107
108
110
228
China Life Insurance Company Limited Annual Report 2015
100%
2.
Note: At the third meeting of the Strategy and Investment Decision Committee of the fifth session of the Board held on 21
December 2015, Mr. Huang Yiping gave written authorization for Mr. Anthony Francis Neoh to act as his proxy to
attend, vote and chair at the meeting.
Performance of duties by the Strategy and Investment Decision Committee
In 2015, all members of the Strategy and Investment Decision Committee attended meetings in a timely manner,
reviewed the proposals on the application of the Company's insurance capital, annual investments, major
strategic projects and annual related reports. Members of the Strategy and Investment Committee diligently
performed their duties. During meetings of the Strategy and Investment Decision Committee, all members
actively participated in discussions and gave professional advices on any proposals considered and discussed at the
meetings.
(1) Studying the application of the Company's insurance capital. All members of the Strategy and Investment
Decision Committee carefully studied the regulatory requirements with respect to the application of
insurance capital, and reviewed the proposals on the entrusted investment of the Company in overseas
private equity markets and authorization of the amounts, the plans on the allocation of the Company's
overseas assets and authorization of entrusted investment, and authorization of entrusted investment
in relation to the marketization of the Company's RMB assets according to the Company's business
development. In order to effectively promote the investment businesses of the Company, the Strategy and
Investment Decision Committee conducted research on an annual authorization mechanism, which provided
a key reference for the decision making of the Board.
3/3
92
Discussing major strategic projects of the Company. In 2015, the Strategy and Investment Decision
Committee fully discussed the necessity, feasibility and risks of the proposals on major strategic projects,
including the overseas issue by the Company of RMB debt instruments for replenishment of capital, capital
debt financing of the Company, strategic asset allocation plan of the Company for the years from 2016 to
2020, overseas issue by the Company of senior bonds and establishment of China Life Health Insurance Co.,
Ltd., and made significant recommendations to the Board.
Corporate Governance
(2)
(3)
(4)
Reviewing annual investment plans and entrusted investments of the Company. In 2015, the Strategy
and Investment Decision Committee carefully reviewed the proposals on investment plans such as the
Company's annual investment plans and annual investment plans in relation to the self-use real estate of the
Company; the proposals on the authorization of investments such as the authorization of annual investment
in non self-use real estate of the Company and the authorization of annual investment in insurance asset
management products of the Company; and the proposals on investment guidelines such as the annual
agreement and investment management guidelines of the Company to AMC and CLI. The Strategy and
Investment Decision Committee fully reviewed the above proposals and submitted its opinions to the Board
in this regard.
Finalizing the relevant annual reports of the Company. The Strategy and Investment Decision Committee
discussed and reviewed the annual assessment report for the “Twelfth Five-year Plan" and the report on the
solvency and capital planning of the Company for the next five years, and inspected, assessed and planned
the implementation of various development objectives and the execution of major work and measures.
Taking into account the overall situation of domestic and international markets and the future development
trends, as well as the key issues identified in the assessment, the committee devised plans for the solvency of
the Company in the coming five years and suggested the key work ideas and the measures for improvement
for the next stage.
INDEPENDENCE OF THE COMPANY FROM ITS CONTROLLING SHAREHOLDER
Employees: The Company is independent in the aspects of employment, human resources and remuneration
100%
China Life Insurance Company Limited Annual Report 2015
3/3
and Investment Decision Committee of
the fifth session of the Board
67%
Lin Dairen
3/3
100%
management.
the fifth session of the Board
Wang Sidong
Non-executive Director, member of the Strategy
3/3
100%
and Investment Decision Committee of
Xu Haifeng
the fifth session of the Board
Executive Director, member of the Strategy
and Investment Decision Committee of
the fifth session of the Board
Anthony Francis Neoh
Independent Director, member of the Strategy
and Investment Decision Committee of
33
Assets: The Company owns all assets relating to the operation of its principal business. At present, the Company does
not provide any guarantee for its shareholders. The Company's assets are independent, complete, and independent of the
shareholders of the Company and other related parties.
In accordance with the Articles of Association, when the Company convenes the shareholders' general meeting,
shareholders individually or in aggregate holding 3% or more of the shares of the Company shall have the right to
submit proposals to the Company. The Company should include such matters that fall into the scope of the functions
and powers of the shareholders' general meeting in the agenda of the meeting. Shareholders individually or in aggregate
holding 3% or more of the shares of the Company may submit provisional proposals in writing to the convenor sixteen
days prior to the shareholders' general meeting. The provisional proposals shall fall into the scope of the functions and
powers of the shareholders' general meeting and specify explicit topics and specific resolution matters.
Organization: The Company has established a well-developed organizational system, under which internal bodies such as
the Board and the Supervisory Committee operate separately. There is no subordinate relationship between such internal
bodies and the functional departments of the Company's controlling shareholder.
In 2015, the Company was awarded the "Corporate Governance Excellence Awards (for companies listed on the Main
Board)" in the assessment and selection of the “Hong Kong Corporate Governance Excellence Awards" jointly organized
by the Chamber of Hong Kong Listed Companies and the Centre for Corporate Governance and Financial Policy,
Hong Kong Baptist University. In the assessment and selection of the “Gold Bull Award for the PRC Listed Companies
in 2014" held by China Securities in 2015, the Company was awarded the title of the “Gold Bull Award for the Most
Profitable Companies in 2014” and Mr. Zheng Yong, the Board Secretary, was awarded the title of the "Gold Bull
Award for Best Board Secretary in 2014". In the assessment and selection of the “2014 China Most Valuable Listed
Companies in the PRC" held by the Securities Times, Mr. Zheng Yong, the Board Secretary, was awarded the title of
the “Top 100 Board Secretaries in the PRC Listed Companies”, whereas in the assessment and selection of the “Golden
Governance-Outstanding Board Secretaries of Listed Companies in 2015" held by Shanghai Securities News, he was
awarded the title of the "Golden Governance-Board Secretary for Information Disclosure".
CHANGES OF THE ARTICLES OF ASSOCIATION
With the approval at the 2014 Annual General Meeting held on 28 May 2015, the Company added the "fund sales
business" into its business scope as stipulated in the Articles of Association and amended certain articles pursuant to the
regulatory requirements. The amendment shall take effect after the approval of the CIRC is obtained. For details of such
amendments, please refer to the Supplemental Notice of Annual General Meeting of the Company dated 8 May 2015.
96
China Life Insurance Company Limited Annual Report 2015
Internal Control
I.
ESTABLISHMENT OF AN INTERNAL CONTROL SYSTEM
The Company has been devoting significant effort towards the promotion of internal control and the
establishment of internal control related systems. In accordance with the requirements of the "Standard
Regulations on Corporate Internal Control”, the “Implementation Guidelines for Corporate Internal Control", the
"Guidance on Internal Control for Companies Listed on the Shanghai Stock Exchange”, the “Rules Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited", and the “Basic Standards of Internal Control
for Insurance Companies" issued by the CIRC, the Company has carried out a lot of work on its internal control
system establishment, rules implementation and risk management by strictly following its corporate governance
structure. The Company also formulated and issued the “Internal Control Implementation Manual of China Life
Insurance Company Limited (2015 Edition)" to strengthen the implementation of internal control standards
and internal control assessments, and actively promoted the culture and philosophy of internal control, thereby
continuously enhancing the internal control of the Company.
Pursuant to the requirements of the “Notice on the Proper Preparation for Disclosure of 2015 Annual Reports of
Listed Companies” promulgated by the SSE, the Company shall release an Internal Control Self-assessment Report
simultaneously with the publication of its 2015 annual report. The Company, as an overseas private issuer, was
required to provide a specific assessment report on its internal control system relating to financial reporting for
the year ended 31 December 2015 in its Form 20-F (U.S. Annual Report) submitted to the U.S. Securities and
Exchange Commission (the “SEC”) in accordance with Section 404 of the U.S. Sarbanes-Oxley Act. In accordance
with the requirements of laws and regulations relating to internal control of the jurisdictions where the Company
is listed, the Company has completed internal control self-assessments in relation to the requirements of Section
404 of the U.S. Sarbanes-Oxley Act and the SSE for the year ended 31 December 2015, and confirmed that its
internal controls were effective. The Company had also received from its independent auditors an unqualified
opinion on the effectiveness of its internal control in relation to financial reporting as at 31 December 2015. The
Company's assessment report and the report of its independent auditors will be included as an attachment to its
annual report submitted to the SSE and its Form 20-F submitted to the SEC.
It is the responsibility of the Board of the Company to establish and effectively implement well-established
internal control systems, assess their effectiveness and disclose the report on the internal control assessment. The
Board and the Audit Committee are responsible for leading the implementation of internal control measures of
the Company, and the Supervisory Committee supervises the internal control assessments performed by the Board.
The Company has established Internal Control and Risk Management Departments and Internal Control and
Compliance Departments in its headquarters and branches. The Company also conducts tests on the management
level, assesses the effectiveness of the established and implemented internal control systems in accordance with the
requirements of the PRC regulatory requirements and Section 404 of the U.S. Sarbanes-Oxley Act, and reports to
the Board, the Audit Committee and the management.
97
China Life Insurance Company Limited Annual Report 2015
Internal Control
In compliance with regulatory requirements and having considered the characteristics of its business and
management requirements, the Company established and implemented a series of internal control measures
and procedures with respect to currency and funds, insurance operations, external investments, physical assets,
information technology, financial reporting and information disclosure to ensure the safety and integrity of its
assets. By complying with relevant PRC laws and regulations as well as the internal rules and regulations of the
Company, the quality of accounting information has been improved.
A relatively well-developed internal control system has been established in terms of team-building, sales and
operations, and system management for the sales channels, such as individual insurance, group insurance,
bancassurance, health insurance and e-commerce. This internal control system regulates the relevant authorizations
and operational workflows, and effectively adopts the measures to prevent and manage risks relating to
the operation of exclusive agents. The Company has promulgated clear regulations for the workflows and
authorizations relating to the verification of insurance policies, insurance claims and insurance preservation. The
Company has also formulated business operation standards and service quality standards, developed systems of
business, document and file management, and further regulated the management of business approval authority to
strengthen its control over business risk and improve the quality of its services.
In accordance with relevant laws and regulations such as the “Accounting Law of the People's Republic of
China” and the “Enterprise Accounting Standards” and taking into account the needs of the Company for its
business development, operation and management, the Company formulated and issued the "Accounting System
of China Life Insurance Company Limited” and the “Accounting Practices of China Life Insurance Company
Limited”. The accounting units of the Company at all levels have implemented them in strict compliance with the
requirements of the accounting system and various basic systems to regulate works relating to financial accounting
and preparation of financial reports. The accounting units of the Company at all levels have assigned positions in
a reasonable manner, clearly defined duties and responsibilities of such positions and their scope of authority on
management, and strictly prohibited employees from serving incompatible positions concurrently, thus exercising
the control over financial risks in an efficient manner.
The Company has formulated the “Provisional Measures on Accountability System for Major Errors in Periodic
Report Disclosures of China Life Insurance Company Limited", which set forth provisions governing the basic
responsibilities of periodic report disclosures, the major errors in periodic report disclosures and the responsibility
attribution. As of 31 December 2015, there has been no major error in periodic report disclosures of the
Company. In order to regulate its inside information management and enhance the confidentiality of its inside
information, the Company formulated the "Measures for the Administration of Persons Who Have Knowledge
of Inside Information of China Life Insurance Company Limited", which was strictly implemented in all
departments, branches, subsidiaries and major affiliates of the Company.
98
In 2015, the Company continuously improved and strengthened its relations with investors, which mainly included
holding the Annual General Meeting, holding results release conferences, embarking on global non-deal roadshows,
meeting and holding conference calls with investors and analysts, attending investors' meetings, frequently updating
information on its investor relations website, establishing an investor relations hotline and an exclusive electronic
mailbox to ensure timely replies to any enquiries from investors and analysts. In 2015, the Company communicated
with more than 3,000 investors and analysts through different channels, including the reception at the Company
of 142 groups of investors and analysts consisting of over 700 individuals in total, communicating with more than
1,000 investors by participating in 16 investors' meetings held locally or overseas, and meeting and visiting more
than 60 investors in roadshows. In addition, the Company kept in close contact with investors by phone and email,
communicated with them through more than 1,500 emails, and answered their calls and emails for more than 1,000
person-time.
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
95
33
93
China Life Insurance Company Limited Annual Report 2015
Corporate Governance
Business operations: The Company independently develops personal insurance businesses, including life insurance,
health insurance and accident insurance businesses, reinsurance relating to the above insurance businesses, use of funds
permitted by applicable PRC laws and regulations or the State Council, as well as its all types of personal insurance
services, consulting business and agency business, and other businesses permitted by insurance administrative and
regulatory authorities of the PRC. The Company currently possesses the “Insurance Company Legal Person Permit”
(Number: 000005) issued by the CIRC. The Company is independently engaged in the businesses as prescribed in its
business scope according to law, has separate sales and agency channels and is licensed to use licensed trademarks without
consideration. The completeness and independence of the Company's business operations will not be adversely affected
by its relationship with related parties.
PERFORMANCE APPRAISAL AND INCENTIVES FOR SENIOR MANAGEMENT
The Company implements a term-of-service and target-related responsibility system for senior management. At the
beginning of each year, a performance target contract will be entered into between the Chairman and the President, the
President and the Vice Presidents, and the President's Office and the senior management of branches of the Company.
The performance target contract system is an important tool in disassembling the strategic goals of the Company in a
scientific manner, which is conducive towards the breakdown of targets and transmission of responsibility, enhancing
the implementation capacity of the Company and ensuring the successful completion of its annual business targets. The
performance appraisal criteria listed in the individual performance target contracts of senior management are partially
linked to the business targets of the Company and partially formulated with reference to the duties and functions of their
respective positions.
The remuneration for senior management comprises basic salary, performance compensation, welfare benefits and
medium and long term incentives.
SHAREHOLDERS' INTERESTS
Finance: The Company has established a separate financial department, and an independent financial accounting system
and financial management system; further, the Company makes financial decisions on its own; it employs separate
financial personnel, opens separate accounts with banks and does not share bank accounts with CLIC; the Company, as a
separate taxpayer, pays taxes individually according to law.
To safeguard shareholders' interests, in addition to the right to participate in the Company's affairs by attending
shareholders' general meetings, shareholders have the right to convene extraordinary shareholders' general meetings
under certain circumstances.
94
China Life Insurance Company Limited Annual Report 2015
Corporate Governance
Attendance rate
Shareholders may put forward enquiries to the Board through the Board Secretary or the Company Secretary, or put
forward proposals at shareholders' general meetings through their proxies. The Company has made available its contact
details in its correspondence with shareholders to enable such enquiries or proposals to be properly directed.
INFORMATION DISCLOSURE AND INVESTOR RELATIONS
The Company has established a well-developed and practical information disclosure system in strict compliance with
the laws and regulations of its listed jurisdictions and continued to improve the quality of its information disclosure so
as to ensure that domestic and overseas investors obtain true, accurate and complete information. The Company has
proactively developed investor relations and strengthened its contact and communication with domestic and overseas
investors through innovative work models, which enabled domestic and overseas investors to understand the business
operations of the Company in a timely manner.
In 2015, the Company continued to strengthen the construction of its information disclosure system and implement
the regulatory requirements relating to information disclosure in a practical manner in order to ensure the timeliness,
fairness, truthfulness, accuracy and completeness of information disclosure. The Company constantly promoted
the innovation of periodic reports, actively studied and improved the method of disclosure of key information, and
extended the scope and depth of information disclosure so as to enable investors to have a deeper understanding of the
development strategies and business operations of the Company, thus further enhancing the quality of information
disclosure of periodic reports. The Company disclosed important announcements in relation to its financial results with
initiative and prudence, which ensured investors to obtain timely and accurate information affecting its decisions. The
Company regularly organized training courses relating to information disclosure, carried out timely study and promotion
of new regulatory rules of its listed jurisdictions in the PRC and overseas, and explained the key points and difficulties
of information disclosure. The Company also strictly implemented the registration and filing procedures of persons
who have knowledge of inside information, strengthened the confidentiality of the Company's inside information, and
safeguarded the legitimate rights and interests of investors, with a view to maintaining the fairness, impartiality and
openness of the information disclosure of the Company.
95
If the number of Directors is less than the number stipulated in the Company Law or two-thirds of the number specified
by the Articles of Association, or the uncovered losses incurred amount to one-third of the Company's total share capital,
or if the Board or the Supervisory Committee deems necessary, or more than half of the Directors (including at least
two Independent Directors) requests, or shareholders holding 10% or more shares of the Company make a requisition,
the Board shall convene an extraordinary shareholders' general meeting within two months. Where shareholders holding
10% or more shares request an extraordinary shareholders' general meeting, such shareholders shall make a request in
writing to the Board with a clear agenda. The Board shall, upon receipt of such a written request, convene a meeting
as soon as possible. If the Board fails to convene a meeting within 30 days of the receipt of such a written request,
shareholders making such a request may convene a meeting by themselves at the cost of the Company within four
months of the receipt by the Board of such a written request.
2/3
3.
Number of meetings attended
(1) Attending meetings of the Risk Management Committee of the Board and providing guidance on the
risk management of the Company. In 2015, all members of the Risk Management Committee diligently
performed their duties, attended all meetings in a timely manner, and reviewed the proposals on risk
management and internal control of the Company. During meetings of the Risk Management Committee,
all members actively participated in discussions and gave guiding opinions on any proposals considered and
discussed at the meetings.
(2)
Providing its opinions for the review of the proposals on risk management to the Board. In 2015, the
Risk Management Committee closely monitored and controlled and effectively prevented internal and
external risks of the Company, assisted the Board in establishing a well-developed internal control system
of the Company, formulated an operational risk management strategy of the Company, and reviewed
the assessment reports on business risk and internal control of the Company according to the regulatory
requirements in the PRC and overseas. The Risk Management Committee provided its opinions for the
review of the proposals on risk management such as the Measures for the Classification of Five Tiers of
the Company's Insurance Asset Risks (Trial) and the assessment management system of the Company's
investment credit risks, which offered professional support to the Board's decision-making in a scientific
manner.
(3) Participated in meetings of the Audit Committee of the Board to listen to the matters relevant to the
annual compliance report and the internal control assessment for the year. In 2015, members of the Risk
Management Committee participated in the thirteenth meeting of the Audit Committee of the fourth
session of the Board and listened to the 2014 internal control assessment of the Company, and the report on
the adjustment of internal control system of the Company according to the COSO new framework.
(4) Conducting investigation and research on local branches. From 19 to 24 August 2015, Mr. Anthony Francis
Neoh, the Chairman of the Risk Management Committee, conducted investigation and research on local
branches in Xinlin Gol and Chifeng for the purpose of understanding the risk prevention and control of the
local branches, and advised the local branches to raise their awareness of risk prevention and adhere to the
bottom line of risks in their business development so as to enhance the legal compliance and risk prevention
in a practical manner.
STRATEGY AND INVESTMENT DECISION COMMITTEE
The Company established the Strategy Committee on 30 June 2003. In October 2010, the proposal to establish the
Strategy and Investment Decision Committee on the basis of the Strategy Committee was reviewed and approved at the
ninth meeting of the third session of the Board. The Strategy and Investment Decision Committee is mainly responsible
for the drawing-up of long-term development strategies and significant investment or financing plans of the Company,
proposing significant projects of capital operation and assets management, and conducting studies and making
recommendations on other important matters affecting the development of the Company.
96
90
China Life Insurance Company Limited Annual Report 2015
Corporate Governance
At present, the Strategy and Investment Decision Committee of the fifth session of the Board comprises Mr. Tang Xin
and Mr. Anthony Francis Neoh, the Independent Directors, Mr. Wang Sidong, a Non-executive Director, Mr. Lin
Dairen and Mr. Xu Haifeng, the Executive Directors, with Mr. Tang Xin acting as the Chairman. Mr. Su Hengxuan
resigned from his position as a member of the Strategy and Investment Decision Committee of the fourth session of
the Board of the Company due to adjustment of working arrangements. Mr. Huang Yiping resigned from his position
as the Chairman of the Strategy and Investment Decision Committee of the fifth session of the Board of the Company
pursuant to relevant policies.
1.
Meetings and attendance
In 2015, 2 regular meetings were held by the Strategy and Investment Decision Committee of the fourth session of
the Board. Attendance records of individual members are as follows:
Name of member
Huang Yiping
Position
In 2015, the Risk Management Committee performed its duties and functions in strict compliance with the
"Procedural Rules for Risk Management Committee Meetings". All members performed their obligations in a
responsible manner, and gave guiding opinions on proposals in relation to the internal control system of the
Company, risk management and construction in compliance with laws.
Independent Director, Chairman of the Strategy
and Investment Decision Committee of
the fourth session of the Board
Performance of duties by the Risk Management Committee
Corporate Governance
Independent Director, Chairman of
the Risk Management Committee of
the fifth session of the Board
Non-executive Director, member of
the Risk Management Committee of
the fifth session of the Board
Non-executive Director, member of
the Risk Management Committee of
the fifth session of the Board
Executive Director, member of the
Risk Management Committee of
the fifth session of the Board
2/2
100%
1/2
Note 1
50%
1/2
12
Note 2
50%
2/2
100%
Notes:
1.
2.
At the first meeting of the Risk Management Committee of the fifth session of the Board held on 28 October 2015, Mr.
Zhang Xiangxian gave written authorization for Mr. Liu Jiade to act as his proxy to attend and vote at the meeting;
At the second meeting of the Risk Management Committee of the fifth session of the Board held on 21 December 2015,
Mr. Liu Jiade gave written authorization for Mr. Zhang Xiangxian to act as his proxy to attend and vote at the meeting.
89
China Life Insurance Company Limited Annual Report 2015
2.
Note
Number of meetings attended
2/2
2/2
100%
Notes:
1.
2.
At the fifteenth meeting of the Strategy and Investment Decision Committee of the fourth session of the Board held on
23 March 2015, Mr. Lin Dairen gave written authorization for Mr. Su Hengxuan to act as his proxy to attend and vote at
the meeting;
At the fifteenth meeting of the Strategy and Investment Decision Committee of the fourth session of the Board held on
23 March 2015, Mr. Wang Sidong gave written authorization for Mr. Anthony Francis Neoh to act as his proxy to attend
and vote at the meeting;
At the sixteenth meeting of the Strategy and Investment Decision Committee of the fourth session of the Board held on
28 April 2015, Mr. Su Hengxuan gave written authorization for Mr. Lin Dairen to act as his proxy to attend and vote at
the meeting.
91
China Life Insurance Company Limited Annual Report 2015
Corporate Governance
In 2015, 3 regular meetings were held by the Strategy and Investment Decision Committee of the fifth session of
the Board. Attendance records of individual members are as follows:
Name of member
Huang Yiping
Position
Independent Director, Chairman of the Strategy
and Investment Decision Committee of
the fifth session of the Board
Executive Director, member of the Strategy
Independent Director, member of the Strategy
and Investment Decision Committee of
the fourth session of the Board
Attendance rate
Anthony Francis Neoh
50%
100%
Lin Dairen
Executive Director, member of the Strategy
1/2
Note 1
50%
and Investment Decision Committee of
the fourth session of the Board
Wang Sidong
Non-executive Director, member of the Strategy
1/2
50%
and Investment Decision Committee of
the fourth session of the Board
Su Hengxuan
Executive Director, member of the Strategy
and Investment Decision Committee of
1/2
Note 3
the fourth session of the Board
Note 2
Xu Hengping
Position
Liu Jiade
China Life Insurance Company Limited Annual Report 2015
Corporate Governance
At present, the Risk Management Committee of the fifth session of the Board comprises Mr. Anthony Francis Neoh, an
Independent Director, Mr. Zhang Xiangxian and Mr. Liu Jiade, the Non-executive Directors, and Mr. Xu Hengping, an
Executive Director, with Mr. Anthony Francis Neoh acting as the Chairman. Mr. Miao Ping retired from his position as
a member of the Risk Management Committee due to the expiry of the term of the Risk Management Committee of the
fourth session of the Board.
1.
Meetings and attendance
In 2015, 2 regular meetings were held by the Risk Management Committee of the fourth session of the Board.
Attendance records of individual members are as follows:
Name of member
Anthony Francis Neoh
Zhang Xiangxian
Miao Ping
Independent Director, Chairman of
the Risk Management Committee of
the fourth session of the Board
Non-executive Director, member of
the Risk Management Committee of
the fourth session of the Board
Executive Director, member of the
Risk Management Committee of
Number of meetings attended
Attendance rate
the fourth session of the Board
42
Zhang Xiangxian
Anthony Francis Neoh
Attendance rate
Number of meetings attended
Position
2/2
In 2015, 2 regular meetings were held by the Risk Management Committee of the fifth session of the Board.
Attendance records of individual members are as follows:
Name of member
22
2/2
100%
2/2
100%
100%
(Note 36)
222,585
28,265
97,029
95,037
2,254
32,211
Total assets
32,514
39,232
52
39,284
39,232
32,211
(Note 35)
303
(Note 34)
Attributable to equity holders
RMB million
355
of the Company
Non-controlling
interests
Total
Share
Other equity
RMB million
Retained
instruments
Reserves
RMB million
RMB million
RMB million
earnings
RMB million
capital
71,798
Total transactions with owners
Capital paid in by
(7,052)
As at 31 December 2014
28,265
145,919
109,937
3,210
601
287,331
Net profit
Other comprehensive income
28,265
145,919
109,937
3,210
As at 1 January 2015
Transactions with owners
109
9,658
non-controlling interests
826
692
1,518
Appropriation to reserves (Note 36)
8,832
(17,311)
(8,832)
(8,479)
(8,479)
Dividends to non-controlling interests
(91)
(91)
Total comprehensive income
Dividends paid (Note 32)
Other comprehensive income
42,324
As at 1 January 2014
For the year ended 31 December 2015
Other comprehensive income
2015
Note
RMB million
2014
Consolidated Statement of Comprehensive Income
RMB million
profit or loss in subsequent periods:
Fair value gains on available-for-sale securities
54,080
70,342
Amount transferred to net profit from other comprehensive income
(32,297)
Other comprehensive income that may be reclassified to
(7,120)
China Life Insurance Company Limited Annual Report 2015
105
Income tax
Net profit
Attributable to:
- Equity holders of the Company
- Non-controlling interests
Basic and diluted earnings per share
RMB1.14
35,187
34,699
488
32,211
303
30
RMB1.22
The notes on pages 110 to 227 form an integral part of these consolidated financial statements.
32,514
Net profit
Portion of fair value changes on available-for-sale securities
(12,767)
287,331
71,798
Attributable to:
- Equity holders of the Company
- Non-controlling interests
41,775
Total comprehensive income for the year, net of tax
71,443
355
The notes on pages 110 to 227 form an integral part of these consolidated financial statements.
106
China Life Insurance Company Limited Annual Report 2015
Consolidated Statement of Changes in Equity
For the year ended 31 December 2015
549
attributable to participating policyholders
39,284
Other comprehensive income for the year, net of tax
(11,035)
Share of other comprehensive income of associates and joint ventures
under the equity method
353
120
Exchange differences on translating foreign operations
10
7,137
Income tax relating to components of other comprehensive income
(2,242)
(13,023)
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods
7,137
39,284
Other comprehensive income that will not be reclassified to
profit or loss in subsequent periods
28
34,699
80
35,187
Net cash inflows/(outflows) from operating activities
(18,811)
78,247
CASH FLOWS FROM INVESTING ACTIVITIES
Disposals and maturities:
Disposals of debt securities
106
Maturities of debt securities
Property, plant and equipment
Disposal of subsidiaries
Purchases:
Debt securities
11,546
21,242
41,806
Disposals of equity securities
22,407
313
1,902
(3,911)
(100,089)
(13,698)
Financial liabilities at fair value through profit or loss
403
9,704
Dividends received - securities at fair value through profit or loss
Receivables and payables
41,330
Income tax paid
(8,380)
(1,923)
Interest received – securities at fair value through profit or loss
1,225
70,482
(1,974)
400,451
199
3,875
Interest received
81,688
78,903
Dividends received
8,828
4,258
(3,630)
Decrease/(increase) in policy loans, net
(13,478)
Net cash inflows/(outflows) from investing activities
67,047
(69,257)
The notes on pages 110 to 227 form an integral part of these consolidated financial statements.
108
(11,305)
285,647
(9,602)
(25,972)
437
(53,340)
(115,808)
Equity securities
(522,787)
(312,544)
Decrease/(increase) in securities purchased under agreements to resell, net
Property, plant and equipment
(5,048)
Additional capital contribution to associates and joint ventures
(766)
(5,671)
Decrease/(increase) in term deposits, net
124,838
(8,384)
(268)
(812)
2,124
Appropriation to reserves (Note 36)
Dividends paid (Note 32)
(10,090)
(11,491)
(11,491)
Dividends to non-controlling interests
(117)
7,791
(117)
296
296
Total transactions with owners
As at 31 December 2015
7,791
10,386
Others
(21,581)
7,791
Capital paid in by other equity
7,076
61
7,137
Total comprehensive income
7,076
34,699
instruments holders
549
42,324
Transactions with owners
Capital paid in by
non-controlling interests
80
(7,888)
49
(37)
(3,441)
28,265
Depreciation and amortisation
Foreign exchange gains
Share of profit of associates and joint ventures, net
Changes in operating assets and liabilities:
Securities at fair value through profit or loss
45,931
Insurance contracts
40,402
(93,548)
(42,506)
(12,928)
112,142
108,955
2,036
(97,582)
Net realised and unrealised gains on financial assets
Investment income
Adjustments for:
7,791
163,381
123,055
3,722
326,214
The notes on pages 110 to 227 form an integral part of these consolidated financial statements.
107
China Life Insurance Company Limited Annual Report 2015
Consolidated Statement of Cash Flows
For the year ended 31 December 2015
2015
RMB million
2014
RMB million
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax
488
2,448,315
(10,744)
40,402
"2015 Top 500 Chinese Enterprises", ranking No.13
"2015 Forbes Global 2000", ranking No.37
of 2015"
"21st Century Business Herald" - "Asian
Insurance Companies Competitiveness Ranking
"National Business Daily" - Assessment and
Selection of the "Golden Tripod Award" (the 6th
Session)
"Value Line" Magazine - the "2nd China Listed
Companies Value Ranking List of 2015"
"Financial Times" "2015 Gold Medal List of
Chinese Financial Institutions"
"2015 Most Reliable Life Insurance Company"
-
The Chamber of Hong Kong Listed Companies
and the Center for Corporate Governance and
Financial Policy, Hong Kong Baptist University
Hexun.com and China Securities Market
Research and Design Center (SEEC) – the “13th
China's Financial Annual Champion Awards of
2015"
"FORTUNE China"
"Forbes"
Honors and Awards
China Life Insurance Company Limited Annual Report 2015
100
Millward Brown
For an analysis and management of the major risk factors of the Company, please refer to Note 4 in the Notes to
the Consolidated Financial Statements of this annual report.
"Hong Kong Corporate Governance Excellence Awards"
"2015 Golden Dragon Award - Best Listed Insurance
Company of the Year"
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. Our report is
made solely to you, as a body, in accordance with the Hong Kong Companies Ordinance, and for no other purpose.
We
do not assume responsibility towards or accept liability to any other person for the contents of this report.
DIRECTORS' RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS
The directors of the Company are responsible for the preparation of consolidated financial statements that give a true
and fair view in accordance with International Financial Reporting Standards and the disclosure requirements of the
Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
AUDITORS' RESPONSIBILITY
We have audited the consolidated financial statements of China Life Insurance Company Limited (the "Company")
and its subsidiaries set out on pages 103 to 227, which comprise the consolidated statement of financial position as at
31 December 2015, and the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting
policies and other explanatory information.
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
EY 安永
Independent Auditors' Report
China Life Insurance Company Limited Annual Report 2015
"2015 BrandZ Top 100 Global Most Valuable Brands",
ranking No.62
101
"2015 Top 100 China Listed Companies Most Respected by
Investors"
Call Center"
International Customer Management Institute
(ICMI) Assessment and Selection of the "2015
Best Global
Assessment and Selection of the "2015 China
Listed Companies Most Respected by Investors"
jointly organized by the Listed Companies
Association of the PRC, China Securities Investor
Protection Fund Corporation, the Shanghai
Stock Exchange, the Shenzhen Stock Exchange,
the Securities Association of China, the Asset
Management Association of China, and co-
organized by "Securities Times"
"2015 Best Life Insurance Company in Asia"
"2015 Golden Tripod Award - the Insurance Company
with the Best Comprehensive Strength of the Year"
"2015 Best Listed Company of China"
"2015 Best Global Call Center"
We conducted our audit in accordance with International Standards on Auditing. Those standards require that we
comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement.
In 2015, the Company commenced a project for the establishment of a solvency risk management system pursuant
to the requirements of the CIRC with respect to a trial run during the transitional period of the C-ROSS and
benchmarked such system to the regulatory rules in all aspects so as to refine the regulatory assessment standards
in two levels: the completeness of the system and the effectiveness of its implementation. By improving the system
and mechanism of insolvency risk management, the Company optimized its mechanism for the formation and
transmission of risk preference. A trial assessment on solvency risk management was carried out pursuant to the
regulatory requirements, and the scores for such trial assessment effectively increased. Meanwhile, the Company
conducted an in-depth analysis on the results of the trial assessment and prepared a breakdown structure in respect
thereof in order to constantly improve its solvency risk management. The Company continued to comply with
the "Guidelines for the Implementation of Comprehensive Risk Management of Personal Insurance Companies”
issued by the CIRC, developed and improved the framework for comprehensive risk management, continued to
carry out risk alert and risk alert classification management, and strengthened its ability to guard against risks in
key risk fields.
II. RISK MANAGEMENT
Notes
RMB million
RMB million
14
1,715,985
1,603,446
Investment contracts
2014
15
72,275
Policyholder dividends payable
107,774
74,745
Interest-bearing loans and borrowings
Bonds payable
675
84,106
The Company established a 5-tier organizational structure with the ultimate responsibility assumed by the Board,
under the direct leadership of the management, having reliance on the risk management departments and with
the close cooperation among the relevant functional departments. The first tier is the corporate governance level,
including the Board, the Supervisory Committee, and the Risk Management Committee and the Audit Committee
under the Board. The second tier is the headquarter level. The President's Office of the Company has set up the
Internal Control and Risk Management Committee, under which several functional departments, such as the
Internal Control and Risk Management Department, the Legal and Compliance Department, the Supervision
Department, the Audit Department, and the departments in charge of finance and business administration, are
established. The third tier is the provincial branches level. The General Manager's Office of the Company has set
up the Internal Control and Risk Management Committee, under which several functional departments, such as
the Internal Control and Compliance Department, the Supervision Department, and the departments in charge of
finance and business administration, are established. The fourth tier is the local or city branches level, including
Supervision (Legal and Compliance) Departments and related functional departments. The fifth tier is the
county sub-branches level, the persons responsible for internal control and risk management of which have been
determined. By establishing the organizational structure of risk control, the Company has gradually established a
criss-cross network of risk control system, with the risk management departments at all levels as leading bodies,
the relevant functional departments as main bodies, the vertical decision-making control system and horizontal
interactive collaboration mechanism as supporting systems and the comprehensive risk management as focus,
thus laying a strong foundation for the Company to achieve a comprehensive risk management system with full
coverage, all-employee participation and effective workflows.
2015
December
Internal Control
China Life Insurance Company Limited Annual Report 2015
99
The Internal Control and Risk Management Department, Audit Department and Supervision Department of
the Company are responsible for overseeing the implementation of its internal control policies. The Internal
Control and Risk Management Department identifies issues in the areas of system design, control implementation
and risk management in a timely manner through the adoption of various measures such as walk-through test,
control test and risk analysis. It also eliminates loopholes, guards against risks and reduces losses by adopting
various measures to improve systems, enhances legal compliance and pursues responsible persons. Adhering to
the risk-oriented principle, in addition to the routine audits, the Audit Department has carried out a variety of
ad-hoc audits, covering strategic resources investment, invoices and seals management, costs overrun, information
system security, connected transactions, rectification of internal control deficiencies, subsequent audit and anti-
money laundering. These routine and ad-hoc audits enabled the Company to identify potential risks in a timely
manner and promote the business operation of the Company in compliance with applicable laws and regulations
through improving the supervision and remedial mechanisms, strengthening the implementation of rectification
measures and enhancing the application of audit results. The Company has formulated regulations with respect
to the reporting, investigation, handling of and responsibility attribution for cases involving any violations of
laws, disciplinary rules and regulations by employees, each being implemented by the Supervision Department,
which ensures that cases involving any violations of laws, disciplinary rules and regulations by employees are
handled in a timely manner, and the persons involved will be attributed to proper responsibility. The Supervision
Department reports the cases involving insurance agents (which specifically refer to judicial cases) and manages the
responsibility attribution of such cases in accordance with regulations such as the "Notice on the Establishment
of a Reporting System of Judicial Cases involving Insurance Industry” issued by the CIRC and internal policies
such as the “Implementing Rules for Responsibility Attribution of Cases", and constantly optimizes the relevant
internal policies pursuant to the standards for administration of cases of insurance institutions promulgated by the
competent authorities in charge of supervision of the insurance industry.
The Company has established a comprehensive information technology system and formed a closed-loop
mechanism focusing on centralized review and publication, periodic inspection and continuous improvement.
Further, the Company has promoted the construction of an information safety system, and formulated and
implemented a series of effective internal control measures in the course of system development and testing and
day-to-day operation and management, thereby strengthening the information safety control and improving the
information safety management of the Company.
The Company has established a well-developed system relating to investment decisions in accordance with the
relevant laws and regulations and based on the actual situation of investment management. The system defines
the approval and decision-making authority, authorization mechanism and specific decision-making procedures
for investment management. All major investment decisions shall be approved at an appropriate level and their
actual implementation shall be in strict compliance with the relevant requirements of the investment management
system. The Investment Decisions Committee is a permanent body of the Company for investment decisions,
which is responsible for reviewing major investments and providing support to any investment decisions made by
the management.
China Life Insurance Company Limited Annual Report 2015
Internal Control
As at 31
December
The notes on pages 110 to 227 form an integral part of these consolidated financial statements.
China Life Insurance Company Limited Annual Report 2015
Consolidated Statement of Financial Position
As at 31 December 2015
LIABILITIES AND EQUITY
Liabilities
Insurance contracts
As at 31
103
16
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the
risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those
risk assessments, the auditors consider internal control relevant to the entity's preparation of consolidated financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the directors, as well as evaluating the overall presentation of the consolidated financial statements.
OPINION
11,925
21,503
9.7
Securities purchased under agreements to resell
53,052
137,990
9.6
Accrued investment income
Securities at fair value through profit or loss
770,516
9.5
Available-for-sale securities
6,153
6,333
9.4
Statutory deposits – restricted
607,531
690,156
9.8
44,350
47,034
76,096
19,411
23,642
13
1,032
1,420
49,552
12
Cash and cash equivalents
Other assets
Reinsurance assets
11,166
11,913
11
Premiums receivable
233
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
562,622
Term deposits
RMB million
2014
2,246,567
Notes
As at 31
December
As at 31
December
As at 31 December 2015
Property, plant and equipment
Consolidated Statement of Financial Position
ASSETS
102
23 March 2016
Hong Kong
Certified Public Accountants
Ernst & Young
In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Company
and its subsidiaries as at 31 December 2015, and of their financial performance and cash flows for the year then ended
in accordance with International Financial Reporting Standards and have been properly prepared in compliance with the
disclosure requirements of the Hong Kong Companies Ordinance.
China Life Insurance Company Limited Annual Report 2015
9.3
Investment properties
69
166,453
207,267
9.2
Loans
517,283
504,075
9.1
7
Held-to-maturity securities
47,175
8
Investments in associates and joint ventures
1,283
1,237
25,348
26,974
44,390
28
2,643
17
23
10,209
5,808
Other income
5,060
4,185
Total revenues
Net fair value gains through profit or loss
BENEFITS, CLAIMS AND EXPENSES
Insurance benefits and claims expenses
440,766
Life insurance death and other benefits
24
(221,701)
(192,659)
Accident and health claims and claim adjustment expenses
24
507,449
(21,009)
7,120
22
Net change in unearned premium reserves
Net premiums earned
363,971
(978)
331,010
(515)
362,993
330,495
32,297
(692)
362,301
330,105
Investment income
21
97,582
93,548
Net realised gains on financial assets
(390)
Net written premiums
(16,752)
24
(7,428)
(4,151)
Statutory insurance fund contribution
20
(743)
(701)
Total benefits, claims and expenses
Other expenses
(463,492)
Share of profit of associates and joint ventures, net
8
1,974
3,911
Profit before income tax
27
45,931
(404,275)
Increase in insurance contract liabilities
(25,432)
Administrative expenses
(109,509)
(105,883)
Investment contract benefits
25
(2,264)
(1,958)
Policyholder dividends resulting from participation in profits
(27,458)
(33,491)
Underwriting and policy acquisition costs
(35,569)
(27,147)
Finance costs
26
(4,320)
(4,726)
(24,866)
2,623
Less: premiums ceded to reinsurers
REVENUES
26,514
20,062
28
16,953
19,375
5,347
52
19
20
217
223
Total liabilities
Equity
2,122,101
1,959,236
34
20
28,265
15,850
Statutory insurance fund
67,994
67,989
Financial liabilities at fair value through profit or loss
856
10,890
Securities sold under agreements to repurchase
18
32,266
31,354
Annuity and other insurance balances payable
30,092
25,617
Premiums received in advance
Other liabilities
Deferred tax liabilities
Current income tax liabilities
46,089
Gross written premiums
28,265
7,791
3,210
326,214
287,331
2,448,315
2,246,567
The notes on pages 110 to 227 form an integral part of these consolidated financial statements.
104
3,722
China Life Insurance Company Limited Annual Report 2015
For the year
ended 31 December 2015
2015
2014
Notes
RMB million
RMB million
Consolidated Statement of Comprehensive Income
35
284,121
Director
36
163,381
145,919
123,055
109,937
Share capital
Other equity instruments
322,492
Reserves
Attributable to equity holders of the Company
Non-controlling interests
Total equity
Total liabilities and equity
Approved and authorised for issue by the Board of Directors on 23 March 2016.
Yang Mingsheng
Director
Lin Dairen
Retained earnings
2015
RMB million
10,090
China Life Insurance Company Limited Annual Report 2015
In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects all phases of
the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement
and all previous versions of IFRS 9. The standard introduces new requirements for classification and
measurement, impairment, and hedge accounting. IFRS 9 is effective for annual periods beginning on or
after 1 January 2018, with early adoption permitted. The Group is currently assessing the impact on the
Group's consolidated financial statements.
IFRS 15 - Revenue from Contracts with Customers
IFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers.
Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity
expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS
15 provide a more structured approach for measuring and recognising revenue. In September 2015, the
IASB issued amendments to IFRS 15 regarding a one-year deferral of the mandatory effective date of IFRS
15 to 1 January 2018. IFRS 15 is not applied to the insurance contracts and financial instruments, which
are the main sources of the Group's revenue. The Group is currently assessing the impact on the Group's
consolidated financial statements.
IFRS 16 Leases
IFRS 16 supersedes IAS 17 Leases. It requires lessees to recognise leases as assets and liabilities on their
balance sheets, with certain exemptions. The lessor accounting is substantially unchanged. IFRS 16 will be
effective for annual periods beginning on or after 1 January 2019. Early application is permitted, provided
that IFRS 15 Revenue from Contracts with Customers is applied. The Group is currently assessing the impact
on the Group's consolidated financial statements.
In addition, the Annual Improvements 2012-2014 Cycle issued in September 2014 sets out amendments
to other standards. These annual improvements were established to make non-urgent but necessary
amendments to IFRSs. No material changes to the accounting policies of the Group are expected as a result
of these annual improvements.
114
2
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
IFRS 9 - Financial Instruments
2.2 Consolidation
power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee);
exposure, or rights, to variable returns from its involvement with the investee; and
•
the ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an investee, including:
the contractual arrangement with the other vote holders of the investee;
•
rights arising from other contractual arrangements; and
•
the Group's voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the
Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.
The consolidated financial statements include the financial statements of the Company and its subsidiaries
for the year ended 31 December 2015. Subsidiaries are those entities which are controlled by the Group
(including the structured entities controlled by the Group). Control is achieved when the Group is exposed,
or has rights, to variable returns from its involvement with the investee and has the ability to affect those
returns through its power over the investee. Specifically, the Group controls an investee if and only if the
Group has:
In January 2016, the IASB published amendments to IAS 7 Statement of Cash Flows. The amendments
require an entity to provide disclosures that enable users of financial statements to evaluate changes in
liabilities arising from financing activities, including both changes arising from cash flows and non-cash
changes. The amendments should be applied for annual periods beginning on or after 1 January 2017,
early application permitted. When an entity first applies the amendments, it is not required to provide
comparative information for preceding periods.
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2015 (continued)
IAS 7 Amendments - Statement of Cash Flows
2.1 Basis of preparation (continued)
Financial Instruments
1 January 2018
Revenue from Contracts with Customers
Leases
1 January 2018
1 January 2019
-
IAS 27 Amendments – Equity Method in Separate Financial Statements
The amendments to IAS 27 will allow entities to use the equity method to account for investments in
subsidiaries, joint ventures and associates in their separate financial statements. The amendments are
effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. The
amendments are not expected to have any impact on the Group's consolidated financial statements since the
Group has no intention to apply the equity method in the separate financial statements.
112
2
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2015 (continued)
IFRS 10 and IAS 28 Amendments - Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture
These amendments eliminate the inconsistency between the requirements in IFRS 10 and those in IAS 28
Investments in Associates and Joint Ventures with regard to dealing with the contribution or sale of assets
between an investor and its associate or joint venture. These amendments are effective for annual periods
beginning on or after 1 January 2016, with early adoption permitted. The amendments are not expected to
have any material impact on the Group's consolidated financial statements.
IFRS 11 Amendments – Accounting for Acquisitions of Interests in Joint Operations
The amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a
joint operation, in which the activity of the joint operation constitutes a business, must apply the relevant
IFRS 3 principles for business combinations accounting. The amendments also clarify that a previously held
interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint
operation while joint control is retained. The amendments are effective for annual periods beginning on
or after 1 January 2016, with early adoption permitted. It is not expected that the amendments would be
relevant to the Group, since the Group has no joint operation as at 31 December 2015.
IFRS 10, IFRS 12 and IAS 28 Amendments – Investment Entities: Applying the Consolidation Exception
Amendments to IFRS 10 clarify that the exemption from presenting consolidated financial statements
applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures
all of its subsidiaries at fair value. The amendments to IFRS 10 also clarify that only a subsidiary that is not
an investment entity itself and provides support services to the investment entity is consolidated. All other
subsidiaries of an investment entity are measured at fair value. Consequential amendments were made to
IFRS 12 to require an investment entity that prepares financial statements in which all of its subsidiaries are
measured at fair value through profit or loss in accordance with IFRS 9 to present the disclosures in respect
of investment entities in accordance with IFRS 12. IAS 28 was also amended to allow an investor that is not
itself an investment entity, and has an interest in an investment entity associate or joint venture, to retain
the fair value measurement applied by the investment entity associate or joint venture to the interest in its
subsidiaries. The amendments are not expected to have any material impact on the Group's consolidated
financial statements as the Company is not an investment entity as defined in IFRS 10.
113
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity
holders of the Company and to the non-controlling interests, even if this results in the non-controlling
interests having a deficit balance. When necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies in line with the Group's accounting policies. All intra-group
assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of
the Group are eliminated in full upon consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it:
•
derecognises the assets (including goodwill) and liabilities of the subsidiary;
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.3 Associates and joint ventures
Associates are entities over which the Group has significant influence, generally accompanying a
shareholding of between 20% and 50% of the voting rights of the investee. Significant influence is the
power to participate in the financial and operating policy decisions of the investee, but is not control or joint
control over those policies.
Joint ventures are the type of joint arrangements whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities require
unanimous consent of the parties sharing control.
Investments in associates and joint ventures are accounted for using the equity method of accounting and are
initially recognised at cost.
The Group's share of post-acquisition profit or loss of its associates and joint ventures is recognised in net
profit, and its share of post-acquisition movements in OCI is recognised in the consolidated statement
of comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying
amount of the investment. When the Group's share of losses in an associate or joint venture equals or
exceeds its interest in the associate or joint venture, including any other unsecured receivables, the Group
does not recognise further losses unless it has obligations to make payments on behalf of the associate or
joint venture.
Unrealised gains on transactions between the Group and its associates or joint ventures are eliminated to the
extent of the Group's interests in the associates or joint ventures. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the asset transferred. Associates and joint ventures'
accounting policies have been changed where necessary to ensure consistency with the policies adopted by
the Group.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net
identifiable assets of acquired associates or joint ventures at the date of acquisition. Goodwill on acquisitions
of associates and joint ventures is included in investments in associates and joint ventures and is tested
annually for impairment as part of the overall balance. Impairment losses on goodwill are not reversed.
Gains or losses on the disposal of an entity take into consideration the carrying amount of goodwill relating
to the entity sold.
The Group determines at each reporting date whether there is any objective evidence that the investments in
associates and joint ventures are impaired. If this is the case, an impairment loss is recognised for the amount
by which the investment's carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of the investment's fair value less costs of disposal and value in use. The impairment of investments in
the associates and joint ventures is reviewed for possible reversal at each reporting date.
The investments in associates and joint ventures are stated at cost less impairment in the Company's
statement of financial position. The results of associates and joint ventures are accounted for by the
Company on the basis of dividends received and receivable.
117
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.4 Segment reporting
The Group's operating segments are presented in a manner consistent with the internal management
reporting provided to the operating decision maker - president office for deciding how to allocate resources
and for assessing performance.
Operating segment refers to the segment within the Group that satisfies the following conditions: i)
the segment generates income and incurs costs from daily operating activities; ii) management evaluates
the operating results of the segment to make resources allocation decision and to evaluate the business
performance; and iii) the Group can obtain relevant financial information of the segment, including
financial condition, operating results, cash flows and other financial performance indicators.
2.5 Foreign currency translation
Except for China Life Franklin Asset Management Company Limited (“AMC HK") (Note 39(c)), the
functional currency of the Group is RMB. The reporting currency of the consolidated financial statements
of the Group is RMB. Transactions in foreign currencies are translated at the exchange rates ruling at the
transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the
exchange rates ruling at the end of the reporting period. Exchange differences arising in these cases are
recognised in net profit.
2.6 Property, plant and equipment
Property, plant and equipment, are stated at historical costs less accumulated depreciation and any
accumulated impairment losses, except for those acquired prior to 30 June 2003, which are stated at deemed
cost less accumulated depreciation and any accumulated impairment losses.
The historical costs of property, plant and equipment comprise its purchase price, including import
duties and non-refundable purchase taxes, and any directly attributable costs of bringing the asset to its
working condition and location for its intended use. Expenditure incurred after terms of property, plant
and equipment have been put into operation, such as repairs and maintenance, is normally charged to the
statement of comprehensive income in the period in which it is incurred. In situations where the recognition
criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the assets
as a replacement. Where significant parts of property, plant and equipment are required to be replaced at
intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them
accordingly.
118
For the year ended 31 December 2015
1 January 2017
Notes to the Consolidated Financial Statements
2
derecognises the carrying amount of any non-controlling interests;
•
derecognises the cumulative translation differences recorded in equity;
•
recognises the fair value of the consideration received;
•
recognises the fair value of any investment retained;
•
recognises any surplus or deficit in profit or loss; and
reclassifies the Group's share of components previously recognised in OCI to profit or loss or
retained earnings, as appropriate, as if the Group had directly disposed of the related assets or
liabilities.
115
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.2 Consolidation (continued)
The Group uses the acquisition method of accounting to account for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the
liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related
costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair value at the acquisition date. On an acquisition-
by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or
at the non-controlling interest's proportionate share of the acquiree's net assets.
The excess of the aggregate of the consideration transferred, the fair value of any non-controlling interest in
the acquiree, and the fair value of any previous equity interest in the acquiree at the acquisition date over the
fair value of the net identifiable assets acquired and liabilities assumed is recorded as goodwill. If this is less
than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the Group
re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed,
and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-
assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration
transferred, then the gain is recognised in profit or loss. Goodwill is tested annually for impairment and
carried at cost less accumulated impairment losses. If there is any indication that goodwill is impaired,
recoverable amount is estimated and the difference between carrying amount and recoverable amount is
recognised as an impairment charge. Impairment losses on goodwill are not reversed in subsequent periods.
Gains or losses on the disposal of an entity take into consideration the carrying amount of goodwill relating
to the entity sold.
The investments in subsidiaries are accounted for only in the Company's statement of financial position
at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent
consideration amendments. Cost also includes direct attributable costs of investment. The results of
subsidiaries are accounted for by the Company on the basis of dividends received and receivable.
Transactions with non-controlling interests
The Group treats transactions with non-controlling interests that do not result in loss of controls as equity
transactions. For shares purchased from non-controlling interests, the difference between any consideration
paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity.
Gains or losses on disposal of shares to non-controlling interests are also recorded in equity.
When the Group ceases to have control or significant influence, any retained interest in the entity is re-
measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value
is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an
associate, joint venture or financial asset. In addition, any amounts previously recognised in OCI in respect
of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This
may mean that amounts previously recognised in OCI are reclassified to profit or loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate
share of the amounts previously recognised in OCI is reclassified to profit or loss as appropriate.
116
China Life Insurance Company Limited Annual Report 2015
Statement of Cash Flows
•
Investment Entities: Applying the Consolidation
Exception
2,630
1,358
(19,415)
16,704
241
10
29,062
25,704
Cash and cash equivalents
Beginning of the year
47,034
21,330
End of the year
76,096
47,034
Analysis of balances of cash and cash equivalents
Cash at banks and in hand
74,135
45,439
Short-term bank deposits
1,961
1,595
The notes on pages 110 to 227 form an integral part of these consolidated financial statements.
109
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
(91)
1
(117)
(11,491)
1 January 2016
CASH FLOWS FROM FINANCING ACTIVITIES
Increase/(decrease) in securities sold under agreements to repurchase, net
Cash received from issuing other equity instruments
Cash received from borrowings
Cash repaid to lenders
Interest paid
Dividends paid to equity holders of the Company
Dividends paid to non-controlling interests
Capital injected into subsidiaries by non-controlling interests
Net cash inflows/(outflows) from financing activities
Foreign exchange gains on cash and cash equivalents
Net increase in cash and cash equivalents
China Life Insurance Company Limited Annual Report 2015
Consolidated Statement of Cash Flows
For the
year ended 31 December 2015
2015
2014
RMB million
RMB million
(13,757)
25,663
7,791
2,881
(10)
(4,618)
(8,479)
2
(4,471)
China Life Insurance Company Limited (the “Company”) was established in the People's Republic of China
("China" or the "PRC”) on 30 June 2003 as a joint stock company with limited liability as part of a group
restructuring of China Life Insurance (Group) Company ("CLIC”, formerly China Life Insurance Company) and
its subsidiaries (the "Restructuring"). The Company and its subsidiaries are hereinafter collectively referred to
as the "Group". The Group's principal activity is the writing of life insurance business, providing life, annuity,
accident and health insurance products in China.
ended 31 December 2015
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for
the financial year beginning on 1 January 2015 (continued)
IFRS 13 Amendments Fair Value Measurement
The amendments to IFRS 13 clarify that the portfolio exception in IFRS 13 can be applied not only to
financial assets and financial liabilities, but also to other contracts within the scope of IFRS 9 Financial
Instruments and IAS 39 Recognition and Measurement. The amendments have had no impact on the Group's
consolidated financial statements.
In addition, the Group has adopted the amendments to the Listing Rules relating to the disclosure of
financial information with reference to the Hong Kong Companies Ordinance (Cap. 622) during the
current financial year. The main impact to the financial statements is on the presentation and disclosure of
certain information in the financial statements.
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2015
Effective for annual period
Standards/Amendments
Content
beginning on or after
IFRS 10, IFRS 12 and
IAS 28 Amendments
IAS 7 Amendments
IFRS 9
IFRS 15
IFRS 16
Equity Method in Separate Financial Statements
Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture
Accounting for Acquisitions of Interests in
Joint Operations
1 January 2016
1 January 2016
ORGANIZATION AND PRINCIPAL ACTIVITIES
1 January 2016
year
For the
IAS 27 Amendments
IFRS 10 and IAS 28
Amendments
IFRS 11 Amendments
China Life Insurance Company Limited Annual Report 2015
The Company is a joint stock company incorporated in the PRC with limited liability. The address of its
registered office is: 16 Financial Street, Xicheng District, Beijing, the PRC. The Company is listed on the New
York Stock Exchange, the Stock Exchange of Hong Kong Limited, and the Shanghai Stock Exchange.
These consolidated financial statements are presented in millions of Renminbi (“RMB million”) unless otherwise
stated. These consolidated financial statements have been approved for issue by the Board of Directors on 23
March 2016.
Notes to the Consolidated Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The Group has prepared these consolidated financial statements in accordance with International Financial
Reporting Standards ("IFRSs”), amendments to IFRSs and interpretations issued by the International
Accounting Standards Board ("IASB"). These consolidated financial statements also comply with the
applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange of
Hong Kong Limited (the “Listing Rules") and the applicable disclosure requirements of the Hong Kong
Companies Ordinance. The Group has prepared the consolidated financial statements under the historical
cost convention, except for financial assets and liabilities at fair value through profit or loss, available-for-
sale securities, insurance contract liabilities and certain property, plant and equipment at deemed cost as
part of the Restructuring process. The preparation of financial statements in conformity with IFRSS requires
the use of certain critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group's accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the consolidated financial statements
are disclosed in Note 3.
110
2
For the year ended 31 December 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for
the financial year beginning on 1 January 2015
Standards
Notes to the Consolidated Financial Statements
entities.
Annual Improvements 2011-2013 Cycle
The Annual Improvements 2010-2012 Cycle issued in January 2014 sets out amendments to a number of
IFRSS and International Accounting Standards (“IASS”). Details of the main amendments that are effective
for the current year are as follows:
IFRS 8 Amendments - Operating Segments
The amendments to IFRS 8 clarify that an entity must disclose the judgements made by management
in applying the aggregation criteria in IFRS 8, including a brief description of operating segments that
have been aggregated and the economic characteristics used to assess whether the segments are similar.
The amendments also clarify that the reconciliation of segment assets to total assets is only required to be
disclosed if the reconciliation is reported to the chief operating decision maker. The amendments have had
no impact on the Group's consolidated financial statements.
111
IAS 24 Amendments – Related Party Disclosures
The amendments to IAS 24 clarify that a management entity (an entity that provides key management
personnel services) is a related party subject to the related party disclosures. In addition, an entity that
uses a management entity is required to disclose the expenses incurred for management services. These
amendments are not relevant for the Group as it does not receive any management services from other
arrangement.
The Annual Improvements 2011-2013 Cycle issued in January 2014 sets out amendments to a number of
IFRSS and IASS. Details of the main amendments that are effective for the current year are as follows:
IFRS 3 Amendments - Business Combinations
The amendments to IFRS 3 clarify that joint arrangements, not just joint ventures, are outside the scope
of IFRS 3. This scope exception applies only to the accounting in the financial statements of the joint
arrangement itself. The amendments have had no impact on the Group as the Company is not a joint
Annual Improvements 2010-2012 Cycle
2.11 Insurance contracts and investment contracts
2.11.1 Classification
123
2.11.2 Insurance contracts
2.11.2.a Recognition and measurement
The Group issues contracts that transfer insurance risk or financial risk or both. The contracts issued by
the Group are classified as insurance contracts and investment contracts. Insurance contracts are those
contracts that transfer significant insurance risk. They may also transfer financial risk. Investment contracts
are those contracts that transfer financial risk without significant insurance risk. A number of insurance
and investment contracts contain a discretionary participating feature ("DPF"). This feature entitles the
policyholders to receive additional benefits or bonuses that are, at least in part, at the discretion of the
Group.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the
ended 31 December 2015
year
Cash amounts represent cash on hand and demand deposits. Cash equivalents are short-term, highly liquid
investments with original maturities of 90 days or less, whose carrying value approximates fair value.
Notes to the Consolidated Financial Statements
(i)
China Life Insurance Company Limited Annual Report 2015
2
Short-term insurance contracts
2.11 Insurance contracts and investment contracts (continued)
The unearned premium reserve represents the portion of the premiums written net of certain
acquisition costs relating to the unexpired terms of coverage.
(ii) Long-term insurance contracts (continued)
2.10 Cash and cash equivalents
(a) The reasonable estimate of liability for long-term insurance contracts is the present value of
reasonable estimates of future cash outflows less future cash inflows. The expected future cash
inflows include cash inflows of future premiums arising from the undertaking of insurance
obligations, with consideration of decrement mostly from death and surrenders. The expected
future cash outflows are cash outflows incurred to fulfil contractual obligations, consisting of the
following:
2.11.2.a Recognition and measurement (continued)
2.11.2 Insurance contracts (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
2
124
The Group uses the discounted cash flow method to estimate the reserve of long-term insurance
contracts. The reserve of long-term insurance contracts consists of a reasonable estimate of liability,
a risk margin and a residual margin. The long-term insurance contract liabilities are calculated using
various assumptions, including assumptions on mortality rates, morbidity rates, lapse rates, discount
rates, and expenses assumption, and based on the following principles:
Long-term insurance contracts include whole life and term life insurance, endowment insurance and
annuity policies with significant life contingency risk. Premiums are recognised as revenue when due
from policyholders.
(ii) Long-term insurance contracts
Reserves for claims and claim adjustment expenses consist of the reserves for reported and unreported
claims and reserves for claim expenses with respect to insured events. In developing these reserves, the
Group considers the nature and distribution of the risks, claims cost development, and experiences in
deriving the reasonable estimated amount and the applicable margins. The methods used for reported
and unreported claims include the case-by-case estimation method, average cost per claim method,
chain ladder method, etc. The Group calculates the reserves for claim expenses based on the reasonable
estimates of the future payments for claim expenses.
Premiums from the sale of short duration accident and health insurance products are recorded when
written and are accreted to earnings on a pro-rata basis over the term of the related policy coverage.
Reserves for short duration insurance products consist of unearned premium reserve and expected
claims and claim adjustment expenses reserve. Actual claims and claim adjustment expenses are
charged to net profit as incurred.
For assets and liabilities that are measured at fair value on a recurring basis, the Group determines whether
transfers have occurred between each level in the hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting
period.
•
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient datas
are available to measure fair value, maximising the use of relevant observable inputs and minimising the use
of unobservable inputs.
In evaluating whether a decline in value is impairment for equity securities, the Group also considers the
extent or the duration of the decline. The quantitative factors include the following:
the disappearance of an active market for that financial asset because of financial difficulties.
it becomes probable that the issuer or debtor will enter into bankruptcy or other financial
reorganisation; and
•
•
a breach of contract, such as a default or delinquency in payments;
•
•
2.8.c Impairment of financial assets other than securities at fair value through profit or loss
Financial assets other than those accounted for as at fair value through profit or loss are adjusted for
impairment, where there are declines in value that are considered to be impairment. In evaluating whether a
decline in value is an impairment for these financial assets, the Group considers several factors including, but
not limited to, the following:
2.8 Financial assets (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
•
ended 31 December 2015
significant financial difficulty of the issuer or debtor;
the market price of the equity securities was more than 50% below their cost at the reporting date;
•
the market price of the equity securities was more than 20% below their cost for a period of at least six
months at the reporting date; and
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The principal or the most advantageous market must be accessible to by the Group at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
in the absence of a principal market, in the most advantageous market for the asset or liability.
•
in the principal market for the asset or liability, or
The Group measures financial instruments, such as securities at fair value through profit or loss and
available-for-sale securities, at fair value at each reporting date. Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. The fair value measurement of assets and liabilities is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either:
2.9 Fair value measurement
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
2
122
When the decline in value is considered impairment, held-to-maturity debt securities are written down
to their present value of estimated future cash flows discounted at the securities' effective interest rates;
available-for-sale debt securities and equity securities are written down to their fair value, and the change is
recorded in net realised gains on financial assets in the period the impairment is recognised. The impairment
loss is reversed through net profit if in a subsequent period the fair value of a debt security increases and the
increase can be objectively related to an event occurring after the impairment loss was recognised through
net profit. The impairment losses recognised in net profit on equity instruments are not reversed through
net profit.
the market price of the equity securities was below their cost for a period of more than one year
(including one year) at the reporting date.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements
are categorised within the fair value hierarchy, described in Notes 4.3, 7, 10 and 39(b) based on the lowest
level input that is significant to the fair value measurement as a whole.
•
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
additional non-guaranteed benefits, such as policyholder dividends;
127
Bonds payable primarily include subordinated debts. Subordinated debts are initially recognised at fair value
and subsequently measured at amortised cost using the effective interest rate method. Amortised cost is
calculated by taking into account any discount or premium at acquisition and transaction costs.
2.14 Bonds payable
The Group retains substantially all the risk and rewards of ownership of securities sold under agreements
to repurchase which generally mature within 180 days from the transaction date. Therefore securities sold
under agreements to repurchase are classified as secured borrowings. The Group may be required to provide
additional collateral based on the fair value of the underlying securities. Securities sold under agreements
to repurchase are recorded at amortised cost, i.e. their cost plus accrued interest at the end of the reporting
period. It is the Group's policy to maintain effective control over securities sold under agreements to
repurchase which includes maintaining physical possession of the securities. Accordingly, such securities
continue to be carried on the consolidated statement of financial position.
2.13 Securities sold under agreements to repurchase
Financial liabilities at fair value through profit or loss are the portions owned by the external investors in
the consolidated structured entities (open-ended funds and trust schemes). Such financial liabilities are
designated at fair value upon initial recognition, and all realised or unrealised gains or losses are recognised
in net profit.
China Life Insurance Company Limited Annual Report 2015
2.12 Financial liabilities at fair value through profit or loss
2.11.4 DPF in long-term insurance contracts and investment contracts
Except for unit-linked contracts, of which the liabilities are carried at fair value, the liabilities of investment
contracts are carried at amortised cost.
contracts.
Revenue from investment contracts with or without DPF is recognised as policy fee income, which consists
of various fee incomes (policy fees, handling fees and management fees, etc.) during the period. Policy fee
income net of acquisition cost is deferred as unearned revenue and amortised over the expected life of the
2.11.3 Investment contracts
2.11 Insurance contracts and investment contracts (continued)
DPF is contained in certain long-term insurance contracts and investment contracts. These contracts are
collectively called participating contracts. The Group is obligated to pay to the policyholders of participating
contracts as a group the higher of 70% of accumulated surplus available and the rate specified in the
contracts. The accumulated surplus available mainly arises from net investment income and gains and losses
arising from the assets supporting these contracts. To the extent unrealised gains or losses from available-
for-sale securities are attributable to policyholders, shadow adjustments are recognised in OCI. The surplus
owed to policyholders is recognised as policyholder dividend payable whether it is declared or not. The
amount and timing of distribution to individual policyholders of participating contracts are subject to future
declarations by the Group.
Notes to the Consolidated Financial Statements
For the
year
year
128
Compensation under the stock appreciation rights is measured based on the fair value of the liabilities
incurred and is expensed over the vesting period. Valuation techniques including option pricing models are
used to estimate fair value of relevant liabilities. The liability is re-measured at the end of each reporting
period to its fair value until settlement. Fair value changes in the vesting period is included in administrative
expenses and changes after vesting period is included in net fair value gains/(losses) through profit or loss in
net profit. The related liability is included in other liabilities.
Stock appreciation rights
each year.
All full-time employees of the Group are entitled to participate in various government-sponsored housing
funds. The Group contributes on a monthly basis to these funds based on certain percentages of the salaries
of the employees. The Group's liability in respect of these funds is limited to the contributions payable in
Housing benefits
Full-time employees of the Group are covered by various government-sponsored pension plans under which
the employees are entitled to a monthly pension based on certain formulae. These government agencies
are responsible for the pension liability to these employees upon retirement. The Group contributes on a
monthly basis to these pension plans. In addition to the government-sponsored pension plans, the Group
established an employee annuity fund pursuant to the relevant laws and regulations in the PRC, whereby the
Group is required to contribute to the schemes at fixed rates of the employees' salary costs. Contributions to
these plans are expensed as incurred. Under these plans, the Group has no legal or constructive obligation
for retirement benefit beyond the contributions made.
Pension benefits
2.16 Employee benefits
Embedded derivatives that are not closely related to their host contracts and meet the definition of a
derivative are separated and fair valued through profit or loss. The Group does not separately measure
embedded derivatives that meet the definition of an insurance contract or embedded derivatives that are
closely relate to host insurance contracts including embedded options to surrender insurance contracts for a
fixed amount (or an amount based on a fixed amount and an interest rate).
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and
are subsequently re-measured at their fair value. The resulting gain or loss of derivative financial instruments
is recognised in net profit. Fair values are obtained from quoted market prices in active market, taking into
consideration of recent market transactions or valuation techniques, including discounted cash flow models
and options pricing models, as appropriate. All derivatives are carried as assets when fair value is positive and
as liabilities when fair value is negative.
2.15 Derivative instruments
2
ended 31 December 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
2.11.2.a Recognition and measurement (continued)
2.11.2 Insurance contracts (continued)
2.11 Insurance contracts and investment contracts (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
125
Margin comprises risk margin and residual margin. Risk margin is the reserve accrued to
compensate for the uncertain amount and timing of future cash flows. At the inception
of the contract, the residual margin is calculated net of certain acquisition costs, mainly
consist of underwriting and policy acquisition costs, by the Group representing Day 1 gain
and will be amortised over the life of the contracts. For insurance contracts of which future
returns are affected by investment yields of corresponding investment portfolios, their related
residual margins are amortised based on estimated future participating dividends payable to
policyholders. For insurance contracts of which future returns are not affected by investment
yields of corresponding investment portfolios, their related residual margins are amortised based
on sum assured of outstanding policies. The subsequent measurement of the residual margin is
independent from the reasonable estimate of future discounted cash flows and risk margin. The
assumption changes have no effect on the subsequent measurement of the residual margin.
(b) Margin has been taken into consideration while computing the reserve of insurance contracts,
measured separately and recognised in net profit in each period over the life of the contracts. At
the inception of the contracts, the Group does not recognise Day 1 gain, whereas on the other
hand, Day 1 loss is recognised in net profit immediately.
On each reporting date, the Group reviews the assumptions for reasonable estimates of liability
and risk margins, with consideration of all available information, taking into account the
Group's historical experience and expectation of future events. Changes in assumptions are
recognised in net profit. Assumptions for the amortization of residual margin are locked in at
policy issuance and are not adjusted at each reporting date.
reasonable expenses incurred to manage insurance contracts or to process claims,
including maintenance expenses and claim settlement expenses. Future administration
expenses are included in the maintenance expenses. Expenses are determined based
on expense analysis with consideration of future inflation and the Group's expense
management control.
(ii)
guaranteed benefits based on contractual terms, including payments for deaths,
disabilities, diseases, survivals, maturities and surrenders;
Long-term insurance contracts (continued)
contracts.
2
126
The Group assesses its reinsurance assets for impairment as at the end of reporting period. If there is
objective evidence that the reinsurance asset is impaired, the Group reduces the carrying amount of the
reinsurance asset to its recoverable amount and recognises that impairment loss in net profit.
The benefits to which the Group is entitled under its reinsurance contracts held are recognised as
reinsurance assets. Amounts recoverable from or due to reinsurers are measured consistently with the
amounts associated with the reinsured insurance contracts and in accordance with the terms of each
reinsurance contract. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and
are recognised as expenses when due.
Contracts with reinsurers under which the Group is compensated for losses on one or more contracts
issued by the Group and that meet the classification requirements for insurance contracts are classified as
reinsurance contracts held. Contracts with reinsurers that do not meet these classification requirements are
classified as financial assets. Insurance contracts entered into by the Group under which the contract holder
is another insurer (inwards reinsurance) are included with insurance contracts.
2.11.2.c Reinsurance contracts held
The Group assesses the adequacy of insurance contract reserves using the current estimate of future cash
flows with available information at the end of each reporting period. If that assessment shows that the
carrying amount of its insurance liabilities (less related intangible assets, if applicable) is inadequate in light
of the estimated future cash flows, the insurance contract reserves will be adjusted accordingly, and any
changes of the insurance contract liabilities will be recognised in net profit.
2.11.2.b Liability adequacy test
The insurance components are accounted for as insurance contracts; and the non-insurance
components are accounted for as investment contracts (Note 2.11.3), which are stated in the
investment contract liabilities.
non-insurance components
•
insurance components
•
Universal life contracts and unit-linked contracts are unbundled into the following components:
(iii) Universal life contracts and unit-linked contracts
(c) The Group has considered the impact of time value on the reserve calculation for insurance
For the
2.8.b Recognition and measurement
China Life Insurance Company Limited Annual Report 2015
2
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
119
The gain or loss on disposal of an item of property, plant and equipment is the difference between the net
sales proceeds and the carrying amount of the relevant asset, and is recognised in net profit.
Property, plant and equipment are reviewed for impairment losses whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in
net profit for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is
the higher of an asset's net selling price and value in use.
Impairment and gains or losses on disposals
Assets under construction mainly represent buildings under construction, which are stated at cost less any
impairment losses and are not depreciated, except for those acquired prior to 30 June 2003, which are stated
at deemed cost less any accumulated impairment losses. Cost comprises the direct costs of construction
and capitalised borrowing costs on related borrowed funds during the period of construction. Assets under
construction are reclassified to the appropriate category of property, plant and equipment, investment
properties or other assets when completed and ready for use.
The residual values, depreciation method and useful lives are reviewed periodically to ensure that the
method and period of depreciation are consistent with the expected pattern of economic benefits from items
of property, plant and equipment.
the lease and the useful lives
Over the shorter of the remaining term of
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
5 to 11 years
Estimated useful lives
Leasehold improvements
Motor vehicles
Office equipment, furniture and fixtures
Buildings
Depreciation is computed on a straight-line basis to write down the cost of each asset to its residual value
over its estimated useful lives as follows:
Depreciation
2.6 Property, plant and equipment (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
2
Notes to the Consolidated Financial Statements
15 to 35 years
2.7 Investment properties
4 to 8 years
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost less accumulated depreciation and any impairment loss.
121
Investment properties are interests in land and buildings that are held to earn rental income and/or for
capital appreciation, rather than for the supply of services or for administrative purposes.
The Group purchases securities under agreements to resell substantially identical securities. These
agreements are classified as secured loans and are recorded at amortised cost, i.e. their costs plus accrued
interests at the end of the reporting period, which approximates fair value. The amounts advanced under
these agreements are reflected as assets in the consolidated statement of financial position. The Group
does not take physical possession of securities purchased under agreements to resell. Sale or transfer of the
securities is not permitted by the respective clearing house on which they are registered while the loan is
outstanding. In the event of default by the counterparty to repay the loan, the Group has the right to the
underlying securities held by the clearing house.
Loans are carried at amortised cost, net of allowance for impairment.
Term deposits primarily represent traditional bank deposits which have fixed maturity dates and are stated at
amortised cost.
Securities at fair value through profit or loss and available-for-sale securities are carried at fair value. Equity
investments that do not have a quoted price in an active market and whose fair value cannot be reliably
measured are carried at cost, net of allowance for impairments. Held-to-maturity securities are carried at
amortised cost using the effective interest method. Investment gains and losses on sales of securities are
determined principally by specific identification. Realised and unrealised gains and losses arising from
changes in the fair value of the securities at fair value through profit or loss category, and the change of fair
value of available-for-sale debt securities due to foreign exchange impact on the amortised cost are included
in net profit in the period in which they arise. The remaining unrealised gains and losses arising from
changes in the fair value of available-for-sale securities are recognised in OCI. When securities classified as
available-for-sale securities are sold or impaired, the accumulated fair value adjustments are included in net
profit as realised gains on financial assets.
Purchase and sale of investments are recognised on the trade date, when the Group commits to purchase
or sell assets. Investments are initially recognised at fair value plus, in the case of all financial assets not
carried at fair value through profit or loss, transaction costs that are directly attributable to their acquisition.
Investments are derecognised when the rights to receive cash flows from the investments have expired or
when they have been transferred and the Group has also transferred substantially all risks and rewards of
ownership.
Available-for-sale securities are non-derivative financial assets that are either designated in this
category or not classified in any of the other categories.
(iv) Available-for-sale securities
(iii) Loans and receivables
2.8.a Classification (continued)
2.8 Financial assets (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market other than those that the Group intends to sell in the short term
or held as available-for-sale. Loans and receivables mainly comprise term deposits, loans, securities
purchased under agreements to resell, accrued investment income and premium receivables as
presented separately in the statement of financial position.
China Life Insurance Company Limited Annual Report 2015
Depreciation is computed on the straight-line basis over the estimated useful lives. The estimated useful lives
of investment properties are 15 to 35 years.
Overseas investment properties that are held by the Group in the forms of property ownership, equity
investment, or other forms, have expected useful lives of 50 years, determined based on the usage in their
locations.
The useful lives and depreciation method are reviewed periodically to ensure that the method and period of
depreciation are consistent with the expected pattern of economic benefits from the individual investment
properties.
An investment property is derecognised when either it has been disposed of or when the investment property
is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any
gains or losses on the retirement or disposal of an investment property are recognised in the statement of
comprehensive income in the year of retirement or disposal. A transfer to, or from, an investment property is
made when, and only when, there is evidence of a change in use.
2.8 Financial assets
2.8.a Classification
(i)
The Group classifies its financial assets into the following categories: securities at fair value through profit
or loss, held-to-maturity securities, loans and receivables and available-for-sale securities. Management
determines the classification of its financial assets at initial recognition which depends on the purpose for
which the assets are acquired. The Group's investments in securities fall into the following four categories:
This category has two sub-categories: securities held for trading and those designated at fair value
through profit or loss at inception. Securities are classified as held for trading at inception if acquired
principally for the purpose of selling in the short term or if they form part of a portfolio of financial
assets in which there is evidence of short term profit-taking. The Group may classify other financial
assets as at fair value through profit or loss if they meet the criteria in IAS 39 and designated as such at
inception.
(ii) Held-to-maturity securities
Held-to-maturity securities are non-derivative financial assets with fixed or determinable payments
and fixed maturities that the Group has the positive intention and ability to hold to maturity and
do not meet the definition of loans and receivables nor designated as available-for-sale securities or
securities at fair value through profit or loss.
120
2
Securities at fair value through profit or loss
63,701
Liabilities of long-term insurance contracts
4.01%
2.58%
43,788
New Xin Feng Endowment (Type A) (a)
%
100.00%
%
As at 31 December 2014
As at 31 December 2015
RMB million
100.00%
95,178
Xin Annuity (b)
RMB million
38,917
2.23%
2,184
115,277
5.85%
92,985
37,810
Hong Fu Participating Endowment (e)
4.77%
75,857
2.29%
5.49%
Fu Lu Shuang Xi Participating Endowment (d)
12.08%
191,865
12.60%
214,120
Kang Ning Whole Life (c)
0.14%
93,267
Total
304,677
78,944
Xin Annuity (b)
0.06%
56
0.07%
80
New Xin Feng Endowment (Type A) (a)
insurance contracts
Insurance benefits of long-term
100.00%
Others (f)
100.00%
331,582
Total
60.84%
185,350
13
0.01%
Kang Ning Whole Life (c)
3,692
46.83%
53,982
Others (f)
10.77%
10,255
47.17%
54,374
82.94%
Hong Fu Participating Endowment (e)
2,367
2.72%
3,136
Fu Lu Shuang Xi Participating Endowment (d)
3.74%
3,556
3.20%
2.49%
1,270,871
136
1,162,308
4.1
RISK MANAGEMENT (continued)
4
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
137
Holding all other variables constant, if claim ratios are 100 basis points higher or lower than the current
assumption, pre-tax profit is expected to be RMB315 million lower or higher, respectively (as at 31
December 2014: RMB258 million).
The assumptions of reserves for claims and claim adjustment expenses may be affected by other variables
such as claims payment of short-term insurance contracts, which may result in the synchronous changes to
reserves for claims and claim adjustment expenses.
Sensitivity analysis of short-term insurance contracts
Holding all other variables constant, if the discount rates were 50 basis points higher or lower than the
current best estimate, pre-tax profit for the year would have been RMB45,811 million or RMB52,049
million (as at 31 December 2014: RMB41,300 million or RMB46,868 million) higher or lower,
respectively.
Holding all other variables constant, if lapse rates were to increase or decrease from the current best estimate
by 10%, pre-tax profit for the year would have been RMB4,032 million or RMB4,229 million (as at 31
December 2014: RMB5,191 million or RMB5,478 million) lower or higher, respectively.
Holding all other variables constant, if mortality rates and morbidity rates were to increase or decrease
from the current best estimate by 10%, pre-tax profit for the year would have been RMB14,597 million
or RMB15,253 million (as at 31 December 2014: RMB12,971 million or RMB13,554 million) lower or
higher, respectively.
Insurance risk (continued)
4.1.3 Sensitivity analysis (continued)
Sensitivity analysis of short-term insurance contracts (continued)
The following table indicates the claim development for short-term insurance contracts without taking
account of reinsurance impacts:
8,279
1 year later
20,497
16,499
11,476
8,056
8,002
Liabilities for long-term insurance contracts and liabilities unbundled from universal life insurance contracts
and unit-linked insurance contracts with insurance risk are calculated based on the assumptions on mortality
rates, morbidity rates, lapse rates and discount rates. Changes in insurance contract reserve assumptions
reflect the Company's actual operating results and changes in its expectation of future events. The Company
considers the potential impact of future risk factors on its operating results and incorporates such potential
impact in the determination of assumptions.
Current year
2015
2014
2013
2012
2011
Estimated claims expenses
Short-term insurance contracts (accident year)
Total
Sensitivity analysis of long-term insurance contracts
4.1.3 Sensitivity analysis
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks (continued)
4.1 Insurance risk (continued)
RISK MANAGEMENT (continued)
4
ended 31 December 2015
year
For the
(a)
Notes to the Consolidated Financial Statements
135
100.00%
1,588,900
100.00%
1,698,773
Total
73.15%
China Life Insurance Company Limited Annual Report 2015
74.81%
New Xin Feng is an endowment insurance contract with single premium. Its insured period is 5
years. This product is applicable to healthy policyholders between 18-year-old and 70-year-old. Both
maturity and death benefits are paid at the basic sum insured. Accident death benefit is paid at 300%
of the basic sum insured.
(c)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
RISK MANAGEMENT (continued)
4
63.89%
Others consist of various long-term insurance contracts with no significant concentration.
(b)
(f)
years or 10 years. The premium shall be paid annually, semiannually, quarterly or monthly. Its
insured period extends from the effective date of the insurance contract to the corresponding date of
the year when the policyholders turn 75-year-old. This product is applicable to healthy policyholders
between 30-day-old and 60-year-old. Starting from the effective date of the insurance contract, the
survival benefit is paid every two policy years on the corresponding date at 10% of the basic sum
insured; the disease death benefit and maturity benefit are paid at the contractual amount of disease
death benefit and maturity benefit.
5
Fu Lu Shuang Xi is an endowment insurance contract with the options for regular premium of 3 years,
Kang Ning is a whole life insurance contract with the options for single premium or regular premium
of 10 years or 20 years. This product is applicable to healthy policyholders under 70-year-old. The
critical illness benefit is paid at 200% of the basic sum insured. Both death and disability benefits are
paid at 300% of the basic sum insured less any critical illness benefits paid.
Xin Annuity is an annuity insurance contract with single premium. Its insured period is 10 years. This
product is applicable to healthy policyholders between 28-day-old and 65-year-old. Annuity is paid
at the basic sum insured. Maturity benefit is paid at the premium received (without interest). Death
benefit is paid at the premium received (without interest) or the cash value of the insurance contract,
whichever greater.
(e)
(d)
Hong Fu is a participating endowment insurance contract with the options for single premium or
regular premium of 3 years. Its insured period can be 6 years or 9 years. This product is applicable
to healthy policyholders between 30-day-old and 60-year-old. Maturity benefit of a single premium
policy is paid at the basic sum insured, while that of a regular premium policy is paid at the basic sum
insured multiplied by the number of years of the premium payments. Disease death benefit incurred
within the first policy year is paid at the premium received (without interest). Disease death benefit
incurred after the first policy year is paid at the basic sum insured for a single premium policy or the
basic sum insured multiplied by the number of years of premium payments for a regular premium
policy. Accident death benefit is paid at 300% of the basic sum insured for a single premium policy or
300% of the basic sum insured multiplied by the number of years of premium payments for a regular
premium policy.
211,826
2015
0.05%
2.21 Current and deferred income taxation
Income tax expense for the period comprises current and deferred tax. Income tax is recognised in net profit,
except to the extent that it relates to items recognised directly in OCI where the income tax is recognised in
OCI.
Current income tax assets and liabilities for the current period are calculated on the basis of the tax laws
enacted or substantively enacted at the end of each reporting period in the jurisdictions where the Company
and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken
with respect to situations in which applicable tax regulation is subject to interpretation.
Deferred income tax is recognised, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Substantively enacted tax rates are used in the determination of deferred income tax.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates
and joint ventures except where the timing of the reversal of the temporary difference can be controlled and
it is probable that the temporary difference will not be reversed in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised. Conversely, previously unrecognised deferred tax assets are reassessed by the
end of each reporting period and are recognised to the extent that it is probable that sufficient taxable profit
will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.
130
2
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.22 Operating leases
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
ended 31 December 2015
year
Other equity instruments are Core Tier 2 Capital Securities issued by the Group. These securities contain no
contractual obligation to deliver cash or another financial asset; or to exchange financial assets or financial
liabilities with another entity under conditions that are potentially unfavorable to the Group; or to be
settled in the Group's own equity instruments. Therefore the Group classifies these securities as other equity
instruments. Fees, commissions and other transaction costs of these securities' issuance are deducted from
equity. The distributions of the Securities are recognised as profit distribution at the time of declaration.
2.19 Revenue recognition
Turnover of the Group represents the total revenues which include the following:
Premiums
Premiums from long-term insurance contracts are recognised as revenue when due from the policyholders.
Premiums from the sale of short duration accident and health insurance products are recorded when written
and are accreted to earnings on a pro-rata basis over the term of the related policy coverage.
Policy fee income
Leases where substantially all the risks and rewards of ownership of assets remain with the lessor company
are accounted for as operating leases.
Revenue from investment contracts is recognised as policy fee income, which consists of various fee incomes
(policy fees, handling fees and management fees, etc.) over the period of which service is provided. Policy fee
income net of certain acquisition costs is deferred as unearned revenue and amortised over the expected life
of the contracts. Policy fee income is recognised in revenue as part of other income.
Investment income comprises interest income from term deposits, cash and cash equivalents, debt securities,
securities purchased under agreements to resell, loans, and dividend income from equity securities. Interest
income is recorded on an accrual basis using the effective interest rate method. Dividend income is
recognised when the right to receive dividend payment is established.
2.20 Finance costs
Interest expenses for bonds payable, securities sold under agreements to repurchase and interest-bearing
loans and borrowings are recognised within finance costs in net profit using the effective interest rate
method.
129
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
Investment income
2.18 Other equity instruments
Where the Group is the lessor, assets leased by the Group under operating leases are included in investment
properties and rentals receivable under such operating leases are credited to the consolidated statement of
comprehensive income on the straight-line basis over the lease terms.
2.23 Provisions and contingencies
The residual margin relating to the long-term insurance contracts is amortised over the expected life of
the contracts, based on the assumptions (mortality rates, morbidity rates, lapse rates, discount rates, and
expenses assumption) that are determined at inception of the contracts and remain unchanged for the
duration of the contracts.
The judgements exercised in the valuation of insurance contract liabilities (including contracts with DPF)
affect the amounts recognised in the consolidated financial statements as insurance contract benefits and
insurance contract liabilities.
The impact of the various assumptions and their changes are described in Note 14.
3.2 Investments
The Group's principal financial instruments are debt securities, equity securities, term deposits and loans.
The critical estimates and judgements are those associated with the recognition of impairment and the
measurement of fair value.
The Group considers a wide range of factors in the impairment assessment as described in Note 2.8.c.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. When the fair values of financial assets
and liabilities recorded in the consolidated statement of financial position cannot be measured based on
quoted prices in active markets, their fair value is measured using valuation techniques which require a
degree of consideration. The methods and assumptions used by the Group in measuring the fair value of
financial instruments are as follows:
132
3
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3.2 Investments (continued)
8,164
The determination of the liabilities under long-term insurance contracts is based on estimates of future
benefit payments, premiums and relevant expenses made by the Group and the margins. Assumptions about
mortality rates, morbidity rates, lapse rates, discount rates, and expenses assumption are made based on the
most recent historical analysis and current and future economic conditions. The liability uncertainty arising
from uncertain future benefit payments, premiums and relevant expenses, is reflected in the risk margin.
contracts
3.1 Estimate of future benefit payments and premiums arising from long-term insurance
Areas susceptible to changes in critical estimates and judgements, which affect the carrying value of assets and
liabilities, are set out below. It is possible that actual results may be different from the estimates and judgements
referred to below.
past
Provisions are recognised when the Group has a present legal or constructive obligation as a result of
events; it is probable that an outflow of resources will be required to settle the obligation; and the amount
has been reliably estimated. Provisions are not recognised for future operating losses.
A contingent liability is a possible obligation that arises from past events and whose existence will only be
confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within
the control of the Group. It can also be a present obligation arising from past events that is not recognised
because it is not probable that outflow of economic resources will be required or the amount of obligation
cannot be measured reliably.
A contingent liability is not recognised in the consolidated statement of financial position but is disclosed in
the notes to the consolidated financial statements. When a change in the probability of an outflow occurs so
that such outflow is probable and can be reliably measured, it will then be recognised as a provision.
2.24 Dividend distribution
Dividend distribution to the Company's equity holders is recognised as a liability in the Group's
consolidated financial statements in the year in which the dividends are approved by the Company's equity
holders.
Where the Group is the lessee, rentals payable under operating leases are charged to the consolidated
statement of comprehensive income on the straight-line basis over the lease terms. The aggregate benefit of
incentives provided by the lessor is recognised as a reduction in rental expenses over the lease terms on the
straight-line basis.
131
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
3
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates
and judgements are continually evaluated and based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. The Group exercises
significant judgement in making appropriate assumptions.
China Life Insurance Company Limited Annual Report 2015
Others (f)
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of equity
instruments are shown in equity as a deduction, net of tax, from the proceeds.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
62,635
11.55%
38,314
New Xin Feng Endowment (Type A) (a)
Premiums of long-term insurance contracts
%
RMB million
%
RMB million
2014
Product name
The table below presents the Group's major products of long-term insurance contracts:
All insurance operations of the Group are located in the PRC. There are no significant differences among
the regions where the Group underwrites insurance contracts.
4.1.2 Concentration of insurance risks
4.1 Insurance risk (continued)
20.56%
Xin Annuity (b)
35,606
10.74%
149
0.02%
63
Hong Fu Participating Endowment (e)
9.76%
29,749
6.71%
For the year ended 31 December 2015
22,265
8.08%
24,623
7.09%
23,508
Kang Ning Whole Life (c)
0.71%
2,171
Fu Lu Shuang Xi Participating Endowment (d)
2.17 Share capital
Notes to the Consolidated Financial Statements
RISK MANAGEMENT (continued)
China Life Insurance Company Limited Annual Report 2015
133
The Group is subject to income tax in numerous jurisdictions. During the normal course of business, certain
transactions and activities for which the ultimate tax determination is uncertain, the Group needs to exercise
significant judgement when determining the income tax. If the final settlement results of the tax matters are
different from the amounts recorded, these differences will impact the final income tax expense and deferred
tax for the period.
3.4 Income tax
The Group assesses whether there are any indicators of impairment for investments in associates and joint
ventures at the end of each reporting period. Investments in associates and joint ventures are tested for
impairment when there are indicators that the carrying amounts may not be recoverable. An impairment
exists when the carrying value of investments in associates and joint ventures exceeds its recoverable amount,
which is the higher of its fair value less costs of disposal and its value in use. The calculation of the fair value
less costs of disposal is based on available data from binding sales transactions in an arm's length transaction
of similar assets or observable market prices less incremental costs for disposing of investments in associates
and joint ventures. When value in use calculations are undertaken, the Group must estimate the expected
future cash flows from investments in associates and joint ventures and choose a suitable discount rate in
order to calculate the present value of those cash flows. Further details are given in Note 8.
3.3 Impairment of investments in associates and joint ventures
For the description of valuation techniques, please refer to Note 4.3. Using different valuation techniques
and parameter assumptions may lead to some differences of fair value estimations.
term deposits and loans: the carrying amounts of these assets in the consolidated statement of financial
position approximate fair value.
equity securities: fair values are generally based upon current bid prices. Where current bid prices are
not readily available, fair values are estimated using either prices observed in recent transactions or
commonly used market pricing models. Equity securities, for which fair values cannot be measured
reliably, are recognised at cost less impairment.
debt securities: fair values are generally based upon current bid prices. Where current bid prices are
not readily available, fair values are estimated using either prices observed in recent transactions, values
obtained from current bid prices of comparable investments or valuation techniques when the market
is not active.
•
2
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
4
134
The Group manages insurance risks through two types of reinsurance agreements, ceding on a quota share
basis or a surplus basis, to cover insurance liability risk. Reinsurance contracts cover almost all products,
which contain risk liabilities. The products reinsured include: life insurance, accident and health insurance
or death, disability, accident, illness and assistance in terms of product category or function, respectively.
These reinsurance agreements spread insured risk to a certain extent and reduce the effect of potential
losses to the Group. However, the Group's direct insurance liabilities to the policyholder are not eliminated
because of the credit risk associated with the failure of reinsurance companies to fulfil their responsibilities.
Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative
variability of the expected outcome will be. In addition, a more diversified portfolio is less likely to be
affected across the board by a change in any subset of the portfolio. The Group has developed its insurance
underwriting strategy to diversify the types of insurance risks accepted and within each of these categories to
achieve a sufficiently large population to reduce the variability of the expected outcome. The Group manages
insurance risk through underwriting strategies, reinsurance arrangements and claims handling.
The risk under any one insurance contract is the possibility that an insured event occurs and the uncertainty
about the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and
therefore unpredictable. For a portfolio of insurance contracts where the theory of probability is applied to
the pricing and provisioning, the principal risk that the Group faces under its insurance contracts is that the
actual claims and benefit payments are less favourable than the underlying assumptions used in establishing
the insurance liabilities. This occurs when the frequency or severity of claims and benefits exceeds the
estimates. Insurance events are random, and the actual number of claims and the amount of benefits paid
will
vary each year from estimates established using statistical techniques.
4.1.1 Types of insurance risks
4.1 Insurance risk
China Life Insurance Company Limited Annual Report 2015
The Group issues contracts that transfer insurance risk or financial risk or both. This section summarises these
risks and the way the Group manages them.
RISK MANAGEMENT
The Group sponsors certain structured entities (e.g. funds), and acts as a manager for such entities according
to the contracts. In addition, the Group may be exposed to variability of returns as a result of holding shares
of the structured entities. Determining whether the Group controls such structured entities usually focuses
on the assessment of the aggregate economic interests of the Group in the entities (including any carried
interests and expected management fees) and the decision-making rights on the entity. As at 31 December
2015, the Group has consolidated some fund products issued and managed by the Company's subsidiary,
China Life AMP Asset Management Company (“CL AMP"), and some trust schemes issued and managed by
third parties in the consolidated financial statements. Please refer to Note 39(c) for the details.
The Group applies its judgment to determine whether the control indicators set out in Note 2.2 indicate
that the Group controls structured entities such as funds and asset management products.
3.5 Determination of control over investee
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
4
3
Risk management is carried out by the Company's Risk Management Committee under policies approved by the
Company's Board of Directors.
11,872
8,090
2 years later
Estimated accumulated
7,977
4 years later
7,997
7,977
3 years later
11,645
7,997
7,977
2 years later
17,127
11,743
8,035
8,161
1 year later
20,359
16,379
claims
11,331
expenses
7,997
17,265
138
9,218
8,104
1,114
Unpaid claims expenses
(55,887)
(12,255)
(16,013)
(11,645)
(7,997)
(7,977)
expenses paid
65,105
20,359
17,127
11,645
7,977
7,916
Accumulated claims
Current year
Accumulated claims
65,750
20,497
8,090
11,775
8,123
8,090
expenses paid
claims expenses
4 years later
8,123
8,090
3 years later
11,775
8,123
7,889
Estimated accumulated
(8,090)
17,265
(11,775)
Total
2015
2014
2013
(8,123)
2011
Estimated claims expenses
Short-term insurance contracts (accident year)
The following table indicates the claim development for short-term insurance contracts taking account of
reinsurance impacts:
2012
8,148
1,120
expenses
(16,145)
Unpaid claims
(56,482)
(12,349)
9,268
142
Securities purchased under agreements to resell are pledged by counterparties' debt securities or term
deposits of which the Group could take the ownership if the owner of the collateral defaults. Policy loans
and most of premium receivables are collateralised by their policies' cash value according to the terms and
conditions of policy loan contracts and policy contracts, respectively.
Collateral and other credit enhancements
The carrying amount of financial assets included on the consolidated statement of financial position
represents the maximum credit risk exposure at the reporting date without taking account of any collateral
held or other credit enhancements attached. The Group has no credit risk exposure relating to off-balance
sheet items as at 31 December 2015 and 2014.
4.2.2 Credit risk
Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. The
Group manages credit risk through in-house research and analysis of the Chinese economy and the
underlying obligors and transaction structures. Where appropriate, the Group obtains collateral in the form
of rights to cash, securities, property and equipment.
Credit risk is the risk that one party of a financial transaction or the issuer of a financial instrument will
fail to discharge its obligation and cause another party to incur a financial loss. Because the Group's
investment portfolio is restricted to the types of investments as permitted by the China Insurance Regulatory
Commission ("CIRC”) and a significant portion of the portfolio is in government bonds, government
agency bonds and term deposits with the state-owned commercial banks, the Group's overall exposure to
credit risk is relatively low.
As at 31 December 2015, if RMB had strengthened or weakened by 10% against US dollar, HK
dollar, GB pound, EUR and other foreign currencies, with all other variables held constant, pre-tax
profit for the year would have been RMB1,592 million (as at 31 December 2014: RMB1,025 million)
lower or higher, respectively, mainly as a result of foreign exchange losses or gains on translation of
US dollar, HK dollar, GB pound, EUR and other foreign currencies denominated financial assets and
financial liabilities other than the available-for-sale equity securities included in the table above. Pre-
tax available-for-sale reserve in equity would have been RMB1,085 million (as at 31 December 2014:
RMB830 million) lower or higher, respectively, as a result of foreign exchange losses or gains on
translation of the available-for-sale equity securities at fair value. The actual exchange gains in 2015
were RMB812 million (2014: exchange gains of RMB268 million).
4
(iii) Currency risk (continued)
Credit risk exposure
RISK MANAGEMENT (continued)
In the normal course of business, the Group attempts to match the maturity of financial assets to the
maturity of insurance and financial liabilities.
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
4.2.2 Credit risk (continued)
Credit quality
The Group's debt securities investment mainly includes government bonds, government agency bonds,
corporate bonds and subordinated bonds or debts, and most of the debt securities are guaranteed by either
the Chinese government or Chinese government controlled financial institutions. As at 31 December 2015,
98.9% (as at 31 December 2014: 99.1%) of the corporate bonds held by the Group or the issuers of these
corporate bonds had credit ratings of AA/A-2 or above. As at 31 December 2015, 99.6% (as at 31 December
2014: 99.6%) of the subordinated bonds or debts held by the Group either have credit ratings of AA/A-2
or above, or were issued by national commercial banks. The bonds, debts or their issuers' credit ratings
are assigned by a qualified appraisal institution in the PRC at the time of its issuance and updated at each
reporting date.
As at 31 December 2015, 99.9% (as at 31 December 2014: 99.7%) of the Group's bank deposits are with
the four largest state-owned commercial banks, other national commercial banks and China Securities
Depository and Clearing Corporation Limited (“CSDCC") in the PRC. The Group believes these
commercial banks, and CSDCC have a high credit quality. The Group's other loans excluding policyholder
loans, are guaranteed by third parties or with pledge, or have the national annual budget income as the
repayment, or have higher credit rating borrowers. As a result, the Group concludes that the credit
risk associated with term deposits and accrued investment income thereof, statutory deposits - restricted,
other loans, and cash and cash equivalents will not cause a material impact on the Group's consolidated
financial statements as at 31 December 2015 and 2014.
source of
The credit risk associated with securities purchased under agreements to resell, policy loans and most of
premium receivables will not cause a material impact on the Group's consolidated financial statements
taking into consideration their collateral held and maturity term of no more than one year as at 31
December 2015 and 2014.
4.2.3 Liquidity risk
Liquidity risk is the risk that the Group is unable to obtain funds at a reasonable funding cost when required
to meet a repayment obligation and fund its asset portfolio within a certain time.
4.2.1 Market risk (continued)
4.2 Financial risk (continued)
4.2 Financial risk (continued)
Total
ended 31 December 2015
143
260
Term deposits
8,774
8,774
Cash and cash equivalents
3,662
68
54
3,784
12,750
8,371
4 RISK MANAGEMENT (continued)
54
Financial liabilities
Interest-bearing loans and borrowings
Total
141
2,623
2,623
2,623
2,623
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
21,175
China Life Insurance Company Limited Annual Report 2015
296,268
For the
48,829
56,003
41,634
Term deposits
562,622
190,658
260
128,322
Statutory deposits-restricted
6,333
484
6,404
232
Securities purchased under
agreements to resell
21,503
21,503
Accrued investment income
49,552
31,218
18,327
7
Premiums receivable
11,913
11,913
96,901
207,267
Loans
910,196
ended 31 December 2015
4 RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.3 Liquidity risk (continued)
The following tables set forth the contractual and expected undiscounted cash flows for financial assets and
liabilities and insurance liabilities:
Contractual and expected cash flows (undiscounted)
Later than 1 year Later than 3
As at 31 December 2015
Carrying
value
Without
maturity
Not later
than 1 year
Notes to the Consolidated Financial Statements
but not later
years
but not later
than 5 years
Later than
5 years
Financial assets
Contractual cash inflows
Equity securities
411,623
411,623
Debt securities
1,000,958
130,340
214,106
170,658
than 3 years
- Available-for-sale securities
402
54
The Group manages price risk by holding an appropriately diversified investment portfolio as
permitted by laws and regulations designed to reduce the risk of concentration in any one specific
industry or issuer.
As at 31 December 2015, if all the Group's equity securities' prices had increased or decreased by 10%
with all other variables held constant, pre-tax profit for the year would have been RMB2,248 million
(as at 31 December 2014: RMB1,054 million) higher or lower, respectively, mainly as a result of an
increase or decrease in fair value of equity securities excluding available-for-sale securities. Pre-tax
available-for-sale reserve in equity would have been RMB22,999 million (as at 31 December 2014:
RMB12,881 million) higher or lower, respectively, as a result of an increase or decrease in fair value of
available-for-sale equity securities. If prices decreased to the extent that the impairment criteria were
met, a portion of such decrease of the available-for-sale equity securities would reduce pre-tax profit
through impairment.
(iii) Currency risk
Currency risk is the volatility of fair value or future cash flows of financial instruments resulted from
changes in foreign currency exchange rates. The Group's currency risk exposure mainly arises from
cash and cash equivalents, term deposits, debt investments, equity investments and loans denominated
in currencies other than the functional currency, such as US dollar, HK dollar, GB pound and EUR.
140
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.1 Market risk (continued)
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
Price risk arises mainly from the volatility of prices of equity securities held by the Group. Prices of
equity securities are determined by market forces. The Group is subject to increased price risk largely
because China's stock markets are relatively volatile.
(iii) Currency risk (continued)
As at 31 December 2015
US dollar HK dollar
GB pound
EUR
Others
Total
Financial assets
Equity securities
- Available-for-sale securities
4,715
8,442
172
The following table summarises financial assets and financial liabilities denominated in currencies
other than RMB as at 31 December 2015 and 2014, expressed in RMB equivalent:
13,329
Price risk
4.2.1 Market risk (continued)
4
RISK MANAGEMENT (continued)
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
4.2
Financial risk
The Group's activities are exposed to a variety of financial risks. The key financial risk is that proceeds from
the sale of financial assets will not be sufficient to fund the obligations arising from the Group's insurance
and investment contracts. The most important components of financial risk are market risk, credit risk and
liquidity risk.
The Group's overall risk management program focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the financial performance of the Group. Risk management is carried
out by a designated department under policies approved by management. The responsible department
identifies, evaluates and manages financial risks in close cooperation with the Group's operating units. The
Group provides written principles for overall risk management, as well as written policies covering specific
areas, such as managing market risk, credit risk, and liquidity risk.
The Group manages financial risk by holding an appropriately diversified investment portfolio as permitted
by laws and regulations designed to reduce the risk of concentration in any one specific industry or issuer.
The structure of the investment portfolio held by the Group is disclosed in Note 9.
The sensitivity analyses below are based on a change in an assumption while holding all other assumptions
constant. In practice this is unlikely to occur, and changes in some of the assumptions may be correlated,
such as change in interest rate and change in market price.
4.2.1 Market risk
(ii)
(i)
Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate
due to changes in market interest rates. The Group's financial assets are principally composed of
term deposits, debt securities and loans which are exposed to interest rate risk. Changes in the level
of interest rates could have a significant impact on the Group's overall investment return. Many of
the Group's insurance policies offer guaranteed returns to policyholders. These guarantees expose the
Group to interest rate risk.
The Group manages interest rate risk through adjustments to portfolio structure and duration, and, to
the extent possible, by monitoring the mean duration of its assets and liabilities.
The sensitivity analysis for interest rate risk illustrates how changes in interest income and the fair
value of future cash flows of a financial instrument will fluctuate because of changes in market interest
rates at the end of the reporting period.
As at 31 December 2015, if market interest rates were 50 basis points higher or lower with all other
variables held constant, pre-tax profit for the year would have been RMB416 million (as at 31
December 2014: RMB883 million) higher or lower, respectively, mainly as a result of higher or lower
interest income on floating rate cash and cash equivalents, term deposits, statutory deposits-restricted,
debt securities and loans and the fair value losses or gains on debt securities assets at fair value through
profit or loss. Pre-tax available-for-sale reserve in equity would have been RMB6,928 million (as at 31
December 2014: RMB6,675 million) lower or higher respectively, as a result of a decrease or increase
in the fair value of available-for-sale securities.
139
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
4 RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
Interest rate risk
-
- Securities at fair value
3,413
18,007
9,148
1,286
2,212
1,242
31,895
Financial liabilities
Interest-bearing loans and borrowings
Total
2,643
2,643
2,643
Total
2,643
US dollar
HK dollar
GB pound
Total
Financial assets
Equity securities
- Available-for-sale securities
8,303
8,303
Debt securities
- Held-to-maturity securities
54
As at 31 December 2014
through profit or loss
4,531
14
70
1,139
2,190
1,056
7,868
Debt securities
- Held-to-maturity securities
68
- Available-for-sale securities
266
68
266
6
- Securities at fair value through
371
15
8
8
Cash and cash equivalents
Term deposits
5,431
5,431
Cash and cash equivalents
3,743
636
132
profit or loss
76,096
year
Subtotal
Financial liabilities at fair
value through profit or loss
10,890
(10,890)
Annuity and other insurance
balances payable
25,617
(25,617)
Interest-bearing loans and
borrowings
2,623
(106)
Bonds payable
67,989
(3,424)
(213)
(73,198)
(2,783)
Subtotal
1,828,929
(10,890)
(150,835)
(207,037)
(35,244) (2,547,580)
Net cash inflows/(outflows)
326,174
(46,089)
46,089
agreements to repurchase
Securities sold under
11,166
Cash and cash equivalents
47,034
47,034
Subtotal
2,155,103
236,030
472,477
592,460
394,308
1,044,967
Financial and insurance liabilities
225,140
Expected cash outflows
1,603,446
(60,896)
(118,434)
(22,634)
(2,463,567)
Investment contracts
72,275
(14,703)
(15,192)
(9,827)
(84,013)
Contractual cash outflows
Insurance contracts
321,642
385,423
359,064
282,820
236,151
85,676
80,193
294%
76,096
According to CIRC Order [2008] No.1, “Solvency Regulations of Insurance Companies", the solvency
ratio is computed by dividing the actual capital by the minimum capital. The CIRC closely monitors
those insurance companies with a solvency ratio less than 100% and may, depending on the individual
circumstances, undertakes certain regulatory measures, including but not limited to restriction of payment
of dividends. Insurance companies with a solvency ratio between 100% and 150% will be required to submit
and implement plans preventing capital deterioration to an inadequate level. Insurance companies with a
solvency ratio above 100% but with significant solvency risk identified would be required to take necessary
rectifying actions.
In addition, pursuant to "Notification of Related Matters on Official Implementation of China Risk Oriented
Solvency System" released by the CIRC, insurance companies should implement “Insurance Institution
Solvency Regulations (No.1-No.17)” (“Solvency II”) from 1 January 2016. The Company will compute
solvency ratio in accordance with Solvency II, recognising, assessing and managing variant risks starting
from 1 January 2016.
4.3 Fair value hierarchy
Level 1 fair value is based on quoted prices (unadjusted) in active markets for identical assets or liabilities
that the entity can obtain at the measurement date.
Other than Level 1 quoted prices, Level 2 fair value is based on valuation techniques using significant
inputs, that are observable for the asset being measured, either directly or indirectly, for substantially the
full term of the asset through corroboration with observable market data. Observable inputs generally used
to measure the fair value of securities classified as Level 2 include quoted market prices for similar assets in
active markets; quoted market prices in markets that are not active for identical or similar assets and other
market observable inputs. This level includes the debt securities for which quotations are available from
pricing services providers. Fair values provided by pricing services providers are subject to a number of
validation procedures by management. These procedures include a review of the valuation models utilised
and the results of these models, and as well as the recalculation of prices obtained from pricing services at the
end of each reporting period.
147
Solvency ratio
China Life Insurance Company Limited Annual Report 2015
For the
year
ended 31 December 2015
4
RISK MANAGEMENT (continued)
4.3
Fair value hierarchy (continued)
Under certain conditions, the Group may not receive price quote from independent third party pricing
services. In this instance, the Group's valuation team may choose to apply internally developed valuation
method to the assets or liabilities being measured, determine the main inputs for valuation, and analyse the
change of the valuation and report it to management. Key inputs involved in internal valuation services are
not based on observable market data. They reflect assumptions made by management based on judgements
and experiences. The assets or liabilities valued by this method are generally classified as Level 3.
As at 31 December 2015, assets classified as Level 1 accounted for approximately 35.24% of assets measured
at fair value on a recurring basis. Fair value measurements classified as Level 1 include certain debt securities,
equity securities that are traded in an active exchange market or interbank market and open-ended funds.
The Group considers a combination of certain factors to determine whether a market for a financial
instrument is active, including the occurrence of trades within the specific period, the respective trading
volume, and the degree which the implied yields for a debt security for observed transactions differs from
the Group's understanding of the current relevant market rates and information. Trading prices from the
Chinese interbank market are determined by both trading counterparties and can be observed publicly. The
Company adopted this price of the debt securities traded on the Chinese interbank market at the reporting
date as their fair market value and classified the investments as Level 1. Open-ended funds also have
active markets. Fund management companies publish the net asset value of these funds on their websites
on each trade date. Investors subscribe for and redeem units of these funds in accordance with the fund
net asset value published by the fund management companies on each trade date. The Company adopted
the unadjusted net asset value of the funds at reporting dates as their fair market value and classified the
investments as Level 1.
As at 31 December 2015, assets classified as Level 2 accounted for approximately 57.47% of assets measured
at fair value on a recurring basis. They primarily include certain debt securities and equity securities.
Valuations are generally obtained from third party pricing services for identical or comparable assets, or
through the use of valuation methodologies using observable market inputs, or recent quoted market prices.
Valuation service providers typically gather, analyse and interpret information related to market transactions
and other key valuation model inputs from multiple sources, and through the use of widely accepted internal
valuation models, provide a theoretical quote on various securities. Debt securities are classified as Level 2
when they are valued at recent quoted prices from the Chinese interbank market or from valuation service
providers.
At 31 December 2015, assets classified as Level 3 accounted for approximately 7.29% of assets measured at
fair value on a recurring basis. They primarily include unlisted equity securities and unlisted debt securities.
Fair values are determined using valuation techniques, including discounted cash flow valuations, market
comparison approach, etc.
For the accounting policies regarding the determination of fair values of financial assets and liabilities, see
Note 3.2.
148
Notes to the Consolidated Financial Statements
11,166
Actual capital
Minimum capital
As at 31
December 2015
RMB million
(1,502,613)
145
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
4 RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.3 Liquidity risk (continued)
The amounts set forth in the tables above for insurance and investment contracts in each column are the
cash flows representing expected future benefit payments taking into consideration of future premiums
payments or deposits from policyholders. The excess cash inflows from matured financial assets will
be reinvested to cover any future liquidity exposures. The estimate is subject to assumptions related to
mortality, morbidity, lapse rate, loss ratio and expense and other assumptions. Actual experience may differ
from estimates.
The liquidity analysis above does not include policyholder dividends payable amounting to RMB107,774
million as at 31 December 2015 (as at 31 December 2014: RMB74,745 million). As at 31 December 2015,
declared dividends of RMB56,597 million (as at 31 December 2014: RMB44,515 million) included in
policyholder dividends payable have a maturity not later than one year. For the remaining policyholder
dividends payable, the amount and timing of the cash flows are indeterminate due to the uncertainty of
future experiences including investment returns and are subject to future declarations by the Group.
As at 31
December 2014
RMB million
Although all investment contracts with DPF and investment contracts without DPF contain contractual
options to surrender that can be exercised immediately by all policyholders at any time, the Group's
expected cash flows as shown in the above tables are based on past experience and future expectations.
Should these contracts were surrendered immediately, it would cause a cash outflow of RMB49,905 million
and RMB33,471 million, respectively for the year ended 31 December 2015 (2014: RMB47,589 million
and RMB24,064 million, respectively), payable within one year.
The Group's objectives for managing capital, which is actual capital calculated as the difference between
admitted assets (defined by the CIRC) and the admitted liabilities (defined by the CIRC), are to comply
with the insurance capital requirements required by the CIRC to meet the minimum capital and safeguard
the Group's ability to continue as a going concern so that it can continue to provide returns for equity
holders and benefits for other stakeholders.
The Group is also subject to other local capital requirements, such as statutory deposits restricted
requirement, statutory reserve fund requirement, general reserve requirement and statutory insurance fund
requirement discussed in detail in Note 9.4, Note 36 and Note 20, respectively.
The Group ensures its continuous and full compliance with the regulations mainly through monitoring its
quarterly and annual solvency ratios, as well as the solvency ratio based on dynamic solvency testing.
146
4
RISK MANAGEMENT (continued)
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
4.2 Financial risk (continued)
4.2.4 Capital management (continued)
The table below summarises the solvency ratio of the Company, the actual capital held against the minimum
required capital:
4.2.4 Capital management
Premiums receivable
330%
8,413
balances payable
30,092
(30,092)
Interest-bearing loans and
borrowings
2,643
(107)
Bonds payable
67,994
(33,424)
(214)
(39,774)
(2,693)
Subtotal
1,933,030
(856)
(192,806)
(100,892)
12,320 (2,897,277)
Net cash inflows/(outflows)
414,837
410,767
366,307
483,042
367,542
(1,945,447)
Annuity and other insurance
(856)
856
value through profit or loss
4,009
2,347,867
411,623
559,113
583,934
355,222
951,830
Financial and insurance liabilities
Expected cash outflows
Insurance contracts
(81,630)
(44,697)
144
26,347
Investment contracts
84,106
(16,199)
(16,207)
(11,334)
(108,091)
Contractual cash outflows
Securities sold under
agreements to repurchase
31,354
(31,354)
Financial liabilities at fair
(2,789,186)
4
1,715,985
4.2 Financial risk (continued)
186,285
982,202
Loans
166,453
85,652
27,423
44,344
36,144
Term deposits
690,156
212,356
367,662
186,342
155,236
Statutory deposits-restricted
6,153
182
2,620
4,434
agreements to resell
11,925
11,925
Accrued investment income
44,350
RISK MANAGEMENT (continued)
31,928
26,621
72,234
Securities purchased under
Debt securities
China Life Insurance Company Limited Annual Report 2015
941,836
4.2.3 Liquidity risk (continued)
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
Contractual and expected cash flows (undiscounted)
Carrying
Without
Not later
but not later
but not later
Later than
Later than 1 year Later than 3 years
value
As at 31 December 2014
Equity securities
Contractual cash inflows
Financial assets
5 years
than 5 years
236,030
than 3 years
year
236,030
than 1
maturity
Charge for the
(1,005)
Disposals
As at 1 January 2015
Impairment
(14,131)
(942)
year
(24)
117
(7,446)
As at 31 December 2015
669
126
393
As at 31 December 2015
33
Disposals
(1,748)
(116)
(4,738)
(24)
16,783
(24)
year
ended 31 December 2015
(135)
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
157
26,974
366
7,565
382
1,878
As at 31 December 2015
25,348
303
6,333
396
2,203
16,113
As at 1 January 2015
Net book value
(24)
(658)
352
Charge for the year
54
Additions
(22)
172
(1,686)
6
1,486
Transfers upon completion
38,424
1,246
6,333
1,392
6,676
22,777
As at 1 January 2015
Cost
RMB million
Total
construction improvements
6 PROPERTY, PLANT AND EQUIPMENT (continued)
vehicles
128
(839)
2,981
3,528
(13,052)
(943)
(996)
(4,473)
(6,640)
As at 1 January 2015
Accumulated depreciation
41,129
1,308
7,565
1,387
6,616
24,253
As at 31 December 2015
(801)
(123)
(63)
(133)
(418)
(64)
Disposals
13
Office
equipment
furniture and
Disposals
fixtures
year
Charge for the
(25)
As at 1 January 2014
Impairment
(13,052)
(943)
(996)
(4,473)
(6,640)
As at 31 December 2014
792
26
54
654
58
(1,844)
(111)
(167)
(778)
(788)
Disposals
Charge for the year
1
(24)
4
158
fixtures
25,348
303
6,333
396
2,203
16,113
As at 31 December 2014
23,393
308
6,125
565
2,381
14,014
As at 1 January 2014
Net book value
(24)
(25)
---- (2)
As at 31 December 2014
Buildings
(12,000)
(883)
(45)
100
(3,194)
-
268
2,781
Transfers upon completion
35,418
1,166
6,125
1,448
6,730
19,949
As at 1 January 2014
Cost
RMB million
Total
Leasehold
construction improvements
Assets under
Motor
vehicles
Additions
(858)
175
2
(4,349)
(5,910)
As at 1 January 2014
Accumulated depreciation
38,424
1,246
6,333
1,392
6,676
22,777
As at 31 December 2014
(1,114)
(33)
(212)
(58)
(683)
(128)
Disposals
4,165
13
3,614
361
Buildings
RISK MANAGEMENT (continued)
Assets under
26,974
Total
Others
Property, plant and equipment
Unallocated
2,396,307
62,075
8,443
74,482
2,251,307
Segment assets
2,335,836
60,471
47,175
475
4,917
7,904
Others
14,900
7,968
69,565
2,243,403
and cash equivalents)
Financial assets (including cash
Assets
RMB million
Total
Elimination
25,034
2,448,315
Liabilities
Insurance contracts
188,889
Others
Unallocated
1,933,212
4,485
7,001
71,293
1,850,433
Segment liabilities
101,767
3,499
401
3,278
Others
94,589
31,354
986
108
931
29,329
Securities sold under agreements to repurchase
10,060
74,046
Investment contracts
1,715,985
6,492
57,024
1,652,469
Others
Accident
As at 31 December 2015
Health
45,931
2,700
1,753
557
40,921
Segment results
1,974
1,974
Share of profit of associates and joint ventures, net
(463,492)
1,081
(4,644)
(12,107)
Income tax
(44,647)
expenses
Segment benefits, claims and
(743)
(94)
(103)
(546)
Statutory insurance fund contribution
1,081
(4)
(33)
(1,044)
Including: inter-segment expenses
(7,428)
(403,175)
Total
(10,744)
35,187
Life
SEGMENT INFORMATION (continued)
5
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
153
2,036
145
40
240
Net profit
263
Depreciation and amortisation
7,076
492
23
202
6,359
equity holders of the Company
Other comprehensive income attributable to
488
34,699
- Non-controlling interests
- Equity holders of the Company
Attributable to
1,388
154
2,122,101
5
(14)
(870)
Available-for-sale securities
profit or loss
Total
Debt securities
RMB million
Equity securities
RMB million
Equity securities
RMB million
RMB million
501
21,635
(856)
542
39,449
39,449
2,785
1,319
4,104
(390)
(329)
(719)
352
352
3,664
3,664
(4,800)
22,678
(4,800)
value through
other comprehensive income
Sales
711
1,884
43,006
- Debt securities
18,304
76,680
94,984
Total
312,817
510,154
64,728
887,699
Liabilities measured at fair value
Closing balance
Financial liabilities at fair value
Investment contracts at fair value
through profit or loss
Total
(856)
(14)
(870)
The following table presents the changes in Level 3 assets for the year ended 31 December 2015:
Securities at fair
Opening balance
Purchases
Transferred into Level 3
Transferred out of Level 3
Total gains recorded in profit or loss
Total gains recorded in
through profit or loss
1,081
501
1,884
32,624
285,574
Net premiums earned
35,319
217,662
- Annuity
- Endowment
29,767
- Whole life
2,871
- Term life
331,010
12,199
11,907
33,192
Gross written premiums
Revenues
Total
Elimination
Others
Accident
RMB million
Health
Life
For the year ended 31 December 2014
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
SEGMENT INFORMATION (continued)
285,619
62,343
330,105
89,814
64,728
149
Segment revenues
(928)
928
Including: inter-segment revenue
4,185
(928)
4,148
67
898
Other income
5,808
Investment income
(547)
154
6,179
Net fair value gains/(losses) through profit or loss
7,120
(48)
24
174
6,970
Net realised gains/(losses) on financial assets
93,548
1,183
315
2,236
22
(997)
(840)
(327)
Operating segments (continued)
(iv) Other businesses (Others)
Other businesses relate primarily to income and allocated cost of insurance agency business in respect
of services to CLIC as described in Note 33, net share of profit of associates and joint ventures,
income and expenses of subsidiaries, and unallocated income and expenditure of the Group.
5.2 Allocation basis of income and expenses
Investment income, net realised gains on financial assets, net fair value gains/(losses) through profit or loss
and foreign exchange gains/(losses) within other expenses are allocated among segments in proportion to
the respective segment's average liabilities of insurance contracts and investment contracts at the beginning
and end of the year. Administrative expenses are allocated among segments in proportion to the unit cost of
respective products in the different segments. Unallocated other income and other expenses are presented in
the "Others" segment directly. Income tax is not allocated.
5.3 Allocation basis of assets and liabilities
Financial assets and securities sold under agreements to repurchase are allocated among segments in
proportion to the respective segment's average liabilities of insurance contracts and investment contracts
at the beginning and end of the year. Insurance and investment contract liabilities are presented under the
respective segments. The remaining assets and liabilities are not allocated.
152
5
SEGMENT INFORMATION (continued)
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
5.1
For the year ended 31 December 2015
Health
Accident
RMB million
Others
Elimination
Total
Revenues
Gross written premiums
308,169
42,041
13,761
363,971
- Term life
3,476
Life
- Whole life
SEGMENT INFORMATION (continued)
ended 31 December 2015
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
4
RISK MANAGEMENT (continued)
4.3 Fair value hierarchy (continued)
The assets whose fair value measurements are classified under Level 3 above do not have
on the profit or loss of the Group.
any
material impact
5
For the assets and liabilities measured at fair value, during the year ended 31 December 2015, RMB59,214
million (2014: RMB22,436 million) debt securities were transferred from Level 1 to Level 2 within the fair
value hierarchy, whereas RMB12,129 million (2014: RMB10,344 million) debt securities were transferred
from Level 2 to Level 1. No material equity securities were transferred between Level 1 and Level 2.
For the years ended 31 December 2015 and 2014, there were no significant changes in the business or
economic circumstances that affected the fair value of the Group's financial assets and liabilities. There were
also no reclassifications of financial assets.
As at 31 December 2015 and 2014, unobservable inputs such as weighted average cost of capital and
liquidity discount were used in the valuation of assets at fair value classified as Level 3. The fair value was
not significantly sensitive to reasonable changes in these unobservable inputs.
5
SEGMENT INFORMATION
The Group operates in four operating segments:
(i)
Life insurance business (Life)
Life insurance business relates primarily to the sale of life insurance policies, including those life
insurance policies without significant insurance risk transferred.
(ii) Health insurance business (Health)
Health insurance business relates primarily to the sale of health insurance policies, including those
health insurance policies without significant insurance risk transferred.
(iii) Accident insurance business (Accident)
Accident insurance business relates primarily to the sale of accident insurance policies.
151
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
5.1 Operating segments
150
28,119
- Annuity
1,081
(1,081)
Segment revenues
444,096
45,204
13,860
5,370
(1,081)
507,449
Benefits, claims and
expenses
Insurance benefits and claims expenses
Life insurance death and other benefits
Including: inter-segment revenue
(219,944)
(20)
(221,701)
Accident and health claims and claim
adjustment expenses
(16,858)
(4,151)
(21,009)
Increase in insurance contract liabilities
(93,668)
(15,803)
(38)
(109,509)
Investment contract benefits
(1,737)
- Endowment
5,060
5,006
177,871
98,703
Net premiums earned
308,081
40,855
13,365
362,301
Investment income
93,819
2,983
344
436
97,582
(1,081)
Net realised gains/(losses) on financial assets
992
115
(69)
32,297
Net fair value gains/(losses) through profit or loss
9,863
313
36
(3)
10,209
Other income
1,074
61
31,259
40,411
22,678
21,635
ended 31 December 2015
4
RISK MANAGEMENT (continued)
4.3
Fair value hierarchy (continued)
The following table presents the Group's quantitative disclosures of fair value measurement hierarchy for
assets and liabilities measured at fair value as at 31 December 2014:
Assets measured at fair value
Fair value measurement using
Quoted prices
in active
Significant
observable
market
inputs
year
Level 1
Significant
unobservable
inputs
Level 3
Total
RMB million
RMB million
RMB million
RMB million
Available-for-sale securities
- Equity securities
151,817
23,479
21,635
- Debt securities
25,437
Level 2
369,403
For the
China Life Insurance Company Limited Annual Report 2015
(6,345)
Other expenses
(27,458)
(2,218)
(3,136)
(3,811)
(18,293)
Administrative expenses
(4,320)
(122)
(15)
(129)
(4,054)
Notes to the Consolidated Financial Statements
Finance costs
(1,307)
(3,813)
(5,528)
(24,921)
Underwriting and policy acquisition costs
(33,491)
(163)
(33,328)
participation in profits
Policyholder dividends resulting from
(2,264)
(188)
(2,076)
(35,569)
542
501
Securities at fair value through
Total gains recorded in profit or loss
Total gains recorded in
other comprehensive income
Closing balance
value through
Available-for-sale securities
profit or loss
Total
Debt securities
RMB million
Equity securities
RMB million
Equity securities
RMB million
RMB million
Transferred out of Level 3
301
200
5,935
13,889
6,135
363
473
836
(377)
(377)
69
69
2,126
2,126
501
13,588
196,931
395,341
Transferred into Level 3
Opening balance
profit or loss
- Equity securities
22,716
582
542
23,840
- Debt securities
18,805
10,407
29,212
Total
218,775
403,871
Purchases
22,678
Liabilities measured at fair value
Investment contracts at fair value
through profit or loss
(10,890)
Investment contracts at fair value
through profit or loss
(21)
Total
(10,911)
(10,890)
(21)
(10,911)
The following table presents the changes in Level 3 assets for the year ended 31 December 2014:
Securities at fair
645,324
- Equity securities
84,106
Securities at fair value
(358,784)
Segment benefits, claims and expenses
(701)
(79)
(116)
(506)
Statutory insurance fund contribution
928
(3)
(32,003)
(22)
Including: inter-segment expenses
(4,151)
928
(562)
(705)
(204)
(3,608)
Other expenses
(25,432)
(903)
(2,087)
(10,722)
928
303
32,211
- Non-controlling interests
through profit or loss
Attributable to
32,514
Net profit
(7,888)
Income tax
(3,694)
40,402
1,546
3,252
30,651
Segment results
3,911
3,911
Share of profit of associates and joint ventures, net
(404,275)
28
4,953
(2,576)
(4,092)
(16,677)
Investment contract benefits
(110)
(8,196)
(97,577)
Increase in insurance contract liabilities
(3,869)
(12,883)
adjustment expenses
Accident and health claims and claim
(1,806)
(13)
(191,291)
Life insurance death and other benefits
Insurance benefits and claims expenses
expenses
Benefits, claims and
440,766
(928)
4,736
12,268
(1,355)
(152)
(192,659)
(16,752)
Administrative expenses
(4,726)
(27,147)
(24,866)
|||
(148)
(16)
(111)
(4,451)
Finance costs
(897)
(3,354)
(4,770)
(18,126)
Underwriting and policy acquisition costs
(124)
(24,742)
participation in profits
Policyholder dividends resulting from
(1,958)
(105,883)
Other comprehensive income attributable to
equity holders of the Company
38,270
951
Others
46,089
1,551
152
1,076
43,310
Securities sold under agreements to repurchase
72,275
8,565
90,703
63,710
1,603,446
5,860
38,872
1,558,714
Insurance contracts
Liabilities
2,246,567
20,615
25,348
Investment contracts
2,732
372
13,513
Motor
equipment
furniture and
Office
PROPERTY, PLANT AND EQUIPMENT
6
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
156
1,959,236
Total
130,106
Others
Unallocated
1,829,130
15,064
6,384
51,245
1,756,437
Segment liabilities
107,320
Total
35,255
Others
Unallocated
Health
Life
Assets
SEGMENT INFORMATION (continued)
5
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
As at 31 December 2014
China Life Insurance Company Limited Annual Report 2015
2,124
152
221
324
1,427
Depreciation and amortisation
39,232
(123)
134
155
Accident
Others
Elimination
2,200,604
71,811
7,273
53,998
2,067,522
Segment assets
56,568
44,390
312
3,985
7,881
Others
2,144,036
27,421
6,961
50,013
2,059,641
cash and cash equivalents)
Financial assets (including
RMB million
Total
Property, plant and equipment
389,435
- Equity holders of the Company
347,810
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
The following table presents the Group's quantitative disclosures of fair value measurement hierarchy for
assets and liabilities measured at fair value as at 31 December 2015:
Assets measured at fair value
Available-for-sale securities
- Equity securities
Fair value measurement using
Quoted prices
Significant
in active
market
observable
inputs
Fair value hierarchy (continued)
Level 1
Significant
unobservable
inputs
Level 3
RMB million
RMB million
RMB million
Total
RMB million
233,527
51,940
62,343
- Debt securities
20,575
380,823
501
401,899
Level 2
4.3
Leasehold
After one year but within five
97,540
of the associates and joint ventures
Total equity attributable to equity holders
600
4,054
330
19,531
2,452
19,531
97,540
Total equity
4,449
7
6,146
48,190
99,995
41,231
330
3,520
330
2,452
41,470
19,531
97,540
2,452
after adjustments
Total equity attributable to equity holders
(534)
239
Total adjustments (i)
600
4,054
of the associates and joint ventures
46,103
1,739,047
Total liabilities
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
70.00%
Jersey Island
35.00%
PRC
For the year ended 31 December 2015
29.46%
40.00%
PRC
20.00%
PRC
Percentage of equity interest held
162
Hong Kong, PRC
8
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
The following table illustrates the summarised financial information of the Group's associates and joint ventures as
at 31 December 2015 and for the year ended 31 December 2015:
600
8,503
337
8,598
65,634 148,185
1,836,587
Total assets
RMB million RMB million RMB million RMB million RMB million RMB million RMB million
Sanya
Company
Street SLP
CLP&C Sino-Ocean Futures Technology
Bank
COFCO Annoroad
10 Upper
CGB
600
Country of incorporation
Proportion of the Group's ownership
40.00%
163
541
(37)
2,171
2,637
10,092
China Life Insurance Company Limited Annual Report 2015
Total comprehensive income
(15)
(80)
379
1,028
Other comprehensive income
496
45
(37)
Notes to the Consolidated Financial Statements
year
Total assets
RMB million
RMB million
RMB million
10 Upper Bank
Street SLP
COFCO
Futures
For the
Sino-Ocean
RMB million
CGB
The following table illustrates the summarised financial information of the Group's associates and joint ventures as
at 31 December 2014 and for the year ended 31 December 2014:
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
8
ended 31 December 2015
CLP&C
RMB million
15
2,251
2,258
Impairment
306
2,464
246
1,397
13,407
(1,010)
7,812
Gross carrying value of the investments
51.00%
70.00%
16.67%
35.00%
29.998%
22,553
Net carrying value of the investments
22,553
7,812
9,064
Net profit/(loss)
432
100
390
31,226
46,829
54,735
Total revenues
06
306
2,464
246
1,397
12,397
20.00%
10 Upper Bank Street SLP
Joint venture
COFCO Futures
(106)
1,435
1,435
Buildings
RMB million
As at 31 December 2014
As at 1 January 2014
(46)
Fair value
As at 1 January 2014
Net book value
As at 31 December 2014
Charge for the year
As at 1 January 2014
Accumulated depreciation
As at 31 December 2014
As at 31 December 2014
(152)
1,283
The Group uses the market comparison approach as its primary method to estimate the fair value of its investment
properties. Under the market comparison approach, the estimated fair value of a property is based on the
average sale price of comparable properties recently sold, with consideration of the comprehensive adjustment
coefficient, which is composed of a number of adjusting factors, including the time and the conditions of sale, the
geographical location, age, decoration, floor area, lot size of the property and other factors.
INVESTMENT PROPERTIES (continued)
8
7
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
1,329
China Life Insurance Company Limited Annual Report 2015
The fair values of investment properties of the Group as at 31 December 2015 amounted to RMB2,238 million
(as at 31 December 2014: RMB2,080 million), which was estimated by the Group having regards to valuations
performed by an independent appraiser. The investment properties were classified as Level 3 in the fair value
hierarchy.
There were no investment properties without title certificates as at 31 December 2015.
The Group has no restrictions on the use of its investment properties and no contractual obligations to each
investment property purchased, constructed or developed or for repairs, maintenance and enhancements.
The Company leases part of its investment properties to its subsidiaries and charges rentals based on the areas
occupied by the respective entities. These properties are categorized as property, plant and equipment of the
Group in the consolidated statement of financial position.
2,080
2,045
160
Additions
As at 1 January 2014
Cost
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
As at 1 January 2015
Fair value
As at 31 December 2015
As at 1 January 2015
For the year ended 31 December 2015
Net book value
As at 1 January 2015
Charge for the year
Accumulated depreciation
As at 31 December 2015
Additions
As at 1 January 2015
Cost
As at 31 December 2015
Buildings
RMB million
1,435
1,435
7 INVESTMENT PROPERTIES (continued)
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
159
2,238
As at 31 December 2015
2,080
1,237
1,283
(198)
(46)
(152)
Under the market comparison approach, an increase (decrease) in the comprehensive adjustment coefficient will
result in an increase (decrease) in the fair value of investment properties.
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
As at 1 January
Investments in associates and joint ventures
40.00%
PRC
20.00%
Percentage of equity interest held
PRC
Company Limited (“Sanya Company”)(ii)
Hong Kong, PRC
China Life (Sanya) Healthy Investment
Joint ventures
Co., Ltd. ("Annoroad Technology")(i)
Annoroad Gene Technology (Beijing)
COFCO Futures Company Limited
("COFCO Futures")
China Guangfa Bank Co., Ltd (“CGB")
China Life Property & Casualty Insurance
Company Limited ("CLP&C")
Sino-Ocean
Associates
10 Upper Bank Street SLP
29.998%
PRC
35.00%
Sino-Ocean
CLP&C
CGB
Associates
Name
As at 31 December 2014, the Group owned the following associates and joint ventures:
In December 2015, the Group contributed RMB306 million in Sanya Company, holding 51.00% of its
equity interests. According to the investment agreement and the articles of association of Sanya Company,
the Group has joint control with another investor over Sanya Company, and therefore accounted for it as a
joint venture.
In June 2015, the Group contributed RMB250 million in Annoroad Technology, holding 16.67% of its
equity interests. According to the provisions of the agreement, the Group can impose a significant influence
over Annoroad Technology's financial and operating decisions through its general meeting and board of
directors, and therefore accounted for it as an associate.
(ii)
51.00%
70.00%
PRC
Jersey Island
16.67%
PRC
Country of incorporation
1,648,056
Name
8
268
5,671
766
34,775
44,390
2014
RMB million
2,984
RMB million
As at 31 December
Impairment (ii)
Dividend received (i)
Other equity movements
Share of profit
Scrip dividend
2015
3,911
649
280
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
161
The Group's investments in associates and joint ventures are unlisted except for Sino-Ocean, which is
listed in Hong Kong. As at 31 December 2015, the stock price of Sino-Ocean was HKD4.97 per share.
As its business performance declined in 2015, and the quoted market price of Sino-Ocean (stock price per
share multiplies shares held by the Group) was below the carrying value for more than one year, the Group
performed an impairment test to this investment. As at 31 December 2015, the recoverable amount of this
investment valued using the discounted future cash flow method was approximately RMB12.40 billion and
therefore an impairment loss of RMB1.01 billion was made for this investment in 2015. In the valuation,
the Group separated the development property and investment property by considering the different future
cash flow features. The discount rates applied in the valuation were 10% and 8% for development property
and investment property, respectively. The impairment for this investment is included in Share of profit of
associates and joint ventures, net in the consolidated statement of comprehensive income.
2014 final dividend of HKD0.165 per ordinary share was approved and declared in the annual general
meeting of Sino-Ocean Land Holdings Limited (“Sino-Ocean”) on 12 May 2015. On 22 May 2015, Sino-
Ocean made the announcement of scrip dividend plan, according to which the shareholders could elect to
receive the 2014 final dividend in cash or in scrip shares. The Company elected the cash option and received
cash dividend amounting to RMB286 million. 2015 interim dividend of HKD0.075 per ordinary share was
approved and declared in the board meeting of Sino-Ocean on 21 August 2015, and each shareholder could
elect to receive the 2015 interim dividend in cash or in scrip shares. The Company elected the cash option
and received cash dividend amounting to RMB136 million.
(ii)
(i)
44,390
47,175
(1,010)
(515)
(604)
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
As at 31 December 2015, the Group owned the following associates and joint ventures:
52,769
132,212
9,784
As at 31
December 2014
December 2015
As at 31
(i)
Total
After ten years
RMB million
After five years but within ten years
After one year but within five
Within one year
Maturing:
Total
Other loans (i)
Policy loans
years
9.2 Loans
RMB million
73,654
18,180
Subtotal
Available-for-sale securities, at cost
Equity securities
Total
Others (i)
84,959
347,810
20,807
15,259
770,516
607,531
(i) Other available-for-sale securities mainly include unlisted equity investments and private equity
funds, etc. The Group did not guarantee or provide any financing support for other available-for-
sale securities, and considers that the carrying value of other available-for-sale securities represents its
122,308
196,931
FINANCIAL ASSETS (continued)
9
ended 31 December 2015
2,000
7 INVESTMENT PROPERTIES
Within one year
As at 31
December 2014
RMB million
As at 31
December 2015
RMB million
Maturing:
11,823
Debt securities - Contractual maturity schedule
The estimated fair value of all held-to-maturity securities was RMB550,844 million as at 31 December 2015
(as at 31 December 2014: RMB526,526 million).
517,283
504,075
449,024
442,085
23
Unlisted debt securities include those traded on the Chinese interbank market.
After one year but within five
years
86,198
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
165
517,283
504,075
Total
284,882
248,427
After ten years
149,986
167,450
After five years but within ten years
70,592
41,050
Others (i)
21,038
50,053
300
6,033
6,153
6,333
6,153
Insurance companies in China are required to deposit an amount that equals to 20% of their registered
capital with banks in conformity with regulations of the CIRC. These funds may not be used for any
purpose, other than to pay off debts during liquidation proceedings.
167
As at 31
December 2014
RMB million
China Life Insurance Company Limited Annual Report 2015
For the
year
ended 31 December 2015
9
FINANCIAL ASSETS (continued)
9.5 Available-for-sale securities
Notes to the Consolidated Financial Statements
RMB million
December 2015
As at 31
years
After five years but within ten years
181,780
200,214
380,842
463,442
26,500
Total
562,622
690,156
9.4 Statutory deposits – restricted
Contractual maturity schedule:
Within one year
After one year but within five years
Total
Available-for-sale securities, at fair value
24
Debt securities
Government agency
1,217
401,899
395,341
Equity securities
Funds
163,366
4,722
83,121
74,629
71,592
Preferred stocks
18,712
3,000
Wealth management products
Common stocks
22,798
19,298
206,511
bonds
Corporate bonds
Subordinated bonds/debts
Others (i)
Subtotal
December 2015
As at 31
As at 31
December 2014
RMB million
RMB million
25,713
26,328
145,399
138,487
206,767
Government bonds
Within one year
37
68,199
3,749
2,539
40,491
16,893
87,449
of the associates and joint ventures
Total adjustments (i)
Total equity attributable to equity holders
2,539
44,383
16,893
As at 31
December 2014
RMB million
RMB million
December 2015
3,749
As at 31
984
Total equity attributable to equity holders of
Gross carrying value of the investments
70.00%
35.00%
29.46%
40.00%
20.00%
(209)
Proportion of the Group's ownership
2,539
41,475
16,893
87,449
adjustments
the associates and joint ventures after
3,540
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
December 2014
December 2015
As at 31
As at 31
166,453
87,449
92,799
Total equity
7,245
87,829
35,876
1,560,607
Total liabilities
8,199
4,450
RMB million
RMB million
90,250
Maturing:
9.3 Term deposits
FINANCIAL ASSETS (continued)
9
166
During the year ended 31 December 2015, the Group's investment income from the above asset
management products was RMB6,455 million (2014: RMB4,137 million), and the related asset
management fee received by AMC for all asset management products it issued was RMB224 million
(2014: RMB171 million).
Other loans mainly consisted of different types of asset management products. As at 31 December
2015, RMB172,983 million (as at 31 December 2014: RMB84,300 million) of asset management
products had been managed by China Life Asset Management Company Limited ("AMC”), a
subsidiary of the Company, of which RMB37,978 million (as at 31 December 2014: RMB39,571
million) was owned by the Group. Meanwhile, the Group also owned RMB75,936 million (as at 31
December 2014: RMB50,034 million) of asset management products managed by other financial
institutions. Asset management products are guaranteed by third parties or with pledge, or have the
national annual budget income as the source of repayment, or have higher credit rating borrowers.
The Group did not guarantee or provide any financing support for other loans, and considers that the
carrying value of other loans represents its maximum risk exposure.
166,453
207,267
8,700
32,345
24,239
53,894
84,078
80,214
20,535
6,757
13,186
1,434
Total
Unlisted
Listed in Singapore
Listed in Hong Kong, PRC
Listed in mainland, PRC
Debt securities
China Life Insurance Company Limited Annual Report 2015
Total
Corporate bonds
Government agency bonds
Government bonds
Debt securities
9.1 Held-to-maturity securities
FINANCIAL ASSETS
Subordinated bonds/debts
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
As at 31
61,916
517,283
504,075
155,705
152,135
146,595
146,405
126,140
126,097
88,843
79,438
RMB million
RMB million
As at 31
December 2014
December 2015
9
50
164
The Group had no contingent liabilities or capital commitments with the associates and joint ventures as at 31
December 2015 and 31 December 2014.
44,644
Total comprehensive income
Other comprehensive income
Net profit
Total revenues
2,478
36,522
maximum risk
13,186
6,757
20,535
Net carrying value of the investments
Impairment
2,478
1,434
40,411
3,306
241
(157)
92
4,587
1,725
14,157
(299)
8
(19)
318
2,120
142
84
4,606
1,407
12,037
(i) Including adjustments for the difference of accounting policies, fair value and others.
207,267
168
exposure.
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
19,411
23,642
6,455
6,368
12,956
17,274
19,411
23,642
173
Total
As at 31
December 2015
For the
year
ended 31 December 2015
14
Unlisted debt securities include those traded on the Chinese interbank market and those not publicly traded.
Unlisted equity securities include those not traded on stock exchanges, which are mainly open-ended funds
with public market price quotation.
170
9
Notes to the Consolidated Financial Statements
FINANCIAL ASSETS (continued)
9.7 Securities purchased under agreements to resell
Carrying value
Maturing:
Total
9.8 Accrued investment income
Bank deposits
Debt securities
Others
Total
INSURANCE CONTRACTS
Within 30 days
11
investment contracts:
The table below presents the carrying value and estimated fair value of major financial assets and liabilities, and
49,552
1,599
2,144
15,667
15,703
27,084
44,350
31,705
RMB million
As at 31
December 2014
December 2015
As at 31
11,925
21,503
RMB million
53,052
Current
31,928
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
10
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
31,218
China Life Insurance Company Limited Annual Report 2015
44,350
49,552
Total
12,422
18,334
Non-current
171
137,990
23,840
43,006
Funds
Equity securities
29,212
94,984
401
24,873
88,291
4,085
5,689
254
603
RMB million
RMB million
As at 31
December 2014
December 2015
As at 31
Subtotal
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
9
6,119
FINANCIAL ASSETS (continued)
Debt securities
Government bonds
Government agency
bonds
Corporate bonds
Others
9.6 Securities at fair value through profit or loss
499
Common stocks
36,887
29,212
Equity securities
Listed in mainland, PRC
32,427
23,488
Listed in Hong Kong
94,984
70
Unlisted
6,099
4,410
352
Subtotal
Total
Listed overseas
11,925
Subtotal
86,076
23,341
Subtotal
Total
43,006
23,840
137,990
23,292
53,052
Listed in mainland, PRC
8,852
5,920
Listed overseas
56
Unlisted
Debt securities
21,503
As at 31
December 2014
RMB million
December 2015
RMB million
21,503
11,925
21,503
11,925
Cash and cash equivalents
76,096
47,034
76,096
47,034
Investment contracts (iii)
(84,106)
(72,275)
(82,644)
(70,694)
Financial liabilities at fair value through profit or loss
(856)
(10,890)
The estimates and judgements to determine the fair value of financial assets are described in Note 3.2.
(i)
(68,370)
(69,580)
(67,989)
(67,994)
Securities purchased under agreements to resell
Bonds payable (iii)
(31,354)
(46,089)
(31,354)
Securities sold under agreements to repurchase
(10,890)
(856)
(46,089)
53,052
137,990
53,052
207,267
166,453
207,267
526,526
550,844
517,283
166,453
504,075
Loans
Held-to-maturity securities (ii)
As at 31
December 2014
RMB million
Estimated fair value (i)
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
RMB million
Term deposits
(ii) The fair value of held-to-maturity securities is determined by reference with other debt securities which
are measured by fair value. Please refer to Note 4.3. The fair value of held-to-maturity under Level 1
was RMB29,777 million and under Level 2 was RMB521,067 million as at 31 December 2015 (as at 31
December 2014: Level 1 RMB69,506 million and Level 2 RMB457,020 million).
562,622
562,622
137,990
Securities at fair value through profit or loss
592,272
749,709
592,272
749,709
690,156
Available-for-sale securities, at fair value
6,333
6,153
6,333
-
Statutory deposits – restricted
690,156
6,153
401,899
(iii) Investment contracts at fair value through profit or loss have quoted prices in active markets, and therefore,
their fair value was classified as Level 1.
PREMIUMS RECEIVABLE
1,032
As at 31
December 2015
As at 31
December 2014
RMB million
RMB million
Receivable from constructors
Land use rights
6,341
1,656
5,998
6,137
Investments receivable
4,242
4,104
Automated policy loans
2,520
2,281
As at 31
For the year ended 31 December 2015
Non-current
Current
Total
2,100
1,420
2,833
684
772
Due from related parties
2,449
936
Tax refundable
Others
908
1,246
124
OTHER ASSETS
Total
Non-current
Current
Total
Claims recoverable from reinsurers (Note 14)
China Life Insurance Company Limited Annual Report 2015
Ceded unearned premiums (Note 14)
Long-term insurance contracts ceded (Note 14)
13
REINSURANCE ASSETS
12
172
As at 31 December 2015, the carrying value of premiums receivable within one year was RMB11,899 million (as
at 31 December 2014: RMB11,143 million).
Due from reinsurance companies
The fair values of investment contracts at amortised cost and bonds payable were determined using valuation
techniques, with consideration of the present value of expected cash flows arising from contracts using a
risk-adjusted discount rate, allowing for the risk-free rate available on the valuation date, credit risk and risk
margin associated with the future cash flows. The fair values of investment contracts at amortised cost and
bonds payable were classified as Level 3.
Notes to the Consolidated Financial Statements
As at 31
December 2015
174
1,032
1,420
39
50
65
For the year ended 31 December 2015
87
37
908
1,246
RMB million
RMB million
As at 31
December 2014
20
169
395,341
121,381
(9,636)
- Cash paid for prior year claims
(6,865)
(4,557)
Claims incurred
- Claims arising in current year
20,497
16,499
669
355
- Claims arising in prior years
Total as at 31 December - Gross
Notified claims
Incurred but not reported
Total as at 31 December - Gross
The table below presents movements in unearned premium reserves:
9,268
Gross
Net
Ceded
Gross
2014
RMB million
RMB million
(12,349)
2015
9,268
5,181
7,520
2,135
1,748
7,316
7,316
Cash paid for current year claims
Cash paid for claims settled
4,655
China Life Insurance Company Limited Annual Report 2015
14
1,602,434
1,714,602
7,165
7,857
Notes to the Consolidated Financial Statements
7,277
1,587,992
1,697,527
176
Total, net
- Unearned premiums
Total
9,218
Ceded
For the year ended 31 December 2015
(c)
7,316
Total as at 1 January – Gross
3,820
5,181
835
2,135
INSURANCE CONTRACTS (continued)
RMB million
2014
2015
Incurred but not reported
Notified claims
The table below presents movements in claims and claim adjustment expense reserve:
Movements in liabilities of short-term insurance contracts
RMB million
Net
As at 1 January
7,230
1,482,946
1,588,900
331,582
(300,990)
RMB million
2014
2015
RMB million
As at 31 December
304,677
Other movements
– Change in discount rates
Change in assumptions
Accretion of interest
Release of liabilities (i)
Premiums
As at 1 January
- Change in other assumptions (ii)
The table below presents movements in the liabilities of long-term insurance contracts:
(265,137)
69,214
178
For the year ended 31 December 2014, the change in other assumptions was mainly caused by
the change in morbidity rate assumptions of certain products, which increased insurance contract
liabilities by RMB441 million. This change reflected the Group's most recent experience and future
expectations about morbidity rate as at the reporting date. Changes in assumptions other than
morbidity rates decreased insurance contract liabilities by RMB21 million.
For the year ended 31 December 2015, the change in other assumptions was mainly caused by
the change in morbidity rate assumptions of certain products, which increased insurance contract
liabilities by RMB980 million. This change reflected the Group's most recent experience and future
expectations about the morbidity rates as at the reporting date. Changes in assumptions other than
morbidity rates increased insurance contract liabilities by RMB7 million.
(ii)
The release of liabilities mainly consists of release due to death or other termination and related
expenses, release of residual margin and change of reserves for claims and claim adjustment expenses.
(i)
68,741
1,588,900
1,379
1,043
420
987
(4,599)
8,510
1,698,773
Short-term insurance contracts
(d) Movements in liabilities of long-term insurance contracts
14
(7,230)
Release
7,165
(65)
7,230
7,857
65
(87)
Increase
6,775
(121)
6,896
7,165
(65)
7,944
INSURANCE CONTRACTS (continued)
(7,165)
121
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
177
(6,896)
7,165
7,230
7,857
(87)
7,944
As at 31 December
(6,775)
(65)
Long-term insurance contracts
- Claims and claim adjustment expenses
(1,012)
401,899
348,944
359,611
260
46,137
42,022
266
RMB million
As at 31
December 2014
December 2015
RMB million
As at 31
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
Subtotal
Unlisted
Listed in Singapore
Listed in mainland, PRC
Net
4.80%-5.00%
4.80%-5.00%
As at 31 December 2014
As at 31 December 2015
Discount rate assumptions
In developing discount rate assumptions, the Group considers investment experience, the current
investment portfolio and trend of the relevant yield curves. The discount rates reflect the future
economic outlook as well as the Group's investment strategy. The assumed discount rates with risk
margin for the past two years are as follows:
395,341
reserves.
(i)
(a) Process used to decide on assumptions
9
FINANCIAL ASSETS (continued)
9.5 Available-for-sale securities (continued)
Debt securities
For the insurance contracts of which future insurance benefits are affected by investment yields of
corresponding investment portfolios, the discount rate assumption is based on expected investment
returns of the asset portfolio backing these liabilities, considering the impacts of time value on
Equity securities
Listed in mainland, PRC
85,658
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
Within one year
32,598
13,939
Maturing:
After one year but within five years
139,737
After five years but within ten years
112,419
120,284
After ten years
121,016
135,866
Discount rate assumptions
Debt securities - Contractual maturity schedule
607,531
71,553
Listed in Hong Kong, PRC
8,391
8,303
Listed in Singapore
172
Unlisted debt securities include those traded on the Chinese interbank market and those not publicly traded.
Unlisted equity securities include those not traded on stock exchanges, which are mainly open-ended funds
with public market price quotation.
Unlisted
132,334
Subtotal
Total
368,617
212,190
770,516
274,396
As at 31 December 2015
For the insurance contracts of which future insurance benefits are not affected by investment yields of
the corresponding investment portfolios, the discount rate assumption is based on the “Yield curve of
reserve computation benchmark for insurance contracts", published on the “China Bond” website with
consideration of liquidity spreads, taxation and other relevant factors. The assumed discount rates with
risk margin for the past two years are as follows:
3.42%-5.78%
3.52%-5.96%
9,268
1,588,900
1,698,773
As at 31
December 2014
RMB million
As at 31
December 2015
RMB million
Total, gross
7,316
- Unearned premiums
Short-term insurance contracts
Long-term insurance contracts
Gross
(b) Net liabilities of insurance contracts
As at 31 December 2014
(v) The Group applied a consistent method to determine risk margin. The Group considers risk margin
for discount rate, mortality and morbidity and expense assumptions to compensate for the uncertain
amount and timing of future cash flow. When determining risk margin, the Group considers historical
experience, future expectations and other factors. The Group determines risk margin level by itself as
the regulations have not imposed any specific requirement on it.
- Claims and claim adjustment expenses
(a) Process used to decide on assumptions (continued)
7,944
1,715,985
(1,383)
Total, ceded
(65)
(87)
- Unearned premiums (Note 12)
(39)
7,230
(50)
Short-term insurance contracts
(908)
(1,246)
Long-term insurance contracts (Note 12)
Recoverable from reinsurers
1,603,446
- Claims and claim adjustment expenses (Note 12)
INSURANCE CONTRACTS (continued)
The Group adopted a consistent process to decide on assumptions for the insurance contracts
disclosed in this note. On each reporting date, the Group reviews the assumptions for reasonable
estimates of liability and risk margin, with consideration of all available information, and taking into
account the Group's historical experience and expectation of future events.
ended 31 December 2015
There is uncertainty on the discount rate assumption, which is affected by factors such as future
macro-economy, monetary and foreign exchange policies, capital market and availability of investment
channels of insurance funds. The Group determines the discount rate assumption based on the
information obtained at the end of each reporting period including consideration of risk margin.
174
14
INSURANCE CONTRACTS (continued)
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
(a) Process used to decide on assumptions (continued)
(ii) The mortality and morbidity assumptions are based on the Group's historical mortality and morbidity
experience. The assumed mortality rates and morbidity rates vary by age of the insured and contract
type.
(iii)
The Group bases its mortality assumptions on China Life Insurance Mortality Table (2000-2003),
adjusted where appropriate to reflect the Group's recent historical mortality experience. The main
source of uncertainty with life insurance contracts is that epidemics and wide-ranging lifestyle changes
could result in deterioration in future mortality experience, thus leading to an inadequate reserving of
liability. Similarly, improvements in longevity due to continuing advancements in medical care and
social conditions may expose the Group to longevity risk.
14
Risk margin is considered in the Group's mortality and morbidity assumptions.
Expense assumptions are based on expected unit costs with the consideration of previous expense
studies and future trends. Expense assumptions are affected by certain factors such as future inflation
and market competition which bring uncertainty to these assumptions. The Group considers risk
margin for expense assumptions based on information obtained at the end of each reporting period.
Components of expense assumptions include cost per policy and percentage of premium as follows:
Individual Life
The Group bases its morbidity assumptions for critical illness products on analysis of historical
experience and expectations of future developments. There are two main sources of uncertainty. First,
wide-ranging lifestyle changes could result in future deterioration in morbidity experience. Second,
future development of medical technologies and improved coverage of medical facilities available
to policyholders may bring forward the timing of diagnosing critical illness, which demands earlier
payment of the critical illness benefits. Both could ultimately result in an inadequate reserving of
liability if current morbidity assumptions do not properly reflect such trends.
As at 31 December 2015
As at 31 December 2014
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
RMB Per Policy
175
0.90%
0.90%
(iv) The lapse rates and other assumptions are affected by certain factors, such as future macro-economy,
availability of financial substitutions, and market competition, which bring uncertainty to these
assumptions. The lapse rates and other assumptions are determined with reference to creditable past
experience, current conditions, future expectations and other information.
0.85%-0.90%
0.85%-0.90%
% of Premium
RMB Per Policy
% of Premium
Group Life
37.00-45.00
37.00-45.00
15.00
14.00
NET PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Net profit attributable to equity holders of the Company is recognised in the financial statements of the Company
to the extent of RMB32,638 million (2014: RMB28,271 million).
(19,375)
EARNINGS PER SHARE
The reconciliation between the Group's effective tax rate and the statutory tax rate of 25% in the PRC
(2014: 25%) is as follows:
188
(16,953)
There is no difference between basic and diluted earnings per share. The basic and diluted earnings per share for
the year ended 31 December 2015 are based on the net profit for the year attributable to ordinary equity holders
of the Company and the weighted average number of 28,264,705,000 ordinary shares (2014: 28,264,705,000
ordinary shares).
Net deferred tax liabilities
7,888
(29,120)
Subtotal
Reversal of impairment
Realised gains
Debt securities
NET REALISED GAINS ON FINANCIAL ASSETS
22
For the year ended 31 December 2015, the interest income included in investment income was RMB88,306
million (2014: RMB88,984 million). All interest income was accrued using the effective interest method.
93,548
97,582
114
89
299
368
8,138
11,115
34,934
32,285
106
326
4,458
8,950
1,571
1,382
18,571
18,526
25,357
24,541
RMB million
RMB million
Equity securities
2014
Realised gains
Subtotal
23
During the year ended 31 December 2015, the Group recognised an impairment charge of RMB147 million
(2014: RMB146 million) of available-for-sale funds, an impairment charge of RMB174 million (2014: RMB1,003
million) of available-for-sale common stocks, and no impairment charge (2014: Nil) of other available-for-sale
securities, for which the Group determined that objective evidence of impairment existed.
22 NET REALISED GAINS ON FINANCIAL ASSETS (continued)
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
7,120
32,297
6,978
32,301
(1,149)
(321)
8,127
32,622
142
(4)
142
(4)
RMB million
RMB million
2014
ended 31 December
year
2015
For the
183
Net realised gains on financial assets are from available-for-sale securities.
Total
Impairment
For the year ended 31 December
2015
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
Payable to constructors
1,025
845
Stock appreciation rights (Note 31)
1,044
1,045
Interest payable of subordinated debts
761
1,117
Agent deposits
2,550
Payable to third party holders of consolidated trust schemes
1,919
2,598
Commission and brokerage payable
4,589
5,220
Salary and welfare payable
5,008
6,410
Interest payable to policyholders
RMB million
RMB million
As at 31
December 2014
December 2015
As at 31
20
OTHER LIABILITIES
19
634
783
Tax payable
Others
China Life Insurance Company Limited Annual Report 2015
Total
Others
Securities purchased under agreements to resell
Loans
Bank deposits
- at fair value through profit or loss
- available-for-sale securities
Equity securities
- at fair value through profit or loss
- available-for-sale securities
-held-to-maturity securities
Debt securities
21 INVESTMENT INCOME
NET FAIR VALUE GAINS THROUGH PROFIT OR LOSS
182
20,062
26,514
20,062
26,514
20,062
26,514
STATUTORY INSURANCE FUND
Total
Current
Non-current
Total
4,216
5,584
717
511
As required by the CIRC Order [2008] No. 2, “Measures for Administration of Statutory Insurance Fund”, all
insurance companies have to pay the statutory insurance fund contribution to the CIRC from 1 January 2009.
The Group is subject to the statutory insurance fund contribution, (i) at 0.15% and 0.05% of premiums and
accumulated policyholder deposits from life policies with guaranteed benefits and life policies without guaranteed
benefits, respectively; (ii) at 0.8% and 0.15% of premiums from short-term health policies and long-term health
policies, respectively; (iii) at 0.8% of premiums from accident insurance contracts, at 0.08% and 0.05% of
accumulated policyholder deposits from accident investment contracts with guaranteed benefits and without
guaranteed benefits, respectively. When the accumulated statutory insurance fund contributions reach 1% of total
assets, no additional contribution to the statutory insurance fund is required.
Debt securities
Equity securities
Stock appreciation rights
2014
RMB million
RMB million
For the year ended 31 December
2015
4,726
4,320
59
106
1,234
784
3,433
3,430
RMB million
RMB million
2014
ended 31 December
year
2015
For the
185
Auditors' remuneration
Foreign exchange gains
Depreciation and amortisation
Contribution to the defined contribution pension plan
Housing benefits
Employee salaries and welfare costs
Profit before income tax is stated after charging/(crediting) the following:
PROFIT BEFORE INCOME TAX
Total
for interest-bearing loans and borrowings
Interest expenses
13,045
11,564
824
787
10,744
1,433
(4,664)
6,455
15,408
2014
RMB million
RMB million
year ended 31 December
2015
For the
Taxation charges
Deferred taxation
Current taxation - Enterprise income tax
(b)
(a) The amount of taxation charged to net profit represents:
Interest expenses for securities sold under agreements to repurchase
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income tax relates to the same tax authority.
28
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
55
60
(268)
(812)
2,124
2,036
1,553
1,678
TAXATION
ended 31 December 2015
Interest expenses for bonds payable
FINANCE COSTS
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
221,701
(248)
221,949
Life insurance death and other benefits
For the year ended 31 December 2015
RMB million
RMB million
RMB million
Net
Ceded
Gross
5,808
10,209
(1,186)
(61)
(255)
180
4,977
9,324
2,272
766
year ended 31 December
2015
2014
RMB million
RMB million
For the
INSURANCE BENEFITS AND CLAIMS EXPENSES
24
Total
Financial liabilities at fair value through profit or loss
21,166
(157)
21,009
109,847
26
Benefits of investment contracts are mainly the interest credited to investment contracts.
25 INVESTMENT CONTRACT BENEFITS
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
(25,621)
315,294
(368)
315,662
Total
105,883
(62)
105,945
27
Increase in insurance contract liabilities
(102)
16,854
Accident and health claims and claim adjustment expenses
192,659
(204)
192,863
Life insurance death and other benefits
For the year ended 31 December 2014
352,219
(743)
352,962
Total
109,509
(338)
Profit before income tax
year
184
Notes to the Consolidated Financial Statements
Investments
Others
RMB million
RMB million
RMB million
Total
RMB million
(i)
(ii)
(iii)
(11,627)
5,627
1,081
(4,919)
552
(1,940)
(45)
(1,433)
(15,805)
2,759
23
(15,805)
2,759
23
As at 31 December 2014
(8,316)
(12,095)
1,036
(19,375)
As at 1 January 2015
Insurance
- Others
attributable to participating
policyholders
available-for-sale securities
10,101
(3,324)
(3,434)
2,655
1,190
(41)
1
19
(30)
12
Income tax at the effective tax rate
10,744
7,888
(i)
(8,316)
Non-taxable income mainly includes interest income from government bonds, and dividend income
from applicable equity securities, etc. Expenses not deductible for tax purposes mainly include
commission, brokerage, donation and other expenses that do not meet the criteria for deduction
according to the relevant tax regulations.
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
TAXATION (continued)
28
(c)
As at 31 December 2015 and 2014, deferred income tax was calculated in full on temporary differences
under the liability method using a principal tax rate of 25%. The movements in deferred tax assets and
liabilities during the year are as follows:
Deferred tax assets/(liabilities)
As at 1 January 2014
(Charged)/credited to net profit
(Charged)/credited to other
comprehensive income
- Available-for-sale securities
- Portion of fair value changes on
186
11,483
(12,095)
(19,375)
28
29
30
TAXATION (continued)
(c) The movements in deferred tax assets and liabilities during the year are as follows: (continued)
Unrecognised deductible tax losses of the Group amounted to RMB727 million as at 31 December 2015
(as at 31 December 2014: RMB879 million). Unrecognised deductible temporary differences of the Group
amounted to RMB186 million as at 31 December 2015 (as at 31 December 2014: RMB166 million).
(d)
The analysis of deferred tax assets and deferred tax liabilities is as follows:
Deferred tax assets:
- deferred tax assets to be recovered after 12 months
- deferred tax assets to be recovered within 12 months
Subtotal
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
9,528
4,219
2,639
2,027
12,167
6,246
Deferred tax liabilities:
- deferred tax liabilities to be settled after 12 months
(26,850)
(24,130)
- deferred tax liabilities to be settled within 12 months
(2,270)
(1,491)
For the
Subtotal
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
(Charged)/credited to net profit
3,673
843
148
4,664
(Charged)/credited to other
comprehensive income
- Available-for-sale securities
- Portion of fair value changes on
available-for-sale securities
attributable to participating
policyholders
- Others
As at 31 December 2015
(5,445)
1,036
3,192
(1,451)
(16,686)
1,184
(5,445)
3,192
11
(16,953)
(i)
(ii)
(iii)
The deferred tax arising from the insurance category is mainly related to the change of long-term
insurance contract liabilities at 31 December 2008 as a result of the first time adoption of IFRSS
in 2009 and the temporary differences of short-term insurance contract liabilities and policyholder
dividends payable.
The deferred tax arising from the investments category is mainly related to the temporary differences
of unrealised gains/(losses), which includes available-for-sale securities, securities at fair value through
profit or loss, and others.
The deferred tax arising from the others category is mainly related to the temporary differences of
employee salaries and welfare costs payable.
187
China Life Insurance Company Limited Annual Report 2015
11
40,402
16,752
2014
RMB million
The Company issued the above three subordinated bonds with a maturity term of 10 years to qualified investors
who met the relevant regulatory requirements. The coupon rates per annum for the first 5 years are 5.50%, 4.70%,
4.58%, respectively, for bonds issued on 26 October 2011, 29 June 2012 and 5 November 2012. The Company
has the right to call the subordinated bonds at par at the end of the fifth year after issuance. If the Company
does not exercise the call option, the coupon rate per annum for the remaining 5 years will be raised by 200 basis
points.
68,000
68,000
Total
10,000
10,000
4.58%
5 November 2022
5 November 2012
28,000
28,000
4.70%
29 June 2022
30,000
30,000
5.50%
26 October 2021
26 October 2011
29 June 2012
RMB million
RMB million
As at 31
December 2014
As at 31
December 2015
Interest rate p.a.
Maturity date
Issue date
Par Value
As at 31 December 2015, all bonds payable were subordinated bonds with a total carrying value of RMB67,994
million (as at 31 December 2014: RMB67,989 million) and the par value of RMB68,000 million (as at 31
December 2014: RMB68,000 million).
BONDS PAYABLE
17
Subordinated bonds are measured at amortised cost as described in Note 2.14.
180
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
45,931
181
China Life Insurance Company Limited Annual Report 2015
transaction.
For debt repurchase transactions through the stock exchange, the Group is required to deposit certain exchange-
traded bonds into a collateral pool with fair value converted at a standard rate pursuant to the stock exchange's
regulation which should be no less than the balance of the related repurchase transaction. As at 31 December
2015, the carrying value of securities deposited in the collateral pool was RMB67,169 million (as at 31 December
2014: RMB49,963 million). The collateral is restricted from trading during the period of the repurchase
As at 31 December 2015, bonds with a carrying value of RMB28,802 million (as at 31 December 2014:
RMB42,177 million) were pledged as collateral for financial assets sold under agreements to repurchase resulting
from repurchase transactions entered into the Group in the interbank market.
46,089
31,354
3,000
118
42,971
31,354
46,089
31,354
2,623
4,612
41,477
27,922
As at 31
December 2014
RMB million
As at 31
Total
After 90 days
After 30 but within 90 days
Within 30 days
Maturing:
Total
Stock exchange market
Interbank market
18 SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
For the year ended 31 December 2015
3,432
2,643
December 2015
RMB million
As at 31
December 2014
RMB million
50,295
As at 31
December 2014
RMB million
RMB million
As at 31
December 2015
For the year ended 31 December 2015
179
As at 31 December
Interest credited
Policy fees deducted from account balances
Deposits withdrawn, payments on death and other benefits
Deposits received
As at 1 January
The table below presents movements of investment contracts with DPF:
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
Total
- At fair value through profit or loss
- At amortised cost
Investment contracts with DPF at amortised cost
15 INVESTMENT CONTRACTS
Tax computed at the statutory tax rate
Non-taxable income (i)
Expenses not deductible for tax purposes (i)
Tax losses utilised from previous periods
Unused tax losses
Others
For the year ended 31 December
3.54%
RMB million
2015
47,962
33,797
Investment contracts without DPF
14
17 June 2019
Interest rate
As at 31
December 2015
RMB million
24,292
Guaranteed loans
Maturity date
16 INTEREST-BEARING LOANS AND BORROWINGS
ended 31 December 2015
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
47,962
50,295
1,288
1,164
year
(34)
(33)
84,106
21
2014
RMB million
2015
47,962
RMB million
46,555
3,746
3,486
(2,543)
(3,334)
72,275
Single
11,888
12,049
First-year regular
77
161
13,403
13
281
150
Total
13
363,971
331,010
China Life Insurance Company Limited Annual Report 2015
13,480
Management Discussion and Analysis
Gross written premiums categorized by channel:
Renewal business
First-year business
24,435
13,761
41,340
For the year ended 31 December
Renewal business
173,720
174,273
Health Insurance Business
42,041
33,192
First-year business
12,199
19,525
18,993
14,459
First-year regular
5,442
5,066
Renewal business
17,606
13,667
Accident Insurance Business
Single
2015
111
2014
3,372
2,878
First-year regular
199
Renewal business
553
506
Short-term insurance business
15,983
Single
13,945
106,028
99,825
First-year business of long-term insurance
87,222
77,881
73,508
65,918
First-year regular
56,381
Bancassurance Channel
2,989
3,571
First-year business of long-term insurance
Exclusive Individual Agent Channel
225,957
205,417
First-year business of long-term insurance
47,974
34,455
Single
495
335
First-year regular
47,479
34,120
Renewal business
171,632
165,131
Short-term insurance business
6,351
5,831
Group Insurance Channel
20,107
17,440
RMB million
First-year regular
Business tax and extra charges for
investment) ((Investment assets at the beginning of the period + Investment assets at the end of the period) / 2)
Gross investment yield including net share of profit of associates and joint ventures = (Investment income + Net realised gains/
(losses) on financial assets + Net fair value gains/(losses) through profit or loss + Total income from investment properties
Business tax and extra charges for investment + Net share of profit of associates and joint ventures) / ((Investment assets at the
beginning of the period + Investments in associates and joint ventures at the beginning of the period + Investment assets at the
end of the period + Investments in associates and joint ventures at the end of the period) / 2)
Comprehensive investment yield
78,068
=
8
9
(Investment income + Net income from investment properties
-
-
13,714
=
(Investment income + Net realised gains/(losses) on financial assets + Net fair value gains/
(losses) through profit or loss + Current net fair value changes of available-for-sale securities recognized in other comprehensive
income + Total income from investment properties – Business tax and extra charges for investment) / ((Investment assets at the
beginning of the period + Investment assets at the end of the period) / 2)
7 Net investment yield
11
The Company fully completed the promotion of comprehensive counter service system, with one-stop services
becoming available at 2,578 counters nationwide. To improve customer experience, the Company launched global
emergency services and VIP services for all long-term policy holders, which covered multi-layer and various classes
of global emergency services, health consultation and VIP care services. The Company continued to support
children education and development and participate in public welfare undertakings, and held painting and
drawing events for children across China for five consecutive years. The Company also cared about physical and
mental health of customers, and actively held various customer activities, such as sports events and lectures, etc.
The results of customer satisfaction and customer loyalty were increased by 1.2% and 4.8% year-on-year, reaching
a record high.
The Company continuously complied with Section 404 of the U.S. Sarbanes-Oxley Act. Meanwhile, it
implemented procedures for the compliance with standard systems of corporate internal control by following
the "Standard Regulations on Corporate Internal Control" and the "Implementation Guidelines for Corporate
Internal Control" jointly issued by five PRC ministries including the Ministry of Finance, etc, and the "Basic
Standards of Internal Control for Insurance Companies” issued by the CIRC. In addition, the Company updated
and benchmarked its internal control system to the “Internal Control-Integrated Framework (2013)” issued by
the U.S. Committee of Sponsoring Organizations (COSO). In accordance with the CIRC's requirements on the
commissioning in the C-ROSS transition period, the Company launched programs to build up its solvency risk
management system, fully benchmarked itself to the regulatory rules, strengthened the soundness, compliance
and validity of its risk management system, and optimized the formation and transmission mechanisms of
risk preference. The Company complied with the “Guidelines for the Implementation of Comprehensive Risk
Management of Life Insurance Companies" issued by the CIRC, continued the work in relation to risk alert
classification management, and created a monitoring system on key risks and explored a remote and vertical
monitoring mode based on its information system. The Company also took the opportunity of the CIRC's special
inspection, namely “two strengthens and two containments”, to identify internal control problems and make
effective adjustments. All the above measures helped to improve the Company's risk management framework,
secure the risk bottom line and optimize the internal control process, which enhanced the Company's capability in
risk management.
II ANALYSIS OF MAJOR ITEMS OF CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
(1) Total Revenues
For the year ended 31 December
RMB million
2015
2014
Net premiums earned
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
Life insurance business
Including debt investment plans, equity investment plans, trust schemes, project asset-backed plans, asset-backed securities and
specialized asset management plans, etc.
5 Exclusive of currency fund.
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
I
From left to right:
Mr. Zheng Yong, Mr. Yang Zheng, Mr. Xu Haifeng, Mr. Lin Dairen, Mr. Xu Hengping, Mr. Li Mingguang,
Mr. Xiao Jianyou
BUSINESS OVERVIEW OF 2015
In 2015, the Company achieved a fast growth of its business and maintained its leading position in the market,
with its business structure continuously optimized and the operating results noticeably improved. During the
Reporting Period, the Company's net premiums earned was RMB362,301 million, an increase of 9.8% from 2014,
with RMB308,081 million from life insurance business, increased by 7.9% from 2014, RMB40,855 million from
health insurance business, increased by 25.2% from 2014, RMB13,365 million from accident insurance business,
increased by 12.2% from 2014; first-year premiums for policies with insurance duration of more than one year
increased by 20.1% from 2014, first-year regular premiums increased by 32.9% from 2014, and the percentage
of first-year regular premiums in first-year premiums for policies with insurance duration of more than one year
increased to 44.22% in 2015 from 39.94% in 2014; first-year regular premiums with 10 years or longer payment
duration increased by 25.4% from 2014, and the percentage of first-year regular premiums with 10 years or longer
payment duration in first-year regular premiums was 52.20%; renewal premiums increased by 1.9% from 2014,
and the percentage of renewal premiums in gross written premiums was 52.64%. As at 31 December 2015, the
number of in-force policies increased by 9.6% from the end of 2014; the Policy Persistency Rate (14 months and
26 months)³ reached 90.00% and 85.50%, respectively; and the Surrender Rate* was 5.55%, a 0.09 percentage
point increase from 2014.
3
The Persistency Rate for long-term individual policy is an important operating performance indicator for life insurance
companies. It measures the ratio of in-force policies in a pool of policies after a certain period of time. It refers to the proportion
of policies that are still effective during the designated month in the pool of policies whose issue date was 14 or 26 months ago.
Surrender Rate = Surrender payment/(Liability of long-term insurance contracts at the beginning of the period + Premium of
long-term insurance contracts)
6
9
With respect to the exclusive individual agent channel, the Company has achieved a relatively rapid increase in
business scale and a remarkable increase in business value based on the continued business structure optimization.
During the Reporting Period, gross written premiums from the exclusive individual agent channel increased by
10.0% year-on-year; first-year regular premiums increased by 39.2% year-on-year; the percentage of first-year
regular premiums in first-year premiums was 98.97%; first-year regular premiums with 10 years or longer payment
duration increased by 24.5% year-on-year; the percentages of first-year regular premiums with 5 years or longer
payment duration and first-year regular premiums with 10 years or longer payment duration in gross first-year
regular premiums were 90.50% and 61.15%, respectively; and renewal premiums increased by 3.9% year-on-
year and the percentage of renewal premiums in gross written premiums of the exclusive individual agent channel
was 75.96%. The Company has made significant achievements in its persistent implementation of the “effective
expansion" strategy for team building. As at the end of the Reporting Period, the Company had a total of 979,000
exclusive individual agents which increased by 31.7% from the end of 2014. The Company continued to promote
the professional development for the exclusive individual agent channel, and its sustainable development capacities
have been enhanced remarkably.
With respect to the group insurance channel, businesses maintained a steady growth. During the Reporting Period,
gross written premiums from the group insurance channel increased by 15.3% year-on-year; short-term insurance
premiums increased by 14.6% year-on-year and short-term accident insurance premiums increased by 12.5% year-
on-year. The group insurance channel actively provided services for economic and social development, effectively
pushed forward the development of micro-insurance business, insurance for college-graduate village officials, birth
planning insurance, accident insurance for senior citizens and new village cooperative supplementary accident
insurance, etc. The Company also actively developed the medical insurance business in the high-end market, and
further operated the multinational co-insurance business and the international insurance business such as the travel
insurance for Sino-Russian tourism. As at the end of the Reporting Period, the Company had a total of 45,000
group insurance sales representatives in the group insurance channel.
With respect to the bancassurance channel, the Company actively responded to new challenges from market
competition by rapidly expanding the sales team, deepening cooperation between different sales channels and
strengthening sales support, enhancing the fundamental management and promoting business development.
While maintaining the business scale as well as the steady growth of regular premiums, the Company made great
efforts in developing businesses with medium- to long-term regular premiums (particularly the regular premiums
with 10 years or longer payment duration) and achieved remarkable results in its channel transformation. During
the Reporting Period, gross written premiums from the bancassurance channel increased by 6.2% year-on-year,
first-year premiums for policies with insurance duration of more than one year increased by 12.0% year-on-year,
first-year regular premiums increased by 14.6% year-on-year, and first-year regular premiums with 10 years or
longer payment duration increased by 35.9% year-on-year. As at the end of the Reporting Period, the number of
intermediary bancassurance outlets was 56,000, with a total of 131,000 sales representatives which increased by
84.5% from the end of 2014.
In 2015, the Company improved its asset allocation capacity representing the core value and operation
characteristics of life insurance, made continuous efforts in diversifying its investment products, channels and
regions, and gradually formed a management structure, which was based on a strategic asset allocation, and relied
on diversified and market-oriented investments with the entrustors' active allocation and arrangement as well as
the organization and implementation by the investment managers. In terms of investment portfolios, in regard
to the falling interest rates, an unsteadily increasing bond market and the narrowed credit spread, the Company
actively responded to the fixed income investment environment by increasing its allocation in transactional bonds
and other financial products. Meanwhile, in view of the increasing fluctuations and distinct divisions of the stock
10
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
market, the Company highly boosted market operations with the advantage of a market-oriented agency, and
actively promoted allocation globally and made investments in sophisticated markets and high-quality assets while
considering the prospective movement of exchange rate. As at the end of the Reporting Period, the Company's
investment assets reached RMB2,287,639 million, an increase of 8.9% from the end of 2014. Among the major
types of investments, the percentage of bonds was 43.55%, the percentage of term deposits was 24.59%, the
percentage of stocks and funds³ was 9.34%, and the percentage of financial assets, such as the debt investment
plans, equity investment plans and trust schemes etc., was 5.26%. During the Reporting Period, interest and
dividend income increased steadily, and net investment yield was 4.30%. Spread income increased significantly,
the
investment yield was 6.24%, and the gross investment yield including net share of profit of associates
and joint ventures³ was 6.20%. The comprehensive investment yield taking into account the current net fair value
changes of available-for-sale financial assets recognized in other comprehensive income was 7.23%.
gross
In 2015, the Company further implemented the “innovation-driven development strategy". On the basis of
further optimizing and improving its IT governance structure, the Company initiated the construction of the
"new generation" comprehensive business processing system which featured as customer oriented, Internet-
based, responsive and reliable. The Company fully promoted Cloud Assistant, Cloud Signage, Cloud Desktop
and Total Internet Connection in order to speed up its mobile Internet-based operation. The Company stepped
up the efforts in product innovation, further optimized its product development mechanism, and introduced
several new products aimed at specific market segments and meeting customers' emerging demands. The Company
innovated a new mobile Internet-based sales model, which enabled a whole electronic process from product
advertising, purchase, premium payment to policy generation. The Company further promoted the application
of E-China Life and E-Store across sales channels, effectively promoting the sales of its major products. The
Company reinforced the innovation of operation and services by launching E-customer Service with Internet
services and mobile app services as its core, marking a new beginning of the Company's “Internet plus" service.
The nationwide promotion of "Counter Pass" system provided "four-pass" services of policy enquiry, claim
acceptance, settlement and payment across provinces without geographical restrictions. The Company put more
efforts in promoting centralized operation and realized centralized underwriting and claim assessment across eight
provinces and municipalities, which accumulated precious experiences for the implementation of the Company's
"Rui Operation" strategy. With automation rate of insurance underwriting and preservation reaching 74% and
81%, respectively, and the launch of a smart claim settlement platform, a pilot program of quick claim settlement
and direct payment at hospitals, the Company's operational productivity and efficiency was further improved.
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
Health insurance business
362,301
330,105
1.
Life Insurance Business
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
During the Reporting Period, net premiums earned from life insurance business increased by 7.9%
year-on-year. This was primarily due to an increase in the first-year premiums for policies with
insurance duration of more than one year resulting from the Company's enhanced efforts in team
building and business development.
Health Insurance Business
During the Reporting Period, net premiums earned from health insurance business increased by
25.2% year-on-year. This was primarily due to the Company's enhanced efforts in developing health
insurance business.
3. Accident Insurance Business
During the Reporting Period, net premiums earned from accident insurance business increased by
12.2% year-on-year. This was primarily due to the Company's continuous efforts in developing
accident insurance business.
Gross written premiums categorized by business:
Net Premiums Earned
For the year ended 31 December
2015
2014
Life Insurance Business
First-year business
308,169
285,619
134,449
111,346
Single
RMB million
2.
440,766
507,449
308,081
285,574
40,855
32,624
Accident insurance business
13,365
11,907
Investment income
97,582
93,548
Net realised gains on financial assets
32,297
7,120
Net fair value gains through profit or loss
10,209
5,808
Other income
5,060
4,185
Total
12
70,006
11,963
4
18,558
Total
16
463,492
404,275
Insurance Benefits and Claims Expenses
1
Life Insurance Business
Management Discussion and Analysis
2
701
3
Health Insurance Business
During the Reporting Period, insurance benefits and claims expenses attributable to health insurance
business increased by 53.3% year-on-year. This was primarily due to an increase in the scale of health
insurance business and the update of actuarial assumptions, such as discount rate assumption of
reserves of traditional insurance contracts.
Accident Insurance Business
During the Reporting Period, insurance benefits and claims expenses attributable to accident
insurance business increased by 5.4% year-on-year. This was primarily due to an increase in the scale
of accident insurance business.
Investment Contract Benefits
During the Reporting Period, investment contract benefits increased by 15.6% year-on-year. This was
primarily due to an increase in the scale of investment contracts.
Policyholder Dividends Resulting from Participation in Profits
During the Reporting Period, policyholder dividends resulting from participation in profits increased by
34.7% year-on-year. This was primarily due to an increase in investment yields of the participating products.
Underwriting and Policy Acquisition Costs
During the Reporting Period, insurance benefits and claims expenses attributable to life insurance
business increased by 8.6% year-on-year. This was primarily due to an increase in the scale of life
insurance business.
During the Reporting Period, underwriting and policy acquisition costs increased by 31.0% year-on-year.
This was primarily due to an increase in underwriting costs for first-year regular premium business resulting
from the growth of the Company's business and the optimization of its business structure.
743
7,428
Accident insurance business
4,209
3,992
Investment contract benefits
2,264
1,958
Policyholder dividends resulting from participation in profits
33,491
24,866
4,151
Underwriting and policy acquisition costs
27,147
Finance costs
4,320
4,726
Administrative expenses
27,458
25,432
Other expenses
Statutory insurance fund contribution
35,569
22,434
Finance Costs
Administrative Expenses
1,753
1,546
2,700
4,953
45,931
40,402
During the Reporting Period, profit before income tax in life insurance business increased by 33.5%
year-on-year. This was primarily due to the growth of business and an increase in income from
investments as compared to the corresponding period of 2014.
Health Insurance Business
During the Reporting Period, profit before income tax in health insurance business decreased by
82.9% year-on-year. This was primarily due to the update of actuarial assumptions, such as discount
rate assumption of reserves of traditional insurance contracts, which partially reduced the profit for the
period.
3,252
3
During the Reporting Period, profit before income tax in accident insurance business increased by
13.4% year-on-year. This was primarily due to an increase in the scale of accident insurance business
as compared to the corresponding period of 2014.
4
Other Business
During the Reporting Period, profit before income tax in other business decreased by 45.5% year-
on-year. This was primarily due to a decrease in net profits of associates and the impairment of
investments in associates.
(4) Income Tax
During the Reporting Period, income tax of the Company was RMB10,744 million, a 36.2% increase year-
on-year. This was primarily due to an increase in profit before income tax.
(5) Net Profit
During the Reporting Period, net profit attributable to equity holders of the Company was RMB34,699
million, a 7.7% increase year-on-year. This was mainly attributable to factors such as the increase in
investment income. However, update of actuarial assumptions, such as discount rate assumption of reserves
of traditional insurance contracts, partially reduced the profit for the period.
18
Accident Insurance Business
During the Reporting Period, finance costs decreased by 8.6% year-on-year. This was primarily due to a
decrease in interest payments for securities sold under agreements to repurchase.
557
40,921
During the Reporting Period, administrative expenses increased by 8.0% year-on-year. This was primarily
due to the Company's increased investment in team building for the purpose of enhancing its sustainable
development capacity.
Other Expenses
During the Reporting Period, other expenses increased by 78.9% year-on-year. This was primarily due to
an increase in business taxes and surcharges expenses resulting from an increase in taxable income from
investments.
17
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
(3) Profit before Income Tax
For the year ended 31 December
30,651
Life insurance business
Accident insurance business
Other business
Total
1
Life Insurance Business
2
RMB million
2015
2014
Health insurance business
34,398
288,868
313,612
1.
2.
363,971
331,010
Other channels mainly include supplementary major medical insurance business, telephone sales, etc.
The Company's channel premium breakdown was presented based on the separate groups of sales personnels
including exclusive individual agent team, direct sales representatives, bancassurance sales team, and other
distribution channels.
14
Investment Income
For the year ended 31 December
Notes:
China Life Insurance Company Limited Annual Report 2015
RMB million
2015
2014
Investment income from securities at fair value through profit or loss
1,708
1,677
Investment income from available-for-sale securities
27,476
23,029
Management Discussion and Analysis
Investment income from held-to-maturity securities
Total
9,806
21,815
Short-term insurance business
248
129
Other Channels¹
11,879
8,328
First-year business of long-term insurance
1,209
6,428
1,262
701
889
First-year regular
508
373
Renewal business
864
638
Short-term insurance business
Single
24,541
25,357
Investment income from bank deposits
15
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
Net Realised Gains on Financial Assets
During the Reporting Period, net realised gains on financial assets increased by 353.6% year-on-year. This
was primarily due to a significant increase in the spread income of available-for-sale stocks and funds.
Net Fair Value Gains through Profit or Loss
During the Reporting Period, net fair value gains through profit or loss increased by 75.8% year-on-year.
This was primarily due to a significant increase in the spread income of stocks at fair value through profit of
loss.
Other Income
During the Reporting Period, other income increased by 20.9% year-on-year. This was primarily due to
an increase in the commission fees earned from CLP&C resulting from the Company's increased efforts in
promoting its interactive business.
During the Reporting Period, investment income from loans increased by 36.6% year-on-year. This
was primarily due to an increase in the scale of policy loans and trust schemes, etc.
(2)
For the year ended 31 December
RMB million
2015
2014
Insurance benefits and claims expenses
Life insurance business
Health insurance business
352,219
315,294
Benefits, Claims and Expenses
Investment Income from Loans
During the Reporting Period, investment income from bank deposits decreased by 7.6% year-on-year.
This was primarily due to a decrease in the allocation of negotiated deposits and the investment yield
of newly increased allocation under the low interest rate environment.
Investment Income from Bank Deposits
Investment income from loans
Other investment income
32,285
34,934
11,115
8,138
457
413
Total
97,582
93,548
1
2
3
5
Investment Income from Securities at Fair Value through Profit or Loss
During the Reporting Period, investment income from securities at fair value through profit or loss
increased by 1.8% year-on-year. This was primarily due to an increase in dividend income from stocks
at fair value through profit or loss.
Investment Income from Available-for-Sale Securities
During the Reporting Period, investment income from available-for-sale securities increased by 19.3%
year-on-year. This was primarily due to an increase in dividend income from available-for-sale funds,
wealth management products and other equity investments.
Investment Income from Held-to-Maturity Securities
During the Reporting Period, investment income from held-to-maturity securities decreased by 3.2%
year-on-year. This was primarily due to a decrease in the allocation of treasury bonds.
Renewal business
China Life Insurance Company Limited Annual Report 2015
Single
A pension fund jointly set up by the Company and
others
68.37%
CLIC
RMB19,324
Subsidiaries
As at 31 December 2014
Amount
million
Percentage
of holding
Increase
million
Decrease
million
Amount
million
As at 31 December 2015
Percentage
of holding
AMC
RMB1,680
60.00%
RMB1,680
60.00%
directly
directly
Pension Company
RMB2,746
74.27%
RMB2,746
74.27%
directly
directly
RMB19,324
68.37%
As at 31 December 2015
Amount Percentage
million
of holding
Decrease
million
6,800
4,600
4,000
3,400
300
588
200
6,800
(i)
In December 2015, the Company completed a RMB500 million capital contribution to Suzhou
Pension Company. After the contribution, the paid-in capital of Suzhou Pension Company increased
from RMB300 million to RMB800 million. As at 31 December 2015, since the business registration
modification procedure for Suzhou Pension Company was still in progress, the registered capital
remained RMB300 million.
191
China Life Insurance Company Limited Annual Report 2015
and indirectly
Notes to the Consolidated Financial Statements
year
ended 31 December 2015
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(c) Registered capital of related parties with control relationship and changes during the year
(continued)
(ii) AMC HK and Golden Phoenix Tree Limited were registered in Hong Kong, and King Phoenix Tree
Limited was registered in the Jersey Island, so the legal definition of registered capital is not applicable
for them.
(d) Percentages of holding of related parties with control relationship and changes during the
year
Shareholder
Amount
million
As at 31 December 2014
Percentage
of holding
Increase
million
For the
Rui Chong Company
and indirectly
HKD30
King Phoenix Tree Limited
100.00%
100.00%
indirectly
indirectly
Rui Chong Company
RMB6,199
RMB6,199
100.00%
directly
192
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(e)
Transactions with significant related parties
The following table summarises significant transactions carried out by the Group with its significant related
parties:
Notes
For the year ended 31 December
2015
RMB million
2014
RMB million
Transactions with CLIC and its subsidiaries
Policy management fee received from CLIC
(i)(viii)
directly
directly
100.00%
100.00%
50.00%
indirectly
-- HKD30
50.00%
indirectly
Suzhou Pension Company
RMB300
100.00%
RMB800
100.00%
directly
directly
CL AMP
AMC HK
RMB500
RMB500
85.03%
indirectly
indirectly
CL Wealth
RMB200
100.00%
RMB200
100.00%
indirectly
indirectly
Golden Phoenix Tree Limited
85.03%
200
CL Wealth
588
A subsidiary of the Company
A subsidiary of the Company
China Life (Suzhou) Pension and Retirement Investment
Company Limited ("Suzhou Pension Company")
Golden Phoenix Tree Limited
Shanghai Rui Chong Investment Co., Limited
("Rui Chong Company”) (i)
AMC HK
CL AMP
King Phoenix Tree Limited
China Life Wealth Management Co., Limited ("CL
Wealth")
Sino-Ocean
A subsidiary of the Company
A subsidiary of the Company
A subsidiary of the Company
An indirect subsidiary of the Company
An indirect subsidiary of the Company
An indirect subsidiary of the Company
An indirect subsidiary of the Company
An associate of the Company
CGB
CLP&C
COFCO Futures
Annoroad Technology
10 Upper Bank Street SLP
Sanya Company
China Life Real Estate Co., Limited ("CLRE")
China Life Insurance (Overseas) Company Limited ("CL
Overseas")
Immediate and ultimate holding company
Relationship with the Company
China Life Pension Company Limited ("Pension
Company")
AMC
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
31
STOCK APPRECIATION RIGHTS
The Board of Directors of the Company approved, on 5 January 2006, an award of stock appreciation rights of
4.05 million units and on 21 August 2006, another award of stock appreciation rights of 53.22 million units to
eligible employees. The exercise prices of the two awards were HKD5.33 and HKD6.83, respectively, the average
closing price of shares in the five trading days prior to 1 July 2005 and 1 January 2006, the dates for vesting and
exercise price setting purposes of this award. The exercise prices of stock appreciation rights were the average
closing price of the shares in the five trading days prior to the date of the award. Upon the exercise of stock
appreciation rights, exercising recipients will receive payments in RMB, subject to any withholding tax, equal to
the number of stock appreciation rights exercised times the difference between the exercise price and market price
of the H shares at the time of exercise.
32
Stock appreciation rights have been awarded in units, with each unit representing the value of one H share. No
shares of common stock will be issued under the stock appreciation rights plan. According to the Company's
plan, all stock appreciation rights will have an exercise period of five years from the date of award and will not
be exercisable before the fourth anniversary of the date of award unless specific market or other conditions have
been met. On 26 February 2010, the Board of Directors of the Company extended the exercise period of all stock
appreciation rights, which is also subject to government policy.
All the stock appreciation rights awarded were fully vested as at 31 December 2015. As at 31 December 2015,
there were 55.01 million units outstanding and exercisable (as at 31 December 2014: 55.01 million). As at 31
December 2015, the amount of intrinsic value for the vested stock appreciation rights was RMB832 million (as at
31 December 2014: RMB1,012 million).
The fair value of the stock appreciation rights is estimated on the date of valuation at each reporting date using
lattice-based option valuation models based on expected volatility from 25% to 45%, an expected dividend yield of
no higher than 2% and a risk-free interest rate ranging from 0.05% to 0.25%.
The Company recognised a gain of RMB180 million in the net fair value through profit or loss in the consolidated
comprehensive income representing the fair value change of the rights during the year ended 31 December 2015
(2014: fair value loss of RMB255 million). RMB832 million and RMB13 million were included in salary and
staff welfare payable included under other liabilities for the units not exercised and exercised but not paid as at
31 December 2015 (as at 31 December 2014: RMB1,012 million and RMB13 million), respectively. There was
no unrecognised compensation cost for the stock appreciation rights as at 31 December 2015 (as at 31 December
2014: Nil).
DIVIDENDS
China Life Investment Holding Company Limited (“CLI”)
China Life Ecommerce Company Limited (“CL
Pursuant to the shareholders' approval at the Annual General Meeting on 28 May 2015, a final dividend of
RMB0.40 (inclusive of tax) per ordinary share totalling RMB11,306 million in respect of the year ended 31
December 2014 was declared and paid in 2015. The dividend has been recorded in the consolidated financial
statements for the year ended 31 December 2015.
Pursuant to a resolution passed at the meeting of the Board of Directors on 23 March 2016, a final dividend of
RMB0.42 (inclusive of tax) per ordinary share totalling approximately RMB11,871 million for the year ended
31 December 2015 was proposed for shareholders' approval at the forthcoming Annual General Meeting. The
dividend has not been recorded in the consolidated financial statements for the year ended 31 December 2015.
189
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
33 SIGNIFICANT RELATED PARTY TRANSACTIONS
(a)
Related parties
The table below summarises the names of significant related parties and nature of relationship with the
Company as at 31 December 2015:
Significant related parties
CLIC
A distribution of RMB185 (inclusive of tax) million to the holders of Core Tier 2 Capital Securities was approved
by the management according to the authorization by the Board of Directors in 2015.
Ecommerce")
China Life Enterprise Annuity Fund (“EAP”)
CL AMP Zunxiang Bond Securities Investment Fund
Relationship with
the company
Nature of
ownership
Legal
representative
Immediate and
ultimate holding
company
Refer to Note 39(c) for the basic and related information of subsidiaries.
State-owned
Yang
Mingsheng
(c) Registered capital of related parties with control relationship and changes during the
year
Name of related party
Beijing, Insurance services including receipt
China of premiums and payment of
benefits in respect of the in-force
life, health, accident and other types
of personal insurance business, and
the reinsurance business; holding or
investing in domestic and overseas
insurance companies or other
financial insurance institutions; fund
management business permitted
by national laws and regulations
or approved by the State Council
of the People's Republic of China;
and other businesses approved by
insurance regulatory agencies.
As at 31
December 2014
RMB million
Decrease
RMB million
As at 31
December 2015
RMB million
CLIC
4,600
AMC
4,000
Pension Company
2,500
900
Suzhou Pension Company (i)
300
CL AMP
Increase
RMB million
950
registration Principal business
CLIC
CL AMP Zengjinbao Money Market Fund
CL AMP Xinqianbao Money Market Fund
Shang Xin Lv Di Collective Fund Trust Scheme
Jiao Yin Guo Xin - Wen Jian No. 798 Collective Fund
Trust Scheme (the second batch)
Jiao Yin Guo Xin - Wen Jian No. 1119 Collective Fund
Trust Scheme
Shang Xin Jing Neng Jin Tai Indemnificatory Housing
Collective Fund Trust Scheme
An associate of the Company
An associate of the Company
An associate of the Company
An associate of the Company
A joint venture of the Company
A joint venture of the Company
Under common control of CLIC
Under common control of CLIC
Under common control of CLIC
Under common control of CLIC
A directly and indirectly held consolidated
structured entity of the Company
A directly held consolidated structured entity of the
Company
Location of
A directly and indirectly held consolidated
structured entity of the Company
A directly held consolidated structured entity of the
Company
A directly held consolidated structured entity of the
Company
A directly held consolidated structured entity of the
Company
(i)
Rui Chong Company was incorporated in 2015.
190
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(b) Related parties with control relationship
Information of the parent company is as follows:
Name
A directly and indirectly held consolidated
structured entity of the Company
987
RMB500
(ii.a)
On 8 March 2015, the Company and CLP&C signed a new 2-year framework insurance agency agreement,
whereby the Company entrusted CLP&C to act as an agent to sell designated life insurance products in certain
authorised jurisdictions. The brokerage fee was determined based on market practice. The agreement was subject to
an automatic one-year renewal if no objections were raised by both parties upon expiry.
On 31 December 2014, the Company signed a property leasing agreement with CLI, effective till 31 December
2017, pursuant to which CLI leased to the Company certain owned buildings. Annual rental payable by the
Company to CLI in relation to the CLI properties is determined either by reference to the market rent, or, the
costs incurred by CLI in holding and maintaining the properties, plus a margin of approximately 5%. The rental
was paid on a semi-annual basis, and each payment was equal to one half of the total annual rental.
196
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(e)
Transactions with significant related parties (continued)
Notes (continued):
(v)
(vi)
On 19 April 2012, the Company and CGB renewed an insurance agency agreement to distribute insurance
products. All individual insurance products suitable for distribution through bancassurance channels are included
in the agreement. CGB provides agency services, including the selling of insurance products, and collecting
premiums and paying benefits. The Company paid the agency commission by multiplying the net amount of total
premiums received from sale of each category individual insurance product after deducting the withdrawn policies
premiums in the hesitation period, by the responding fixed commission rate. The commission rates for various
insurance products sold by CGB are agreed based on arm's length transactions. The commissions are payable on
a monthly basis. The agreement is effective for three years and subject to an automatic one-year renewal with no
limitation of times if no objections were raised by either party upon expiry. On 19 April 2015, the agreement was
automatically renewed for another one year.
On 18 March 2015, the Company and CL Ecommerce signed a one year agreement for managing the regional
telemarketing centre, effective on the signing date. Pursuant to the agreement, the Company entrusted CL
Ecommerce to manage the operation of its telemarketing centre, and paid the management fee accordingly. The
total amount of the management fee is not expected to exceed RMB100 million, but is still pending for negotiation
between the two parties based on the actual circumstance.
(vii) On 27 November 2014, the Company and Pension Company signed an agency agreement for the distribution and
customer service of enterprise annuity funds, pension management business and occupational pension management
business. The agreement was effective from 28 November 2014 and expiry after 1 year, and was subject to an
automatic one-year renewal if no objections were raised by either party upon expiry. On 28 November 2015,
the agreement was automatically renewed for another one year. The commissions for the entrusting service of
enterprise annuity fund management, which is the core business of Pension Company, are calculated at 30%
to 80% of the annual entrusting management fee revenues, depending on the duration of the agreement. The
commissions for account management service are calculated at 60% of the first year's account management fee and
were only charged for the first year, regardless of the duration of the agreement. The commissions for investment
management service, in accordance with the duration of the agreement, are calculated at 60% to 3% of the annual
investment management fee (excluding risk reserves for investment), and decreased annually. The calculation base,
method and charge rate for the agency fee of occupation annuity should refer to that of enterprise annuity funds.
The charge rate for the agency fee of group pension plan is in line with that of the investment management fee
of enterprise annuity funds. The agency fee of personal pension plan is 30% of the daily management fee of the
personal pension plan annually.
(viii) These transactions constitute continuing connected transactions which are subject to reporting and announcement
requirements but are exempt from independent shareholders' approval requirements under Chapter 14A of the
Listing Rules. The Company has complied with the disclosure requirements in accordance with Chapter 14A of the
Listing Rules.
(ix)
The transaction constitutes a one-off connected transaction which is subject to reporting and announcement
requirements but is exempt from independent shareholders' approval requirements under Chapter 14A of the
Listing Rules. The Company has complied with the disclosure requirements in accordance with Chapter 14A of the
Listing Rules.
Asset management fee received from CLIC
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Amounts due from/to significant related parties
(f)
On 8 April 2012, the Company and CLP&C signed a 2-year framework insurance agency agreement, whereby
the Company entrusted CLP&C to act as an agent to sell designated life insurance products in certain authorised
jurisdictions. The brokerage fee was determined based on cost (tax included) plus a margin. The agreement was
subject to an automatic one-year renewal if no objections were raised by both parties upon expiry. This agreement
expired on 7 April 2015.
On 8 March 2015, the Company and CLP&C signed a new 2-year framework insurance agency agreement,
whereby CLP&C entrusted the Company to act as an agent to sell designated P&C insurance products in certain
authorized jurisdictions. The agency fee was determined based on cost (tax included) plus a margin. The agreement
was subject to an automatic one-year renewal if no objections were raised by both parties upon expiry.
On 8 March 2012, the Company and CLP&C renewed a 2-year framework insurance agency agreement, whereby
CLP&C entrusted the Company to act as an agent to sell designated P&C insurance products in certain authorized
jurisdictions. The agency fee was determined based on cost (tax included) plus a margin. The agreement was
subject to an automatic one-year renewal if no objections were raised by both parties upon expiry. This agreement
expired on 7 March 2015.
(iv)
On 29 December 2014, the Company and CLIC signed a renewable insurance agency agreement, effective from
1 January 2015 to 31 December 2017. The agreement was subject to an automatic three-year renewal if no
objections were raised by both parties. The Company performs its duties of insurance agents in accordance with
the agreement, but does not acquire any rights and profits or assume any obligations, losses and risks as an insurer
of the non-transferrable policies. The policy management fee was payable semi-annually, and is equal to the sum
of (1) the number of policies in force as at the last day of the period, multiplied by RMB8.00 per policy and (2)
2.50% of the actual premiums and deposits received during the period, in respect of such policies. The policy
management fee income is included in other income in the consolidated statement of comprehensive income.
(ii.a) On 31 December 2014, CLIC signed an asset management agreement with AMC, entrusting AMC to manage and
make investments of its insurance funds. The agreement is effective from the signing date to 31 December 2015.
In accordance with the agreement, CLIC paid AMC a basic service fee at the rate of 0.05% per annum for the
management of insurance funds. The service fee was calculated and payable on a monthly basis, by multiplying
the average book value of the assets under management (after deducting the funds obtained and interests accrued
for from repurchase transactions, debt and equity investment schemes, project asset-backed schemes, the principal
and interests of customized non-standard products) at the beginning and the end of any given month by the rate of
0.05%, divided by 12. At the end of each year, CLIC assessed the investment performance of the assets managed by
AMC, compared actual results against benchmark returns and made adjustment to the basic service fee.
194
33
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(e) Transactions with significant related parties (continued)
Notes (continued):
(ii.b) On 24 January 2014, CL Overseas renewed an investment management agreement with AMC HK, effective from
1 January 2014 to 31 December 2014. On 27 April 2015, agreed by both parties, the agreement was automatically
renewed for another year. In accordance with the agreement, CL Overseas entrusted AMC HK to manage and
make investments of its insurance funds and paid AMC HK a basic investment management fee and an investment
performance fee. The basic investment management fee was accrued by multiplying the weighted average total
funds by the basic fee rate. The investment performance fee was calculated based on the difference between total
actual annual yield and predetermined net realized yield. The basic investment management fee was calculated and
payable on a semi-annual basis. The investment performance fee was payable according to the total actual annual
yield at the end of each year.
(ii.c) In 2015, CLP&C signed an agreement for the management of insurance funds with AMC, entrusting AMC to
manage and make investments of its insurance funds. The agreement was effective from 1 January 2015 to 31
December 2016. In accordance with the agreement, CLP&C paid AMC a fixed service fee and a variable service
fee. The fixed service fee was calculated and payable on a monthly basis, by multiplying the average net asset value
of each category assets under management at the beginning and the end of any given month by the responding
annual investment management fee rate, divided by 12. The variable service fee was linked to investment
performance.
The following table summarises the balances due from and to significant related parties. The balances are
non-interest bearing, unsecured and have no fixed repayment dates except for the deposits with CGB and
the subordinated debts and corporate bonds issued by Sino-Ocean.
(ii.d) On 31 December 2014, the Company and CLI signed a management agreement of alternative investment of
insurance funds, which was effective for 1 year from 1 January 2015. In accordance with the agreement, the
Company entrusted CLI to engage in specialized investment, operation and management of equities, real estates
and related financial products, securitized financial products under the instructions of the annual guidelines. The
Company paid CLI an asset management fee and a performance related bonus based on the agreement. For fixed-
income projects, the management fee rate is 0.05%-0.6% according to a different range of returns and without
performance related bonus; for non-fixed-income projects, the management fee rate is 0.3% and the performance
related bonus was linked to the return on comprehensive investment upon expiry of the project.
195
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(e)
Transactions with significant related parties (continued)
Notes (continued):
(ii.f) On 19 September 2013, the Company and AMC HK renewed the offshore investment management service
agreement, effective for two years starting from the signing date. The agreement was subject to an automatic one-
year renewal if no objections were raised by both parties upon expiry. On 19 September 2015, the agreement was
automatically renewed for another one year. In accordance with the agreement, the Company entrusted AMC HK
to manage and make investment of its insurance funds and paid AMC HK an asset management fee. The asset
management fee was calculated at a fixed rate of 0.40% of portfolio asset value and a performance bonus capped at
0.15% of portfolio asset value for assets managed on a discretionary basis. Management fees on assets managed on
a non-discretionary basis are calculated at 0.05% of portfolio asset value. The above management fee was calculated
based on the net value of the entrusted asset from the monthly reports provided by the trustee, without deducting
the monthly management fee payable. The fixed management fee was calculated monthly and payable quarterly. A
performance bonus was calculated and payable on an annual basis. Asset management fees charged to the Company
by AMC HK are eliminated in the consolidated statement of comprehensive income.
(iii)
(ii.e) On 27 December 2012, the Company and AMC entered into a renewable agreement for the management of
insurance funds, effective from 1 January 2013 to 31 December 2014. The agreement was subject to an automatic
one-year renewal if no objections were raised by both parties upon expiry. The agreement was automatically
renewed for 1 year from 1 January 2015. In accordance with the agreement, the Company entrusted AMC to
manage and make investments of its insurance funds and paid AMC a fixed service fee and a variable service fee.
The fixed annual service fee was calculated and payable on a monthly basis, by multiplying the average net value
of the assets under management by the rate of 0.05%; the variable service fee was payable annually, based on the
results of performance evaluation, at 20% of the fixed service fee per annum. The service fees were determined by
the Company and AMC based on an analysis of the cost of service, market practice and the size and composition
of the asset pool to be managed. Asset management fees charged to the Company by AMC are eliminated in the
consolidated statement of comprehensive income.
The resulting balance due from and to significant related parties of the Group
Amount due from CLIC
Amount due to CLIC
(6)
16
12
(71)
(49)
2
2
(1)
9,660
16,287
194
296
(2)
(13)
872
260
4
(40)
50
48
(6)
(5)
(325)
(225)
(7)
(3)
(1)
(i)
114
15
Amount due from CL Overseas
Amount due from CLP&C
Amount due to CLP&C
Amount due from CLI
Amount due to CLI
Amount due from CLRE
Amount due to CLRE
Amount deposited with CGB
Amount due from CGB
Amount due to CGB
Subordinated debts and corporate bonds of Sino-Ocean
Amount due from CL Ecommerce
203
Amount due to CL Ecommerce
Amount due from Pension Company
Amount due to Pension Company
Amount due to AMC
Amount due to AMC HK
198
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
526
541
(1)
(1)
21
The resulting balance due from and to subsidiaries of the Company
Notes:
197
Distribution from the Group's consolidated trust
schemes to the Company
Payment of rental, project fee and others expenses to CLRE
Property leasing expenses charged by CLI
(iv)
Asset management fee received from CLI
Payment to CLI for purchase of fixed assets
(ix)
Payment of an asset management fee to CLI
(ii.d)(viii)
167
Property leasing income received from CLI
Payment of a business management service fee to CL Ecommerce
(vi)
428222532
4
41
35
86
17
14
97
29
2221
79
89
29
Rental and a service fee received from CLP&C
(iii)
Payment of an agency fee to CLP&C
1,013
133
128
Payment of dividends from the Company to CLIC
7,729
5,797
Distribution of profits from AMC to CLIC
106
187
Asset management
fee received from CL Overseas
(ii.b)
39
Transactions between CGB and the Group
30
(ii.c)
26
11
Payment of insurance premium to CLP&C
51
50
Claim and other payments received from CLP&C
17
18
Agency fee received from CLP&C
(iii)(viii)
1,464
Asset management fee received from CLP&C
Interest on deposits received from CGB
91
838
2014
RMB million
Transactions between AMC and the Company
Payment of an asset management fee to AMC
Distribution of profits from AMC
(ii.e)(viii)
1,020
886
158
137
Transactions between Pension Company and the Company
Rental received from Pension Company
24
23
For the year ended 31 December
2015
RMB million
Agency fee received from Pension Company for entrusted
sales of annuity funds
20
12
Marketing fee income for promotion of annuity business
from Pension Company
14
19
Transactions between AMC HK and the Company
Payment of an investment management fee to AMC HK
14
11
Transactions between the Group's consolidated trust
schemes and the Company
524
(vii)
Notes
(ii.f)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Transactions with significant related parties (continued)
(e)
(v)
15
Commission expenses charged by CGB
Transactions between Sino-Ocean and the Group
Scrip dividend from Sino-Ocean
Cash dividend from Sino-Ocean (Note 8)
Interest payment of subordinated debts and
bonds received from Sino-Ocean
Project management fee paid to Sino-Ocean
Transactions between EAP and the Group
Contribution to EAP
corporate
193
268
422
8
559
131
year
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
286
For the
34
59
25
34
303
ended 31 December 2015
57
654
(919)
54
25
790
As at 31 December 2014
(6,469)
(4,382)
(982)
year
Impairment
As at 1 January 2014
(25)
Charge for the
Disposals
1
As at 31 December 2014
(24)
----(25)
(24)
(12,752)
Disposals
Accumulated depreciation
(108)
(58)
Net book value
(212)
(32)
(1,113)
As at 31 December 2014
22,114
6,527
1,373
6,332
(1,797)
1,222
As at 1 January 2014
(5,764)
(4,275)
(870)
(836)
(11,745)
Charge for the year
(762)
(761)
(166)
37,568
As at 1 January 2014
1,513
2,331
1,513
Accumulated depreciation
As at 1 January 2015
(168)
Charge for the
year
(49)
Transfer from property, plant and equipment
As at 31 December 2015
(217)
Buildings
RMB million
Net book value
As at 31 December 2015
Fair value
As at 1 January 2015
1,345
1,296
2,231
As at 31 December 2015
2,415
208
(683)
As at 1 January 2015
13,497
As at 31 December 2015
Additions
559
6,125
306
22,818
As at 31 December 2014
15,621
2,145
391
6,332
303
Transfer from property, plant and equipment
24,792
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
39
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Investment properties
Cost
As at 1 January 2015
207
(128)
The Group had the following capital commitments relating to property development projects and
4,138
For the year ended 31 December
2015
RMB million
Salaries and other benefits
Key management personnel compensation
(g)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
Buildings
Office
equipment
Cost
Property, plant and equipment
(a)
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
39
ended 31 December 2015
year
2014
RMB million
14
25
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
199
28,265
28,264,705,000
28,265
28,264,705,000
For the
RMB million
RMB million
As at 31 December 2015
No. of shares
Registered, authorised, issued and fully paid
Ordinary shares of RMB1 each
34 SHARE CAPITAL
As at 31 December 2015, most of the bank deposits of the Group were with state-owned banks; the issuers
of corporate bonds and subordinated bonds held by the Group were mainly state-owned enterprises. For
the year ended 31 December 2015, a large portion of its group insurance business of the Group were with
state-owned enterprises; the majority of bancassurance commission charges were paid to state-owned banks
and postal office; and almost all of the reinsurance agreements of the Group were entered into with a state-
owned reinsurance company.
Under IAS 24 Related Party Disclosures ("IAS 24”), business transactions between state-owned enterprises
controlled by the PRC government are within the scope of related party transactions. CLIC, the ultimate
holding company of the Group, is a state-owned enterprise. The Group's key business is insurance and
investment related and therefore the business transactions with other state-owned enterprises are primarily
related to insurance and investment activities. The related party transactions with other state-owned
enterprises were conducted in the ordinary course of business. Due to the complex ownership structure, the
PRC government may hold indirect interests in many companies. Some of these interests may, in themselves
or when combined with other indirect interests, be controlling interests which may not be known to the
Group. Nevertheless, the Group believes that the following captures the material related parties and has
applied IAS 24 exemption and disclosed only qualitative information.
(h) Transactions with state-owned enterprises
The total compensation package for the Company's key management personnel for the year ended 31
December 2015 has not yet been finalised in accordance with regulations of the relevant PRC authorities.
The final compensation will be disclosed in a separate announcement when determined. The compensation
of 2014 has been approved by the relevant authorities. The total compensation of 2014 was RMB25 million,
including a deferred payment I about RMB5 million.
As at 31 December 2014
No. of shares
year
Notes to the Consolidated Financial Statements
205
Total liabilities
223
217
20
Statutory insurance fund
5,256
Current income tax liabilities
19,023
16,883
39(p)
Deferred tax liabilities
19,431
23,182
39(0)
Other liabilities
15,850
32,266
Equity
2,114,123
1,943,137
Share capital
2,211,673
2,418,226
Total liabilities and equity
268,536
304,103
Total equity
95,265
106,375
China Life Insurance Company Limited Annual Report 2015
Retained earnings
161,672
39(r)
Reserves
28,265
28,265
7,791
39(q)
Other equity instruments
34
145,006
Premiums received in advance
ended 31 December 2015
As at 31 December 2015, the Company's share capital was as follows:
284,121
322,492
As at 31
December 2014
RMB million
December 2015
RMB million
As at 31
For the year ended 31 December 2015
Equity attributable to ordinary equity holders of non-controlling interests
Equity attributable to non-controlling interests
Equity attributable to ordinary equity holders of the Company
Equity attributable to other equity instruments holders of the Company
Equity attributable to equity holders of the Company
(b) Equity attributable to equity holders
OTHER EQUITY INSTRUMENTS (continued)
35
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
200
The Company issued Core Tier 2 Capital Securities at par with the nominal value of USD1,280 million on
3 July 2015, and obtained an approval to list such securities on the Stock Exchange of Hong Kong Limited,
effective on 6 July 2015. After a deduction of the issue expense, the total amount of the proceeds raised
from this issuance was USD1,274 million or RMB7,791 million. The issued capital securities have a term
of 60 years, extendable upon expiry. The initial distribution rate for the first five interest-bearing years is
4.00%, and the Company may redeem the securities at its option at the end of the fifth year after issuance.
If the Company does not exercise this option, the rate of distribution will be reset based on comparable US
treasury yield plus a margin of 2.294% at the end of the fifth
and every
year
five years thereafter.
314,701
284,121
7,791
3,722
reserve
fund
the equity
method
for-sale
securities
reserves
Other
Share
premium
translating
Statutory Discretionary
7,791
under
Exchange
differences on
of investees
Share of other
Unrealised comprehensive
gains/ income
(losses) from
36 RESERVES
Refer to Note 32 for the information of distribution to other equity instruments holders of the Company
for the year
ended 31 December 2015. As at 31 December 2015, there were no accumulated distributions
unpaid attributable to other equity instruments holders of the Company.
3,210
3,722
3,210
available-
34 SHARE CAPITAL (continued)
1,280
1,280
1,500
1,500,000,000
8,941
8,941,175,000
19,324
19,323,530,000
RMB million
No. of shares
As at 31 December 2015
(ii)
All shares owned by CLIC are domestic listed shares.
(i)
Overseas listed (ii)
Total
Including: Domestic listed
Owned by other equity holders
Owned by CLIC (i)
7,441,175,000
7,441
28,264,705,000
28,265
Total
7,791
1,280
7,791
1,280
Core Tier 2 Capital Securities
RMB million
RMB million Quantity million
7,791
RMB million Quantity million
Quantity million
As at 31
December 2015
Decrease
Increase
As at 31
December 2014
(a) Basic information
35 OTHER EQUITY INSTRUMENTS
Overseas listed shares are traded on the Stock Exchange of Hong Kong and the New York Stock Exchange.
RMB million Quantity million
25,617
30,092
Annuity and other insurance balances payable
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
585
524
17
13
361
253
207
258
RMB million
As at 31
December 2014
As at 31
December 2015
RMB million
203
39
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS
Statement of financial position
As at 31 December 2015
Investments in associates and joint ventures
11,705
11,843
39(c)
Investments in subsidiaries
1,345
1,296
39(b)
Total
Investment properties
26,421
39(a)
Property, plant and equipment
As at 31
December 2014
RMB million
RMB million
Notes
As at 31
December 2015
ASSETS
24,792
39(d)
Later than five years
Later than one year but not later than five
As at 31
December 2014
As at 31
December 2015
The future minimum lease payments under non-cancellable operating leases are as follows:
(b) Operating lease commitments - as lessee
33,903
36,307
9,887
87
23,929
30,453
5,820
34
RMB million
RMB million
As at 31
December 2014
As at 31
December 2015
Total
Property, plant and equipment
Others
Investments
Contracted, but not provided for
Not later than one year
Later than one year but not later than five
years
Later than five years
Not later than one year
The future minimum rentals receivable under non-cancellable operating leases are as follows:
as lessor
-
(c) Operating lease commitments
The operating lease payments charged to profit before income tax for the year ended 31 December 2015
were RMB857 million (2014: RMB774 million).
1,312
1,275
years
10
753
721
549
534
ཚཊྚ॰
RMB million
RMB million
Total
20
27,810
27,044
Held-to-maturity securities
Insurance contracts
Liabilities
LIABILITIES AND EQUITY
As at 31 December 2015
Statement of financial position (continued)
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
2,211,673
2,418,226
204
Total assets
42,984
74,750
17,969
16,294
As at 31
December 2015
Notes
RMB million
As at 31
December 2014
RMB million
44,538
30,368
39(n)
Securities sold under agreements to repurchase
67,989
67,994
17
Bonds payable
39(m)
74,745
Policyholder dividends payable
72,275
84,106
15
Investment contracts
1,603,446
1,715,985
14
107,774
1,032
1,420
12
39(i)
Available-for-sale securities
5,653
5,653
39(h)
-
Statutory deposits – restricted
685,471
766,799
560,807
Term deposits
165,913
203,152
39(f)
Loans
516,710
503,489
39(e)
39(g)
reserve
605,245
39(j)
Cash and cash equivalents
Other assets
Disposals
Reinsurance assets
11,166
11,913
11
Premiums receivable
Securities at fair value through profit or loss
43,981
39(1)
Accrued investment income
11,841
21,461
39(k)
Securities purchased under agreements to resell
38,822
135,733
49,385
General
investments:
fund
19,286
As at 1 January 2014
RMB million
Total
Leasehold
Assets under
construction improvements
vehicles
Motor
equipment
furniture
and fixtures
Buildings
Office
6,606
Cost
(a)
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
206
26,421
356
7,544
378
1,829
Property, plant and equipment (continued)
1,429
6,125
1,142
(1,680)
166
(22)
Additions
51
341
128
2,955
8
3,483
Disposals
(64)
12
3,613
2
336
175
Additions
(45)
100
(3,194)
268
2,781
Transfers upon completion
34,588
16,314
As at 31 December 2015
24,792
303
(115)
(134)
(639)
(813)
Charge for the year
(12,752)
(919)
(982)
(4,382)
(6,469)
As at 1 January 2015
Accumulated depreciation
40,262
1,282
7,544
1,368
6,481
23,587
As at 31 December 2015
(767)
(114)
(63)
(133)
(393)
foreign
(1,701)
6
Disposals
369
6,332
391
2,145
(24)
----(24)
As at 1 January 2015
Net book value
(24)
As at 31 December 2015
49
(24)
Disposals
year
Charge for the
As at 1 January 2015
Impairment
(13,817)
(926)
(990)
(4,652)
(7,249)
As at 31 December 2015
636
108
126
33
1,486
15,621
37,568
296
296
Others
10,090
3,492
3,160
Appropriation to reserves
7,076
3
364
6,709
Other comprehensive income for the year
145,919
21,747
21,627
24,801
(184)
As at 31 December 2015
23,254
53,860
29,963
Approved at the Annual General Meeting in May 2015, the Company appropriated RMB3,160 million to the
discretionary reserve fund for the year ended 31 December 2014 based on net profit under CAS (2014: RMB2,470
million).
Pursuant to the relevant PRC laws, the Company appropriated 10% of its net profit under Chinese Accounting Standards
("CAS”) to statutory reserve which amounted to RMB3,438 million for the year ended 31 December 2015 (2014:
RMB3,160 million).
(c)
(b)
(a)
36 RESERVES (continued)
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
201
163,381
25,239
24,787
28,239
180
1,113
Pursuant to "Financial Standards of Financial Enterprises-Implementation Guide" issued by the Ministry of Finance of the
PRC on 30 March 2007, for the year ended 31 December 2015, the Company appropriated 10% of net profit under CAS
which amounted to RMB3,438 million to the general reserve for future uncertain catastrophes, which cannot be used for
dividend distribution or conversion to share capital increment (2014: RMB3,160 million). In addition, pursuant to the
CAS, the Group appropriated RMB54 million to the general reserve of its subsidiaries attributable to the Company in the
consolidated financial statements (2014: RMB42 million).
817
53,860
39,089
Other comprehensive income for the year
97,029
18,545
19,157
21,641
(327)
(15,835)
53,860
As at 1 January 2014
(c)
(b)
(a)
RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
Total
reserve operations
Transfers upon completion
143
416
39,232
3,160
As at 1 January 2015
145,919
(3)
21,747
21,627
24,801
(184)
23,254
817
53,860
As at 31 December 2014
826
826
Others
8,832
3,202
2,470
Appropriation to reserves
Under related PRC law, dividends may be paid only out of distributable profits. Any distributable profits that are
not distributed in a given year are retained and available for distribution in subsequent years.
3,438
The following is a summary of the significant contingent liabilities:
1,222
6,332
1,373
6,527
22,114
As at 1 January 2015
RMB million
Total
construction improvements
vehicles
Leasehold
Motor Assets under
37 PROVISIONS AND CONTINGENCIES
furniture
and fixtures
389
Pending lawsuits
As at 31
December 2015
RMB million
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
38
COMMITMENTS
The Group involves in certain lawsuits arising from the ordinary course of businesses. In order to accurately
disclose the contingent liabilities for pending lawsuits, the Group analysed all pending lawsuits case by case at the
end of each reporting period. A provision will only be recognised if management determines, based on third-party
legal advice, that the Group has present obligations and the settlement of which is expected to result in an outflow
of the Group's resources embodying economic benefits, and the amount of such obligations could be reasonably
estimated. Otherwise, the Group will disclose the pending lawsuits as contingent liabilities. As at 31 December
2015 and 2014, the Group had other contingent liabilities but disclosure of such was not practical because the
amounts of liabilities could not be reliably estimated and were not material in aggregate.
(a) Capital commitments
440
RMB million
As at 31
December 2014
202
36,887
38,822
135,733
22,058
42,745
Total
Subtotal
21,559
Common stocks
401
5,858
Funds
Equity securities
16,764
92,988
Debt securities
14,782
86,816
499
Listed in mainland, PRC
8,194
5,098
352
Subtotal
Total
42,745
22,058
135,733
4,149
38,822
216
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(k) Securities purchased under agreements to sell
Maturing:
Unlisted debt securities include those traded on the Chinese interbank market and those not publicly traded.
Unlisted equity securities include those not traded on stock exchanges, which are mainly open-ended funds
with public market price quotation.
254
1,728
6,099
Listed overseas
Listed overseas
56
Unlisted
84,738
11,666
Subtotal
Unlisted
92,988
Equity securities
Listed in mainland, PRC
32,427
21,706
Listed in Hong Kong
70
16,764
5,218
As at 31
December 2015
RMB million
119,987
After ten years
120,003
120,485
Total
215
399,810
394,035
China Life Insurance Company Limited Annual Report 2015
RMB million
Notes to the Consolidated Financial Statements
Within 30 days
112,012
For the
ended 31 December 2015
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(j)
As at 31
December 2014
Securities at fair value through profit or loss
Debt securities
Government bonds
Government agency
bonds
Corporate bonds
Others
Subtotal
year
553
After five years but within ten years
135,733
85,403
71,548
Listed in Hong Kong, PRC
8,391
8,303
Listed in Singapore
172
Unlisted
273,023
131,359
Subtotal
Total
139,624
366,989
766,799
605,245
Unlisted debt securities include those traded on the Chinese interbank market and those not publicly
traded. Unlisted equity securities include those not traded on stock exchanges, which are mainly open-
ended funds with public market price quotation.
Debt securities - Contractual maturity schedule
Maturing:
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
Within one year
32,062
13,939
After one year but within five
years
211,210
Total
Cost
Bank deposits
Debt securities
16,294
Total
3,240
2,147
Others
625
756
Due from related parties
2,449
936
Tax refundable
2,281
2,520
Automated policy loans
3,431
4,126
5,943
5,809
Investments receivable
Land use rights
As at 31
December 2014
RMB million
RMB million
As at 31
December 2015
(m) Other assets
30,368
17,969
Current
Non-current
Total
(n) Securities sold under agreements to repurchase
218
Total
After 90 days
3,000
Within 30 days
41,538
30,368
Maturing:
44,538
30,368
4,039
2,902
Listed in mainland, PRC
40,499
RMB million
As at 31
December 2014
As at 31
December 2015
RMB million
17,969
16,294
6,063
5,900
11,906
10,394
Total
Stock exchange market
Interbank market
27,466
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
12,377
18,256
Non-current
31,604
31,129
Current
43,981
49,385
1,596
2,131
15,450
15,642
Total
26,935
As at 31
December 2014
RMB million
December 2015
RMB million
As at 31
11,841
21,461
11,841
21,461
As at 31
December 2014
RMB million
RMB million
As at 31
December 2015
Total
Others
31,612
(1) Accrued investment income
49,385
China Life Insurance Company Limited Annual Report 2015
39
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Investment properties (continued)
As at 1 January 2014
Additions
Transfer from property, plant and equipment
As at 31 December 2014
Buildings
RMB million
1,513
1,513
Accumulated depreciation
As at 1 January 2014
43,981
(119)
year
(49)
Transfer from property, plant and equipment
As at 31 December 2014
(168)
Net book value
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
39
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
Charge for the
Equity securities
Corporate bonds
399,810
Investment management
No. 798 Collective Fund
Trust Scheme (the second batch)
Jiao Yin Guo Xin-Wen Jian
98.00% directly
RMB500 million
Investment management
No. 1119 Collective Fund
Trust Scheme
Shang Xin Jing Neng Jin Tai
66.67% directly
RMB1,500 million
Investment management
Indemnificatory Housing
Collective Fund Trust Scheme
(d) Investments in associates and joint ventures
As at 1 January
Investments in associates and joint ventures
Scrip dividend
RMB2,000 million
As at 31 December
100.00% directly
RMB4,000 million
2,195
1,345
1,394
As at 31 December 2014
As at 1 January 2014
Fair value
As at 31 December 2014
Investment Fund
CL AMP Zengjinbao Money
Market Fund
57.67% directly
RMB262 million
Investment management
CL AMP Xinqianbao Money
Market Fund
Shang Xin Lv Di Collective
Fund Trust Scheme
Jiao Yin Guo Xin-Wen Jian
99.98% directly and indirectly
As at 1 January 2014
Investment management
49.00% directly and indirectly
Investment management
2,231
211
2014
Listed in mainland, PRC
Unlisted
Total
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
79,438
88,843
126,097
126,140
145,824
146,027
152,130
155,700
503,489
516,710
61,916
68,199
Debt securities
2015
Total
Corporate bonds
RMB million
RMB million
27,044
766
23,976
2,800
268
27,810
27,044
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(e) Held-to-maturity securities
Debt securities
Government bonds
Government agency bonds
Subordinated bonds/debts
441,573
The fair value of investment properties of the Company as at 31 December 2015 amounted to RMB2,415
million (as at 31 December 2014: RMB2,231 million), which was estimated by the Company having regards
to valuations performed by an independent appraiser. The investment properties were classified as Level 3 in
the fair value hierarchy.
China Life Insurance Company Limited Annual Report 2015
100.00% indirectly
100.00% directly
Jersey Island
PRC
Rui Chong Company
King Phoenix Tree Limited
Investment
Financial service
Asset management
Investment in
retirement properties
Fund management
Not Applicable
100.00% directly
Hong Kong, PRC
Golden Phoenix Tree Limited
RMB200 million
100.00% indirectly
PRC
CL Wealth
RMB588 million
85.03% indirectly
Not Applicable
PRC
Investment
Investment
44,538
Investment management
RMB867 million
CL AMP Zunxiang Bond Securities 30.68% directly and indirectly
Principal activities
Funds/trust received
Percentage of shares held
Name
(ii) The table below presents the basic information of the Company's consolidated structured entities as at
31 December 2015:
Investments in subsidiaries (continued)
(c)
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
210
Non-controlling interests in subsidiaries are not significant to the Company.
RMB6,800 million
209
CL AMP
100.00% directly
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December
11,705
11,843
RMB million
RMB million
31 December
2014
2015
31 December
As at
As at
Unlisted investments at cost
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(c) Investments in subsidiaries
39
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
2015:
Not applicable
RMB300 million
Place of
incorporation
and operation
PRC
Suzhou Pension Company
50.00% indirectly
Hong Kong, PRC
AMC HK
and indirectly
Asset management
Pension and annuity
RMB4,000 million
RMB3,400 million
74.27% directly
PRC
Pension Company
60.00% directly
PRC
AMC
Principal activities
Registered capital
Percentage of
equity interest held
Name
394,035
448,511
516,710
RMB million
25,258
25,913
145,399
138,487
205,149
205,620
19,298
22,798
4,706
1,217
Subtotal
399,810
394,035
Equity securities
Funds
162,563
Others (i)
82,714
Subordinated bonds/debts
Government bonds
Contractual maturity schedule:
Within one year
After one year but within five years
Total
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
300
5,353
5,653
5,653
5,653
Insurance companies in China are required to deposit an amount that equals to 20% of their registered
capital with banks in conformity with regulations of the CIRC. These funds may not be used for any
purpose, other than to pay off debts during liquidation proceedings.
Available-for-sale securities
As at 31
December 2015
As at 31
December 2014
RMB million
Available-for-sale securities, at fair value
Debt securities
Government agency bonds
(i)
Common stocks
71,592
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
Available-for-sale securities (continued)
(i)
(i) Other available-for-sale securities mainly include unlisted equity investments and private equity
funds, etc. The Company did not guarantee or provide any financing support for other available-for-
sale securities, and considers that the carrying value of other available-for-sale securities represents its
maximum risk exposure.
Debt securities
Listed in mainland, PRC
Listed in Singapore
Unlisted
Subtotal
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
41,549
266
45,707
260
357,995
348,068
China Life Insurance Company Limited Annual Report 2015
74,592
605,245
15,259
Preferred stocks
18,712
3,000
Wealth management products
50,053
21,038
Others (i)
40,310
17,607
Subtotal
346,230
195,951
Available-for-sale securities, at cost
Equity securities
Others (i)
Total
214
20,759
766,799
503,489
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(h) Statutory deposits – restricted
year
503,489
516,710
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
39
(f) Loans
Policy loans
Other loans
Total
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
84,959
73,654
118,193
212
92,259
Total
248,127
The estimated fair value of all held-to-maturity securities was RMB550,199 million as at 31 December 2015
(as at 31 December 2014: RMB525,949 million).
Unlisted debt securities include those traded on the Chinese interbank market.
Debt securities - Contractual maturity schedule
Maturing:
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
Within one year
2,000
11,816
After one year but within five
years
86,072
70,477
After five years but within ten years
167,290
149,837
After ten years
284,580
ended 31 December 2015
203,152
As at 31
Maturing:
Within one year
After one year but within five
years
After five years but within ten years
179,965
195,529
380,842
463,442
26,500
Total
560,807
685,471
213
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
As at 31
December 2014
RMB million
165,913
As at 31
December 2015
RMB million
203,152
December 2015
RMB million
As at 31
December 2014
RMB million
Maturing:
Within one year
90,102
80,137
After one year but within five
years
80,311
53,665
After five years but within ten years
24,039
32,111
After ten years
8,700
Total
(g) Term deposits
165,913
RMB257 million
217
68.4
Total
in total
in total
RMB Thousand
Yang Mingsheng
486.7
1,072.4
1,559.1
536.2
contribution
302.5
1,960.3
536.2
1,424.1
Wan Feng
109.5
241.3
350.8
120.6
70.1
98.7
in kind
income salary income
bonuses
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
(a) Directors' and chief executive's emoluments (continued)
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the
ended 31 December 2014 are as follows:
year
Deferred
Deferred
Performance
Subtotal
payment
Pension
payment
Actual paid
related
of salary
included in
Benefits
scheme
included
included
Name
Basic salaries
23.6
For the year ended 31 December 2015
444.5
323.9
250.0
70.0
320.0
Anthony Francis Neoh
250.0
50.0
300.0
320.0
320.0
Bruce Douglas Moore
300.0
Tang Jianbang
Su Hengxuan
216.6
477.2
693.8
238.6
135.3
49.0
878.1
300.0
Sun Changji
Wang Sidong
Zhang Xiangxian
Lin Dairen
436.8
962.4
1,399.2
481.2
275.0
95.9
1,770.1
481.2
1,288.9
Liu Yingqi
108.3
238.6
346.9
119.3
69.7
23.5
440.1
119.3
320.8
Miao Jianmin
120.6
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
224
(a) Directors' and chief executive's emoluments
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the year
ended 31 December 2015 are as follows:
Name
Remuneration
paid Benefits in kind
Pension scheme
contributions
Total
RMB Thousand
Yang Mingsheng
The total compensation package for these directors, supervisors, chief executive and senior management for the
year ended 31 December 2015 has not yet been finalised in accordance with regulations of the relevant PRC
authorities. The amount of the compensation not provided for is not expected to have a significant impact on
the Group's 2015 consolidated financial statements. The final compensation will be disclosed in a separate
announcement when determined.
435.2
105.4
601.9
Lin Dairen
397.8
213.4
100.6
711.8
Miao Jianmin
Zhang Xiangxian
61.3
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION
ended 31 December 2015
year
(iii) Operating lease commitments - as lessor
The future minimum rentals receivable under non-cancellable operating leases are as follows:
Not later than one year
Later than one year but not later than five
Later than five years
years
Total
223
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
272
222
261
389
13
17
546
628
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
Wang Sidong
Bruce Douglas Moore (i)
133.3
133.3
196.7
63.8
51.9
312.4
Liu Jiade (vi)
Robinson Drake Pike (vii)
160.0
160.0
(i)
Bruce Douglas Moore retired as independent director on 28 May 2015.
(ii)
Su Hengxuan resigned as executive director on 8 May 2015.
(iii)
Miao Ping retired as executive director on 28 May 2015.
(iv)
Huang Yiping resigned as independent director on 26 August 2015. The resignation became effective on 7 March
2016, pursuant to the CIRC's approval on the qualification of a newly appointed independent director.
(v)
Xu Hengping and Xu Haifeng were appointed as executive directors on 11 July 2015.
(vi)
Liu Jiade was appointed as non-executive director on 11 July 2015.
(vii) Robinson Drake Pike was appointed as independent director on 11 July 2015.
Xu Haifeng (v)
238.6
314.6
68.2
Su Hengxuan (ii)
131.1
99.0
32.7
262.8
Anthony Francis Neoh
300.0
300.0
Miao Ping (iii)
196.7
145.3
49.2
391.2
Chang Tso Tung Stephen
320.0
320.0
Huang Yiping (iv)
320.0
320.0
Xu Hengping (v)
196.7
49.7
1,194
639.5
216.6
62.5
62.5
62.5
Yang Cuilian
615.5
472.6
1,088.1
291.2
90.2
12.5
1,469.5
Li Xuejun
589.8
480.2
1,070.0
285.3
88.7
1,444.0
1,444.0
Xiong Junhong
1,469.5
50.0
Luo Zhongmin
1,508.8
Total
in total
in total
RMB Thousand
Xia Zhihua
433.1
954.4
1,387.5
477.2
275.6
95.9
1,759.0
477.2
1,281.8
Shi Xiangming
615.5
514.4
1,129.9
288.4
90.5
1,508.8
The compensation amounts disclosed above for these supervisors for the year ended 31 December 2014 were
restated based on the finalised amounts determined during 2015.
in kind contribution
The supervisors received the compensation amounts disclosed above during their term of office in 2015 and
226
RMB0- RMB1,000,000
RMB1,000,001 - RMB2,000,000
RMB2,000,001 - RMB3,000,000
RMB3,000,001 - RMB4,000,000
RMB4,000,001 - RMB4,500,000
5
25
For the year ended 31 December 2015, no emoluments have been paid by the Company to the directors,
chief executive, supervisors or any of the five highest paid individuals as an inducement to join or upon
joining the Company or as compensation for loss of office (for the year ended 31 December 2014: Nil).
The emoluments of the five highest paid individuals are the total emoluments paid to them during the year.
2014
There was no arrangement under which a director, chief executive or supervisor waived or agreed to waive
any remuneration during the year.
On 29 February 2016, the Company entered into an acquisition agreement with Citigroup Inc. (“Citigroup”)
and a tripartite share transfer agreement with IBM Credit LLC (“IBM Credit”) and Citigroup. According to
the agreements, the Company will acquire 3,648,276,645 shares of CGB from Citigroup and IBM Credit
(3,080,479,452 shares from Citigroup and 567,797,193 shares from IBM Credit) with a total consideration
of RMB23.3 billion at RMB6.39 per share. Upon the completion of this transaction, the Company will hold
6,728,756,097 shares of CGB, a 43.686% ownership interest. This transaction will not render CGB a consolidated
subsidiary of the Company. Up to the approval date of these consolidated financial statements, this transaction is
still pending approval of the relevant regulatory departments.
227
China Life Insurance Company Limited Annual Report 2015
Embedded Value
BACKGROUND
China Life Insurance Company Limited prepares financial statements to public investors in accordance with the relevant
accounting standards. An alternative measure of the value and profitability of a life insurance company can be provided
by the embedded value method. Embedded value is an actuarially determined estimate of the economic value of the life
insurance business of an insurance company based on a particular set of assumptions about future experience, excluding
the economic value of future new business. In addition, the value of one year's sales represents an actuarially determined
estimate of the economic value arising from new life insurance business issued in one year based on a particular set of
assumptions about future experience.
China Life Insurance Company Limited believes that reporting the Company's embedded value and value of one
year's sales provides useful information to investors in two respects. First, the value of the Company's in-force business
represents the total amount of distributable earnings, in present value terms, which can be expected to emerge over time,
in accordance with the assumptions used. Second, the value of one year's sales provides an indication of the value created
for investors by new business activity based on the assumptions used and hence the potential of the business. However,
the information on embedded value and value of one year's sales should not be viewed as a substitute of financial
measures under the relevant accounting basis. Investors should not make investment decisions based solely on embedded
value information and the value of one year's sales.
It is important to note that actuarial standards with respect to the calculation of embedded value are still evolving. There
is still no universal standard which defines the form, calculation methodology or presentation format of the embedded
value of an insurance company. Hence, differences in definition, methodology, assumptions, accounting basis and
disclosures may cause inconsistency when comparing the results of different companies.
Also, the calculation of embedded value and value of one year's sales involves substantial technical complexity and
estimates can vary materially as key assumptions are changed. Therefore, special care is advised when interpreting
embedded value results.
EVENTS AFTER THE REPORTING PERIOD
Number of individuals
2015
The emoluments fell within the following bands:
9,046
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
(c) Five highest paid individuals
The five individuals whose emoluments were the highest in the Company include five supervisors (2014:
three directors and one supervisor).
41
Details of remuneration of the five highest paid individuals are as follows:
2015
2014
RMB
RMB
Thousand
Thousand
Basic salaries, housing allowances, other allowances and benefits in kind
Pension scheme contributions
7,347
8,557
476
489
Total
7,823
2014.
included
included
scheme
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
(b) Supervisors' emoluments
The aggregate amounts of emoluments paid to supervisors of the Company for the
2015 are as follows:
year
225
ended 31 December
Remuneration
paid
Benefits in kind
Pension scheme
contributions
Total
RMB Thousand
Xia Zhihua (i)
229.5
155.9
Name
In addition to the directors' emoluments disclosed above, certain directors of the Company receive
emoluments from CLIC, the amounts of which have not been apportioned between their services to the
Company and their services to CLIC.
The directors and chief executive received the compensation amounts disclosed above during their term of
office in 2015 and 2014.
year ended 31
477.2
693.8
238.6
135.3
49.0
878.1
238.6
639.5
Chang Tso Tung Stephen
62.5
17.5
80.0
80.0
80.0
Huang Yiping
62.5
17.5
80.0
80.0
80.0
The compensation amounts disclosed above for these directors and the chief executive for the
December 2014 were restated based on the finalised amounts determined during 2015.
57.6
443.0
Shi Xiangming
1,261.4
88.7
47.8
695.6
(i)
Xia Zhihua, Yang Cuilian and Li Xuejun retired as supervisors on 11 July 2015.
(ii)
Miao Ping was appointed as supervisor on 11 July 2015, and was appointed as the chairman of board of supervisors
on 24 July 2015.
(iii)
Zhan Zhong and Wang Cuifei were appointed as supervisors on 11 July 2015.
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December
2014 are as follows:
Performance
related
Subtotal
Name
Basic salaries
bonuses
Deferred
payment
of salary
included in
income salary income
Deferred
Pension
payment
Actual paid
Benefits
559.1
Miao Ping
Wang Cuifei (iii)
49.8
245.6
96.5
1,603.5
Yang Cuilian (i)
677.6
163.9
54.3
895.8
Li Xuejun (i)
732.8
161.0
53.8
947.6
Xiong Junhong
Miao Ping (ii)
196.7
51.6
316.7
Zhan Zhong (iii)
684.3
87.7
821.8
The values shown below do not consider the future financial impact of transactions between the Company and CLIC,
CLI, AMC, Pension Company, CLP&C, and etc.
1,159
20
comprehensive income
(Charged)/credited to other
4,349
142
534
3,673
(Charged)/credited to net profit
(19,023)
930
(11,637)
(8,316)
As at 1 January 2015
(19,023)
930
- Available-for-sale securities
(11,637)
As at 31 December 2014
2,759
2,759
policyholders
attributable to participating
(15,762)
10
(1,337)
(62)
(1,827)
(4,683)
992
5,952
(11,627)
552
(8,316)
(5,401)
(5,401)
- Portion of fair value changes on
6,134
11,800
1,929
2,553
4,205
9,247
As at 31
December 2014
RMB million
As at 31
December 2015
RMB million
Subtotal
- deferred tax assets to be recovered within 12 months
- deferred tax assets to be recovered after 12 months
Deferred tax assets:
is as follows:
year
(ii) The analysis of deferred tax assets and deferred tax liabilities during the
Taxation (continued)
(p)
available-for-sale securities
attributable to participating
policyholders
3,192
3,192
As at 31 December 2015
(1,451)
Total
RMB million
(16,504)
(16,883)
220
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
1,072
Deferred tax liabilities:
Others
RMB million
Investments
634
Payable to constructors
1,025
845
Stock appreciation rights (Note 31)
1,044
1,045
Interest payable of subordinated debts
761
1,117
Agent deposits
1,919
2,598
Commission and brokerage payable
778
4,006
Salary and welfare payable
5,008
6,410
Interest payable to policyholders
RMB million
As at 31
December 2014
As at 31
December 2015
RMB million
(o) Other liabilities
For debt repurchase transactions through the stock exchange, the Company is required to deposit certain
exchange-traded bonds into a collateral pool with fair value converted at a standard rate pursuant to the
stock exchange's regulation which should be no less than the balance of the related repurchase transaction.
As at 31 December 2015, the carrying value of securities deposited in the collateral pool was RMB66,027
million (as at 31 December 2014: RMB49,308 million). The collateral is restricted from trading during the
period of the repurchase transaction.
As at 31 December 2015, bonds with a carrying value of RMB28,185 million (as at 31 December 2014:
RMB42,131 million) were pledged as collateral for financial assets sold under agreements to repurchase
resulted from repurchase transactions entered into by the Company in the interbank market.
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(n) Securities sold under agreements to repurchase (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
4,561
Tax payable
484
693
Insurance
RMB million
available-for-sale securities
- Portion of fair value changes on
- Available-for-sale securities
comprehensive income
(Charged)/credited to other
(Charged)/credited to net profit
As at 1 January 2014
Deferred tax assets/(liabilities)
(i) The movements in deferred tax assets and liabilities during the year are as follows:
(p) Taxation
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
Others
5,488
4,197
Total
Current
Non-current
RMB million
Total
23,182
19,431
23,182
19,431
23,182
19,431
219
- deferred tax liabilities to be settled after 12 months
(15,762)
(23,709)
39
389
440
RMB million
As at 31
December 2014
December 2015
RMB million
As at 31
222
Pending lawsuits
The following is a summary of the significant contingent liabilities:
Provisions and contingencies
161,672
25,027
24,787
China Life Insurance Company Limited Annual Report 2015
28,191
53,860
As at 31 December 2015
10,036
3,438
3,160
3,438
6,630
6,630
income for the year
Appropriation to reserves
Other comprehensive
145,006
21,589
21,627
24,753
29,807
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
690
644
494
495
RMB million
RMB million
As at 31
December 2014
As at 31
December 2015
(26,500)
Later than five years
Later than one year but not later than five years
Not later than one year
The future minimum lease payments under non-cancellable operating leases are as follows:
33,903
36,199
87
9,887
(t) Commitments
(i) Capital commitments
Capital commitments of the Company relating to property development projects and investments:
(ii)
Contracted, but not provided for
Investments
23,177
Property, plant and equipment
Total
Operating lease commitments - as lessee
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
31,314
4,851
34
23,929
Others
53,860
Total
145,006
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(r) Reserves
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
221
Refer to Note 32 for the information of distribution to other equity instruments holders of the Company
for the year ended 31 December 2015. As at 31 December 2015, there were no accumulated distributions
unpaid attributable to other equity instruments holders of the Company.
268,536
268,536
7,791
296,312
304,103
Equity attributable to other equity instruments holders of the Company
Equity attributable to ordinary equity holders of the Company
Equity attributable to equity holders of the Company
RMB million
As at 1 January 2015
- deferred tax liabilities to be settled within 12 months
(2,183)
(1,448)
Subtotal
(28,683)
(s)
(25,157)
(16,883)
(19,023)
(q) Other equity instruments
As at 31
December 2015
As at 31
December 2014
RMB million
Net deferred tax liabilities
Unrealised
gains/(losses)
from
228
Share premium
97,205
39,011
39,011
3,160
2,470
3,160
Appropriation to reserves
8,790
As at 31 December 2014
53,860
24,753
21,627
available-for-sale
21,589
18,429
19,157
23,177
(15,834)
21,593
Discretionary
reserve fund
reserve
RMB million
RMB million
General
RMB million
53,860
RMB million
As at 1 January 2014
Other comprehensive
income for the year
Statutory
reserve fund
Total
RMB million
securities
RMB million
Using 2014 EV assumptions
Note: Taxable income is based on earnings calculated using solvency reserves for Scenarios 1 to 16.
31,338
possible scenario
Treatment Related to Insurance Contracts" under one
in accordance to the "Provisions on the Accounting
Taxable income based on the accounting profit
17.
32,291
297,864
234
292,818
32,395
29,388
269,973
Solvency margin at 150% of statutory minimum
15.
291,947
10% decrease in claim ratio of short term business
14.
30,662
291,150
13. 10% increase in claim ratio of short term business
China Life Insurance Company Limited Annual Report 2015
Embedded Value
31,704
16.
TOWERS WATSON'S REVIEW OPINION REPORT ON EMBEDDED VALUE
Based on the scope of work above, we have concluded that:
China Life Insurance Company Limited (“China Life") has prepared embedded value results for the financial year ended
31 December 2015 ("EV Results”). The disclosure of these EV Results, together with a description of the methodology
and assumptions that have been used, are shown in the Embedded Value section.
The cover photo of the printed version of this report was photographed by
Mr. Wu Chang, a retired employee of CLIC.
In case of any discrepancy between the Chinese version and the English version of
this report, the Chinese version shall prevail; in case of any discrepancy between
the printed version and the website version of this report, the website version shall
prevail.
◎ 国家
236
Wesley Cui
23rd March 2016
Michael Freeman
For and on behalf of Towers Watson
the EV Results have been prepared, in all material respects, in accordance with the methodology and assumptions
set out in the Embedded Value section.
no changes have been assumed to the treatment of tax, but some sensitivity results relating to tax have been shown
by China Life; and
the operating assumptions used by China Life have been set with appropriate regard to past, current and expected
future experience;
the economic assumptions used by China Life are internally consistent, have been set with regard to current
economic conditions, and have made allowance for the company's current and expected future asset mix and
investment strategy;
the embedded value methodology used by China Life is consistent with the requirements of the “Life Insurance
Embedded Value Reporting Guidelines" issued by the CIRC. It is noted that the China Risk Oriented Solvency
System ("C-ROSS”) requirements have not been considered in the embedded value results as of 31 December
2015, as updated Chinese EV guidance under C-ROSS has not been released. The methodology applied by China
Life is a common methodology used to determine embedded values of life insurance companies in China at the
current time;
294,595
Opinion
Embedded Value
China Life Insurance Company Limited Annual Report 2015
235
In carrying out our review, we have relied on the accuracy of audited and unaudited data and information provided by
China Life.
a review of the results of China Life's calculation of the EV Results.
a review of the economic and operating assumptions used to develop the embedded value and value of one year's
sales as at 31 December 2015;
a review of the methodology used to develop the embedded value and value of one year's sales as at 31 December
2015, in the light of the requirements of the “Life Insurance Embedded Value Reporting Guidelines” issued by the
China Insurance Regulatory Commission (“CIRC”) in September 2005;
scope of work covered:
Our
•
Scope of work
China Life has engaged Towers Watson Management Consulting (Shenzhen) Co. Ltd. Beijing Branch ("WTW") to
review its EV Results. This report is addressed solely to China Life in accordance with the terms of our engagement
letter, and sets out the scope of our work and our conclusions. To the fullest extent permitted by applicable law, we do
not accept or assume any responsibility, duty of care or liability to anyone other than China Life for or in connection
with our review work, the opinions we have formed, or for any statement set forth in this report.
To The Directors of China Life Insurance Company Limited
10% decrease in morbidity rates
10% decrease in mortality rate for non-annuity products
31,355
4.
37,274
338,279
10% increase in investment return
3.
33,222
306,029
Risk discount rate of 10.5%
2.
29,953
278,043
Risk discount rate of 11.5%
245,077
1.
291,549
Base case scenario
VALUE OF ONE YEAR'S
SALES AFTER COST OF
SOLVENCY MARGIN
RMB million
SOLVENCY MARGIN
VALUE OF IN-FORCE
BUSINESS AFTER COST OF
Sensitivity Results
Table 4
Sensitivity testing was performed using a range of alternative assumptions. In each of the sensitivity tests, only the
assumption referred to was changed, with all other assumptions remaining unchanged. The results are summarized
below:
SENSITIVITY RESULTS
Embedded Value
(4,155)
31,528
25,789
5.
10% increase in
288,533
10% increase in morbidity rates
11.
32,029
292,199
10% decrease in lapse rates
10.
30,959
290,806
10% increase in lapse rates
9.
31,669
293,398
and 10% increase in mortality rate for annuity products
8.
31,388
289,720
and 10% decrease in mortality rate for annuity products
10% increase in mortality rate for non-annuity products
7.
33,685
294,454
10% decrease in expenses
6.
29,372
288,643
expenses
12.
10% decrease in investment return
(3,380)
ITEM
44,956
454,906
Embedded Value as at 31 December 2015 (sum A through J)
K
Other
J
Shareholder Dividend Distribution and Capital Injection
H
Value of One Year's Sales after Cost of Solvency Margin (F + G)
31,528
23,253
Notes: 1) Numbers may not be additive due to rounding.
2) Taxable incomes in embedded value and the value of one year's sales are based on earnings calculated using solvency reserves.
231
China Life Insurance Company Limited Annual Report 2015
Embedded Value
VALUE OF ONE YEAR'S SALES BY CHANNEL
31,528
The value of one year's sales by channel is shown below:
2,685
(5,602)
F
Compares actual with expected investment returns during 2015.
E
Reflects the difference between actual operating experience in 2015 (including mortality, morbidity, lapse, and expenses
etc.) and the assumptions.
D
Value of new business sales in 2015.
C
worth.
Reflects expected impact of covered business, and the expected return on investments supporting the 2015 opening net
Notes: 1) Numbers may not be additive due to rounding.
B
2) Items B through J are explained below:
560,277
(34)
(3,699)
745
14,199
20,591
Table 2
Value of One Year's Sales by Channel
Channel
Table 3
Analysis of Embedded Value Movement in 2015
RMB million
I
AB
Embedded Value at Start of Year
В Expected Return on Embedded Value
Value of New Business in the Period
C
D
Operating Experience Variance
E
Investment Experience Variance
F
Methodology, Model and Assumption Changes
G
Market Value and Other Adjustments
The following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period.
MOVEMENT ANALYSIS
China Life Insurance Company Limited Annual Report 2015
Embedded Value
23,253
Exclusive Individual Agent Channel
Group Insurance Channel
Bancassurance Channel
Total
Notes: 1) Numbers may not be additive due to rounding.
2) Taxable income is based on earnings calculated using solvency reserves.
232
RMB million
Reflects the effect of projection method, model enhancements and assumption changes.
31 December
2015
2014
28,851
21,740
371
464
2,306
1,048
31,528
31 December
H
G
H
194,236
268,729
Adjusted Net Worth
A
31 December
2014
2015
31 December
ITEM
RMB million
Components of Embedded Value and Value of One Year's Sales
Table 1
The embedded value as at 31 December 2015 and the value of one year's sales for the 12 months to 31 December 2015,
and their corresponding results as at 31 December 2014 are shown below:
SUMMARY OF RESULTS
China Life Insurance Company Limited Annual Report 2015
Embedded Value
230
Other operating assumptions such as mortality, morbidity, lapses and expenses are based on the Company's recent
operating experience and expected future outlook.
The calculations are based upon assumed corporate tax rate of 25% for all years. The investment returns are assumed
to be grading from 5.1% to 5.5% by 0.1% every year (remaining level thereafter). 12% grading to 16% by 1% every
year (remaining level thereafter) of the investment return is assumed to be exempt from income tax. These investment
return and tax exempt assumptions are based on the Company's strategic asset mix and expected future returns. The risk-
adjusted discount rate used is 11%.
B
Economic assumptions:
Value of In-Force Business before Cost of Solvency Margin
300,712
G
26,633
35,684
Value of One Year's Sales before Cost of Solvency Margin
F
454,906
560,277
Embedded Value (A + D)
E
260,670
291,549
Value of In-Force Business after Cost of Solvency Margin (B + C)
D
(40,042)
(43,951)
Cost of Solvency Margin
C
335,500
Change in the market value adjustment from the beginning of year 2015 to 31 December 2015 and other related
adjustments.
ASSUMPTIONS
The embedded value and the value of one year's sales were prepared by China Life Insurance Company Limited in
accordance with “Life Insurance Embedded Value Reporting Guidelines" issued by China Insurance Regulatory
Commission. The China Risk Oriented Solvency System ("C-ROSS") requirements have not been considered in the
embedded value results as of 31 December 2015, as updated Chinese EV guidance under C-ROSS has not been released.
Towers Watson, an international firm of consultants, performed a review of China Life's embedded value. The review
statement from Towers Watson is contained in the "Towers Watson's review opinion report on embedded value"
section.
Reflects the gains or losses due to changes in exchange rate.
I
J
Reflects dividends distributed to shareholders and issuance of Core Tier 2 Capital Securities during 2015.
Other miscellaneous items.
233
China Life Insurance Company Limited Annual Report 2015
On 15 May 2012, the Ministry of Finance and the State Administration of Taxation issued the "Notice on Corporate
Income Tax Deduction of Reserves for Insurance Companies" (Cai Shui [2012] No. 45), requiring the taxation basis
to be based on accounting profits. Based on the above regulation, in preparing the 2015 embedded value report, the
adjusted net worth has reflected the tax treatment in accordance with accounting profits. When calculating the value of
in-force business and value of one year's sales, as there is uncertainty in the accounting liability assumptions in future
valuation periods (such as valuation interest rates), correspondingly, numerous scenarios could be possible as to future
accounting profits. Consequently, we have adopted the profits based on the solvency liability in projecting future tax
payable in the base scenario. We also disclose the value of in-force business and value of one year's sales calculated using
tax payable based on the accounting profits in accordance to the “Provisions on the Accounting Treatment Related to
Insurance Contracts" under one possible scenario in the table 4 of "SENSITIVITY RESULTS".
Cost of Solvency Margin
China Life Insurance Company Limited Annual Report 2015
Embedded Value
DEFINITIONS OF EMBEDDED VALUE AND VALUE OF ONE YEAR'S SALES
Exchange Gains or Losses
"Adjusted net worth" is equal to the sum of:
Net assets, defined as assets less PRC solvency policy reserves and other liabilities; and
Net-of-tax adjustments for relevant differences between the market value and the book value of assets, together
with relevant net-of-tax adjustments to certain liabilities.
PREPARATION AND REVIEW
Embedded Value
China Life Insurance Company Limited Annual Report 2015
The market value of assets can fluctuate significantly over time due to the impact of the prevailing market environment.
Hence the adjusted net worth can fluctuate significantly between valuation dates.
229
The value of in-force business and the value of one year's sales have been determined using a traditional deterministic
discounted cash flow methodology. This methodology makes implicit allowance for the cost of investment guarantees
and policyholder options, asset/liability mismatch risk, credit risk, the risk of operating experience's fluctuation and the
economic cost of capital through the use of a risk-adjusted discount rate.
The "value of in-force business" and the "value of one year's sales" are defined here as the discounted value of the
projected stream of future after-tax distributable profits for existing in-force business at the valuation date and for one
year's sales in the 12 months immediately preceding the valuation date. Distributable profits arise after allowance for
PRC solvency reserves and solvency margins at the required regulatory minimum level.
The embedded value of a life insurer is defined as the sum of the adjusted net worth and the value of in-force business
allowing for the cost of capital supporting a company's desired solvency margin.
RMB million
As at
20
(2)
Major Liabilities
Insurance contracts
Securities sold under agreements to repurchase
Policyholder dividends payable
Annuity and other insurance balances payable
Interest-bearing loans and borrowings
Bonds payable
Deferred tax liabilities
Other liabilities
Insurance Contracts
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
As at
Investment contracts
Total
Cash, cash equivalents and others include cash and cash equivalents, and securities purchased under agreements to
resell.
31 December 2015 31 December 2014
7.41%
169,485
Funds
4.52%
94,933
4.87%
111,516
Common stocks
11.23%
236,030
17.99%
411,623
Equity investments
5.31%
111,475
6.60%
150,753
Other fixed-maturity investments²
2.97%
62,348
67,569
Insurance asset management products
44.77%
940,619
43.55%
83,620
3.98%
Other equity investments³
130,622
4.
Other equity investments include private equity funds, unlisted equities, preference stocks, equity investment
plans, wealth management products, etc.
3.
Other fixed-maturity investments include policy loans, trust schemes, statutory deposits - restricted, etc.
2.
Insurance asset management products under fixed-maturity investments include infrastructure and real estate debt
investment plans and project asset-backed plans.
100.00%
2,100,870
100.00%
2,287,639
1.
Notes:
20
Total
58,959
4.27%
97,599
Cash, cash equivalents and others
0.06%
1,283
0.05%
1,237
Investment properties
2.73%
57,477
5.71%
2.81%
1,715,985
1.
84,106
For the
(3) Consolidated Cash Flows
22
22
We believe that our sources of liquidity are sufficient to meet our current cash requirements.
Our principal cash outflows primarily relate to the payables for the liabilities associated with our various life
insurance, annuity, accident insurance and health insurance products, operating expenses, income taxes and
dividends that may be declared and paid to our equity holders. Cash outflows arising from our insurance
activities primarily relate to benefit payments under these insurance products, as well as payments for policy
surrenders, withdrawals and loans.
Liquidity Uses
(2)
IV
Our investment portfolio also provides us with a source of liquidity to meet unexpected cash outflows.
We are also subject to market liquidity risk due to the large size of our investments in some of the markets
in which we invest. In some circumstances, some of our holdings of investment securities may be large
enough to have an influence on the market value. These factors may adversely affect our ability to sell these
investments or sell them at a fair price.
Our cash and bank deposits can provide us with a source of liquidity to meet normal cash outflows. As at the
end of the Reporting Period, the amount of cash and cash equivalents was RMB76,096 million. In addition,
substantially all of our term deposits with banks allow us to withdraw funds on deposit, subject to a penalty
interest charge. As at the end of the Reporting Period, the amount of term deposits was RMB562,622
million.
Our principal cash inflows come from insurance premiums, deposits from investment contracts, proceeds
from sales and maturity of investment assets, and investment income. The primary liquidity risks with
respect to these cash inflows are the risk of early withdrawals by contract holders and policyholders, as well
as the risks of default by debtors, interest rate changes and other market volatilities. We closely monitor and
manage
these risks.
Liquidity Sources
(1)
ANALYSIS OF CASH FLOWS
year
ended 31 December
Net cash inflow/(outflow) from operating activities
Net cash inflow/(outflow) from investing activities
Net cash inflow/(outflow) from financing activities
Foreign exchange gains on cash and cash equivalents
China Life Insurance Company Limited Annual Report 2015
Risks relating to macro trends
25,704
29,062
Net increase in cash and cash equivalents
V
16,704
10
241
As at the end of the Reporting Period, equity holders' equity was RMB322,492 million, a 13.5% increase
year-on-year. This was primarily due to the combined effect of an increase in the fair value of available-for-
sale financial assets and the profit earned during the Reporting Period.
(19,415)
67,047
78,247
(18,811)
2014
2015
RMB million
Management Discussion and Analysis
(69,257)
Equity Holders' Equity
As at the end of the Reporting Period, deferred tax liabilities decreased by 12.5% year-on-year. This was
primarily due to an increase in the deductible temporary differences.
Deferred Tax Liabilities
2,122,101
47,077
65,200
19,375
16,953
67,989
67,994
1,959,236
2,623
25,617
30,092
74,745
107,774
46,089
31,354
72,275
2,643
1,603,446
As at the end of the Reporting Period, insurance contracts liabilities increased by 7.0% year-on-year. This
was primarily due to the accumulation of insurance liabilities from new insurance business and renewal
business. As at the date of the statement of financial position, the Company's insurance contracts reserves
passed liability adequacy testing.
Investment Contracts
As at the end of the Reporting Period, bonds payable remained stable compared to the end of 2014. This
was primarily due to the fact that no subordinated debts were issued by the Company in 2015.
Bonds Payable
(3)
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2015
21
As at the end of the Reporting Period, interest-bearing loans and borrowings remained stable compared to
the end of 2014, and there were no new loans and borrowings in 2015. In June 2014, to meet the needs
of overseas investment, one of the Company's subsidiaries applied for a fixed-interest rate bank loan of
GBP275 million with a term of five years. As at the end of the Reporting Period, the loan balance was
equivalent to RMB2,643 million.
996,236
Interest-bearing Loans and Borrowings
Annuity and Other Insurance Balances Payable
As at the end of the Reporting Period, policyholder dividends payable increased by 44.2% year-on-year. This
was primarily due to an increase in investment yields of participating products.
Policyholder Dividends Payable
As at the end of the Reporting Period, securities sold under agreements to repurchase decreased by 32.0%
year-on-year. This was primarily due to the needs for liquidity management.
Securities Sold under Agreements to Repurchase
year.
As at the end of the Reporting Period, account balance of investment contracts increased by 16.4% year-on-
This was primarily due to an increase in the scale of certain investment contracts.
As at the end of the Reporting Period, annuity and other insurance balances payable increased by 17.5%
year-on-year. This was primarily due to an increase in maturities payable.
Bonds
2.95%
690,156
2.
pace
The global economy is experiencing profound changes with insufficient momentum for recovery; the
growth of international trade is sluggish; the volatility is seen in the financial and bulk commodity markets;
the geopolitical risks are mounting; and the instabilities and uncertainties in the external environment are
increasing. The impact of all the above factors on China's development cannot be underestimated. Domestic
conflicts and risks that have been building up over the years become more obvious. With the change of
in economic growth, the difficulties associated with structural adjustments, and the interwoven problems
arising from the transformation of the drivers of growth, the downward pressure on the economy is growing.
Changes in international and domestic markets will be transferred to the insurance industry through
multiple channels such as the real economy, financial markets and consumer demands, which will in turn
affect the business development, use of funds and solvency in various aspects.
We have established a cash flow testing system. We conduct regular tests to monitor the cash inflows and
outflows under various changing circumstances and adjust accordingly the asset portfolio to ensure sufficient
sources of liquidity. During the Reporting Period, the change of net cash flow from operating activities was
primarily due to an increase in securities at fair value through profit or loss. The change of net cash flow
from investing activities was primarily due to the needs for investment management. The change in net cash
flow from financing activities was primarily due to the needs for liquidity management.
SOLVENCY RATIO
The solvency ratio of an insurance company is a measure of capital adequacy, which is calculated by dividing the
actual capital of the company (which is its admitted assets less admitted liabilities, determined in accordance with
relevant regulatory rules) by the minimum required capital. The following table shows our solvency ratio as at the
end of the Reporting Period:
Actual capital
Minimum capital
Solvency ratio
RMB million
As at
Risks relating to our business
As at
282,820
85,676
330.10%
236,151
80,193
294.48%
The increase in the Company's solvency ratio was primarily due to a significant increase in the comprehensive
income during the Reporting Period and the issue of Core Tier 2 Capital Securities.
23
23
China Life Insurance Company Limited Annual Report 2015
In 2016, the Company will strengthen its in-depth analysis of macro-economic trends and complex risk factors to
maintain its continuous and healthy growth. The major risk factors which may have an impact on the Company's
future development strategy and business objectives include:
32.85%
Management Discussion and Analysis
31 December 2015 31 December 2014
3.
As the financial reform steadily moves forward within a certain period of time in future, the effects from
the further implementation of the exchange rate reform and the falling of the risk-free interest rate etc.
will become increasingly apparent. Further, the market-oriented reform of premium rate for life insurance,
the intensified market competition and the application of new technologies, etc. will bring about various
challenges and uncertainties to the business development of the Company. Generally affected by these
factors, the Company is experiencing more difficulties in maintaining steady business growth, as well
as facing more uncertainties and complexities. Due to factors such as investment income and the cost
of liabilities, there may be higher possibility of fluctuation of the Company's profits. In addition, the
operational and financial risks of associated enterprises and the fluctuation in their profitability may
undermine the expected returns on investment, which would have an impact on the Company's profitability.
Risks relating to investments
Huang Yiping
Chang Tso Tung Stephen
Bruce Douglas Moore
Anthony Francis Neoh
Miao Jianmin
Zhang Xiangxian
Wang Sidong
Liu Jiade
Xu Hengping
Xu Haifeng
Miao Ping
Su Hengxuan
Independent Directors
Non-executive Directors
Lin Dairen
Yang Mingsheng (Chairman)
Executive Directors
Directors of the Company during the Reporting Period and up to the date of this report were as follows:
Mr. Yang Mingsheng, Mr. Miao Jianmin, Mr. Zhang Xiangxian, Mr. Wang Sidong, Mr. Liu Jiade,
Mr. Robinson Drake Pike, Mr. Anthony Francis Neoh
2,931
From left to right:
Report of the Board of Directors
China Life Insurance Company Limited Annual Report 2015
27
In 2016, under the guidance of the “innovation-driven development strategy", and with adherence to the
business philosophy of “focusing on value, enhancing personnel, optimizing structure, maintaining growth
and guarding against risks", the Company will focus on breakthroughs and strengthen benchmarking,
and pay more attention to the acceleration of its development, sales transformation, team quality
improvement, market benchmarking, as well as reform and innovation, in order to improve the Company's
core competitiveness and sustainable development capability as a whole and to lay a solid foundation for
achieving the Company's development objectives of the “13th Five-Year Plan”. Given the above mentioned
risk factors, the Company will firmly adhere to its core development objectives, and fine-tune its business
development objectives in accordance with market trends to an appropriate degree, so as to efficiently
respond to challenges from market competitors and changes in the external environment. Meanwhile, the
Company will focus on innovation in mechanisms, building of sales force, innovation in products, services
and technology, in order to constantly enhance its vitality, creativity, competitiveness and capacity for
sustainable development. The Company believes that it will have sufficient capital to meet its insurance
business expenditures and general new investment needs in 2016. At the same time, if there is any further
capital demand, the Company will make corresponding arrangements based on capital market conditions to
further implement its future business development strategies.
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
26
Given that the interest rate in China maintains at a low level, the investment yield of the newly allocated
fixed income assets may decline, the difficulty of asset allocation may increase, and the risk relating to
asset misallocation may increase. In light of the complexity of the domestic and international economies,
as well as the greater volatility of the financial markets, the market risk relating to investment portfolios
and credit risk may go up. In the meanwhile, the Company may develop new investment channels, utilize
new investment vehicles or appoint new investment managers. All of the above may considerably affect the
Company's investment income and the book value of its assets, and thus result in a greater fluctuation of the
Company's profits. Moreover, some of the Company's assets are held in foreign currencies, which may be
adversely affected by exchange rate movements.
FUTURE PROSPECT AND RISK ANALYSIS
Details of structured entities controlled by the Company is set out in Note 39(c) in the Notes to the Consolidated
Financial Statements in this annual report.
STRUCTURED ENTITIES CONTROLLED BY THE COMPANY
XI
IX
During the Reporting Period, there was no sale of material assets and equity of the Company.
BUSINESS OPERATIONS OF OUR MAIN SUBSIDIARIES AND AFFILIATES
Company Name
Major Business Scope
China Life Asset
Management Company
Limited
China Life Pension
Company Limited
China Life Property
and Casualty Insurance
Company Limited
Management and utilization of proprietary funds;
acting as agent or trustee for asset management
business; consulting business relevant to the above
businesses; other asset management businesses
permitted by applicable PRC laws and regulations
Group pension insurance and annuity; individual
pension insurance and annuity; short-term health
insurance; accident insurance; reinsurance of the
above insurance businesses; business for the use of
insurance funds that are permitted by applicable
PRC laws and regulations; pension insurance asset
management product business; management of
funds in RMB or foreign currency as entrusted
by entrusting parties for the retirement benefit
purpose; other businesses permitted by the CIRC
Property loss insurance; liability insurance; credit
insurance and bond insurance; short-term health
insurance and accident insurance; reinsurance
of the above insurance businesses; businesses for
the use of insurance funds that are permitted
by applicable PRC laws and regulations; other
businesses permitted by the CIRC
25
RMB million
Registered
Capital
4,000
Shareholding
Percentage Total Assets
60% 7,608
Net Assets
Net Profit
6,940
1,096
3,400
70.74% is held
3,440
VIII SALES OF MATERIAL ASSETS AND EQUITY
Robinson Drake Pike
Tang Xin
During the Reporting Period, there was no other material equity investment or non-equity investment with a total
investment amount of more than 10% of the Company's audited net asset as at the end of last year.
Investment business is one of the principal businesses of the Company, among which, equity investment consists
of listed equities, unlisted equities and private equity funds, etc; non-equity investment consists of bank deposits,
bonds and financial assets such as debt investment plans, trust schemes and wealth management products, etc.
X
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2015
2,258
19,531
65,634
40%
15,000
held by AMC
and 3.53% is
by the Company,
17
VI
ANALYSIS OF CORE COMPETITIVENESS
The Company has the advantage of very strong brand recognition. It is the only life insurance company in China
with shares listed on the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the New York Stock
Exchange. It is also a core member of China Life Insurance (Group) Company which is one of the “Fortune
Global 500" and the "World's 500 Most Influential Brands". In 2015, the brand of China Life has been ranked
as one of the "World's 500 Most Influential Brands" published by World Brand Lab for nine consecutive years.
The brand was also ranked as No.5 on the "China's 500 Most Valuable Brands” list, with brand value estimated at
RMB182,272 million, ranking No.1 in the insurance industry.
The Company has an extensive services and distribution network in China, with its business outlets and
services counters covering both urban and rural areas. The 979,000 exclusive individual agents, 45,000 direct
sales representatives, 56,000 intermediary bancassurance outlets and 131,000 sales representatives at those
bancassurance outlets form a unique distribution and services network in China, and make the Company the life
insurance service provider closest to the customers. Making use of internationally leading information technology
and expanding telephone, Internet, email and other electronic service channels, the Company strives to meet
customer demand for purchasing insurance products through multiple channels.
The Company has the most extensive customer base. As at 31 December 2015, the Company had approximately
216 million long-term individual and group life insurance policies, annuity contracts and long-term health
insurance policies in force.
The Company possesses great financial strength. As at 31 December 2015, the registered capital and the total
assets of the Company were RMB28,265 million and RMB2,448,315 million, respectively, which ranked No.1
in China's life insurance industry. As at the end of 2015, the total market capitalization of the Company was
US$114,921 million, which ranked No.2 among all listed insurance companies in the world.
The Company is one of the largest institutional investors in China, and through its controlling shareholding
in China Life Asset Management Company Limited, the Company is the largest insurance asset management
company in China. As at 31 December 2015, the investment assets reached RMB2,287,639 million, an increase of
8.9% from the end of 2014.
The Company has rich experience in life insurance management. The predecessor of China Life was the first
enterprise to underwrite life insurance business in China, and played the role of an explorer and pioneer in China's
life insurance industry. During the long course of its development, the Company has accumulated a wealth of
experience in operation and management, has a stable, professional management team, and has become well versed
in the art of management in China's life insurance market. The Company's key management team and personnel
comprise those who have in-depth knowledge and understanding of the life insurance market in China, including
members of the Company's senior management, qualified underwriting personnel, actuaries and experienced
investment managers, etc. During the Reporting Period, there was no movement of these personnel which might
have material impacts on the Company.
24
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
VII MAJOR INVESTMENTS
On 8 December 2015, the Company and Postal Savings Bank of China Co., Ltd. ("Postal Savings Bank”) entered
into the Share Subscription Agreement, pursuant to which, Postal Savings Bank conditionally agreed to allot and
issue, and the Company conditionally agreed to subscribe for, 3,341,900,000 shares of Postal Savings Bank for a
total consideration of RMB12,999,991,000. Upon the completion of the transaction on 17 December 2015, the
Company holds no more than 5% of the enlarged issued share capital of Postal Savings Bank. For details, please
refer to the announcement published by the Company on the website of the SSE and the HKExnews website of the
Hong Kong Exchanges and Clearing Limited on 8 December 2015.
(resigned with effect from 8 May 2015)
Mr. Tang Xin, Mr. Chang Tso Tung Stephen, Mr. Xu Haifeng, Mr. Xu Hengping, Mr. Lin Dairen,
(appointed as Director with effect from 11 July 2015)
Held-to-Maturity Securities
As at the end of the Reporting Period, term deposits decreased by 18.5% year-on-year. This was primarily
due to a decrease in the allocation of negotiated deposits.
2,246,567
2,448,315
Term Deposits
Total
145,697
160,676
1,283
1,237
6,153
As at the end of the Reporting Period, held-to-maturity securities decreased by 2.6% year-on-year. This was
primarily due to a decrease in the allocation of treasury bonds.
6,333
Investment properties
Statutory deposits - restricted
166,453
207,267
47,034
76,096
11,925
21,503
Securities purchased under agreements to resell
53,052
137,990
Other assets
Available-for-Sale Securities
As at the end of the Reporting Period, available-for-sale securities increased by 26.8% year-on-year. This was
primarily due to an increase in the allocation of funds, wealth management products and unlisted equities in
light of market conditions in a timely manner.
Securities at Fair Value through Profit or Loss
24.59%
562,622
Term deposits
85.90%
1,804,598
77.69%
1,777,180
Fixed-maturity investments
Percentage
As at 31 December 2014
Amount
As at 31 December 2015
Amount
Percentage
RMB million
classes:
As at the end of the Reporting Period, our investment assets are categorized as below in terms of asset
As at the end of the Reporting Period, investment properties decreased by 3.6% year-on-year. This was
primarily due to the depreciation of the investment properties.
Investment Properties
As at the end of the Reporting Period, loans increased by 24.5% year-on-year. This was primarily due to an
increase in the scale of policy loans and trust schemes, etc.
Loans
As at the end of the Reporting Period, cash and cash equivalents increased by 61.8% year-on-year. This was
primarily due to the needs for liquidity management.
Cash and Cash Equivalents
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2015
19
loss.
As at the end of the Reporting Period, securities at fair value through profit or loss increased by 160.1%
year-on-year. This was primarily due to an increase in the allocation of bonds at fair value through profit or
(retired upon expiry of the term with effect from 28 May 2015)
(appointed as Director with effect from 11 July 2015)
607,531
117
Available-for-sale securities
504,075
690,156
562,622
2,100,870
2,287,639
Loans
Cash and cash equivalents
Securities at fair value through profit or loss
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
Held-to-maturity securities
Term deposits
Investment assets
31 December 2015 31 December 2014
RMB million
As at
As at
517,283
(1) Major Assets
III ANALYSIS OF MAJOR ITEMS OF CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
(appointed as Director with effect from 11 July 2015)
(retired upon expiry of the term with effect from 28 May 2015)
(resigned with effect from 7 March 2016)
(appointed as Director with effect from 11 July 2015)
(appointed as Director with effect from 7 March 2016)
28
770,516
equity holders of
the Company in
the consolidated
2014
Year in which
2015
statements
financial
dividends were
the year in which in the consolidated
financial
statements for
of the Company
dividends were
distributed
Amount of
Transfer of
public reserve
Number of
Percentage of
amount of cash
dividends per
bonus stocks
per
ten shares (shares)
ten shares (RMB)
Unit: RMB million
Amount of
cash dividends
(inclusive of tax)
(inclusive of tax) ten shares (shares)
Net profit
attributable to
dividends
in net profit
attributable to
equity holders
into share
capital per
11,871
2013
34,699
34%
11,306
32,211
35%
8,479
24,765
33
34%
China Life Insurance Company Limited Annual Report 2015
Report of the Board of Directors
5.
6.
7.
CHANGES IN ACCOUNTING POLICIES AND ESTIMATES
The changes in accounting policies and estimates of the Company during the Reporting Period are set out in Note
2 and Note 3 in the Notes to the Consolidated Financial Statements in this annual report.
RESERVES
Details of the reserves of the Company are set out in Note 36 in the Notes to the Consolidated Financial
Statements in this annual report.
CHARITABLE DONATIONS
The total amount of charitable donations made by the Company during the Reporting Period was approximately
RMB99 million.
PROPERTY, PLANT AND EQUIPMENT
Details of the movement in property, plant and equipment of the Company are set out in Note 6 in the Notes to
the Consolidated Financial Statements in this annual
report.
8.
SHARE CAPITAL
9.
33
3.0
4.0
4.2
distributed
4.
China Life Insurance Company Limited Annual Report 2015
INFORMATION OF TAX DEDUCTION FOR HOLDERS OF LISTED SECURITIES
Shareholders are taxed and/or enjoy tax relief for the dividend income received from the Company in accordance
with the “Individual Income Tax Law of the People's Republic of China”, the “Enterprise Income Tax Law of the
People's Republic of China”, and relevant administrative rules, governmental regulations and guiding documents.
Please refer to the announcement published by the Company on the website of the SSE on 8 June 2015 for the
information on income tax in respect of the dividend distributed to A Share shareholders during the Reporting
Period, and the announcement published by the Company on the HKExnews website of the Hong Kong
Exchanges and Clearing Limited on 28 May 2015 for the information on income tax in respect of the dividend
distributed to H Share shareholders during the Reporting Period.
3.
Currently, the fifth session of the Supervisory Committee comprises Mr. Miao Ping, Mr. Shi Xiangming,
Ms. Xiong Junhong, Mr. Zhan Zhong and Ms. Wang Cuifei, with Mr. Miao Ping acting as the Chairman
of the Supervisory Committee. Of the members of the Supervisory Committee, Mr. Miao Ping, Mr. Shi
Xiangming and Ms. Xiong Junhong are Non Employee Representative Supervisors, and Mr. Zhan Zhong
and Ms. Wang Cuifei are Employee Representative Supervisors.
Attending meetings of the Supervisory Committee and diligently discharging their duties. Pursuant to the
regulatory requirements of the jurisdictions where the Company is listed, the Articles of Association and
the "Procedural Rules for Supervisory Committee Meetings" of the Company, and in accordance with the
work arrangement of the Supervisory Committee, the Supervisory Committee convened its regular meetings
in a timely manner, at which it considered and approved proposals in relation to the Company's financial
reports, periodic reports, internal control, and risk management. In 2015, the fourth and the fifth sessions
of the Supervisory Committee held 6 meetings, at which the Supervisors earnestly expressed their views,
actively participated in discussions and diligently discharged their duties, thereby providing valuable advice
for the business development of the Company.
Attending and participating in corporate governance meetings and actively exercising their supervisory
role. In 2015, the Supervisory Committee attended the 2014 Annual General Meeting and the First
Extraordinary General Meeting 2015 of the Company, and participated in the regular meetings of the
Board. All members of the Supervisory Committee participated in the meetings of the Nomination and
Remuneration Committee, the Risk Management Committee, and the Strategy and Investment Decision
Committee, respectively, in accordance with the work allocation among Supervisors determined by the
Supervisory Committee, with a focus on the meetings of the Audit Committee. By attending these meetings,
all Supervisors diligently discharged their duties, oversaw the procedures for convening meetings, carefully
listened to the matters considered at the meetings, and participated in discussions when necessary, thus
bringing positive effects on further enhancement of corporate governance.
88
38
Service/Nature
Remuneration paid by China Life Insurance Company Limited to the auditors in 2015 was as follows:
Remuneration paid by the Company to the auditors is subject to approval at the shareholders' general meeting,
pursuant to which the Board is authorized to determine the amount and make payment. Audit fees paid by the
Company to the auditors will not affect the independence of the auditors.
Resolutions were passed at the 2014 Annual General Meeting to engage Ernst & Young Hua Ming LLP and Ernst
& Young as the PRC and international auditors of the Company for the year 2015, respectively. Ernst & Young
Hua Ming LLP and Ernst & Young have been serving as the Company's auditors for three consecutive years.
25. AUDITORS
Report of the Board of Directors
36
Period.
The Company has applied the principles of the Corporate Governance Code (the “CG Code”) as set out in
Appendix 14 to the Listing Rules, and has complied with all code provisions of the CG Code during the Reporting
2.
24. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
1.
ACTIVITIES OF THE SUPERVISORY COMMITTEE
The dividend distribution of the Company for the recent 3 years is as follows:
Fees (RMB million)
Financial report audit fee
Internal control audit fee
46.00
11.50
Ernst & Young Hua Ming LLP and Ernst & Young have been re-appointed as the PRC and international auditors
of the Company for the year 2016 at the First Extraordinary General Meeting 2015 held on 29 December 2015.
By Order of the Board
Yang Mingsheng
Chairman
Beijing, China
23 March 2016
37
China Life Insurance Company Limited Annual Report 2015
Report of the Supervisory Committee
From left to right:
Ms. Wang Cuifei, Ms. Xiong Junhong,
Mr. Miao Ping, Mr. Shi Xiangming,
Mr. Zhan Zhong
1.
Based on the information publicly available to the Company and within the knowledge of the Directors as at the
Latest Practicable Date (23 March 2016), not less than 25% of the issued share capital of the Company (being the
minimum public float applicable to the shares of the Company) was held in public hands.
23. SUFFICIENCY OF PUBLIC FLOAT
During the Reporting Period, the gross written premiums received from the Company's five largest customers
accounted for less than 30% of the Company's gross written premiums for the year.
16. DISCLOSURE OF INTERESTS OF DIRECTORS, SUPERVISORS AND THE CHIEF
EXECUTIVE IN THE SHARES OF THE COMPANY
No arrangements to which the Company or its controlling shareholder or any of their respective subsidiaries is a
party, and whose objects are, or one of whose objects is, to enable Directors or Supervisors (including their spouses
and children under the age of 18) to acquire benefits by means of the acquisition of shares in, or debentures of,
the Company or any other body corporate, subsisted at any time during the Reporting Period or at the end of the
Reporting Period.
15. DIRECTORS' AND SUPERVISORS' RIGHTS TO ACQUIRE SHARES
14. INTERESTS OF DIRECTORS AND SUPERVISORS (AND THEIR CONNECTED
ENTITIES) IN MATERIAL TRANSACTIONS, ARRANGEMENTS OR CONTRACTS
None of the Directors or Supervisors (and their connected entities) is or was materially interested, directly
or indirectly, in any transaction, arrangement or contract of significance entered into by the Company or its
controlling shareholders or any of their respective subsidiaries at any time during the Reporting Period or subsisted
at the end of the Reporting Period.
None of the Directors or Supervisors has entered into any service contract with the Company and its subsidiaries
that are not terminable within one year or can only be terminated by the Company with payment of compensation
(other than statutory compensation).
13. DIRECTORS' AND SUPERVISORS' SERVICE CONTRACTS
Report of the Board of Directors
China Life Insurance Company Limited Annual Report 2015
34
Details of the Board meetings and the Board's performance of its duties during the Reporting Period are set out in
the section “Corporate Governance" in this annual report.
12. DAY-TO-DAY OPERATIONS OF THE BOARD
No H Share Stock Appreciation Rights of the Company were granted or exercised in 2015. The Company will
deal with such rights and related matters in accordance with the relevant PRC governmental policies.
11. H SHARE STOCK APPRECIATION RIGHTS
During the Reporting Period, save for the issue of Core Tier 2 Capital Securities by the Company as disclosed
in "V. Miscellaneous" under the section of “Significant Events" in this annual report, the Company and its
subsidiaries did not purchase, sell or redeem any of the Company's listed securities.
10. PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S SECURITIES
As at the end of the Reporting Period, none of the Directors, Supervisors and the chief executive of the Company
had any interests or short positions in the shares, underlying shares or debentures of the Company or its associated
corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws
of Hong Kong) (the “SFO")) that were required to be recorded in the register of the Company required to be
kept pursuant to Section 352 of the SFO or which had to be notified to the Company and the HKSE pursuant
to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in
Appendix 10 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the
“Listing Rules"). In addition, the Board has created a code of conduct in relation to the sale and purchase of the
Company's securities by Directors and Supervisors, which is no less stringent than the Model Code. Upon specific
inquiry by the Company, the Directors and Supervisors have confirmed observation of the Model Code and the
Company's own code of conduct in the year of 2015.
17. PRE-EMPTIVE RIGHTS AND ARRANGEMENTS FOR SHARE OPTIONS
According to the Articles of Association and relevant PRC laws, there is no provision for any pre-emptive rights of
the shareholders of the Company. At present, the Company does not have any arrangement
for share options.
18. MANAGEMENT CONTRACTS
22. MAJOR CUSTOMERS
In accordance with the requirements of the “Standard Regulations on Corporate Internal Control”, the Board
conducted an assessment on internal control relating to the Company's financial reporting functions, and
confirmed that its internal control was effective as at 31 December 2015.
21. BOARD'S STATEMENT ON INTERNAL CONTROL
20. RESPONSIBILITY STATEMENT OF DIRECTORS ON FINANCIAL REPORTS
the Company has expressly provided in its Articles of Association the level of authority required for
approving external guarantees and the approval procedures.
the Company's internal control system regarding external guarantees is in compliance with laws, regulations,
and the requirements under the “Notice in relation to the Standardization of Capital Flows between
Listed Companies and Connected Parties and Issues in relation to External Guarantees Granted by Listed
Companies"; and
guarantee;
Details of the movement in share capital of the Company are set out in Note 34 in the Notes to the Consolidated
Financial Statements in this annual report.
(3)
(1) during the Reporting Period, the Company did not provide any external
Independent Directors of the Company have rendered their independent opinions on the Company's external
guarantees, and are of the view that:
19. MATERIAL GUARANTEES
Report of the Board of Directors
China Life Insurance Company Limited Annual Report 2015
35
No management or administration contracts for the whole or substantial part of any business of the Company
were entered into during the Reporting Period.
(2)
The profit distribution policy of the Company complied with the Articles of Association and the
examination and approval procedures of the Company, clearly defined the dividend distribution
standards and percentage and the decision-making procedures and systems. Small- and medium-sized
shareholders of the Company have sufficient opportunities to express their opinions and appeals, and
their legitimate rights have been well protected. The Independent Directors diligently considered the
profit distribution policy and expressed their independent opinion in this regard.
(I)
No public reserve capitalization is provided for in the profit distribution plan for the current financial
The Company actively promoted the construction of a democratic management system with an employee
representative meeting as its basic form to protect the democratic rights of employees and to facilitate the
joint development between employees and enterprise. Its head office and branches have fully established the
system of employee representative meetings, organized their respective employees to perform democratic
management and supervisory role according to law, and inspected and monitored the implementation of any
resolutions adopted by employee representative meetings, thus carrying out the supervisory and performing
functions of proposals in a serious manner and constantly improving democratic management.
The Company entered into labor contracts with employees in a timely manner to actively create a
harmonious labor relationship according to law. Taking into account the moldability of new employees, the
Company specifically designed a method to cultivate new employees and adopted measures including tutor
counseling, internship rotation and follow-up appraisal, etc. for cultivation purpose. It also expanded the
career development path for employees, conducted regular job rotation, two-way selection, communication
and practice, education and training, and performance counseling, and implemented base platform exercises
and cultivation of professional leaders and talents, etc. to facilitate the career development of employees at
all levels. The Company implemented a mechanism for the determination of individual remuneration based
on the principle of “salary determined by post and performance” so as to enable its employees to obtain
labor remuneration in full that is commensurate with their responsibilities and performance. The Company
protected the rights of employees to have rest days and annual leave as conferred by laws and regulations
in a practical manner to fully reflect its humanistic concern about employees, and encouraged employees
to arrange rest days and annual leave in a scientific way in an attempt to maintain a reasonable work-life
balance.
(V) Relationship between the Company and its employees
3.
China Life Insurance Company Limited Annual Report 2015
Report of the Board of Directors
30
In 2015, the Company launched a number of services and activities for developing and improving customer
relations in response to the customers' diversified characteristics and demands, including the global
emergency services and VIP services for all long-term policyholders that covered multi-layer and various
classes of the global emergency, health consultation and VIP care services. The Company constantly stepped
up its efforts to offer care to customers by regularly carrying out a variety of sports activities and seminars
on health topics, and set up platforms of health services. The Company was also concerned about the
growth of teenagers and children, and organized over 6,300 activities, including customer festivals, such as
"Hand-in-Hand" series of activities, and “Little Painters of China Life" activities, covering nearly 3 million
customers. By innovating new form of services, taking full advantage of Internet technology and adopting
mobile communication tools such as WeChat, the Company made its communication with customers more
convenient. The Company steadily promoted return visits via WeChat to improve customers' experience.
In addition, the Company enhanced its protection of the rights and interests of insurance customers, by
establishing a mechanism for protection, and intensified its supervisory function through assessment. In
2015, the number of customer complaints in all systems of the Company decreased by 14% from 2014.
It is the core mission of an enterprise to provide high quality services to its customers. The Company
regards customer satisfaction and customer experience as the basic standards for assessing its services, and
established a customer-oriented business model in order to take customer resources as the engine to create
value for the Company. As at the end of the Reporting Period, the Company provided commercial insurance
protection services for more than 400 million customers and offered supplementary major medical insurance
and policy-oriented insurance such as New Village Cooperative Medical Insurance for nearly 400 million
customers. The results of the overall customer satisfaction and customer loyalty increased by 1.2% and
4.8%, respectively, from 2014.
(IV) Relationship between the Company and its customers
Under the guidance of the industry's core values of “being trustworthy, assuming risks, emphasizing on
services and being legal compliant" all along, the Company stuck to the business compliance concepts of
"being compliant from the top level, having responsibility for all to be compliant, and creating value from
compliance”, strictly observed and effectively implemented applicable laws and regulations and regulatory
requirements, such as the Insurance Law, the Company Law, the “Regulations for the Administration
of Insurance Companies", the "Measures for the Administration of Insurance Clauses and Insurance
Premium Rates of Personal Insurance Companies”, and the “Interim Measures for the Administration of
Utilization of Insurance Funds”, seriously applied the decision made by the National People's Congress for
the amendment to the Insurance Law with respect to the disqualification of insurance sales practitioners,
and actively put into practice the “Judicial Interpretation (3)” of the Insurance Law promulgated by
the Supreme People's Court. The Company also sorted out, assessed, revised and improved the existing
business procedures, invoices and vouchers, medical and insurance products, as well as ancillary practices,
etc., pushed forward the “Interim Measures for the Supervision of the Internet Insurance Business” issued
by the CIRC in a practical manner to further regulate the business conduct of Internet insurance, and
voluntarily undertook the social responsibilities of mitigating burdens and serving medical reforms to enable
more people to enjoy preferential policies of the PRC government. The Company tried hard to construct a
compliance management system covering the whole process of operation and management, such as corporate
governance, investment management, sales management and insurance policy services, with a view to fully
serving and safeguarding the business development of the Company and its reform and innovation.
(III) Compliance by the Company with the relevant laws and regulations that have a significant impact
Report of the Board of Directors
China Life Insurance Company Limited Annual Report 2015
For details regarding the Company's employees (including the number of employees, composition of
professionals, educational levels, remuneration policy and training program), please refer to the section
"Directors, Supervisors, Senior Management and Employees" in this annual report.
29
The Company formulated and released the “Provisional Measures for the Administration of Energy Saving
and Emission Reduction" in 2015 to further regulate the utilization of energy throughout all systems of the
Company. It also requested all branches to submit and report to the head office regularly the attainment of
environmental indicators each year, established a statistics mechanism for the collection of environmental
information, and regulated the utilization, repair and retirement of measuring instruments and equipment
for water, electricity, gas, heating and other supplies of the Company.
The Company actively responded to the call from the PRC government for energy saving and emission
reduction, carried out all staff actions on energy saving and environmental protection in great depth, and
cut down energy consumption and carbon emission in each operational aspect through the saving of energy,
reduction of wastage, optimization of procedures, and utilization of new types of environmental protection
materials.
(II) Environmental policies and performance of the Company
For details of the overall operation of the Company during the Reporting Period, the future development
of its business and the principal risks faced by it, please refer to the section of “Management Discussion and
Analysis" in this annual
report.
(I) Overall operation of the Company during the Reporting Period
BUSINESS REVIEW
The Company is the largest life insurance company in China's life insurance market and possesses the most
extensive distribution network in China, comprising exclusive agents, direct sales representatives as well as
dedicated and non-dedicated agencies. The Company provides products and services such as individual and group
life insurance, accident and health insurance. The Company is one of the largest institutional investors in China,
and is China's largest insurance asset management company through its controlling shareholding in China Life
Asset Management Company Limited. The Company also has controlling shareholding in China Life Pension
Company Limited.
PRINCIPAL BUSINESS
2.
1.
Report of the Board of Directors
China Life Insurance Company Limited Annual Report 2015
year.
In 2015, the Company continued to conscientiously adopt the working style of diligence and thrift,
to actively create the corporate culture of all being thrifty in every aspect, and to cut down energy
consumption through the optimization of procedures, innovation of technologies and utilization of new
types of environmental protection materials. The Company lowered its costs by reducing the number of
meetings and activities, scaling down the size of meetings, and cutting down the number of documents to
be issued. Office automation was fully implemented. Electronization of meeting proposals, remote review of
proposals, remote handling of meeting affairs and enquiries of meeting files were achieved at the meetings
of the Board, the Supervisory Committee and the special committees. Through the establishment of the
Research & Development Center and Data Center to construct a centralized operational services system,
the Company achieved the centralization of research, development, operation and maintenance, as well as
the standardization of services. The daily average approved operations amounted to over 100 million. As a
result, the Company lowered carbon emissions while enhancing its efficiency. The Company cut down the
use of advertising paper materials as much as possible and effectively saved the paper consumption resulting
from paper cheques, letters and insurance policies through the adoption of new electronic services, such as
electronic invoices, electronic insurance policies, WeChat, official websites and mobile apps.
FORMULATION AND IMPLEMENTATION OF PROFIT DISTRIBUTION POLICY
In accordance with Article 211 of the Articles of Association, the basic principles of the Company's profit
distribution are as follows:
The Directors are responsible for overseeing the preparation of the financial report for each financial period which
gives a true and fair view of the Company's financial position, performance results and cash flow for that period.
To the best knowledge of the Directors, there was no material event or condition during the Reporting Period that
might have a material adverse effect on the continuing operation of the Company.
2.
1.
In accordance with the profit distribution plan for the year 2015 approved by the Board on 23 March
2016, with the appropriation to its discretionary surplus reserve fund of RMB3,438 million (10%
of the net profit for 2015), the Company, based on 28,264,705,000 shares in issue, proposed to
distribute cash dividends amounting to RMB11,871 million to all shareholders of the Company at
RMB0.42 per
share (inclusive of tax). The foregoing profit distribution plan is subject to the approval
by the 2015 Annual General Meeting to be held on 30 May 2016 (Monday). Dividends payable to
domestic shareholders are declared, valued and paid in RMB. Dividends payable to shareholders of
the Company's foreign-listed shares are declared and valued in RMB and paid in the currency of the
jurisdiction in which the foreign-listed shares are listed (if the Company is listed in more than one
jurisdiction, dividends shall be paid in the currency of the Company's principal jurisdiction of listing
as determined by the Board). The Company shall pay dividends to shareholders of foreign-listed shares
in accordance with PRC regulations on foreign exchange control. If no such regulations are in place,
the applicable exchange rate is the average closing rate published by the People's Bank of China one
week before the declaration of the distribution of dividends.
year
Profit distribution plan or public reserves capitalization plan for the
1.
Report of the Board of Directors
China Life Insurance Company Limited Annual Report 2015
(IV) Profit distribution plan and public reserves capitalization plan
2.
32
The Company's profit distribution proposal shall be reviewed by the Board of Directors. The Board of
Directors shall have a sufficient discussion of the reasonableness of the profit distribution proposal. After
a special resolution regarding the proposal is reached and independent opinions have been given by the
Company's Independent Directors, the proposal shall be submitted to the Company's general meeting for
approval. In reviewing the profit distribution proposal, the Company shall provide Internet-based voting
mechanism to the shareholders. When deliberating on specific cash dividend proposal by the Company's
general meeting, the Company shall make active communication with shareholders, especially small-
and medium-sized shareholders, through various channels. The Company shall also fully solicit opinions
and appeals from small- and medium-sized shareholders, and give timely reply to concerns of small- and
medium-sized shareholders.
(III) In accordance with Article 213 of the Articles of Association, the procedures of reviewing the Company's
profit distribution proposal is as follows:
above are satisfied.
Conditions for distribution of share dividends: If the Company's operation is sound and the Board
of Directors is of the opinion that share dividends distribution is in the interest of all the Company's
shareholders since the Company's stock price does not match the Company's share capital, the
Company may propose a share dividends distribution plan if the conditions for cash dividends listed
of 2015
Profit distribution modes: The Company may distribute dividends in the form of cash or shares or a
combination of cash and shares. If practicable, the Company may distribute interim dividends. The
Company's dividends shall not bear interest, save in the case where the Company fails to distribute the
dividends to the shareholders on the day when dividends were due to have been distributed.
Conditions for and percentage of distribution of cash dividends: If the Company makes profits in a
given year and the cumulative undistributed profit is positive, the Company shall distribute dividends
in the form of cash and the cumulative profits distributed in cash over the past three years by the
Company shall be no less than thirty percent (30%) of the average annual distributable profits. If the
Company's solvency ratio is less than a hundred percent (100%) of the regulatory requirement, the
Company shall not distribute profits to its shareholders. If the Company's solvency ratio is less than
one hundred and fifty percent (150%) of the regulatory requirement, the lower of the following two
factors shall be the basis for profit distribution: (1) the distributable profit as ascertained under the
Accounting Standards for Business Enterprises; (2) the residual overall income ascertained pursuant to
the rules for the preparation of the Company's solvency report.
The Company shall take the investment return for investors into full account and allocate the required
percentage of the Company's realized distributable profits to shareholders as dividends each year;
3.
The Company shall give priority to cash dividends as its profit distribution manner.
31
China Life Insurance Company Limited Annual Report 2015
The Company shall maintain a sustainable and steady profit distribution policy and at the same time
take into consideration the Company's long-term interest, general interest of all the shareholders and
the sustainable development of the Company;
(II)
In accordance with Article 212 of the Articles of Association, the Company's profit distribution policy is as
follows:
1.
2.
3.
Report of the Board of Directors
During the Reporting Period, the following continuing connected transactions were carried out by the
Company under Chapter 14A of the Listing Rules, including the framework agreements entered into by
AMP with the Company, Pension Company, CLIC and CLP&C, respectively. These continuing connected
transactions were subject to the reporting, announcement, annual review and independent shareholders'
approval requirements under the Listing Rules. Such agreements and the transactions thereunder have been
approved by the shareholders' general meeting of the Company held on 29 May 2014. AMP is a non-wholly
owned subsidiary of AMC and is therefore a connected subsidiary of the Company.
During the Reporting Period, the following continuing connected transactions were carried out by the
Company pursuant to Rule 14A.76(2) of the Listing Rules, including the policy management agreement
between the Company and CLIC, the asset management agreement between the Company and AMC,
the insurance sales framework agreement between the Company and CLP&C, and the framework
agreements entered into by CLWM with the Company, CLIC, CLP&C, China Life Insurance (Overseas)
Company Limited (“CLO”) and CLI, respectively. These continuing connected transactions were subject
to the reporting, announcement and annual review requirements but were exempt from the independent
shareholders' approval requirement under the Listing Rules. CLIC, the controlling shareholder of the
Company, holds 60% of the equity interest in CLP&C and 100% of the equity interest in each of CLO and
CLI. Therefore, each of CLIC, CLP&C, CLO and CLI constitutes a connected person of the Company.
AMC is held as to 60% and 40% by the Company and CLIC, respectively, and is therefore a connected
subsidiary of the Company. CLWM is a subsidiary of AMC, and is therefore a connected subsidiary of the
Company.
(I) Continuing Connected Transactions
MAJOR CONNECTED TRANSACTIONS
II.
I.
Significant Events
During the Reporting Period, the Company also entered into certain continuing connected transactions,
including the asset management agreement between CLIC and AMC, which were exempt from the
reporting, announcement, annual review and independent shareholders' approval requirements under
Chapter 14A of the Listing Rules.
China Life Insurance Company Limited Annual Report 2015
During the Reporting Period, the Company was not involved in any material litigation or arbitration.
In addition, the asset management agreement for alternative investments and the transactions thereunder
entered into between the Company and CLI during the Reporting Period were subject to the reporting,
announcement and annual review requirements but were exempt from the independent shareholders'
approval requirement under the Listing Rules. However, such agreement was subject to approval by the
shareholders' general meeting of the Company under the SSE Listing Rules. Such agreement and the
transactions thereunder have been approved by the shareholders' general meeting of the Company held on
29 December 2015.
2.
41
China Life Insurance Company Limited Annual Report 2015
Significant Events
1.
Policy Management Agreement
Since 30 September 2003, the Company and CLIC have from time to time entered into policy
management agreements. The renewed agreement between the parties expired on 31 December 2014.
The Company and CLIC entered into the 2015 policy management agreement on 29 December 2014,
with a term from 1 January 2015 to 31 December 2017. Pursuant to the 2015 policy management
agreement, the Company agreed to provide policy administration services to CLIC relating to the
non-transferred policies. The Company acts as a service provider under the agreement and does not
acquire any rights or assume any obligations as an insurer under the non-transferred policies. For
details as to the method of calculation of the service fee, please refer to Note 33 in the Notes to the
Consolidated Financial Statements. The annual cap for each of the three years ending 31 December
2017 is RMB1,037 million.
For the year ended 31 December 2015, the service fee paid by CLIC to the Company amounted to
RMB950 million.
Asset Management Agreements
(1) Asset Management Agreement between the Company and AMC
Since 30 November 2003, the Company has from time to time entered into asset management
agreements with AMC. The renewed asset management agreement between the parties
expired on 31 December 2012. On 27 December 2012, the Company entered into the 2012
asset management agreement with AMC, which was for a term of two years effective from 1
January 2013 and has been extended to 31 December 2015 pursuant to the automatic renewal
clause. Pursuant to the 2012 asset management agreement, AMC agreed to invest and manage
assets entrusted to it by the Company, on a discretionary basis, within the scope granted by
the Company and in accordance with the requirements of applicable laws and regulations,
regulatory requirements and the investment guidelines given by the Company. In consideration
of AMC's services in respect of investing and managing various categories of assets entrusted
to it by the Company under the agreement, the Company agreed to pay AMC a service fee.
For details as to the method of calculation of the asset management fee, please refer to Note 33
in the Notes to the Consolidated Financial Statements. The annual cap for each of the three
years ended 31 December 2015 was RMB1,200 million. On 29 December 2015, the Company
entered into the 2016 asset management agreement with AMC, which was for a term of three
years from 1 January 2016 to 31 December 2018. Pursuant to the 2016 asset management
agreement, AMC will continue to invest and manage assets entrusted to it by the Company. The
annual cap for each of the three years ending 31 December 2018 is RMB1,500 million.
23 March 2016
The Company has complied with the disclosure requirements under Chapter 14A of the Listing Rules in
respect of the above continuing connected transactions. When conducting the above continuing connected
transactions during the year, the Company has followed the pricing policies and guidelines formulated at the
time when such transactions were entered into.
Beijing, China
The Company's operational compliance with the law. During the Reporting Period, the Company's
operations were in compliance with the law. The Company's operations and decision-making procedures
were in compliance with the Company Law and the Articles of Association. All Directors and senior
management of the Company maintained strict principles of diligence and integrity and performed their
duties conscientiously. The Supervisory Committee is not aware of any of them having violated any law,
regulation, or any provision in the Articles of Association or harmed the interests of the Company in the
course of discharging their duties.
Miao Ping
China Life Insurance Company Limited Annual Report 2015
Report of the Supervisory Committee
2.
4.
Strengthening training and enhancing duty performance of the Supervisors. In April 2015, Ms. Xiong
Junhong attended the training courses for new directors, supervisors and senior management of insurance
companies and insurance asset management companies in 2015 organized by the General Office of the
CIRC. In 2015, all members of the Supervisory Committee attended the training courses on the PRC
insurance market of 2014, which gave them a general review and analysis of the overall situation of the
PRC insurance market in 2014 from various aspects, including insurance regulation, industry development
and horizontal competition. According to the requirements of the CIRC, members of the Supervisory
Committee attended the training course on the "Analysis of China Risk Oriented Solvency System" to
ensure the truthfulness, accuracy, completeness and compliance of the solvency report submitted by the
Company, and to enhance the solvency of the Company, its risk management capability and the level of
public disclosure of its solvency to external parties. To comply with the regulatory requirements, members
of the Supervisory Committee have studied training materials relating to anti-money laundering for the
purpose
of understanding the latest regulatory system in a timely manner.
INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON CERTAIN
MATTERS
During the Reporting Period, the Supervisory Committee of the Company performed its supervisory duties in a
diligent manner in accordance with the requirements of the Company Law, the Articles of Association and the
"Procedural Rules for Supervisory Committee Meetings".
1.
2.
For the year ended 31 December 2015, the Company paid AMC an asset management fee of
RMB1,020 million.
The authenticity of the financial report. The Company's annual financial report truly and completely
reflected the Company's financial position and its operating results. Ernst & Young Hua Ming LLP and
Ernst & Young have performed audits and have issued unqualified Independent Auditors' Report on the
consolidated financial statements for the year ended 2015 in accordance with the China Standards on
Auditing of PRC Certified Public Accountants and the International Standards on Auditing, respectively.
39
China Life Insurance Company Limited Annual Report 2015
Report of the Supervisory Committee
3.
4.
5.
Acquisition and sale of assets. During the Reporting Period, the prices for acquisition and sale of assets were
fair and reasonable. The Supervisory Committee is not aware of any insider trading, any acts harming the
interests of shareholders or incurring any loss to the Company's assets.
Connected transactions. During the Reporting Period, the connected transactions of the Company were
on commercial terms. The Supervisory Committee is not aware of any acts harming the interests of the
Company.
Internal control system and self-evaluation report on internal control. During the Reporting Period, the
Company sought to improve its internal control system, and continued to improve the effectiveness of such
system. The Supervisory Committee of the Company reviewed the self-evaluation report on the Company's
internal control systems and did not raise any objection against the self-evaluation report of the Board
regarding the Company's internal control systems.
40
By Order of the Supervisory Committee
Chairman of the Supervisory Committee
42
MATERIAL LITIGATIONS OR ARBITRATIONS
(2) Asset Management Agreement between CLIC and AMC
year ended 31 December 2015, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB0 million, the redemption price and
corresponding redemption fee for the redemption of fund products was RMB0 million, the sales
commission fee and client maintenance fee paid by AMP were RMB0 million, and the fees for
other daily transactions were RMB0 million.
(3) Framework Agreement between CLIC and AMP
As approved at the thirteenth meeting of the fourth session of the Board and the 2013 Annual
General Meeting, CLIC and AMP entered into the “Framework Agreement in relation to
Subscription and Redemption of Fund Products" on 30 May 2014. The agreement became
effective upon signing by the parties and will expire on 31 December 2016. Pursuant to
the agreement, CLIC and AMP will enter into transactions in relation to the subscription
and redemption of fund products. Pricing of the transactions under the agreement shall be
determined by the parties through arm's length negotiations with reference to the industry
practices. For the three years ending 31 December 2016, the annual caps of the subscription
price and corresponding subscription fee for the subscription of fund products are RMB5,000
million, RMB10,000 million and RMB10,000 million, respectively; and the annual caps of the
redemption price and corresponding redemption fee for the redemption of fund products are
RMB5,000 million, RMB10,000 million and RMB10,000 million, respectively.
For the year ended 31 December 2015, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB6,250.00 million, and the redemption
price and corresponding redemption fee for the redemption of fund products was RMB555.47
million.
46
5.
China Life Insurance Company Limited Annual Report 2015
Significant Events
(4) Framework Agreement between CLP&C and AMP
As approved at the thirteenth meeting of the fourth session of the Board and the 2013 Annual
General Meeting, CLP&C and AMP entered into the "Cooperation Framework Agreement"
on 6 June 2014. The agreement became effective upon signing by the parties and will expire on
31 December 2016. Pursuant to the agreement, CLP&C and AMP will enter into certain daily
transactions, including subscription and redemption of fund products, sales agency services and
other daily transactions permitted by laws and regulations. Pricing of the transactions under the
agreement shall be determined by the parties through arm's length negotiations with reference
to the industry practices. For the three years ending 31 December 2016, the annual caps of
the subscription price for the fund products are RMB5,000 million, RMB10,000 million and
RMB10,000 million, respectively; the annual caps of the redemption price for the fund products
are RMB5,000 million, RMB10,000 million and RMB10,000 million, respectively; the annual
caps of the subscription fee for the fund products are RMB50 million, RMB100 million and
RMB100 million, respectively; the annual caps of the redemption fee for the fund products are
RMB50 million, RMB100 million and RMB100 million, respectively; the annual caps of the
sales commission fee and client maintenance fee payable by AMP are RMB50 million, RMB100
million and RMB100 million, respectively; and the annual caps of the fees for other daily
transactions are RMB50 million, RMB100 million and RMB100 million, respectively.
For the
year ended 31 December 2015, the subscription price for the fund products was RMB0
million, the redemption price for the fund products was RMB0 million, the subscription fee
for the fund products was RMB0 million, the redemption fee for the fund products was RMBO
million, the sales commission fee and client maintenance fee paid by AMP were RMB0 million,
and the fees for other daily transactions were RMB0.03 million.
Framework Agreements with CLWM
For the
(1) Framework Agreement between the Company and CLWM
48
China Life Insurance Company Limited Annual Report 2015
Significant Events
For the year ended 31 December 2015, the management fee paid by the Company for the asset
management services was RMB0 million; the fees in connection with the sale agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee were RMB0 million; the fees for other daily transactions were RMB0 million.
(2) Framework Agreement between CLIC and CLWM
As approved at the fourth meeting of the fifth session of the Board, CLIC and CLWM entered
into the "Framework Agreement in relation to Asset Management Services" on 26 January 2016.
The
agreement became effective upon signing by the parties and will expire on 31 December
2017. Pursuant to the agreement, CLIC will subscribe for the asset management products, in
respect of which CLWM acts as the manager, according to its needs of asset allocation. Pricing
of the transactions under the agreement shall be determined by the parties through arm's length
negotiations with reference to the industry practices. For the three years ending 31 December
2017, the annual caps of the management fee payable by CLIC for the asset management
services are RMB40 million, RMB70 million and RMB80 million, respectively.
For the year ended 31 December 2015, the management fee paid by CLIC for the asset
management services was RMB0 million.
(3) Framework Agreement between CLP&C and CLWM
China Life Insurance Company Limited Annual Report 2015
Significant Events
As approved at the fourth meeting of the fifth session of the Board, CLP&C and CLWM
entered into the “Framework Agreement in relation to Asset Management Services and Other
Daily Transactions" on 9 March 2016. The agreement became effective upon signing by
the parties and will expire on 31 December 2017. Pursuant to the agreement, CLP&C and
CLWM will enter into certain daily transactions, including asset management services, sale
agency services for asset management products and other daily transactions permitted by laws
and regulations. Pricing of the transactions under the agreement shall be determined by the
parties through arm's length negotiations with reference to the industry practices. For the
three years ending 31 December 2017, the annual caps of the management fee payable by
CLP&C for the asset management services are RMB5 million, RMB180 million and RMB300
million, respectively; the annual caps of fees in connection with the sale agency services payable
by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee are RMB2 million, RMB150 million and RMB200 million, respectively; the
annual caps of the fees for other daily transactions are RMB5 million, RMB50 million and
RMB50 million, respectively.
For the year ended 31 December 2015, the management fee paid by CLP&C for the asset
management services was RMB0 million; the fees in connection with the sale agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee were RMB0 million; the fees for other daily transactions were RMB0 million.
As approved at the fourth meeting of the fifth session of the Board, the Company and CLWM
entered into the “Framework Agreement in relation to Asset Management Services and Other
Daily Transactions" on 30 December 2015. The agreement became effective upon signing by
the parties and will expire on 31 December 2017. Pursuant to the agreement, the Company
and CLWM will enter into certain daily transactions, including asset management services,
sale agency services for asset management products and other daily transactions permitted
by laws and regulations. Pricing of the transactions under the agreement shall be determined
by the parties through arm's length negotiations with reference to the industry practices. For
the three years ending 31 December 2017, the annual caps of the management fee payable
by the Company for the asset management services are RMB55 million, RMB180 million
and RMB240 million, respectively; the annual caps of fees in connection with the sale agency
services payable by CLWM, including the sales commission fee, client maintenance fee,
handling fee and intermediary fee are RMB25 million, RMB50 million and RMB100 million,
respectively; the annual caps of the fees for other daily transactions are RMB25 million, RMB50
million and RMB100 million, respectively.
As approved at the thirteenth meeting of the fourth session of the Board and the 2013 Annual
General Meeting, Pension Company and AMP entered into the "Framework Agreement in
relation to Subscription and Redemption of Fund Products, Sale of Funds and Other Daily
Transactions" on 4 September 2014. The agreement became effective upon signing by the
parties and will expire on 31 December 2016. Pursuant to the agreement, Pension Company
and AMP will enter into certain daily transactions, including subscription and redemption
of fund products, sales agency services and other daily transactions permitted by laws and
regulations. Pricing of the transactions under the agreement shall be determined by the parties
through arm's length negotiations with reference to the industry practices. For the three
years ending 31 December 2016, the annual caps of the subscription price and corresponding
subscription fee for the subscription of fund products are RMB5,000 million, RMB10,000
million and RMB10,000 million, respectively; the annual caps of the redemption price and
corresponding redemption fee for the redemption of fund products are RMB5,000 million,
RMB10,000 million and RMB10,000 million, respectively; the annual caps of the sales
commission fee and client maintenance fee payable by AMP are RMB50 million, RMB100
million and RMB100 million, respectively; and the annual caps of the fees for other daily
transactions are RMB50 million, RMB100 million and RMB100 million, respectively.
47
the management fee paid by the Company for the asset management for specific clients was
RMB1.49 million, and the fees for other daily transactions were RMB0.42 million.
For the year ended 31 December 2015, CLIC paid AMC an asset management fee of RMB133
million.
(3) Asset Management Agreement for Alternative Investments between the Company and CLI
Since 22 March 2013, the Company and CLI have from time to time entered into asset
management agreements for alternative investments. As approved at the seventeenth meeting
of the fourth session of the Board and the Second Extraordinary General Meeting 2014,
the Company and CLI entered into the 2015 asset management agreement for alternative
investments on 31 December 2014, with a term of one year from 1 January 2015 to 31
December 2015. Pursuant to the 2015 asset management agreement for alternative investments,
CLI will invest and manage assets entrusted to it by the Company, on a discretionary basis,
within the scope of utilization of insurance funds as specified by the CIRC and in accordance
with the requirements of applicable laws and regulations and the investment guidelines of
the Company. The entrusted assets include equity, real estate, related financial products and
securitization financial products. The Company will pay CLI the investment management
service fee and performance incentive fee in respect of the investment and management
services provided by CLI to the Company under this agreement. For details as to the method
of calculation of the investment management fee and performance incentive fee, please refer
to Note 33 in the Notes to the Consolidated Financial Statements. For the year ended 31
December 2015, the investment management service fee and performance incentive fee
payable by the Company to CLI would not exceed RMB500 million. The contractual amount
of the assets entrusted by the Company to CLI for investment and management would not
exceed RMB150,000 million or its equivalent in foreign currency (including the contractual
amount already entrusted prior to the execution of the agreement and the contractual amount
to be entrusted during the term of the agreement) as at the expiry date of the agreement.
The aforesaid contractual amount shall include the contractual amount of the assets newly
entrusted by the Company in its co-investment with CLIC and CLP&C, which shall not exceed
(2) Framework Agreement between Pension Company and AMP
Since 30 November 2003, CLIC has from time to time entered into asset management
agreements with AMC. The renewed asset management agreement between the parties expired
on 31 December 2014. On 31 December 2014, CLIC and AMC entered into the 2015 asset
management agreement, and the entrustment term was from 1 January 2015 to 31 December
2015. Pursuant to the 2015 asset management agreement, AMC agreed to invest and manage
assets entrusted to it by CLIC on a discretionary basis, subject to the investment guidelines
and instructions given by CLIC. In consideration of AMC's services in respect of investing
and managing assets entrusted to it by CLIC under the agreement, CLIC agreed to pay AMC
a service fee. For details as to the method of calculation of the asset management fee, please
refer to Note 33 in the Notes to the Consolidated Financial Statements. The annual cap for
the year
ended 31 December 2015 was RMB320 million. On 30 December 2015, CLIC and
AMC entered into the 2016 asset management agreement, and the entrustment term is from 1
January 2016 to 31 December 2018. Pursuant to the 2016 asset management agreement, AMC
will continue to invest and manage assets entrusted to it by CLIC. The annual caps for the three
years ending 31 December 2018 are RMB320 million, RMB310 million and RMB300 million,
respectively.
43
China Life Insurance Company Limited Annual Report 2015
Significant Events
As approved at the third meeting of the fifth session of the Board and the First Extraordinary
General Meeting 2015, the Company and CLI entered into the 2016 asset management
agreement for alternative investments on 3 February 2016, with a term from 1 January 2016 to
30 June 2017. Pursuant to the 2016 asset management agreement for alternative investments,
CLI will continue to invest and manage assets entrusted to it by the Company (including
equity, real estate, related financial products and securitization financial products), and the
Company will pay CLI investment management service fee and performance incentive fee in
this regard. During the term of the agreement, the investment management service fee and
performance incentive fee payable by the Company to CLI will not exceed RMB1,000 million
or its equivalent in foreign currency, in particular, the investment management service fee and
performance incentive fee for the year of 2016 will not exceed RMB590 million or its equivalent
in foreign currency, and the investment management service fee and performance incentive
fee for the first half of 2017 will not exceed RMB410 million or its equivalent in foreign
currency. The contractual amount of assets entrusted by the Company to CLI for investment
and
management will not exceed RMB250,000 million or its equivalent in foreign currency
(including the contractual amount already entrusted prior to the execution of the agreement
and the contractual amount to be entrusted during the term of the agreement) as at the expiry
date of the agreement, in particular, the contractual amount as at 31 December 2016 will not
exceed RMB200,000 million or its equivalent in foreign currency, and the contractual amount
as at 30 June 2017 will not exceed RMB250,000 million or its equivalent in foreign currency;
the contractual amount to be entrusted during the term of the agreement will not exceed
RMB150,000 million or its equivalent in foreign currency (including the contractual amount
to be entrusted during the year of 2016 of no more than RMB100,000 million or its equivalent
in foreign currency, and the contractual amount to be entrusted during the first half of 2017
of no more than RMB50,000 million or its equivalent in foreign currency). The contractual
amount of the assets to be entrusted by the Company in its co-investments with CLIC and
CLP&C during the term of the agreement will not exceed RMB40,000 million or its equivalent
in foreign currency, in particular, the contractual amount of the co-investments to be entrusted
by the Company during the year of 2016 will not exceed RMB23,500 million or its equivalent
in foreign currency, and the contractual amount of the co-investments to be entrusted by the
Company during the first half of 2017 will not exceed RMB16,500 million or its equivalent in
foreign currency.
For the
year ended 31 December 2015, the Company paid CLI investment management service
fee and performance incentive fee of RMB167 million in total. As at 31 December 2015,
the contractual amount of the assets entrusted by the Company to CLI for investment and
management amounted to RMB98,445 million, among which, the contractual amount of the
assets newly entrusted by the Company in its co-investment with CLIC and CLP&C was RMBO
million.
44
China Life Insurance Company Limited Annual Report 2015
Significant Events
RMB40,000 million or its equivalent in foreign currency. The co-investments of the Company,
CLIC and CLP&C shall be limited to cash contribution at the same price in the same related
financial products and securitization financial products, and the benefits enjoyed by each of
them shall be in proportion to their respective investment amount.
4.
Significant Events
China Life Insurance Company Limited Annual Report 2015
45
3.
As approved at the thirteenth meeting of the fourth session of the Board and the 2013 Annual
General Meeting, the Company and AMP entered into the "Framework Agreement in relation
to Subscription and Redemption of Fund Products, Sale of Funds, Asset Management for
Specific Clients and Other Daily Transactions" on 30 May 2014. The agreement became
effective upon signing by the parties and will expire on 31 December 2016. Pursuant to
the agreement, the Company and AMP will enter into certain daily transactions, including
subscription and redemption of fund products, sales agency services, asset management for
specific clients and other daily transactions permitted by laws and regulations. Pricing of the
transactions under the agreement shall be determined by the parties through arm's length
negotiations with reference to the industry practices. For the three years ending 31 December
2016, the annual caps of the subscription price and corresponding subscription fee for the
subscription of fund products are RMB30,000 million, RMB66,000 million and RMB72,600
million, respectively; the annual caps of the redemption price and corresponding redemption
fee for the redemption of fund products are RMB30,000 million, RMB66,000 million and
RMB72,600 million, respectively; the annual caps of the sales commission fee and client
maintenance fee payable by AMP are RMB100 million, RMB300 million and RMB400 million,
respectively; the annual caps of the management fee payable by the Company for the asset
management for specific clients are RMB10 million, RMB20 million and RMB20 million,
respectively; and the annual caps of the fees for other daily transactions are RMB50 million,
RMB100 million and RMB100 million, respectively.
(1) Framework Agreement between the Company and AMP
For the year ended 31 December 2015, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB3,910.01 million, the redemption price
and corresponding redemption fee for the redemption of fund products was RMB5,817.71
million, the sales commission fee and client maintenance fee paid by AMP were RMB0 million,
Framework Agreements with AMP
For the year ended 31 December 2015, CLP&C paid the Company an agency service fee of
RMB1,464 million, which has slightly exceeded the annual cap for the year of 2015. For further
details, please refer to the announcement of the Company dated 23 March 2016.
On 18 November 2008, the Company and CLP&C entered into the 2008 insurance sales framework
agreement, which expired on 17 November 2011. On 8 March 2012, the Company and CLP&C
entered into the 2012 insurance sales framework agreement for a term of two years, which has been
extended to 7 March 2015 pursuant to the automatic renewal clause of the agreement. On 8 March
2015, the Company and CLP&C entered into the 2015 insurance sales framework agreement, with
a term of two years effective from 8 March 2015. The agreement will automatically be extended for
another year after its expiry unless terminated by either party by giving the other party a written notice
within 30 days prior to its expiry. Pursuant to the above agreement, CLP&C entrusted the Company
to act as an agent to sell selected insurance products within the authorized regions, and agreed to
pay an agency service fee to the Company in consideration of the services provided. For details as
to the method of calculation of the agency service fee, please refer to Note 33 in the Notes to the
Consolidated Financial Statements. The annual caps for the three years ending 31 December 2017 are
RMB1,386 million, RMB1,738 million and RMB2,222 million, respectively.
Insurance Sales Framework Agreement
Xu Hengping
Male
Executive Director
Executive Director
Xu Haifeng
No
11.79
56
19.67
0
Since 11 July 2015
57
Male
31.46
Since 11 July 2015
0
11.57
0
No
Since 24 July 2012
60
Non-executive Director Male
Zhang Xiangxian
0
0
0
0
Since 27 October 2008
51
Non-executive Director Male
Miao Jianmin
31.24
19.67
71.18
Gender Age Term
39.78
changes
the year
the year
Position
Name
connected
thousands
ten thousands
RMB ten
beginning of at the end of Reason for
from the
Company Period in RMB
paid/fee in
0
in RMB ten
thousands
(before tax)
parties
0
0
Male 57 Since 27 October 2008
Executive Director
Lin Dairen
No
60.19
16.67
43.52
0
0
Since 22 May 2012
Male 60
Chairman,
Executive Director
Yang Mingsheng
31.40
0
According to the “Procedural Rules for Board of Directors Meetings of China Life Insurance Company Limited”,
Directors serve for a term of three years and may be re-elected. However, Independent Directors may not serve for
more than six years.
Non-executive Director
Yes
Yes
Yes
No
2 3 3 3 3 3 2 3
0
Yes
0
0
0
44 Since 7 March 2016
Male
Independent Director
Tang Xin
0
Yes
Yes
No
58
According to the requirements of the relevant PRC policies, the final amount of emoluments of the Chairman and
Executive Directors is currently subject to review and approval. The result of the review will be disclosed when the
final amount is confirmed.
With the approval given at the 2014 Annual General Meeting held on 28 May 2015, the fifth session of the Board
of Directors of the Company was elected, and on the same date, the first meeting of the fifth session of the Board
of Directors was held, which elected Mr. Yang Mingsheng as the Chairman of the fifth session of the Board of
Directors of the Company. With the approval given at the 2014 Annual General Meeting and the approval from
the CIRC, Mr. Xu Hengping, Mr. Xu Haifeng, Mr. Liu Jiade and Mr. Robinson Drake Pike were appointed as the
Directors with effect from 11 July 2015. With the approval given at the First Extraordinary General Meeting 2015
and the approval from the CIRC, Mr. Tang Xin was appointed as a Director with effect from 7 March 2016.
4.
3.
The positions of the Directors in this annual report reflect their positions as at the submission date of this annual
report. The emoluments are calculated based on their terms of office during the Reporting Period.
held at the shares held
2.
1.
Notes:
272.07
0
0
Total
Yes
16.00
0
16.00
0
Independent Director
Anthony Francis Neoh
0
0
0
0
0
Since 11 July 2015
53
Male
Non-executive Director
0
Since 24 July 2012
54
Male
Male
Wang Sidong
Liu Jiade
69
0
64 Since 11 July 2015
Male
Independent Director
Robinson Drake Pike
32.00
0
32.00
Since 20 October 2014
67
Male
Independent Director
Chang Tso Tung Stephen
30.00
0
30.00
Since 21 June 2010
emolument
housing
paid by the
Total number of
shares held as at
the end of the
Reporting Period
Percentage of
shareholding
Nature of shareholder
Name of shareholder
Unit: Shares
report
No. of H Share shareholders:
30,639
No. of A Share shareholders:
154,287
Total number of ordinary
share shareholders as at the
No. of H Share shareholders: end of the month prior to
the disclosure of this annual
30,651
No. of A Share shareholders:
143,316
Particulars of top ten shareholders of the Company
Total number of
ordinary share
shareholders as at
the end of the
Reporting Period
Total number of shareholders and their shareholdings
1.
3.
INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER
As at the end of the Reporting Period, the Company had not issued any securities in the last three years. During
the Reporting Period, there was no change in the total number of shares and the share structure of the Company
due to bonus issues or placings, nor were there any internal employees' shares.
ISSUE AND LISTING OF SECURITIES
During the Reporting Period, there was no change in the total number of shares and the share capital of the
Company.
CHANGES IN SHARE CAPITAL
2.
1.
Changes in Ordinary Shares and Shareholders Information
China Life Insurance Company Limited Annual Report 2015
53
53
Increase/decrease
Number of shares
during the
Reporting Period
subject to selling
China International Television Corporation
China National Nuclear Corporation³
Allocation of Consumption and
Vitality of Hybrid Securities Investment Fund²
Limited-China Southern Flexible
+34,367,716
34,367,716
+119,719,900
119,719,900
0.42%
0.12%
Other
Industrial and Commercial Bank of China
State-owned legal person
Central Huijin Asset Management Limited
On 29 February 2016, the Company entered into the Share Purchase Agreement with Citigroup Inc.
("Citigroup") and the Equity Transfer Agreement with IBM Credit LLC (“IBM Credit") and Citigroup.
Pursuant to such agreements, the Company will purchase from Citigroup and IBM Credit an aggregate of
3,648,276,645 shares of China Guangfa Bank Co., Ltd. (“CGB") at a price of RMB6.39 per share for a
total consideration of RMB23,312,487,761.55. Upon the closing of the transaction, the Company will hold
6,728,756,097 shares of CGB, representing 43.686% of the issued share capital of CGB. For details, please
refer to the announcement published by the Company on the website of the SSE and the HKExnews website
of the Hong Kong Exchanges and Clearing Limited on 29 February 2016.
+19,573,721
520,692,410 +489,145,438
State-owned legal person
China Securities Finance Corporation Limited
7,314,012,229
25.88%
Overseas legal person
HKSCC Nominees Limited
19,323,530,000
68.37%
State-owned legal person
China Life Insurance (Group) Company
pledged or frozen
restrictions
Number of shares
1.84%
The Company issued the US$1,280 million Core Tier 2 Capital Securities at an initial distribution rate
of 4.00% by way of debt issues to professional investors only. The securities (Stock Code: 5540) were
permitted for listing and trading on the HKSE on 6 July 2015.
2.
1.
50
50
except for the agency service fee of RMB1,464 million paid by CLP&C to the Company in 2015
under the 2015 insurance sales framework agreement, which exceeded the annual cap of RMB1,386
million, the amounts of the above transactions have not exceeded the relevant annual caps.
the transactions were entered into in accordance with the agreements governing those continuing
connected transactions, and the terms are fair and reasonable and in the interests of shareholders of the
Company as a whole; and
(4)
(3)
(2) the transactions were conducted on normal commercial terms;
(1) the transactions were entered into in the ordinary and usual course of business of the Company;
The Company's Independent Directors have reviewed the above continuing connected transactions which
were subject to the reporting, announcement and/or independent shareholders' approval requirements, and
confirmed that:
Confirmation by Independent Directors
except for the agency service fee of RMB1,464 million paid by CLP&C to the Company in 2015
under the 2015 insurance sales framework agreement, which exceeded the annual cap of RMB1,386
million, nothing has come to the auditors' attention that causes them to believe that the amounts
of the continuing connected transactions have exceeded the annual caps disclosed in the previous
announcements of the Company.
(4)
(3) nothing has come to the auditors' attention that causes them to believe that the transactions were
not entered into, in all material respects, in accordance with the relevant agreements governing such
transactions; and
China Life Insurance Company Limited Annual Report 2015
Significant Events
for transactions involving the provision of goods or services by the Company, nothing has come to the
auditors' attention that causes them to believe that the transactions were not, in all material respects,
in accordance with the pricing policies of the Company;
(1) nothing has come to the auditors' attention that causes them to believe that the disclosed continuing
connected transactions have not been approved by the Company's Board of Directors;
The Board has received a comfort letter from the auditor of the Company with respect to the above
continuing connected transactions which were subject to the reporting, announcement and/or independent
shareholders' approval requirements, and the letter stated that during the Reporting Period:
Confirmation by auditor
Significant Events
China Life Insurance Company Limited Annual Report 2015
49
For the year ended 31 December 2015, the management fee paid by CLI for the asset
management services was RMB0.40 million; the fees in connection with the sale agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee were RMB0 million; the fees for other daily transactions were RMB0 million.
As approved at the fourth meeting of the fifth session of the Board, CLI and CLWM entered
into the “Framework Agreement in relation to Asset Management Services and Other Daily
Transactions" on 3 February 2016. The agreement became effective upon signing by the parties
and will expire on 31 December 2017. Pursuant to the agreement, CLI and CLWM will enter
into certain daily transactions, including asset management services, sale agency services for asset
management products and other daily transactions permitted by laws and regulations. Pricing
of the transactions under the agreement shall be determined by the parties through arm's length
negotiations with reference to the industry practices. For the three years ending 31 December
2017, the annual caps of the management fee payable by CLI for the asset management services
are RMB20 million (including the management fee in an amount of RMB0.4 million paid by
CLI to CLWM for the provision of asset management services prior to the execution of the
framework agreement), RMB30 million and RMB50 million, respectively; the annual caps
of fees in connection with the sale agency services payable by CLWM, including the sales
commission fee, client maintenance fee, handling fee and intermediary fee are RMB10 million,
RMB40 million and RMB80 million, respectively; the annual caps of the fees for other daily
transactions are RMB10 million, RMB40 million and RMB80 million, respectively.
(5) Framework Agreement between CLI and CLWM
For the year ended 31 December 2015, the management fee paid by CLO for the asset
management services was RMB0 million; the fees in connection with the sale agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee were RMB0 million; the fees for other daily transactions were RMB0 million.
As approved at the fourth meeting of the fifth session of the Board, CLO and CLWM entered
into the "Framework Agreement in relation to Asset Management Services and Other Daily
Transactions" on 30 December 2015. The agreement became effective upon signing by the
parties and will expire on 31 December 2017. Pursuant to the agreement, CLO and CLWM
will enter into certain daily transactions, including asset management services, sale agency
services for asset management products and other daily transactions permitted by laws and
regulations. Pricing of the transactions under the agreement shall be determined by the parties
through arm's length negotiations with reference to the industry practices. For the three years
ending 31 December 2017, the annual caps of the management fee payable by CLO for the asset
management services are RMB10 million, RMB30 million and RMB50 million, respectively;
the annual caps of fees in connection with the sale agency services payable by CLWM, including
the sales commission fee, client maintenance fee, handling fee and intermediary fee are RMB5
million, RMB5 million and RMB10 million, respectively; the annual caps of the fees for other
daily transactions are RMB5 million, RMB5 million and RMB10 million, respectively.
(4) Framework Agreement between CLO and CLWM
China Life Insurance Company Limited Annual Report 2015
Significant Events
(2)
State-owned legal person
(II) Other Major Connected Transactions
2.
MISCELLANEOUS
Given that the change of ownership of the above two properties and related land use rights were directed by the
co-owners, and all formalities in relation to the change of ownership were proceeded slowly due to reasons such
as issues rooted in history and government approvals, CLIC the controlling shareholder of the Company, made
further commitment as follows: CLIC will assist the Company in completing, and urge the co-owners to complete,
the formalities in relation to the change of ownership in respect of the above two properties and related land use
rights as soon as possible. If the formalities cannot be completed due to the reasons of the co-owners, CLIC will
take any other legally practicable measures to resolve the issue and will bear any potential losses suffered by the
Company as a result of the defective ownership.
The Company's Shenzhen Branch and the other co-owners of the properties have issued a letter to the governing
department of the original owner of the properties in respect of the confirmation of ownership of the properties,
requesting it to report the ownership issue to the State-owned Assets Supervision and Administration Commission
of the State Council ("SASAC”), and requesting the SASAC to confirm the respective shares of each co-owner in
the properties and to issue written documents in this regard to the department of land and resources of Shenzhen,
so as to assist the Company and the other co-owners to complete the formalities in relation to the division of
ownership of the properties.
China Life Insurance Company Limited Annual Report 2015
Significant Events
V.
52
CLIC strictly followed these commitments. As at the end of the Reporting Period, save for the two properties and
related land of the Company's Shenzhen Branch, the ownership registration formalities of which had not been
completed due to historical reasons, all other formalities in relation to the change of land and property ownership
had been completed. The Shenzhen Branch of the Company continues to use such properties and land, and no
other parties have questioned or hindered the use of such properties and land by the Company.
Prior to the listing of the Company's A Shares (30 November 2006), land use rights were injected by CLIC into
the Company during its reorganization. Out of these, four pieces of land (with a total area of 10,421.12 square
meters) had not had its formalities in relation to the change of ownership completed. Further, out of the properties
injected into the Company, there were six properties (with a gross floor area of 8,639.76 square meters) in respect
of which the formalities in relation to the change of ownership had not been completed. CLIC undertook to
complete the above-mentioned formalities within one year of the date of listing of the Company's A Shares, and in
the event that such formalities could not be completed within such period, CLIC would bear any potential losses
to the Company due to the defective ownership.
IV. UNDERTAKINGS OF THE COMPANY, SHAREHOLDERS, EFFECTIVE
CONTROLLERS, ACQUIRERS, DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT
OR OTHER RELATED PARTIES WHICH ARE EITHER GIVEN OR EFFECTIVE
DURING THE REPORTING PERIOD
Except otherwise disclosed in this annual report, the Company had no other material contracts during the
Reporting Period.
Entrusted cash asset investment during the Reporting Period or any investment occurred in previous periods
but subsisted during the Reporting Period: Investment is one of the principal businesses of the Company.
The Company has adopted the mode of entrusted investment for management of its investment assets,
and established a diversified framework of entrusted investment management with China Life's internal
managers playing the key role and the external managers offering effective
The internal managers
supports.
include AMC and its subsidiaries, and CLI. The external managers comprise both domestic and overseas
managers, including fund companies, securities companies and other professional investment management
institutions. The Company selected different investment managers based on the purpose of allocation of
various types of investments, their risk features and the expertise of different managers, so as to establish
a great variety of investment portfolios and improve the efficiency of capital utilization. The Company
entered into entrusted investment management agreements with all managers and supervised the managers'
daily investment performance through the measures such as investment guidelines, asset entrustment and
performance appraisals. The Company also adopted risk control measures in respect of specific investments
based on the characteristics of different managers and investment products.
The Company neither gave external guarantees nor provided guarantees to its subsidiaries during the
Reporting Period.
During the Reporting Period, the Company neither acted as trustee, contractor or lessee of other companies'
assets, nor entrusted, contracted or leased its assets to other companies, the profit or loss from which
accounted for 10% or more of the Company's profits for the Reporting Period, nor were there any such
matters that occurred in previous periods but subsisted during the Reporting Period.
1.
4.
2.
1.
III. MATERIAL CONTRACTS AND THEIR PERFORMANCE
Significant Events
China Life Insurance Company Limited Annual Report 2015
51
During the Reporting Period, the Company was not involved in claims, debt transactions or guarantees with
connected parties outside the course of its business.
(III) Statement on Claims, Debt Transactions and Guarantees etc. with Connected Parties
outside the Course of its Business
Of the above connected transactions, the transaction in relation to the acquisition of properties from
CLI by the Company was subject to the reporting and announcement requirements but was exempt
from the independent shareholders' approval requirement pursuant to Rule 14A.76(2) of the Listing
Rules. The Company has complied with the disclosure requirements under Chapter 14A of the Listing
Rules in respect of such connected transaction.
Entrustment of Enterprise Annuity Funds and Account Management Agreement
Since 27 July 2009, the Company, CLIC and AMC have from time to time entered into the
entrustment of enterprise annuity funds and account management agreements with Pension Company.
The renewed agreement between the parties expired on 1 December 2013. On 22 March 2014,
the Company, CLIC, AMC and Pension Company entered into a new “Entrustment of Enterprise
Annuity Funds and Account Management Agreement of China Life Insurance (Group) Company
(including Supplemental Terms for Account Management and Investment Management)”, with a
term from 2 December 2013 to 31 December 2016. As a trustee, account manager and investment
manager, Pension Company provides trusteeship, account management services and investment
management services for the enterprise annuity funds of the Company, CLIC and AMC, and charges
trustee management fees, account management fees and investment management fees in accordance
with the agreement.
The framework agreement expired on 26 June 2015. As at the expiry date of the agreement, 40
properties had been transferred, with a total transaction amount of RMB331 million.
On 27 June 2012, the Company and CLI entered into the “Property Transfer Framework Agreement",
which was for a term of three years. Pursuant to the framework agreement, the Company proposed
to acquire from CLI properties for use by the Company's branches as office premises, which consist
of 1,198 properties with a total gross floor area of approximately 803,424.09 square meters. The
properties shall be transferred in batches with standalone agreement to be entered into for each
transfer. The actual purchase price of each property shall be valued and determined by the qualified
intermediaries agreed upon by the parties with reference to prevailing market price. The total
consideration for the property purchase is expected to be no more than RMB1,700 million. The
parties shall
cooperate with each other to complete the transfer of ownership and deliver the properties
if standalone property transfer agreements in respect of such properties have been signed prior to the
expiry of the framework agreement. The parties shall not transfer any properties under the framework
agreement if standalone property transfer agreements in respect of such properties have not been
signed prior to the expiry of the framework agreement.
Acquisition of Properties from CLI
3.
Reporting
0.07%
State-owned legal person
6.15%
457,721,642 (L)
H Shares
Interest in controlled corporation
BlackRock, Inc.
(Note 2)
1.13%
4.27%
318,375,062 (P)
0.34%
1.27%
94,911,965 (S)
1.94%
7.38%
549,486,256 (L)
H Shares
Beneficial owner, investment
manager, trustee and custodian
corporation/approved lending agent
(Note 1)
68.37%
92.80%
A Shares 19,323,530,000 (L)
Beneficial owner
China Life Insurance (Group)
Company
JPMorgan Chase & Co.
of shares issued
Percentage of
the total number
Percentage of
the respective
class of shares
Number of
shares held
1.62%
The letter "L" denotes a long position. The letter “S” denotes a short position. The letter “P” denotes interest in a lending pool.
56
China Life Insurance Company Limited Annual Report 2015
Remuneration
of shares Number of
received
during the
annuity fund
Number
Whether
the Company
and enterprise
received from
provident fund
emoluments
Total
Class of shares
social insurance,
1.
I
CURRENT DIRECTORS
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
52
57
Save as disclosed above, the Directors, Supervisors and the chief executive of the Company are not aware that there
is any party who, as at 31 December 2015, had an interest or short position in the shares and underlying shares of
the Company which were recorded in the register required to be kept by the Company pursuant to Section 336 of
the SFO.
(Note 2): BlackRock, Inc. was interested in a total of 457,721,642 H shares in accordance with the provisions of Part XV of the
SFO. Of these shares, BlackRock Investment Management, LLC, BlackRock Financial Management, Inc., BlackRock
Institutional Trust Company, National Association, BlackRock Fund Advisors, BlackRock Advisors, LLC, BlackRock
Japan Co., Ltd., BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia)
Limited, BlackRock Asset Management North Asia Limited, BlackRock (Netherlands) B.V., BlackRock Advisors
(UK) Limited, BlackRock International Limited, BlackRock Asset Management Ireland Limited, BLACKROCK
(Luxembourg) S.A., BlackRock Investment Management (UK) Limited, BlackRock Asset Management Deutschland
AG, BlackRock Fund Managers Limited, BlackRock Life Limited, BlackRock (Singapore) Limited and BlackRock
Asset Management (Schweiz) AG were interested in 2,767,315 H shares, 1,733,000 H shares, 106,339,385 H shares,
166,381,000 H shares, 216,000 H shares, 8,566,352 H shares, 2,397,165 H shares, 953,000 H shares, 23,232,127 H
shares, 2,919,000 H shares, 59,540,161 H shares, 3,022,700 H shares, 45,276,186 H shares, 14,313,000 H shares,
15,954,251 H shares, 363,000 H shares, 3,202,000 H shares, 244,000 H shares, 266,000 H shares and 36,000 H
shares respectively. All of these entities are either controlled or indirectly controlled subsidiaries of BlackRock, Inc. Of
these 457,721,642 H shares, 561,000 H shares were cash settled unlisted derivatives.
JPMorgan Chase & Co. held by way of attribution a short position as defined under Part XV of the SFO in
94,911,965 H shares (1.27%). Of these 94,911,965 H shares, 18,090,240 H shares were physically settled listed
derivatives, 22,997,300 H shares were cash settled listed derivatives, 58,131 H shares were physically settled unlisted
derivatives and 53,346,794 H shares were cash settled unlisted derivatives.
Included in the 549,486,256 H shares are 318,375,062 H shares (4.27%), which are held in the “lending pool", as
defined under Section 5(4) of the Securities and Futures (Disclosure of Interests-Securities Borrowing and Lending)
Rules. Of these 549,486,256 H shares, 19,857,255 H shares were physically settled listed derivatives, 248,000
H shares were cash settled listed derivatives, 3,474,035 H shares were physically settled unlisted derivatives and
43,193,173 H shares were cash settled unlisted derivatives.
Changes in Ordinary Shares and Shareholders Information
Other benefits,
Capacity
Name of substantial shareholder
So far as is known to the Directors, Supervisors and the chief executive of the Company, as at 31 December 2015,
the following persons (other than the Directors, Supervisors and the chief executive of the Company) had interests
or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the
Company under the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance (Chapter
571 of the Laws of Hong Kong) (the “SFO”), or which were recorded in the register required to be kept by the
Company pursuant to Section 336 of the SFO, or as otherwise notified to the Company and HKSE:
Changes in Ordinary Shares and Shareholders Information
China Life Insurance Company Limited Annual Report 2015
1.
54
Securities Investment Fund²
Limited-SSE 50 Exchange Traded Index
+1,675,837
11,996,529
0.04%
Other
Industrial and Commercial Bank of China
Equity Securities Investment Fund
Credit Suisse Internet Plus Stock
HKSCC Nominees Limited is a company that holds shares on behalf of the clients of the Hong Kong stock brokers and other participants of the
CCASS system. The relevant regulations of the HKSE do not require such persons to declare whether their shareholdings are pledged or frozen.
Hence, HKSCC Nominees Limited is unable to calculate or provide the number of shares that are pledged or frozen.
+12,903,409
0.05%
Other
Bank of Communications Co., Ltd - ICBC
2
Tianfu Bull No. 53 Asset Management Plan
- Industrial and Commercial Bank of
China Limited-China Universal -
+15,015,845
15,015,845
0.05%
Other
China Universal Asset Management Co., Ltd
18,452,300
0.07%
12,903,409
20,000,000
2.
2.
INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES
OF THE COMPANY HELD BY SUBSTANTIAL SHAREHOLDERS AND OTHER
PERSONS UNDER HONG KONG LAWS AND REGULATIONS
During the Reporting Period, there was no change to the controlling shareholder and the effective controller
of the Company. As at the end of the Reporting Period, there was no other corporate shareholder holding
more than 10% of the shares in the Company.
China Life Insurance Company Limited
4.
68.37%
China Life Insurance (Group) Company
100%
Ministry of Finance of the PRC
The effective controller of the Company is the Ministry of Finance of the People's Republic of China. The
equity and controlling relationship between the Company and its effective controller is set out below:
Changes in Ordinary Shares and Shareholders Information
China Life Insurance Company Limited Annual Report 2015
55
55
Details of shareholders
As at 31 December 2015, CLIC held 1,785,098,644 shares (H shares) of Town
Health International Medical Group Limited, representing 23.90% of its total
shares.
21 July 2003 (CLIC was formerly known as China Life Insurance Company, a
company approved and formed by the State Council in January 1999. With the
approval of the CIRC in 2003, China Life Insurance Company was restructured as
CLIC.)
Yang Mingsheng
China Life Insurance (Group) Company
subsidiaries and affiliates listed
in China or abroad during the
Reporting Period
Shareholdings in other
Major businesses
Date of incorporation
Legal representative
Name of company
The controlling shareholder of the Company is CLIC, and its relevant information is set out below:
Information relating to the Controlling Shareholder and Effective Controller
Both Industrial and Commercial Bank of China Limited-China Southern Flexible Allocation of Consumption and Vitality of Hybrid Securities
Investment Fund and Industrial and Commercial Bank of China Limited-SSE 50 Exchange Traded Index Securities Investment Fund have
Industrial and Commercial Bank of China Limited as their fund depositary. China Universal Asset Management Co., Ltd – Industrial and
Commercial Bank of China Limited - China Universal – Tianfu Bull No.53 Asset Management Plan has Industrial and Commercial Bank of
China Limited as its asset trustee. Save as above, the Company was not aware of any connected relationship and concerted parties as defined by
the "Measures for the Administration of the Takeover of Listed Companies" among the top ten shareholders of the Company.
China National Nuclear Corporation and China International Television Corporation became the top 10 shareholders of the Company through
the strategic placement during the initial public offering of A Shares of the Company in December 2006. The trading restriction period of the
shares from the strategic placement was from 9 January 2007 to 9 January 2008.
3.
Insurance services including receipt of premiums and payment of benefits in
respect of the in-force life, health, accident and other types of personal insurance
business, and the reinsurance business; holding or investing in domestic and
overseas insurance companies or other financial insurance institutions; funds
management business permitted by national laws and regulations or approved by
the State Council of the PRC; other businesses approved by insurance regulatory
agencies.
(Note 1): JPMorgan Chase & Co. was interested in a total of 549,486,256 H shares in accordance with the provisions of Part
XV of the SFO. Of these shares, J.P. Morgan Securities LLC, J.P. Morgan Clearing Corp, J.P. Morgan Investment
Management Inc., J.P. Morgan GT Corporation, J.P. Morgan Trust Company of Delaware, J.P. Morgan Whitefriars
Inc., J.P. Morgan Securities plc, JPMorgan Chase Bank, N.A., J.P. Morgan Chase Bank Berhad and JPMorgan Asset
Management (UK) Limited were interested in 16,807,782 H shares, 1,467,859 H shares, 629,000 H shares, 1,500,000
H shares, 6,240 H shares, 136,758,345 H shares, 66,721,185 H shares, 318,378,337 H shares, 6,913,508 H shares
and 304,000 H shares respectively. All of these entities are either controlled or indirectly controlled subsidiaries of
JPMorgan Chase & Co.
0
Mr. Li became the Vice President of the Company in November 2014. He became the Chief
Actuary of the Company in March 2012. Mr. Li joined the Company in 1996 and subsequently
served as Deputy Director, Director, Assistant to the General Manager of the Product
Development Department, Responsible Actuary of the Company and General Manager of the
Actuarial Department. He graduated from Shanghai Jiaotong University majoring in Computer
Science with a Bachelor's degree in 1991, Central University of Finance and Economics majoring
in Monetary Banking (Actuarial Science) with a Master's degree in 1996 and Tsinghua University
with an EMBA in 2010, and also studied in University of Pennsylvania in the United States
in 2011. Mr. Li is a Fellow of the China Association of Actuaries (FCAA) and a Fellow of the
Institute and Faculty of Actuaries (FIA). He was the Chairman of the first session of the China
Actuarial Working Committee and the Secretary-general of both the first and the second sessions
of the China Association of Actuaries. He is currently an Executive Director of the China
Association of Actuaries and a Special Executive of the Board of Directors of the Insurance
Institute of China.
received
during the
annuity fund
Number
Whether
the Company
and enterprise
received from
provident fund
emoluments
housing
Total
social insurance,
Other benefits,
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
CURRENT SUPERVISORS
2.
30.44
69.78
No
Xu Haifeng
Vice President
of shares Number of
Remuneration
paid by the
Reporting
0
0
Male 57 Since 11 July 2015
Chairman of the
Miao Ping
parties
(before tax)
thousands
thousands
changes
the year the year
Male 56 Since November 2014
Gender Age Term
Name
connected
in RMB ten ten thousands
RMB ten
Reason for
beginning of at the end of
from the
Company Period in RMB
paid/fee in
held at the shares held
emolument
Position
0
0
39.34
47
Since July 2015
0
0
18.35
14.71
33.06
No
Board Secretary
Male
53
Male
Since June 2013
0
36.69
34.66
71.35
No
0
0
456.20
Notes:
1.
2.
0
19.67
Assistant President
No
30.86
70.20
No
Li Mingguang
Vice President,
Male 46 As Vice President since
0
0
39.34
30.69
70.03
Xiao Jianyou
Zheng Yong
Total
No
November 2014 and
Chief Actuary since
March 2012
Yang Zheng
Vice President
Male 45 Since November 2014
0
0
39.34
31.26
70.60
Chief Actuary
3.
12.00
No
from the
Company Period in RMB
Remuneration
held at the share held at
emolument
Reporting
paid by the
of share Number of
received
during the
annuity fund
Number
Whether
the Company
and enterprise
provident fund received from
emoluments
housing
Total
Other benefits,
social insurance,
3. CURRENT SENIOR MANAGEMENT
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
beginning of
the end of
Reason for paid in RMB
in RMB ten
0
Since November 2014
Male 57
Vice President
Xu Hengping
No
71.18
31.40
39.78
Since April 2014
Male 57
59
President
parties
(before tax)
thousands
changes ten thousands
the year
the year
Gender Age Term
Position
Name
connected
ten thousands
Lin Dairen
59
According to the requirements of the relevant PRC policies, the final amount of emoluments of the Chairman of
the Supervisory Committee is currently subject to review and approval. The result of the review will be disclosed
when the final amount is confirmed.
With the approval given at the 2014 Annual General Meeting held on 28 May 2015, the fifth session of the
Supervisory Committee of the Company was elected. With the approval given at the 2014 Annual General Meeting
and the approval from the CIRC, Mr. Miao Ping was appointed as a Non Employee Representative Supervisor of
the Company with effect from 11 July 2015. With the approval given at the first meeting of the second session of
the Employee Representative Meeting of the Company and the approval from the CIRC, Mr. Zhan Zhong and
Ms. Wang Cuifei were appointed as Employee Representative Supervisors of the Company with effect from 11 July
2015. The first meeting of the fifth session of the Supervisory Committee was held on 24 July 2015, which elected
Mr. Miao Ping as the Chairman of the fifth session of the Supervisory Committee of the Company.
Employee Representative
Zhan Zhong
Yes
0
0
0
0
0
Since 20 October 2014
Female 47
Supervisor
Male 47
Xiong Junhong
160.35
34.21
126.14
0
0
Since 25 May 2009
56
Male
Supervisor
Shi Xiangming
Supervisory Committee
No
31.67
Since 11 July 2015
68.43
The positions of the Supervisors in this annual report reflect their positions as at the submission date of this annual
report. The emoluments are calculated based on their terms of office during the Reporting Period.
Pursuant to the Articles of Association, Supervisors serve for a term of three years and may be re-elected.
4.
3.
2.
1.
343.76
0
0
Notes:
Total
0
Supervisor
69.56
13.65
55.91
0
0
Employee Representative Female 52 Since 11 July 2015
Wang Cuifei
Supervisor
No
82.18
13.75
No
68
The positions of the members of the Senior Management in this annual report reflect their positions as at the
submission date of this annual report. The emoluments are calculated based on their terms of office during the
Reporting Period.
With the approval given at the first meeting of the fifth session of the Board of Directors of the Company and the
approval from the CIRC, Mr. Xiao Jianyou was appointed as an Assistant President of the Company with effect
from 21 July 2015.
Female 48
December 2014 -
February 2016
0
36.69
35.85
72.54
No Retired due to the expiration of session of the
Supervisory Committee
Yes Resigned due to adjustment of work
arrangements
No Retired due to adjustment of work
arrangements
Total
0
2,000
429.98
61
China Life Insurance Company Limited Annual Report 2015
Directors, Supervisors, Senior Management and Employees
DIRECTORS
Mr. Yang Mingsheng, born in 1955, Chinese
Mr. Yang became the Chairman and an Executive Director of the Company in May 2012.
He has been the Chairman of China Life Insurance (Group) Company since March 2012, the
Chairman of China Life Property and Casualty Insurance Company Limited since March 2012,
the Chairman of China Life Insurance (Overseas) Company Limited since January 2013, and
the Chairman of China Life Asset Management Company Limited since December 2013. Mr.
Yang has many years of experience in financial industry. He acted as the Vice Chairman of China
Insurance Regulatory Commission from 2007 to 2012, and worked in Agricultural Bank of China
from 1980 to 2007, where he held various positions such as the Vice President of Shenyang
Branch, Head of Industrial Credit Department and President of Tianjin Branch. He was
appointed as the Vice President of Agricultural Bank of China in 1997 and was then promoted to
the President of Agricultural Bank of China in 2003. Mr. Yang, a Senior Economist, graduated
from the Faculty of Finance of Nankai University, majoring in Monetary Banking with a Master's
degree in Economics.
Mr. Lin Dairen, born in 1958, Chinese
Mr. Lin became an Executive Director of the Company in October 2008, and was appointed as
the President of the Company by the Board in March 2014. He serves concurrently as a Non-
executive Director of China Life Property and Casualty Insurance Company Limited, China Life
Pension Company Limited and China Life Asset Management Company Limited. He served as
the Vice President of the Company from 2003 to March 2014, and an Executive Director and
the President of China Life Pension Company Limited from November 2006 to March 2014.
Mr. Lin graduated with a Bachelor's degree in Medicine from Shandong Province Changwei
Medical Institute in 1982. Mr. Lin, a Senior Economist, has over 30 years of experience in the
operation of the life insurance business and insurance management, and was awarded special
allowance by the State Council. He is currently the Chairman of the China Life Foundation,
the Vice Chairman of the Insurance Institute of China and the Insurance Association of China,
the Director of the Life Insurance Committee of the Insurance Association of China and a Non-
executive Director of China's Insurance Protection Fund Co., Ltd.
662
Financial
Controller
Huang Xiumei
18.07
8.23
21.82
89.58
No Retired due to the expiration of session of the
Supervisory Committee
No Retired due to the expiration of session of the
Supervisory Committee
Li Xuejun
Employee
Representative
Supervisor
Male 45 24 July 2012 -
11 July 2015
0
2,000 Bought from
the secondary
73.28
China Life Insurance Company Limited Annual Report 2015
39
94.76
45
market
Liu Anlin
Vice President
Male
52
March 2013-
March 2015
0
0
9.84
21.48
Directors, Supervisors, Senior Management and Employees
2
Mr. Xu Hengping, born in 1958, Chinese
Mr. Tang became an Independent Director of the Company in March 2016. He is a professor of
the School of Law of Tsinghua University, the Deputy Head of the Commercial Law Research
Center of Tsinghua University, an associate editor of "Tsinghua Law Review", a member of the
Listing Committee of the Shanghai Stock Exchange, the Chairman of the Independent Director
Committee of the Listed Companies Association of the PRC, and an Independent Director of
each of Harvest Fund Management Co., Ltd., GF Securities Co., Ltd., and Oriza Holdings Co.,
Ltd. Mr. Tang was elected as a member of the first and second sessions of the Merger, Acquisition
and Reorganization Review Committee of the China Securities Regulatory Commission from
2008 to 2010. He served as an Independent Director of China Spacesat Co., Ltd. from 2008
to 2014, an Independent Director of each of SDIC Power Holdings Co., Ltd. and Changjiang
Securities Company Limited from 2009 to 2013, and an Independent Director of Beijing Rural
Commercial Bank Co., Ltd. from 2009 to 2015. Mr. Tang graduated from Renmin University of
China with Bachelor's, Master's and Doctorate degrees in Law.
66
China Life Insurance Company Limited Annual Report 2015
Directors, Supervisors, Senior Management and Employees
SUPERVISORS
Mr. Miao Ping, born in 1958, Chinese
Mr. Miao became the Chairman of the Supervisory Committee of the Company in July 2015.
He has been an Executive Director of the Company since July 2014, the Vice President of the
Company since December 2009, the General Manager of the Company's Jiangsu Branch since
September 2006, the General Manager of the Company's Jiangxi Branch since September 2004,
and the Deputy General Manager of the Company's Jiangsu Branch since April 2002. Mr.
Miao graduated from the Correspondence College of Yangzhou University in 1996, majoring in
Economics and Management. Mr. Miao, a Senior Economist, has over 30 years of experience in
the operation of life insurance business and the management of insurance business.
Mr. Shi Xiangming, born in 1959, Chinese
Mr. Shi became a Supervisor of the Company in May 2009, and has been the General Manager
of the Supervisory Department of the Company since September 2008. Mr. Shi served as Deputy
General Manager of the Human Resources Department and Office Director of the Company
from September 2003 to September 2008. From March 2002 to August 2003, Mr. Shi served as
the Deputy General Manager of the Supervisory Department of China Life Insurance Company.
Mr. Shi graduated from the Chemistry School of the first branch college of Peking University
with a Bachelor of Science degree.
Ms. Xiong Junhong, born in 1968, Chinese
Ms. Xiong became a Supervisor of the Company in October 2014. She is a Senior Economist
with a PhD in Finance from Nankai University. From July 1993 to August 2003, Ms. Xiong
worked at the Banking Department and Trust Department of China People's Insurance Trust
and Investment Company, and the Assets Management Department of China Life Insurance
Company. Ms. Xiong has been the Director of the Assets Management Department of China
Life Insurance (Group) Company since September 2003, the Senior Manager of the Strategic
Planning Department of China Life Insurance (Group) Company since August 2006, an
Assistant to the General Manager of the Strategic Planning Department of China Life Insurance
(Group) Company since September 2008, an Assistant to the General Manager (equivalent to
the rank of departmental deputy general manager of China Life Insurance (Group) Company)
of the Company's Hebei Branch since December 2010, and the Deputy General Manager of the
Strategic Planning Department of China Life Insurance (Group) Company since June 2013. Ms.
Xiong has many years of experience in strategic management and investment research, and has
extensive working experience in assets preservation, risk management, management of retained
assets, investment research and strategic planning.
Mr. Tang Xin, born in 1971, Chinese
67
Directors, Supervisors, Senior Management and Employees
e
Mr. Zhan Zhong, born in 1968, Chinese
Mr. Zhan became a Supervisor of the Company in July 2015. He has been the General Manager
of the Individual Insurance Division of the Company (general manager level of provincial
branches) since July 2014. Mr. Zhan served as the General Manager of the Company's Qinghai
Branch from January 2014 to June 2014. Mr. Zhan joined the Company in November 1994,
and has successively served as the General Manager of the Individual Insurance Division of the
Company's Guangdong Branch, Assistant to the General Manager of the Company's Guangdong
Branch, Deputy General Manager (responsible for daily operation) and General Manager of the
Individual Insurance Division of the Company and Deputy Secretary of the Party Committee
and Deputy General Manager (responsible for daily operation) of the Company's Qinghai
Branch. Mr. Zhan graduated from Kunming Institute of Technology with a Bachelor's degree in
Computer and Automation.
Ms. Wang Cuifei, born in 1964, Chinese
Ms. Wang became a Supervisor of the Company in July 2015. She has been the General Manager
of the Customer Services Department of the Company since September 2014. Ms. Wang served
as the General Manager of the Sales Inspection Department of the Company from March 2009 to
August 2014. She joined the Company in July 2001, and has served successively as the person-in-
charge (deputy director level) and General Manager (division level) of the Training Management
Division of the Brokerage Agency Department, Deputy General Manager of the Bancassurance
Department and General Manager of the Sales Inspection Department of the Company. Ms.
Wang graduated from the Party School of the Central Committee of CPC with a Bachelor's
degree in Economic Management.
SENIOR MANAGEMENT
Mr. Lin Dairen, please see the section "Directors" for his profile.
Mr. Xu Hengping, please see the section “Directors” for his profile.
Mr. Xu Haifeng, please see the section “Directors” for his profile.
Mr. Li Mingguang, born in 1969, Chinese
China Life Insurance Company Limited Annual Report 2015
67.76
Mr. Pike became an Independent Director of the Company in July 2015. Before his retirement
from Goldman Sachs in 2014, Mr. Pike served as the Managing Director of Goldman Sachs and
the Chief Representative of the Beijing Representative Office of Goldman Sachs International
Bank UK from August 2011 to May 2014, and the Managing Director of Goldman Sachs and
the senior advisor and project coordinator sent to the Industrial and Commercial Bank of China
by Goldman Sachs from January 2007 to August 2011. From July 2000 to December 2006, he
was the Senior Vice President of Lehman Brothers and the Deputy Head and Head of Asia Credit
Risk Management of Lehman Brothers. Mr. Pike currently sits on the four-member Committee
of Inspection of Peregrine Fixed Income Limited. He has over 30 years of experience in the Asian
financial industry with a focus on risk management and China's banking industry. He holds a
Bachelor of Arts degree in Chinese Language and Literature from Yale University and a Master of
Public Affairs degree in development economics from Princeton University's Woodrow Wilson
School.
Directors, Supervisors, Senior Management and Employees
Mr. Xu became an Executive Director of the Company in July 2015. He has been the Vice
President of the Company since November 2014, the Chief Operating Officer of the Company
since August 2010, the General Manager of the Company's Fujian Branch since April 2007, the
Deputy General Manager of the Company's Fujian Branch since December 2002, an Assistant
to the General Manager of the Company's Fujian Branch since September 1998, and a Director
of Personal Insurance Division of the Company's Fujian Branch since July 1996. Mr. Xu once
served as the General Manager of the Sales Department and General Manager of Longyan Branch
of Fuzhou Life Insurance Company Limited. Mr. Xu graduated from Hunan University, majoring
in Finance. Mr. Xu, a Senior Economist, has over 30 years of experience in operation of the life
insurance business and insurance management.
Mr. Xu Haifeng, born in 1959, Chinese
Mr. Xu became an Executive Director of the Company in July 2015. He has been the Vice
President of the Company since November 2014. He has been the Business Controller of the
Company since February 2014, and concurrently serves as the General Manager of Hebei Branch
of the Company. Mr. Xu served as the General Manager of Beijing Branch and the General
Manager of Hebei Branch of the Company from 2006 to 2014. Prior to that, Mr. Xu served
as the Deputy General Manager and General Manager of Linyi Branch in Shandong Province
and the General Manager of the Sales Management Department in Shandong Branch of the
Company, the General Manager of Jinan Branch and the Deputy General Manager of Beijing
Branch of the Company. Mr. Xu graduated from Linyi Foreign Language Normal University in
1982, from Shandong Provincial Party School majoring in Economic Management in 1996, and
obtained a Master's degree in Business Administration from Zhongnan University of Economics
and Law in 2007. Mr. Xu, a Senior Economist, has over 30 years of experience in the operation of
life insurance business and insurance management.
Mr. Miao Jianmin, born in 1965, Chinese
Mr. Miao became a Non-executive Director of the Company in October 2008. He is the Vice
Chairman and President of China Life Insurance (Group) Company. He is concurrently a
Director of China Life Asset Management Company Limited, a Director of China World Trade
Center Co., Ltd., and an Executive Director of China Finance 40 Forum. He was awarded special
allowance by the State Council. In 2009, he was named as a "State-level Candidate for the New
Century Talents Project” and one of the “60 People in China Insurance Industry in the 60-
year History of New China". Mr. Miao graduated from the Central University of Finance and
Economics with a Doctorate in Economics. Before that, Mr. Miao graduated from the post-
graduate division of the People's Bank of China with a Master's degree in Money and Banking,
and the Central University of Finance and Economics with a Bachelor's degree in Insurance. Mr.
Miao is a Senior Economist.
63
69
China Life Insurance Company Limited Annual Report 2015
Directors, Supervisors, Senior Management and Employees
Mr. Zhang Xiangxian, born in 1955, Chinese
Mr. Zhang became a Non-executive Director of the Company in July 2012. He has been the
Secretary of Commission for Disciplinary Inspection of China Life Insurance (Group) Company
since October 2006, and the Vice President of China Life Insurance (Group) Company since
August 2008. Mr. Zhang has many years of experience in the insurance industry and held various
positions from 1993 to 2006, including the Director of the Promotion Division of General Office
and Deputy General Manager of General Office of the People's Insurance Company of China,
the Office Director of the CIRC, the Deputy Office Director (responsible for daily operation) of
Shenzhen office of the CIRC, and the Director of Administrative Department of Representative
Agencies of the CIRC. Mr. Zhang is a Senior Editor and obtained a Master's degree in Business
Administration for senior management from Zhongnan University of Economics and Law.
Mr. Robinson Drake Pike, born in 1951, American
Mr. Wang Sidong, born in 1961, Chinese
Mr. Liu Jiade, born in 1963, Chinese
Mr. Liu became a Non-executive Director of the Company in July 2015. He is the Vice President
of China Life Insurance (Group) Company and the Chairman of China Life Pension Company
Limited. Mr. Liu has been a Director of China Guangfa Bank Co., Ltd. since December 2006
and a Supervisor of Sinopec Sales Company Limited since March 2015. He served as the Deputy
Director and the Director of the Trade and Finance Department of the Ministry of Finance,
the Deputy County Magistrate (as a titular position) of Guantao County People's Government
in Hebei Province, and the Deputy Director of the Finance Department of the Ministry of
Finance. Mr. Liu served as the Vice President of the Company from 2003 to March 2014, and
also concurrently served as a Director of China Life Asset Management Company Limited, a
Director of China Life Property and Casualty Insurance Company Limited, and a Director of
China Life Franklin Asset Management Company Limited. He is currently a member of the
Accounting Informatization Committee of the Ministry of Finance. Mr. Liu, a Senior Economist,
graduated from the Central Finance College (now known as the Central University of Finance
and Economics) majoring in Finance with a Bachelor's degree in Economics.
64
China Life Insurance Company Limited Annual Report 2015
Directors, Supervisors, Senior Management and Employees
Mr. Anthony Francis Neoh, born in 1946, Chinese
Mr. Neoh became an Independent Director of the Company in June 2010. He currently serves
as a member of the International Consultation Committee of the CSRC. He previously served as
Chief Advisor to the CSRC, a member of the Basic Law Committee of the Hong Kong Special
Administrative Region under the Standing Committee of the National People's Congress of
China, and the Chairman of the Hong Kong Securities and Futures Commission, etc. From 1996
to 1998, he was the Chairman of the Technical Committee of the International Organization of
Securities Commissions. He was appointed as Queen's Counsel (since retitled as Senior Counsel)
in Hong Kong in 1990. Mr. Neoh graduated from the University of London with a Bachelor's
degree in Law in 1976. He is a barrister of England and Wales and admitted to the State Bar
of California. In 2003, he was conferred the Doctorate in Laws, honoris causa, by the Chinese
University of Hong Kong. He was elected Honorary Fellow of the Hong Kong Securities Institute
and Academician of the International Euro-Asian Academy of Sciences in 2009. Mr. Neoh was a
Non-executive Director of Global Digital Creations Holdings Limited from November 2002 to
December 2005, and the Manager of the Link Real Estate Investment Trust and an Independent
Non-executive Director of the Link Management Limited from September 2004 to March 2006.
He served as an Independent Non-executive Director of Bank of China Limited from August
2004 to September 2013. Since December 2014, he has been an Independent Non-executive
Director of CITIC Limited. Since April 2015, he has been an Independent Non-executive
Director of the Industrial and Commercial Bank of China Co., Ltd.
Mr. Chang Tso Tung Stephen, born in 1948, Chinese
Mr. Chang became an Independent Director of the Company in October 2014. He served as
the Vice Chairman of the Greater China Region of Ernst & Young, the Managing Partner for
professional services and the Chairman of auditing and consulting service of Ernst & Young
until his retirement in 2004. From 2007 to 2013, Mr. Chang was an Independent Non-executive
Director of China Pacific Insurance (Group) Co., Ltd. Mr. Chang is currently an Independent
Non-executive Director of China Cinda Asset Management Co., Ltd., Kerry Properties Limited
and Hua Hong Semiconductor Limited, all of which are listed on the HKSE. Mr. Chang has been
practicing as a certified public accountant in Hong Kong for around 30 years and has extensive
experience in accounting, auditing and financial management. Mr. Chang holds a Bachelor
of Science degree from the University of London, and is a fellow member of the Institute of
Chartered Accountants in England and Wales.
65
China Life Insurance Company Limited Annual Report 2015
Mr. Wang became a Non-executive Director of the Company in July 2012. He has been the Vice
President of China Life Insurance (Group) Company, the Chairman of China Life Investment
Holding Company Limited, and a Director of China Life Pension Company Limited since
June 2004. Mr. Wang worked for the Ministry of Foreign Economic Relations and Trade, the
Xinhua News Agency Hong Kong Branch, and the Hong Kong Chinese Enterprises Association.
He served as the Deputy Director of the General Office of China Life Insurance Company, the
Deputy General Manager of its Zhejiang Branch and the Deputy Director of the Shares Reform
Office of China Life from 2000. Mr. Wang was the Director of the General Office of China Life
Insurance (Group) Company in 2003. Mr. Wang, a Senior Economist, graduated from Shandong
University with a Bachelor's degree in Arts, majoring in Chinese Language and Literature.
According to the requirements of the relevant PRC policies, the final amount of emoluments of the Senior
Management is currently subject to review and approval. The result of the review will be disclosed when the final
amount is confirmed.
0
Female 51 24 July 2012-
11 July 2015
connected
Name
Previous Position Gender Age Term
of the year
year
changes
thousands
thousands
(before tax)
parties
Reason for changes
Su Hengxuan
Executive Director Male
53
1 July 2014-
0
0
13.11
13.17
26.28
Yes Resigned due to adjustment of work
8 May 2015
arrangements
in RMB ten ten thousands
RMB ten
Reason for
the beginning the end of the
60
4.
China Life Insurance Company Limited Annual Report 2015
Directors, Supervisors, Senior Management and Employees
RESIGNATION AND RETIREMENT OF DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT
Other
benefits, social
insurance,
Total
housing emoluments
provident fund received from
and enterprise the Company
Vice President
Whether
during the
received
Number of Number of
Remuneration
paid by the
Reporting
emolument
share held at share held at
paid/fee in
Company Period in RMB
from the
annuity fund
August 2008-
8 May 2015
Miao Ping
0
32.00
0
32.00
No Retired due to the expiration of session of the
Board
Retired due to adjustment of work
arrangements
No Retired due to the expiration of session of the
Board
No Resigned according to relevant policies
7 March 2016
Xia Zhihua
0
Chairperson of
the Supervisory
Committee
16 March 2006 -
11 July 2015
001
25
22.95
21.35
44.30
430
Yang Cuilian
Employee
Representative
Supervisor
Female 61
0
20 October 2014 -
Male
Executive Director Male
57 1 July 2014-
0
0
19.67
19.45
39.12
28 May 2015
Vice President
December 2009-
May 2015
52
Bruce Douglas
Moore
Male
66
4 June 2009-
0
13.33
333
0
13.33
28 May 2015
Huang Yiping
Independent
Director
Independent
Director
39.34
2
Mr. Zheng became the Board Secretary of the Company in June 2013. He previously held
positions as the Department Head of the Ministry of Justice of the PRC, a practicing lawyer
of Beijing Longan Law Firm, China Legal Service Ltd. (Hong Kong) and Beijing DeHeng
Law Offices, the Deputy General Manager of the Department of Legal Affairs, the Company
Secretary, and the General Manager of the Legal and Compliance Department of the Company,
and an Executive Director and Vice President of China Guangfa Bank Co., Ltd. Mr. Zheng
received his LL.B. degree from Peking University, and LL.M. degrees from the China University
of Political Science and Law and University of Essex (UK). Mr. Zheng was a visiting researcher
at Harvard Law School and Harvard Kennedy School of Government in the United States from
August 1996 to October 1997. Mr. Zheng is a Senior Economist.
Board Secretary
Board Secretariat/Company Secretary
Decision Committee
Strategy and
Investment
Risk
Management
Committee
Nomination and
Remuneration
Committee
Audit Committee
Supervisory
Committee
Board of Directors
Shareholders'
General Meeting
The Company implements good corporate governance policies and strongly believes that through fostering sound
corporate governance, further enhancing its transparency and establishing effective system of accountability, the
Company can operate in a more systematic manner, make decisions in a more scientific way, and boost the confidence of
investors.
OVERVIEW OF CORPORATE GOVERNANCE
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
72
(Corporate Governance Structure Chart)
72
Training Plans
3.
The Company has established a remuneration and incentive system with reference to employee's positions,
the Company's performance and market conditions.
Remuneration Policy
98,823
5,240
2,921
34,918
52,264
Number of Employees
Total
Others
Secondary School
College Diploma
Adhering to the philosophy of "people-oriented and both capability and integrity being equally important”,
the Company has been promoting the unity between the growth of the Company and its employees in a
harmonious way. In 2015, the Company pushed forward employees' training to local branches and frontline
business management teams for further in-depth development under the direction of its “innovation-driven
growth" strategy. With the aim of transforming training results into operating performance, the annual
training plan is designed to strengthen training support for key personnel of the Company, including local
management teams, sales management teams and key personnels in all professional sectors, increase training
resources for companies in key cities and working units with faster business development, and focus on
the training of the pool of talents of companies at all levels, thus increasing the value of training for the
purposes of improving operating performance and achieving business targets. The Company's education and
training departments at all levels actively broadened their horizon for training and offered innovative ways
of training, which improved the training resources protection system for the entire career development of
employees. Through the implementation of a series of training programs with prominent themes and clear
objectives, the education and training departments effectively promoted the relevant work of the Company
in business development, team building, culture cultivation, service improvement, efficiency optimization
and risk prevention in 2015.
With the establishment of a corporate governance system with reasonably designed structure, well-developed mechanism,
strict rules and regulations, as well as high efficiency in operation as its core objectives, the Company continues to
promote development of its corporate governance framework, strictly perform its obligation of information disclosure,
enhance its transparency and actively serve the interest of public investors so as to enhance its image and position in the
capital market.
1.
2.
Date of publication
of resolutions
28 May 2015
2014 Annual General Meeting
Index for websites on which
resolutions were published
Date of the meeting
Session of the meeting
1. Shareholders' general meetings convened during the Reporting Period are as follows:
The shareholders' general meeting, as an organ of the highest authority of the Company, exercises its duties and
functions in accordance with relevant laws. Its duties and powers include the election, appointment and removal of
Directors and Non Employee Representative Supervisors, review and approval of the reports of the Board and the
Supervisory Committee, review and approval of the annual budget and final accounts of the Company, and any other
matters required by the Articles of Association to be approved by way of resolution of the shareholders' general meeting.
The Company ensures that all shareholders are equally treated so as to ensure that the rights of all shareholders are
protected, including the right of access to information in relation to, and the right to vote in respect of, major matters
of the Company. The Company has the ability to operate and manage its business autonomously, and is separate and
independent from its controlling shareholder in its business operations, personnel, assets and financial matters.
SHAREHOLDERS' GENERAL MEETING
The Company actively organized Directors and Supervisors to attend various training courses. In 2015, Directors
and Supervisors of the Company attended a training course on the PRC insurance market of 2014 and a training
course on the "Analysis of China Risk Oriented Solvency System" pursuant to the regulatory requirements. They
also attended training courses relating to anti-money laundering pursuant to the regulatory requirements so as to
understand the latest anti-money laundering rules and regulations and the working situation of the Company on
anti-money laundering, and to enhance the capability of Directors and Supervisors to prevent against any risks of
money laundering.
9.
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
74
The Board of the Company conducted extensive investigation and research activities. Mr. Anthony Francis Neoh,
Mr. Chang Tso Tung Stephen and Mr. Robinson Drake Pike, all of whom were Independent Directors, carried
out investigation and research on local branches of the Company in Xilin Gol and Chifeng for the purpose of
understanding the business development, and the risk prevention and control of the local branches. Through
investigation and research, all Directors comprehended the working situation of local branches in great depth and
examined the effectiveness of the Board in implementing its decisions, thus enhancing the legal compliance and
risk prevention of the Company in an efficient and practical manner.
The Company has continued to optimize its system relevant to the corporate governance. In accordance with the
latest amendments to the Corporate Governance Code as contained in Appendix 14 to the Listing Rules of the
HKSE, as well as the requirements of the CIRC with respect to the risk assessment on C-ROSS, the Company
revised its Articles of Association, the "Procedural Rules for Board of Directors Meetings" and the "Procedural
Rules for Risk Management Committee Meetings” with reference to its actual operation. The major amendments
included the change of business scope of the Company, the increase of duties of the Board with respect to the
systems of risk management and internal control, as well as the increase of duties of the Risk Management
Committee with respect to the risk management of solvency, etc.
The Company has made information disclosure in a timely, open and transparent manner pursuant to the
requirements of the listing rules of its listed jurisdictions. The Company has continuously improved its
management of investor relations and enhanced its communication with investors in both form and substance,
thus ensuring that all shareholders enjoy equal rights and have access to information about the Company in an
open, fair, true and accurate manner.
The Company has set up a corporate governance structure with well-defined duties and responsibilities strictly
in accordance with relevant laws, regulations and regulatory requirements, including the Company Law and the
Securities Law of the PRC. The corporate governance structure of the Company generally meets the regulatory
requirements of its listed jurisdictions and the relevant provisions. The Company has carried out its corporate
governance procedures strictly in accordance with relevant laws, regulations and regulatory requirements,
including the Company Law and the Securities Law of the PRC, as well as the requirements of its Articles of
Association and procedural rules. Shareholders' general meetings, Board meetings and Supervisory Committee
meetings of the Company have been functioning independently and in a coordinated manner.
In accordance with the regulatory requirements of its listed jurisdictions and the relevant provisions of its Articles
of Association, the Company has continuously improved the decision-making mechanism of the Board. The Board
is accountable to the shareholders of the Company with respect to the assets and resources entrusted to it by the
shareholders, and performs its duties on corporate governance. All members of the Board have taken initiatives to
look into the Company's affairs and have had a comprehensive understanding of the Company's businesses. They
have devoted sufficient time in performing their duties as Directors with due care and in a diligent and efficient
manner. By setting up mechanisms including regular reporting of business development strategy and marketing
tactics, the management of the Company can periodically report the business operation, development strategies
and marketing tactics to the Board, which provides a basis for the Board's decision-making.
73
China Life Insurance Company Limited Annual Report 2015
Corporate Governance
3.
Bachelor
4.
6.
7.
8.
The Company has actively promoted the establishment of corporate governance, continuously improved its
corporate governance structure and enhanced its scientific decision-making ability. In order to improve the
decision-making efficiency of the specialized Board committees, the Board has established four specialized Board
committees, i.e. the Audit Committee, the Nomination and Remuneration Committee, the Risk Management
Committee, and the Strategy and Investment Decision Committee. These specialized Board committees conduct
studies on specific matters, hold meetings on both regular and ad-hoc basis, communicate with the management,
provide advice and recommendations for the Board's consideration, and deal with matters entrusted or authorized
by the Board, for the purpose of improving the Board's efficiency and intensifying the Board's functions.
The Supervisory Committee of the Company has carried out its work and performed its duties in accordance
with the Articles of Association and the “Procedural Rules for Supervisory Committee Meetings". Members
of the Supervisory Committee attended the shareholders' general meetings and the Supervisory Committee
meetings, participated in the Board meetings and the meetings of the specialized Board committees based on
their work allocation, and conducted investigations on local branches to have an in-depth understanding of the
implementation of the decisions made by the Board, so as to diligently perform their role of supervision.
During the Reporting period, the Company successfully completed the change of members of the new sessions of
the Board and the Supervisory Committee, as well as the procedures relating to the resignation and appointment
of Directors and Supervisors in compliance with the regulatory requirements of its listed jurisdictions and
the provisions of its Articles of Association. In the course of this process, the Company strictly carried out all
procedures and elected all members of the fifth sessions of the Board of Directors and the Supervisory Committee
at the shareholders' general meeting and employee representative meeting through widespread solicitation of
opinions, stringent selections and sufficient deliberation.
5.
First Extraordinary General
Meeting 2015
Master or above
(2) Education Level
Deputy General Manager
of Strategic Planning
Department
Since August 2008
Since October 2013
Vice Chairman, President
Vice President
Vice President
Vice President
Since March 2012
Term
Position
Chairman
China Life Insurance (Group) Company
China Life Insurance (Group) Company
China Life Insurance (Group) Company
China Life Insurance (Group) Company
China Life Insurance (Group) Company
China Life Insurance (Group) Company
Name of shareholders
Name
Yang Mingsheng
Miao Jianmin
Zhang Xiangxian
Wang Sidong
Liu Jiade
Xiong Junhong
II POSITIONS HELD BY CURRENT DIRECTORS, SUPERVISORS AND SENIOR
MANAGEMENT IN SHAREHOLDERS OF THE COMPANY
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
770
Since June 2004
Since August 2014
Since June 2013
70
Mr. Heng is the managing partner of Morison Heng, Certified Public Accountants. Mr. Heng
holds a Master of Science degree of the Imperial College of Science, Technology and Medicine,
the University of London. Mr. Heng is a member of The Hong Kong Institute of Certified Public
Accountants and a fellow of The Association of Chartered Certified Accountants. Mr. Heng has
over 10 years of experience in accounting and auditing for private and public companies and
financial consultancy. Mr. Heng serves as an Independent Non-executive Director of China Fire
Safety Enterprise Group Limited, Lee & Man Chemical Company Limited, Matrix Holdings
Limited and Lee & Man Handbags Holding Limited, all of which are listed on the main board of
Mr. Heng Victor Ja Wei, born in 1977, British
COMPANY SECRETARY
Mr. Zheng Yong, born in 1962, Chinese
3
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
69
Mr. Xiao became an Assistant to the President of the Company in July 2015. He has been a
Non-executive Director of China Life Property and Casualty Insurance Company Limited since
September 2015, and the General Manager of the Company's Jiangsu Branch since January 2014.
From April 2013 to January 2014, he was the Deputy General Manager (responsible for daily
operation) of the Company's Jiangsu Branch. From 2006 to 2013, he held various positions at
the Company, including the Deputy General Manager, Assistant to the General Manager and
Marketing Director of Jiangsu Branch and General Manager and Deputy General Manager of
Taizhou Branch in Jiangsu Province. Before that, Mr. Xiao held various other positions at the
Company's Jiangsu Branch, including Deputy Manager of the Sales Management Department,
Assistant to the General Manager, Deputy General Manager (responsible for daily operation)
and General Manager of the Individual Insurance Department. Mr. Xiao, a Senior Economist,
graduated from Jiangxi Traditional Chinese Medicine College in 1991 with a Bachelor's degree,
and received double Bachelor's degrees in Medicine and Law from Jiangxi Traditional Chinese
Medicine College and Nanjing University, respectively.
Mr. Xiao Jianyou, born in 1968, Chinese
Mr. Yang became the Vice President of the Company in November 2014. He became the Chief
Financial Officer of the Company since April 2013. He served as the Qualified Accountant
of the Company since 2006, and an Assistant to the General Manager, the Deputy General
Manager and the General Manager of the Finance Department of the Company since 2005.
Mr. Yang has been a Director of China Life Asset Management Company Limited since 2009
and a Director of Sino-Ocean Land Holdings Limited since 2011, and a Director of China Life
Franklin Asset Management Co., Limited since 2014. From 2000 to 2005, Mr. Yang was the
Senior Financial Analyst of MOLEX in the United States. Mr. Yang graduated from Beijing
University of Technology in 1993 with a Bachelor's degree in Engineering. He obtained a
MBA from Northeastern University in the United States in 2000. Mr. Yang is a member of the
American Institute of Certified Public Accountants (AICPA) and the Association of Chartered
Certified Accountants (ACCA). He is currently a member of the eighth session of the Board of
the Accounting Society of China, a member of the National Accounting Informatization and
Standardization Technical Committee, the third session of China Insurance Solvency Regulatory
Standard Committee and the China Accounting Standards Committee of the Ministry of Finance
of the PRC, respectively.
Mr. Yang Zheng, born in 1970, Chinese
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
the HKSE.
III
EMPLOYEES
1.
2.
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
98,823
4,469
2,674
29,330
5,373
33,036
23,941
Number of Employees
71
Total
Others
Other expertise and technicians
Insurance verification, claim processing and customer services
Finance and auditing
Employees
Number of employees of the Company
97,607
Number of employees of the Company's major subsidiaries
1,216
Employees in total
Education Level
98,823
As at the end of the Reporting Period, the composition of the employees of the Company and its major
subsidiaries is as follows:
(1)
Structure of Expertise
Class of Expertise
Management and administration
Sales and sales management
Retired employees of the Company and its major subsidiaries for which extra costs have to be incurred
29 December 2015
3,480
29 May 2015
Stephen
50%
1
0
0
1
2
Independent Director
Chang Tso Tung
100%
0
0
0
2
2
Independent Director
Anthony Francis Neoh
2
1
0
0
1
50%
Huang Yiping
Liu Jiade
1
1
0
0
0
100%
Non-executive Director
Non-executive Director
Independent Director
0
78
The Company has continued to optimize its system relevant to the corporate governance. In accordance with the latest
amendments to the Corporate Governance Code as contained in Appendix 14 to the Listing Rules of the HKSE, as well
as the requirements of the CIRC with respect to the risk assessment on C-ROSS, the Company revised its Articles of
Association, the "Procedural Rules for Board of Directors Meetings" and the “Procedural Rules for Risk Management
Committee Meetings” in 2015 with reference to its actual operation. The major amendments included the change of
business scope of the Company, the increase of duties of the Board with respect to the systems of risk management
and internal control, as well as the increase of duties of the Risk Management Committee with respect to the risk
management of solvency, etc.
At present, the fifth session of the Board comprises the following members: Mr. Yang Mingsheng, Mr. Lin Dairen, Mr.
Xu Hengping and Mr. Xu Haifeng, all being Executive Directors, Mr. Miao Jianmin, Mr. Zhang Xiangxian, Mr. Wang
Sidong and Mr. Liu Jiade, all being Non-executive Directors, and Mr. Anthony Francis Neoh, Mr. Chang Tso Tung
Stephen, Mr. Robinson Drake Pike and Mr. Tang Xin, all being Independent Directors, with Mr. Yang Mingsheng as
the Chairman of the Board. Mr. Miao Ping and Mr. Bruce Douglas Moore retired from their position as Director due
to the expiry of the term of the fourth session of the Board, Mr. Su Hengxuan resigned as Director due to adjustment of
working arrangements, and Mr. Huang Yiping resigned as Director pursuant to the relevant policies.
All Directors shall have access to the advice and services of the Board Secretary and the Company Secretary. Detailed
minutes of Board meetings regarding matters considered by the Board and decisions reached, including any concerns
raised by Directors or dissenting views expressed, are kept by the Board Secretary. Minutes of Board meetings are
available upon reasonable notice for inspection and comment by any Director.
If a Director is materially interested in a matter to be considered by the Board, the Director having such conflict of
interest shall have no voting right on the matter to be considered and shall not be counted in the quorum for the Board
meeting.
Regular Board meetings are held mainly to review the quarterly, interim or annual reports of the Company and to deal
with other related matters. The practice of obtaining Board consent through the circulation of written resolutions does
not constitute a regular Board meeting. An ad-hoc Board meeting may be convened in urgent situations if requisitioned
by any of the following: shareholders representing over one-tenth of voting shares, Directors constituting more than one-
third of the total number of Directors, the Supervisory Committee, more than two Independent Directors, the Chairman
or the President. If the resolution to be considered at such ad-hoc Board meetings has been circulated to all the Directors
and more than half of the Directors having voting rights approve such resolution by signing the resolution in writing, the
Board meeting need not be convened and such resolution in writing shall become an effective resolution.
http://www.sse.com.cn
http://www.hkexnews.hk
http://www.e-chinalife.com
http://www.sse.com.cn
http://www.hkexnews.hk
http://www.e-chinalife.com
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
77
In 2015, Independent Directors of the Company possessed extensive experience in various fields, such as macro-
economics, finance and insurance, legal compliance, accounting and auditing. The Company also complies with the
requirement of the Listing Rules of the HKSE that at least one of its Independent Directors has appropriate professional
qualifications or accounting qualifications or related financial management expertise. As required under the Listing Rules
of the SSE and the HKSE, the Company has obtained a written confirmation from each of its Independent Directors in
respect of their independence, and the Company is of the opinion that all of the Independent Directors are independent
of the Company and strictly perform their duties as Independent Directors. Pursuant to the Articles of Association,
Directors shall be elected at the shareholders' general meeting for a term of three years and may be re-elected on expiry
of the three-year term. However, Independent Directors may not serve for more than six years.
Currently, the Board comprises 12 members, including four Executive Directors, four Non-executive Directors and
four Independent Directors. The number of Independent Directors complies with the minimum requirement of three
Independent Directors and the requirement that at least one-third of the Board be represented by Independent Directors
under the Listing Rules of the HKSE. All members of the Board have devoted sufficient time in dealing with the affairs
of the Board and attended the relevant training courses organized by external regulatory authorities and the Company
according to regulatory requirements. They have referred to regulatory documents on a regular basis so as to keep
themselves informed of the regulatory development in a timely manner. The Company has purchased director's liability
insurances for its Directors, which provide protection to Directors for liabilities that might arise in the course of their
performance of duties according to law and facilitate Directors to fully perform their duties. So far as the Company
is aware, no financial, business, family or other material relationship exists among Board members, members of the
Supervisory Committee or senior management members, including between the Chairman, Mr. Yang Mingsheng and the
President, Mr. Lin Dairen.
The Board is the standing decision-making body of the Company and its main duties include: performing the function
of corporate governance of the Company, convening shareholders' general meetings, implementing resolutions passed
at such meetings, improving the Company's corporate governance policies, approving the Company's development
strategies and operation plans, formulating and supervising the Company's financial policies, annual budgets and
financial reports, providing an objective evaluation on the Company's operating results in its financial reports and
other disclosure documents, dealing with senior management personnel matters, arranging for Directors and senior
management to attend various training courses, attaching importance to the enhancement of their professional quality,
reviewing the compliance policies of the Company, and assessing the internal control systems of the Company. The
day-to-day management and operation of the Company are delegated to the management. The responsibilities of Non-
executive Directors and Independent Directors include, without limitation, regularly attending meetings of the Board
and the specialized Board committees of which they are members, providing opinions at meetings of the Board and
the specialized Board committees, resolving any potential conflict of interest, serving on the Audit Committee, the
Nomination and Remuneration Committee and other specialized Board committees, and inspecting, supervising and
reporting on the performance of the Company. The Board is accountable to the shareholders of the Company and
reports to them.
BOARD
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
76
0
0
2
0
Robinson Drake Pike
Independent Director
2
1
0
0
1
0
Note: Mr. Su Hengxuan resigned as Director on 8 May 2015 due to adjustment of working arrangements, whereas Mr. Miao
Ping and Mr. Bruce Douglas Moore retired from their position as Director on 28 May 2015 due to the change of session
of the Board. The above Directors did not attend any shareholders' general meeting of the Company during the Reporting
Period.
76
0
Wang Sidong
Meetings of the Board are held both on a regular and an ad-hoc basis. Regular meetings are convened at least four times
a year for the examination and approval of proposals, such as annual report, interim report, quarterly reports, related
financial reports, and major business operations of the year. Meetings are convened by the Chairman and a notice is
given to all Directors 14 days before such meetings. Agendas and related documents are sent to the Directors at least
three days prior to such meetings. In 2015, all notices, agendas and related documents in respect of such regular Board
meetings were sent in compliance with the above requirements. By fully reviewing all the relevant proposals, the Board
has confirmed that the information contained in its periodic reports and financial reports is true, accurate and complete
and contains no false representations, misleading statements or material omissions, and no event or situation which
would have material adverse impacts on the Company's ongoing operation has been found.
2
2
100%
0
0
0
2
Executive Director
Executive Director
Yang Mingsheng
Lin Dairen
rate
absent
by proxies
telephony
attended
meetings Attendance
attended
Number of
meetings
0
30 December 2015
24 proposals including: the “Proposal in relation to the Report of the Board of Directors of the Company for
the Year 2014”, the “Proposal in relation to the Report of the Supervisory Committee of the Company for the
Year 2014", the "Proposal in relation to the Financial Report of the Company for the Year 2014”, the “Proposal
in relation to the Profit Distribution Plan of the Company for the Year 2014", the “Proposal in relation to the
Remuneration of Directors and Supervisors of the Company”, the “Proposal in relation to the Remuneration of
Auditors of the Company for the Year 2014 and the Appointment of Auditors of the Company for the Year 2015",
the “Proposal in relation to the Election of Mr. Yang Mingsheng as an Executive Director of the Fifth Session
of the Board of Directors of the Company”, the “Proposal in relation to the Election of Mr. Miao Ping as a Non
Employee Representative Supervisor of the Fifth Session of the Supervisory Committee of the Company", and
the "Proposal in relation to the Overseas Issue by the Company of RMB Debt Instruments for Replenishment of
Capital", etc. were considered and approved by way of on-site and online voting, and the “Duty Report of the
Independent Directors of the Fourth Session of the Board of Directors of the Company for the Year 2014” and
the “Report on the Status of Connected Transactions and the Execution of Connected Transactions Management
System of the Company for the Year 2014” were received and reviewed at the 2014 Annual General Meeting held
in Beijing on 28 May 2015.
75
Corporate Governance
Six proposals including: the “Proposal in relation to the Election of Mr. Tang Xin as an Independent Director
of the Fifth Session of the Board of Directors of the Company”, the “Proposal in relation to the Appointment
of Auditors of the Company for the Year 2016", the "Proposal in relation to the Entrusted Investment and
Management Agreement for Alternative Investments with Insurance Funds between the Company and China
Life Investment Holding Company Limited”, the “Proposal in relation to the Capital Debt Financing of the
Company”, and the “Proposal in relation to the Overseas Issue of Senior Bonds by the Company”, etc. were
considered and approved by way of on-site and online voting at the First Extraordinary General Meeting 2015
held in Beijing on 29 December 2015.
1
Attendance records of Directors at the shareholders' general meetings convened during the Reporting Period:
2.
Name of Director
Type of Director
shareholders'
general meetings
the Director was
required to attend
during the year
Number of Number of Number of
meetings meetings
physically attended by
Number of
0
China Life Insurance Company Limited Annual Report 2015
1
0
0
0
Non-executive Director
Zhang Xiangxian
50%
1
0
0
1
2
Non-executive Director
Miao Jianmin
100%
2
0
50%
0
Xu Hengping
Executive Director
1
1
0
0
0
1
0
Executive Director
Xu Haifeng
0
100%
Attendance rate
4/4
Zhan Zhong
Wang Cuifei
100%
Shi Xiangming
Miao Ping
Name of Supervisor
In 2015, 4 meetings were held by the fifth session of the Supervisory Committee. Attendance records of individual
Supervisors are as follows:
Note: At the seventeenth meeting of the fourth session of the Supervisory Committee held on 28 April 2015, Ms. Yang Cuiliain
gave written authorization for Mr. Shi Xiangming to act as her proxy to attend and vote at the meeting.
100%
2/2
Number of meetings attended
Xiong Junhong
50%
2/2
1/2
Note
100%
2/2
2/2
Attendance rate
Number of meetings attended
Xiong Junhong
Li Xuejun
3/4
Yang Cuilian
Shi Xiangming
Xia Zhihua
100%
100%
At the third meeting of the fifth session of the Supervisory Committee held on 28 October 2015, Mr. Shi Xiangming gave
written authorization for Mr. Zhan Zhong to act as his proxy to attend and vote at the meeting;
75%
Name of member
Position
Name of Supervisor
In 2015, 2 regular meetings were held by the Audit Committee of the fourth session of the Board. Attendance
records of individual members are as follows:
Meetings and attendance
1.
All members of the Audit Committee have extensive experience in financial matters. The principal duties of the Audit
Committee are to review and supervise the preparation of the Company's financial reports, assess the effectiveness
of the Company's internal control system, supervise the Company's internal audit system and its implementation,
and recommend the engagement or replacement of external auditors. The Audit Committee is also responsible for
communications between the internal and external auditors and the establishment of the internal reporting mechanism
of the Company.
The Company established its Audit Committee on 30 June 2003. In 2015, the Audit Committee comprised only
Independent Directors of the Company. At present, the Audit Committee of the fifth session of the Board comprises
Mr. Robinson Drake Pike, Mr. Chang Tso Tung Stephen and Mr. Tang Xin, with Mr. Robinson Drake Pike acting
as the Chairman. Mr. Bruce Douglas Moore retired from his position as the Chairman of the Audit Committee of the
Company due to the expiry of the term of the Audit Committee of the fourth session of the Board. Mr. Huang Yiping
resigned from his position as a member of the Audit Committee of the fifth session of the Board of the Company
pursuant to the relevant policies.
AUDIT COMMITTEE
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
83
For the activities carried out by the Supervisory Committee during the Reporting Period, please refer to the
"Report of the Supervisory Committee” in this annual report.
Note 1
Activities of the Supervisory Committee during the Reporting Period
At the second meeting of the fifth session of the Supervisory Committee held on 26 August 2015, Ms. Wang Cuifei gave
written authorization for Mr. Zhan Zhong to act as her proxy to attend and vote at the meeting.
2.
1.
3.
2.
Notes:
75%
3/4
Note 2
100%
4/4
100%
4/4
The Supervisory Committee had no objection in respect of any matters under its supervision
during the Reporting Period.
In 2015, 2 meetings were held by the fourth session of the Supervisory Committee. Attendance records of
individual Supervisors are as follows:
At the third meeting of the fifth session of the Board held on 28 October 2015, Mr. Yang Mingsheng, the Chairman, gave
written authorization for Mr. Lin Dairen to act as his proxy to attend, vote and chair the meeting;
1.
5.
4.
3.
2.
1.
Notes:
No
100%
0
0
0
3
3
6.
Independent Director
No
75%
0
2
4
Note 7
Note 6
Independent Director
Huang Yiping
No
100%
0
Number of meetings attended
Robinson Drake Pike
Meetings and attendance
7.
At the first meeting of the fifth session of the Board held on 28 May 2015, Mr. Zhang Xiangxian gave written
authorization for Mr. Wang Sidong to act as his proxy to attend and vote at the meeting; at the second meeting of the
fifth session of the Board held on 26 August 2015, Mr. Zhang Xiangxian gave written authorization for Mr. Wang Sidong
to act as his proxy to attend and vote at the meeting;
The fifth session of the Supervisory Committee of the Company comprises Mr. Miao Ping, Mr. Shi Xiangming and Ms.
Xiong Junhong, all being Non Employee Representative Supervisors, and Mr. Zhan Zhong and Ms. Wang Cuifei, both
being Employee Representative Supervisors, with Mr. Miao Ping acting as the Chairman of the Supervisory Committee.
Ms. Xia Zhihua, Ms. Yang Cuilian and Mr. Li Xuejun retired from their position as Supervisor due to the expiry of the
term of the fourth session of the Supervisory Committee.
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
82
Meetings of the Supervisory Committee are convened by the Chairman of the Supervisory Committee. According to
the Articles of Association, the Company formulated the “Procedural Rules for Supervisory Committee Meetings” and
established protocols for Supervisory Committee meetings. Supervisory Committee meetings are categorized as regular
or ad-hoc meetings in accordance with the degree of pre-planning involved. There are at least three regular meetings
each year, mainly to adopt and review financial reports and periodical reports, and examine the financial conditions and
internal control of the Company. Ad-hoc meetings are convened when necessary.
The Supervisory Committee is accountable to the shareholders and reports its work to the shareholders' general meeting
according to relevant laws. It is also responsible for appraising the Company's operations, financial reports, connected
transactions and internal control, etc. during the Reporting Period.
The Supervisory Committee consists of Non Employee Representative Supervisors, such as shareholder representatives,
and Employee Representative Supervisors, of which the Employee Representative Supervisors shall not be less than one-
third of the Supervisory Committee. Non Employee Representative Supervisors, such as shareholder representatives, shall
be elected and removed by a shareholders' general meeting while Employee Representative Supervisors shall be elected
and removed by employees of the Company in a democratic manner.
Pursuant to the Company Law and the Articles of Association, the Company has established a Supervisory Committee.
The Supervisory Committee performs the following duties in accordance with the Company Law, the Articles of
Association and the “Procedural Rules for Supervisory Committee Meetings": to examine the finances of the Company;
to monitor whether the Directors, President, Vice Presidents and other senior management officers of the Company
have acted in contravention of laws, regulations, the Articles of Association and resolutions of the shareholders' general
meetings when discharging their duties; to review the financial information of the Company such as financial reports,
results reports and profit distribution plans to be approved by the Board; to propose the convening of extraordinary
shareholders' general meetings, to propose resolutions at shareholders' general meetings and to perform any other duties
under the laws, regulations and regulatory rules of the Company's listed jurisdictions.
SUPERVISORY COMMITTEE
During the Reporting Period, Mr. Yang Mingsheng served as the Chairman of the Board of Directors of the Company.
The Chairman is the legal representative of the Company, primarily responsible for convening and presiding over
Board meetings, ensuring the implementation of Board resolutions, attending annual general meetings and arranging
attendance by Chairmen of Board committees to answer questions raised by shareholders, signing securities issued by the
Company and other important documents, providing leadership for the Board to ensure that the Board works effectively
and performs its responsibilities, encouraging all Directors to make a full and active contribution to the Board's affairs,
promoting a culture of openness and debate, convening special meetings with Non-executive Directors and Independent
Directors, and exercising other rights conferred on him by the Board. The Chairman is accountable to and reports to the
Board. Mr. Lin Dairen was the President of the Company. The President is responsible for the day-to-day operations
of the Company, including implementing strategies, policies, operation plans and investment schemes approved by the
Board, formulating the Company's internal management structure and fundamental management policies, drawing up
basic rules and regulations of the Company, submitting to the Board requests for appointment or removal of senior
management officers and exercising other rights granted to him under the Articles of Association and by the Board. The
President is fully accountable to the Board for the operations of the Company.
CHAIRMAN AND PRESIDENT
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
At the second meeting of the fifth session of the Board held on 26 August 2015, Mr. Miao Jianmin gave written
authorization for Mr. Liu Jiade to act as his proxy to attend and vote at the meeting; at the third meeting of the fifth
session of the Board held on 28 October 2015, Mr. Miao Jianmin gave written authorization for Mr. Zhang Xiangxian to
act as his proxy to attend and vote at the meeting;
81
From 19 to 24 August 2015, Mr. Anthony Francis Neoh, Mr. Chang Tso Tung Stephen and Mr. Robinson Drake
Pike, all of whom were Independent Directors, carried out investigation and research on local branches of the
Company in Xilin Gol and Chifeng, listened to the work reports of local branches in Inner Mongolia, Xilin Gol
and Chifeng, held in-depth conferences with their respective key management, conducted an on-site investigation
and research on counters of the business department of Chifeng local branch for the purpose of understanding
the business development, and the risk prevention and control of the local branches. Through investigation and
research, all Directors comprehended the working situation of local branches in great depth and examined the
effectiveness of the Board in implementing its decisions, thus enhancing the legal compliance and risk prevention
of the Company in a practical manner.
In 2015, the Independent Directors of the Company and the representatives from the external auditors (Ernst &
Young Hua Ming LLP and Ernst & Young) convened a special meeting to discuss various matters including the
audit for the year 2014, the annual financial reports, and the impact of the implementation of the C-ROSS on the
Company, and also discussed the work relating to the audit of the Company.
All Independent Directors diligently fulfilled their responsibilities and faithfully performed their duties by
attending meetings of the Board and the specialized Board committees in 2015, examining and approving
the Company's business development, financial management and connected transactions, participating in the
establishment of specialized Board committees, providing professional and constructive advice in respect of
major decisions of the Company, seriously listening to the reports from the relevant personnel, understanding
the daily operation and any possible operational risks of the Company in a timely manner, and expressing their
opinions and exercising their functions and powers at Board meetings, thus actively performing their duties as
Independent Directors in an effective manner. At the annual special meeting among the Chairman, Non-executive
Directors and Independent Directors, all Independent Directors made recommendations in various aspects, such
as the development of the global capital market, return on investment and balance of risks, and gave constructive
advice on corporate governance, team building and marketing method. The Board attached great importance to
opinions and advice from Independent Directors, actively strengthened its communication with them and adopted
their advice after careful deliberation and discussion. In 2015, the Company provided various materials to the
Independent Directors, which facilitated them to comprehend information associated with the insurance industry.
All Independent Directors obtained information relating to the operation and management of the Company
through various channels, which therefore formed the basis of their scientific and prudent decisions.
In 2015, all Independent Directors of the Company possessed extensive experience in various fields, such as
macro-economics, finance and insurance, legal compliance, accounting and auditing. They satisfied the criteria
for Independent Directors under the regulatory rules of the Company's listed jurisdictions. The Independent
Directors of the Company performed their duties pursuant to the Articles of Association and the provisions and
requirements of the listing rules of the Company's listed jurisdictions.
Performance of duties by Independent Directors
2.
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
80
At the fourth meeting of the fifth session of the Board held on 22 December 2015, Mr. Huang Yiping gave written
authorization for Mr. Anthony Francis Neoh to act as his proxy to attend and vote at the meeting.
At the first meeting of the fifth session of the Board held on 28 May 2015, Mr. Huang Yiping attended the meeting by
way of telephony;
At the fourth meeting of the fifth session of the Board held on 22 December 2015, Mr. Liu Jiade gave written
authorization for Mr. Zhang Xiangxian to act as his proxy to attend and vote at the meeting;
At the fourth meeting of the fifth session of the Board held on 22 December 2015, Mr. Wang Sidong gave written
authorization for Mr. Miao Jianmin to act as his proxy to attend and vote at the meeting;
During the Reporting Period, no Independent Director has raised any objection against the proposals and matters
considered by the Board of the Company.
Attendance rate
2
Independent Director, Chairman of the Audit
Committee of the fourth session of the Board
2/2
Attendance rate
Number of meetings attended
Chang Tso Tung Stephen Independent Director, Chairman of the
Position
Name of member
In 2015, 2 regular meetings were held by the Nomination and Remuneration Committee of the fifth session of the
Board. Attendance records of individual members are as follows:
of the fourth session of the Board
Nomination and Remuneration Committee
100%
2/2
Non-executive Director, member of the
Miao Jianmin
100%
of the fourth session of the Board
100%
2/2
Independent Director, member of the
Bruce Douglas Moore
of the fourth session of the Board
Nomination and Remuneration Committee
100%
2/2
Attendance rate
Number of meetings attended
Chang Tso Tung Stephen Independent Director, Chairman of the
Position
Name of member
Nomination and Remuneration Committee
In 2015, 2 regular meetings were held by the Nomination and Remuneration Committee of the fourth session of
the Board. Attendance records of individual members are as follows:
Nomination and Remuneration Committee
Robinson Drake Pike
0
RISK MANAGEMENT COMMITTEE
Carrying out the performance appraisal of senior management officers. The Nomination and Remuneration
Committee reviewed the results of performance appraisal of senior management officers for 2014 and the
performance target contract for 2015, and made recommendations to the Board in respect of matters such as
the determination of performance target, performance appraisal procedures and results.
Proposed remuneration policy of Directors, Supervisors and senior management officers of the Company.
The Nomination and Remuneration Committee took into account various factors such as business
development management, strategic investment decisions, and corporate governance management and
control, carefully examined and determined the specific remuneration packages of all Executive Directors
and senior management officers, approved the terms of service contracts between the Company and each
of the Executive Directors, Non-executive Directors and Independent Directors and pushed forward the
signing of service contracts between the Company and all Directors, defined the rights, obligations and
remunerations of Directors, and seriously appraised the performance of Directors in the discharge of
their duties. According to the requirements of the CIRC, the Nomination and Remuneration Committee
reviewed and approved the report for the management of the Company's annual remuneration, conducted
a self-assessment on the remuneration management system of the Company and agreed to submit such
proposal to the Board for approval.
(3)
(2)
(1) Proposed appointment of Directors and senior management officers of the Company. In accordance with
the "Procedural Rules for Nomination and Remuneration Committee Meetings" and the “Board Diversity
Policy", the Nomination and Remuneration Committee carefully reviewed the structure of the Board,
its number of members and composition (taking into account diversity factors, including gender, age,
cultural and educational background, skills, knowledge and experience), selected and recommended a list of
candidates for members of the fifth session of the Board, fully reviewed the professional qualifications and
industrial background of the Director candidates and the members of the specialized Board committees, and
the independence of the Independent Directors, etc. and submitted the opinions in relation thereto to the
Board, conducted a careful assessment on the qualifications, skills, knowledge and experience of candidates
for senior management officers so as to ensure that the candidates met the requirements set by the Company.
The Nomination and Remuneration Committee also issued a review opinion to the Board and agreed to
submit such proposals to the Board for approval.
In 2015, the Nomination and Remuneration Committee reviewed the proposal on the remuneration of Directors,
Supervisors and senior management officers, candidates for Directors, nomination of senior management officers,
business objectives and appraisal results. Pursuant to the requirements of the procedural rules for meetings, the
Nomination and Remuneration Committee reviewed the report on the duty performance of the Audit Committee
and the Nomination and Remuneration Committee. During meetings of the Nomination and Remuneration
Committee, all members actively participated in discussions and gave professional opinions on the proposals
considered and discussed at the meetings.
Performance of duties by the Nomination and Remuneration Committee
2.
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
88
of the fifth session of the Board
87
Note: At the second meeting of the Nomination and Remuneration Committee of the fifth session of the Board held on 26
August 2015, Mr. Miao Jianmin gave written authorization for Mr. Chang Tso Tung Stephen to act as his proxy to attend
of the fifth session of the Board
Nomination and Remuneration Committee
50%
Note
1/2
Non-executive Director, member of the
Miao Jianmin
of the fifth session of the Board
Nomination and Remuneration Committee
100%
1/1
Independent Director, member of the
and vote at the meeting.
Meetings and attendance
1.
The Nomination and Remuneration Committee determines, with delegated responsibility, the remuneration packages of
all Executive Directors and senior management officers. The fixed salary of the Executive Directors and other members
of senior management are determined in accordance with market levels and their respective positions, and the amount
of their performance-related bonuses is determined according to the results of performance appraisals. Directors' fees
and the volume of share appreciation rights to be granted are determined with reference to market levels and the actual
circumstances of the Company.
Independent Director, member of the Audit
Huang Yiping
Committee of the fifth session of the Board
100%
3/3
Chang Tso Tung Stephen Independent Director, member of the Audit
100%
3/3
Independent Director, Chairman of the Audit
Committee of the fifth session of the Board
Robinson Drake Pike
Attendance rate
Number of meetings attended
Position
Note
Name of member
Committee of the fourth session of the Board
100%
2/2
42
Independent Director, member of the Audit
Huang Yiping
Committee of the fourth session of the Board
100%
2/2
22
Chang Tso Tung Stephen Independent Director, member of the Audit
100%
2/2
In 2015, 3 regular meetings were held by the Audit Committee of the fifth session of the Board. Attendance
records of individual members are as follows:
2/3
67%
Committee of the fifth session of the Board
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
86
The Nomination and Remuneration Committee, as an advisor to the Board on the nomination of Directors, shall
first discuss and agree on the list of candidates to be nominated as new Directors, following which such candidates are
recommended to the Board. The Board shall then determine whether such candidates' appointments should be proposed
for approval at the shareholders' general meeting. The major criteria considered by the Nomination and Remuneration
Committee and the Board are educational background, management and research experience in the insurance industry,
and the candidates' commitment to the Company. As to the nomination of Independent Directors, the Nomination and
Remuneration Committee will give special consideration to the independence of the relevant candidates.
At present, the Nomination and Remuneration Committee of the fifth session of the Board comprises Mr. Chang Tso
Tung Stephen and Mr. Robinson Drake Pike, the Independent Directors, and Mr. Miao Jianmin, a Non-executive
Director, with Mr. Chang Tso Tung Stephen acting as the Chairman. Mr. Bruce Douglas Moore retired from his
position as a member of the Nomination and Remuneration Committee due to the expiry of the term of the Nomination
and Remuneration Committee of the fourth session of the Board.
The Company established the Management Training and Remuneration Committee on 30 June 2003. On 16
March 2006, the Board resolved to change the name of the Management Training and Remuneration Committee to
the Nomination and Remuneration Committee, with a majority of Independent Directors on the committee. The
Nomination and Remuneration Committee is mainly responsible for reviewing the structure of the Board, its number of
members and composition and drawing up plans for the appointment, succession and appraisal criteria of Directors and
senior management. The committee is also responsible for formulating training and remuneration policies for the senior
management of the Company.
NOMINATION AND REMUNERATION COMMITTEE
Conducting investigation and research of local branches. From 19 to 24 August 2015, Mr. Robinson Drake
Pike, the Chairman of the Audit Committee, and Mr. Chang Tso Tung Stephen, a member of the Audit
Committee, carried out investigation and research on local branches of the Company in Xilin Gol and
Chifeng, and gave constructive advice on the differentiated financial policies formulated by the Company
taking into account local conditions.
Examining the internal audit functions of the Company. The Audit Committee reviewed proposals
including the "Proposal on the 2014 Internal Audit Summary and the 2015 Internal Audit Work Plan
and Budget of the Costs of the Company" and the “Proposal on the Internal Audit Summary for the First
Half of 2015 and the Internal Audit Work Plan for the Second Half of 2015", in order to facilitate the
communication between the Company's internal audit department and the independent auditors, and
confirmed that the Company's internal audit function was effective.
(6)
(5)
(4) Assessing the effectiveness of internal control and monitoring the operation of the Company to be in
compliance with law. The Audit Committee provided guidance to the Company on the management of
internal control, devised the working plan for internal control assessment, reviewed the work report on
assessment of internal control, and inspected the rectification of problems identified in the internal control
pursuant to Section 404 of the U.S. Sarbanes-Oxley Act. The Audit Committee earnestly performed its
duties and responsibilities and monitored the Company to carry out the work in compliance with laws
and regulations pursuant to the relevant requirements of the CIRC and the SSE. As required by its duties
and responsibilities, the Audit Committee reviewed the annual and half-year compliance reports of the
Company to ensure that its work was conducted strictly according to the relevant regulatory requirements in
a reasonable and efficient manner.
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
85
85
Supervising and assessing the work of and strengthening communications with external auditors. Besides
regular meetings, the Audit Committee convened communication meetings in advance with the relevant
departments of the Company and external auditors for several times so as to discuss the annual audit plan
of the Company, determine the service scope of the annual audit and to listen to the report given by the
auditors with respect to the results of the audit on and review of periodic financial reports of the Company.
Through communications, the Audit Committee enhanced the effectiveness of the internal control of
the Company and further supervised the performance of duties by the external auditors in a diligent and
responsible way.
Reviewing connected transactions. In 2015, the Audit Committee reviewed the “Proposal on the Connected
Transactions under the Asset Management Agreement for Alternative Investments between the Company
and China Life Investment Holding Company Limited”, and submitted it to the Board and shareholders'
general meeting for approval; and listened to the report on the list of connected parties of the Company on a
regular basis. The Audit Committee reviewed the audit report on connected transactions for conscientiously
implementation of laws and regulations with respect to connected transactions. The Company entered
into written agreements in respect of all new connected transactions, the formalities of which were fully
completed. The contents of the agreements were in compliance with law, and their approval and disclosure
procedures were in compliance with the regulatory requirements. Hence, the Company better performed its
obligations as a listed company pursuant to the regulatory requirements of its listed jurisdictions.
Reviewing and approving financial reports. The Audit Committee, according to its duties, reviewed and
approved annual, interim and quarterly financial reports, as well as solvency report of the Company. The
Audit Committee was of the view that the financial reports of the Company reflected the overall situation
of the Company in a true, accurate and complete manner, and gave its written opinion in this regard. By
reviewing and monitoring the completeness of financial reports, annual report and accounts, interim report
and quarterly reports of the Company, and examining significant matters such as financial statements
and reports, the Audit Committee guaranteed the accuracy and completeness of the financial information
disclosed by the Company and the consistency of its financial reports. Prior to the audit conducted by the
accounting firm and the review of the annual report, the Audit Committee communicated the relevant
situations with the auditors and listened to the report in connection with the arrangement of the audit. After
a preliminary opinion on audit was issued by the accounting firm, the Audit Committee commenced in-
depth communications with it so as to understand whether there were any issues identified during the audit.
(3)
(2)
(1)
In 2015, the Audit Committee performed its relevant duties and functions in strict compliance with the
"Procedural Rules for Audit Committee Meetings”. All members of the Audit Committee attended meetings in
a timely manner for the purpose of reviewing the proposals in relation to the audit of the Company, its financial
reports, connected transactions, internal control and legal compliance. During meetings of the Audit Committee,
all members actively participated in discussions and gave guiding opinions on any proposals considered and
discussed at the meetings.
Performance of duties by the Audit Committee
2.
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
84
Note: At the third meeting of the Audit Committee of the fifth session of the Board held on 21 December 2015, Mr. Huang
Yiping gave written authorization for Mr. Chang Tso Tung Stephen to act as his proxy to attend and vote at the meeting.
Bruce Douglas Moore
0
0
Independent Director
No
50%
0
1
0
1
Note 4
No
100%
0
0
0
2
Bruce Douglas Moore
22
Non-executive Director
No
50%
0
1
0
1
2
Note 3
Non-executive Director
Wang Sidong
Miao Jianmin
Zhang Xiangxian
No
Non-executive Director
100%
Independent Director
0
0
0
2
2
Independent Director
No
100%
0
0
0
2
2
Independent Director
2
Chang Tso Tung Stephen
Huang Yiping
100%
0
0
0
2
2
Independent Director
Anthony Francis Neoh
4
No
100%
0
0
No
0
0
0
proxies
telephony
attended
the year
Type of Director
Name of Director
consecutive
meetings
Attendance
meetings
Number of
meetings
attended by
attended by
physically
absent
meetings
to attend two
Number of
Number of
Number of
Whether the
Director failed
meetings the
Director was
required to
attend during
Number of
In 2015, 2 regular Board meetings were held by the fourth session of the Board, both of which were physical
meetings. The attendance records of individual Directors are as follows:
Meetings and attendance
1.
During 2015, members of the Board of the Company attended a training course on the PRC insurance market of
2014, which gave them a general review and analysis of the overall situation of the PRC insurance market of 2014 from
various aspects, including insurance regulation, industry development and horizontal competition. According to the
requirements of the CIRC, members of the Board attended a training course on the "Analysis of China Risk Oriented
Solvency System”, to enhance their capability of risk management on the Company's solvency and the level of public
disclosure of the Company's solvency to external parties. Directors also attended training courses relating to anti-
money laundering pursuant to the regulatory requirements so as to understand the latest anti-money laundering rules
and regulations and the working situation of the Company on anti-money laundering, and to enhance the capability of
Directors to prevent against any risks of money laundering.
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
meetings
0
rate
Note 1
2
No
50%
0
1
0
1
Note 2
No
100%
0
0
0
in person
2
50%
0
1
0
1
2222
Executive Director
Miao Ping
Executive Director
Su Hengxuan
Executive Director
Executive Director
Yang Mingsheng
Lin Dairen
No
100%
88
Notes:
0
100%
No
Xu Hengping
Executive Director
3
0
0
0
100%
No
Xu Haifeng
Executive Director
0
3
0
0
0
100%
No
Miao Jianmin
Note 2
Non-executive Director
4
2
0
2
0
3
50%
0
4
No
Number of
consecutive
meetings Attendance
meetings
Name of Director
Type of Director
the year
attended
telephony
proxies
absent
rate
4
in
Note 1
Yang Mingsheng
Executive Director
4
3
0
1
0
75%
meetings
attended by
No
Lin Dairen
Executive Director
person
Yes
3
Zhang Xiangxian
0
0
100%
No
Chang Tso Tung Stephen
attended by
physically
attend during
meetings
meetings
required to
to attend two
Number of
Number of
Number of
Whether the
Director failed
Number of
meetings the
Director was
In 2015, 4 regular Board meetings were held by the fifth session of the Board, of which 3 were physical meetings
and 1 was combined physical and telephony meeting. The attendance records of individual Directors are as
follows:
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
79
At the twentieth meeting of the fourth session of the Board held on 28 April 2015, Mr. Wang Sidong gave written
authorization for Mr. Zhang Xiangxian to act as his proxy to attend and vote at the meeting.
At the nineteenth meeting of the fourth session of the Board held on 10 March 2015, Mr. Miao Jianmin gave written
authorization for Mr. Zhang Xiangxian to act as his proxy to attend and vote at the meeting;
Note 3
At the twentieth meeting of the fourth session of the Board held on 28 April 2015, Mr. Yang Mingsheng, the Chairman,
gave written authorization for Mr. Lin Dairen to act as his proxy to attend, vote and chair the meeting;
4.
3.
2.
1.
0
4
At the twentieth meeting of the fourth session of the Board held on 28 April 2015, Mr. Su Hengxuan gave written
authorization for Mr. Miao Ping to act as his proxy to attend and vote at the meeting;
Independent Director
4
Non-executive Director
4
2
2
The Company established its Risk Management Committee on 30 June 2003. The Risk Management Committee is
mainly responsible for formulating the Company's system of risk control benchmarks, assisting the management in
establishing and improving the Company's internal control system, formulating the operational risk management policy
of the Company, reviewing the assessment reports in relation to the Company's operational risk and internal control,
and coordinating the handling of sudden and significant risks or crises.
50%
Yes
Wang Sidong
Note 4
Non-executive Director
4
3
0
0
0
No
1
0
0
2
67%
3
75%
No
Note 5
Anthony Francis Neoh
Non-executive Director
Liu Jiade
Ernst & Young
Prominent
principal
business
and solid
financial
strength
Long
history
and
excellent
brand
Well-
established
network
and leading
technologies
Core Competitiveness
China Life Insurance Company Limited Annual Report 2017
Profound
and extensive
customer base
6
Avenue, Central, Hong Kong
Address: 22/F, CITIC Tower, 1 Tim Mei
Prelude
Name of the Signing
Debevoise & Plimpton LLP
Address: 60 Wall Street, New York, NY 10005
Auditors: Zhang Xiaodong,
Wu Jun
Ernst & Young Hua Ming LLP
Address: Level 16, Ernst
& Young Tower, Oriental
Plaza, No.1 East Changan
Avenue, Dongcheng
District, Beijing, P.R.
China
Latham & Watkins
Domestic Auditor
King & Wood Mallesons
Deutsche Bank
Address: Shops 1712-1716, 17th Floor, Hopewell
Centre, 183 Queen's Road East, Wanchai, Hong
Kong
The predecessor of the Company, one of the first batch of enterprises to underwrite insurance
business in China, was approved by the Central Government for establishment in October 1949,
when the People's Republic of China was founded. After the restructuring and reorganization,
the Company was successively listed at home and abroad, becoming the first financial insurance
enterprise in China triple-listed on the Shanghai Stock Exchange, the Hong Kong Stock Exchange
and the New York Stock Exchange. The Company is a key member of China Life Insurance
(Group) Company, which is enlisted in Fortune "Global 500" and "The World's 500 Most
Influential Brands”. Since its establishment, the Company has played the role of an explorer and
pioneer in China's life insurance industry, and has committed to creating a world-class financial
insurance brand. Through long-term and continuous brand building, China Life has become one
of the famous and strong brands in the world with growing brand value and influence. As at 31
December 2017, the brand of China Life has been ranked as one of the "The World's 500 Most
Influential Brands" published by World Brand Lab for eleven consecutive years, and was again
ranked No. 4 on the 2017 (the 14th session) “China's 500 Most Valuable Brands" list published
by World Brand Lab.
Computershare Hong Kong
Investor Services Limited
International Auditor
The Company sticks to its principal business, further explores the huge potentials of the life
insurance market, and maintains its leading position in China's life insurance market. In 2017, the
Company's gross written premiums exceeded RMB500,000 million, achieving a new record high.
Through the long-term development and accumulation, the Company has solid financial strength
comparable to world-class enterprises in the world. As at 31 December 2017, the Company's total
assets amounted to RMB2,897,591 million, ranking No. 1 in the life insurance industry in China.
As one of the largest institutional investors in China, the Company becomes one of the largest
insurance asset management companies in China through its controlling shareholding in China
Life Asset Management Company Limited. As at the end of 2017, the total market capitalization
of the Company was USD120,834 million, which ranked No. 1 among all listed life insurance
companies in the world.
a year-on-year increase of 18.9%
The Company has an extensive customer base. As at 31 December 2017, the Company had
approximately 268 million long-term individual and group life insurance policies, annuity
contracts and long-term health insurance policies in force, offering insurance services for over 500
million customers.
Auditors of the Company
8 China Life Insurance Company Limited Annual Report 2017
a year-on-year increase of 28.9%
RMB288,106 million
Renewal premiums
a year-on-year increase of 28.5%-
RMB66,003 million
First-year regular premiums with ten
years or longer payment duration
a year-on-year increase of 20.4%
RMB113,121 million
First-year regular premiums
The Company has a sound institutional and services network, with its business outlets and services
counters covering both urban and rural areas. As at the end of the Reporting Period, the total
number of sales force of the Company across all channels was 2.025 million, which forms a unique
and powerful distribution and services network in China and through which, the Company
becomes the life insurance service provider within the reach of customers. Moreover, the Company
vigorously promotes the upgrade of “Online China Life", "Intelligent China Life” and “Digital
China Life" by taking advantages of mobile internet technologies, so as to cultivate its first-class
operational management, risk control and customer services. The Company strives to establish
a customer services system equipped with mobile, intelligent and sociable features, and leverages
technologies to provide convenient insurance services to the public.
$
Gross written premiums
S
Business Highlights
Prelude
7
Annual Report 2017
China Life Insurance Company Limited
During the long course of its development, the Company has accumulated a wealth of
experience in operation and management and has a stable and professional management team
that is well versed in the art of management in China's life insurance market. The Company's
core management team and key personnel comprise those who have in-depth knowledge and
understanding of the life insurance market in China, including members of the Company's senior
management, experienced underwriting personnel, insurance actuaries and investment managers.
During the Reporting Period, there was no change of these personnel which might have a material
impact on the Company.
core team
and stable
Professional
RMB511,966 million
International Legal Advisers
Stock Code
Depositary of ADR
China Life Insurance Company Limited and its subsidiaries
RMB
China or PRC
Articles of Association
Securities Law
Insurance Law
Company Law
SSE
HKSE
CSRC
CIRC
CLI
CLP&C
CLWM
AMP
China Life Insurance (Group) Company, the controlling shareholder of the
Company
Pension Company
China Life Asset Management Company Limited, a non-wholly owned
subsidiary of the Company
China Life AMP Asset Management Company Limited, an indirect non-
wholly owned subsidiary of the Company
Company Profile
China Life Insurance Company Limited Annual Report 2017
4
Except for "the Company" referred to in the Consolidated Financial Statements.
The Company has stated in this report the details of its existing risks including risks relating to business and risks
relating to investments and profitability. Please refer to the analysis of the risks which the Company may face in its
future development in the section headed “Management Discussion and Analysis".
Material Risk Alert:
For the purpose of this report, “China” or “PRC” refers to the People's
Republic of China, excluding the Hong Kong Special Administrative
Region, Macau Special Administrative Region and Taiwan region
Renminbi Yuan
Articles of Association of China Life Insurance Company Limited
Securities Law of the People's Republic of China
Company Law of the People's Republic of China
Insurance Law of the People's Republic of China
China Securities Regulatory Commission
The Stock Exchange of Hong Kong Limited
Shanghai Stock Exchange
China Insurance Regulatory Commission
China Life Investment Holding Company Limited, a wholly-owned
subsidiary of CLIC
China Life Property and Casualty Insurance Company Limited, a non-
wholly owned subsidiary of CLIC
China Life Wealth Management Company Limited, an indirect non-wholly
owned subsidiary of the Company
China Life Pension Company Limited, a non-wholly owned subsidiary of
the Company
AMC
CLIC
The Company'
52
Significant Events
44
Embedded Value
19
Management Discussion and Analysis
11
Chairman's Statement
3
Prelude
Contents
Annual Report 2017
Stock Code: 2628
China Life Insurance Company Limited
中国人寿保险股份有限公司
Corporate Governance
70
Other Information
135
In this annual report, unless the context otherwise requires, the following expressions have the following meanings:
Definitions and Material Risk Alert
Prelude
10
8
7
Financial Summary
Prelude
Business Highlights
Company Profile
5
4
Definitions and Material Risk Alert
Prelude
142
Financial Report
Core Competitiveness
The Company is a life insurance company established in Beijing, China on 30 June 2003 according to the Company
Law and 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 2017, the Company had approximately 268 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.
www.sse.com.cn
China Securities Journal, Shanghai Securities News, Securities Times
The Company's Annual
Reports may be obtained at
The Company's H Share
Disclosure Websites
Website for the Company's
Annual Report Disclosure
CSRC's Designated
A Share Disclosure
Media for the Company's
III. INFORMATION DISCLOSURE AND PLACE FOR OBTAINING THE REPORT
Prelude
5
China Life Insurance Company Limited Annual Report 2017
*Ms. Li Yinghui, Securities Representative
of the Company, is also the main contact
person of the external Company Secretary
engaged by the Company
liyh@e-chinalife.com
86-10-66575112
HKExnews website of Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk
The Company's website at www.e-chinalife.com
12/F, China Life Plaza, 16 Financial Street, Xicheng District, Beijing, P.R. China
IV. STOCK INFORMATION
Stock Type
Transfer Office
H Share Registrar and
V. OTHER RELEVANT INFORMATION
LFC
2628
China Life
The Stock Exchange of
Hong Kong Limited
New York Stock
Exchange
86-10-63631191
601628
Shanghai Stock Exchange
Stocks are Listed
Stock Short Name
Exchanges on which the
ADR
H Share
A Share
China Life
Domestic Legal Adviser
16 Financial Street, Xicheng District,
Beijing, P.R. China
Securities Representative
Email
Fax
Telephone
Office Address
Name
Fax
Telephone
Hong Kong Office Address
Email
Website
Fax
Telephone
Postal Code
Current Office Address
Registered Name in English
Legal Representative
Registered Office Address
Postal Code
I. BASIC INFORMATION
中國人壽保險股份有限公司(簡稱「中國人壽」)
China Life Insurance Company Limited (“China Life”)
Yang Mingsheng
ir@e-chinalife.com
86-10-66575112
86-10-63631241
16 Financial Street, Xicheng District,
Beijing, P.R. China
Li Mingguang
Board Secretary
II. CONTACT INFORMATION
Li Yinghui
852-29192638
16/F, Tower A, China Life Centre, One Harbour Gate, 18 Hung Luen Road,
Hung Hom, Kowloon, Hong Kong
ir@e-chinalife.com
www.e-chinalife.com
86-10-66575722
86-10-63633333
16 Financial Street, Xicheng District, Beijing, P.R. China
100033
16 Financial Street, Xicheng District, Beijing, P.R. China
100033
852-29192628
Registered Name in Chinese
Robinson Drake Pike
Remuneration
21.66 135.06
No
Xu Haifeng
Vice President
Male
May 1959
Since November 2014
0
0
113.40
113.40
135.06
No
Li Mingguang
Vice President,
Male
July 1969
Appointed as Vice
113.40
21.84 135.24
21.66
0
0
November 1958 Since November 2014
at the end
for
Remuneration
enterprise during the received
annuity fund Reporting emolument
paid by the Period in from
paid Company RMB ten connected
in RMB ten in RMB ten thousands parties of
thousands thousands (before tax) the Company
Name
Position
Gender Date of Birth
Term
of the year
of the year changes
Lin Dairen
President
Male
June 1958
Since April 2014
140.00
21.88 161.88
No
Xu Hengping
Vice President
Male
No
share held Reason
Chief Actuary,
Board Secretary
Since March 2018
0
0
26.25
5.54
31.79
No
Refer to the Notes
0
No
98.00 29.94 127.94
(his qualification is
subject to the
approval of CIRC)
Zhan Zhong
Marketing Director
Yang Hong
Operation Director
Male
April 1968
Female February 1967
Since August 2017
No
133.71
21.71
112.00
2014, Chief Actuary
since March 2012, Board
Secretary since June 2017
Zhao Lijun
Vice President
Male
Xiao Jianyou
Zhao Peng
Vice President
Vice President
Male
Ruan Qi
Vice President
Male
July 1963
Male September 1968
April 1972
July 1966
Since July 2016
113.40
21.71
135.11
No
Since October 2016
0
President since November
0
the beginning
mally
Male
April 1958
Since 11 July 2015
0
0
114.80
21.66
136.46
No
Chairman of the
Supervisory Committee
Supervisor
Male
November 1959 Since 25 May 2009
0
125.37
32.24
157.61
No
Luo Zhaohui
Wang Cuifei
Shi Xiangming
Miao Ping
Company
thousands thousands (before tax)
fund paid
Reporting
from
Name
Position
Gender Date of Birth
Term
Number of Number of
shares held at shares held
the beginning at the end
of the year of the year changes
Annual Report 2017
by the
Period in
connected
Reason
paid/fee
Company
RMB ten
parties
for
in RMB ten in RMB ten
thousands
of the
Supervisor
Number of Number of
share held at
Male
Since 11 February 2018
459.65
Notes:
1.
Pursuant to the Articles of Association, Supervisors serve for a term of three years and may be re-elected.
2.
The positions of the Supervisors in this annual report reflect their positions as at the submission date of this annual
report. The emoluments are calculated based on their terms of office during the Reporting Period.
China Life Insurance Company Limited Annual Report 2017
3.
4.
0
According to the requirements of the relevant remuneration policies of the Company, the final amount of
emoluments of the Chairman of the Supervisory Committee and the Supervisors is currently subject to review and
approval. The result of the review will be disclosed when the final amount is confirmed.
(III) Current Senior Management
Corporate Governance
Other
benefits,
social
insurance,
Total
housing emoluments
provident received
fund from the
and Company Whether
Following the election at the First Extraordinary General Meeting 2017 of the Company and upon the approval
by the CIRC, the appointment of Mr. Luo Zhaohui as a Supervisor of the Company became effective from 11
February 2018. Following the election at the Sixth Extraordinary Meeting of the Second Session of the Employee
Representative Meeting of the Company and upon the approval by the CIRC, the appointment of Mr. Song Ping
as a Supervisor of the Company became effective from 15 March 2018.
0
Total
90
0
0
0
0
0
Yes
Song Ping
Employee Representative Female January 1964
Supervisor
Employee Representative Male
Supervisor
Since 11 July 2015
0
0
134.17
31.41
165.58
No
June 1964
Since 15 March 2018
0
0
No
90
March 1974
annuity during the emolument
0
27
of work
-12 January 2018
0
0
0
0
December 1961 24 July 2012
Non-executive Male
Director
Wang Sidong
arrangements
Yes Resigned due
to adjustment
-7 April 2017
Director
27 October 2008
Non-executive Male January 1965
Miao Jianmin
Company changes
thousands thousands (before tax)
of the year changes
of the year
00/000 Ye
Yes Resigned due
to adjustment
of work
to adjustment
Yes Resigned due
arrangements
of work
adjustment
0
0
0
-23 February 2018
Xiong Junhong Supervisor Female December 1968 20 October 2014
-8 August 2017
Director
Yes Resigned
0
0
0
0
0
Non-executive Male Feburary 1963 11 July 2015
Liu Jiade
arrangements
Term
of work
Gender Date of Birth
thousands
Whether
from the
fund and
provident received
housing emolument
Total
insurance,
Other
benefits, social
(IV) Resignation and Retirement of Directors, Supervisors and Senior Management
enterprise Company
China Life Insurance Company Limited Annual Report 2017
With the approval given at the twelfth meeting of the fifth session of the Board of Directors of the Company
and the approval by the CIRC, Mr. Li Mingguang was appointed as the Board Secretary of the Company with
effect from 28 June 2017. With the approval given at the fourteenth meeting of the fifth session of the Board
of Directors of the Company, Mr. Zhan Zhong was appointed as the Marketing Director of the Company with
effect from 24 August 2017. With the approval given at the fourteenth meeting of the fifth session of the Board
of Directors of the Company and the approval of the CIRC, Mr. Zhao Peng was appointed as an Assistant to the
President of the Company with effect from 12 October 2017. With the approval given at the nineteenth meeting of
the fifth session of the Board of Directors of the Company, Mr. Zhao Peng was appointed as the Vice President of
the Company with effect from 2 March 2018, Mr. Ruan Qi was appointed as the Vice President of the Company
(his qualification as the Vice President of the Company is subject to the approval of the CIRC), and Ms. Yang
Hong was appointed as the Operation Director of the Company with effect from 2 March 2018.
3.
According to the requirements of the relevant remuneration policies of the Company, the final amount of
emoluments of the Senior Management is currently subject to review and approval. The result of the review will be
disclosed when the final amount is confirmed.
The positions of the members of the Senior Management in this annual report reflect their positions as at the
submission date of this annual report. The emoluments are calculated based on their terms of office during the
Reporting Period.
2.
1.
Notes:
Corporate Governance
91
92
received
annuity
during the emolument
in RMB ten in RMB ten
for
at the end
the beginning
Previous
Position
Name
parties
RMB ten
Company
paid
Reason
share held
share held at
from
connected
Period in
Remuneration paid by the
Number of
Number of
Reporting
fund
Salary/
of the Reason for
32.67
arrangements
11 July 2015
Mr. Chang Tso Tung Stephen, born in 1948, Chinese
Mr. Yin became a Non-executive Director of the Company in July 2017. He has been
the Vice President of China Life Insurance (Group) Company since October 2016.
He joined the Bank of Communications in July 1990, and consecutively served as an
Assistant to the President of Beijing branch and the Vice President of Shanxi branch of
the Bank of Communications from 2005, and the President of Shanxi branch, Hebei
branch and Beijing branch of the Bank of Communications from 2011. Mr. Yin graduated
from the China University of Political Science and Law with a master's degree in public
administration. Before that, he graduated from the Faculty of Accounting of the Beijing
College of Finance and Commerce with a bachelor's degree in economics.
Mr. Yin Zhaojun, born in 1965, Chinese
China Life Insurance Company Limited Annual Report 2017
96
Mr. Liu became a Non-executive Director of the Company in July 2017. He has been
the Vice President of China Life Insurance (Group) Company since September 2013. He
served as the Vice President of China Life Asset Management Company Limited from
2004, and the President and a Director of the same company from 2006, during which he
concurrently served as the Chairman of China Life Franklin Asset Management Company
Limited and the Chairman of China Life AMP Asset Management Co., Ltd., etc. Mr.
Liu graduated from the Peking University with a doctoral degree in international law.
Before that, he graduated from the School of Social Sciences of the University of Sussex
in the United Kingdom with a master's degree in development economics and the Peking
University with a bachelor's degree in national economic management, respectively.
Mr. Liu Huimin, born in 1965, Chinese
Mr. Yuan became a Non-executive Director of the Company in February 2018. He is
the Vice Chairman, President and Deputy Secretary to the Party Committee of China
Life Insurance (Group) Company. Mr. Yuan served as the Chairman of the Supervisory
Committee and the Deputy Secretary to the Party Committee of Agricultural Bank of
China Limited from April 2015 to May 2017. He served as the Deputy General Manager
and the Secretary to the Discipline Inspection Committee of China Everbright Group
Corporation Limited from November 2014 to April 2015, the Secretary to the Discipline
Inspection Committee of China Everbright Group Limited from December 2008 to
August 2012, and an Executive Director, the Deputy General Manager and the Secretary
to the Discipline Inspection Committee of China Everbright Group Limited from
August 2012 to November 2014, during which he concurrently acted as the Chairman of
Everbright Securities Company Limited. During the period from 1995 to 2008, he served
as the Vice President, President and Secretary to the Party Committee of Xinjiang Branch,
the President and Secretary to the Party Committee of Henan Branch, and the Director
of the Organization Department of the Party Committee and the General Manager of the
Human Resources Department of the head office of Industrial and Commercial Bank of
China Limited. During the period from 1981 to 1995, he held various professional and
management positions in branch offices of the People's Bank of China and Industrial and
Commercial Bank of China. Mr. Yuan, a senior economist, graduated from the University
of Hong Kong, majoring in international business administration with a master's degree in
business administration.
Mr. Yuan Changqing, born in 1961, Chinese
Mr. Chang became an Independent Director of the Company in October 2014. He served
as the Vice Chairman of the Greater China Region of Ernst & Young, the Managing
Partner for professional services and the Chairman of auditing and consulting service
of Ernst & Young until his retirement in 2004. From 2007 to 2013, Mr. Chang was
an Independent Non-executive Director of China Pacific Insurance (Group) Co., Ltd.
Mr. Chang is currently an Independent Non-executive Director of China Cinda Asset
Management Co., Ltd., Kerry Properties Limited and Hua Hong Semiconductor Limited,
all of which are listed on the HKSE. Mr. Chang has been practicing as a certified public
accountant in Hong Kong for around 30 years and has extensive experience in accounting,
auditing and financial management. Mr. Chang holds a bachelor's degree of science
from the University of London, and is a fellow member of the Institute of Chartered
Accountants in England and Wales.
Corporate Governance
Annual Report 2017
China Life Insurance Company Limited
Mr. Xu became an Executive Director of the Company in July 2015. He has been the Vice
President of the Company since November 2014 and a Non-executive Director of China
Life Asset Management Company Limited since September 2015. He served as a Non-
executive Director of China Life E-commerce Company Limited from January 2015 to
January 2017. He served as the Business Controller of the Company from February to
November 2014, during which he concurrently served as the General Manager of Hebei
Branch of the Company. Mr. Xu served as the General Manager of Beijing Branch and
the General Manager of Hebei Branch of the Company from 2006 to 2014. Prior to that,
Mr. Xu served as the Deputy General Manager and General Manager of Linyi Branch in
Shandong Province and the General Manager of the Business Management Department in
Shandong Branch of the Company, the General Manager of Jinan Branch and the Deputy
General Manager of Beijing Branch of the Company. Mr. Xu graduated from Linyi
Foreign Language Normal University in 1982, from Shandong Provincial Party School
majoring in economic management in 1996, and obtained a master's degree in business
administration from Zhongnan University of Economics and Law in 2007. Mr. Xu, a
senior economist, has over 30 years of experience in the operation of life insurance business
and insurance management.
Mr. Xu Haifeng, born in 1959, Chinese
Corporate Governance
Mr. Xu became an Executive Director of the Company in July 2015. He has been the
Vice President of the Company since November 2014, the Chief Operating Officer of
the Company since August 2010, the General Manager of the Company's Fujian Branch
since April 2007, the Deputy General Manager of the Company's Fujian Branch since
December 2002, an Assistant to the General Manager of the Company's Fujian Branch
since September 1998, and the Division Chief of the Personal Insurance Division of the
Company's Fujian Branch since July 1996. Mr. Xu served as the General Manager of the
Sales Department and the General Manager of Longyan Branch of Fuzhou Life Insurance
Company Limited. Mr. Xu graduated from Hunan University, majoring in finance. Mr.
Xu, a senior economist, has over 35 years of experience in operation of the life insurance
business and insurance management.
Mr. Xu Hengping, born in 1958, Chinese
China Life Insurance Company Limited Annual Report 2017
94
95
Corporate Governance
Mr. Robinson Drake Pike, born in 1951, American
Mr. Pike became an Independent Director of the Company in July 2015. Before his
retirement from Goldman Sachs in 2014, Mr. Pike served as the Managing Director
of Goldman Sachs and the Chief Representative of the Beijing Representative Office
of Goldman Sachs International Bank UK from August 2011 to May 2014, and the
Managing Director of Goldman Sachs and the senior advisor and project coordinator sent
to the Industrial and Commercial Bank of China by Goldman Sachs from January 2007
to August 2011. He was the Senior Vice President of Lehman Brothers and the Deputy
Head and the Head of Asia Credit Risk Management of Lehman Brothers from July 2000
to December 2006. Mr. Pike has over 30 years of experience in the Asian financial industry
with a focus on risk management and China's banking industry. He holds a bachelor's
degree of arts in Chinese Language and Literature from Yale University and a master's
degree of public affairs in development economics from Princeton University's Woodrow
Wilson School.
Since March 2018
0
0
Total
0
0
10.33
43.00
No
No
1,038.79
China Life Insurance Company Limited Annual Report 2017
98
98
Ms. Leung Oi-Sie Elsie became an Independent Director of the Company in July 2016.
She was the first Secretary for Justice of Hong Kong, as well as a member of the Executive
Council of Hong Kong. She is currently the Deputy Director of the Hong Kong Basic Law
Committee of the Standing Committee of the National People's Congress and a consultant
of Iu, Lai & Li Solicitors & Notaries. Ms. Leung served as a member of the Social Welfare
Advisory Committee and the Equal Opportunities Commission, an executive committee
member and a council member of the Hong Kong Federation of Women, the Chairperson
and President of the International Federation of Women Lawyers, and the Honorary
President of the Nanhai Worldwide Friendship Federation. She is a Justice of the Peace, a
Notary Public and a China-Appointed Attesting Officer. She has been awarded the "Grand
Bauhinia Medal” and admitted as a solicitor by the Law Societies of Hong Kong and
England. Ms. Leung graduated from the University of Hong Kong with a master's degree
in law, and is a fellow of the International Academy of Matrimonial Lawyers. She has been
an Independent Non-executive Director of United Company RUSAL Plc since December
2009, an Independent Non-executive Director of China Resources Power Holdings
Company Limited since April 2010. She has been an Independent Non-executive Director
of PetroChina Company Limited since June 2017.
Ms. Leung Oi-Sie Elsie, born in 1939, Chinese
Mr. Tang became an Independent Director of the Company in March 2016. He is
a professor of the School of Law of Tsinghua University, the Deputy Head of the
Commercial Law Research Center of Tsinghua University, an associate editor of “Tsinghua
Law Review", a member of the Listing Committee of the Shanghai Stock Exchange, the
Chairman of the Independent Director Committee of the China Association for Pubic
Companies, and an Independent Director of each of Harvest Fund Management Co.,
Ltd., GF Securities Co., Ltd. and Oriza Holdings Co., Ltd. Mr. Tang was elected as a
member of the first and second sessions of the Merger, Acquisition and Reorganization
Review Committee of the China Securities Regulatory Commission from 2008 to 2010.
He served as an Independent Director of China Spacesat Co., Ltd. from 2008 to 2014,
an Independent Director of each of SDIC Power Holdings Co., Ltd. and Changjiang
Securities Company Limited from 2009 to 2013, and an Independent Director of Beijing
Rural Commercial Bank Co., Ltd. from 2009 to 2015. Mr. Tang graduated from Renmin
University of China with bachelor's, master's and doctorate degrees in law.
Mr. Tang Xin, born in 1971, Chinese
Corporate Governance
97
China Life Insurance Company Limited Annual Report 2017
94
Zhan Zhong Employee Male April 1968
Mr. Lin became an Executive Director of the Company in October 2008, and was
appointed as the President of the Company by the Board in March 2014. He serves
concurrently as a Non-executive Director of China Life Property and Casualty Insurance
Company Limited, China Life Pension Company Limited and China Life Asset
Management Company Limited. He served as the Vice President of the Company from
2003 to March 2014, and an Executive Director and the President of China Life Pension
Company Limited from November 2006 to March 2014. Mr. Lin graduated with a
bachelor's degree in medicine from Shandong Province Changwei Medical Institute in
1982. Mr. Lin, a senior economist, has over 30 years of experience in the operation of the
life insurance business and insurance management, and was awarded special allowance by
the State Council. He is currently the Chairman of the China Life Foundation, the Vice
Chairman of the Insurance Institute of China and the Insurance Association of China, a
Non-executive Director of China Insurance Security Fund Co., Ltd., the Deputy Director
of the Life Insurance Committee of the Insurance Association of China and the Director
of the Insurance Institutional Investors Professional Committee of the Insurance Asset
Management Association of China.
Mr. Yang became an Executive Director and the Chairman of the Company in May 2012.
He has been the Chairman of China Life Insurance (Group) Company since March 2012,
the Chairman of China Life Property and Casualty Insurance Company Limited since
March 2012, the Chairman of China Life Insurance (Overseas) Company Limited since
January 2013, the Chairman of China Life Asset Management Company Limited since
December 2013, and the Chairman of China Guangfa Bank Co., Ltd. since September
2016. Mr. Yang has many years of experience in financial industry. He acted as the Vice
Chairman of China Insurance Regulatory Commission from 2007 to 2012, and worked
for Agricultural Bank of China from 1980 to 2007, where he held various positions such
as the Vice President of Shenyang Branch, Head of the Industrial Credit Department of
the head office and President of Tianjin Branch. He was appointed as the Vice President
of Agricultural Bank of China in 1997 and was then promoted to the President of
Agricultural Bank of China in 2003. Mr. Yang, a senior economist, graduated from the
Faculty of Finance of Nankai University, majoring in monetary banking with a master's
degree in economics.
Zheng Yong Board Secretary Male
-2 January 2018
Representative
Director
49.39
11.47
37.92
0
0
31 August 2017
November 1962 5 June 2013
Male April 1965
Li Guodong
Director
-21 August 2017
Representative
No Resigned due
100.49
20.82
79.67
0
Employee
00/35.00
10.39
45.39
Mr. Yang Mingsheng, born in 1955, Chinese
DIRECTORS
Corporate Governance
93
Annual Report 2017
China Life Insurance Company Limited
Corporate Governance
195.27
arrangements
of work
to adjustment
No Resigned due
arrangements
of work
to adjustment
arrangements
No Resigned due
of work
to adjustment
0
Total
-27 April 2017
Mr. Lin Dairen, born in 1958, Chinese
enterprise Company received
China Life Insurance Company Limited
4.
Since 20 October 2014
32.00
0
32.00
Yes
Independent Director
Male
Directors, Supervisors, Senior Management and Employees
October 1951
32.00
0
32.00
No
Tang Xin
Independent Director
Male
Since 11 July 2015
I. DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
(I) Current Directors
Other
of shares Number of
Reporting from
fund paid
Number
annuity during the emolument
received
enterprise Company
Whether
the
fund and
from
provident
received
housing
insurance, emoluments
social Total
benefits,
September 1971
Since 7 March 2016
32.00
0
China Life Insurance Company Limited Annual Report 2017
69
89
Corporate Governance |
3.
According to the requirements of the relevant remuneration policies of the Company, the final amount of
emoluments of the Executive Directors is currently subject to review and approval. The result of the review will be
disclosed when the final amount is confirmed.
Following the election at the 2016 Annual General Meeting of the Company and upon the approval by the CIRC,
the appointment of Mr. Liu Huimin and Mr. Yin Zhaojun as Directors of the Company became effective from 31
July 2017. Following the election at the First Extraordinary General Meeting 2017 of the Company and upon the
approval by the CIRC, the appointment of Mr. Yuan Changqing as a Director of the Company became effective
from 11 February 2018.
(II) Current Supervisors
Other
benefits,
social Total
insurance, emoluments
housing received
provident
fund and
from
the Whether
The positions of the Directors in this annual report reflect their positions as at the submission date of this annual
report. The emoluments are calculated based on their terms of office during the Reporting Period.
Remuneration
According to the “Procedural Rules for Board Meetings of China Life Insurance Company Limited”, Directors
serve for a term of three years and may be re-elected. However, Independent Directors may not serve for more than
six years.
1.
32.00
Yes
Leung Oi-Sie Elsie
Independent Director
Female
April 1939
Since 20 July 2016
0
30.00
0
30.00
Yes
Total
0
0
558.00
Notes:
2.
by the
Corporate Governance
connected
0
Period in
September 1961
No
21.66 135.06
113.40
0
Since 11 July 2015
May 1959
Male
Executive Director
Non-executive Director Male
No
21.66 135.06
113.40
0
Since 11 July 2015
No
0
0
Yes
Liu Huimin
November 1948
Male
Chang Tso Tung Stephen Independent Director
Yes
0
0
0
0
21.88 161.88
Since 31 July 2017
Non-executive Director Male
Yin Zhaojun
Yes
0
0
Since 31 July 2017
June 1965
Non-executive Director Male
July 1965
140.00
Since 11 February 2018
0
thousands
of the year of the year changes
Term
Gender Date of Birth
Position
Name
of the
thousands
thousands
for
parties
RMB ten
Company
paid/fee
0
held at the shares held
beginning at the end
in RMB ten in RMB ten
(before tax)
Reason
Yang Mingsheng
Company
Since 27 October 2008
Male
Executive Director
Xu Hengping
Xu Haifeng
Yuan Changqing
Male
Executive Director
Lin Dairen
Executive Director
June 1958
November 1958
0
0
0
0
Since 22 May 2012
August 1955
Yes
Chairman of the Board, Male
SENIOR MANAGEMENT
Mr. Lin Dairen, please see the section “Directors” for his profile.
Mr. Xu Hengping, please see the section “Directors” for his profile.
Mr. Xu Haifeng, please see the section “Directors” for his profile.
Mr. Li Mingguang, born in 1969, Chinese
Mr. Li became the Vice President of the Company in November 2014. He has been
the Chief Actuary of the Company since March 2012 and the Board Secretary of the
Company since June 2017. Mr. Li joined the Company in 1996 and subsequently served
as the Deputy Division Chief, the Division Chief, an Assistant to the General Manager
of the Product Development Department, the Responsible Actuary of the Company
and the General Manager of the Actuarial Department. He graduated from Shanghai
Jiaotong University with a bachelor's degree in computer science in 1991, Central
University of Finance and Economics majoring in monetary banking (actuarial science)
with a master's degree in 1996 and Tsinghua University with an EMBA in 2010, and also
studied in University of Pennsylvania in the United States in 2011. Mr. Li is a Fellow of
the China Association of Actuaries (FCAA) and a Fellow of the Institute and Faculty of
Actuaries (FIA). He was the Chairman of the first session of the China Actuarial Working
Committee and the Secretary-general of both the first and the second sessions of the China
Association of Actuaries. He is currently an Executive Director of the China Association
of Actuaries, a Special Executive of the Board of Directors of the Insurance Institute of
China and a member of the China National Master of Insurance Education Supervisory
Committee.
Mr. Zhao Lijun, born in 1963, Chinese
Corporate Governance
China Life Insurance Company Limited Annual Report 2017
101
Mr. Xiao Jianyou, born in 1968, Chinese
Mr. Xiao became the Vice President of the Company in October 2016. He has been an
Assistant to the President of the Company since July 2015 and a Non-executive Director
of China Life Property and Casualty Insurance Company Limited since September 2015.
He served as the General Manager of the Company's Jiangsu Branch from January 2014
and the Deputy General Manager (responsible for daily operation) of the Company's
Jiangsu Branch from April 2013 to January 2014. From 2006 to 2013, he successively
served as the Deputy General Manager, an Assistant to the General Manager and the
Marketing Director of Jiangsu Branch and the General Manager and the Deputy General
Manager of Taizhou Branch in Jiangsu Province. Before that, Mr. Xiao held various
other positions at the Company's Jiangsu Branch, including the Deputy Manager of
the Marketing Department and Management Department, an Assistant to the General
Manager, the Deputy General Manager (responsible for daily operation) and the General
Manager of the Personal Insurance Department. Mr. Xiao, a senior economist, graduated
from Jiangxi Traditional Chinese Medicine College in 1991 with a bachelor's degree,
and received the double bachelor's degrees in medicine and law from Jiangxi Traditional
Chinese Medicine College and Nanjing University, respectively.
102
Mr. Zhao became the Vice President of the Company in March 2018. He has been an
Assistant to the President of the Company since October 2017 and the General Manager
of Zhejiang Branch of the Company since January 2015. From 2014 to 2015, he had
successively served as the Deputy General Manager (at the general manager level of the
provincial branches) and the person-in-charge of Zhejiang Branch of the Company. From
2003 to 2014, he successively held various positions in China Life Insurance (Group)
Company, including the Division Chief of the Capital Management Division of the
Finance Department, an Assistant to the General Manager and the Division Chief of the
Capital Management Division of the Finance Department, an Assistant to the General
Manager, the Deputy General Manager and the General Manager of the Finance and
Accounting Department, and the General Manager of the Finance Department. From
1995 to 2003, Mr. Zhao successively served as a staff member of the Capital Division,
a staff member of the Financial Management Division, the Deputy Division Chief and
the Division Chief of the Capital Division of the Planning and Finance Department of
China Life Insurance Company. Mr. Zhao graduated from Hunan College of Finance
and Economics in July 1995, majoring in actuarial science with a bachelor's degree in
economics, from Central University of Finance and Economics in June 2002, majoring
in finance with a master's degree in economics, and from Tsinghua University in
January 2007, majoring in business administration with a master's degree in Business
Administration.
Corporate Governance
Mr. Zhao Peng, born in 1972, Chinese
Mr. Zhao became the Vice President of the Company in July 2016. He served as the Chief
Financial Officer and the General Manager of the Finance Department of China Life
Insurance (Group) Company from May 2014 to April 2016. From 2012 to 2014, Mr.
Zhao successively served as the Deputy General Manager (responsible for daily operation)
and the General Manager of the Data Center of the Company. From 2010 to 2012,
Mr. Zhao served as the General Manager of the Legal and Compliance Department of
the Company. From 2008 to 2010, Mr. Zhao served as the Deputy General Manager of
Shandong branch of the Company. From 2003 to 2008, Mr. Zhao successively served as
an Assistant to the General Manager and the General Manager of the Finance Department
of the Company. Prior to that, he successively served as a cadre in the Planning & Finance
Department of the People's Insurance Company of China, the Director and Deputy
Manager of the Planning & Finance Department of China Reinsurance Corporation in
Hong Kong, the Deputy Manager and Manager of the Planning & Finance Department
of China Insurance H.K. (Holdings) Company Limited, the Deputy Division Chief,
the Division Chief and an Assistant to the General Manager of the Planning & Finance
Department of China Life Insurance Company. Mr. Zhao graduated from the Accounting
Department of Anhui Finance & Trade College with a bachelor's degree in industrial
accounting and finance in 1987, and from Tsinghua University with an EMBA in 2010.
Mr. Zhao is a senior accountant.
China Life Insurance Company Limited Annual Report 2017
China Life Insurance Company Limited Annual Report 2017
Mr. Song Ping, born in 1964, Chinese
China Life Insurance Company Limited Annual Report 2017
Mr. Heng Victor Ja Wei, born in 1977, British
SUPERVISORS
Mr. Miao Ping, born in 1958, Chinese
Mr. Miao became the Chairman of the Supervisory Committee of the Company in July
2015. He served as an Executive Director of the Company from July 2014 to May 2015
and the Vice President of the Company from December 2009 to May 2015. Mr. Miao
served as the General Manager of the Company's Jiangsu Branch from September 2006,
the General Manager of the Company's Jiangxi Branch from September 2004, and the
Deputy General Manager of the Company's Jiangsu Branch from April 2002. Mr. Miao
graduated from the Correspondence College of Yangzhou University in 1996, majoring in
economics and management. Mr. Miao, a senior economist, has over 30 years of experience
in the operation of life insurance business and the management of insurance business.
Corporate Governance
Mr. Shi Xiangming, born in 1959, Chinese
Mr. Song became a Supervisor of the Company in March 2018. He has been the General
Manager of the Administration Office of the Company since January 2017. From 2006 to
2017, he successively served as an Assistant to the General Manager of the Development
and Reform Department, an Assistant to the General Manager of Beijing Branch,
the Deputy General Manager of the Legal and Compliance Department, the Deputy
General Manager of the Human Resources Department, and the General Manager of the
E-Commence Department of the Company. From 1999 to 2006, he successively served
as the Division Chief of the Agents Management Department, the Individual Insurance
Department and the Group Insurance Department of the Company. Mr. Song graduated
from Peking University in July 1987, majoring in Chinese language and literature with a
bachelor's degree of arts.
Mr. Shi became a Supervisor of the Company in May 2009, and has been the General
Manager of the Supervisory Department of the Company since September 2008. Mr.
Shi served as the Deputy General Manager of the Human Resources Department and the
Office Director of the Company from September 2003 to September 2008. From March
2002 to August 2003, Mr. Shi served as the Deputy General Manager of the Supervisory
Department of China Life Insurance Company. Mr. Shi graduated from the Chemistry
School of the first branch college of Peking University with a bachelor's degree of science.
Mr. Luo became a Supervisor of the Company in February 2018. Mr. Luo worked at the
Risk Management Department of China Life Insurance Company and the General Office
of China Life Insurance (Group) Company from August 2002 to August 2013, and was
appointed as the Senior Manager of the Comprehensive Information Division of the
General Office of China Life Insurance (Group) Company in May 2009 and an Assistant
to the General Manager of the Strategic Planning Department of China Life Insurance
(Group) Company in August 2013. Mr. Luo was seconded to Shijiazhuang Branch of
the Company in Hebei Province as the Deputy General Manager during the period from
November 2013 to October 2015, and was then appointed as the Deputy General Manager
of the Strategic Planning Department of China Life Insurance (Group) Company in July
2016. Mr. Luo has been involved in strategic management related work for a long time,
with considerable working experience in such aspects as risk management, market analysis
and research, life insurance operation, as well as strategic planning and management. Mr.
Luo, a senior economist, graduated from Peking University, majoring in finance with a
doctoral degree.
99
96
Corporate Governance
Ms. Wang Cuifei, born in 1964, Chinese
Ms. Wang became a Supervisor of the Company in July 2015. She has been the General
Manager of the Work Department of the Trade Union of the Company since January
2018. Ms. Wang served as the General Manager of the Customer Services Department
of the Company from September 2014 to February 2018 and the General Manager of
the Sales Inspection Department of the Company from March 2009 to August 2014.
She joined the Company in July 2001, and served successively as the person-in-charge
(at the deputy director level) and the Manager of the Training Management Division of
the Brokerage Agency Department, the Deputy General Manager of the Bancassurance
Department and the General Manager of the Sales Inspection Department of the
Company. Ms. Wang graduated from the Party School of the Central Committee of CPC
with a bachelor's degree in economic management.
100
Mr. Luo Zhaohui, born in 1974, Chinese
Mr. Ruan Qi, born in 1966, Chinese
Mr. Heng is the managing partner of Morison Heng, Certified Public Accountants. Mr.
Heng holds a Master of Science degree of the Imperial College of Science, Technology
and Medicine, the University of London. Mr. Heng is a member of The Hong Kong
Institute of Certified Public Accountants and a fellow of The Association of Chartered
Certified Accountants. Mr. Heng has over 10 years of experience in accounting and
auditing for private and public companies and financial consultancy. Mr. Heng serves as
an Independent Non-executive Director of China Fire Safety Enterprise Group Limited,
Lee & Man Chemical Company Limited, Matrix Holdings Limited, Best Food Holding
Company Limited and SCUD Group Limited, all of which are listed on the main board of
the HKSE.
Corporate Governance
2,347
31,861
59,810
4,219
Total
Others
Secondary School
College Diploma
Bachelor
Master or above
Number of Employees
Education Level
4,060
Education Level
3,943
4,106
27,960
5,122
38,859
22,307
Number of Employees
China Life Insurance Company Limited Annual Report 2017
Total
Others
Other expertise and technicians
Insurance verification, claim processing and customer services
102,297
102,297
(II) Remuneration Policy for Employees
The Company has established a remuneration and incentive system with reference to employee's positions,
the Company's performance and market conditions.
As approved by the nineteenth meeting of the fifth session of the Board of Directors of
the Company held in March 2018, Mr. Ruan was appointed as the Vice President of
the Company (whose qualification is subject to the approval of the CIRC). He has been
the Chief Information Technology Officer of the Company since October 2016 and
the General Manager (at the general manager level of the provincial branches) of the
Information Technology Department of the Company since March 2016. He served as
the General Manager of China Life Data Center and the General Manager (at the general
manager level of the provincial branches) of the Information Technology Department
of the Company from 2014 to 2016, and the Deputy General Manager and the General
Manager of the Information Technology Department of the Company from 2004 to 2014.
He successively served as the Deputy Division Chief of the Computer Division of Fujian
Branch, and the Deputy Manager (responsible for daily operation) and the Manager of
the Information Technology Department of the Company from 2000 to 2004. Mr. Ruan,
a senior engineer, graduated from Beijing Institute of Posts and Telecommunications
in August 1987, majoring in computer science and communications with a bachelor's
degree in engineering and from Xiamen University with a master's degree in business
administration for senior management (EMBA) in December 2007.
China Life Insurance Company Limited Annual Report 2017
In accordance with the regulatory requirements of its listed jurisdictions and the relevant provisions of its
Articles of Association, the Company has continuously improved the decision-making mechanism of the
Board. The Board is accountable to shareholders of the Company with respect to the assets and resources
entrusted to it by the shareholders, and performs its duties on corporate governance. All members of the
Board have taken initiatives to look into the Company's affairs and have had a comprehensive understanding
of the Company's businesses. They have devoted sufficient time in performing their duties as Directors with
due care and in a diligent and efficient manner. By setting up mechanisms including regular reporting of
business development strategies and marketing tactics, the management of the Company can periodically
report the business operation, development strategies and marketing tactics to the Board, which provides a
basis for the Board's decision-making.
The Company has set up a corporate governance structure with well-defined duties and responsibilities
strictly in accordance with relevant laws, regulations and regulatory requirements, including the Company
Law and the Securities Law of the PRC. The corporate governance structure of the Company generally meets
the regulatory requirements of its listed jurisdictions and the relevant provisions. The Company has carried
out its corporate governance procedures strictly in accordance with relevant laws, regulations and regulatory
requirements, including the Company Law and the Securities Law of the PRC, as well as the requirements
of its Articles of Association and procedural rules. Shareholders' general meetings, Board meetings and
Supervisory Committee meetings of the Company have been functioning independently and coordinately.
2.
1.
With the establishment of a corporate governance system with reasonably designed structure, well-developed
mechanism, strict rules and regulations, as well as high efficiency in operation as its core objectives, the Company
continues to promote development of its corporate governance framework, strictly perform its obligation of
information disclosure, enhance its transparency and actively serve the interest of public investors so as to enhance
its image and position in the capital market.
(Corporate Governance Structure Chart)
Board Secretariat/Company Secretary
Board Secretary
Strategy and
Investment
Decision Committee
108
Risk
Management
Committee
Nomination and
Remuneration
Committee
Audit Committee
Supervisory Committee
Board of Directors
Shareholders'
General Meeting
The Company implements good corporate governance policies and strongly believes that through fostering sound
corporate governance, further enhancing its transparency and establishing effective system of accountability,
the Company can operate in a more systematic manner, make decisions in a more scientific way, and boost the
confidence of investors.
OVERVIEW OF CORPORATE GOVERNANCE
I.
Corporate Governance
Corporate Governance
China Life Insurance Company Limited Annual Report 2017 107
Corporate Governance
Adhering to the philosophy of “people-oriented and both capability and integrity being equally important”,
the Company has been promoting the unity between the growth of the Company and its employees in a
harmonious way.
In 2017, the Company implemented the work requirements of “close to the frontline,
close to the practice and adapt to the era” in great depth, and pushed forward employees' trainings to local
branches and frontline business management teams for further in-depth development under the direction
of its "speedy development, transformation and upgrade, and risk prevention and control" strategy. The
Company also strengthened training supports for its key personnel (including local management teams,
sales management teams and key personnel in all professional sectors), and focused on personnel reserve and
education of companies at all levels, thus facilitating the transformation of training results into operating
performance. The Company actively broadened its horizon for trainings, enriched training methods, injected
training resources and introduced advanced training technologies, which constantly improved the training
system for the entire career development of employees. Through the implementation of a series of training
programs with prominent themes and clear objectives, the Company effectively promoted its relevant work
in business development, team building, cultural cultivation, service improvement, efficiency optimization
and risk prevention in 2017.
(III) Training Plans
Finance and auditing
Sales and sales management
2.
Class of Expertise
Since March 2012
Since May 2017
Vice Chairman, President
Vice President
Vice President
Deputy General Manager of
Strategic Planning Department
China Life Insurance (Group) Company
China Life Insurance (Group) Company
Luo Zhaohui
Yin Zhaojun
Term
China Life Insurance (Group) Company
China Life Insurance (Group) Company
China Life Insurance (Group) Company
Liu Huimin
Yuan Changqing
Name of shareholder
Name
Yang Mingsheng
Since September 2013
POSITIONS HELD BY CURRENT DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
IN SHAREHOLDERS OF THE COMPANY
China Life Insurance Company Limited Annual Report 2017
Mr. Zhan Zhong, born in 1968, Chinese
Management and administration
COMPANY SECRETARY
104
Ms. Yang became the Operation Director in March 2018. She has been the General
Manager of the Operation Service Center of the Company since January 2018. Ms. Yang
successively served as the Deputy General Manager (responsible for daily operations)
and General Manager of the Research and Development Center, the General Manager
(at the general manager level of the provincial branches) of the Business Management
Department and the General Manager (at the general manager level of the provincial
branches) of the Business Process Management Department of the Company from 2011
to 2018. From 2002 to 2011, she successively served as an Assistant to the General
Manager and the Deputy General Manager of the Business Management Department, and
the General Manager of the Customer Service Department of the Company. Ms. Yang
graduated from the Computer Science Department of Jilin University in 1989, majoring
in system structure with a bachelor's degree of science, and from the School of Economics
and Management of Tsinghua University in 2013 with a master's degree in business
administration for senior management.
Ms. Yang Hong, born in 1967, Chinese
Corporate Governance
103
China Life Insurance Company Limited Annual Report 2017
Mr. Zhan became the Marketing Director of the Company in August 2017 He has been
the General Manager (as the general manager level of the provincial branches) of the
Individual Insurance Division of the Company since July 2014. Mr. Zhan served as the
Deputy General Manager (responsible for daily operations) and the General Manager
of the Company's Qinghai Branch from 2013 to 2014. From 2009 to 2013, Mr. Zhan
successively served as the Deputy General Manager (responsible for daily operations) and
the General Manager of the Individual Insurance Division of the Company. From 2005
to 2009, he had successively served as the General Manager of the Individual Insurance
Division of the Company's Guangdong Branch and an Assistant to the General Manager
of the Company's Guangdong Branch. From 1996 to 2005, he successively served as
the Director of the Marketing Department of the Chengdu High-tech Sub-branch of
Zhongbao Life Insurance Company, an Assistant to the Manager and the Manager of the
Marketing Department of the Chengdu Branch, and the Deputy General Manager of the
Chengdu Branch of Taikang Life Insurance Company. Mr. Zhan graduated from Kunming
Institute of Technology in July 1989, majoring in industrial electric automation with a
bachelor's degree in engineering.
II.
Since October 2016
Since July 2016
Position
Chairman
1.
102,297
Corporate Governance
Retired employees of the Company and its major subsidiaries for which extra costs have to be incurred
14
Number of employees of the Company's major subsidiaries
100,920
As at the end of the Reporting Period, the composition of the employees of the Company and its major
subsidiaries is as follows:
Number of employees of the Company
106
(I) Employees
1,377
IV. EMPLOYEES
Corporate Governance
105
Annual Report 2017
Structure of Expertise
China Life Insurance Company Limited
Actual payment of remuneration to Directors, Supervisors and senior management: During the Reporting
Period, the remuneration actually received by all Directors, Supervisors and senior management (including
the resigned Directors, Supervisors and senior management) from the Company totaled RMB18.1971
million. In accordance with the relevant requirements of the measures for the administration of
remuneration of the Company, the standard for performance-based bonus (as part of the compensation)
payable to Directors, Supervisors and senior management of the Company in 2017 has not yet been
determined.
Basis for determination of the remuneration of Directors, Supervisors and senior management: The
remuneration of Directors, Supervisors and senior management are determined based on the operating
results of the Company and the performance appraisal conducted by the Board of Directors, and in
accordance with the measures for the administration of remunerations of the Company.
3.
2.
III. REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Decision-making procedures for the remuneration of Directors, Supervisors and senior management: The
remuneration of Directors and Supervisors shall be approved by shareholders at general meetings, whereas
the remuneration of senior management shall be approved by the Board of Directors.
1.
Employees in total
83%
Tang Xin
No
6
0
1
Independent Director
6
100%
0
0
No
Leung Oi-Sie Elsie
Independent Director
6
0
0
5
6
6
5
4
Note 7
Independent Director
Chang Tso Tung Stephen
No
67%
China Life Insurance Company Limited Annual Report 2017
Note 8
118
Activities of the Supervisory Committee during the Reporting Period
2
0
0
100%
No
Robinson Drake Pike
Independent Director
For the activities carried out by the Supervisory Committee during the Reporting Period, please refer to the
"Report of the Supervisory Committee” in this annual report.
1 Note 9
Notes:
0
In 2017, five meetings were held by the fifth session of the Supervisory Committee. Attendance records of
individual Supervisors are as follows:
Meetings and attendance
1.
The fifth session of the Supervisory Committee of the Company comprises Mr. Miao Ping, Mr. Shi Xiangming
and Mr. Luo Zhaohui, all being Non-employee Representative Supervisors, Ms. Wang Cuifei and Mr. Song
Ping, being Employee Representative Supervisors, with Mr. Miao Ping acting as the Chairman of the Supervisory
Committee. In August 2017, Mr. Zhan Zhong resigned from his position as an Employee Representative
Supervisor due to adjustment of work arrangements. Mr. Li Guodong resigned from his position as an Employee
Representative Supervisor due to adjustment of work arrangements in January 2018. Ms. Xiong Junhong resigned
from her position as a Non-employee Representative Supervisor due to adjustment of work arrangements in
February 2018.
Corporate Governance
117
Name of Supervisor
necessary.
The Supervisory Committee is accountable to the shareholders and reports its work to the shareholders' general
meeting according to relevant laws. It is also responsible for appraising the Company's operations, financial
reports, connected transactions and internal control, etc. during the Reporting Period.
The Supervisory Committee consists of Non-employee Representative Supervisors, such as shareholder
representatives, and Employee Representative Supervisors, of which the Employee Representative Supervisors
shall not be less than one-third of the Supervisory Committee. Non-employee Representative Supervisors, such
as shareholder representatives, shall be elected and removed by a shareholders' general meeting while Employee
Representative Supervisors shall be elected and removed by employees of the Company in a democratic manner.
Pursuant to the Company Law and the Articles of Association, the Company has established a Supervisory
Committee. The Supervisory Committee performs the following duties in accordance with the Company
Law, the Articles of Association and the “Procedural Rules for Supervisory Committee Meetings": to examine
the finances of the Company; to monitor whether the Directors, President, Vice Presidents and other senior
management officers of the Company have acted in contravention of laws, regulations, the Articles of Association
and resolutions of the shareholders' general meetings when discharging their duties; to review the financial
information of the Company such as financial reports, results reports and profit distribution plans to be approved
by the Board; to propose the convening of extraordinary shareholders' general meetings, to propose resolutions at
shareholders' general meetings and to perform any other duties under the laws, regulations and regulatory rules of
the Company's listed jurisdictions.
SUPERVISORY COMMITTEE
0
During the Reporting Period, Mr. Yang Mingsheng served as the Chairman of the Board of the Company. The
Chairman of the Board is the legal representative of the Company, primarily responsible for convening and
presiding over Board meetings, ensuring the implementation of Board resolutions, attending annual general
meetings and arranging attendance by Chairmen of Board committees to answer questions raised by shareholders,
signing securities issued by the Company and other important documents, providing leadership for the Board to
ensure that the Board works effectively and performs its responsibilities, encouraging all Directors to make a full
and active contribution to the Board's affairs, and promoting a culture of openness and debate. The Chairman
of the Board is accountable to and reports to the Board. Mr. Lin Dairen was the President of the Company. The
President is responsible for the day-to-day operations of the Company, including implementing strategies, policies,
operation plans and investment schemes approved by the Board, formulating the Company's internal management
structure and fundamental management policies, drawing up basic rules and regulations of the Company,
submitting to the Board requests for appointment or removal of senior management officers and exercising other
rights granted to him under the Articles of Association and by the Board. The President is fully accountable to the
Board for the operations of the Company.
Meetings of the Supervisory Committee are convened by the Chairman of the Supervisory Committee. According
to the Articles of Association, the Company formulated the "Procedural Rules for Supervisory Committee
Meetings" and established protocols for Supervisory Committee meetings. Supervisory Committee meetings
are categorized as regular or ad-hoc meetings in accordance with the degree of pre-planning involved. There
are at least three regular meetings each year, mainly to adopt and review financial reports and periodic reports,
and examine the financial condition and internal control of the Company. Ad-hoc meetings are convened when
V.
Miao Ping
Xiong Junhong
Wang Cuifei
100%
2/2
60%
3/5 Note 3
80%
4/5 Note 2
Shi Xiangming
80%
4/5M
100%
5/5
Attendance rate
Number of meetings attended
Li Guodong
Note 1
Notes:
IV. CHAIRMAN AND PRESIDENT
China Life Insurance Company Limited Annual Report 2017
Notes:
Yes
33%
0
2
1
1.
0
Non-executive Director
Note 2
Note 1
No
100%
0
3
Corporate Governance
2.
At the eleventh meeting of the fifth session of the Board held on 23 March 2017, Mr. Liu Jiade attended the
meeting by telephony.
116
During the Reporting Period, no Independent Director has raised any objection against the proposals and
matters considered by the Board of the Company.
According to the arrangement of the Board for annual training courses, Mr. Chang Tso Tung Stephen, Mr.
Robinson Drake Pike, Mr. Tang Xin and Ms. Leung Oi-Sie Elsie, all being Independent Directors of the
Company, attended the internal training on the business development and the regulations on connected
transactions of the Company as organized by nine departments of the Company including the Strategy and
Marketing Department and the Legal and Compliance Department in Beijing from 31 May to 1 June 2017.
From 14 to 16 February 2017, Mr. Robinson Drake Pike, Mr. Tang Xin and Ms. Leung Oi-Sie Elsie,
all being Independent Directors of the Company, carried out investigation and research on CGB for the
purpose of understanding the insurance-banking collaboration and the risk control of CGB; from 31
July to 4 August 2017, Mr. Chang Tso Tung Stephen, Mr. Robinson Drake Pike and Mr. Tang Xin, all
being Independent Directors of the Company, carried out investigation and research on local branches of
the Company in Guizhou Province for the purpose of understanding the business development, financial
control, remuneration and incentive measures, and risk control of the local branches.
In 2017, the Independent Directors of the Company and the representatives from the external auditors
(Ernst & Young Hua Ming LLP and Ernst & Young) convened one special meeting to discuss on matters
including the audit for the year 2016, the annual financial reports, and the impact of the implementation of
the C-ROSS on the Company, and also discussed the work relating to the audit of the Company.
All Independent Directors diligently fulfilled their responsibilities and faithfully performed their duties by
attending meetings of the Board and the specialized Board committees in 2017, examining and approving
the Company's business development, its financial management and connected transactions, focusing on
the necessity and compliance of the Company's connected transactions and the fairness of their pricing
when reviewing the proposals in relation to the connected transactions, participating in the establishment of
specialized Board committees, providing professional and constructive advice in respect of major decisions of
the Company, seriously listening to the reports from relevant personnel, understanding the daily operation
and any possible operational risks of the Company in a timely manner, and expressing their opinions
and exercising their functions and powers at Board meetings, thus actively performing their duties as
Independent Directors in an effective manner. The Board attached great importance to opinions and advice
from Independent Directors, actively strengthened its communication with them and adopted their advice
after careful deliberation and discussion. In 2017, the Company provided various materials to Independent
Directors, which facilitated them to comprehend information associated with the insurance industry. All
Independent Directors obtained information relating to the operation and management of the Company
through various channels, which therefore formed the basis of their scientific and prudent decisions.
Corporate Governance
In 2017, all Independent Directors of the Company possessed extensive experience in various fields, such
as macro-economics, finance and insurance, legal compliance, accounting and auditing. They satisfied the
criteria for Independent Directors under the regulatory rules of the Company's listed jurisdictions. The
Independent Directors of the Company performed their duties pursuant to the Articles of Association and
the provisions and requirements of the listing rules of the Company's listed jurisdictions.
2.
Corporate Governance
115
Annual Report 2017
China Life Insurance Company Limited
At the twelfth meeting of the fifth session of the Board held on 27 April 2017, Mr. Liu Jiade gave written
authorisation for Mr. Xu Hengping to act as his proxy to attend and vote at the meeting; at the thirteenth meeting
of the fifth session of the Board held on 14 July 2017, Mr. Liu Jiade gave written authorisation for Mr. Wang
Sidong to act as his proxy to attend and vote at the meeting.
Performance of duties by Independent Directors
1.
2.
3.
At the fifteenth meeting of the fifth session of the Board held on 26 October 2017, Mr. Yin Zhaojun gave written
authorisation for Mr. Liu Huimin to act as his proxy to attend and vote at the meeting.
At the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Mr. Chang Tso Tung Stephen
attended the meeting by telephony; at the fourteenth meeting of the fifth session of the Board held on 24 August
2017, Mr. Chang Tso Tung Stephen attended the meeting by telephony.
At the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Mr. Robinson Drake Pike gave
written authorisation for Mr. Tang Xin to act as his proxy to attend and vote at the meeting.
At the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Ms. Leung Oi-Sie Elsie attended
the meeting by telephony.
In 2017, the attendance records of the resigned Directors at the Board Meetings are as follows:
Number of
meetings
the Director
was required
to attend
At the eleventh meeting of the fifth session of the Board held on 23 March 2017, Mr. Wang Sidong gave written
authorisation for Mr. Miao Jianmin to act as his proxy to attend and vote at the meeting; at the twelfth meeting of
the fifth session of the Board held on 27 April 2017, Mr. Wang Sidong gave written authorisation for Mr. Chang
Tso Tung Stephen to act as his proxy to attend and vote at the meeting.
Whether
failed to
Number of
Number of
Number of
attend two
during
the Director
Name of Director
At the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Mr. Wang Sidong attended the
meeting by telephony.
9.
100%
No
1.
2.
At the eleventh meeting of the fifth session of the Board held on 23 March 2017, Mr. Yang Mingsheng, the
Chairman of the Board, gave written authorisation for Mr. Lin Dairen to act as his proxy to attend, vote at
and chair the meeting; at the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Mr.
Yang Mingsheng, the Chairman of the Board, gave written authorisation for Mr. Lin Dairen to act as his proxy
to attend, vote at and chair the meeting; at the sixteenth meeting of the fifth session of the Board held on 19
December 2017, Mr. Yang Mingsheng, the Chairman of the Board, gave written authorisation for Mr. Lin Dairen
to act as his proxy to attend, vote at and chair the meeting.
At the eleventh meeting of the fifth session of the Board held on 23 March 2017, Mr. Xu Hengping gave written
authorisation for Mr. Xu Haifeng to act as his proxy to attend and vote at the meeting; at the fifteenth meeting of
the fifth session of the Board held on 26 October 2017, Mr. Xu Hengping gave written authorisation for Mr. Xu
Haifeng to act as his proxy to attend and vote at the meeting.
At the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Mr. Xu Haifeng gave written
authorisation for Mr. Xu Hengping to act as his proxy to attend and vote at the meeting.
114
3.
4.
5.
6.
7.
8.
China Life Insurance Company Limited Annual Report 2017
Type of Director
the year
meetings
physically
attended
0
3.
The Supervisory Committee had no objection in respect of any matters under its
supervision during the Reporting Period.
2.
100%
2/2
0
Zhan Zhong
Number of meetings attended
Name of Supervisor
During the Reporting Period, the attendance records of the resigned Supervisor at the Supervisory
Committee Meetings are as follows:
At the tenth meeting of the fifth session of the Supervisory Committee held on 23 March 2017, Ms. Wang
Cuifei gave written authorisation for Mr. Zhan Zhong to act as her proxy to attend and vote at the meeting; at
the fourteenth meeting of the fifth session of the Supervisory Committee held on 19 December 2017, Ms. Wang
Cuifei i gave written authorisation for Mr. Shi Xiangming to act as her proxy to attend and vote at the meeting.
At the twelfth meeting of the fifth session of the Supervisory Committee held on 24 August 2017, Ms. Xiong
Junhong gave written authorisation for Mr. Shi Xiangming to act as her proxy to attend and vote at the meeting.
At the thirteenth meeting of the fifth session of the Supervisory Committee held on 26 October 2017, Mr. Shi
Xiangming gave written authorisation for Ms. Wang Cuifei to act as his proxy to attend and vote at the meeting.
Attendance rate
1
1
Non-executive Director
meetings
attended by
meetings
Number of
consecutive
attended
meetings
Attendance
meetings
telephony
by proxies
absent
rate
in
person
Miao Jianmin
Liu Jiade
0
1
Corporate Governance
2
2
0
0
0
2
0
Non-executive Director
Liu Huimin
1
0
0
0
1
0
Non-executive Director
Yin Zhaojun
Wang Sidong
1
Xu Hengping
Executive Director
2
1
0
0
50%
1
Xu Haifeng
Executive Director
2
1
0
0
50%
Non-executive Director
1
1
Tang Xin
Independent Director
2
2
0
0
50%
0
Leung Oi-Sie Elsie
Independent Director
2
0
0
50%
100%
1
0
0
0
0
0
100%
Chang Tso Tung Stephen Independent Director
2
2
0
0
0
100%
Robinson Drake Pike
Independent Director
2
1
100%
0
0
0
SHAREHOLDERS' GENERAL MEETING
The shareholders' general meeting, as an organ of the highest authority of the Company, exercises its duties and
functions in accordance with relevant laws. Its duties and powers include the election, appointment and removal
of Directors and Non-employee Representative Supervisors, review and approval of the reports of the Board and
the Supervisory Committee, review and approval of the annual budget and final accounts of the Company, and
any other matters required by the Articles of Association to be approved by way of resolution of the shareholders'
general meeting. The Company ensures that all shareholders are equally treated so as to ensure that the rights of
all shareholders are protected, including the right of access to information in relation to, and the right to vote
in respect of, major matters of the Company. The Company has the ability to operate and manage its business
autonomously, and is separate and independent from its controlling shareholder in its business operations,
personnel, assets and financial matters.
1. Shareholders' general meetings convened during the Reporting Period are as follows:
Session of the meeting
Date of the meeting
Index for websites on
which resolutions were published
During the Reporting Period, the Company was named by the CIRC as a “high-quality” company in its
corporate governance on-site evaluation. It also won the "Hong Kong Corporate Governance Excellence
Award (Main Board Companies - Hang Seng Composite Index Constituent Companies)" in the “Hong
Kong Corporate Governance Excellence Awards 2017” jointly organized by the Chamber of Hong Kong
Listed Companies and the Centre for Corporate Governance and Financial Policy, Hong Kong Baptist
University.
Date of publication
of resolutions
31 May 2017
First Extraordinary
20 December 2017
General Meeting 2017
110
China Life Insurance Company Limited Annual Report 2017
2016 Annual General Meeting 31 May 2017
The Company has actively organized Directors and Supervisors to attend various training courses and
examinations. All Independent Directors of the Company attended internal training courses on the
business development and the regulations on the connected transactions of the Company as organized
by the departments of the Company such as the Strategy and Marketing Department and the Legal
and Compliance Department. Pursuant to the regulatory requirements of the CIRC, all Directors and
Supervisors attended training programs on anti-money laundering. The members of the Supervisory
Committee attended the seminar of 2017 for the chairmen of the supervisory committees of listed
companies as organized by China Association for Public Companies and special training courses of 2017
for directors and supervisors of listed companies within the territory of Beijing as organized by the Listed
Companies Association of Beijing, etc. The new Directors and Supervisors of the Company sat for the
examinations of the CIRC regarding the approval of qualifications of new directors, supervisors and senior
management officers of insurance institutions as organized by the CIRC. They attended training courses for
a total of 11 person-times.
9.
8.
Corporate Governance
3.
4.
5.
6.
7.
The Company has actively promoted the establishment of corporate governance, continuously improved its
corporate governance structure and enhanced its scientific decision-making ability. In order to improve the
decision-making efficiency of the specialized Board committees, the Board has established four specialized
Board committees, i.e. the Audit Committee, the Nomination and Remuneration Committee, the Risk
Management Committee, and the Strategy and Investment Decision Committee. These specialized
Board committees conduct studies on specific matters, hold meetings on both regular and ad-hoc basis,
communicate with the management, provide advice and recommendations for the Board's consideration,
and deal with matters entrusted or authorized by the Board, for the purpose of improving the Board's
efficiency and intensifying the Board's functions.
The Supervisory Committee of the Company has carried out its work and performed its duties in accordance
with the Articles of Association and the “Procedural Rules for Supervisory Committee Meetings". Members
of the Supervisory Committee attended the shareholders' general meetings and the Supervisory Committee
meetings, participated in the Board meetings and the meetings of the specialized Board committees based on
their work allocation, and conducted investigations on local branches to have an in-depth understanding of
the implementation of the decisions made by the Board, so as to diligently perform their role of supervision.
The Company carried out the procedures relating to the resignation, retirement and appointment of
Directors, Supervisors and senior management in compliance with the regulatory requirements of its listed
jurisdictions and the provisions of its Articles of Association. Mr. Miao Jianmin, Mr. Wang Sidong and
Mr. Liu Jiade resigned from the Board due to adjustment of work arrangements. Mr. Zhan Zhong and
Mr. Li Guodong resigned from their positions as Employee Representative Supervisors due to adjustment
of work arrangements. The Board considered and approved the proposals in relation to the nomination of
Mr. Li Mingguang as the Board Secretary of the Company, nomination of Mr. Zhao Peng as an Assistant
to the President of the Company, nomination of Mr. Zhan Zhong as the Marketing Director of the
Company, nomination of Mr. Zhao Peng as the Vice President of the Company, nomination of Mr. Ruan
Qi as the Vice President of the Company and nomination of Ms. Yang Hong as the Operation Director
of the Company. Following the election at the 2016 Annual General Meeting of the Company and upon
the approval by the CIRC, the appointment of Mr. Liu Huimin and Mr. Yin Zhaojun as Directors of the
Company became effective from 31 July 2017. Following the election at the First Extraordinary General
Meeting 2017 and upon the approval by the CIRC, the appointment of Mr. Yuan Changqing as a Director
and Mr. Luo Zhaohui as a Supervisor became effective from 11 February 2018. Following the election at
the Sixth Extraordinary Meeting of the Second Session of the Employee Representative Meeting of the
Company and upon the approval by the CIRC, the appointment of Mr. Song Ping as a Supervisor of the
Company became effective from 15 March 2018.
The Company has made information disclosure in a timely, open and transparent manner pursuant to
the requirements of the listing rules of its listed jurisdictions. The Company has continuously improved
its management of investor relations and enhanced its communication with investors in both form and
substance, thus ensuring that all shareholders enjoy equal rights and have access to information about the
Company in an open, fair, true and accurate manner.
The Board and the Supervisory Committee of the Company have conducted extensive investigation and
research activities. The members of the Board subsequently carried out investigation and research on China
Guangfa Bank Co., Ltd. (“CGB") and local branches of the Company in Guizhou Province for the purpose
of understanding the operation of the local branches and their implementation of decisions of the Board
and the management. The members of the Supervisory Committee carried out investigation and research on
local branches of the Company in Guangxi Zhuang Autonomous Region for the purpose of examining the
effectiveness of the implementation of decisions of the Board and the management, which thus enhanced the
legal compliance and risk prevention of the Company in a practical manner.
China Life Insurance Company Limited Annual Report 2017
109
Corporate Governance
II.
http://www.sse.com.cn
China Life Insurance Company Limited
http://www.hkexnews.hk
http://www.e-chinalife.com
http://www.sse.com.cn
http://www.hkexnews.hk
http://www.e-chinalife.com
2.
by proxies
absent
rate
Yang Mingsheng
Lin Dairen
Executive Director
2
telephony
0
0
2
0
Executive Director
2
2
0
Attendance
meetings
attended
Eleven proposals including: the “Proposal in relation to the Report of the Board of Directors of the
Company for the Year 2016”, the “Proposal in relation to the Report of the Supervisory Committee of the
Company for the Year 2016”, the “Proposal in relation to the Financial Report of the Company for the Year
2016", the "Proposal in relation to the Profit Distribution Plan of the Company for the Year 2016", the
"Proposal in relation to the Remuneration of Directors and Supervisors of the Company”, the “Proposal in
relation to the Election of Mr. Liu Huimin as a Non-executive Director of the Fifth Session of the Board
of Directors of the Company”, the “Proposal in relation to the Election of Mr. Yin Zhaojun as a Non-
executive Director of the Fifth Session of the Board of Directors of the Company”, the “Proposal in relation
to the Remuneration of Auditors of the Company for the Year 2016 and the Appointment of Auditors of the
Company for the Year 2017”, the “Proposal in relation to the 'Framework Agreement for Daily Connected
Transactions between the Company and Chongqing International Trust Inc.”, the “Proposal in relation
to the ‘Entrusted Investment and Management Agreement for Alternative Investments with Insurance
Funds' between the Company and China Life Investment Holding Company Limited” and the “Proposal in
relation to the General Mandate for the Issuance of H Shares by the Company", etc. were considered and
approved by a combination of on-site and online voting, and the “Duty Report of the Independent Directors
of the Fifth Session of the Board of Directors of the Company for the Year 2016" and the "Report on the
Status of Connected Transactions and the Execution of Connected Transactions Management System of
the Company for the Year 2016" were received and reviewed at the 2016 Annual General Meeting held in
Beijing on 31 May 2017.
Two proposals including: the “Proposal in relation to the Election of Mr. Yuan Changqing as a Non-executive
Director of the Fifth Session of the Board of Directors of the Company” and the “Proposal in relation to
the Election of Mr. Luo Zhaohui as a Non-employee Representative Supervisor of the Fifth Session of the
Supervisory Committee of the Company" were considered and approved by a combination of on-site and
online voting at the First Extraordinary General Meeting 2017 held in Beijing on 20 December 2017.
Attendance records of Directors at the shareholders' general meetings convened during the Reporting
Period:
Number of
shareholders'
Corporate Governance
general
meetings the
Director was
required to
attend during
Number of
Name of Director
Type of Director
the year
meetings
physically
attended
Number of
meetings
attended by
Number of
meetings
Number of
20 December 2017
0
Annual Report 2017
Corporate Governance
6
6
0
0
0
100%
Executive Director
No
Executive Director
6
4
Note 2
0
2
Xu Hengping
0
Lin Dairen
50%
telephony
proxies
absent
rate
in
person
No
Yang Mingsheng
6
Note 1
3
0
3
0
Executive Director
67%
No
Xu Haifeng
Yes
Liu Huimin
Non-executive Director
3
3
0
67%
0
100%
No
Yin Zhaojun
Non-executive Director
3
Note 6
0
0
2
1
Executive Director
Note 3
6
5
0
1
0
83%
No
Wang Sidong
Non-executive Director
Note 4
6
Note 5
3
attended
111
the year
Name of Director
meetings Attendance
absent
rate
Miao Jianmin
Liu Jiade
Non-executive Director
Non-executive Director
0
0
by proxies
0
0
0
1
0
0
0
0
telephony
attended
the year
Attendance records of the resigned Directors at the shareholders' general meetings convened during the
Reporting Period:
Number of
shareholders'
general
meetings the
Director was
Number of Number of
Number of
required to
attend during
meetings
physically attended by
meetings
meetings
Number of
attended
Name of Director
Type of Director
1
0
III. BOARD
The Board is the standing decision-making body of the Company and its main duties include: performing the
function of corporate governance of the Company, convening shareholders' general meetings, implementing
resolutions passed at such meetings, improving the Company's corporate governance policies, approving the
Company's development strategies and operation plans, formulating and supervising the Company's financial
policies, annual budgets and financial reports, providing an objective evaluation on the Company's operating
results in its financial reports and other disclosure documents, dealing with senior management personnel matters,
arranging for Directors and senior management to attend various training courses, attaching importance to the
enhancement of their professional quality, reviewing the compliance policies of the Company, assessing the
internal control systems of the Company and reviewing the compliance by the Company with the Corporate
Governance Code. The day-to-day management and operation of the Company are delegated to the management.
The responsibilities of Non-executive Directors and Independent Directors include, without limitation, regularly
attending meetings of the Board and the specialized Board committees of which they are members, providing
opinions at meetings of the Board and the specialized Board committees, resolving any potential conflict of
interest, serving on the Audit Committee, the Nomination and Remuneration Committee and other specialized
Board committees, and inspecting, supervising and reporting on the performance of the Company. The Board is
accountable to the shareholders of the Company and reports to them.
Directors
failed to
Number of
Number of
meetings
attend during
physically
meetings
attended by
Number of
meetings
attended by
attend two
Number of
consecutive
meetings
Attendance
meetings
Number of
meetings the
Director was
required to
Type of Director
Whether the
Meetings and attendance
Currently, the Board comprises eleven members, including four Executive Directors, three Non-executive
Directors and four Independent Directors. The number of Independent Directors complies with the minimum
requirement of three Independent Directors and the requirement that at least one-third of the Board be
represented by Independent Directors under the Listing Rules of the HKSE. All members of the Board have
devoted sufficient time in dealing with the affairs of the Board and attended the relevant training courses organized
by external regulatory authorities and the Company according to regulatory requirements. They have referred
to regulatory documents on a regular basis so as to keep themselves informed of the regulatory development in
a timely manner. The Company has purchased director's liability insurances for its Directors, which provide
protection to Directors for liabilities that might arise in the course of their performance of duties according to
law and facilitate Directors to fully perform their duties. So far as the Company is aware, no financial, business,
family or other material relationship exists among members of the Board, the Supervisory Committee or the senior
management (including between the Chairman of the Board, Mr. Yang Mingsheng, and the President of the
Company, Mr. Lin Dairen).
China Life Insurance Company Limited Annual Report 2017
112
In 2017, Independent Directors of the Company possessed extensive experience in various fields, such as macro-
economics, finance and insurance, legal compliance, accounting and auditing. The Company also complies with
the requirement of the Listing Rules of the HKSE that at least one of its Independent Directors has appropriate
professional qualifications or accounting qualifications or related financial management expertise. As required
under the Listing Rules of the SSE and the HKSE, the Company has obtained a written confirmation from each
of its Independent Directors in respect of their independence, and the Company is of the opinion that all of
the Independent Directors are independent of the Company and strictly perform their duties as Independent
Directors. Pursuant to the Articles of Association, Directors shall be elected at the shareholders' general meeting
for a term of three years and may be re-elected on expiry of the three-year term. However, Independent Directors
may not serve for more than six years.
Meetings of the Board are held both on a regular and an ad-hoc basis. Regular meetings are convened at least
four times a year for the examination and approval of proposals, such as annual report, interim report, quarterly
reports, related financial reports, and major business operations of the year. Meetings are convened by the
Chairman of the Board and a notice is given to all Directors 14 days before such meetings. Agendas and related
documents are sent to the Directors at least three days prior to such meetings. In 2017, all notices, agendas and
related documents in respect of such regular Board meetings were sent in compliance with the above requirements.
By fully reviewing all the relevant proposals, the Board has confirmed that the information contained in its
periodic reports and financial reports is true, accurate and complete and contains no false representations,
misleading statements or material omissions, and no event or situation which would have material adverse impacts
on the Company's ongoing operation has been found.
Regular Board meetings are held mainly to review the quarterly, interim or annual reports of the Company and
to deal with other related matters. The practice of obtaining Board consent through the circulation of written
resolutions does not constitute a regular Board meeting. An ad-hoc Board meeting may be convened in urgent
situations if requisitioned by any of the following: shareholders representing over one-tenth of voting shares,
Directors constituting more than one-third of the total number of Directors, the Supervisory Committee, more
than two Independent Directors, the Chairman of the Board or the President of the Company. If the resolution
to be considered at such ad-hoc Board meetings has been circulated to all the Directors and more than half of
the Directors having voting rights approve such resolution by signing the resolution in writing, the ad-hoc Board
meeting need not be physically convened and such resolution in writing shall become an effective resolution.
If a Director is materially interested in a matter to be considered by the Board, the Director having such conflict of
interest shall have no voting right on the matter to be considered and shall not be counted in the quorum for the
Board meeting. All Directors shall have access to the advice and services of the Board Secretary and the Company
Secretary. Detailed minutes of Board meetings regarding matters considered by the Board and decisions reached,
including any concerns raised by Directors or dissenting views expressed, are kept by the Board Secretary. Minutes
of Board meetings are available upon reasonable notice for inspection and comment upon by Directors.
Currently, the fifth session of the Board comprises the following members: Mr. Yang Mingsheng, Mr. Lin Dairen,
Mr. Xu Hengping and Mr. Xu Haifeng, all being Executive Directors, Mr. Yuan Changqing, Mr. Liu Huimin and
Mr. Yin Zhaojun, all being Non-executive Directors, and Mr. Chang Tso Tung Stephen, Mr. Robinson Drake
Pike, Mr. Tang Xin and Ms. Leung Oi-Sie Elsie, all being Independent Directors, with Mr. Yang Mingsheng as
the Chairman of the Board. Mr. Miao Jianmin, Mr. Wang Sidong and Mr. Liu Jiade resigned from their positions
as Directors due to adjustment of work arrangements.
China Life Insurance Company Limited
Annual Report 2017
113
Corporate Governance |
During 2017, all Independent Directors of the Company attended internal training on the business development
and the regulations on the connected transactions of the Company as organized by the departments of the
Company such as the Strategy and Marketing Department and the Legal and Compliance Department. Pursuant
to the regulatory requirements of the CIRC, all members of the Board attended training programs on anti-money
laundering for the purpose of understanding the latest anti-money laundering rules and regulations and the
Company's work on anti-money laundering, and enhancing the capability of Directors to safeguard against the risk
of money laundering.
1.
In 2017, six regular Board meetings were held by the fifth session of the Board, all of which were physical
meetings. The attendance records of individual Directors are as follows:
China Life Insurance Company Limited Annual Report 2017
124
The Risk Management Committee is mainly responsible for formulating the Company's system of risk
control benchmarks, discussing with the management and assisting them in establishing well-developed risk
management and internal control systems, examining and reviewing the Company's risk preference and risk
tolerance, formulating the Company's risk management policy, reviewing the assessment reports in relation to the
Company's risk management and internal control, studying major investigation findings on risk management and
internal control matters as delegated by the Board or on its own initiative and the management's response to these
findings, and dealing with major risk emergency events or crisis events or major disagreement in risk management.
The Company established its Audit Committee on 30 June 2003. In 2017, the Audit Committee comprised
only Independent Directors of the Company. Currently, the Audit Committee of the fifth session of the Board
comprises Mr. Robinson Drake Pike, Mr. Chang Tso Tung Stephen and Mr. Tang Xin, all being Independent
Directors, with Mr. Robinson Drake Pike acting as the Chairman.
China Life Insurance Company Limited Annual Report 2017
In 2017, attendance records of the resigned Director at the Risk Management Committee meetings are as
follows:
Name of member
Position
Liu Jiade
Non-executive Director, member of the
Risk Management Committee of the fifth
session of the Board
Number of
meetings attended
Attendance rate
1/2 Note
50%
Corporate Governance
2.
Note: At the seventh meeting of the Risk Management Committee of the fifth session of the Board held on 26 April
2017, Mr. Liu Jiade gave written authorisation for Mr. Xu Hengping to act as his proxy to attend and vote at the
meeting.
Performance of duties by the Risk Management Committee
In 2017, the Risk Management Committee performed its duties and functions in strict compliance with the
"Procedural Rules for Risk Management Committee Meetings”. All members performed their obligations in
a responsible manner and reviewed the proposals in relation to the internal control system of the Company,
risk management and construction in compliance with law. During meetings of the Risk Management
Committee, all members actively participated in discussions and gave guiding opinions on the proposals
considered and discussed at the meetings.
(1) Reviewing the risk analysis on major matters concerning the business operation and management
of the Company. In 2017, the Risk Management Committee reviewed the risk analysis on major
matters concerning the business operation and management of the Company, reviewed and approved
the "Proposal in relation to the Financial Budget of the Company for the Year 2018”, the “Proposal
in relation to the Risk Analysis on the Investment Plan of the Company for the Year 2018" and the
"Proposal in relation to the Risk Compliance Analysis on the 'Strategic Asset Allocation Plan of the
Company for the Years from 2018 to 2020" and gave guiding opinions on risk control for major
matters concerning the business operation and management of the Company such as the financial
budget of the Company for the year 2018 and the investment plan of the Company for the
in accordance with the regulatory requirements of the CIRC on C-ROSS.
(2)
2018
Providing its opinions for the review of the proposals on risk management to the Board. In 2017, the
Risk Management Committee closely monitored and controlled and effectively prevented internal
and external risks of the Company, assisted the Board in improving an internal control system of the
Company, formulated an operational risk management policy of the Company, and reviewed the
assessment reports on business risk and internal control of the Company according to the regulatory
requirements in the PRC and overseas. The Risk Management Committee provided its opinions for
the review of the proposals on risk management such as the work summary on anti-money laundering
for the year 2016 and the work plan for the year 2017, the report on the rectification of issues
identified during the anti-money laundering on-site enforcement inspection of the Company for
the year 2016 and the rectification plan in relation thereto, the statement of the Company on risk
preference for the year 2017, and the audit report on the solvency risk management system of the
Company for the year 2017, which offered professional support to the Board's decision-making in a
scientific manner.
China Life Insurance Company Limited Annual Report 2017
125
Corporate Governance
(3)
(4)
Receiving the report on the prevention against and control over misleading sales practices for the year
2017. In 2017, the Risk Management Committee received and reviewed the “Report on the Prevention
Against and Control Over Misleading Sales Practices for the Year 2017” and gave guiding opinions on
the commencement of anti-money laundering rectification measures by the Company in accordance with
the regulatory authorities for the purpose of enhancing the Company' sales service level, improving its
reputation and social image and further strengthening the risk control over misleading sales practices.
At the ninth meeting of the Risk Management Committee of the fifth session of the Board held on 26 October
2017, Mr. Yin Zhaojun gave written authorisation for Mr. Liu Huimin to act as his proxy to attend and vote at the
meeting.
At the sixth meeting of the Risk Management Committee of the fifth session of the Board held on 22 March 2017,
Mr. Xu Hengping gave written authorisation for Ms. Leung Oi-Sie Elsie to act as his proxy to attend and vote at
the meeting; at the ninth meeting of the Risk Management Committee of the fifth session of the Board held on
26 October 2017, Mr. Xu Hengping gave written authorisation for Ms. Leung Oi-Sie Elsie to act as his proxy to
attend and vote at the meeting;
2.
1.
In 2017, five regular meetings were held by the Risk Management Committee of the fifth session of the
Board. Attendance records of individual members are as follows:
Name of member
Position
Leung Oi-Sie Elsie
Independent Director, Chairperson of the
Risk Management Committee of the fifth
session of the Board
Number of
meetings attended
Attendance rate
515
100%
Xu Hengping
Executive Director, member of the Risk
3/5 Note
Conducting investigation and research on local branches. From 14 to 16 February 2017, Ms. Leung Oi-
Sie Elsie, the chairperson of the Risk Management Committee, carried out investigation and research on
CGB and received a special report given by Mr. Liu Jiade, the president of CGB, in respect of the current
development and future plan for the purpose of understanding the risk control of CGB. She also made
an on-site visit to Nanhai Financial Center of CGB and studied major investigation findings on risk
management and internal control matters and the management's response to these findings.
1
Management Committee of the fifth
session of the Board
Liu Huimin
Non-executive Director, member of the Risk
3/3
100%
Management Committee of the fifth
session of the Board
Yin Zhaojun
Non-executive Director, member of the Risk
Management Committee of the fifth
session of the Board
Note 2
2/3
67%
Notes:
60%
Meetings and attendance
IX. STRATEGY AND INVESTMENT DECISION COMMITTEE
The Strategy and Investment Decision Committee is mainly responsible for the drawing-up of long-term
development strategies and significant investment or financing plans of the Company, proposing significant
projects of capital operation and assets management, and conducting studies and making recommendations on
other important matters affecting the development of the Company.
0
and Investment Decision Committee of the
fifth session of the Board
Corporate Governance
2.
Note: At the tenth meeting of the Strategy and Investment Decision Committee of the fifth session of the Board held on
22 March 2017, Mr. Wang Sidong gave written authorisation for Mr. Lin Dairen to act as his proxy to attend and
vote at the meeting.
Performance of duties by the Strategy and Investment Decision Committee
In 2017, all members of the Strategy and Investment Decision Committee attended meetings in a timely
manner, reviewed the proposals on the application of the Company's insurance capital, annual investments,
major strategic projects and annual related reports. Members of the Strategy and Investment Committee
diligently performed their duties. During meetings of the Strategy and Investment Decision Committee,
all members actively participated in discussions and gave professional advices on proposals considered and
discussed at the meetings.
(1) Reviewing annual investment plans and entrusted investments of the Company. In 2017, the Strategy
and Investment Decision Committee carefully reviewed the proposals on investment plans such as the
annual investment plan of the Company and the annual investment plan of the Company for self-
use real estate, the proposals on authorisation of investments such as the annual authorisation by the
Company of investment in non self-use real estate, the annual authorisation of investment entrusted
by the Company in connection with Renminbi liberalization and the annual authorisation by the
Company of investment in equity investment funds, and the proposals on investment guidelines
such as the management guidelines on the investment made by AMC, Franklin Asset Management
Company Limited and CLI under the entrustment of the Company. The Strategy and Investment
Decision Committee fully reviewed the above proposals and submitted its opinions to the Board in
this regard.
ล
Discussing major strategic projects of the Company. In 2017, the Strategy and Investment Decision
Committee reviewed major strategic projects of the Company, such as the strategic asset allocation
plan of the Company for the years from 2018 to 2020, and investments by the Company in Jinxiu
Project, Jinhou Project and Jinhong Project, fully discussed the necessity, feasibility and risks of the
project proposals and made recommendations to the Board.
China Life Insurance Company Limited
Annual Report 2017
127
X.
(3) Finalizing the Company's development plans and reports, and revising the measures for the
administration of investment of the Company. In 2017, the Strategy and Investment Decision
Committee discussed and reviewed proposals including the "Proposal in relation to the 'Assessment
Report for the Outline of the 13th Five-year Development Plan for the Year 2016"", and submitted
its opinions to the Board. Given that the CIRC subsequently rolled out a number of regulatory
requirements to expand the market scope for the application of insurance capital and the types of
investment and to set higher requirements for the management method and level of management of
insurance capital investments, the Strategy and Investment Decision Committee carefully reviewed
the "Proposal in relation to the Amendments to the 'Measures for the Administration of Investment
of the Company" after taking into account the establishment of internal departments of the Company
and the adjustment of their duties and functions.
(4)
Conducting investigation and research on local branches. From 14 to 16 February 2017, Mr. Tang
Xin, the Chairman of the Strategy and Investment Decision Committee, and Ms. Leung Oi-Sie Elsie,
a member of the Strategy and Investment Decision Committee, carried out investigation and research
on CGB for the purpose of understanding the implementation of insurance-banking collaboration;
from 31 July to 4 August 2017, Mr. Tang Xin, the Chairman of the Strategy and Investment
Decision Committee, carried out investigation and research on local branches of the Company in
Guizhou Province for the purpose of understanding the business development of the local branches,
supervising, evaluating and examining major issues such as the implementation of the Company's
strategy and use of funds.
INDEPENDENCE OF THE COMPANY FROM ITS CONTROLLING SHAREHOLDER
Employees: The Company is independent in the aspects of employment, human resources and remuneration
management.
Assets: The Company owns all assets relating to the operation of its principal business. At present, the Company
does not provide any guarantee for its shareholders. The Company's assets are independent, complete, and
independent of the shareholders of the Company and other related parties.
Finance: The Company has established a separate financial department, and an independent financial accounting
system and financial management system; further, the Company makes financial decisions on its own; it employs
separate financial personnel, opens separate accounts with banks and does not share bank accounts with CLIC; the
Company, as a separate taxpayer, pays taxes individually according to law.
Organization: The Company has established a well-developed organizational system, under which internal bodies
such as the Board and the Supervisory Committee operate separately. There is no subordinate relationship between
such internal bodies and the functional departments of the Company's controlling shareholder.
Business operations: The Company independently develops personal insurance businesses, including life insurance,
health insurance and accident insurance businesses, reinsurance relating to the above insurance businesses, use
of funds permitted by applicable PRC laws and regulations or the State Council, as well as all types of personal
insurance services, consulting business and agency business, sale of securities investment funds, and other businesses
permitted by insurance administrative and regulatory authorities of the PRC. The Company currently possesses the
“Insurance Company Legal Person Permit” (Number: 000005) issued by the CIRC. The Company is independently
engaged in the businesses as prescribed in its business scope according to law, has separate sales and agency channels
and is licensed to use licensed trademarks without consideration. The completeness and independence of the
Company's business operations will not be adversely affected by its relationship with related parties.
Corporate Governance
128
China Life Insurance Company Limited Annual Report 2017
VI. AUDIT COMMITTEE
0/1 Note
Non-executive Director, member of the Strategy
Wang Sidong
Attendance rate
1.
Meetings and attendance
In 2017, five regular meetings were held by the Strategy and Investment Decision Committee of the fifth
session of the Board. Attendance records of individual members are as follows:
Name of member
Position
Tang Xin
Lin Dairen
Xu Haifeng
Leung Oi-Sie Elsie
Independent Director, Chairman of the Strategy
and Investment Decision Committee of the
fifth session of the Board
Executive Director, member of the Strategy
and Investment Decision Committee of
the fifth session of the Board
Executive Director, member of the Strategy
and Investment Decision Committee of
the fifth session of the Board
Independent Director, member of the Strategy
and Investment Decision Committee of
the fifth session of the Board
126
China Life Insurance Company Limited Annual Report 2017
Number of
meetings attended
The Company established the Strategy Committee on 30 June 2003. In October 2010, the proposal to establish
the Strategy and Investment Decision Committee on the basis of the Strategy Committee was reviewed and
approved at the ninth meeting of the third session of the Board. Currently, the Strategy and Investment Decision
Committee of the fifth session of the Board comprises Mr. Tang Xin and Ms. Leung Oi-Sie Elsie, the Independent
Directors, Mr. Lin Dairen and Mr. Xu Haifeng, the Executive Directors, with Mr. Tang Xin acting as the
Chairman.
Attendance rate
100%
5/5
100%
4/5 Note
80%
5/5
100%
Note: At the tenth meeting of the Strategy and Investment Decision Committee of the fifth session of the Board held on
22 March 2017, Mr. Xu Haifeng gave written authorisation for Mr. Tang Xin to act as his proxy to attend and vote
at the meeting.
In 2017, attendance records of the resigned Director at the Strategy and Investment Decision Committee
meetings are as follows:
Number of
Name of member
Position
meetings attended
5/5
1.
year
Attendance rate
In 2017, four regular meetings were held by the Nomination and Remuneration Committee of the fifth
session of the Board. Attendance records of individual members are as follows:
Meetings and attendance
122
1.
Corporate Governance
121
Name of member
China Life Insurance Company Limited Annual Report 2017
The Company established the Management Training and Remuneration Committee on 30 June 2003. On 16 March
2006, the Board resolved to change the name of the Management Training and Remuneration Committee to the
Nomination and Remuneration Committee, with a majority of Independent Directors on the committee. Currently,
the Nomination and Remuneration Committee of the fifth session of the Board comprises Mr. Chang Tso Tung
Stephen and Mr. Robinson Drake Pike, the Independent Directors, and Mr. Yuan Changqing, a Non-executive
Director, with Mr. Chang Tso Tung Stephen acting as the Chairman. In April 2017, Mr. Miao Jianmin resigned
from his position as a member of the Nomination and Remuneration Committee of the fifth session of the Board
due to adjustment of work arrangements, and Mr. Wang Sidong was appointed as a member of the Nomination
and Remuneration Committee. In January 2018, Mr. Wang Sidong resigned from his position as a member of the
Nomination and Remuneration Committee of the fifth session of the Board due to adjustment of work arrangements.
The Nomination and Remuneration Committee is mainly responsible for reviewing the structure of the Board,
its number of members and composition and drawing up plans for the appointment, succession and appraisal
criteria of Directors and senior management. The committee is also responsible for formulating training
and remuneration policies for the senior management of the Company. The Nomination and Remuneration
Committee, as an advisor to the Board on the nomination of Directors, shall first discuss and agree on the list of
candidates to be nominated as new Directors, following which such candidates are recommended to the Board.
The Board shall then determine whether such candidates' appointments should be proposed for approval at the
shareholders' general meeting. The major criteria considered by the Nomination and Remuneration Committee
and the Board are educational background, management and research experience in the insurance industry, and the
candidates' commitment to the Company. As to the nomination of Independent Directors, the Nomination and
Remuneration Committee will give special consideration to the independence of the relevant candidates.
VII. NOMINATION AND REMUNERATION COMMITTEE
(6) Conducting investigation and research of local branches. From 14 to 16 February 2017, Mr. Robinson
Drake Pike, the Chairman of the Audit Committee, and Mr. Tang Xin, a member of the Audit
Committee, carried out investigation and research on CGB for the purpose of understanding the
insurance-banking collaboration. From 31 July to 4 August 2017, Mr. Robinson Drake Pike, the
Chairman of the Audit Committee, together with Mr. Chang Tso Tung Stephen and Mr. Tang Xin,
members of the Audit Committee, carried out investigation and research on local branches of the
Company in Guizhou Province for the purpose of reviewing the financial control and internal control
system of the local branches, including the implementation of the recommendations given by the
internal audit department of the Company and the external independent auditors in the local branches
at different levels.
including the "Proposal on the 2016 Internal Audit Summary and the 2017 Internal Audit Work
Plan and Budget of the Costs of the Company" and the "Proposal on the Internal Audit Summary for
the First Half of 2017 and the Internal Audit Work Plan for the Second Half of 2017", in order to
facilitate the communication between the Company's internal audit department and the independent
auditors, and confirmed that the Company's internal audit function was effective.
(5) Examining the internal audit functions of the Company. The Audit Committee reviewed proposals
Corporate Governance
The Nomination and Remuneration Committee determines, with delegated responsibility, the remuneration
packages of all Executive Directors and senior management officers. The fixed salary of the Executive Directors
and other members of senior management are determined in accordance with market levels and their respective
positions, and the amount of their performance-related bonuses is determined according to the results of
performance appraisals. Directors' fees and the volume of share appreciation rights to be granted are determined
with reference to market levels and the actual circumstances of the Company.
120
Chang Tso Tung Stephen Independent Director, Chairman of the
meetings attended
3/3
Non-executive Director, member of the
Wang Sidong
of the fifth session of the Board
Nomination and Remuneration Committee
100%
Number of
4/4
Robinson Drake Pike
of the fifth session of the Board
Nomination and Remuneration Committee
100%
4/4 Note
Attendance rate
Independent Director, member of the
100%
Corporate Governance
(4) Assessing the effectiveness of internal control and monitoring the operation of the Company to be in
compliance with law. The Audit Committee provided guidance to the Company on the management
of internal control, devised the working plan for internal control assessment, reviewed the work report
on assessment of internal control, and inspected the rectification of problems identified in the internal
control pursuant to Section 404 of the U.S. Sarbanes-Oxley Act. The Audit Committee earnestly
performed its duties and responsibilities and monitored the Company to carry out its work in
compliance with laws and regulations pursuant to the relevant requirements of the CIRC, the SSE and
the HKSE. As required by its duties and responsibilities, the Audit Committee reviewed the annual
and half-year compliance reports of the Company to ensure that its work was conducted strictly
according to the relevant regulatory requirements in a reasonable and efficient manner.
Chang Tso Tung Stephen Independent Director, member of the
Audit Committee of the fifth session of the Board
Independent Director, Chairman of the
Robinson Drake Pike
100%
4/4
Tang Xin
meetings attended
Position
Name of member
In 2017, four regular meetings were held by the Audit Committee of the fifth session of the Board.
Attendance records of individual members are as follows:
Meetings and attendance
1.
All members of the Audit Committee have extensive experience in financial matters. The principal duties of
the Audit Committee are to review and supervise the preparation of the Company's financial reports, assess the
effectiveness of the Company's internal control system, supervise the Company's internal audit system and its
implementation, and recommend the engagement or replacement of external auditors. The Audit Committee
is also responsible for communications between the internal and external auditors and the establishment of the
internal reporting mechanism of the Company.
Number of
China Life Insurance Company Limited Annual Report 2017
Audit Committee of the fifth session of the Board
Independent Director, member of the Audit
Committee of the fifth session of the Board
4/4
(3) Assessing the work of and strengthening communications with external auditors. Besides regular
meetings, the Audit Committee convened communication meetings in advance with the relevant
departments of the Company and external auditors for several times so as to discuss the annual audit
plan of the Company, determine the service scope of the annual audit, listen to the report given by
the auditors with respect to the results of the audit on and review of periodic financial reports of the
Company, and review the work arrangement for the selection and engagement of auditors for the years
from 2018 to 2020. Through communications, the Audit Committee enhanced the effectiveness of
the internal control of the Company and further supervised the performance of duties by the external
auditors in a diligent and responsible way.
(2) Reviewing connected transactions. In 2017, the Audit Committee reviewed the "Proposal in relation
to the 'Framework Agreement for Daily Connected Transactions' between the Company and
Chongqing International Trust Inc.", and the “Proposal in relation to the Entrusted Investment and
Management Agreement for Alternative Investments with Insurance Funds between the Company
and China Life Investment Holding Company Limited", and submitted them to the Board and
shareholders' general meeting for approval; and listened to the report on the list of connected parties
of the Company on a regular basis. The Audit Committee reviewed the audit report on connected
transactions for conscientious implementation of laws and regulations with respect to connected
transactions. The Company entered into written agreements in respect of all new connected
transactions, the formalities of which were fully completed. The contents of the agreements were
in compliance with law, and their approval and disclosure procedures were in compliance with the
regulatory requirements. Hence, the Company better performed its obligations as a listed company
pursuant to the regulatory requirements of its listed jurisdictions.
and approved annual, interim and quarterly financial reports. The Audit Committee was of the
view that the financial reports of the Company reflected the overall situation of the Company in a
true, accurate and complete manner, and gave its written opinion in this regard. By reviewing and
monitoring the completeness of financial reports, annual report and accounts, interim report and
quarterly reports of the Company, and examining significant matters such as financial statements and
reports, the Audit Committee guaranteed the accuracy and completeness of the financial information
disclosed by the Company and the consistency of its financial reports. Prior to the audit conducted
by the accounting firm and the review of the annual report, the Audit Committee communicated the
relevant situations with the auditors and listened to the report in connection with the arrangement
of the audit. After a preliminary opinion on audit was issued by the accounting firm, the Audit
Committee commenced in-depth communications with it so as to understand whether there were any
issues arising during the audit.
(1) Reviewing and approving financial reports. The Audit Committee, according to its duties, reviewed
119
China Life Insurance Company Limited Annual Report 2017
Note
Corporate Governance
Performance of duties by the Audit Committee
Note: At the eleventh meeting of the Audit Committee of the fifth session of the Board held on 24 August 2017, Mr.
Chang Tso Tung Stephen attended the meeting by telephony.
2.
100%
4/4
100%
In 2017, the Audit Committee performed its relevant duties and functions in strict compliance with the
"Procedural Rules for Audit Committee Meetings". All members of the Audit Committee performed their
obligations in a responsible manner and reviewed the proposals in relation to the audit of the Company,
its financial reports, connected transactions, internal control and legal compliance. During meetings of the
Audit Committee, all members actively participated in discussions and gave guiding opinions on proposals
considered and discussed at the meetings.
Nomination and Remuneration Committee
Position
Note: At the tenth meeting of the Nomination and Remuneration Committee of the fifth session of the Board held on 24
August 2017, Mr. Chang Tso Tung Stephen attend the meeting by telephony.
of the fifth session of the Board
The Company established its Risk Management Committee on 30 June 2003. Currently, the Risk Management
Committee of the fifth session of the Board comprises Ms. Leung Oi-Sie Elsie, an Independent Director, Mr.
Xu Hengping, an Executive Director, and Mr. Liu Huimin and Mr. Yin Zhaojun, the Non-executive Directors,
with Ms. Leung Oi-Sie Elsie acting as the Chairperson. In August 2017, Mr. Liu Jiade resigned from his position
as a member of the Risk Management Committee of the fifth session of the Board due to adjustment of work
arrangements.
VIII. RISK MANAGEMENT COMMITTEE
Corporate Governance
123
China Life Insurance Company Limited Annual Report 2017
(3) Carrying out the performance appraisal of senior management officers. The Nomination and
Remuneration Committee reviewed the “Proposal on the Remuneration of Directors and Supervisors
of the Company”, the “Proposal on the Remuneration of Senior Management Officers of the
Company”, the “Proposal on the Results of Performance Appraisal of Senior Management Officers
for 2016" and the "Proposal on the Performance Target Contract of Senior Management Officers for
2017”, and made recommendations to the Board in respect of matters such as the determination of
performance target, performance appraisal procedures and results.
Proposed remuneration policy of Directors, Supervisors and senior management officers of the
Company. The Nomination and Remuneration Committee took into account various factors such
as business development management, strategic investment decisions, and corporate governance
management and control, carefully examined and determined the specific remuneration packages
of all Executive Directors and senior management officers, approved the terms of service contracts
between the Company and each of the Executive Directors, Non-executive Directors and Independent
Directors and pushed forward the signing of service contracts between the Company and all
Directors, defined the rights, obligations and remunerations of Directors, and seriously appraised the
performance of Directors in the discharge of their duties.
with the "Procedural Rules for Nomination and Remuneration Committee Meetings" and the Board
diversity policy, the Nomination and Remuneration Committee carefully reviewed the structure of
the Board, its number of members and composition (taking into account diversity factors, including
gender, age, cultural and educational background, skills, knowledge and experience), fully reviewed
the professional qualifications and industrial background of the candidates for Directors, examined
and approved the proposal in relation to the nomination of Mr. Yuan Changqing as a Non-executive
Director of the fifth session of the Board of Directors of the Company and submitted the opinions in
relation thereto to the Board, conducted a careful assessment on the qualifications, skills, knowledge
and experience of candidates for senior management officers to ensure that the candidates meet the
requirements set by the Company, examined and approved the proposals in relation to the nomination
of Mr. Li Mingguang as the Board Secretary of the Company, nomination of Mr. Zhao Peng as an
Assistant to the President of the Company, nomination of Mr. Zhan Zhong as the Marketing Director
of the Company and nomination of Ms. Zhang Jun as the responsible person of the Company for
audit, etc, and submitted a review opinion to the Board.
(2)
(1) Proposed appointment of Directors and senior management officers of the Company. In accordance
Corporate Governance
China Life Insurance Company Limited Annual Report 2017
(4) Conducting investigation and research on local branches. From 14 to 16 February 2017, Mr.
Robinson Drake Pike, a member of the Nomination and Remuneration Committee, carried out
investigation and research on CGB for the purpose of understanding the remuneration and incentive
system of CGB. From 31 July to 4 August 2017, Mr. Chang Tso Tung Stephen, the chairman of
the Nomination and Remuneration Committee, and Mr. Robinson Drake Pike, a member of the
Nomination and Remuneration Committee, carried out investigation and research on local branches
of the Company in Guizhou Province for the purpose of understanding the remuneration standard
and appraisal incentive measures of the local branches and their sub-branches.
Performance of duties by the Nomination and Remuneration Committee
In 2017, the Nomination and Remuneration Committee performed its relevant duties and functions in
strict compliance with the "Procedural Rules for Nomination and Remuneration Committee Meetings". All
members of the Nomination and Remuneration Committee performed their obligations in a responsible
manner and reviewed the proposals on the candidates for Directors, nomination of senior management
officers, business objectives and appraisal results, the remuneration of Directors, Supervisors and senior
management, and the report on the duty performance of the Audit Committee and the Nomination and
Remuneration Committee. During meetings of the Nomination and Remuneration Committee, all members
actively participated in discussions and gave guiding opinions on the proposals considered and discussed at
the meetings.
In 2017, the attendance records of the resigned Director at the Nomination and Remuneration Committee
Meetings are as follows:
Number of
Name of member
meetings attended
Attendance rate
Position
Non-executive Director, member of the Nomination
and Remuneration Committee of the fifth session
of the Board
1/1
100%
2.
Miao Jianmin
16
-
2017/4/7
China Life Insurance Company Limited
Announcement on Changes in Accounting Estimates
2017/3/23
17
Announcement - Resignation of Non-Executive Director
2017/4/11
20
List of Directors and Their Role and Function
2017/4/7
19
Annual Report 2016
2017/4/11
21
Overseas Regulatory Announcement
Reports of The Board & Supervisory Committee, Financial Report & Profit
Distribution Plan, Remuneration of Directors & Supervisors, Election of Directors,
Remuneration of Auditors & Appointment of Auditors, Continuing Connected
Transactions, General Mandate to Issue H Shares, Duty Report of the Independent
Directors of the Board of Directors, Report on the Status of Connected Transactions
& Execution of the Connected Transactions Management System & Notice of AGM
Notice of Annual General Meeting
18
2017/3/23
Announcement
15
2017/3/10
2017/3/14
10 Announcement of Results for the year ended 31 December 2016
2017/3/23
11
Announcement on Supplementary Information regarding the Compensation of
Directors, Supervisors and Senior Management Members in 2015
2017/3/23
2017/5/15
China Life Insurance Company Limited 2016 Corporate Social Responsibility Report
12
Renewal of Continuing Connected Transactions in relation to the
Entrusted Investment and Management Agreement for Alternative Investments with
Insurance Funds
2017/3/23
13
Announcement - Continuing Connected Transactions with Chongqing Trust
2017/3/23
14
Summary of Solvency Quarterly Report of Insurance Company (Fourth Quarter of
2016)
2017/3/23
Announcement
Announcement of Premium Income
29
2017/4/27
26
Notification Letter and Request Form to Non-Registered Shareholders
25
Notification Letter and Change Request Form to Registered Shareholders
Reply Slip of H Share Shareholders
24
23
No.
Announcement of Premium Income
Date of disclosure
Serial
Other Information
China Life Insurance Company Limited Annual Report 2017
136
2017/4/11
Form of Proxy of H Share Shareholders for use at the Annual General Meeting of the
Company to be held on Wednesday, 31 May 2017
2017/2/15
22
Items
33
27
2017/4/11
2017/4/27
Summary of Solvency Quarterly Report of Insurance Company (First Quarter of 2017)
Overseas Regulatory Announcement China Life Insurance Company Limited -
Announcement on Changes in Accounting Estimates
32
2017/4/11
31
2017/4/27
-
Overseas Regulatory Announcement – 2017 First Quarter Report
Announcement - Change of Composition of Board Committees
30
Notice of Board Meeting
2017/4/13
List of Directors and Their Role and Function
28
2017/4/13
2017/4/13
2017/4/11
2017/4/11
2017/4/13
Announcement of Premium Income
During the Reporting Period, no amendment was made to the Articles of Association by the Company.
China Life Insurance Company Limited Annual Report 2017
Announcement of Premium Income
1.
Internal Control
The Company has been devoting significant effort towards the promotion of internal control and the
establishment of internal control related systems. In accordance with the requirements of Section 404
of the “U.S. Sarbanes-Oxley Act”, the “Standard Regulations on Corporate Internal Control", the
"Implementation Guidelines for Corporate Internal Control", the "Guidance on Internal Control for
Companies Listed on the Shanghai Stock Exchange", the "Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited", and the "Basic Standards of Internal Control for Insurance
Companies" issued by the CIRC, the Company has carried out a lot of work on its internal control system
establishment, rules implementation and risk management by strictly following its corporate governance
structure. The Company has also formulated and issued the “Internal Control Implementation Manual
of China Life Insurance Company Limited (2017 Edition)” to strengthen the implementation of internal
control standards and internal control assessments, and actively promoted the culture and philosophy of
internal control, thereby continuously enhancing the internal control of the Company.
Pursuant to the requirements of the "Notice on the Proper Preparation for Disclosure of 2017 Annual
Reports of Listed Companies" promulgated by the SSE, the Company shall release an Internal Control
Self-assessment Report simultaneously with the publication of its 2017 annual report. The Company,
as an overseas private issuer, was required to provide a specific assessment report on its internal control
system relating to financial reporting for the year ended 31 December 2017 in its Form 20-F (U.S.
Annual Report) submitted to the SEC in accordance with Section 404 of the U.S. Sarbanes-Oxley Act. In
accordance with the requirements of laws and regulations relating to internal control of the jurisdictions
where the Company is listed, the Company has completed internal control self-assessments in relation
to the requirements of Section 404 of the U.S. Sarbanes-Oxley Act and the SSE for the year ended 31
December 2017 in two stages, namely, interim assessment and supplementary test, and confirmed after the
assessments that its internal controls were effective. The Company has also received from its independent
auditors an unqualified opinion on the effectiveness of its internal control in relation to financial reporting
as at 31 December 2017. The Company's assessment report and the report of its independent auditors will
be included as an attachment to its annual report submitted to the SSE and its Form 20-F submitted to the
SEC.
It is the responsibility of the Board of the Company to establish and effectively implement well-
established internal control systems, assess their effectiveness and disclose the report on the internal
control assessment. The Board and the Audit Committee are responsible for leading the implementation of
internal control measures of the Company, and the Supervisory Committee supervises the internal control
assessments performed by the Board. The Company has established the Risk Management Department
in its headquarters and branches. The Company also conducts tests on the management level, assesses the
effectiveness of the established and implemented internal control systems in accordance with the regulatory
requirements of the jurisdictions where the Company is listed, and reports to the Board, the Audit
Committee and the management.
China Life Insurance Company Limited Annual Report 2017
131
Corporate Governance
Corporate Governance
A relatively well-developed internal control system has been established in terms of team-building, sales and
operations, and system management for the sales channels, such as individual insurance, bancassurance,
group insurance, health insurance and e-commerce. This internal control system regulates the relevant
authorisations and operational workflows, and effectively adopts the measures to prevent and manage
risks relating to the operation of exclusive agents. The Company has promulgated clear regulations for
the workflows and authorisations relating to the insurance underwriting, insurance claims settlement
and insurance preservation. The Company has also formulated business operation standards and service
quality standards, developed systems of business, document and file management, and further regulated
the management of business approval authority to strengthen its control over business risk and improve the
quality of its services.
In accordance with relevant laws and regulations such as the "Accounting Law of the People's Republic
of China” and the “Enterprise Accounting Standards” and taking into account the needs of the Company
for its business development, operation and management, the Company has formulated and issued the
"Accounting System of China Life Insurance Company Limited" and the "Accounting Practices of China
Life Insurance Company Limited”. The accounting units of the Company at all levels have implemented
them in strict compliance with the requirements of the accounting system and various basic systems to
regulate works relating to financial accounting and preparation of financial reports. The accounting units
of the Company at all levels have assigned positions in a reasonable manner, clearly defined duties and
responsibilities of such positions and their scope of authority on management, and strictly prohibited
employees from serving incompatible positions concurrently, thus exercising the control over financial risks
in an efficient manner.
The Company has formulated the "Measures on the Administration of the Accountability System for
Major Errors in Periodic Report Disclosures of China Life Insurance Company Limited”, which set forth
provisions governing the basic responsibilities of periodic report disclosures, the major errors in periodic
report disclosures and the responsibility attribution. As at 31 December 2017, there had no material error in
periodic report disclosures of the Company. In order to enhance the confidentiality of its inside information
and regulate the collection, management and reporting of its material information, the Company has
formulated the "Measures for the Administration of Persons Who Have Knowledge of Inside Information
of China Life Insurance Company Limited” and the “System of Internal Reporting of Material Information
of China Life Insurance Company Limited”. In particular, the internal report on material information has
been included in the indicator system under the internal control report of the Company. Persons responsible
for reporting material information (including all departments, branches, subsidiaries and affiliates of the
Company, the controlling shareholder and the shareholders holding over 5% of shares of the Company)
obtain and identify potential material information at the level of operation and management by making use
of various information technologies, and submit and report such information to the President and the Board
of the Company as early as possible. The Board then makes the final decision on whether to release the
material information, and discloses the same to such extent as it considers reasonable and practicable.
132
China Life Insurance Company Limited Annual Report 2017
Corporate Governance
The Company has established a well-developed system relating to investment decisions in accordance with
the relevant laws and regulations and based on the actual situation of investment management. The system
defines the approval and decision-making authority, authorisation mechanism and specific decision-making
procedures for investment management. All major investment decisions shall be approved at an appropriate
level and their actual implementation shall be in strict compliance with the relevant requirements of the
investment management system. The Investment Decisions Committee is a standing body of the Company
for investment decisions, which is responsible for reviewing major investments and providing support to any
investment decisions made by the management.
The Company has established a comprehensive information technology system to cover all aspects of
IT work and formed a closed-loop mechanism focusing on centralized review and publication, periodic
inspection and continuous improvement. By conducting internal control measures such as the inspection
of system implementation, the Company has guaranteed the effective implementation of the system and
facilitated the standardization and normalization of various IT work. Further, the Company has constantly
promoted the construction of an information safety system, and formulated and implemented a series of
effective information safety control measures at various stages including the request for construction of the
system, its design, development, testing, publication and arrangement, thereby strengthening the Company's
information safety protection capability and effectively ensuring the successful commencement of its work.
The Risk Management Department, Audit Department and Supervision Department of the Company
are responsible for the supervision and inspection of its internal control measures. The Risk Management
Department identifies issues in the areas of system design, control implementation and risk management in
a timely manner through the adoption of various measures such as walk-through test, control test and risk
analysis. It also eliminates loopholes, guards against risks and reduces losses by adopting various measures
to improve systems, enhances legal compliance and pursues responsible persons. In 2017, with the active
adaption to the stringent regulatory environment in the financial industry and after taking into account the
requirements of the regulatory regime, the Company adjusted the organizational structure of internal audit,
improved its internal audit system, strengthened the mechanism construction of internal audit organizations,
actively exerted the functions of internal audit supervision, and carried out the economic responsibility
audit on managers at all levels, anti-money laundering audit, and a variety of ad-hoc audits with a focus on
connected transactions, solvency risk management system, capital management, reimbursement or deduction
of commissions, supplementary medical fund business and lapsed insurance policies for the purpose of
implementing the stringent internal audit supervision. The Company has also constantly improved its
supervision and remedial mechanisms for identifying issues in internal audit, thus effectively exerting the
value of internal audit and facilitating the standardized management and compliance operation of the
Company. The Company has formulated regulations with respect to the reporting, investigation, handling
of and responsibility attribution for cases involving any violations of laws, disciplinary rules and regulations
by employees, each being implemented by the Supervision Department, which ensures that cases involving
any violations of laws, disciplinary rules and regulations by employees are handled in a timely manner, and
the persons involved will be attributed to proper responsibility. The Supervision Department reports the
cases involving insurance agents (which specifically refer to judicial cases) and manages the responsibility
attribution of such cases in accordance with regulations such as the “Notice on the Establishment of a
Reporting System of Judicial Cases involving Insurance Industry” issued by the CIRC and internal policies
such as the "Implementing Rules for Responsibility Attribution of Cases". In 2017, the Company further
refined and optimized the “Rules for Handling the Violation of Laws, Disciplinary Rules and Regulations by
Employees" and the “Implementing Rules for Responsibility Attribution of Cases"
pursuant to the standards
for administration of cases of insurance institutions promulgated by the competent authorities in charge
of supervision of the insurance industry. In order to actively adapt to the new developments of external
regulatory environment, the Company has established a sound compliance management system, clearly
defined the responsibilities of compliance management, built up a well-developed compliance management
regime, promoted the establishment of compliance culture, and actively prevented against and dissolved
compliance risks.
In compliance with regulatory requirements and having considered the characteristics of its business and
management requirements, the Company has established and implemented a series of internal control
measures and procedures with respect to currency and funds, insurance operations, external investments,
physical assets, information technology, financial reporting and information disclosure to ensure the safety
and integrity of its assets. By complying with relevant PRC laws and regulations as well as the internal rules
and regulations of the Company, the quality of accounting information has been improved.
China Life Insurance Company Limited Annual Report 2017
The Company has consistently complied with the regulatory requirements of relevant regulatory authorities, such
as the SSE, the HKSE and the U.S. Securities and Exchange Commission (the “SEC”), with respect to corporate
internal control.
Corporate Governance
XIV. CHANGES OF THE ARTICLES OF ASSOCIATION
In the assessment and selection of the “China Securities Golden Bauhinia Awards 2017” held by Hong Kong Ta
Kung Wen Wei Media Group, the Company was awarded the title of the “Best Investment Value Award for Listed
Companies". In the assessment and selection of the “Hong Kong Corporate Governance Excellence Awards 2017”,
the Company was awarded the title of the “Hong Kong Corporate Governance Excellence Award (the Main Board
Companies - Hang Seng Composite Index Constituent Companies)".
In 2017, the Company continuously improved and strengthened its relations with investors, which mainly
included holding the Annual General Meeting, holding results briefings, embarking on global non-deal roadshows,
meeting and holding conference calls with investors and analysts, attending investors' meetings, frequently
updating information on its investor relations website, and timely responding to enquiries from investors and
analysts. The Company attached great importance to the innovation of investor relations, and kept abreast with
the development pace of technology era. In March 2017, the Company created a WeChat official account for
investor relations and investors could obtain the latest news of the Company, check announcements, view results
briefings, attend conference calls and online roadshows, etc. from their mobile phones. Looking back to 2017,
the Company communicated with more than 3,000 investors and analysts through different channels, including
communicating with more than 900 investors who attended results briefings physically, by conference calls or
internet broadcast, holding over 140 meetings with approximately 1,200 investors and analysts who visited the
Company, communicating with more than 1,000 institutional investors by participating in 29 investors' meetings
held locally or internationally, and meeting and visiting more than 130 investors in roadshows. In addition, the
Company kept in close contact with investors by phone and email, communicated with them through more than
1,500 emails, and answered their calls and emails for more than 300 person-times.
In 2017, the Company continued to strengthen the construction of its information disclosure system and
implement the regulatory requirements relating to information disclosure in a practical manner in order to
ensure the timeliness, fairness, truthfulness, accuracy and completeness of information disclosure. The Company
constantly enhanced the quality of information disclosure, actively studied and improved the method of disclosure
of key information from the perspective of investors, in particular medium and small investors, to enable them to
have a deeper understanding of the Company's development strategies, business operations and major issues, and
increased the readability of periodic reports by adding charts and pictures. The Company extended the scope and
depth of information disclosure of periodic reports and announcements to ensure investors to obtain timely and
accurate information affecting their decisions. The Company also regularly organized internal training courses
relating to information disclosure, carried out timely study and promotion of new regulatory rules of its listed
jurisdictions in the PRC and overseas, and explained the key points and difficulties of information disclosure. The
Company strictly implemented the registration and filing procedures of persons who have knowledge of inside
information, strengthened the confidentiality of the Company's inside information, and safeguarded the legitimate
rights and interests of investors, with a view to maintaining the fairness, impartiality and openness of the
information disclosure of the Company. The Company received the highest grade “A Grade” in the information
disclosure work assessment conducted by the SSE in 2017.
The Company has established a well-developed and practical information disclosure system in strict compliance
with the laws and regulations of its listed jurisdictions and continued to improve the quality of its information
disclosure so as to ensure that domestic and overseas investors obtain true, accurate and complete information.
The Company has proactively developed investor relations and strengthened its contact and communication
with domestic and overseas investors, and addressed hot issues as earlier as possible, which enabled domestic and
overseas investors to understand the business operations of the Company in a timely manner.
XIII. INFORMATION DISCLOSURE AND INVESTOR RELATIONS
Corporate Governance
129
XV. INTERNAL CONTROL AND RISK MANAGEMENT
Annual Report 2017
Shareholders may put forward enquiries to the Board through the Board Secretary or the Company Secretary, or
put forward proposals at shareholders' general meetings through their proxies. The Company has made available
its contact details in its correspondence with shareholders to enable such enquiries or proposals to be properly
directed.
In accordance with the Articles of Association, when the Company convenes the shareholders' general meeting,
shareholders individually or in aggregate holding 3% or more of the shares of the Company shall have the right
to submit proposals to the Company. The Company should include such matters that fall into the scope of the
functions and powers of the shareholders' general meeting in the agenda of the meeting. Shareholders individually
or in aggregate holding 3% or more of the shares of the Company may submit provisional proposals in writing
to the convenor sixteen days prior to the shareholders' general meeting. The provisional proposals shall fall into
the
scope of the functions and powers of the shareholders' general meeting and specify explicit topics and specific
resolution matters.
If the number of Directors is less than the number stipulated in the Company Law or two-thirds of the number
specified by the Articles of Association, or the uncovered losses incurred amount to one-third of the Company's
total share capital or if the Board or the Supervisory Committee deems necessary, or more than half of the
Directors (including at least two Independent Directors) request, or shareholders holding 10% or more shares of
the Company make a requisition, the Board shall convene an extraordinary shareholders' general meeting within
two months. Where shareholders holding 10% or more shares request an extraordinary shareholders' general
meeting, such shareholders shall make a request in writing to the Board with a clear agenda. The Board shall, upon
receipt of such a written request, convene a meeting as soon as possible. If the Board fails to convene a meeting
within 30 days of the receipt of such a written request, shareholders making such a request may convene a meeting
by themselves at the cost of the Company within four months of the receipt by the Board of such a written
request.
To safeguard shareholders' interests, in addition to the right to participate in the Company's affairs by attending
shareholders' general meetings, shareholders have the right to convene extraordinary shareholders' general meetings
under certain circumstances.
XII. SHAREHOLDERS' INTERESTS
The remuneration for senior management mainly comprises position compensation, performance rewards, welfare
benefits and medium and long term incentives.
The Company implements a term-of-service and target-related responsibility system for senior management. At
the beginning of each year, performance target contracts will be entered into between the Chairman of the Board
and the President, and between the President and other senior management of the Company. The performance
target contract system is an important tool in disassembling the strategic goals of the Company in a scientific
manner, which is conducive towards the breakdown of targets and transmission of responsibility, enhancing the
implementation capability of the Company and ensuring the successful completion of its annual business targets.
The performance appraisal criteria listed in the individual performance target contracts of senior management are
partially linked to the business targets of the Company and partially formulated with reference to the duties and
functions of their respective positions.
XI. PERFORMANCE APPRAISAL AND INCENTIVES FOR SENIOR MANAGEMENT
China Life Insurance Company Limited
Notice of Board Meeting
133
-
2
Election of Language and Means of Receipt of Corporate Communication
2017/1/20
3
Reply Form
2017/1/20
4
Announcement on Estimated Profit Decrease for the year 2016
2017/1/17
2017/1/25
Announcement - Forfeiture of Unclaimed Dividends
2017/2/8
6
Change of Principal Place of Business in Hong Kong
2017/2/15
7
8
9
5
Corporate Governance
Announcement of Premium Income
No.
130
The Company has established a 5-tier organizational structure with the ultimate responsibility assumed
by the Board, under the direct leadership of the management, having reliance on the risk management
departments and with the close cooperation among the relevant functional departments. The first tier is the
corporate governance level, including the Board, the Supervisory Committee, and the Risk Management
Committee and the Audit Committee under the Board. The second tier is the headquarter level. The
President's Office of the Company has set up the Risk Management Committee, under which several
functional departments, such as the Risk Management Department, the Legal and Compliance Department,
the Supervision Department, the Audit Department, and the departments in charge of finance and business
administration, are established. The third tier is the provincial branches level. The General Manager's Office
of the Company has set up the Risk Management Committee, under which several functional departments,
such as the Risk Management Department, the Supervision Department, and the departments in charge
of finance and business administration, are established. The fourth tier is the local or city branches level,
including Supervision (Legal and Compliance) Departments and related functional departments. The fifth
tier is the county sub-branches level, the persons responsible for internal control and risk management of
which have been determined. By establishing the organizational structure of risk control, the Company has
gradually established a criss-cross network of risk control system, with the risk management departments
at all levels as leading bodies, the relevant functional departments as main bodies, the vertical decision-
making control system and horizontal interactive collaboration mechanism as supporting systems and the
comprehensive risk management as focus, thus laying a strong foundation for the Company to achieve
a comprehensive risk management system with full coverage, all-employee participation and effective
workflows.
Pursuant to the requirements of the CIRC on the China Risk Oriented Solvency System (C-ROSS),
the Company pushed forward the establishment of a solvency risk management system, reinforced the
mechanism of formation, transmission and application of the risk preference system, and implemented key
risk monitoring and risk pre-warning classification management, in order to enhance its ability of solvency
risk management. The Company conducts a self-assessment on solvency risk management capability every
year so as to assess all work in relation to risk management at two levels: the soundness of the system and the
effectiveness of its implementation. The Company persists with its target as the leader of the industry and is
fully recognised by regulatory authorities. The Company was named by the CIRC as a unit exempted from
inspection in 2017. The Company conducts the risk assessments on seven types of risks (including insurance
risk, market risk, credit risk, operational risk, strategic risk, reputational risk and liquidity risk) at least once
every six months, and reports the same to its senior management. Based on the assessments, the overall risk
of the Company is within a controllable range.
The Company consistently followed the requirements under anti-money laundering laws and regulations,
and performed legal responsibilities including client identity verification, documentation of client identity
information and transaction records, money laundering risk classification and report of large sums and
suspicious transaction data. Meanwhile, pursuant to external regulatory requirements, the Company
conducted special governance on illegal fund raising activities and carried out the review and rectification in
key risk areas, which improved the Company's precaution capability in key risk areas.
For an analysis and management of the major risk factors of the Company, please refer to Note 4 in the
Notes to the Consolidated Financial Statements of this annual report.
It should be stated that the risk management and internal control of the Company are designed with the
objectives to reasonably ensure the legal compliance of business operation and management, safety of assets,
truthfulness and completeness of financial reports and relevant information, improvement of operating
efficiency and effect, and accomplishment of development strategy. Given the inherent limitations on risk
management and internal control, the Company can only provide reasonable assurance with respect to the
accomplishment of the above objectives.
134
China Life Insurance Company Limited Annual Report 2017
1
Other Information
Honors and Awards
136
140
Information Disclosure Index
Other Information
Serial
Items
Date of disclosure
Announcement Index
Resolutions Passed at the Annual General Meeting and Distribution
2017/8/24
2017/5/31
Overseas Regulatory Announcement – 2017 Third Quarter Report
2017/10/26
57
Summary of Solvency Quarterly Report of Insurance Company (Third Quarter of
2017)
2017/10/26
58
Announcement Renewal of Continuing Connected Transactions under the Policy
Management Agreement
2017/10/26
59
Announcement Renewal of Continuing Connected Transactions between the
Company and CLWM
2017/10/26
60
60
Announcement - Continuing Connected Transactions between AMP and CLI
2017/10/26
56
61
2017/10/20
55
50
Notification Letter and Change Request Form to Registered Shareholders
2017/9/8
51
Notification Letter and Request Form to Non-Registered Shareholders
2017/9/8
52
Announcement of Premium Income
2017/9/14
53
Announcement of Premium Income
2017/10/16
54
Notice of Board Meeting
2017/10/16
Announcement on Estimated Profit Increase for the First Three Quarters of 2017
2017/9/8
Announcement - Proposed Acquisition of Properties jointly with CLP&C
62
2017/11/2
69
Announcement of Premium Income
2017/11/13
70 Announcement of Premium Income
2017/12/12
71
Announcement - Premium Income exceeding RMB500 Billion
2017/12/15
72
Announcement - Connected Transaction – Formation of Partnership
2017/12/19
138
China Life Insurance Company Limited Annual Report 2017
34
Notification Letter and Request Form to Non-Registered Shareholders
2017/10/26
68
Notification Letter and Change Request Form to Registered Shareholders
Overseas Regulatory Announcement China Life Insurance Company Limited -
Announcement on Changes in Accounting Estimates
2017/10/26
63
Election of Mr. Yuan Changqing as a Non-Executive Director of the Fifth Session
of the Board of Directors, Election of Mr. Luo Zhaohui as a Non-Employee
Representative Supervisor of the Fifth Session of the Supervisory Committee and
Notice of the First Extraordinary General Meeting 2017
2017/11/2
64
Notice of the First Extraordinary General Meeting 2017
2017/11/2
65
Form of Proxy of Holders of H Shares for use at the First Extraordinary General
Meeting 2017 of The Company to be held on Wednesday, 20 December 2017
2017/11/2
66
Reply Slip of Holders of H Shares
2017/11/2
67
2017/11/2
2017 Interim Report
Risk Management
No.
42
2017/8/14
Notice of Board Meeting
35
Announcement of Premium Income
2017/6/14
36
49
Announcement of Premium Income
2017/7/14
37
Announcement - Election of Employee Representative Supervisor
2017/7/20
Announcement - Approval of Qualification as Directors by the CIRC and Resignation
38
2017/8/10
of Final Dividend
of Director
39
List of Directors and Their Role and Function
2017/8/10
40
Announcement of Premium Income
Announcement - Resignation of Supervisor
2017/8/22
43
Announcement of Unaudited Interim Results for the six months ended 30 June 2017
Date of disclosure
Items
Serial
Other Information
137
Annual Report 2017
China Life Insurance Company Limited
2017/9/7
48 Announcement - Approval of Qualification As Supervisor by the CIRC
2017/8/24
Overseas Regulatory Announcement China Life Insurance Company Limited
Announcement on Changes in Accounting Estimates
41
47
2.
46
Nomination of Non-Executive Director and Non Employee
Announcement
2017/8/24
Summary of Solvency Quarterly Report of Insurance Company (Second Quarter of
2017)
45
2017/8/24
Announcement - Connected Transaction – Formation of Partnership
44
2017/8/24
Representative Supervisor
2017/8/14
Independent Auditor's Report (continued)
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
Fair value of financial assets
Key audit matter
KEY AUDIT MATTERS (continued)
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
145
China Life Insurance Company Limited Annual Report 2017
We assessed the objectivity and capability of the external
valuer. We compared the selling prices of development
properties and rentals of investment properties with
the historical business performance of Sino-Ocean and
industry data to review the assumptions used in the cash
flow projection.
Financial Report
Calculating the Weighted Average Cost of Capital
using the Capital Asset Pricing Model.
In our audit, our internal valuation specialists were
involved to review the technique and the discount rate
used in the impairment test with reference to valuation
guidelines and industry practices, and our procedures
included:
How our audit addressed the key audit matter
Disclosure of the impairment of this investment is
disclosed in Note 8.
The Group held material investment in an associate,
Sino-Ocean Group Holding Limited ("Sino-Ocean"), a
company listed on the Stock Exchange of Hong Kong
Limited, with a carrying value of RMB13.63 billion as
at 31 December 2017. As the quoted market price of
this investment had been below its carrying value for
more than one year, the Group performed impairment
tests with the assistance from an external valuer in prior
years, based on which an accumulated impairment loss
of RMB1.01 billion was recorded as at 31 December
2016. During 2017, the quoted market price of this
investment was still below its carrying value, and the
Group performed an impairment test with the assistance
from an external valuer at the year end of 2017 as well,
with the result that no further impairment loss was needed
to be recorded. In the assessment of the value in use of
this investment, business assumptions for the projection
of future cash flows and the determination of the discount
rate were made by management based on their analysis
of the historical operating results and the estimation of
future expectations.
The impairment test for investment in an associate
Key audit matter
KEY AUDIT MATTERS (continued)
Assessing the comparable companies selected to
generate certain inputs in calculating the Weighted
Average Cost of Capital by reference to the financial
and operational information of those companies and
Sino-Ocean; and
Independent Auditor's Report (continued)
Establishing models independently to test the
valuation of liabilities for selected insurance
products; and
144
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in
that context.
We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the consolidated financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the performance
of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial
statements. The results of our audit procedures, including the procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying consolidated financial statements.
China Life Insurance Company Limited Annual Report 2017
143
Independent Auditor's Report (continued)
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
KEY AUDIT MATTERS (continued)
Key audit matter
Valuation of insurance contract liabilities
The Group had significant insurance contract liabilities
stated at RMB2,025.13 billion as at 31 December 2017,
representing 78.73% of the Group's total liabilities.
This is an area that involves significant judgement over
uncertain future outcomes, including primarily the timing
and amount of ultimate full settlement of policyholder
liabilities. Actuarial models are used to support the
calculation of insurance contract liabilities. The
complexity of the models may give rise to errors as a result
of inaccurate/incomplete data or the design or application
of the models. Assumptions used in actuarial models,
such as mortality, morbidity, lapse rates, discount rates,
expense assumptions, and so on, are set up by applying
estimates and judgements based on the experience analysis
and future expectations by management.
The Group's disclosures about valuation of insurance
contract liabilities are included in Note 3.1, which
specifically explains the uncertainty of key assumptions
applied in the valuation. Please also refer to Note 4.1.3
for the sensitivity analysis of the impact of changes in key
assumptions on the performance of the Group.
How our audit addressed the key audit matter
In our audit, we involved our internal actuarial specialists
to perform the following audit procedures in this area,
which included among others:
•
•
Assessing the design and testing the operating
effectiveness of internal controls over the insurance
contract liabilities valuation processes including
management's determination and approval processes
for experience analysis and setting of assumptions,
calculation processes for actuarial estimation and
actual result, and so on;
Assessing the assumptions by reference to the
industry data, and considering both historical
experience and business expectation of the Group;
The Group held material investments in certain financial
assets such as private equity funds, preference shares, other
equity and debt investments, which are accounted for as
available-for-sale securities at fair value and securities at
fair value through profit or loss with the total amount
of RMB147.10 billion as at 31 December 2017. These
investments are classified as level 3 in the fair value
hierarchy, as their fair values are measured using valuation
techniques with unobservable significant inputs. Fair
value measurement can be a subjective area and more so
for areas of the market reliant on model based valuation
or with weak liquidity and price discovery. The selection
of valuation techniques for these financial assets can be
subjective and is so for assumptions. The use of different
valuation techniques and assumptions could produce
significantly different estimates of fair value.
Analysing the movement of these liabilities
considering the changes in actuarial assumptions of
the reporting period.
We tested the underlying data used in the valuation of
these liabilities, and compared it with original documents.
By applying our insurance industry knowledge and
experience, we compared the methodology, models
and assumptions used by the Group against recognised
actuarial practices.
Financial Report
China Life Insurance Company Limited Annual Report 2017
Note 4.3 discloses the balance of these investments,
the valuation techniques and significant unobservable
inputs used in the measurement of the fair value of these
investments.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group's internal control.
In our audit, our internal valuation specialists were
involved to assess the valuation techniques against
industry practice and valuation guidelines, compare
assumptions used against industry benchmarks, investigate
significant differences and perform our own independent
valuations where applicable.
147
Independent Auditor's Report (continued)
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS (continued)
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
China Life Insurance Company Limited Annual Report 2017
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
regarding independence and to communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.
communication.
Financial Report
The engagement partner on the audit resulting in this independent auditor's report is Ng Chi Keung.
Ernst & Young
Certified Public Accountants
Hong Kong
22 March 2018
148
China Life Insurance Company Limited Annual Report 2017
From the matters communicated with the Audit Committee, we determine those matters that were of most significance
in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
KEY AUDIT MATTERS
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
We tested the valuation, verification and model approval
processes, and evaluated the design and operating
effectiveness of the internal controls over those processes.
OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT
The directors of the Company are responsible for the other information. The other information comprises the
information included in the Annual Report, other than the consolidated financial statements and our auditor's report
thereon.
Financial Report
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
146
China Life Insurance Company Limited Annual Report 2017
Independent Auditor's Report (continued)
Financial Report
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL
STATEMENTS
The directors of the Company are responsible for the preparation of consolidated financial statements that give a
true and fair view in accordance with IFRSs issued by the IASB and the disclosure requirements of the Hong Kong
Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of
the consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the
Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors of the Company either intend to liquidate the Company or to
cease operations or have no realistic alternative but to do so.
The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the
Group's financial reporting process.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Our report is made solely to you, as a body, and for no other purpose. We do not assume responsibility towards or
accept liability to any other person for the contents of this report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial statements.
As
How our audit addressed the key audit matter
We conducted our audit in accordance with International Standards on Auditing (“ISAs”) issued by the International
Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the consolidated financial statements section of our report. We are independent
of the Group in accordance with the Code of Ethics for Professional Accountants (the "Code") issued by the Hong Kong
Institute of Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with
the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
141
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of
the Group as at 31 December 2017, and of its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with International Financial Reporting Standards ("IFRSs”) issued by the International
Accounting Standards Board (“IASB") and have been properly prepared in compliance with the disclosure requirements
of the Hong Kong Companies Ordinance.
Annual Report 2017
139
Other Information
Honors and Awards
Forbes
"2017 Forbes Global 2000", ranking No. 52
BASIS FOR OPINION
"2017 China Securities Golden Bauhinia Award -
Best Investment Value Award for Listed Companies"
21st Century Business Herald - "Assessment and Selection of the Competitiveness of
Asian Financial Enterprises in the 21st Century"
"2017 Best Life Insurance Company in Asia"
Financial Times - "Gold Medal List of Chinese Financial Institutions"
-
"Golden Dragon Award – 2017 Best Life Insurance Company"
"Hong Kong Corporate Governance Excellence Awards 2017” jointly organized by the Chamber of Hong Kong Listed
Companies and the Centre for Corporate Governance and Financial Policy, Hong Kong Baptist University
"Hong Kong Corporate Governance Excellence Award (Main Board Companies -
Hang Seng Composite Index Constituent Companies)"
China Life Insurance Company Limited
140
Other Information
Announcement – Resolutions Passed at the First Extraordinary General Meeting 2017
Serial
No.
Items
Date of disclosure
73
Announcement - Renewal of Continuing Connected Transactions under the Insurance
Sales Framework Agreement
2017/12/19
74
Announcement - Continuing Connected Transactions with CLWM
2017/12/19
Announcement
75
2017/12/19
Chongqing Trust
76
2017/12/20
China Life Insurance Company Limited Annual Report 2017
"China Securities Golden Bauhinia Awards" jointly organized by Hong Kong Ta Kung Wen Wei Media Group, the
Listed Companies Association of Beijing, the Hong Kong Chinese Enterprises Association, Chinese Financial Association
of Hong Kong, Chinese Securities Association of Hong Kong, the Hong Kong Institute of Chartered Secretaries and
Hong Kong Securities Professionals Association
“2017 Global Top 100 Companies by Market Capitalization”, ranking No. 84
Consolidated Statement of
Changes in Equity
153
Consolidated Statement of
Cash Flows
154
Notes to the Consolidated
Financial Statements
Stone Business Review - "Global Top 100 Companies by Market Capitalization (Year-end edition)"
Independent Auditor's Report
Financial Report
EY安永
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
OPINION
We have audited the consolidated financial statements of China Life Insurance Company Limited (the "Company")
and its subsidiaries (the "Group") set out on pages 149 to 268, which comprise the consolidated statement of financial
position as at 31 December 2017, and the consolidated statement of comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies.
151
Comprehensive Income
156
149
Consolidated Statement of
Jointly published by China Enterprise Research Centre of Tsinghua University and National Business Daily
“2017 Chinese Listed Companies with Brand Value”, ranking No. 12
"2017 Annual Conference for the Management of Assets and Liabilities of the PRC insurance Industry” organized by
Securities Times and the Insurance Asset Management Association of China
"Ark Prize for Trustworthy Insurance Company in 2017"
National Business Daily – the “2017 China Financial Development Forum and Golden Tripod Award
"Golden Tripod Award
-
(the 8th Session)"
Continuing Connected Transactions between CLWM and
Other Information
the Insurance Company with the Most Social Responsibility of 2017”
Consolidated Statement of
143
Financial Position
Financial Report
China Life Insurance Company Limited Annual Report 2017
Independent Auditor's Report
325,310
4,027
Yang Mingsheng
Director
4,377
303,621
320,933
Director
Lin Dairen
Approved and authorised for issue by the Board of Directors on 22 March 2018.
145,675
139,202
145,007
36
7,791
7,791
35
28,265
34
122,558
28,265
ended 31 December 2017
2,897,591
Profit before income tax
5,855
7,143
8
(522,794)
(608,827)
(1,048)
(1,068)
20
20
(4,859)
(6,426)
Share of profit of associates and joint ventures, net
27
Total benefits, claims and expenses
Other expenses
(31,854)
(35,953)
Administrative expenses
(4,767)
(4,601)
26
Finance costs
(52,022)
(64,789)
Underwriting and policy acquisition costs
(15,883)
(21,871)
Statutory insurance fund contribution
Policyholder dividends resulting from participation in profits
41,671
Income tax
Other comprehensive income
2,389,303
year
For the
Consolidated Statement of Comprehensive Income (continued)
Financial Report
151
Annual Report 2017
China Life Insurance Company Limited
Financial Report
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
RMB0.66
RMB1.13
23,842
30
19,127
32,253
499
19,585
32,752
share
Basic and diluted earnings per
- Non-controlling interests
- Equity holders of the Company
Attributable to:
Net profit
(4,257)
(8,919)
28
458
307,648
(5,316)
25
426,230
506,910
(2,510)
(1,395)
428,740
508,305
(1,758)
(3,661)
430,498
511,966
RMB million
RMB million
Notes
Investment income
2016
Net premiums earned
Net change in unearned premium reserves
Net written premiums
Less: premiums ceded to reinsurers
Gross written premiums
REVENUES
ended 31 December 2017
year
For the
Consolidated Statement of Comprehensive Income
China Life Insurance Company Limited Annual Report 2017
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
2,696,951
2017
(8,076)
Net realised gains on financial assets
222
(126,619)
(172,517)
24
(27,269)
(33,818)
24
22
Investment contract benefits
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
(253,157)
(259,708)
24
Life insurance death and other benefits
Net fair value gains through profit or loss
Other income
BENEFITS, CLAIMS AND EXPENSES
Insurance benefits and claims expenses
540,781
643,355
6,460
7,493
(7,094)
6,183
23
6,038
42
22
109,147
122,727
21
Total revenues
2,572,281
149
Total equity
9.8
Accrued investment income
43,538
36,185
9.7
Securities purchased under agreements to resell
50,641
209,124
9.6
Securities at fair value through profit or loss
766,423
810,734
9.5
Available-for-sale securities
136,809
55,945
Premiums receivable
11
2,897,591
67,046
48,586
22,013
33,952
13
2,134
3,046
12
Total assets
Cash and cash equivalents
Other assets
Reinsurance assets
13,421
14,121
6,333
6,333
9.4
Statutory deposits - restricted
42,707
69
Investment properties
Property, plant and equipment
RMB million
RMB million
Notes
2016
31 December
31 December
2017
As at
As at
ASSETS
As at 31 December 2017
Consolidated Statement of Financial Position
30,389
2,696,951
3,064
Investments in associates and joint ventures
538,325
449,400
9.3
226,573
383,504
9.2
Term deposits
Loans
594,730
717,037
9.1
Held-to-maturity securities
119,766
161,472
8
1,191
Total liabilities and equity
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
Annual Report 2017
19
229
28
35,252
18,505
Statutory insurance fund
47,430
Current income tax liabilities
Other liabilities
Premiums received in advance
39,038
44,820
Annuity and other insurance balances payable
81,088
Deferred tax liabilities
36,836
4,871
7,768
Non-controlling interests
Attributable to equity holders of the Company
Retained earnings
Reserves
Other equity instruments
Share capital
Equity
Total liabilities
150
491
282
20
20
1,214
6,198
87,309
18
Securities sold under agreements to repurchase
2,031
14
Insurance contracts
Liabilities
LIABILITIES AND EQUITY
2016
RMB million
RMB million
Notes
31 December
31 December
2017
As at
As at
As at 31 December 2017
Consolidated Statement of Financial Position (continued)
Financial Report
Other comprehensive income that may be reclassified to
2,025,133
Financial Report
1,847,986
15
2,529
Financial liabilities at fair value through profit or loss
37,998
17
16,170
18,794
16
675
Bonds payable
Interest-bearing loans and borrowings
87,725
83,910
Policyholder dividends payable
195,706
232,500
Investment contracts
profit or loss in subsequent periods:
China Life Insurance Company Limited
Amount transferred to net profit from other comprehensive income
Portion of fair value changes on available-for-sale securities
Total transactions with owners
Others
interests
Dividends to non-controlling
Dividends paid (Note 32)
Appropriation to reserves (Note 36)
Transactions with owners
24,826
485
32,253
(7,912)
As at 31 December 2017
Total comprehensive income
(14)
(7,912)
Other comprehensive income
32,752
499
32,253
Net profit
307,648
4,027
122,558
145,007
(7,926)
8,445
(8,445)
(7,164)
CASH FLOWS FROM OPERATING ACTIVITIES
ended 31 December 2017
year
For the
Consolidated Statement of Cash Flows
Financial Report
153
China Life Insurance Company Limited Annual Report 2017
Financial Report
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
325,310
4,377
139,202
145,675
7,791
28,265
(7,164)
(135)
(15,609)
8,580
135
135
(135)
(135)
(7,164)
7,791
28,265
As at 1 January 2017
307,648
(25,774)
(25,776)
(2)
(25,774)
19,585
458
19,127
326,214
3,722
123,055
163,381
7,791
(Note 36)
(Note 35)
28,265
(Note 34)
RMB million
RMB million
earnings
RMB million
RMB million
Reserves
Retained
Total
Non-controlling
interests
RMB million
19,127
Profit before income tax
456
Total comprehensive income
4,027
122,558
145,007
7,791
28,265
As at 31 December 2016
(12,375)
(151)
(19,624)
7,400
Total transactions with owners
33
33
Others
(151)
(151)
interests
Dividends to non-controlling
(12,257)
(12,257)
Dividends paid (Note 32)
(7,367)
7,367
Appropriation to reserves (Note 36)
Transactions with owners
(6,191)
instruments
2017
RMB million
(7,164)
1,539
38,967
124,466
(4,473)
(9,331)
4,497
5,465
778
526
Net cash inflows/(outflows) from operating activities
931
CASH FLOWS FROM INVESTING ACTIVITIES
Disposals of debt investments
200,990
89,098
Maturities of debt investments
Disposals of equity investments
Property, plant and equipment
Purchases:
Debt investments
Equity investments
30,540
10,447
Disposals and maturities:
(76,318)
76,378
Interest received – securities at fair value through profit or loss
Dividends received - securities at fair value through profit or loss
23,842
Adjustments for:
Investment income
(122,727)
(109,147)
Net realised and unrealised (gains)/losses on financial assets
(6,225)
1,056
Insurance contracts
176,148
131,354
Depreciation and amortisation
2,240
2,083
Foreign exchange (gains)/losses
(52)
(582)
Share of profit of associates and joint ventures, net
(7,143)
(5,855)
Changes in operating assets and liabilities:
Securities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
Receivables and payables
Income tax paid
142,845
50,101
506,306
508,476
(11)
Net cash inflows/(outflows) from investing activities
(173,676)
(104,703)
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
154
China Life Insurance Company Limited Annual Report 2017
Consolidated Statement of Cash Flows (continued)
For the
year
ended 31 December 2017
2017
2016
RMB million
RMB million
CASH FLOWS FROM FINANCING ACTIVITIES
Increase/(decrease) in securities sold under agreements to repurchase, net
Interest paid
Dividends paid to equity holders of the Company
6,228
49,999
(5,671)
Fair value gains/(losses) on available-for-sale securities
41,671
RMB million
(399)
2016
Cash paid related to other investing activities
(15,515)
103
114
(516,051)
(173,628)
(500,737)
(537,012)
Property, plant and equipment
(9,619)
(5,310)
Capital contribution to associates and joint ventures
(37,304)
(65,158)
Decrease/(increase) in term deposits, net
92,148
37,515
Decrease/(increase) in securities purchased under agreements to resell, net
6,981
(22,035)
Interest received
98,012
78,891
Dividends received
29,014
20,390
Decrease/(increase) in policy loans, net
(7,483)
(4,891)
(12,257)
RMB million
Recognition of Deferred Tax Assets for
Unrealised Losses
Disclosure of Interests in Other Entities
1 January 2017
1 January 2017
Financial Report
156
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
Disclosure Initiative
For the year ended 31 December 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for
the financial year beginning on 1 January 2017 (continued)
IAS 7 Amendments - Disclosure Initiative
Amendments to IAS 7 Statement of Cash Flows require an entity to provide disclosures that enable users of
financial statements to evaluate changes in liabilities arising from financing activities, including both changes
arising from cash flows and non-cash changes. Disclosure of the changes in liabilities arising from financing
activities is provided in Note 37 to the financial statements.
IAS 12 Amendments - Recognition of Deferred Tax Assets for Unrealised Losses
Amendments to IAS 12 clarify that an entity, when assessing whether taxable profits will be available
against which it can utilise a deductible temporary difference, needs to consider whether tax law restricts the
sources of taxable profits against which it may make deductions on the reversal of that deductible temporary
difference. Furthermore, the amendments provide guidance on how an entity should determine future
taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets
for more than their carrying amount. The Group applied the amendments retrospectively. However, their
application has no impact on the Group's financial position and performance, as the accounting treatment
of the Group for the previous period was consistent with the clarification in these amendments.
IFRS 12 Amendments – Disclosure of Interests in Other Entities
Financial Report
Amendments to IFRS 12 clarify that the disclosure requirements in IFRS 12, other than those disclosure
requirements in paragraphs B10 to B16 of IFRS 12, apply to an entity's interest in a subsidiary, a joint
venture or an associate, or a portion of its interest in a joint venture or an associate that is classified as held
for sale or included in a disposal group classified as held for sale. The amendments have had no impact on
the Group's consolidated financial statements as the Group has no interest in a subsidiary, a joint venture or
an associate that is classified as held for sale.
Content
IAS 7 Amendments
IAS 12 Amendments
China Life Insurance Company Limited Annual Report 2017
155
Notes to the Consolidated Financial Statements
For the year ended 31 December 2017
1
2
ORGANIZATION AND PRINCIPAL ACTIVITIES
China Life Insurance Company Limited (the “Company”) was established in the People's Republic of China
("China" or the "PRC”) on 30 June 2003 as a joint stock company with limited liability as part of a group
restructuring of China Life Insurance (Group) Company (“CLIC”, formerly China Life Insurance Company) and
its subsidiaries (the “Restructuring”). The Company and its subsidiaries are hereinafter collectively referred to as
the "Group". The Group's principal activities are the writing of life, health, accident and other types of personal
insurance business; reinsurance business for personal insurance business; fund management business permitted by
national laws and regulations or approved by the State Council of the People's Republic of China, etc.
IFRS 12 Amendments
included in Annual
Improvements to IFRSS
2014-2016 Cycle
The Company is a joint stock company incorporated in the PRC with limited liability. The address of its
registered office is 16 Financial Street, Xicheng District, Beijing, the PRC. The Company is listed on the New
York Stock Exchange, the Stock Exchange of Hong Kong Limited, and the Shanghai Stock Exchange.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The Group has prepared these consolidated financial statements in accordance with International Financial
Reporting Standards (“IFRSs”), amendments to IFRSs and interpretations issued by the International
Accounting Standards Board ("IASB"). These consolidated financial statements also comply with the
applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited (the “Listing Rules”) and the applicable disclosure requirements of the Hong Kong
Companies Ordinance. The Group has prepared the consolidated financial statements under the historical
cost convention, except for financial assets and liabilities at fair value through profit or loss, available-for-
sale securities, insurance contract liabilities and certain property, plant and equipment at deemed cost as
part of the Restructuring process. The preparation of financial statements in compliance with IFRSS requires
the use of certain critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group's accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the consolidated financial statements
are disclosed in Note 3.
2.1.1 New accounting standards and amendments adopted by the Group for the first time for
the financial year beginning on 1 January 2017
Effective for annual periods
beginning on or after
1 January 2017
Standards/Amendments
These consolidated financial statements are presented in millions of Renminbi ("RMB million”) unless otherwise
stated. These consolidated financial statements have been approved and authorised for issue by the Board of
Directors on 22 March 2018.
Financial Report
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2017
IFRS 2 Amendments
No mandatory effective
date yet determined but
available for adoption
The Group has not early adopted any standard, interpretation or amendment that has been issued but is not
yet effective.
China Life Insurance Company Limited Annual Report 2017
Financial Report
IFRS 9 requires that the Group classifies debt instruments based on the combined effect of application
of business model (hold to collect contractual cash flows, hold to collect contractual cash flows and sell
financial assets or other business models) and contractual cash flow characteristics (sole payments of
principal and interest on the principal amount outstanding or not). Debt instruments not giving rise to
cash flows that are sole payments of principal and interest on the principal amount outstanding would
be measured at fair value through profit and loss. Other debt instruments giving rise to cash flows that
are sole payments of principal and interest on the principal amount outstanding would be measured at
amortised cost, fair value through other comprehensive income ("FVOCI") or fair value through profit
or loss ("FVTPL”), based on their respective business model. The Group is in the process of analysing the
contractual cash flow characteristics of financial assets and assessing the application of the business model.
Equity instruments would generally be measured at fair value through profit or loss unless the Group elects
to measure at FVOCI for certain equity investments not held for trading. This will result in unrealised
gains and losses on equity instruments currently classified as available-for-sale securities being recorded in
income going forward. Currently, these unrealised gains and losses are recognised in other comprehensive
income ("OCI"). If the Group elect to record equity investments at FVOCI, gains and losses would never
be recognised in income except for the received dividends which do not represent a recovery of part of the
Classification and measurement
In July 2014, the IASB issued the final version of IFRS 9, bringing together all phases of the financial
instruments project to replace IAS 39 and all previous versions of IFRS 9. The standard introduces new
requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective
for annual periods beginning on or after 1 January 2018, with early adoption permitted. Based on the
current assessment, the Group expects the adoption of IFRS 9 will have a material impact on the Group's
consolidated financial statements.
IFRS 9 Financial Instruments
1 January 2021
Classification and Measurement of Share-based Payment Transactions
In June 2016, the IASB issued amendments to IFRS 2 Share-based Payment that address three main areas:
the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction;
the classification of a share-based payment transaction with net settlement features for withholding a
certain amount in order to meet an employee's tax obligation associated with the share-based payment;
and accounting where a modification to the terms and conditions of a share-based payment transaction
changes its classification from cash-settled to equity-settled. The amendments clarify that the approach
used to account for vesting conditions when measuring equity-settled share-based payments also applies to
cash-settled share-based payments. The amendments introduce an exception so that a share-based payment
transaction with net share settlement features for withholding a certain amount in order to meet the
employee's tax obligation is classified in its entirety as an equity-settled share-based payment transaction
when certain conditions are met. Furthermore, the amendments clarify that if the terms and conditions of a
cash-settled share-based payment transaction are modified, with the result that it becomes an equity-settled
share-based payment transaction, the transaction is accounted for as an equity-settled transaction from the
date of the modification. On adoption, entities are required to apply the amendments without restating
prior periods, but retrospective application is permitted if they elect to adopt for all three amendments and
other criteria are met. The Group will adopt the amendments from 1 January 2018. The amendments are
not expected to have any significant impact on the Group's consolidated financial statements.
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2017 (continued)
2.1 Basis of preparation (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
For the year ended 31 December 2017
Other equity
Notes to the Consolidated Financial Statements (continued)
157
IFRS 2 Amendments
Standards/Amendments
1 January 2019
1 January 2018
IFRS 9
China Life Insurance Company Limited Annual Report 2017
158
IFRS 4 Amendments
IFRS 15
IFRS 15 Amendments
IAS 40 Amendments
IFRS 16
IFRS 17
1 January 2018
IFRS 10 and IAS 28
Amendments
Classification and Measurement of
Share-based Payment Transactions
Financial Instruments
Applying IFRS 9 Financial Instruments
with IFRS 4 Insurance Contracts
Revenue from Contracts with Customers
Clarifications to IFRS 15 Revenue from
Contracts with Customers
Transfers of Investment Property
Leases
Insurance Contracts
Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
Effective for annual period
beginning on or after
1 January 2018
1 January 2018
1 January 2018
1 January 2018
Content
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
investment cost.
1,142
(7,926)
(25,776)
Total comprehensive income for the year, net of tax
(6,191)
Attributable to:
- Equity holders of the Company
- Non-controlling interests
24,341
(6,647)
485
456
152
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
China Life Insurance Company Limited Annual Report 2017
Consolidated Statement of Changes in Equity
For the year ended 31 December 2017
As at 1 January 2016
Net profit
Other comprehensive income
Share capital
RMB million
Attributable to equity holders
of the Company
Other comprehensive income for the year, net of tax
Other comprehensive income that will not be reclassified to
profit or loss in subsequent periods
(25,776)
(7,926)
attributable to participating policyholders
2017
2016
Note
RMB million
(15,003)
(42)
(44,509)
(6,038)
5,605
17,372
Dividends paid to non-controlling interests
Share of other comprehensive income of associates and joint
ventures under the equity method
(864)
Exchange differences on translating foreign operations
64,364
2,682
(865)
21
Income tax relating to components of other comprehensive income
28
2,359
8,242
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods
20
(135)
24,826
Cash received from borrowings
Cash at banks and in hand
Analysis of balances of cash and cash equivalents
48,586
year
(45,595)
6,270
Foreign exchange gains/(losses) on cash and cash equivalents
(179)
47,444
285
76,096
67,046
Beginning of the year
Cash and cash equivalents
(9,050)
(18,460)
(151)
Net decrease in cash and cash equivalents
End of the
Short-term bank deposits
67,046
2,939
13,831
4,034
(38,000)
(30,000)
Cash paid related to other financing activities
(8,008)
(13,200)
3,121
Net cash inflows/(outflows) from financing activities
Capital injected into subsidiaries by non-controlling interests
Cash repaid to lenders
When the Group ceases to have control or significant influence, any retained interest in the entity is re-
measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value
is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an
associate, joint venture or financial asset. In addition, any amounts previously recognised in OCI in respect
of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This
may mean that amounts previously recognised in OCI are reclassified to profit or loss.
2.2 Consolidation (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
The Group treats transactions with non-controlling interests that do not result in loss of controls as equity
transactions. For shares purchased from non-controlling interests, the difference between any consideration
paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity.
Gains or losses on disposal of shares to non-controlling interests are also recorded in equity.
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Transactions with non-controlling interests
Joint ventures are the type of joint arrangements whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities require
the unanimous consent of the parties sharing control.
Associates are entities over which the Group has significant influence, generally accompanying a
shareholding of between 20% and 50% of the voting rights of the investee. Significant influence is the
power to participate in the financial and operating policy decisions of the investee, but is not control or joint
control over those policies.
164
Financial Report
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net
identifiable assets of acquired associates or joint ventures at the date of acquisition. Goodwill on acquisitions
of associates and joint ventures is included in investments in associates and joint ventures and is tested
annually for impairment as part of the overall balance. Impairment losses on goodwill are not reversed.
Gains or losses on the disposal of an entity take into consideration the carrying amount of goodwill relating
to the entity sold.
Unrealised gains on transactions between the Group and its associates or joint ventures are eliminated to the
extent of the Group's interests in the associates or joint ventures. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the asset transferred. Associates and joint ventures'
accounting policies have been changed where necessary to ensure consistency with the policies adopted by
the Group.
163
2.3 Associates and joint ventures
The Group's share of post-acquisition profit or loss of its associates and joint ventures is recognised in net
profit, and its share of post-acquisition movements in OCI is recognised in the consolidated statement
of comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying
amount of the investment. When the Group's share of losses in an associate or joint venture equals or
exceeds its interest in the associate or joint venture, including any other unsecured receivables, the Group
does not recognise further losses unless it has obligations to make payments on behalf of the associate or
joint venture.
Investments in associates and joint ventures are accounted for using the equity method of accounting and are
initially recognised at cost.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate
share of the amounts previously recognised in OCI is reclassified to profit or loss as appropriate.
China Life Insurance Company Limited Annual Report 2017
recognises the fair value of the consideration received;
The excess of the aggregate of the consideration transferred, the fair value of any non-controlling interest in
the acquiree, and the fair value of any previous equity interest in the acquiree at the acquisition date over the
fair value of the net identifiable assets acquired and liabilities assumed is recorded as goodwill. If this is less
than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the Group
re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed,
and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-
assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration
transferred, then the gain is recognised in profit or loss. Goodwill is tested annually for impairment and
carried at cost less accumulated impairment losses. If there is any indication that goodwill is impaired,
recoverable amount is estimated and the difference between carrying amount and recoverable amount is
recognised as an impairment charge. Impairment losses on goodwill are not reversed in subsequent periods.
Gains or losses on the disposal of an entity take into consideration the carrying amount of goodwill relating
to the entity sold.
exposure, or rights, to variable returns from its involvement with the investee; and
•
the ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an investee, including:
the contractual arrangement with the other vote holders of the investee;
rights arising from other contractual arrangements; and
power over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee);
the Group's voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the
Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.
162
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
2
China Life Insurance Company Limited Annual Report 2017
•
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.2 Consolidation (continued)
The Group uses the acquisition method of accounting to account for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the
liabilities incurred and the equity interest issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related
costs are expensed as incurred. Identifiable assets acquired, and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair value at the acquisition date. On an acquisition-
by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or
at the non-controlling interest's proportionate share of the acquiree's net assets.
reclassifies the Group's share of components previously recognised in OCI to profit or loss or retained
earnings, as appropriate, as if the Group had directly disposed of the related assets or liabilities
recognises any surplus or deficit in profit or loss; and
Financial Report
recognises the fair value of any investment retained;
•
•
derecognises the cumulative translation differences recorded in equity;
•
derecognises the carrying amount of any non-controlling interests;
•
derecognises the assets (including goodwill) and liabilities of the subsidiary;
•
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it:
Profit or loss and each component of OCI are attributed to the equity holders of the Company and to
the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies in line with the Group's accounting policies. All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions between members of the Group are eliminated in full upon
consolidation.
The investments in subsidiaries are accounted for only in the Company's statement of financial position
at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent
consideration amendments. Cost also includes direct attributable costs of investment. The results of
subsidiaries are accounted for by the Company on the basis of dividends received and receivable.
Notes to the Consolidated Financial Statements (continued)
Leasehold improvements
Financial Report
The residual values, depreciation method and useful lives are reviewed periodically to ensure that the
method and period of depreciation are consistent with the expected pattern of economic benefits from items
of property, plant and equipment.
Assets under construction mainly represent buildings under construction, which are stated at cost less any
impairment losses and are not depreciated, except for those acquired prior to 30 June 2003, which are stated
at deemed cost less any accumulated impairment losses. Cost comprises the direct costs of construction
and capitalised borrowing costs on related borrowed funds during the period of construction. Assets under
construction are reclassified to the appropriate category of property, plant and equipment, investment
properties or other assets when completed and ready for use.
Impairment and gains or losses on disposals
Property, plant and equipment are reviewed for impairment losses whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in
net profit for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is
the higher of an asset's net selling price and value in use.
The gain or loss on disposal of an item of property, plant and equipment is the difference between the net
sales proceeds and the carrying amount of the relevant asset, and is recognised in net profit.
2.7 Investment properties
Investment properties are interests in land and buildings that are held to earn rental income and/or for
capital appreciation, rather than for the supply of services or for administrative purposes.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost less accumulated depreciation and any impairment loss.
Depreciation is computed on the straight-line basis over the estimated useful lives. The estimated useful lives
of investment properties are 15 to 35 years.
Overseas investment properties that are held by the Group in the form of property ownership, equity
investment, or other forms, have expected useful lives not longer than 50 years, determined based on the
usage in their locations.
The useful lives and depreciation method are reviewed periodically to ensure that the method and period of
depreciation are consistent with the expected pattern of economic benefits from the individual investment
properties.
166
Over the shorter of the remaining term of
the lease and the useful lives
China Life Insurance Company Limited Annual Report 2017
For the year ended 31 December 2017
Financial Report
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.7 Investment properties (continued)
An investment property is derecognised when either it has been disposed of or when the investment property
is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any
gains or losses on the retirement or disposal of an investment property are recognised in the statement of
comprehensive income in the year of retirement or disposal. A transfer to, or from, an investment property is
made when, and only when, there is evidence of a change in use.
2.8 Financial assets
2.8.a Classification
for
The Group classifies its financial assets into the following categories: securities at fair value through profit
or loss, held-to-maturity securities, loans and receivables, and available-for-sale securities. Management
determines the classification of its financial assets at initial recognition which depends on the purpose
which the assets are acquired. The Group's investments in securities fall into the following four categories:
Securities at fair value through profit or loss
(i)
(ii)
Notes to the Consolidated Financial Statements (continued)
4 to 8 years
3 to 11 years
15 to 35 years
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.3 Associates and joint ventures (continued)
The Group determines at each reporting date whether there is any objective evidence that the investments in
associates and joint ventures are impaired. If this is the case, an impairment loss is recognised for the amount
by which the investment's carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of the investment's fair value less costs of disposal and value in use. The impairment of investments in
the associates and joint ventures is reviewed for possible reversal at each reporting date.
The investments in associates and joint ventures are stated at cost less impairment in the Company's
statement of financial position. The results of associates and joint ventures are accounted for by the
Company on the basis of dividends received and receivable.
2.4 Segment reporting
The Group's operating segments are presented in a manner consistent with the internal management
reporting provided to the operating decision maker-president office for deciding how to allocate resources
and for assessing performance.
Operating segment refers to the segment within the Group that satisfies the following conditions: i)
the segment generates income and incurs costs from daily operating activities; ii) management evaluates
the operating results of the segment to make resource allocation decision and to evaluate the business
performance; and iii) the Group can obtain relevant financial information of the segment, including
financial condition, operating results, cash flows and other financial performance indicators.
2.5 Foreign currency translation
The Company's functional currency is RMB. Each entity in the Group determines its own functional
currency and items included in the financial statements of each entity are measured using that functional
currency. The reporting currency of the consolidated financial statements of the Group is RMB.
Transactions in foreign currencies are translated at the exchange rates ruling at the transaction dates.
Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates ruling
at the end of the reporting period. Exchange differences arising in these cases are recognised in net profit.
2.6 Property, plant and equipment
Property, plant and equipment, are stated at historical costs less accumulated depreciation and any
accumulated impairment losses, except for those acquired prior to 30 June 2003, which are stated at deemed
cost less accumulated depreciation and any accumulated impairment losses.
The historical costs of property, plant and equipment comprise its purchase price, including import
duties and non-refundable purchase taxes, and any directly attributable costs of bringing the asset to its
working condition and location for its intended use. Expenditure incurred after terms of property, plant
and equipment have been put into operation, such as repairs and maintenance, is normally charged to the
statement of comprehensive income in the period in which it is incurred. In situations where the recognition
criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the assets
as a replacement. Where significant parts of property, plant and equipment are required to be replaced at
intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them
accordingly.
China Life Insurance Company Limited Annual Report 2017
165
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.6 Property, plant and equipment (continued)
Depreciation
Depreciation is computed on a straight-line basis to write down the cost of each asset to its residual value
over its estimated useful lives as follows:
Financial Report
Buildings
Office equipment, furniture and fixtures
Motor vehicles
The consolidated financial statements include the financial statements of the Company and its subsidiaries
for the year ended 31 December 2017. Subsidiaries are those entities which are controlled by the Group
(including the structured entities controlled by the Group). Control is achieved when the Group is exposed,
or has rights, to variable returns from its involvement with the investee and has the ability to affect those
returns through its power over the investee. Specifically, the Group controls an investee if and only if the
Group has:
Estimated useful lives
For the year ended 31 December 2017
2.2 Consolidation
160
now.
Available-for-sale securities are non-derivative financial assets that are either designated in this
category or not classified in any of the other categories.
(iv) Available-for-sale securities
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market other than those that the Group intends to sell in the short-term
or held as available-for-sale. Loans and receivables mainly comprise term deposits, loans, securities
purchased under agreements to resell, accrued investment income and premium receivables as
presented separately in the statement of financial position.
(iii) Loans and receivables
Held-to-maturity securities are non-derivative financial assets with fixed or determinable payments
and fixed maturities that the Group has the positive intention and ability to hold to maturity and
do not meet the definition of loans and receivables nor designated as available-for-sale securities or
securities at fair value through profit or loss.
This category has two sub-categories: securities held for trading and those designated as at fair value
through profit or loss at inception. Securities are classified as held for trading at inception if acquired
principally for the purpose of selling in the short-term or if they form part of a portfolio of financial
assets in which there is evidence of taking short-term profit. The Group may classify other financial
assets as at fair value through profit or loss if they meet the criteria in IAS 39 and designated as such at
inception.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
Financial Report
2
2.8.b Recognition and measurement
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2017 (continued)
Impairment
IFRS 9 replaces the “incurred loss" model with the “expected credit loss” model which is designed to include
forward-looking information. The Group is in the process of developing and testing the key models required
under IFRS 9 and analysing the impact on the expected loss provision; the Group believed the provision for
debt instruments of the Group under the "expected credit loss" model would be larger than that under the
previous "incurred loss" model.
Hedge accounting
In addition, besides the amendments to IFRS 12, which are effective for annual periods beginning on
or after 1 January 2017, the Annual Improvements 2014-2016 Cycle issued in December 2016 set out
amendments to IFRS 1 and IAS 28, which are effective for annual periods beginning on or after 1 January
2018. The Annual Improvements 2015-2017 Cycle issued in December 2017 set out amendments to IFRS 3,
IFRS 11, IAS 12 and IAS 23, which are effective for annual periods beginning on or after 1 January 2019.
There is no material impact on the accounting policies of the Group as a result of these amendments.
IFRS 4 Amendments - Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
Amendments to IFRS 4 address issues arising from the different effective dates of IFRS 9 and IFRS 17.
The amendments introduce two alternative options that allow entities issuing contracts within the scope of
IFRS 4 for the adoption of IFRS 9, notably a temporary exemption and an overlay approach. The temporary
exemption enables eligible entities to defer the implementation date of IFRS 9 until the effective date of
IFRS 17. The amendments clarify that an insurer may apply the temporary exemption from IFRS 9 if: (i)
it has not previously applied any version of IFRS 9, other than only the requirements for the presentation
of gains and losses on financial liabilities designated as FVTPL; and (ii) its activities are predominantly
connected with insurance on its annual reporting date that immediately precedes 1 April 2016. The overlay
approach allows entities applying IFRS 9 from 2018 onwards to remove from profit or loss the effects arising
from the adoption of IFRS 9 and reclassify the amounts to OCI for designated financial assets. An entity can
apply the temporary exemption from IFRS 9 for annual periods beginning on or after 1 January 2018, or
apply the overlay approach when it applies IFRS 9 for the first time.
During 2016, the Group performed an assessment of the amendments and reached the conclusion that
its activities are predominantly connected with insurance as at 31 December 2015. There had been no
significant change in the activities of the Group since then that requires reassessment, and the Group
considered that it continues to meet the criteria of applying the temporary exemption. The Group decides to
apply the temporary exemption from IFRS 9 and, therefore, continue to apply IAS 39 to its financial assets
and liabilities in its reporting period starting on 1 January 2018.
IFRS 15 - Revenue from Contracts with Customers and IFRS 15 Amendments
IFRS 15, issued in May 2014, establishes a new five-step model to account for revenue arising from
contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration
to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The principles in IFRS 15 provide a more structured approach for measuring and recognising revenue.
The standard also introduces extensive qualitative and quantitative disclosure requirements, including
disaggregation of total revenue, information about performance obligations, changes in contract asset and
liability account balances between periods and key judgements and estimates. The standard will supersede
all current revenue recognition requirements under IFRSs. Either a full retrospective application or a
modified retrospective adoption is required on the initial application of the standard. In April 2016, the
IASB issued amendments to IFRS 15 to address the implementation issues on identifying performance
obligations, application guidance on principal-versus-agent consideration, licences of intellectual property,
and transition. The amendments are also intended to help ensure a more consistent application when entities
adopt IFRS 15 and decrease the cost and complexity of applying the standard. IFRS 15 and the amendments
are effective for annual periods beginning on or after 1 January 2018, and early adoption is permitted.
China Life Insurance Company Limited Annual Report 2017
2.1 Basis of preparation (continued)
159
Purchase and sale of investments are recognised on the trade date, when the Group commits to purchase
or sell assets. Investments are initially recognised at fair value plus, in the case of all financial assets not
carried at fair value through profit or loss, transaction costs that are directly attributable to their acquisition.
Investments are derecognised when the rights to receive cash flows from the investments have expired or
when they have been transferred and the Group has also transferred substantially all risks and rewards of
ownership.
Annual Report 2017
China Life Insurance Company Limited Annual Report 2017
168
the market price of the equity securities was below their cost for a period of more than one year
(including one year) at the reporting date.
the market price of the equity securities was more than 50% below their cost at the reporting date;
the market price of the equity securities was more than 20% below their cost for a period of at least six
months at the reporting date; and
In evaluating whether a decline in value is impairment for equity securities, the Group also considers the
extent or the duration of the decline. The quantitative factors include the following:
the disappearance of an active market for that financial asset because of financial difficulties.
it becomes probable that the issuer or debtor will enter into bankruptcy or other financial
reorganisation; and
a breach of contract, such as a default or delinquency in payments;
significant financial difficulty of the issuer or debtor;
2.8.c Impairment of financial assets other than securities at fair value through profit or loss
Financial assets other than those accounted for as at fair value through profit or loss are adjusted for
impairment, where there are declines in value that are considered to be impairment. In evaluating whether a
decline in value is an impairment for these financial assets, the Group considers several factors including, but
not limited to, the following:
China Life Insurance Company Limited
The Group purchases securities under agreements to resell substantially identical securities. These
agreements are classified as secured loans and are recorded at amortised cost, i.e., their costs plus accrued
interests at the end of the reporting period, which approximates fair value. The amounts advanced under
these agreements are reflected as assets in the consolidated statement of financial position. The Group
does not take physical possession of securities purchased under agreements to resell. Sale or transfer of the
securities is not permitted by the respective clearing house on which they are registered while the lended
money is outstanding. In the event of default by the counterparty, the Group has the right to the underlying
securities held by the clearing house.
Term deposits primarily represent traditional bank deposits which have fixed maturity dates and are stated at
amortised cost.
Securities at fair value through profit or loss and available-for-sale securities are carried at fair value. Equity
investments that do not have a quoted price in an active market and whose fair value cannot be reliably
measured are carried at cost, net of allowance for impairments. Held-to-maturity securities are carried at
amortised cost using the effective interest method. Investment gains and losses on sales of securities are
determined principally by specific identification. Realised and unrealised gains and losses arising from
changes in the fair value of the securities at fair value through profit or loss category, and the change of fair
value of available-for-sale debt securities due to foreign exchange impact on the amortised cost are included
in net profit in the period in which they arise. The remaining unrealised gains and losses arising from
changes in the fair value of available-for-sale securities are recognised in OCI. When securities classified as
available-for-sale securities are sold or impaired, the accumulated fair value adjustments are included in net
profit as realised gains on financial assets.
2.8.b Recognition and measurement (continued)
2.8 Financial assets (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Report
2
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
167
Loans are carried at amortised cost, net of allowance for impairment.
Notes to the Consolidated Financial Statements (continued)
The Group does not apply the hedge accounting currently, so the new hedge accounting model under IFRS
9 has no impact on the Group's consolidated financial statements.
2
•
The fulfilment cash flows including the expected present value of future cash flows and explicit risk
adjustment, remeasured every reporting period;
A Contractual Service Margin (CSM) represents the unearned profitability of the insurance contracts
and is recognised in profit or loss over the coverage period;
Certain changes in the expected present value of future cash flows are adjusted against the CSM and
thereby recognised in profit or loss over the remaining coverage period;
The effect of changes in discount rates will be reported in either profit or loss or other comprehensive
income, determined by an accounting policy choice;
For the year ended 31 December 2017
Amounts that the policyholder will always receive, regardless of whether an insured event happens
(non-distinct investment components) are not presented in the income statement, but are recognised
directly on the balance sheet;
Insurance services results are presented separately from the insurance finance income or expense;
Extensive disclosures to provide information on the recognised amounts from insurance contracts and
the nature and extent of risks arising from these contracts.
IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2021, with comparative
figures required. Early application is permitted, provided the entity also applies IFRS 9 and IFRS 15 on or
before the date it first applies IFRS 17. Retrospective application is required. However, if full retrospective
application for a group of insurance contracts is impracticable, then the entity is required to choose either a
modified retrospective approach or a fair value approach.
The Group is currently assessing the impact of the standard upon adoption.
China Life Insurance Company Limited Annual Report 2017
161
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
2
Financial Report
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2017 (continued)
IFRS 10 and IAS 28 Amendments
Joint Venture
Sale or Contribution of Assets between an Investor and its Associate or
Amendments to IFRS 10 and IAS 28 address an inconsistency between the requirements in IFRS 10 and IAS
28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture.
The amendments require a full recognition of a gain or loss when the sale or contribution of assets between
an investor and its associate or joint venture constitutes a business. For a transaction involving assets that do
not constitute a business, a gain or loss resulting from the transaction is recognised in the investor's profit or
loss only to the extent of the unrelated investor's interest in that associate or joint venture. The amendments
are to be applied prospectively. The previous mandatory effective date of amendments to IFRS 10 and IAS
28 was removed and a new mandatory effective date will be determined after the completion of a broader
review of accounting for associates and joint ventures. However, the amendments are available for adoption
•
•
The recognition of insurance revenue and insurance service expenses in the statement of
comprehensive income based on the concept of services provided during the period;
•
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2017 (continued)
IFRS 15 - Revenue from Contracts with Customers and IFRS 15 Amendments (continued)
•
IAS 40 Amendments - Transfers of Investment Property
Amendments to IAS 40, issued in December 2016, clarify when an entity should transfer property, including
property under construction or development into, or out of investment property. The amendments state that
a change in use occurs when the property meets, or ceases to meet, the definition of investment property and
there is evidence of the change in use. A mere change in management's intentions for the use of a property
does not provide evidence of a change in use. The amendments are to be applied prospectively, and shall
be applied to the changes that occurred, during or after the financial year when it applies amendments for
the first time. An entity should reassess the classification of property held at the date that it first applies
the amendments and, if applicable, reclassify property to reflect the conditions that exist at that date.
Retrospective application is only permitted if it is possible without the use of hindsight. The Group expects
to adopt the amendments from 1 January 2018. The amendments are not expected to have any significant
impact on the Group's consolidated financial statements.
IFRS 16 Leases
IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRS Interpretations Committee
Interpretation No.4 Determining whether an Arrangement contains a Lease, Standing Interpretations
Committee ("SIC”) Interpretation No.15 Operating Leases – Incentives and SIC-27 Evaluating the Substance
of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition,
measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single
on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes
two recognition exemptions for lessees-leases of low-value assets and short-term leases (i.e., leases with a
lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to
make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset
during the lease term (i.e., the right-of-use asset). The right-of-use asset is subsequently measured at cost
less accumulated depreciation and any impairment losses unless the right-of-use asset meets the definition
of investment property in IAS 40, or relates to a class of property, plant and equipment to which the
revaluation model is applied. The lease liability is subsequently increased to reflect the interest on the lease
liability and reduced for the lease payments. Lessees will be required to separately recognise the interest
expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will be also
required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease
term, a change in future lease payments resulting from a change in an index or rate used to determine those
payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as
an adjustment to the right-of-use asset. Lessor accounting under IFRS 16 is substantially unchanged from
today's accounting under IAS 17. Lessors will continue to classify all leases using the same classification
principle as in IAS 17 and distinguish between two types of leases: operating and finance leases. IFRS 16 also
requires lessees and lessors to make more extensive disclosures than under IAS 17. IFRS 16 is effective for
annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity
applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified
retrospective approach. The standard's transition provisions permit certain reliefs. The Group is assessing
the impact of IFRS 16 on its consolidated financial statements.
Financial Report
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
The Group will adopt IFRS 15 from 1 January 2018 and plans to adopt the modified retrospective
approach. Given insurance contracts are scoped out of IFRS 15, the main impact of the new standard is on
the accounting treatment of income from administrative and investment management services. The Group
does not expect any significant impact on the Group's consolidated financial statement.
Financial Report
For the year ended 31 December 2017
•
The main features of the new accounting model for insurance contracts are, as follows:
In contrast to the requirements in IFRS 4, which are largely based on grandfathering previous local
accounting policies for measurement purposes, IFRS 17 provides a comprehensive model (the general model)
for insurance contracts, supplemented by the variable fee approach for contracts with direct participation
features and the premium allocation approach mainly for short-duration which typically applies to certain
non-life insurance contracts.
In May 2017, the IASB issued IFRS 17 Insurance Contracts, a comprehensive new accounting standard for
insurance contracts covering recognition and measurement, presentation and disclosure, which replaces IFRS
4 Insurance Contracts.
Held-to-maturity securities
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2017 (continued)
2.1 Basis of preparation (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
IFRS 17 Insurance Contracts
reasonable expenses incurred to manage insurance contracts or to process claims,
including maintenance expenses and claim settlement expenses. Future administration
expenses are included in the maintenance expenses. Expenses are determined based
on expense analysis with consideration of future inflation and the Group's expense
management control.
China Life Insurance Company Limited Annual Report 2017
178
Financial Report
The risk under any one insurance contract is the possibility that an insured event occurs and the uncertainty
about the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and
therefore unpredictable. For a portfolio of insurance contracts where the theory of probability is applied to
the pricing and provisioning, the principal risk that the Group faces under its insurance contracts is that the
actual claims and benefit payments are less favourable than the underlying assumptions used in establishing
the insurance liabilities. This occurs when the frequency or severity of claims and benefits exceeds the
estimates. Insurance events are random, and the actual number of claims and the amount of benefits paid
will vary each year from estimates established using statistical techniques.
4.1.1 Types of insurance risks
4.1 Insurance risk
RISK MANAGEMENT
Risk management is carried out by the Company's Risk Management Committee under policies approved by the
Company's Board of Directors.
The Group issues certain structured entities (e.g. funds and asset management plans), and acts as a manager
for such entities according to the contracts. In addition, the Group may be exposed to variability of
returns as a result of holding shares of the structured entities. Determining whether the Group controls
such structured entities usually focuses on the assessment of the aggregate economic interests of the Group
in the entities (including any carried interests and expected management fees) and the decision-making
rights on the entity. As at 31 December 2017, the Group has consolidated some fund products issued and
managed by the Company's subsidiary, China Life AMP Asset Management Company ("CL AMP"), some
debt investment schemes issued and managed by the Company's subsidiary, China Life Asset Management
Company Limited (“CL AMC”) and some trust schemes and debt investment schemes issued and managed
by third parties in the consolidated financial statements. Please refer to Note 40(c) for the details.
The Group applies its judgement to determine whether the control indicators set out in Note 2.2 indicate
that the Group controls structured entities such as funds and asset management products.
The Group is subject to income tax in numerous jurisdictions. During the normal course of business, certain
transactions and activities for which the ultimate tax determination is uncertain, the Group needs to exercise
significant judgement when determining the income tax. If the final settlement results of the tax matters are
different from the amounts recorded, these differences will impact the final income tax expense and deferred
tax for the period.
The Group assesses whether there are any indicators of impairment for investments in associates and joint
ventures at the end of each reporting period. Investments in associates and joint ventures are tested for
impairment when there are indicators that the carrying amounts may not be recoverable. An impairment
exists when the carrying value of investments in associates and joint ventures exceeds its recoverable amount,
which is the higher of its fair value less costs of disposal and its value in use. The calculation of the fair value
less costs of disposal is based on available data from binding sales transactions in an arm's length transaction
of similar assets or observable market prices less incremental costs for disposing of investments in associates
and joint ventures. When value in use calculations are undertaken, the Group must estimate the expected
future cash flows from investments in associates and joint ventures and choose a suitable discount rate in
order to calculate the present value of those cash flows.
3.3 Impairment of investments in associates and joint ventures
The Group issues contracts that transfer insurance risk or financial risk or both. This section summarises these
risks and the way the Group manages them.
3.4 Income tax
On each reporting date, the Group reviews the assumptions for reasonable estimates of liability
and risk margins, with consideration of all available information, taking into account the
Group's historical experience and expectation of future events. Changes in assumptions are
recognised in net profit. Assumptions for the amortisation of residual margin are locked in at
policy issuance and are not adjusted at each reporting date.
For the year ended 31 December 2017
Policy fee income
Premiums from long-term insurance contracts are recognised as revenue when due from the policyholders.
Premiums from the sale of short duration accident and health insurance products are recorded when written
and are accreted to earnings on a pro-rata basis over the term of the related policy coverage.
Premiums
Turnover of the Group represents the total revenues which include the following:
2.19 Revenue recognition
Other equity instruments are Core Tier 2 Capital Securities issued by the Group. These securities contain no
contractual obligation to deliver cash or another financial asset; or to exchange financial assets or financial
liabilities with another entity under conditions that are potentially unfavorable to the Group; or to be settled
in the Group's own equity instruments. Therefore, the Group classifies these securities as other equity
instruments. Fees, commissions and other transaction costs of these securities' issuance are deducted from
equity. The distributions of the securities are recognised as profit distribution at the time of declaration.
2.18 Other equity instruments
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of equity
instruments are shown in equity as a deduction, net of tax, from the proceeds.
2.17 Share capital
Compensation under the stock appreciation rights is measured based on the fair value of the liabilities
incurred and is expensed over the vesting period. Valuation techniques including option pricing models are
used to estimate fair value of relevant liabilities. The liability is re-measured at the end of each reporting
period to its fair value until settlement. Fair value changes in the vesting period is included in administrative
expenses and changes after the vesting period is included in net fair value gains through profit or loss in net
profit. The related liability is included in other liabilities.
Stock appreciation rights
All full-time employees of the Group are entitled to participate in various government-sponsored housing
funds. The Group contributes on a monthly basis to these funds based on certain percentages of the salaries
of the employees. The Group's liability in respect of these funds is limited to the contributions payable in
each year.
Housing benefits
Full-time employees of the Group are covered by various government-sponsored pension plans under which
the employees are entitled to a monthly pension based on certain formulae. These government agencies
are responsible for the pension liability to these employees upon retirement. The Group contributes on a
monthly basis to these pension plans. In addition to the government-sponsored pension plans, the Group
established an employee annuity fund pursuant to the relevant laws and regulations in the PRC, whereby the
Group is required to contribute to the schemes at fixed rates of the employees' salary costs. Contributions to
these plans are expensed as incurred. Under these plans, the Group has no legal or constructive obligation
for retirement benefit beyond the contributions made.
Pension benefits
2.16 Employee benefits
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
173
Revenue from investment contracts is recognised as policy fee income, which consists of various fee incomes
(policy fees, handling fees and management fees, etc.) over the period of which the service is provided.
Policy fee income net of certain acquisition costs is deferred as unearned revenue and amortised over the
expected life of the contracts. Policy fee income is recognised in revenue as part of other income.
China Life Insurance Company Limited Annual Report 2017
Financial Report
China Life Insurance Company Limited Annual Report 2017
175
Annual Report 2017
China Life Insurance Company Limited
Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable
right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax
liabilities relate to income tax levied by the same taxation authority on either the same taxable entity or
different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to
realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts
of deferred tax liabilities or assets are expected to be settled or recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the end of the reporting period.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised. Conversely, previously unrecognised deferred tax assets are reassessed by the
end of each reporting period and are recognised to the extent that it is probable that sufficient taxable profit
will be available to allow all or part of the deferred tax asset to be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates
and joint ventures except where the timing of the reversal of the temporary difference can be controlled and
it is probable that the temporary difference will not be reversed in the foreseeable future.
Deferred income tax is recognised, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Substantively enacted tax rates are used in the determination of deferred income tax.
Current income tax assets and liabilities for the current period are calculated on the basis of the tax laws
enacted or substantively enacted at the end of each reporting period in the jurisdictions where the Company
and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken
with respect to situations in which applicable tax regulations are subject to interpretation.
Income tax expense for the period comprises current and deferred tax. Income tax is recognised in net profit,
except to the extent that it relates to items recognised directly in OCI where the income tax is recognised in
OCI.
2.21 Current and deferred income taxation
Interest expenses for bonds payable, securities sold under agreements to repurchase and interest-bearing
loans and borrowings are recognised within finance costs in net profit using the effective interest rate
method.
2.20 Finance costs
Investment income comprises interest income from term deposits, cash and cash equivalents, debt securities,
securities purchased under agreements to resell, loans and dividend income from equity securities. Interest
income is recorded on an accrual basis using the effective interest rate method. Dividend income is
recognised when the right to receive dividend payment is established.
Investment income
2.19 Revenue recognition (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
Financial Report
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
174
Embedded derivatives that are not closely related to their host contracts and meet the definition of a
derivative are separated and fair valued through profit or loss. The Group does not separately measure
embedded derivatives that meet the definition of an insurance contract or embedded derivatives that are
closely related to host insurance contracts including embedded options to surrender insurance contracts for a
fixed amount (or an amount based on a fixed amount and an interest rate).
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and
are subsequently re-measured at their fair value. The resulting gain or loss of derivative financial instruments
is recognised in net profit. Fair values are obtained from quoted market prices in active market, taking into
consideration of recent market transactions or valuation techniques, including discounted cash flow models
and option pricing models, as appropriate. All derivatives are carried as assets when fair value is positive and
as liabilities when fair value is negative.
2.15 Derivative instruments
2.11.2.b Liability adequacy test
The insurance components are accounted for as insurance contracts; and the non-insurance
components are accounted for as investment contracts (Note 2.11.3), which are stated in the
investment contract liabilities.
non-insurance components
insurance components
Universal life contracts and unit-linked contracts are unbundled into the following components:
•
(iii) Universal life contracts and unit-linked contracts
2.11.2.a Recognition and measurement (continued)
2.11.2 Insurance contracts (continued)
2.11 Insurance contracts and investment contracts (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017 171
contracts.
The Group has considered the impact of time value on the reserve calculation for insurance
Margin comprises risk margin and residual margin. Risk margin is the reserve accrued to
compensate for the uncertain amount and timing of future cash flows. At the inception
of the contract, the residual margin is calculated net of certain acquisition costs, mainly
consist of underwriting and policy acquisition costs, by the Group representing Day 1 gain
and will be amortised over the life of the contracts. For insurance contracts of which future
returns are affected by investment yields of corresponding investment portfolios, their related
residual margins are amortised based on estimated future participating dividends payable to
policyholders. For insurance contracts of which future returns are not affected by investment
yields of corresponding investment portfolios, their related residual margins are amortised based
on sum assured of outstanding policies. The subsequent measurement of the residual margin is
independent from the reasonable estimate of future discounted cash flows and risk margin. The
assumption changes have no effect on the subsequent measurement of the residual margin.
(c)
(b) Margin has been taken into consideration while computing the reserve of insurance contracts,
measured separately and recognised in net profit in each period over the life of the contracts. At
the inception of the contracts, the Group does not recognise Day 1 gain, whereas on the other
hand, Day 1 loss is recognised in net profit immediately.
Notes to the Consolidated Financial Statements (continued)
The Group assesses the adequacy of insurance contract reserves using the current estimate of future cash
flows with available information at the end of each reporting period. If that assessment shows that the
carrying amount of its insurance liabilities (less related intangible assets, if applicable) is inadequate in light
of the estimated future cash flows, the insurance contract reserves will be adjusted accordingly, and any
changes of the insurance contract liabilities will be recognised in net profit.
2.11.2.c Reinsurance contracts held
Contracts with reinsurers under which the Group is compensated for losses on one or more contracts
issued by the Group and that meet the classification requirements for insurance contracts are classified as
reinsurance contracts held. Contracts with reinsurers that do not meet these classification requirements are
classified as financial assets. Insurance contracts entered into by the Group under which the contract holder
is another insurer (inwards reinsurance) are included with insurance contracts.
The benefits to which the Group is entitled under its reinsurance contracts held are recognised as
reinsurance assets. Amounts recoverable from or due to reinsurers are measured consistently with the
amounts associated with the reinsured insurance contracts and in accordance with the terms of each
reinsurance contract. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and
are recognised as expenses when due.
Bonds payable primarily include subordinated debts. Subordinated debts are initially recognised at fair value
and subsequently measured at amortised cost using the effective interest rate method. Amortised cost is
calculated by taking into account any discount or premium at acquisition and transaction costs.
2.14 Bonds payable
The Group retains substantially all the risk and rewards of ownership of securities sold under agreements
to repurchase which generally mature within 180 days from the transaction date. Therefore, securities sold
under agreements to repurchase are classified as secured borrowings. The Group may be required to provide
additional collateral based on the fair value of the underlying securities. Securities sold under agreements
to repurchase are recorded at amortised cost, i.e., their cost plus accrued interest at the end of the reporting
period. It is the Group's policy to maintain effective control over securities sold under agreements to
repurchase which includes maintaining physical possession of the securities. Accordingly, such securities
continue to be carried on the consolidated statement of financial position.
2.13 Securities sold under agreements to repurchase
Financial liabilities at fair value through profit or loss are the portions owned by the external investors in
the consolidated structured entities (open-ended funds). Such financial liabilities are designated at fair value
upon initial recognition, and all realised or unrealised gains or losses are recognised in net profit.
2.12 Financial liabilities at fair value through profit or loss
DPF is contained in certain long-term insurance contracts and investment contracts. These contracts are
collectively called participating contracts. The Group is obligated to pay to the policyholders of participating
contracts as a group at the higher of 70% of accumulated surplus available and the rate specified in the
contracts. The accumulated surplus available mainly arises from net investment income and gains and losses
arising from the assets supporting these contracts. To the extent unrealised gains or losses from available-
for-sale securities are attributable to policyholders, shadow adjustments are recognised in OCI. The surplus
owed to policyholders is recognised as policyholder dividend payable whether it is declared or not. The
amount and timing of distribution to individual policyholders of participating contracts are subject to future
declarations by the Group.
2.11.4 DPF in long-term insurance contracts and investment contracts
2.11 Insurance contracts and investment contracts (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Notes to the Consolidated Financial Statements (continued)
2
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
172
Financial Report
Except for unit-linked contracts, of which the liabilities are carried at fair value, the liabilities of investment
contracts are carried at amortised cost.
contracts.
Revenue from investment contracts with or without DPF is recognised as policy fee income, which consists
of various fee incomes (policy fees, handling fees and management fees, etc.) during the period. Policy fee
income net of acquisition cost is deferred as unearned revenue and amortised over the expected life of the
2.11.3 Investment contracts
The Group assesses its reinsurance assets for impairment as at the end of reporting period. If there is
objective evidence that the reinsurance asset is impaired, the Group reduces the carrying amount of the
reinsurance asset to its recoverable amount and recognises that impairment loss in net profit.
Financial Report
For the year ended 31 December 2017
3.5 Determination of control over investee
2
The Group issues contracts that transfer insurance risk or financial risk or both. The contracts issued by
the Group are classified as insurance contracts and investment contracts. Insurance contracts are those
contracts that transfer significant insurance risk. They may also transfer financial risk. Investment contracts
are those contracts that transfer financial risk without significant insurance risk. A number of insurance
and investment contracts contain a discretionary participating feature ("DPF"). This feature entitles the
policyholders to receive additional benefits or bonuses that are, at least in part, at the discretion of the
Group.
2.11.2 Insurance contracts
2.11.2.a Recognition and measurement
(i)
Short-term insurance contracts
Premiums from the sale of short duration accident and health insurance products are recorded when
written and are accreted to earnings on a pro-rata basis over the term of the related policy coverage.
Reserves for short duration insurance products consist of unearned premium reserve and expected
claims and claim adjustment expenses reserve. Actual claims and claim adjustment expenses are
charged to net profit as incurred.
The unearned premium reserve represents the portion of the premiums written net of certain
acquisition costs relating to the unexpired terms of
coverage.
Reserves for claims and claim adjustment expenses consist of the reserves for reported and unreported
claims and reserves for claims expenses with respect to insured events. In developing these reserves,
the Group considers the nature and distribution of the risks, claims cost development, and experiences
in deriving the reasonable estimated amount and the applicable margins. The methods used for
reported and unreported claims include the case-by-case estimation method, average cost per claim
method, chain ladder method, etc. The Group calculates the reserves for claims expenses based on the
reasonable estimates of the future payments for claims expenses.
(ii) Long-term insurance contracts
Long-term insurance contracts include whole life insurance, term life insurance, endowment insurance
and annuity policies with significant life contingency risk. Premiums are recognised as revenue when
due from policyholders.
The Group uses the discounted cash flow method to estimate the reserve of long-term insurance
contracts. The reserve of long-term insurance contracts consists of a reasonable estimate of liability,
a risk margin and a residual margin. The long-term insurance contract liabilities are calculated using
various assumptions, including assumptions on mortality rates, morbidity rates, lapse rates, discount
rates, and expense assumptions, and based on the following principles:
170
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
Financial Report
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.11 Insurance contracts and investment contracts (continued)
2.11.2 Insurance contracts (continued)
2.11.2.a Recognition and measurement (continued)
2.11.1 Classification
2.11 Insurance contracts and investment contracts
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
Financial Report
Financial Report
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.8 Financial assets (continued)
2.8.c Impairment of financial assets other than securities at fair value through profit or loss
(continued)
When the decline in value is considered impairment, held-to-maturity debt securities are written down
to their present value of estimated future cash flows discounted at the securities' effective interest rates;
available-for-sale debt securities and equity securities are written down to their fair value, and the change is
recorded in net realised gains on financial assets in the period the impairment is recognised. The impairment
loss is reversed through net profit if in a subsequent period the fair value of a debt security increases and the
increase can be objectively related to an event occurring after the impairment loss was recognised through
net profit. The impairment losses recognised in net profit on equity instruments are not reversed through
net profit.
2.9 Fair value measurement
The Group measures financial instruments, such as securities at fair value through profit or loss and
available-for-sale securities, at fair value at each reporting date. Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. The fair value measurement of assets and liabilities is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either:
in the principal market for the asset or liability, or
(ii)
in the absence of a principal market, in the most advantageous market for the asset or liability.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximising the use of relevant observable inputs and minimising the use
of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements
are categorised within the fair value hierarchy, described in Notes 4.3, 7, 10 and 40(b) based on the lowest
level input that is significant to the fair value measurement as a whole.
2.10 Cash and cash equivalents
Cash amounts represent cash on hand and demand deposits. Cash equivalents are short-term, highly liquid
investments with original maturities of 90 days or less, whose carrying value approximates fair value.
China Life Insurance Company Limited Annual Report 2017
169
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
Financial Report
The principal or the most advantageous market must be accessible to by the Group at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
Long-term insurance contracts (continued)
For assets and liabilities that are measured at fair value on a recurring basis, the Group determines whether
transfers have occurred between each level in the hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting
period.
The reasonable estimate of liability for long-term insurance contracts is the present value of
reasonable estimates of future cash outflows less future cash inflows. The expected future cash
inflows include cash inflows of future premiums arising from the undertaking of insurance
obligations, with consideration of decrement mostly from death and surrenders. The expected
future cash outflows are cash outflows incurred to fulfil contractual obligations, consisting of the
following:
China Life Insurance Company Limited Annual Report 2017
176
The determination of the liabilities under long-term insurance contracts is based on estimates of future
benefit payments, premiums and relevant expenses made by the Group and the margins. Assumptions about
mortality rates, morbidity rates, lapse rates, discount rates, and expense assumptions are made based on the
most recent historical analysis and current and future economic conditions. The liability uncertainty arising
from uncertain future benefit payments, premiums and relevant expenses is reflected in the risk margin.
contracts
3.1 Estimate of future benefit payments and premiums arising from long-term insurance
Areas susceptible to changes in critical estimates and judgements, which affect the carrying value of assets and
liabilities, are set out below. It is possible that actual results may be different from the estimates and judgements
referred to below.
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates
and judgements are continually evaluated and based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. The Group exercises
significant judgement in making appropriate assumptions.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Dividend distribution to the Company's equity holders is recognised as a liability in the Group's
consolidated financial statements in the year in which the dividends are approved by the Company's equity
holders.
2.24 Dividend distribution
A contingent liability is not recognised in the consolidated statement of financial position but is disclosed in
the notes to the consolidated financial statements. When a change in the probability of an outflow occurs so
that such outflow is probable and can be reliably measured, it will then be recognised as a provision.
A contingent liability is a possible obligation that arises from past events and whose existence will only be
confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within
the control of the Group. It can also be a present obligation arising from past events that is not recognised
because it is not probable that outflow of economic resources will be required or the amount of obligation
cannot be measured reliably.
additional non-guaranteed benefits, such as policyholder dividends; and
2.23 Provisions and contingencies
Where the Group is the lessee, rentals payable under operating leases are charged to the consolidated
statement of comprehensive income on the straight-line basis over the lease terms. The aggregate benefit of
incentives provided by the lessor is recognised as a reduction in rental expenses over the lease terms on the
straight-line basis.
Where the Group is the lessor, assets leased by the Group under operating leases are included in investment
properties and rentals receivable under such operating leases are credited to the consolidated statement of
comprehensive income on the straight-line basis over the lease terms.
Leases where substantially all the risks and rewards of ownership of assets remain with the lessor company
are accounted for as operating leases.
2.22 Operating leases
(a)
3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past
events; it is probable that an outflow of resources will be required to settle the obligation; and the amount
has been reliably estimated. Provisions are not recognised for future operating losses.
3
4
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
guaranteed benefits based on contractual terms, including payments for deaths,
disabilities, diseases, survivals, maturities and surrenders;
Financial Report
3
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
For the description of valuation techniques, please refer to Note 4.3. Using different valuation techniques
and parameter assumptions may lead to some differences of fair value estimations.
fair value of other loans are obtained from valuation techniques.
securities purchased under agreements to resell, policy loans, term deposits, interest-bearing loans and
borrowings, and securities sold under agreements to repurchase: the carrying amounts of these assets in
the consolidated statement of financial position approximate fair value.
177
debt securities: fair values are generally based upon current bid prices. Where current bid prices are
not readily available, fair values are estimated using either prices observed in recent transactions, values
obtained from current bid prices of comparable investments or valuation techniques when the market
is not active.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. When the fair values of financial assets
and liabilities recorded in the consolidated statement of financial position cannot be measured based on
quoted prices in active markets, their fair value is measured using valuation techniques which require a
degree of judgements. The methods and assumptions used by the Group in measuring the fair value of
financial instruments are as follows:
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3.1 Estimate of future benefit payments and premiums arising from long-term insurance
contracts (continued)
The Group considers a wide range of factors in the impairment assessment as described in Note 2.8.c.
The Group's principal investments are debt securities, equity securities, term deposits and loans. The critical
estimates and judgements are those associated with the recognition of impairment and the measurement of
fair value.
3.2 Financial instruments
The impact of the various assumptions and their changes are described in Note 14.
equity securities: fair values are generally based upon current bid prices. Where current bid prices are
not readily available, fair values are estimated using either prices observed in recent transactions or
commonly used market pricing models. Equity securities, for which fair values cannot be measured
reliably, are recognised at cost less impairment.
The residual margin relating to the long-term insurance contracts is amortised over the expected life of
the contracts, based on the assumptions (mortality rates, morbidity rates, lapse rates, discount rates, and
expenses assumption) that are determined at inception of the contracts and remain unchanged for the
duration of the contracts.
The judgements exercised in the valuation of insurance contract liabilities (including contracts with DPF)
affect the amounts recognised in the consolidated financial statements as insurance contract benefits and
insurance contract liabilities.
Total
Financial assets
Equity securities
- Available-for-sale securities
6,968
19,907
148
- Securities at fair value
through profit or loss
Others
1,115
3,906
128
12,791
EUR
3,901
HK dollar
Financial liabilities
Interest-bearing loans and
2,475
other borrowings
12,480
Total
12,480
2,413
2,413
3,901
18,794
18,794
Financial Report
As at 31 December 2016
US dollar
GB pound
1,135
Total
Debt securities
4,961
20,177
15,002
1,274
2,517
1,305
40,275
Financial liabilities
Interest-bearing loans and
other borrowings
13,100
Total
13,100
2,339
59,772
9
8,759
39
2,083
- Held-to-maturity securities
164
164
- Securities at fair value
through profit or loss
348
14
3
13
378
Term deposits
6,106
6,106
Cash and cash equivalents
2,685
145
1,206
EUR
1,388
4.2.1 Market risk (continued)
(iii) Currency risk (continued)
The following table summarises financial assets and financial liabilities denominated in currencies
other than RMB as at 31 December 2017 and 2016, expressed in RMB equivalent:
As at 31 December 2017
US dollar HK dollar
GB pound
731
Others
Total
Financial assets
Equity securities
- Available-for-sale securities
8,697
28,859
37,556
4.2 Financial risk (continued)
- Securities at fair value
RISK MANAGEMENT (continued)
For the year ended 31 December 2017
Financial Report
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.1 Market risk (continued)
(ii)
Price risk
Price risk arises mainly from the volatility of prices of equity securities held by the Group. Prices of
equity securities are determined by market forces. The Group is subject to increased price risk largely
because China's capital markets are relatively volatile.
The Group manages price risk by holding an appropriately diversified investment portfolio as
permitted by laws and regulations designed to reduce the risk of concentration in any one specific
industry or issuer.
As at 31 December 2017, if the prices of all the Group's equity securities had increased or decreased
by 10% with all other variables held constant, pre-tax profit for the year would have been RMB3,341
million or RMB5,393 million (as at 31 December 2016: RMB3,263 million or RMB3,400 million)
higher or lower, respectively, mainly as a result of an increase or decrease in fair value of equity
securities excluding available-for-sale securities. Pre-tax available-for-sale reserve in equity would have
been RMB23,423 million or RMB32,651 million (as at 31 December 2016: RMB24,999 million or
RMB28,153 million) higher or lower, respectively, as a result of an increase or decrease in fair value of
available-for-sale equity securities. If prices decreased to the extent that the impairment criteria were
met, a portion of such decrease of the available-for-sale equity securities would reduce pre-tax profit
through impairment.
(iii) Currency risk
Currency risk is the volatility of fair value or future cash flows of financial instruments resulted from
changes in foreign currency exchange rates. The Group's currency risk exposure mainly arises from
cash and cash equivalents, term deposits, debt investments, equity investments, interest-bearing loans
and borrowings denominated in currencies other than the functional currency, such as US dollar, HK
dollar, GB pound and EUR, etc.
184
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
4
2,823
through profit or loss
146
5
463
Term deposits
7,744
7,744
Cash and cash equivalents
1,246
185
282
128
3
1,844
Total
25,165
29,190
5
4,707
18
profit or loss
1,088
2,690
1,198
9,829
Debt securities
- Held-to-maturity securities
155
155
- Loans
952
952
- Available-for-sale securities
1,229
1,229
- Securities at fair value through
435
16,170
As at 31 December 2017
731
48,586
Subtotal
2,653,350
409,528
522,250
604,552
471,293
1,372,041
Financial and insurance liabilities
Expected cash outflows
Insurance contracts
Investment contracts
2,025,133
16,319
221,905
48,586
47,109
Cash and cash equivalents
14,121
Statutory deposits-restricted
6,333
4,084
734
2,106
Securities purchased under
agreements to resell
36,185
36,185
Accrued investment income
50,641
44,789
5,602
250
Premiums receivable
14,121
1,240,465
128,753
2,823
232,500
(29,981)
(18,557)
Subtotal
2,411,085
(2,529)
(132,358)
173,367
20,217
(4,195,862)
Net cash inflows/(outflows)
242,265
406,999
389,892
777,919
491,510
(2,823,821)
(1,240)
(15,308)
18,794
Interest-bearing loans and
(26,892)
(3,807,542)
(388,320)
Contractual cash outflows
Securities sold under agreements
to repurchase
87,309
(87,309)
Financial liabilities at fair value
through profit or loss
2,529
(2,529)
Annuity and other insurance
balances payable
44,820
(44,820)
other borrowings
133,013
252,571
104,976
186
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
Financial Report
4.2 Financial risk (continued)
4.2.2 Credit risk (continued)
Credit quality
The Group's debt securities investment mainly includes government bonds, government agency bonds,
corporate bonds and subordinated bonds or debts, and most of the debt securities are guaranteed by either
the Chinese government or Chinese government controlled financial institutions. As at 31 December 2017,
99.9% (as at 31 December 2016: 99.0%) of the corporate bonds held by the Group or the issuers of these
corporate bonds had credit ratings of AA/A-2 or above. As at 31 December 2017, 99.9% (as at 31 December
2016: 99.9%) of the subordinated bonds or debts held by the Group either had credit ratings of AA/A-2
or above, or were issued by national commercial banks. The bonds, debts or their issuers' credit ratings are
assigned by a qualified appraisal institution in the PRC and updated at each reporting date.
As at 31 December 2017, 99.8% (as at 31 December 2016: 99.5%) of the Group's bank deposits are with
the four largest state-owned commercial banks, other national commercial banks and China Securities
Depository and Clearing Corporation Limited (“CSDCC") in the PRC. The Group believes these
commercial banks, and CSDCC have a high credit quality. The Group's most other loans excluding
policyholder loans, are guaranteed by third parties or with pledge, or have the fiscal annual budget income
as the source of repayment, or have higher credit rating borrowers. As a result, the Group concludes that
the credit risk associated with term deposits and accrued investment income thereof, statutory deposits-
restricted, other loans, and cash and cash equivalents will not cause a material impact on the Group's
consolidated financial statements as at 31 December 2017 and 2016.
The credit risk associated with securities purchased under agreements to resell, policy loans and most of
premium receivables will not cause a material impact on the Group's consolidated financial statements
taking into consideration their collateral held and maturity terms of no more than one year as at 31
December 2017 and 2016.
4.2.3 Liquidity risk
Liquidity risk is the risk that the Group is unable to obtain funds at a reasonable funding cost when required
to meet a repayment obligation and fund its asset portfolio within a certain time.
Securities purchased under agreements to resell are pledged by counterparties' debt securities or term
deposits of which the Group could take the ownership if the owner of the collateral defaults. Policy loans
and most of premium receivables are collateralised by their policies' cash value according to the terms and
conditions of policy loan contracts and policy contracts, respectively.
In the normal course of business, the Group attempts to match the maturity of financial assets to the
maturity of insurance and financial liabilities.
Collateral and other credit enhancements
Credit risk exposure
16,170
China Life Insurance Company Limited Annual Report 2017
185
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
Financial Report
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.1 Market risk (continued)
(iii) Currency risk (continued)
As at 31 December 2017, if RMB had strengthened or weakened by 10% against US dollar, HK
dollar, GB pound, EUR and other foreign currencies, with all other variables held constant, pre-tax
profit for the year would have been RMB308 million (as at 31 December 2016: RMB420 million)
lower or higher, respectively, mainly as a result of foreign exchange losses or gains on translation of
US dollar, HK dollar, GB pound, EUR and other foreign currencies denominated financial assets and
financial liabilities other than the available-for-sale equity securities included in the table above. Pre-
tax available-for-sale reserve in equity would have been RMB3,541 million (as at 31 December 2016:
RMB1,743 million) lower or higher, respectively, as a result of foreign exchange losses or gains on
translation of the available-for-sale equity securities at fair value. The actual exchange gains in 2017
were RMB52 million (2016: exchange gains of RMB582 million).
4.2.2 Credit risk
Credit risk is the risk that one party of a financial transaction or the issuer of a financial instrument will
fail to discharge its obligation and cause another party to incur a financial loss. Because the Group's
investment portfolio is restricted to the types of investments as permitted by the China Insurance Regulatory
Commission ("CIRC”) and a significant portion of the portfolio is in government bonds, government
agency bonds and term deposits with the state-owned commercial banks, the Group's overall exposure to
credit risk is relatively low.
Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. The
Group manages credit risk through in-house research and analysis of the Chinese economy and the
underlying obligors and transaction structures. Where appropriate, the Group obtains collateral in the form
of rights to cash, securities, property and equipment to lower the credit risk.
The carrying amount of financial assets included on the consolidated statement of financial position
represents the maximum credit risk exposure at the reporting date without taking account of any collateral
held or other credit enhancements attached. The Group has no credit risk exposure relating to off-balance
sheet items as at 31 December 2017 and 2016.
China Life Insurance Company Limited Annual Report 2017
187
Financial Report
Equity securities
409,528
409,528
Debt securities
1,255,052
127,830
240,582
271,538
Loans
383,504
141,679
105,063
64,386
Term deposits
449,400
Contractual cash inflows
Financial assets
Later than
5 years
than 3 years
but not later
than 5 years
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.3 Liquidity risk (continued)
The following tables set forth the contractual and expected undiscounted cash flows for financial assets and
liabilities and insurance liabilities:
2,339
Contractual and expected cash flows (undiscounted)
Carrying
value
Without
maturity
Not later
Later
than 1 year
but not later
Later
than 1 year
than 3 years
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
21,262
China Life Insurance Company Limited Annual Report 2017
China Life Insurance Company Limited
Annual Report 2017
179
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
Financial Report
4
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks (continued)
As at 31 December 2017
RMB million
%
As at 31 December 2016
RMB million
%
RISK MANAGEMENT (continued)
100.00%
179,902
100.00%
29.96%
73,261
40.72%
Hong Tai Endowment (e)
41,271
24.83%
25,093
13.95%
Others (f)
62,926
37.85%
77,255
42.94%
Total
166,224
Liabilities of long-term insurance contracts
New Xin Feng Endowment (Type A) (a)
69,280
3.47%
0.84%
57,356
3.14%
Others (f)
1,554,071
77.73%
1,361,761
74.58%
Total
1,999,066
100.00%
1,825,956
100.00%
(a)
(b)
16,730
49,796
Hong Tai Endowment (e)
117,946
43,794
2.40%
Xin Fu Ying Jia Annuity (b)
19,771
0.99%
987
0.05%
Kang Ning Whole Life (c)
268,708
13.44%
244,112
13.37%
Hong Ying Participating Endowment (d)
70,506
3.53%
6.46%
Hong Ying Participating Endowment (d)
2.20%
3,949
%
Premiums of long-term insurance
contracts
New Xin Feng Endowment (Type A) (a)
59,636
12.83%
38,059
9.75%
Xin Fu Ying Jia Annuity (b)
40,588
8.73%
1,626
0.42%
Kang Ning Whole Life (c)
21,435
RMB million
4.61%
%
2016
188
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.1 Types of insurance risks (continued)
Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative
variability of the expected outcome will be. In addition, a more diversified portfolio is less likely to be
affected across the board by a change in any subset of the portfolio. The Group has developed its insurance
underwriting strategy to diversify the types of insurance risks accepted and within each of these categories to
achieve a sufficiently large population to reduce the variability of the expected outcome. The Group manages
insurance risk through underwriting strategies, reinsurance arrangements and claims handling.
The Group manages insurance risks through two types of reinsurance agreements, ceding on a quota share
basis or a surplus basis, to cover insurance liability risk. Reinsurance contracts cover almost all products,
which contain risk liabilities. The products reinsured include: life insurance, accident and health insurance
or death, disability, accident, illness and assistance in terms of product category or function, respectively.
These reinsurance agreements spread insured risk to a certain extent and reduce the effect of potential
losses to the Group. However, the Group's direct insurance liabilities to the policyholder are not eliminated
because of the credit risk associated with the failure of reinsurance companies to fulfil their responsibilities.
4.1.2 Concentration of insurance risks
All insurance operations of the Group are located in the PRC. There are no significant differences among
the regions where the Group underwrites insurance contracts.
The table below presents the Group's major products of long-term insurance contracts:
Product name
For the year ended 31 December
2017
RMB million
(c)
22,420
Hong Ying Participating Endowment (d)
Insurance benefits of long-term
insurance contracts
New Xin Feng Endowment (Type A) (a)
78
0.05%
67
0.04%
Xin Fu Ying Jia Annuity (b)
7,956
4.79%
277
0.15%
Kang Ning Whole Life (c)
4,197
2.52%
100.00%
5.74%
390,438
464,898
3,019
0.65%
4,968
1.27%
Hong Tai Endowment (e)
166
0.04%
203
0.05%
Others (f)
340,054
73.14%
323,162
82.77%
Total
100.00%
New Xin Feng is an endowment insurance contract with single premium. Its insured period is 5
years. This product is applicable to healthy policyholders between 18-year-old and 70-year-old. Both
maturity and death benefits are paid at the basic sum insured. Accident death benefit is paid at 300%
of the basic sum insured.
Xin Fu Ying Jia Annuity is an annuity insurance contract with the options for regular premium of 3
years, 5 years or 10 years. Its insured period extends from the effective date of Xin Fu Ying Jia Annuity
to the corresponding date when policyholders reach the age of 88. This product is applicable to
healthy policyholders between 28-day-old and 70-year-old. From the effective date to the contractual
date starting to claim of Xin Fu Ying Jia Annuity, the annuity payment of first policy year is paid
at 20% of the first premium of the product, the following annuity payments are paid at 20% of the
basic sum insured by Xin Fu Ying Jia Annuity. From the first corresponding date after the contractual
date starting to claim of annuity, to the corresponding date when the policyholders reach the age of
88-year-old, annuity is paid at 3% of the basic sum insured during the insured period if policyholders
live to the annual corresponding effective date; annuity is paid at the premium received (without
interest) during the insured period if policyholders live to the contractual date starting to claim of
annuity; the contract terminates and death benefit is paid at the premium received (without interest)
or the cash value of the contract, whichever greater when death incurred before the contractual date
starting to claim of annuity; the contract terminates and death benefit is paid at the cash value of
the contract when death incurred after contractual date starting to claim of annuity; the contract
terminates and accidental death benefit is paid at the premium received (without interest) less any
death benefit paid when accidents occurred and due to which death incurred within 180 days.
Kang Ning is a whole life insurance contract with the options for single premium or regular premium
of 10 years or 20 years. This product is applicable to healthy policyholders under 70-year-old. The
critical illness benefit is paid at 200% of the basic sum insured. Both death and disability benefits are
paid at 300% of the basic sum insured less any critical illness benefits paid.
20,359
26,897
33,700
1 year later
11,743
17,127
27,107
2 years later
11,645
16,589
21,259
11,645
16,589
11,645
3 years later
16,379
4 years later
11,331
Total
(21,404)
(97,374)
Unpaid claims
expenses
1,256
12,522
13,778
The following table indicates the claim development for short-term insurance contracts taking into account
the impacts of ceded business:
Short-term insurance contracts (accident year)
Estimated claims expenses
2013
2014
2015
2016
2017
Year end
(26,047)
Estimated accumulated
11,645
For the year ended 31 December 2017
4
Financial Report
RISK MANAGEMENT (continued)
4.2 Financial risk
The Group's activities are exposed to a variety of financial risks. The key financial risk is that proceeds from
the sale of financial assets will not be sufficient to fund the obligations arising from the Group's insurance
and investment contracts. The most important components of financial risk are market risk, credit risk and
liquidity risk.
The Group's overall risk management program focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the financial performance of the Group. Risk management is carried
out by a designated department under policies approved by management. The responsible department
identifies, evaluates and manages financial risks in close cooperation with the Group's operating units. The
Group provides written principles for overall risk management, as well as written policies covering specific
areas, such as managing market risk, credit risk, and liquidity risk.
The Group manages financial risk by holding an appropriately diversified investment portfolio as permitted
by laws and regulations designed to reduce the risk of concentration in any one specific industry or issuer.
The structure of the investment portfolio held by the Group is disclosed in Note 9.
The sensitivity analyses below are based on a change in an assumption while holding all other assumptions
constant. In practice this is unlikely to occur, and changes in some of the assumptions may be correlated,
such as change in interest rate and change in market price.
4.2.1 Market risk
(i) Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate
due to changes in market interest rates. The Group's financial assets are principally composed of
term deposits, debt securities and loans which are exposed to interest rate risk. Changes in the level
of interest rates could have a significant impact on the Group's overall investment return. Many of
the Group's insurance policies offer guaranteed returns to policyholders. These guarantees expose the
Group to interest rate risk.
The Group manages interest rate risk through adjustments to portfolio structure and duration, and, to
the extent possible, by monitoring the mean duration of its assets and liabilities.
The sensitivity analysis for interest rate risk illustrates how changes in interest income and the fair
value of future cash flows of a financial instrument will fluctuate because of changes in market interest
rates at the end of the reporting period.
As at 31 December 2017, if market interest rates were 50 basis points higher or lower with all other
variables held constant, pre-tax profit for the year would have been RMB35 million lower or higher
(as at 31 December 2016: RMB160 million higher or lower), respectively, mainly as a result of higher
or lower interest income on floating rate cash and cash equivalents, term deposits, statutory deposits
- restricted, debt securities and loans and the fair value losses or gains on debt securities assets at fair
value through profit or loss. Pre-tax available-for-sale reserve in equity would have been RMB11,463
million or RMB8,306 million (as at 31 December 2016: RMB6,948 million or RMB6,948 million)
lower or higher, as a result of a decrease or increase in the fair value of available-for-sale securities.
Notes to the Consolidated Financial Statements (continued)
claims expenses
China Life Insurance Company Limited Annual Report 2017
12,427
16,589
21,259
27,107
33,700
110,300
Accumulated claims
expenses paid
(11,645)
(16,589)
(21,259)
(25,860)
(21,273)
(96,626)
Unpaid claims expenses
1,247
13,674
183
(21,422)
(11,775)
Holding all other variables constant, if lapse rates were to increase or decrease from the current best estimate
by 10%, pre-tax profit for the year would have been RMB1,940 million or RMB1,989 million (as at 31
December 2016: RMB2,823 million or RMB2,953 million) lower or higher, respectively.
Holding all other variables constant, if the discount rates were 50 basis points higher or lower than the
current best estimate, pre-tax profit for the year would have been RMB70,732 million or RMB80,152
million (as at 31 December 2016: RMB57,591 million or RMB65,427 million) higher or lower,
respectively.
China Life Insurance Company Limited
Annual Report 2017
181
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.3 Sensitivity analysis (continued)
Sensitivity analysis of short-term insurance contracts
The assumptions of reserves for claims and claim adjustment expenses may be affected by other variables
such as claims payment of short-term insurance contracts, which may result in the synchronous changes to
reserves for claims and claim adjustment expenses.
Holding all other variables constant, if claim ratios are 100 basis points higher or lower than the current
assumption, pre-tax profit is expected to be RMB445 million (as at 31 December 2016: RMB372 million)
lower or higher, respectively.
Holding all other variables constant, if mortality rates and morbidity rates were to increase or decrease
from the current best estimate by 10%, pre-tax profit for the year would have been RMB19,731 million
or RMB20,559 million (as at 31 December 2016: RMB16,746 million or RMB17,492 million) lower or
higher, respectively.
The following table indicates the claim development for short-term insurance contracts without taking into
account the impacts of ceded business:
Liabilities for long-term insurance contracts and liabilities unbundled from universal life insurance contracts
and unit-linked insurance contracts with insurance risk are calculated based on the assumptions on mortality
rates, morbidity rates, lapse rates and discount rates. Changes in insurance contract reserve assumptions
reflect the Company's actual operating results and changes in its expectation of future events. The Company
considers the potential impact of future risk factors on its operating results and incorporates such potential
impact in the determination of assumptions.
4.1.3 Sensitivity analysis
180
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
Financial Report
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks (continued)
(d)
(e)
(f)
Hong Ying is a participating endowment insurance contract with the options for single premium or
regular premium of 3 years, 5 years or 10 years. Its insured period can be 6 years, 10 years or 15 years.
This product is applicable to healthy policyholders between 30-day-old and 70-year-old. Maturity
benefit of a single premium policy is paid at the basic sum insured, while that of a regular premium
policy is paid at the basic sum insured multiplied by the number of years of the premium payments.
Disease death benefit incurred within the first policy year is paid at the premium received (without
interest). Disease death benefit incurred after the first policy year is paid at the basic sum insured
for a single premium policy or the basic sum insured multiplied by the number of years of premium
payments for a regular premium policy. When accidents occurred during taking a train, a ship or a
flight period, death benefit is paid at 300% of the basic sum insured for a single premium policy or
300% of the basic sum insured multiplied by the number of years of premium payments for a regular
premium policy. When accidents occurred out of the period of taking a train, a ship or a flight, death
benefit is paid at 200% of the basic sum insured for a single premium policy or 200% of the basic sum
insured multiplied by the number of years of premium payments for a regular premium policy.
Hong Tai is long-term individual participating endowment insurance contract with options for single
premium or regular premium of 10 years, designed for healthy policyholders of age between 30-day-
old and 75-year-old. Insured period can be 5 years, 6 years or 10 years. Maturity benefit for single
premium is paid at 100% of basic sum insured. Maturity benefit for regular premium is paid at basic
sum insured multiplied by number of year of premium payments. Disease death benefit incurred
within first year is paid at premium received (without interest). All other death benefits incurred
are paid at basic sum insured or basic sum insured multiplied by the number of year of premium
payments for single premium and regular premium, respectively.
Others consist of various long-term insurance contracts with no significant concentration.
Sensitivity analysis of long-term insurance contracts
(16,726)
182
2013
3 years later
11,775
16,726
4 years later
11,775
Estimated accumulated
claims expenses
11,775
16,726
21,422
27,303
33,926
111,152
Accumulated claims
expenses paid
21,422
Estimated claims expenses
16,726
2 years later
2015
Short-term insurance contracts (accident year)
2014
2016
2017
Total
Year end
11,476
16,499
20,497
27,120
33,926
1 year later
11,872
17,265
27,303
11,775
21,427
China Life Insurance Company Limited Annual Report 2017
year-on-year.
percentage
point
Gross investment yield (%)
5.16
4.61
6.47
5.42
4.97
0.55
percentage
point
Notes:
1.
2.
3.
4.
5.
6.
Net profit refers to net profit attributable to equity holders of the Company, while equity holders' equity refers to equity
attributable to equity holders of the Company.
Investment assets = Cash and cash equivalents + Securities at fair value through profit or loss + Available-for-sale securities +
Held-to-maturity securities + Term deposits + Securities purchased under agreements to resell + Loans + Statutory deposits-
restricted + Investment properties
In calculating “Earnings per share (basic and diluted)", the tail differences of the basic figures have been taken into account.
Ratio of assets and liabilities = Total liabilities/Total assets
Gross investment yield = (Gross investment income - Interest paid for securities sold under agreements to repurchase)/
((Investment assets at the beginning of the period - Securities sold under agreements to repurchase at the beginning of the period
+ Investment assets at the end of the period – Securities sold under agreements to repurchase at the end of the period)/2)
The figures as at the end of the past years were adjusted on the same basis.
10
China Life Insurance Company Limited Annual Report 2017
Chairman's Statement
0.18
Chairman's Statement
88.72
86.68
7.80
Net cash inflows/(outflows) from operating activities
per
share
7.11
3.15
125.6%
(0.67)
2.77
2.42
Major financial ratio
Weighted average ROE (%)
10.49
6.16
increase of
11.56
12.83
11.22
4.33
percentage
points
Ratio of assets and liabilities*(%)
88.77
88.59
increase of
87.21
10.05
12
將藥局將藏傳 藏傳 藏傳
有世書世世書世書世書世
for
Respecting market rules to ensure healthy business
development and safeguard against various risks.
A company who manages risks must ensure its own
safety first. We consciously acted in accordance with
the highest international internal control standards,
strictly complied with the regulatory rules for listed
companies, and carried out our businesses in compliance
with various laws and regulations. Under the stringent
supervision, we considered compliances and external
supervision as opportunities for making the Company's
development sound and stable, and promoted transition
of risk prevention and control system from "remedy
afterwards" to "forestalling beforehand” through building
a long-acting risk control system and management
mechanism and enhancing audit supervision and risk
pre-warning. With sufficient cash flow and the solvency
ratio as high as over 270%, the Company firmly held
the bottom line of risk management, and maintained
stable and healthy development for the Company as well
as the industry, and therefore, the Company was praised
as the "stabilizer" and "firm rock" of the industry.
With the past yet to be fading and the future already
unfolding, we shall catch up with the time, strive
to overcome inherent inertia, embrace changes and
transformation, and become the pioneer of the era.
China Life Insurance Company Limited
Annual Report 2017
15
Chairman's Statement
Closely following “changes" in the information
era and building "Technology-driven China Life".
Technology is an important pillar for the Company's
operation and management. Since 2015, we have
accelerated our pace in building "Technology-driven
China Life", and basically completed the development
of a "New Generation of Integrated Business Processing
System" with the objectives of “being customer-
centered, featured with Internet and artificial
intelligence, quick response and safe and reliable
architecture". We developed an advanced business
structure, rebuilt and optimized the business processes
with an end-to-end and scenario-based approach, and
independently designed and built a fully open cloud
architecture, based on which, we greatly facilitated
transformation and upgrade of the Company's
operation and management. As online platforms
for agents and customers, "China Life E-store" and
"China Life E-Bao", through interconnections,
significantly supported customer relations and sales
force management and provided customers with various
application functions such as insurance policy services
and purchase. “China Life E-store” had average monthly
active users of 1.242 million. "China Life E-Bao"
had 24.01 million new registered users. 95% policy-
related services of the Company were available online.
We rolled out 25,000 digital field offices. Besides, we
launched the "China Life Health Platform". Smarter
customer services were provided by introducing
the loop-locked digital information operation and
management system and customer family unified view.
Keeping a close eye on “changes" in the insurance
market and giving full play to internal potentials.
Being market-oriented, we initiated to take global
best practices as the benchmark to actively develop
a market-oriented performance assessment matrix
and remuneration mechanism, put great efforts in
facilitating development of individual insurance business
and markets in large and medium-sized cities and rural
areas, based on which, the Company's inner vitality
has been put into full play and market expanding
capabilities have been improved significantly. In 2017,
the Company maintained a market leading position in
terms of gross written premiums and business and sales
force of the exclusive individual agent channel, and the
core competitiveness of the Company was continuously
enhanced.
Taking advantage of sales model “changes" and
enhancing growth dynamic. With rapid expansion of
the Company's sales force and in response to market
changes, we actively learned from advanced experiences
at home and abroad, and pushed forward transformation
of our sales management model by actively developing a
professional operation and management system for the
exclusive individual agent channel. While enhancing
the Company's professional management and supports,
we also improved our appraisal and compensation
mechanism, put more efforts in improving the
capabilities and quality of our sales force, and gradually
enhanced the dominant role of agent managers at all
levels in daily operation and management of their teams,
thereby further strengthened the Company's growth
dynamic.
16
China Life Insurance Company Limited Annual Report 2017
Chairman's Statement
SEEKING PROGRESS UNDER THE PREMISE
OF STABILITY AND EXCELLING IN HIGH-
QUALITY DEVELOPMENT
In the near future, the main characteristic of China's
economic development will turn from fast growth to
high-quality development, and the insurance industry
will play a more important role than ever before in risk
protection and risk management. Changes in major
groups of insurance consumers and their purchase
habits, diversification of product demands and high
requirements of service quality, along with the stringent
and strengthened supervision which led to ongoing
industry transformations, not only put forward
challenges for the industry but also present new room
for the Company's development. Despite the challenges
and pressures in a short term, in general, there will be
long-term benefits for the Company which has long
been upholding a prudent and value-oriented strategy.
2018 is the first year for the Company to enter the era
of high-quality development. We will actively adapt to
changes in customer needs and regulatory requirements
in the new era, deepen the construction of supply
system, investment system, innovation system, talent
system and risk control system and spare no efforts to
complete the five major tasks of “transforming sales
management model, adjusting business structure,
revitalizing and taking lead in large and medium-
sized cities, building technology-driven China Life
and preventing and controlling risks" by sticking to
the general keynote of “making steady progress" and
satisfying the fundamental requirements of high-quality
development. We will also actively seek to build a
"customer-oriented, extensive service-supported and
digitalization-featured" operation and management
system, transform the Company from a leader in size
to a leader in quality, provide customers with better
services, create more value for shareholders and make
more contributions to the society.
In 2018, we will reembark on our journey with high-
quality development, from now and from here.
By Order of the Board
£12 £
Yang Mingsheng
Chairman
Beijing, China
22 March 2018
China Life Insurance Company Limited
Annual Report 2017
17
Upholding social responsibilities and caring for
people's well-being. We focused on our principal
business and enhanced our expertise to exert the
function of insurance in long-term risk management
and protection. We worked hard to build a protection
network for people's well-being. In particular, we have
provided claims settlement services to more than 43
million people on an accumulative basis since 2013,
with a benefit payment of RMB110,000 million for
commercial insurances; we made maturity payment of
RMB505,300 million. By implementing the "Healthy
China" initiative, we undertook over 260 supplementary
major medical expenses insurance programs covering
420 million people and paid more than RMB40,000
million on an accumulative basis to over 17 million
people in relation to supplementary major medical
expenses insurance. We carried out administration for
over 400 basic social healthcare programs entrusted by
local governments which provided medical coverage
to more than 68 million people. By implementing
the national targeted poverty alleviation initiative, we
provided insurance coverage of RMB2.4 trillion to more
than 22 million registered poverty-stricken persons
and supported more than 1,200 poverty alleviation
working sites. We also provided insurance coverage of
RMB1.5 trillion for micro-insurance business, with
the number of insured for micro-insurance business
reaching nearly 100 million. We strengthened people-
oriented management, promoted the culture of "Success
you, success by you", shared interests and shouldered
responsibilities to build the Company into a spiritual
and career homeland for our employees, agents and
sales representatives, so that the working enthusiasm of
employees was stimulated and a positive atmosphere of
integrity and harmony was created, which paved the way
for the prosperity and bright future of the Company.
Chairman's Statement
Chairman's Statement
14
e
1000
6444
China Life Insurance Company Limited Annual Report 2017
Yang Mingsheng, Chairman
PHOTO ALBUM
Chairman's Statement
As the spring thunder awakens the land, the gorgeous
clouds welcome the spring back. In this beautiful season
where the whole world is flourishing and thriving, I,
on behalf of the Company's board of directors, hereby
report to shareholders and the public the Company's
achievements made in 2017 and illuminate our
blueprint in the new era.
OUTSTANDING RESULTS ACHIEVED IN 2017
WITH CONSISTENT EFFORTS
In 2017, we achieved outstanding operating results
by adhering to the operating guideline of “prioritizing
value, strengthening sales force, optimizing business
structure, achieving stable growth and safeguarding
against risks", putting great efforts in implementing
the overall "innovation-driven development strategy"
and consistently pushing forward the three key tasks of
"accelerated development, transformation and upgrade,
and risk prevention and control” in a coordinated way.
Business development reached a new high. In 2017,
on the high base of 2016, the Company maintained a
strong growth in business development and achieved
gross written premiums of RMB511,966 million, an
increase of 18.9% year-on-year, as a result of which,
the Company became the first insurance company
in China achieving premiums over RMB500,000
million. In particular, gross written premiums from
the exclusive individual agent channel amounted to
RMB353,668 million, an increase of 25.4% year-on-
year. First-year regular premiums were RMB113,121
million, an increase of 20.4% year-on-year, exceeding
RMB100,000 million for the first time; first-year regular
premiums with ten years or longer payment duration
reached RMB66,003 million, an increase of 28.5%
year-on-year; renewal premiums were RMB288,106
million, an increase of 28.9% year-on-year; and short-
term insurance premiums were RMB47,068 million, an
increase of 17.5% year-on-year.
Business value and profitability were improved
significantly. The Company put great efforts to
constantly improve its business value which was the
strategic focus. In 2017, the value of one year's sales of
the Company reached RMB60,117 million, an increase
of 21.9% year-on-year. Seizing the opportunity of
interest rate hike, the Company increased its allocation
in fixed income assets, leveraged the opportunities
in equity market and optimized its assets structure,
through which, the Company's gross investment yield
reached 5.16% and its comprehensive investment yield
reached 4.55%, an increase of 0.55 percentage point
and 2.12 percentage points year-on-year, respectively.
By strengthening the control of administrative
expenses, the Company's administrative expense ratio²
dropped to 5.59% from 5.89% in the corresponding
period of 2016, indicating the expense structure
being continuously optimized and cost control being
constantly effective. Due to the impact of a fairly fast
increase in investment income and the update on the
discount rate assumption for reserves of traditional
insurance contracts, net profit attributable to equity
holders of the Company during the Reporting Period
was RMB32,253 million, a significant increase of 68.6%
Business structure was further optimized. In 2017, the
Company further accelerated the development of regular
premium business. During the Reporting Period, the
percentage of first-year regular premiums in long-term
first-year premiums was 63.99% and the percentage
of first-year regular premiums with ten years or longer
payment duration in first-year regular premiums was
58.35%, an increase of 7.71 percentage points and
3.66 percentage points year-on-year, respectively.
The percentage of renewal premiums in gross written
premiums was 56.27%, an increase of 4.35 percentage
points year-on-year. The Company emphasized playing
the due role of insurance in protection, further pushed
forward its product diversification strategy and achieved
rapid growth of its protection-oriented businesses.
2
Administrative expense ratio = Administrative expenses/Total revenues
China Life Insurance Company Limited Annual Report 2017 13
Chairman's Statement
Development foundation was strengthened effectively.
While maintaining the steady growth in its size, the
quality of the Company's sales force was notably
improved. In 2017, the Company's total sales force
across all channels reached 2.025 million, a net increase
of 0.211 million year-on-year. The average productive
agents on a quarterly basis in the exclusive individual
agent channel increased by 29.8% year-on-year. The
Company introduced new measures in customer relation
management and actively expanded its customer base, as
a result of which, the number of new customers of long-
term individual insurance business increased by 18.9%
year-on-year.
GRASPING THE “CHANGE" AND
"UNCHANGE” IN LIFE INSURANCE
OPERATION BY PROACTIVE THINKING AND
DILIGENT PRACTICING
The life insurance industry is a traditional industry
engraved with a history of several hundred years,
and also a sunrise industry embracing positive
restructuring. In the face of changing economic and
social conditions, diversification and globalization of
the industry development and increasingly fierce market
competition, I, together with other members of the
Company's board of directors, have navigated China
Life, a flagship in the industry, at a resolute and steady
pace, and gained a better understanding on the "change"
and "unchange" in the operation of life insurance.
Everything has its inherent rule, so is a company's
development. We shall unremittingly pursue our
original aspiration, abide by rules, uphold social
responsibilities and care for people's well-being, respect
regulations and strive for accelerated development while
maintaining stability and resilience.
Observing the rule of life insurance operation and
maintaining strategic consistency. We emphasized
playing the due role of insurance in protection, adhered
to the value-oriented principle, made great efforts in
developing protection-oriented and long-term savings
insurance products, accelerated the development of mid-
to-long-term regular businesses, optimized the business
structure and continuously enhanced development
sustainability and value-creation capability. We attached
great importance to management of assets and liabilities
and upheld the philosophies of "long-term investment,
value-oriented investment and safe investment”,
supplying long-term funds, riding on industry trends
and discovering long-term value. We committed to
supporting the real economy and allocated assets in the
backdrop of national economic development to achieve
asset appreciation and returns on investments.
Continuously improving service quality and putting
customers' needs in priority. We are dedicated to
provide every customer with our high-quality services.
We pushed forward the systematic and diversified
product development and introduced competitive
products such as the “Xin” series, the “Shengshi” series
and the "Guoshoufu" series through our extended
service network, covering more than 500 million people
in both urban and rural areas. We enhanced quality
management and upgraded the quality and efficiency
of our basic services. We provided individualized and
differentiated services to middle-and high-end customers
by way of categorized management. We attached great
importance to the management of customer complaints,
effectively protected interests of customers, and fulfilled
our commitment of "Life-time promise, life-long
partner" by carrying forward integrity and sincerity
culture. In 2017, the Company achieved a record-high
level of customer satisfaction.
China Life Insurance Company Limited Annual Report 2017
11.41
increase of
10.74
2017
20166
Change
2015
2014
2013
643,355
540,781
19.0%
507,449
440,766
417,883
506,910
426,230
18.9%
362,301
330,105
324,813
Benefits, claims and
expenses
608,827
522,794
16.5%
463,492
404,275
Net premiums earned
391,557
Total revenues
For the year
Gross investment income
RMB129,021 million
a year-on-year increase of 19.3%
Prelude
Gross investment yield
5.16%
an increase of 0.55 percentage point ◆
Value of one year's sales
RMB60,117 million
a year-on-year increase of 21.9%
العالم
Embedded value
RMB734,172 milli
a year-on-year increase of 12.6%
Net profit attributable to
equity holders of the Company
RMB32,253 mil
million
a year-on-year increase of 68.6%
China Life Insurance Company Limited Annual Report 2017
9
Prelude
5.7%
RMB million
Under International Financial Reporting Standards (IFRS)
Major Financial Data¹
ended
Insurance benefits and claims expenses
Financial Summary
407,045
125.6%
(18,811)
78,247
68,292
As at 31 December
Total assets
Investment assets²
Total liabilities
Total equity holders' equity
Per share (RMB)
2,897,591 2,696,951
2,591,652 2,453,283
2,572,281 2,389,303
320,933
7.4%
5.6%
89,098
2,448,315 2,246,567 1,972,941
5.7%
2,287,639 2,100,870 1,848,681
2,122,101 1,959,236 1,750,356
322,492 284,121 220,331
Earnings per share (basic and diluted)³
1.13
0.66
70.1%
1.22
1.14
0.88
Equity holders' equity per share
11.35
466,043
7.7%
200,990
303,621
24,765
14.5%
Net cash inflows/(outflows) from operating activities
352,219
315,294
312,288
Profit before income tax
41,671
74.8%
45,931
40,402
29,451
Net profit attributable to equity holders of the Company
32,253
23,842
31,873
34,514
19,127
70.1%
18,741
Net profit attributable to ordinary share holders of the Company
32,211
24,765
32,211
34,699
68.6%
1,914,597
2,897,591
Liabilities
Insurance contracts
42,707
35,713
232,500
218,436
8,346
2,025,133
Investment contracts
14,064
81,163
Total
Securities sold under agreements to repurchase
102,190
Others
Later
2,819,171
Without
Not later
3,832
Carrying
value
As at 31 December 2016
than 1 year
Later
Contractual and expected cash flows (undiscounted)
4.2.3 Liquidity risk (continued)
4.2 Financial risk (continued)
RISK MANAGEMENT (continued)
4
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
199,894
Property, plant and equipment
321
Health
87,309
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
5
SEGMENT INFORMATION (continued)
Life
For the year ended 31 December 2016
Accident
RMB million
Others
Elimination
Total
Revenues
Gross written premiums
361,905
but not later
54,010
197
1,993
Financial Report
2,572,281
Others
41,888
3,123
21,323
66,558
Segment liabilities
2,256,084
123,209
8,891
23,316
2,411,500
Unallocated
Others
Total
160,781
China Life Insurance Company Limited Annual Report 2017
than 3 years
but not later
9,942
than 1 year
1,078,038
347,781
537,596
700,129
421,383
2,521,458
Subtotal
67,046
67,046
Cash and cash equivalents
13,421
13,421
Premiums receivable
123
11,100
Financial and insurance liabilities
44,722
Expected cash outflows
Investment contracts
14,583
(81,088)
81,088
to repurchase
Securities sold under agreements
Contractual cash outflows
(3,229,394)
(259,905)
(33,128)
(34,147)
(15,880)
195,706
35,088
97,236
(43,322)
1,847,986
Insurance contracts
maturity
55,945
43,538
Loans
1,014,074
188,740
214,105
210,589
1,148,894
Debt securities
421,383
421,383
Equity securities
Contractual cash inflows
Financial assets
Later than
5 years
than 5 years
than 3 years
226,573
Accrued investment income
119,247
41,697
43,538
agreements to resell
Securities purchased under
209
4,720
1,909
6,333
Statutory deposits-restricted
8,858
117,012
260,065
199,657
538,325
Term deposits
55,106
47,606
430,498
(522,794)
3,871
890
(4,859)
Including: inter-segment expenses
(853)
(34)
(3)
890
Statutory insurance fund contribution
(804)
(138)
(106)
(1,048)
Segment benefits, claims and expenses
(451,372)
(52,681)
(1,360)
(13,540)
(467)
(3,666)
(2,216)
(52,022)
Finance costs
(4,395)
(174)
(17)
(181)
(4,767)
Administrative expenses
(22,248)
(4,373)
(2,899)
(2,334)
(31,854)
Other expenses
(256)
(4,441)
(6,091)
Financial liabilities at fair value
to equity holders of the Company
(23,433)
(930)
(91)
(1,320)
(25,774)
Depreciation and amortisation
1,490
257
196
140
2,083
198
China Life Insurance Company Limited Annual Report 2017
122,194
Other comprehensive income attributable
890
458
- Non-controlling interests
Share of profit of associates and joint ventures, net
5,855
5,855
Segment results
14,732
2,093
852
6,165
23,842
Income tax
(4,257)
Net profit
19,585
Attributable to
- Equity holders of the Company
19,127
- Term life
(6,906)
Underwriting and policy acquisition costs
231
23
(39)
6,038
Net fair value gains through profit or loss
(6,436)
(255)
(25)
(378)
(7,094)
Other income
1,345
86
5,919
(890)
5,823
6,460
Net realised gains on financial assets
899
- Whole life
29,524
- Endowment
- Annuity
188,415
140,095
Net premiums earned
361,649
50,590
13,991
426,230
Investment income
103,723
4,122
403
109,147
(38,459)
Including: inter-segment revenue
(890)
(27,269)
Increase in insurance contract liabilities
(109,767)
(16,578)
(274)
(126,619)
Investment contract benefits
(5,091)
(225)
(5,316)
Policyholder dividends resulting from
participation in profits
(15,787)
(96)
(15,883)
(5,311)
890
(21,958)
Accident and health claims and claim
Segment revenues
466,104
54,774
14,392
6,401
(890)
540,781
Benefits, claims and
expenses
Insurance benefits and claims expenses
Life insurance death and other benefits
(251,155)
(1,977)
(25)
(253,157)
adjustment expenses
through profit or loss
224
(2,031)
Life insurance business relates primarily to the sale of life insurance policies, including those life
insurance policies without significant insurance risk transferred.
Life insurance business (Life)
(i)
The Group operates in four operating segments:
Operating segments
5.3
5.2
5.1
SEGMENT INFORMATION
As at 31 December 2017 and 2016, unobservable inputs such as the weighted average cost of capital and
liquidity discount were used in the valuation of assets at fair value classified as Level 3. The fair value was
not significantly sensitive to reasonable changes in these unobservable inputs.
For the years ended 31 December 2017 and 2016, there were no significant changes in the business or
economic circumstances that affected the fair value of the Group's financial assets and liabilities. There were
also no reclassifications of financial assets.
For the assets and liabilities measured at fair value, during the year ended 31 December 2017, RMB19,275
million (2016: RMB8,932 million) debt securities were transferred from Level 1 to Level 2 within the fair
value hierarchy, whereas RMB9,652 million (2016: RMB8,668 million) debt securities were transferred
from Level 2 to Level 1. No material equity securities were transferred between Level 1 and Level 2.
The assets whose fair value measurements are classified under Level 3 above do not have material impact on
the profit or loss of the Group.
Financial Report
5
Fair value hierarchy (continued)
4.3
RISK MANAGEMENT (continued)
4
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
194
91,239
1,061
76,445
13,733
Depreciation and amortisation
1,513
(ii) Health insurance business (Health)
351
Health insurance business relates primarily to the sale of health insurance policies, including those
health insurance policies without significant insurance risk transferred.
Accident insurance business relates primarily to the sale of accident insurance policies.
36,496
- Whole life
4,110
- Term life
511,966
14,436
67,708
429,822
Gross written premiums
Revenues
Total
Elimination
Others
For the year ended 31 December 2017
Accident
RMB million
Health
Life
SEGMENT INFORMATION (continued)
5
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
195
China Life Insurance Company Limited Annual Report 2017
Financial assets and securities sold under agreements to repurchase are allocated among segments in
proportion to the respective segments' average liabilities of insurance contracts and investment contracts
at the beginning and end of the year. Insurance and investment contract liabilities are presented under the
respective segments. The remaining assets and liabilities are not allocated.
Allocation basis of assets and liabilities
Investment income, net realised gains on financial assets, net fair value gains through profit or loss and
foreign exchange gains/(losses) within other expenses are allocated among segments in proportion to the
respective segments' average liabilities of insurance contracts and investment contracts at the beginning and
end of the year. Administrative expenses are allocated among segments in proportion to the unit cost of
respective products in the different segments. Unallocated other income and other expenses are presented in
the "Others" segment directly. Income tax is not allocated.
Allocation basis of income and expenses
Other businesses relate primarily to income and cost of the agency business in respect of transactions
with CLIC, etc., as described in Note 33, net share of profit of associates and joint ventures, income
and expenses of subsidiaries, and unallocated income and expenditure of the Group.
(iv) Other businesses (Others)
(iii) Accident insurance business (Accident)
216
160
2,240
(67)
(67)
(3,938)
(1,884)
(2,054)
2,454
1,128
1,326
26,032
12,499
64,728
1,884
62,343
501
13,533
RMB million
RMB million
Equity securities
Equity securities
RMB million
Debt securities
RMB million
Total
value through
profit or loss
Available-for-sale securities
(2,043)
(12)
(2,031)
Closing balance
Maturity
other comprehensive income
Total gains/(losses) recorded in
2,331
2,331
(301)
(301)
196
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
5
SEGMENT INFORMATION (continued)
Life
Health
As at 31 December 2017
Accident
RMB million
Others
Elimination
Total
Assets
Financial assets (including cash
- Endowment
and cash equivalents)
114,045
9,390
38,422
Others
8,402
8,149
552
161,472
2,640,596
178,575
Segment assets
Unallocated
2,487,141
2,031
327
2,478,739
- Annuity
Net premiums earned
198,418
Statutory insurance fund contribution
1,126
(4)
(51)
(1,071)
Including: inter-segment expenses
(6,426)
1,126
(1,521)
(147)
(376)
(5,508)
Other expenses
(35,953)
(2,629)
(3,423)
(5,615)
(24,286)
Administrative expenses
(4,601)
(431)
(16)
(187)
(3,967)
Finance costs
(64,789)
(2,949)
(4,565)
(8,494)
(777)
(180)
(111)
(1,068)
(31)
(370)
(7,838)
to equity holders of the Company
Other comprehensive income attributable
499
32,253
- Non-controlling interests
- Equity holders of the Company
Attributable to
32,752
Net profit
(8,919)
Income tax
(48,781)
41,671
528
3,246
29,315
Segment results
7,143
7,143
Share of profit of associates and joint ventures, net
(608,827)
1,126
(7,530)
(14,271)
(65,877)
(522,275)
Segment benefits, claims and expenses
8,582
in profit or loss
Underwriting and policy acquisition costs
(123)
Including: inter-segment revenue
7,493
(1,126)
7,268
75
1,276
Other income
6,183
201
23
269
5,690
Net fair value gains through profit or loss
42
(1)
2
41
Net realised gains on financial assets
122,727
1,501
456
5,454
115,316
Investment income
506,910
14,320
63,323
429,267
190,798
1,126
(1,126)
Segment revenues
551,590
(21,748)
participation in profits
Policyholder dividends resulting from
(8,076)
(278)
(7,798)
Investment contract benefits
(172,517)
(158)
(20,249)
(152,110)
Increase in insurance contract liabilities
(33,818)
(5,826)
(21,871)
(27,992)
Accident and health claims and claim
(259,708)
(25)
(2,383)
(257,300)
Life insurance death and other benefits
Insurance benefits and claims expenses
expenses
Benefits, claims and
643,355
(1,126)
8,969
14,799
69,123
adjustment expenses
Total gains/(losses) recorded
(7,912)
Transferred into Level 3
Level 2
Level 3
RMB million
RMB million
RMB million
RMB million
Available-for-sale securities
- Equity securities
Level 1
196,673
- Debt securities
46,898
350,893
89,111
57,333
334,773
455,124
Securities at fair value through
profit or loss
- Equity securities
48,989
inputs
inputs
markets
As at 31 December 2017, assets classified as Level 2 accounted for approximately 51.20% of assets measured
at fair value on a recurring basis. They primarily include certain debt securities and equity securities.
Valuations are generally obtained from third party pricing services for identical or comparable assets, or
through the use of valuation methodologies using observable market inputs, or recent quoted market prices.
Valuation service providers typically gather, analyse and interpret information related to market transactions
and other key valuation model inputs from multiple sources, and through the use of widely accepted internal
valuation models, provide a theoretical quote on various securities. Debt securities are classified as Level 2
when they are valued at recent quoted prices from the Chinese interbank market or from valuation service
providers.
At 31 December 2017, assets classified as Level 3 accounted for approximately 15.87% of assets measured at
fair value on a recurring basis. They primarily include unlisted equity securities and unlisted debt securities.
Fair values are determined using valuation techniques, including discounted cash flow valuations, the market
comparison approach, etc.
For the accounting policies regarding the determination of fair values of financial assets and liabilities, see
Note 3.2.
192
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.3 Fair value hierarchy (continued)
The following table presents the Group's quantitative disclosures of fair value measurement hierarchy for
assets and liabilities measured at fair value as at 31 December 2017:
Assets measured at fair value
Fair value measurement using
Total
Quoted prices
in active
Significant
observable
Significant
unobservable
52,300
- Debt securities
9,301
963
73,590
Equity securities
Equity securities
RMB million
RMB million
RMB million
Opening balance
Purchases
13,733
76,445
1,061
47,909
15,197
91,239
63,106
Transferred into Level 3
2,842
695
3,537
Transferred out of Level 3
(5,598)
(1,059)
Debt securities
RMB million
As at 31 December 2017, assets classified as Level 1 accounted for approximately 32.93% of assets
measured at fair value on a recurring basis. Fair value measurements classified as Level 1 include certain
debt securities, equity securities that are traded in an active exchange market or interbank market and
open-ended funds with public market price quotation. The Group considers a combination of certain
factors to determine whether a market for a financial instrument is active, including the occurrence of
trades within the specific period, the respective trading volume, and the degree which the implied yields
for a debt security for observed transactions differs from the Group's understanding of the current relevant
market rates and information. Trading prices from the Chinese interbank market are determined by both
trading counterparties and can be observed publicly. The Company adopted this price of the debt securities
traded on the Chinese interbank market at the reporting date as their fair market value and classified the
investments as Level 1. Open-ended funds also have active markets. Fund management companies publish
the net asset value of these funds on their websites on each trade date. Investors subscribe for and redeem
units of these funds in accordance with the funds' net asset value published by the fund management
companies on each trade date. The Company adopted the unadjusted net asset value of the funds at the
reporting date as their fair market value and classified the investments as Level 1.
Total
Available-for-sale securities
655
53,918
82,891
Total
305,172
474,435
147,099
926,706
Liabilities measured at fair value
Financial liabilities at fair value
through profit or loss
Investment contracts at fair value
through profit or loss
(2,529)
(12)
Total
(2,541)
The following table presents the changes in Level 3 assets for the year ended 31 December 2017:
Securities at fair
(2,529)
(12)
(2,541)
value through
profit or loss
Under certain conditions, the Group may not receive a price quote from independent third party pricing
services. In this instance, the Group's valuation team may choose to apply internally developed valuation
method to the assets or liabilities being measured, determine the main inputs for valuation, and analyse the
change of the valuation and report it to management. Key inputs involved in internal valuation services are
not based on observable market data. They reflect assumptions made by management based on judgements
and experiences. The assets or liabilities valued by this method are generally classified as Level 3.
4.3 Fair value hierarchy (continued)
RISK MANAGEMENT (continued)
584,526
349,741
(2,411,261)
Financial Report
China Life Insurance Company Limited
Annual Report 2017
189
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
Financial Report
4.2 Financial risk (continued)
4.2.3 Liquidity risk (continued)
The amounts set forth in the tables above for insurance and investment contracts in each column are the
cash flows representing expected future benefit payments taking into consideration of future premiums
payments or deposits from policyholders. The excess cash inflows from matured financial assets will
be reinvested to cover any future liquidity exposures. The estimate is subject to assumptions related to
mortality, morbidity, the lapse rate, the loss ratio of short-term insurance contracts, expense and other
assumptions. Actual experience may differ from estimates.
The liquidity analysis above does not include policyholder dividends payable amounting to RMB83,910
million as at 31 December 2017 (as at 31 December 2016: RMB87,725 million). As at 31 December 2017,
declared dividends of RMB68,731 million (as at 31 December 2016: RMB64,623 million) included in
policyholder dividends payable have a maturity not later than one year. For the remaining policyholder
dividends payable, the amount and timing of the undiscounted cash flows are indeterminate due to the
uncertainty of future experiences including investment returns and are subject to future declarations by the
Group.
Although all investment contracts with DPF and investment contracts without DPF contain contractual
options to surrender that can be exercised immediately by all policyholders at any time, the Group's
expected cash flows as shown in the above tables are based on past experience and future expectations.
Should these contracts were surrendered immediately, it would cause a cash outflow of RMB56,709 million
and RMB173,557 million, respectively for the year ended 31 December 2017 (2016: RMB53,271 million
and RMB140,565 million, respectively), payable within one year.
4.2.4 Capital management
The Group's objectives for managing capital are to comply with the insurance capital requirements based on
the minimum capital and actual capital required by the CIRC, prevent risk in operation and safeguard the
Group's ability to continue as a going concern so that it can continue to provide returns for equity holders
and benefits for other stakeholders. The Group replenishes capital to improve the solvency ratio by issuing
subordinated bonds and Core Tier 2 Capital Securities according to the relevant laws and the approval of the
relevant authorities.
480,631
The Group is also subject to other local capital requirements, such as statutory deposits-restricted
requirement, statutory insurance fund requirement, statutory reserve fund requirement and general reserve
requirement discussed in detail in Note 9.4, Note 20 and Note 36, respectively.
419,352
Net cash inflows/(outflows)
Annuity and other insurance
balances payable
39,038
(39,038)
Interest-bearing loans and
other borrowings
16,170
(1,138)
(16,159)
Bonds payable
37,998
(39,032)
Subtotal
2,220,017
(2,031)
(219,498)
46,930
1,960
(3,489,299)
301,441
(6,657)
The Group manages capital to ensure its continuous and full compliance with the regulations mainly
through monitoring its quarterly solvency ratios, as well as the solvency ratio based on annual stress testing.
China Life Insurance Company Limited Annual Report 2017
297%
According to the solvency ratios results mentioned above, and the unquantifiable evaluation results of
operational risk, strategic risk, reputational risk and liquidity risk of insurance companies, the CIRC
evaluates the comprehensive solvency of insurance companies and supervises insurance companies by
classifying them into four categories:
(i)
Category A: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational
risk and liquidity risk are very low;
(ii) Category B: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational
risk and liquidity risk are low;
(iii) Category C: solvency ratios do not meet the requirements or solvency ratios meet the requirements but
one or several risks in operation, strategy, reputation and liquidity are high;
(iv) Category D: solvency ratios do not meet the requirements or solvency ratios meet the requirements
but one or several risks in operation, strategy, reputation and liquidity are severe.
According to Cai Kuai Bu Han [2017] No.1510 Notification of the Evaluation Results of Integrated Risk
Rating (Classification Regulation) for the Third Quarter of 2017, released by the CIRC, the latest Integrated
Risk Rating result of the Company was Category A.
4.3 Fair value hierarchy
Level 1 fair value is based on quoted prices (unadjusted) in active markets for identical assets or liabilities
that the entity can obtain at the measurement date.
Other than Level 1 quoted prices, Level 2 fair value is based on valuation techniques using significant
inputs, that are observable for the asset being measured, either directly or indirectly, for substantially the
full term of the asset through corroboration with observable market data. Observable inputs generally used
to measure the fair value of securities classified as Level 2 include quoted market prices for similar assets in
active markets; quoted market prices in markets that are not active for identical or similar assets and other
market observable inputs. This level includes the debt securities for which quotations are available from
pricing services providers. Fair values provided by pricing services providers are subject to a number of
validation procedures by management. These procedures include a review of the valuation models utilised
and the results of these models, as well as the recalculation of prices obtained from pricing services at the end
of each reporting period.
Financial Report
China Life Insurance Company Limited
Annual Report 2017
191
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
Financial Report
4
278%
190
280%
228,080
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.4 Capital management (continued)
The table below summarises the core and comprehensive solvency ratio, core capital, actual capital and
minimum capital of the Company under Insurance Institution Solvency Regulations (No.1-No.17):
Core capital
Actual capital
Minimum capital
Core solvency ratio
Comprehensive solvency ratio
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
706,516
639,396
706,623
677,768
254,503
278%
Transferred out of Level 3
Total gains/(losses) recorded
(42)
154,406
Total
301,746
561,725
954,710
Liabilities measured at fair value
Financial liabilities at fair value
through profit or loss
Investment contracts at fair value
through profit or loss
(2,031)
(12)
Total
(2,043)
The following table presents the changes in Level 3 assets for the year ended 31 December 2016:
Securities at fair
Opening balance
Purchases
RMB million
RMB million
117,234
RMB million
37,172
Available-for-sale securities
- Equity securities
in profit or loss
183,222
86,161
- Debt securities
28,562
357,463
76,445
13,733
345,828
399,758
Securities at fair value through
profit or loss
- Equity securities
52,790
867
1,061
54,718
- Debt securities
RMB million
91,239
Level 2
147,099
655
89,111
57,333
Closing balance
(3,790)
(3,790)
Maturity
(90)
(90)
Disposals
(204)
Level 3
(519)
other comprehensive income
Total gains/(losses) recorded in
(42)
Financial Report
China Life Insurance Company Limited
315
193
Significant
unobservable
inputs
Annual Report 2017
Level 1
markets
observable
Significant
Quoted prices
in active
Total
Fair value measurement using
inputs
The following table presents the Group's quantitative disclosures of fair value measurement hierarchy for
assets and liabilities measured at fair value as at 31 December 2016:
4.3 Fair value hierarchy (continued)
RISK MANAGEMENT (continued)
4
For the year ended 31 December 2017
Financial Report
Assets measured at fair value
Notes to the Consolidated Financial Statements (continued)
5,855
7,143
68,387
37,110
47,175
2016
RMB million
RMB million
2017
As at 31 December
Other equity movements
Declared dividends
Share of profit or loss
119,766
(1,862)
Accounting
(831)
161,472
119,766
Movement
As at
31 December
Change
of the
Share of
Other
profit
Declared
equity
Provision
of
As at 1 January
Change of the cost
(820)
8 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
As at 31 December 2016
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
4,629
2,201
3,064
1,191
As at 31 December 2017
As at 1 January 2017
Fair value
As at 31 December 2017
As at 1 January 2017
Net book value
method
(302)
(58)
Notes to the Consolidated Financial Statements (continued)
(244)
1,931
1,435
Buildings
RMB million
202
As at 31 December 2017
Accumulated depreciation
As at 1 January 2017
Charge for the year
As at 31 December 2017
Additions
As at 1 January 2017
Cost
7 INVESTMENT PROPERTIES
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
3,366
For the year ended 31 December 2017
7 INVESTMENT PROPERTIES (continued)
Cost
Financial Report
203
Financial Report
China Life Insurance Company Limited Annual Report 2017
Under the market comparison approach, an increase (decrease) in the comprehensive adjustment coefficient will
result in an increase (decrease) in the fair value of investment properties.
The Group uses the market comparison approach as its primary method to estimate the fair value of its investment
properties. Under the market comparison approach, the estimated fair value of a property is based on the
average sale price of comparable properties recently sold, with consideration of the comprehensive adjustment
coefficient, which is composed of a number of adjusting factors, including the time and the conditions of sale, the
geographical location, age, decoration, floor area, lot size of the property and other factors.
The fair value of investment properties of the Group as at 31 December 2017 amounted to RMB4,629 million
(as at 31 December 2016: RMB2,201 million), which was estimated by the Group having regards to valuations
performed by an independent appraiser. The investment properties were classified as Level 3 in the fair value
hierarchy.
As at 31 December 2017, the net book value of investment properties which are in process to obtain title
certificates is RMB1,872 million (31 December 2016: Nil).
The Group has no restrictions on the use of its investment properties and no contractual obligations to each
investment property purchased, constructed or developed or for repairs, maintenance and enhancements.
The Company leases part of its investment properties to its subsidiaries and charges rentals based on the areas
occupied by the respective entities. These properties are categorised as property, plant and equipment of the Group
in the consolidated statement of financial position.
2,201
2,238
1,191
1,237
(244)
(46)
(198)
As at 1 January 2016
Additions
As at 31 December 2016
Accumulated depreciation
As at 1 January 2016
Charge for the year
As at 31 December 2016
For the year ended 31 December 2017
Net book value
As at 31 December 2016
Fair value
As at 1 January 2016
Buildings
RMB million
1,435
1,435
As at 1 January 2016
(685)
Accumulated depreciation
Financial Report
16,696
627
42,707
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
6 PROPERTY, PLANT AND EQUIPMENT (continued)
Cost
Buildings
Office
equipment,
furniture and
fixtures
Motor
vehicles
Assets under
Leasehold
construction improvements
448
Total
As at 1 January 2016
24,253
6,616
1,387
7,565
1,308
41,129
Transfers upon completion
1,176
(1,438)
256
(6)
Additions
37
RMB million
653
1,751
As at 31 December 2017
Cost
(955)
(1,068)
(181)
46
(15,311)
(1,910)
693
(1,203)
(16,528)
200
Impairment
As at 1 January 2017
(24)
Charge for the
year
23,185
| |
Transfers into investment
properties
Disposals
As at 31 December 2017
(24)
(24)
Net book value
As at 1 January 2017
17,027
1,903
426
10,548
485
30,389
(24)
177
4,896
16
(4,934)
(998)
(1,068)
(15,311)
Impairment
As at 1 January 2016
(24)
(24)
Charge for the year
Disposals
As at 31 December 2016
(24)
(24)
Net book value
(8,311)
As at 1 January 2016
1,878
382
7,565
366
26,974
As at 31 December 2016
17,027
1,903
426
10,548
485
30,389
As at 31 December 2017, the net book value of buildings above which are in process to obtain title certificates is
RMB6,209 million (31 December 2016: Not significant).
China Life Insurance Company Limited Annual Report 2017
16,783
As at 31 December 2016
621
22
5,779
Disposals
(104)
(432)
(140)
(475)
(27)
(1,178)
As at 31 December 2016
25,362
6,837
1,424
10,548
1,553
45,724
As at 1 January 2016
(7,446)
(1,801)
(148)
(14,131)
(942)
137
426
201
36
(130)
(622)
(901)
Charge for the year
(1,005)
(4,738)
Disposals
2016
Listed in Hong Kong, PRC
or loss
37,231
11,287
72,773
151,265
2,047,592
Total assets
million
million
million
million
million
million
Sanya
Company
RMB
Company
RMB
RMB
RMB
RMB
RMB
Futures
CLP&C
CGB Sino-Ocean
Pipeline
COFCO
The following table illustrates the financial information of the Group's major associates and joint venture as at 31
December 2016 and for the year ended 31 December 2016:
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
799
8
Total liabilities
101,935
adjustments
of the associates and joint ventures after
Total equity attributable to equity holders
(1,576)
3,163
Total adjustments (i)
591
32,217
2,496
19,823
43,999
105,974
of the associates and joint ventures
Total equity attributable to equity holders
591
32,217
2,577
19,823
49,330
105,974
Total equity
208
5,014
8,710
52,950
1,941,618
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
21,347
1,466
8,185
13,626
53,459
Net carrying value of the investments
(1,010)
Impairment
291
51.00%
571
135,393
10.56%
21,783
2,631 35,985
35.00% 43.86%
1,466 21,347
20,463
40.00%
8,185
14,636
53,459
Gross carrying value of the investments
45,885
43.686% 29.79%
Proportion of the Group's ownership
116,113
ventures after adjustments
holders of the associates and joint
Total equity attributable to equity
676
(2,617)
21,783
291
Total revenues
50,531
206
(20)
1,454
3,055
135
785
7,171
7,872
Total comprehensive income
(230)
(35)
912
109,137
(2,332)
(20)
1,684
3,055
135
820
6,259
10,204
Net profit/(loss)
5,644 274,829
399
61,142
49,236
Other comprehensive income
42,423
19,823
Proportion of the Group's ownership
144
136
64,192
91,631
594,730
717,037
150,089
148,494
178,444
200,869
169,001
241,808
97,196
125,866
RMB million
December 2016
As at 31
As at 31
December 2017
RMB million
Total
Unlisted
Listed in Singapore
(5,122)
Listed in Mainland, PRC
Debt securities
Total
19
20
625,251
530,374
China Life Insurance Company Limited Annual Report 2017
594,730
717,037
Total
260,846
293,113
After ten years
231,608
288,496
After five years but within ten years
71,661
112,932
Subordinated bonds/debts
years
30,615
22,496
Within one year
RMB million
As at 31
December 2016
As at 31
December 2017
RMB million
Maturing:
Debt securities - Contractual maturity schedule
Unlisted debt securities include those traded on the Chinese interbank market.
The estimated fair value of all held-to-maturity securities was RMB692,984 million as at 31 December 2017
(as at 31 December 2016: RMB619,152 million).
594,730
717,037
After one year but within five
2,267
Government bonds
Government agency bonds
Corporate bonds
208
375
55,728
37,748
55,276
Total revenues
301
20,000
1,419
7,929
12,680
50,229
Net carrying value of the investments
(1,010)
Impairment
301
51.00%
591
2,496 32,217
35.00% 43.86%
1,419 20,000
7,929
13,690
50,229
Gross carrying value of the investments
40.00%
29.991%
43.686%
2,339
1
Net profit/(loss)
9,504
9.1 Held-to-maturity securities
FINANCIAL ASSETS
9
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
207
China Life Insurance Company Limited Annual Report 2017
Financial Report
Including adjustments for the difference of accounting policies, fair value and others.
(i)
The Group had no contingent liabilities with the associates and joint ventures as at 31 December 2017 and 31
December 2016. The Group had a capital contribution commitment of RMB20.996 billion with a joint venture
as at 31 December 2017 (31 December 2016: RMB2,991 million). The capital contribution commitment amount
has been included in the capital commitments in Note 39.
Debt securities
631
631
4,282
8,434
(526)
(164)
(1,070)
Total comprehensive income
Other comprehensive income
631
66
1,157
4,446
66
cost
Total adjustments (i)
135,393
China Life (Sanya) Health
Joint ventures
(1,010)
129,598
(1,418) (1,139)
21,829 7,662
102,523 102,664
Subtotal
9,732
567 (776) (466)
9,948 10,407
Equity Method
Others (iv)
("China Unicom") (iii)
Communications Limited
10.56%
21,783
(28)
1
(18)
21,829
21,829
Note
Equity Method
China United Network
Equity Method
Company")
306
291
Note: Including the amount originally held by the Company.
(1,010)
161,472
(685)
(1,862)
7,143
136,178 119,766 37,110
Total
31,874
454
(444)
(519)
33,655 17,102 15,281
Subtotal
31,583
454
(444)
(509)
16,801 15,281
33,349
Equity Method
Others (iv)
("Sanya Company")
Investments Co., Ltd
51.00%
301
Co., Ltd. ("Pipeline
China Gas Pipeline
43.86%
Limited ("Sino-Ocean") (ii)
(1,010)
29.79%
13,626
298
(553)
1,201
12,680
11,245
Equity Method
Sino-Ocean Group Holding
43.686%
53,459
(956)
4,186
50,229
32,162
Equity Method
China Guangfa Bank
Co., Ltd. ("CGB") (i)
Associates
interest impairment
of equity amount of
Percentage Accumulated
As at 31
December
2017
dividends movements impairment
China Life Property &
Equity Method
6,000
7,929
21,347
16
20
(20)
1,351
20,000
20,000
Equity Method
Sinopec Sichuan to East
Futures")
Limited ("COFCO
35.00%
204
1,466
1,419
1,339
Equity Method
COFCO Futures Company
("CLP&C")
Company Limited
Casualty Insurance
8,185 40.00%
(3)
(69)
28
328
47
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
Total assets
RMB
million
Sanya
Company
China
Unicom
RMB
million
million
million
COFCO Pipeline
Futures Company
RMB
RMB
RMB
million
million
RMB
RMB
million
CLP&C
CGB Sino-Ocean
The following table illustrates the financial information of the Group's major associates and joint venture as at 31
December 2017 and for the year ended 31 December 2017:
51.00%
43.86%
35.00%
40.00%
29.991%
43.686%
Percentage of equity interest held
51.00%
10.56%
43.86%
2,072,915
191,894
79,601
10,651
35,309
2,631
48,502 20,463
113,846
joint ventures
holders of the associates and
Total equity attributable to equity
571
307,018
35,309
2,631
20,463
35.00%
58,728
Total equity
317
266,599
934
8,020
59,138
133,166
1,959,069
Total liabilities
888
573,617
36,243
113,846
571
40.00%
43.686%
COFCO Futures
CLP&C
Sino-Ocean
CGB
Associates
Name
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
As at 31 December 2017, the major associates and joint venture of the Group are as follows:
8
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
205
Annual Report 2017
China Life Insurance Company Limited
Except for a 36-month restricted period of the investment in China Unicom, as mentioned in (iii), the
Group has no restrictions to transact other investments in associates and joint ventures.
(v)
£
(iv) The Group invested in real estate, industrial logistics assets and other industries through these enterprises.
(iii) On 16 August 2017, the Company entered into an agreement to acquire 3,177,159,590 non-public offering
of A ordinary shares of China Unicom, with a total consideration of RMB21.7 billion to participate
into the Mixed Ownership Reform of China Unicom. Upon the completion of the transaction as at 31
October 2017, the Group's share percentage of China Unicom increased from 0.08% to 10.56%, making
the Company the second largest shareholder of China Unicom. In accordance with the articles of China
Unicom, the Company is entitled to nominate candidates for the Board of Directors and Supervisors. The
candidate of Board of Directors nominated by the Company was approved in the General Meeting of China
Unicom on 8 February 2018. The management considered that the Group can exert significant influence
upon China Unicom, and therefore accounted for it as an associate. On 29 December 2017 (the last trading
day in 2017), the stock price of China Unicom was RMB6.33 per share. As at 31 December 2017, the
Company had not yet completed the valuation for fair value of the identifiable net assets of China Unicom.
Sino-Ocean, the Group's associate is listed in Hong Kong. On 29 December 2017 (the last trading day in
2017), the stock price of Sino-Ocean was HKD5.39 per share. As at 31 December 2017, an impairment loss
of RMB1.01 billion for the investment in Sino-Ocean had been made by the Group. The Group performed
an impairment test to this investment on 31 December 2017. The recoverable amount of this investment
valued by the Group approximated to the carrying amount and therefore no impairment loss was made for
this investment in 2017.
(ii) The 2016 final dividend of HKD0.12 in cash per ordinary share was approved and declared in the Annual
General Meeting of Sino-Ocean on 18 May 2017. The Company received a cash dividend amounting
to RMB239 million. The 2017 interim dividend of HKD0.167 in cash per ordinary share was approved
and declared by the board of directors of Sino-Ocean on 23 August 2017. The Company received a cash
dividend amounting to RMB314 million.
The Company proposed to subscribe for 1,869,586,305 additional shares offering of CGB at no more than
RMB7.01 per share, with a total consideration of RMB13.2 billion. The specific subscription price and
quantity will be subject to the adjustment based on the valuation result filed to state-owned assets authority.
Upon the completion of transaction, the Company will hold 43.686% of CGB's ownership interest,
unchanged from prior to the transaction. As at 31 December 2017, the transaction has been reviewed and
approved by the Board of Directors of the Company, and the relevant parties of the transaction have not
entered into the contracts.
(i)
INVESTMENT IN ASSOCIATES AND JOINT VENTURES (continued)
8
Pipeline Company
China Unicom
Joint venture
Sanya Company
PRC
PRC
PRC
PRC
Hong Kong, PRC
PRC
Country of incorporation
Sanya Company
Joint venture
Pipeline Company
COFCO Futures
CLP&C
29.79%
Sino-Ocean
Associates
Name
As at 31 December 2016, the major associates and joint venture of the Group are as follows:
Percentage of equity interest held
PRC
PRC
PRC
PRC
PRC
Hong Kong, PRC
PRC
Country of incorporation
CGB
(9,248)
For the year ended 31 December 2017
187
2,696,951
Liabilities
Insurance contracts
1,762,363
77,837
7,786
Investment contracts
183,773
11,933
1,847,986
195,706
Securities sold under agreements to repurchase
77,649
3,081
302
23,064
56
Others
73,277
3,563
338
18,194
95,372
Segment liabilities
2,097,062
96,414
8,426
18,250
2,220,152
Unallocated
Others
81,088
30,389
Total
Others
As at 31 December 2017
Notes to the Consolidated Financial Statements (continued)
5
SEGMENT INFORMATION (continued)
Life
Health
As at 31 December 2016
Accident
RMB million
Others
Elimination
Total
Assets
Financial assets (including cash
and cash equivalents)
2,379,782
92,220
8,906
27,392
Property, plant and equipment
Unallocated
Segment assets
2,643,498
147,158
9,397
169,151
98,996
2,508,300
135,198
119,766
491
6,776
8,165
Others
2,387,947
Total
For the year ended 31 December 2017
2,389,303
16,454
Transfers into investment
properties
(1,931)
(1,931)
Disposals
(48)
(463)
(195)
(148)
(48)
(902)
As at 31 December 2017
32,457
6,873
1,403
16,696
444
China Life Insurance Company Limited
Disposals
(144)
(632)
(953)
13
Charge for the year
(4,934)
(8,311)
As at 1 January 2017
Accumulated depreciation
59,259
1,830
(998)
15,747
16
450
174
Annual Report 2017
199
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
6 PROPERTY, PLANT AND EQUIPMENT
Cost
Buildings
Financial Report
Motor
vehicles
Assets under
Leasehold
construction improvements
Total
Office
equipment,
furniture
and fixtures
As at 1 January 2017
70
RMB million
(86)
312
(7,520)
49
7,073
Additions
45,724
1,553
10,548
1,424
25,362
6,837
Transfers upon completion
449,400
538,325
449,400
538,325
6,333
6,333
6,333
789,897
745,586
789,897
745,586
6,333
375,899
RMB million
383,504
619,152
692,984
594,730
717,037
Available-for-sale securities, at fair value
Statutory deposits-restricted
Term deposits
Loans (iii)
Held-to-maturity securities (ii)
As at 31
December 2016
RMB million
Estimated fair value (i)
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
December 2017
226,573
Securities at fair value through profit or loss
(232,500)
209,124
Interest-bearing loans and borrowings
Carrying value
As at 31
(38,204)
(37,998)
Bonds payable (iii)
(81,088)
(87,309)
(81,088)
(87,309)
Securities sold under agreements to repurchase
(2,031)
(2,529)
(2,031)
(2,529)
Financial liabilities at fair value through profit or loss
(192,373)
(229,222)
136,809
209,124
Securities purchased under agreements to resell
36,185
43,538
36,185
136,809
43,538
48,586
67,046
48,586
67,046
Investment contracts (iii)
(195,706)
Cash and cash equivalents
investment contracts:
43,518
20
10 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
9.8 Accrued investment income
Total
After 30 but within 90 days
Within 30 days
Maturing:
9.7 Securities purchased under agreements to resell
FINANCIAL ASSETS (continued)
214
9
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
China Life Insurance Company Limited Annual Report 2017 213
Financial Report
As at 31
Unlisted debt securities include those traded on the Chinese interbank market and those not publicly traded.
Unlisted equity securities include those not traded on stock exchanges, which are mainly open-ended funds
with public market price quotation.
136,809
Total
54,718
53,918
Subtotal
10,746
7,210
Unlisted
6,284
7,187
74
79
Listed overseas
(18,794)
209,124
The table below presents the carrying value and estimated fair value of major financial assets and liabilities, and
December 2017
RMB million
36,055
130
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
55,945
50,641
Total
11,223
5,852
Non-current
44,722
44,789
Current
55,945
50,641
As at 31
December 2016
RMB million
Total
4,276
17,642
21,423
35,763
24,942
Others
Debt securities
Bank deposits
RMB million
As at 31
December 2016
December 2017
RMB million
As at 31
43,538
36,185
2,540
(16,170)
6,201
(16,170)
As at 31 December 2016
As at 31 December 2017
(ii)
Financial Report
4.85%
Discount rate assumptions
In developing discount rate assumptions, the Group considers investment experience, the current
investment portfolio and trend of the relevant yield curves. The assumed discount rates reflect the
future economic outlook as well as the Group's investment strategy. The assumed discount rates with
risk margin are as follows:
reserves.
For the insurance contracts of which future insurance benefits are affected by investment yields of the
corresponding investment portfolios, the discount rate assumption is based on expected investment
returns of the asset portfolio backing these liabilities, considering the impacts of time value on
(i)
(a) Process used to decide on assumptions
14 INSURANCE CONTRACTS
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
4.45%-4.85%
22,013
6,348
8,019
15,665
25,933
22,013
33,952
3,217
5,140
6,571
403
927
987
1,718
2,705
33,952
2,814
For the insurance contracts of which future insurance benefits are not affected by investment yields of
the corresponding investment portfolios, the discount rate assumption is based on the "Yield curve of
reserve computation benchmark for insurance contracts”, published on the “China Bond” website with
consideration of liquidity spreads, taxation and other relevant factors. The assumed spot discount rates
with risk margin for the past two years are as follows:
Discount rate assumptions
The Group adopted a consistent process to decide on assumptions for the insurance contracts
disclosed in this note. On each reporting date, the Group reviews the assumptions for reasonable
estimates of liability and risk margin, with consideration of all available information, and taking into
account the Group's historical experience and expectation of future events.
(v) The Group applied a consistent method to determine risk margin. The Group considers risk margin
for discount rate, mortality and morbidity and expense assumptions to compensate for the uncertain
amount and timing of future cash flow. When determining risk margin, the Group considers historical
experience, future expectations and other factors. The Group determines the risk margin level by itself
as the regulations have not imposed any specific requirement on it.
(iv) The lapse rates and other assumptions are affected by certain factors, such as future macro-economy,
availability of financial substitutions, and market competition, which bring uncertainty to these
assumptions. The lapse rates and other assumptions are determined with reference to creditable past
experience, current conditions, future expectations and other information.
0.90%
0.90%
15.00
25.00
0.85%-0.90%
0.85% 0.90%
45.00
37.00-45.00
As at 31 December 2017
As at 31 December 2016
% of Premium
RMB Per Policy
% of Premium
RMB Per Policy
Group Life
As at 31 December 2017
As at 31 December 2016
Individual Life
Process used to decide on assumptions (continued)
(a)
14 INSURANCE CONTRACTS (continued)
Financial Report
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
217
China Life Insurance Company Limited Annual Report 2017
Risk margin is considered in the Group's mortality and morbidity assumptions.
The Group bases its morbidity assumptions for critical illness products on analysis of historical
experience and expectations of future developments. There are two main sources of uncertainty.
Firstly, wide-ranging lifestyle changes could result in future deterioration in morbidity experience.
Secondly, future development of medical technologies and improved coverage of medical facilities
available to policyholders may bring forward the timing of diagnosing critical illness, which demands
earlier payment of the critical illness benefits. Both could ultimately result in an inadequate reserving
of liability if current morbidity assumptions do not properly reflect such trends.
The Group bases its mortality assumptions on China Life Insurance Mortality Table (2000-2003),
adjusted where appropriate to reflect the Group's recent historical mortality experience. The main
source of uncertainty with life insurance contracts is that epidemics and wide-ranging lifestyle changes
could result in deterioration in future mortality experience, thus leading to an inadequate reserving of
liability. Similarly, improvements in longevity due to continuing advancements in medical care and
social conditions may expose the Group to longevity risk.
The mortality and morbidity assumptions are based on the Group's historical mortality and morbidity
experience. The assumed mortality rates and morbidity rates vary with the age of the insured and
contract type.
There is uncertainty on the discount rate assumption, which is affected by factors such as future
macro-economy, monetary and foreign exchange policies, capital market and availability of investment
channels of insurance funds. The Group determines the discount rate assumption based on the
information obtained at the end of each reporting period including consideration of risk margin.
3.31%-4.86%
3.23%-4.68%
(iii) Expense assumptions are based on expected unit costs with the consideration of previous expense
studies and future trends. Expense assumptions are affected by certain factors such as future inflation
and market competition which bring uncertainty to these assumptions. The Group considers risk
margin for expense assumptions based on information obtained at the end of each reporting period.
Components of expense assumptions include the cost per policy and percentage of premium as
follows:
3,050
5,855
Listed in Hong Kong, PRC
64
1,783
2,351
RMB million
As at 31
December 2016
As at 31
December 2017
RMB million
Total
Ceded unearned premiums (Note 14)
Claims recoverable from reinsurers (Note 14)
Due from reinsurance companies
Long-term insurance contracts ceded (Note 14)
REINSURANCE ASSETS
As at 31 December 2017, the carrying value of premiums receivable within one year was RMB14,079 million (as
at 31 December 2016: RMB13,346 million).
PREMIUMS RECEIVABLE
123
12
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
215
Annual Report 2017
China Life Insurance Company Limited
Financial Report
The fair value of policy loans approximated its carrying value. The fair values of other loans, investment
contracts at amortised cost and bonds payable were determined using valuation techniques, with
consideration of the present value of expected cash flows arising from contracts using a risk-adjusted
discount rate, allowing for the risk-free rate available on the valuation date, credit risk and risk margin
associated with the future cash flows. The fair values of other loans and investment contracts at amortised
cost, and bonds payable were classified as Level 3.
their fair value was classified as Level 1.
(iii) Investment contracts at fair value through profit or loss have quoted prices in active markets, and therefore,
The fair value of held-to-maturity securities is determined by reference with other debt securities which are
measured by fair value. Please refer to Note 4.3. The fair value of held-to-maturity securities under Level
1 was RMB55,137 million and that under Level 2 was 637,847 million as at 31 December 2017 (as at 31
December 2016: Level 1 RMB76,299 million and Level 2 RMB542,853 million).
The estimates and judgements to determine the fair value of financial assets are described in Note 3.2.
(ii)
(i)
11
527
125
104
911
15,466
RMB million
December 2016
December 2017
RMB million
As at 31
As at 31
2,134
3,046
1,783
2,351
351
695
2,134
3,046
China Life Insurance Company Limited Annual Report 2017
Total
103
Current
Non-current
Total
13 OTHER ASSETS
216
(18,794)
Investments receivable
Land use rights
Disbursements
Due from related parties
Prepaid to constructors
Others
Total
Current
Non-current
Automated policy loans
37,614
After ten years
Listed in Mainland, PRC
9.5 Available-for-sale securities
FINANCIAL ASSETS (continued)
9
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
210
Insurance companies in China are required to deposit an amount that equals 20% of their registered capital
with banks in compliance with regulations of the CIRC. These funds may not be used for any purpose other
than for paying off debts during liquidation proceedings.
6,333
6,333
4,613
2,400
1,720
3,933
Available-for-sale securities, at fair value
Total
After one year but within five
Within one year
RMB million
As at 31
December 2016
As at 31
December 2017
RMB million
Contractual maturity schedule:
9.4 Statutory deposits - restricted
On 6 December 2017, New Fortune Wisdom Limited and New Capital Wisdom Limited, subsidiaries of the
Company's subsidiary, Ningbo Meishan Bonded Port Area Guo Yang Guo Sheng Investment Partnership
("Guo Yang Guo Sheng”), entered into a loan agreement with a subsidiary of the Agricultural Bank of
China. Guo Yang Guo Sheng arranged overseas borrowings backed by domestic deposit transactions with the
Beijing Xicheng branch of the Agricultural Bank of China. As at 31 December 2017, the amounts of term
deposits and current deposits are RMB2,000 million and RMB1,247 million, respectively.
In September 2016, CL Hotel Investor, L.P. and Glorious Fortune Forever Limited, subsidiaries of the
Company, entered into a loan agreement with the New York and Seoul branches of the Agricultural Bank of
China, respectively. In December 2016, Sunny Bamboo Limited and Golden Bamboo Limited, subsidiaries
of the Company, entered into a loan agreement with the Hong Kong branch of the Agricultural Bank of
China. As at 31 December 2017, the Company arranged overseas borrowings backed by domestic term
deposit transactions with the Beijing Xicheng branch of the Agricultural Bank of China with amounts of
RMB6,861 million, RMB7,080 million and RMB750 million, respectively.
As at 31 December 2017, term deposits of RMB16.691 billion (2016: RMB13.2 billion) deposited in banks
for overseas borrowings backed by domestic deposits business are restricted to use.
538,325
449,400
7,700
344,790
years
185,835
Debt securities
As at 31
December 2017
129,424
Common stocks
105,290
91,344
Funds
Equity securities
399,758
455,124
Subtotal
15,429
61,669
Others (i)
11,321
430
Government bonds
Wealth management products
13,495
Subordinated bonds/debts
188,337
197,133
Corporate bonds
146,310
157,765
Government agency bonds
21,653
24,632
RMB million
December 2016
As at 31
RMB million
16,708
97,076
349,524
2,800
RMB million
RMB million
As at 31
226,573
383,504
134,131
275,547
92,442
107,957
RMB million
RMB million
December 2016
December 2017
As at 31
As at 31
(i)
As at 31
Total
After five but within ten years
years
years
After one year but within five
Within one year
Maturing:
Total
Other loans (i)
Policy loans
9.2 Loans
FINANCIAL ASSETS (continued)
9
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
After ten years
December 2017
December 2016
RMB million
As at 31
December 2016
December 2017
As at 31
Total
After five years but within ten years
years
After one year but within five
Within one year
Maturing:
9.3 Term deposits
FINANCIAL ASSETS (continued)
9
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
209
Financial Report
RMB million
128,856
112,592
132,575
70,978
90,556
100,131
25,503
17,500
383,504
226,573
Other loans mainly consisted of different types of asset management products. As at 31 December
2017, asset management products of RMB44,835 million (as at 31 December 2016: RMB37,679
million) were owned by the Group, which are issued by CL AMC (including its subsidiaries), a
subsidiary of the Company. The total assets of those products were RMB62,015 million (as at 31
December 2016: RMB114,499 million). Meanwhile, the Group also owned asset management
products of RMB202,255 million (as at 31 December 2016: RMB77,999 million) issued by other
financial institutions. Asset management products are guaranteed by third parties or with pledge,
or have the fiscal annual budget income as the source of repayment, or have higher credit rating
borrowers. The Group did not guarantee or provide any financing support for other loans, and
considers that the carrying value of other loans represents its maximum risk exposure.
During the year ended 31 December 2017, the Group's investment income from the above asset
management products was RMB10,150 million (2016: RMB6,820 million), and the related asset
management fee received by AMC (including its subsidiaries) for all asset management products it
issued was RMB222 million (2016: RMB236 million).
China Life Insurance Company Limited Annual Report 2017
31,517
39,442
Preferred stocks
27,880
As at 31
As at 31
Subtotal
Common stocks
Funds
Equity securities
Subtotal
Others
Corporate bonds
Government agency bonds
Government bonds
Debt securities
9.6 Securities at fair value through profit or loss
FINANCIAL ASSETS (continued)
December 2017
RMB million
9
Notes to the Consolidated Financial Statements (continued)
399,758
455,124
108,275
91,532
113,779
167,552
144,443
153,630
33,261
42,410
As at 31
December 2016
RMB million
As at 31
December 2017
RMB million
China Life Insurance Company Limited Annual Report 2017
For the year ended 31 December 2017
Total
December 2016
2,081
Equity securities
Subtotal
154,406
82,891
19,512
89
134,805
55,823
Unlisted
292
Listed overseas
26,776
Listed in Mainland, PRC
Debt securities
Total
209,124
RMB million
136,809
53,918
40,035
44,026
14,683
9,892
154,406
82,891
3,133
4,811
144,131
66,915
6,762
9,084
380
54,718
218
After five years but within ten years
After one year but within five years
Debt securities
9.5 Available-for-sale securities (continued)
FINANCIAL ASSETS (continued)
212
9
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
211
China Life Insurance Company Limited Annual Report 2017
Financial Report
Other available-for-sale securities mainly include unlisted equity investments, private equity funds and
trust schemes. The Group did not guarantee or provide any financing support for other available-for-
sale securities, and considered that the carrying value of other available-for-sale securities represents its
maximum risk exposure.
(i)
766,423
Listed in Mainland, PRC
810,734
20,837
Total
Others (i)
Equity securities
Available-for-sale securities, at cost
345,828
334,773
Subtotal
30,673
42,027
Others (i)
81,854
40,327
Wealth management products
20,837
Unlisted
Subtotal
Equity securities
Within one year
Maturing:
Debt securities - Contractual maturity schedule
Unlisted debt securities include those traded on the Chinese interbank market and those not publicly traded.
Unlisted equity securities include those not traded on stock exchanges, which are mainly open-ended funds
with public market price quotation and wealth management products.
766,423
810,734
366,665
355,610
250,388
220,587
232
132
25,034
41,507
91,011
93,384
399,758
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted
Subtotal
Total
31,651
As at 31
As at 31
December 2016
RMB million
44,929
37,163
410,195
362,595
455,124
December 2017
RMB million
China Life Insurance Company Limited Annual Report 2017
231,005
NET REALISED GAINS ON FINANCIAL ASSETS
Financial liabilities at fair value through profit or loss
Total
INSURANCE BENEFITS AND CLAIMS EXPENSES
(1,542)
(918)
8,179
(6,319)
Stock appreciation rights
(179)
(275)
(48)
6,183
(7,094)
Gross
Ceded
Net
191
Equity securities
Debt securities
24
5,992
42
6,038
Total
Net realised gains on financial assets are from available-for-sale securities.
During the year ended 31 December 2017, the Group recognised an impairment charge of RMB619 million
(2016: RMB1,615 million) of available-for-sale funds, an impairment charge of RMB2,024 million (2016:
RMB898 million) of available-for-sale common stocks, and an impairment charge of RMB114 million (2016:
RMB143 million) of available-for-sale debt securities, for which the Group determined that objective evidence of
impairment existed.
Financial Report
China Life Insurance Company Limited Annual Report 2017
225
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
23
NET FAIR VALUE GAINS THROUGH PROFIT OR LOSS
For the year ended 31 December
2017
RMB million
2016
RMB million
RMB million
165
RMB million
For the year ended 31 December 2017
27,519
(250)
27,269
Increase in insurance contract liabilities
127,156
(537)
126,619
Accident and health claims and claim adjustment expenses
Total
(1,454)
407,045
25
INVESTMENT CONTRACT BENEFITS
Benefits of investment contracts are mainly the interest credited to investment contracts.
26
FINANCE COSTS
408,499
253,157
(667)
253,824
Life insurance death and other benefits
260,853
(1,145)
259,708
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
34,101
(283)
33,818
173,085
(568)
172,517
Total
468,039
(1,996)
466,043
For the year ended 31 December 2016
Life insurance death and other benefits
RMB million
(2,513)
(2,643)
8,505
STATUTORY INSURANCE FUND
47,430
36,836
As required by the CIRC Order [2008] No. 2, “Measures for Administration of Statutory Insurance Fund", all
insurance companies have to pay the statutory insurance fund contribution to the CIRC from 1 January 2009.
The Group is subject to the statutory insurance fund contribution, (i) at 0.15% and 0.05% of premiums and
accumulated policyholder deposits from life policies with guaranteed benefits and life policies without guaranteed
benefits, respectively; (ii) at 0.8% and 0.15% of premiums from short-term health policies and long-term health
policies, respectively; (iii) at 0.8% of premiums from accident insurance contracts, at 0.08% and 0.05% of
accumulated policyholder deposits from accident investment contracts with guaranteed benefits and without
guaranteed benefits, respectively. When the accumulated statutory insurance fund contributions reach 1% of total
assets, no additional contribution to the statutory insurance fund is required.
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
Total
21 INVESTMENT INCOME
- available-for-sale securities
- at fair value through profit or loss
Equity securities
- available-for-sale securities
- at fair value through profit or loss
Bank deposits
Loans
-held-to-maturity securities
224
20
36,836
1,611
Stock appreciation rights (Note 31)
833
654
Tax payable
689
657
Interest payable of debt instruments
Others
127
813
9,553
7,628
Total
Current
Non-current
47,430
36,836
47,430
Securities purchased under agreements to resell
Total
For the year ended 31 December
2017
2016
RMB million
Debt securities
Realised gains
Impairment
Subtotal
Equity securities
Realised gains
Impairment
Subtotal
For the year ended 31 December
2017
RMB million
2016
RMB million
(9)
(114)
189
(143)
(123)
46
2,808
22
Interest expenses for bonds payable
For the year ended 31 December 2017, the interest income included in investment income was RMB94,788
million (2016: RMB88,876 million). All interest income was accrued using the effective interest method.
122,727
RMB million
30,669
24,854
19,608
17,499
3,618
5,683
27,019
19,744
920
527
23,827
27,851
16,320
12,018
746
971
109,147
1,906
Interest expenses for securities sold under agreements to repurchase
Interest expenses for interest-bearing loans and borrowings
226
(i)
(ii)
(iii)
(1,451)
(16,686)
1,184
(614)
Total
RMB million
1,126
(16,953)
943
12,639
12,639
(4,343)
(4,343)
- Others
(54)
431
Others
RMB million
Investments
RMB million
RMB million
China Life Insurance Company Limited
Annual Report 2017
227
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
28 TAXATION (continued)
(c)
As at 31 December 2017 and 2016, deferred income tax was calculated in full on temporary differences
under the liability method using the principal tax rate of 25%. The movements in deferred income tax assets
and liabilities during the year are as follows:
Deferred tax assets/(liabilities)
As at 1 January 2016
(Charged)/credited to net profit
(Charged)/credited to other
comprehensive income
- Available-for-sale securities
- Portion of fair value changes on
available-for-sale securities
attributable to participating
policyholders
Insurance
(54)
Financial Report
As at 31 December 2016
(2,975)
- Others
(1,401)
1
As at 31 December 2017
(i)
(6,737)
(494)
2,360
(1,401)
(4,871)
(iii)
The deferred tax liabilities arising from the insurance category are mainly related to the change of long-term
insurance contract liabilities at 31 December 2008 as a result of the first time adoption of IFRSS in 2009 and the
temporary differences of short-term insurance contract liabilities and policyholder dividends payable.
The deferred tax arising from the investments category is mainly related to the temporary differences of unrealised
gains/(losses) on available-for-sale securities and securities at fair value through profit or loss, and others.
The deferred tax arising from the others category is mainly related to the temporary differences of employee salaries
and welfare costs payable.
Unrecognised deductible tax losses of the Group amounted to RMB607 million as at 31 December 2017(as
at 31 December 2016: RMB807 million). Unrecognised deductible temporary differences of the Group
amounted to RMB243 million as at 31 December 2017 (as at 31 December 2016: RMB219 million).
228
China Life Insurance Company Limited Annual Report 2017
(ii)
attributable to participating
policyholders
available-for-sale securities
- Portion of fair value changes on
1,615
(7,768)
As at 1 January 2017
(6,408)
(2,975)
1,615
(7,768)
(Charged)/credited to net profit
1,072
(1,279)
745
538
(Charged)/credited to other
comprehensive income
- Available-for-sale securities
3,759
3,759
(6,408)
Non-taxable income mainly includes interest income from government bonds, and dividend income from
applicable equity securities, etc. Expenses not deductible for tax purposes mainly include brokerages, commissions,
donations and other expenses that do not meet the criteria for deduction according to the relevant tax regulations.
4,257
8,919
ΤΑΧΑΤΙΟΝ
For the year ended 31 December
2017
2016
RMB million
RMB million
18,741
15,955
Remuneration in respect of audit services provided by auditors
933
2,357
1,798
2,240
2,083
(52)
(582)
59
838
Foreign exchange (gains)/losses
Depreciation and amortisation
Contribution to the defined contribution pension plan
China Life Insurance Company Limited Annual Report 2017
For the year ended 31 December
2017
RMB million
2016
RMB million
1,033
3,144
3,126
1,460
424
181
4,601
4,767
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
27 PROFIT BEFORE INCOME TAX
Profit before income tax is stated after charging/(crediting) the following:
28
Employee salaries and welfare costs
Housing benefits
58
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income tax relates to the same tax authority.
(a)
The amount of taxation charged to net profit represents:
For the year ended 31 December
2017
RMB million
2016
RMB million
41,671
23,842
10,418
5,961
(7,847)
(6,080)
6,105
4,259
6
58
(15)
(49)
252
108
(i)
Total
Income tax at the effective tax rate
Tax losses utilised from previous periods
Current taxation - Enterprise income tax
Deferred taxation
Total tax charges
For the year ended 31 December
2017
RMB million
2016
RMB million
9,457
5,200
(538)
(943)
8,919
4,257
(b) The reconciliation between the Group's effective tax rate and the statutory tax rate of 25% in the PRC
(2016: 25%) is as follows:
Profit before income tax
Tax computed at the statutory tax rate
Non-taxable income (i)
Expenses not deductible for tax purposes (i)
Unused tax losses
Others
Agent deposits
Debt securities
2,668
Ceded
Net
Gross
Ceded
Net
As at 1 January
10,492
Gross
(125)
7,944
(87)
7,857
Increase
12,289
(527)
11,762
10,367
RMB million
2016
2017
RMB million
27,120
178
391
- Claims arising in prior years
Total as at 31 December - Gross
Notified claims
Incurred but not reported
Total as at 31 December - Gross
The table below presents movements in unearned premium reserves:
13,778
11,538
2,672
2,085
11,106
9,453
13,778
11,538
10,492
(125)
10,367
Release
Accretion of interest
Change in assumptions
- Change in discount rates
- Change in other assumptions (ii)
2017
RMB million
1,825,956
464,898
2016
RMB million
(379,262)
1,698,773
390,438
(353,048)
78,232
73,644
6,599
14,262
2,424
474
219
Release of liabilities (i)
33,926
As at 1 January
Premiums
(d) Movements in liabilities of long-term insurance contracts
(10,492)
125
(10,367)
(7,944)
87
(7,857)
As at 31 December
12,289
1,032
11,762
10,492
(125)
10,367
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
14 INSURANCE CONTRACTS (continued)
The table below presents movements in the liabilities of long-term insurance contracts:
1,413
- Claims arising in current year
(8,877)
1,847,986
Recoverable from reinsurers
Long-term insurance contracts (Note 12)
(2,351)
(1,783)
Short-term insurance contracts
- Claims and claim adjustment expenses (Note 12)
2,025,133
(104)
- Unearned premiums (Note 12)
(527)
(125)
Total, ceded
(2,982)
(2,011)
Net
(103)
10,492
12,289
11,538
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
14 INSURANCE CONTRACTS (continued)
(b) Net liabilities of insurance contracts
Gross
Long-term insurance contracts
Short-term insurance contracts
- Claims and claim adjustment expenses
- Unearned premiums
Total, gross
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
1,999,066
1,825,956
13,778
Long-term insurance contracts
1,996,715
1,824,173
Short-term insurance contracts
2017
2016
RMB million
RMB million
2,085
1,748
9,453
7,520
11,538
9,268
Total as at 1 January - Gross
Cash paid for claims settled
Cash paid for current year claims
(21,404)
(16,364)
-Cash paid for prior year claims
(10,460)
Notified claims
Incurred but not reported
Claims incurred
220
(c) Movements in liabilities of short-term insurance contracts
- Claims and claim adjustment expenses
13,674
11,435
- Unearned premiums
11,762
10,367
Total, net
2,022,151
1,845,975
China Life Insurance Company Limited
Financial Report
Annual Report 2017
219
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
14 INSURANCE CONTRACTS (continued)
The table below presents movements in claims and claim adjustment expense reserve:
Other movements
(527)
(i)
Total
China Life Insurance Company Limited Annual Report 2017
38,000
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
17
18
5 November 2022
BONDS PAYABLE (continued)
Subordinated bonds are measured at amortised cost as described in Note 2.14.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Interbank market
Stock exchange market
Total
Maturing:
Within 30 days
As at 31 December
5 November 2012
29 June 2022
29 June 2012
EURIBOR + 3.8% (i)
3,121
18,794
16,170
(i)
3.8% when EURIBOR is negative.
17
BONDS PAYABLE
As at 31 December 2017, the carrying value of bonds payable is nil (as at 31 December 2016: the carrying value
and
par
value are RMB37,998 million and RMB38,000 million, respectively).
Issue date
Par value
Maturity date
Interest rate p.a.
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
4.70%
4.58%
28,000
10,000
Total
6 December 2020
As at 31
December 2017
RMB million
75,002
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
Salary and welfare payable
10,129
7,234
Interest payable to policyholders
OTHER LIABILITIES
9,614
Payable to third party holders of consolidated trust schemes and debt investment schemes
6,252
5,488
Brokerage and commission payable
5,659
3,713
Payable to constructors
8,006
19
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
65,479
12,307
15,609
87,309
81,088
87,309
81,088
87,309
81,088
As at 31 December 2017, bonds with a carrying value of RMB79,543 million (as at 31 December 2016:
RMB76,207 million) were pledged as collateral for financial assets sold under agreements to repurchase resulting
from repurchase transactions entered into by the Group in the interbank market.
For debt repurchase transactions through the stock exchange, the Group is required to deposit certain exchange-
traded bonds into a collateral pool with fair value converted at a standard rate pursuant to the stock exchange's
regulation which should be no less than the balance of the related repurchase transaction. As at 31 December
2017, the carrying value of securities deposited in the collateral pool was RMB139,727 million (as at 31 December
2016: RMB81,280 million). The collateral is restricted from trading during the period of the repurchase
transaction.
Financial Report
China Life Insurance Company Limited
Annual Report 2017
223
Financial Report
As at 31
December 2016
RMB million
780
The Company issued the above two subordinated bonds with a maturity term of 10 years to qualified investors
who met the relevant regulatory requirements. The Company has the right to call the subordinated bonds at
par at the end of the fifth year after issuance. If the Company does not exercise the call option, the coupon rate
per annum for the remaining five years are 6.70% and 6.58%, respectively. On 29 June 2017 and 6 November
2017, the Company exercised the option right to redeem the subordinated bonds issued on 29 June 2012 and 5
November 2012, and redeemed all of the subordinated bonds registered on the record dates of redemption, with
the amounts of RMB28,000 million and RMB10,000 million, respectively.
11 January 2018
195,706
Financial Report
China Life Insurance Company Limited
Annual Report 2017
221
Financial Report
Notes to the Consolidated Financial Statements (continued)
232,500
For the year ended 31 December 2017
The table below presents movements of investment contracts with DPF:
16
222
As at 1 January
Deposits received
Deposits withdrawn, payments on death and other benefits
Policy fees deducted from account balances
15 INVESTMENT CONTRACTS (continued)
12
142,006
175,335
12
(ii)
1,999,066
1,825,956
The release of liabilities mainly consists of release due to death or other termination and related
expenses, release of residual margin and change of reserves for claims and claim adjustment expenses.
For the year ended 31 December 2017, the change in other assumptions was mainly caused by
the change in morbidity rate assumptions of certain products, which increased insurance contract
liabilities by RMB1,718 million. This change reflected the Group's most recent experience and future
expectations about the morbidity rates as at the reporting date. Changes in assumptions other than
morbidity rates increased insurance contract liabilities by RMB706 million.
For the year ended 31 December 2016, the change in other assumptions was mainly caused by
the change in morbidity rate assumptions of certain products, which increased insurance contract
liabilities by RMB464 million. This change reflected the Group's most recent experience and future
expectations about the morbidity rates as at the reporting date. Changes in assumptions other than
morbidity rates increased insurance contract liabilities by RMB10 million.
15 INVESTMENT CONTRACTS
Investment contracts with DPF at amortised cost
1.495%
At amortised cost
- At fair value through profit or loss
Total
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
57,153
53,688
Interest credited
As at 31 December
Investment contracts without DPF
Guaranteed loans
Guaranteed loans
Guaranteed loans
Guaranteed loans
Guaranteed loans
Credit loans
As at 31
December 2016
RMB million
17 June 2019
3.54%
2,413
2,339
27 September 2019
2.30%
6,338
6,579
30 September 2019
6,142
6,521
9 June 2017
1.50%
731
INTEREST-BEARING LOANS AND BORROWINGS
As at 31
December 2017
RMB million
Interest rate
2.40%
53,688
Maturity date
2017
2016
RMB million
Total
53,688
50,295
4,829
RMB million
(2,510)
(2,357)
(37)
(36)
1,183
1,106
4,680
57,153
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the
Transactions between Pension Company and the Company
Distribution of profits from AMC
Payment of an asset management fee to AMC
Transactions between AMC and the Company
Transaction between other associates and joint
Distribution of profits from other associates and
ventures and the Group
236
For the year ended 31 December 2017
(g) Transactions with significant related parties (continued)
joint ventures to the Group
year
2017
1,154
Notes
RMB million
2016
RMB million
1,240
437
(ii.e) (viii)
1,081
187
215
Rental received from Pension Company
Agency fee received from Pension Company for
Notes to the Consolidated Financial Statements (continued)
Marketing fee income for promotion of annuity
entrusted sales of annuity funds
ended 31 December
Financial Report
ཚུག
Annual Report 2017
business from Pension Company
37
Property leasing income received from CLI
Payment of a business management service fee to
CL Ecommerce
38
(vi)
64
56
Transactions between CGB and the Group
Interest on deposits received from CGB
Commission expenses charged by CGB
1,382
(v)
92
685
235
42
Project management fee paid to Sino-Ocean
Transactions between EAP and the Group
Contribution to EAP
553
248
252
27
38
55
60
368
700
337
Financial Report
China Life Insurance Company Limited
Transactions between Sino-Ocean and the Group
Cash dividend from Sino-Ocean (Note 8)
Interest payment of corporate bonds received
from Sino-Ocean
43
(2,213)
(vii)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
Financial Report
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Transactions with significant related parties (continued)
Notes (continued):
(ii.a) On 30 December 2015, CLIC renewed an asset management agreement with AMC, entrusting AMC to manage
and make investments for its insurance funds. The agreement is effective from 1 January 2016 to 31 December
2018. In accordance with the agreement, CLIC paid AMC a basic service fee at the rate of 0.05% per annum for the
management of insurance funds. The service fee was calculated and payable on a monthly basis, by multiplying the
average book value of the assets under management (after deducting the funds obtained from and interests accrued for
repurchase transactions, deducting debt and equity investment schemes, project asset-backed schemes, the principal
and interests of customised non-standard products) at the beginning and the end of any given month by the rate of
0.05%, divided by 12. At the end of each year, CLIC assessed the investment performance of the assets managed by
AMC, compared the actual results against benchmark returns and made adjustment to the basic service fee.
(ii.b) On 28 June 2017, CL Overseas renewed an investment management agreement with AMC HK, effective from
1 January 2016 to 31 December 2016. In accordance with the agreement, CL Overseas entrusted AMC HK to
manage and make investments for its insurance funds and paid AMC HK a basic investment management fee and
an investment performance fee. The basic investment management fee was accrued by multiplying the weighted
average total funds by the basic fee rate. The investment performance fee was calculated based on the difference
between the total actual annual yield and predetermined net realised yield. The basic investment management fee
was calculated and payable on a semi-annual basis. The investment performance fee was payable according to the
total actual annual yield at the end of each year. On 15 December 2017, CL Overseas renewed the agreement with
AMC HK, effective to the next year when the contract is signed and sealed. The terms are applied in 2017. The
agreement was subject to an automatic one-year renewal if no objections were raised by both parties with written
consent in 5 years.
a
(1,381)
(ii.d) On 3 February 2016, the Company and CLI renewed a management agreement of alternative investment of
insurance funds, which was effective from 1 January 2016 to 30 June 2017. In accordance with the agreement, the
Company entrusted CLI to engage in specialised investment, operation and management of equities, real estate
and related financial products, and securitised financial products under the instructions of the annual guidelines.
The Company paid CLI an asset management fee and a performance related bonus based on the agreement. For
fixed-income projects, the management fee rate was 0.05%-0.6% according to different ranges of returns and
without a performance-related bonus; for non-fixed-income projects, the management fee rate was 0.3% and the
performance-related bonus was linked to the return on comprehensive investment upon expiry of the project. On
30 June 2017, the Company and CLI renewed a management agreement of alternative investment of insurance
funds, which is retrospectively effective from 1 January 2017 to 31 December 2018. The management fee rates
of fixed-income projects and non-fixed-income projects remain the same as those in the previous agreement.
In addition, the Company adjusts the investment management fees for fixed-income projects and non-fixed-
income projects based on the annual evaluation results to CLI's performance. The adjustment amount (variable
management fee) ranges from negative 10% to positive 15% of the investment management fee in the current
period.
China Life Insurance Company Limited Annual Report 2017
237
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
For the year ended 31 December 2017
Transactions with significant related parties (continued)
Notes (continued):
(ii.e) On 29 December 2015, the Company and AMC renewed a renewable agreement for the management of insurance
funds, effective from 1 January 2016 to 31 December 2018. In accordance with the agreement, the Company
entrusted AMC to manage and make investments for its insurance funds and paid AMC a fixed service fee and a
variable service fee. The fixed annual service fee was calculated and payable on a monthly basis, by multiplying
the average net value of the assets under management by the rate of 0.05%; the variable service fee was payable
annually, based on the results of performance evaluation, at 20% of the fixed service fee per annum. The service
fees were determined by the Company and AMC based on an analysis of the cost of service, market practice and the
size and composition of the asset pool to be managed. Asset management fees charged to the Company by AMC are
eliminated in the consolidated statement of comprehensive income.
(ii.f) On 18 September 2016, the Company and AMC HK renewed the offshore investment management service
agreement, which is effective from 19 September 2016 to 31 December 2018. In accordance with the agreement,
the Company entrusted AMC HK to manage and make investments for its insurance funds and paid AMC HK an
asset management fee. The asset management fee was calculated at a fixed rate of 0.40% of the portfolio asset value
and a performance bonus capped at 0.15% of the portfolio asset value for assets managed on a discretionary basis.
Management fees on assets managed on a non-discretionary basis are calculated at 0.05% of the portfolio asset
value. The above management fee was calculated based on the net value of the entrusted asset from the monthly
reports provided by the trustee, without deducting the monthly management fee payable. The fixed management
fee was calculated monthly and payable quarterly. A performance bonus was calculated and payable on an annual
basis. Asset management fees charged to the Company by AMC HK are eliminated in the consolidated statement of
comprehensive income.
(iii)
(iv)
On 8 March 2015, the Company and CLP&C signed a new 2-year framework insurance agency agreement,
whereby CLP&C entrusted the Company to act as an agent to sell designated P&C insurance products in certain
authorised jurisdictions. The agency fee was determined based on cost (tax included) plus a margin. The agreement
was subject to an automatic one-year renewal if no objections were raised by both parties upon expiry. On 8 March
2017, the agreement was automatically renewed for one year.
On 8 March 2015, the Company and CLP&C signed a new 2-year framework insurance agency agreement,
whereby the Company entrusted CLP&C to act as an agent to sell designated life insurance products in certain
authorised jurisdictions. The brokerage fee was determined based on market practice. The agreement was subject
to an automatic one-year renewal if no objections were raised by both parties upon expiry. On 8 March 2017, the
agreement was automatically renewed for one year.
On 31 December 2014, the Company signed a property leasing agreement with CLI, effective till 31 December
2017, pursuant to which CLI leased to the Company certain owned buildings. Annual rental payable by the
Company to CLI in relation to the CLI properties is determined either by reference to the market rent, or, the
costs incurred by CLI in holding and maintaining the properties, plus a margin of approximately 5%. The rental
was paid on a semi-annual basis, and each payment was equal to one half of the total annual rental.
Financial Report
238
China Life Insurance Company Limited Annual Report 2017
298
Notes to the Consolidated Financial Statements (continued)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
34
On 29 December 2014, the Company and CLIC signed a renewable insurance agency agreement, effective from
1 January 2015 to 31 December 2017. The agreement was subject to an automatic three-year renewal if no
objections were raised by both parties. The Company performs its duties of insurance agents in accordance with
the agreement, but does not acquire any rights and profits or assume any obligations, losses and risks as an insurer
of the non-transferrable policies. The policy management fee was payable semi-annually, and is equal to the sum
of (1) the number of policies in force as at the last day of the period, multiplied by RMB8.00 per policy and (2)
2.50% of the actual premiums and deposits received during the period, in respect of such policies. The policy
management fee income is included in other income in the consolidated statement of comprehensive income.
(i)
42
31
10
14
Transactions between AMC HK and the Company
Payment of an investment management fee to AMC HK
(ii.f)
14
14
Transactions between Suzhou Pension Company and the Company
Capital contribution to Suzhou Pension Company
260
526
Transactions between Rui Chong Company and the Company
to the Company
Capital contribution to Rui Chong Company
Transaction between other associates and joint ventures
and the Company
Distribution of profits from other associates and joint
ventures to the Company
203
134
Transactions between the consolidated structured
entities/other subsidiaries and the Company
Distribution of profits from the consolidated structured
entities to the Company
Distribution of profits from the Group's other subsidiaries
3,944
443
70
Notes:
601
396
(ii.c) In 2015, CLP&C signed an agreement for the management of insurance funds with AMC, entrusting AMC to
manage and make investments for its insurance funds. The agreement was effective from 1 January 2015 to 31
December 2016. The agreement was subject to an automatic one-year renewal if no objections were raised by
both parties upon expiry. On 1 January 2017, the agreement was automatically renewed to 31 December 2017. In
accordance with the agreement, CLP&C paid AMC a fixed service fee and a variable service fee. The fixed service
fee was calculated and payable on a monthly basis, by multiplying the average net asset value of assets of each
category under management at the beginning and the end of any given month by the responding annual investment
management fee rate, divided by 12. The variable service fee was linked to investment performance.
Payment of an asset management fee to CLI
Equity Investment Fund
Management Co., Limited
RMB1,730
RMB1,730
("Franklin Shenzhen Company")
(i)
(ii)
USD2
USD2
In March 2017, the Company completed a RMB260 million capital contribution to Suzhou Pension
Company, after which the paid-in capital of Suzhou Pension Company increased from RMB1,326
million to RMB1,586 million. As at 31 December 2017, Suzhou Pension Company completed its
business registration modification procedure for the registered capital with the amount increased from
RMB1,060 million to RMB1,991 million.
In March and July 2017 respectively, the Company completed RMB370 million and RMB231 million
capital contributions to Rui Chong Company, after which the paid-in capital of Rui Chong Company
increased from RMB6,199 million to RMB6,800 million.
(iii) For those subsidiaries which were not set up or invested in Mainland China or incorporated as
partnership, the legal definition of registered capital is not applicable for them.
232
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(f) Percentages of holding of related parties with control relationship and changes during the
year
Shareholder
As at 31 December 2016
Amount
million
China Life Franklin (Shenzhen)
("CL Health")
Management Co., Limited
China Life (Beijing) Health
RMB4,600
RMB4,000
RMB4,000
Limited ("Pension Company")
RMB3,400
RMB3,400
China Life (Suzhou) Pension
and Retirement Investment
Company Limited
("Suzhou Pension Company”) (i)
RMB1,060
Percentage
of holding
RMB931
CL AMP
RMB588
RMB588
CL Wealth
RMB200
RMB200
Shanghai Rui Chong
Investment Co., Limited
("Rui Chong Company") (ii)
RMB6,800
RMB6,800
RMB1,991
RMB4,600
Increase
million
As at 31 December 2017
Amount
million
RMB2,746
directly
74.27%
directly
and indirectly
and indirectly
China Life Franklin Asset
HKD130
50.00%
HKD130
50.00%
Management Company
indirectly
indirectly
Limited ("AMC HK")
Suzhou Pension Company
RMB1,326
100.00%
RMB260
RMB1,586
100.00%
directly
directly
CL AMP
74.27%
RMB2,746
Pension Company
directly
Percentage
of holding
CLIC
RMB19,324
68.37%
RMB19,324
68.37%
Financial Report
Subsidiaries
As at 31 December 2016
Amount
Percentage
Decrease
million
million
Increase
million
Decrease
million
Amount
AMC
RMB1,680
60.00%
directly
As at 31 December 2017
Percentage
of holding
million
RMB1,680
60.00%
of holding
RMB500
China Life Pension Company
CLIC
(14,418)
Net deferred tax liabilities
(4,871)
(7,768)
NET PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Net profit attributable to equity holders of the Company is recognised in the financial statements of the Company
to the extent of RMB25,550 million (2016: RMB14,014 million).
EARNINGS PER SHARE
There is no difference between the basic and diluted earnings per share. The basic and diluted earnings per
share for the year ended 31 December 2017 are calculated based on the net profit for the year attributable to
ordinary equity holders of the Company and the weighted average of 28,264,705,000 ordinary shares (2016:
28,264,705,000 ordinary shares).
Financial Report
China Life Insurance Company Limited Annual Report 2017 229
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
31 STOCK APPRECIATION RIGHTS
32
The Board of Directors of the Company approved, on 5 January 2006, an award of stock appreciation rights of
4.05 million units and on 21 August 2006, another award of stock appreciation rights of 53.22 million units to
eligible employees. The exercise prices of the two awards were HKD5.33 and HKD6.83, respectively, the average
closing price of shares in the five trading days prior to 1 July 2005 and 1 January 2006, the dates for vesting and
exercise price setting purposes of this award. The exercise prices of stock appreciation rights were the average
closing price of the shares in the five trading days prior to the date of the award. Upon the exercise of stock
appreciation rights, exercising recipients will receive payments in RMB, subject to any withholding tax, equal to
the number of stock appreciation rights exercised times the difference between the exercise price and market price
of the H shares at the time of exercise.
Stock appreciation rights have been awarded in units, with each unit representing the value of one H share. No
shares of common stock will be issued under the stock appreciation rights plan. According to the Company's
plan, all stock appreciation rights will have an exercise period of five years from the date of award and will not
be exercisable before the fourth anniversary of the date of award unless specific market or other conditions have
been met. On 26 February 2010, the Board of Directors of the Company extended the exercise period of all stock
appreciation rights, which is also subject to government policy.
All the stock appreciation rights awarded were fully vested as at 31 December 2017. As at 31 December 2017,
there were 55.01 million units outstanding and exercisable (as at 31 December 2016: 55.01 million units). As at
31 December 2017, the amount of intrinsic value for the vested stock appreciation rights was RMB820 million (as
at 31 December 2016: RMB641 million).
The fair value of the stock appreciation rights is estimated on the date of valuation at each reporting date using
lattice-based option valuation models based on expected volatility from 20% to 32%, an expected dividend yield of
no higher than 3% and a risk-free interest rate ranging from 0.51% to 1.02%.
The Company recognised a loss of RMB179 million in the net fair value through profit or loss in the consolidated
comprehensive income representing the fair value change of the rights during the year ended 31 December 2017
(2016: fair value gains of RMB191 million). RMB820 million and RMB13 million were included in salary and
staff welfare payable included under other liabilities for the units not exercised and exercised but not paid as at
31 December 2017 (as at 31 December 2016: RMB641 million and RMB13 million), respectively. There was no
unrecognised compensation cost for the stock appreciation rights as at 31 December 2017 (as at 31 December
2016: Nil).
DIVIDENDS
Pursuant to the shareholders' approval at the Annual General Meeting on 31 May 2017, a final dividend of
RMB0.24 (inclusive of tax) per ordinary share totalling RMB6,784 million in respect of the year ended 31
December 2016 was declared and paid in 2017. The dividend has been recorded in the consolidated financial
statements for the year ended 31 December 2017.
A distribution of RMB380 million (inclusive of tax) to the holders of Core Tier 2 Capital Securities was approved
by management in 2017 according to the authorisation by the Board of Directors, which was delegated by the
General Meeting.
Pursuant to a resolution passed at the meeting of the Board of Directors on 22 March 2018, a final dividend of
RMB0.40 (inclusive of tax) per ordinary share totalling approximately RMB11,306 million for the year ended
31 December 2017 was proposed for shareholders' approval at the forthcoming Annual General Meeting. The
dividend has not been recorded in the consolidated financial statements for the year ended 31 December 2017.
(11,344)
Subtotal
(ii.d) (viii)
- deferred tax liabilities to be settled within 12 months
For the year ended 31 December 2017
28 TAXATION (continued)
(d)
The analysis of deferred tax assets and deferred tax liabilities is as follows:
29
30
Deferred tax assets:
- deferred tax assets to be recovered after 12 months
- deferred tax assets to be recovered within 12 months
Subtotal
Deferred tax liabilities:
Financial Report
As at 31
As at 31
December 2016
RMB million
1,980
3,024
4,493
3,626
6,473
6,650
- deferred tax liabilities to be settled after 12 months
(9,131)
(13,037)
December 2017
RMB million
AMC
230
Notes to the Consolidated Financial Statements (continued)
China Life Investment Holding Company
Under common control of CLIC
Limited ("CLI")
China Life Ecommerce Company Limited
("CL Ecommerce")
China Life Enterprise Annuity Fund (“EAP”)
A pension fund jointly set up by the Company and others
Under common control of CLIC
Financial Report
China Life Insurance Company Limited Annual Report 2017 231
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(e) Registered capital of related parties with control relationship and changes during the year
Name of related party
As at 31
December 2016
Increase
million
million
Decrease
million
As at 31
December 2017
million
Under common control of CLIC
China Life Insurance (Overseas) Company Limited
Under common control of CLIC
China Life Real Estate Co., Limited ("CLRE")
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS
(a) Related parties with control relationship
Information of the parent company is as follows:
Name
CLIC
Location of
registration Principal business
Beijing, Insurance services including receipt
China of premiums and payment of
benefits in respect of the in-force
life, health, accident and other types
of personal insurance business, and
the reinsurance business; holding or
investing in domestic and overseas
insurance companies or other
financial insurance institutions; fund
management business permitted
by national laws and regulations or
approved by the State Council of the
People's Republic of China; and other
businesses approved by insurance
regulatory agencies.
Relationship with
the Company
Nature of
ownership
China Life Insurance Company Limited Annual Report 2017
Legal
Immediate and
ultimate holding
company
State-owned
Yang
Mingsheng
(b) Subsidiaries
Refer to Note 40(c) for the basic and related information of subsidiaries.
(c) Associates and joint ventures
Refer to Note 8 for the basic and related information of associates and joint ventures.
(d) Other related parties
Significant related parties
Relationship with the Company
representative
85.03%
("CL Overseas")
85.03%
(Limited Partnership)
234
("Wan Sheng") (i)
Ningbo Meishan Bonded
(i)
Port Area Bai Ning
Investment Partnership
("Bai Ning") (i)
RMB1,680
RMB1,680
99.98%
directly
Guo Yang Guo Sheng, New Capital Wisdom Limited, New Fortune Wisdom Limited, Wisdom Forever Limited
Partnership, Yuan Shu Yuan Jiu, Yuan Shu Yuan Pin, Wan Sheng, and Bai Ning are new subsidiaries set up or
invested by the Company in 2017.
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Transactions with significant related parties
The following table summarises significant transactions carried out by the Group with its significant related
parties:
For the year ended 31 December
2017
2016
Notes
RMB million
directly
Partnership
99.998%
RMB3,900
USD447
USD447
100.00%
Partnership (i)
indirectly
Shanghai Yuan Shu Yuan Jiu
RMB606
RMB606
99.98%
Investment Management
directly
RMB million
Partnership
("Yuan Shu Yuan Jiu”) (i)
Shanghai Yuan Shu Yuan Pin
RMB606
RMB606
Investment Management
99.98%
directly
Partnership
(Limited Partnership)
(“Yuan Shu Yuan Pin”) (i)
Shanghai Wansheng Industry
RMB3,900
(Limited Partnership)
Wisdom Forever Limited
Transactions with CLIC and its subsidiaries
(i) (viii)
Asset management fee received from CLI
81
78
RMB500
(iv)
44
50
Payment of rental, project fee and other expenses to CLRE
Property leasing expenses charged by CLI
135
69
Cash dividend from CLP&C (Note 8)
43
59
Rental and a service fee received from CLP&C
2
1
(iii)
Payment of an agency fee to CLP&C
2,337
3,030
(iii) (viii)
18
Agency fee received from CLP&C
9
13
Payment to CLI for purchase of fixed assets
141
740
869
fee received from CLIC
(ii.a)
107
124
Payment of dividends from the Company to CLIC
Distribution of profits from AMC to CLIC
Asset management fee received from CL Overseas
4,638
8,116
125
143
Policy management fee received from CLIC
(ii.b)
74
Asset management
Payment of insurance premium to CLP&C
fee received from CLP&C
(ii.c)
14
36
44
49
Claim and other payments received from CLP&C
16
119
indirectly
Asset management
New Fortune Wisdom Limited (i)
New Aldgate Limited
RMB1,167
100.00%
RMB1,167
100.00%
directly
directly
Glorious Fortune
100.00%
100.00%
Forever Limited
indirectly
directly
CL Hotel Investor, L.P.
100.00%
100.00%
directly
directly
Golden Bamboo Limited
RMB1,734
100.00%
100.00%
directly
directly
directly
Sunny Bamboo Limited
indirectly
RMB200
directly
directly
100.00%
100.00%
RMB6,800
RMB601
100.00%
RMB6,199
Rui Chong Company
indirectly
indirectly
CL Wealth
100.00%
King Phoenix Tree Limited
directly
directly
100.00%
100.00%
Golden Phoenix Tree Limited
indirectly
indirectly
100.00%
RMB200
100.00%
100.00%
RMB1,632
RMB1,734
RMB1,632
directly
100.00%
indirectly
directly
USD0.6
100.00%
indirectly
China Life Insurance Company Limited Annual Report 2017
233
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
100.00%
(f) Percentages of holding of related parties with control relationship and changes during the
year (continued)
As at 31 December 2016
Amount
million
Percentage
of holding
Increase
million
Decrease
million
million
As at 31 December 2017
Amount Percentage
of holding
Guo Yang Guo Sheng (i)
RMB3,250
RMB3,250
New Capital Wisdom Limited (i)
99.997%
directly
100.00%
indirectly
Subsidiaries (continued)
Franklin Shenzhen Company
USD0.6
100.00%
indirectly
RMB2,176
100.00%
directly
directly
China Century Core
USD894
Fund Limited
Fortune Bamboo Limited
USD2
USD896
100.00%
100.00%
indirectly
CL Health
RMB1,730
100.00%
directly
directly
100.00%
RMB1,730
100.00%
("Century Core Fund")
RMB2,176
The future minimum lease payments under non-cancellable operating leases are as follows:
As at 31
December
1
91,784
45,079
2016
(b) Operating lease commitments - - as lessee
As at 31
December
5,462
5,202
39,616
86,582
RMB million
RMB million
2017
As at 31
December
463
Later than one year but not later than five years
Total
China Life Insurance Company Limited Annual Report 2017
As at 31
December
2017
2016
RMB million
RMB million
254
Later than five years
186
267
76
10
741
Total
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS
411
Not later than one year
Later than one year but not later than five years
As at 31
December
Later than five years
Total
As at 31
December
2017
2016
RMB million
RMB million
784
Not later than one year
632
764
44
27
1,929
1,423
The operating lease payments charged to profit before income tax for the year ended 31 December 2017
were RMB1,204 million (2016: RMB994 million).
(c) Operating lease commitments - as lessor
The future minimum rentals receivable under non-cancellable operating leases are as follows:
1,101
Property, plant and equipment
Others
239
Contracted, but not provided for
Financial Report
240
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(h) Amounts due from/to significant related parties
The following table summarises the balances due from and to significant related parties. The balances are
non-interest-bearing, unsecured and have no fixed repayment dates except for deposits with CGB, interbank
certificates of deposits of CGB, wealth management products of CGB and corporate bonds issued by Sino-
Ocean.
The resulting balances due from and to significant related parties of the Group
Amount due from CLIC
Amount due from CL Overseas
Amount due from CLP&C
Amount due to CLP&C
(viii) These transactions constitute continuing connected transactions which are subject to reporting and announcement
requirements but are exempt from independent shareholders' approval requirements under Chapter 14A of the
Listing Rules. The Company has complied with the disclosure requirements in accordance with Chapter 14A of the
Listing Rules.
Amount due from CLI
Amount due from CLRE
Amount deposited with CGB
Interbank certificates of deposits of CGB
Wealth management products of CGB
Amount due from CGB
Amount due to CGB
Corporate bonds of Sino-Ocean
Amount due from Sino-Ocean
Amount due from CL Ecommerce
Amount due to CL Ecommerce
Statement of financial position
The resulting balances due from and to subsidiaries of the Company
Amount due from Pension Company
As at 31
Amount due to CLI
Investments
(vii) On 28 November 2016, the Company and Pension Company signed a new agency agreement for the distribution
and customer service of enterprise annuity funds, the pension management business and the occupational pension
management business. The agreement was effective from 28 November 2016 and expired on 31 December
2017. The agreement is subject to an automatic one-year renewal if no objections were raised by either party
upon expiry. The commissions agreed upon in the agreement include the daily business commissions and the
annual promotional plans commissions. According to the agreement, the commissions for the entrusting service
of enterprise annuity fund management, which is the core business of Pension Company, are calculated at 30%
to 80% of the annual entrusting management fee revenues, depending on the duration of the agreement. The
commissions for account management service are calculated at 60% of the first year's account management fee and
were only charged for the first year, regardless of the duration of the agreement. The commissions for investment
management service, in accordance with the duration of the agreement, are calculated at 60% to 3% of the annual
investment management fee (excluding risk reserves for investment), and decreased annually. The commissions of
the group pension plan is, in accordance with the duration of the contracts, calculated at 50% to 3% of the annual
investment management fee, and decreased annually; the commissions of the personal pension plan is calculated
at 30% to 50% of the annual investment management fee according to the various rates of daily management fee
applied to the various individual pension management products in all of the management years; the commissions of
occupation annuity is in accordance with the provision of annual promotional plans, which should be determined
by both parties on a separate occasion. The commissions charged to the Company by Pension Company are
eliminated in the consolidated statement of the comprehensive income of the Group.
Transactions with significant related parties (continued)
investments:
246
The Group had the following capital commitments relating to property development projects and
(a) Capital commitments
39 COMMITMENTS
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
245
Financial Report
China Life Insurance Company Limited Annual Report 2017
The Group involves in certain lawsuits arising from the ordinary course of business. In order to accurately disclose
the contingent liabilities for pending lawsuits, the Group analysed all pending lawsuits case by case at the end of
each reporting period. A provision will only be recognised if management determines, based on third-party legal
advice, that the Group has present obligations and the settlement of which is expected to result in an outflow of
the Group's resources embodying economic benefits, and the amount of such obligations could be reasonably
estimated. Otherwise, the Group will disclose the pending lawsuits as contingent liabilities. As at 31 December
2017 and 2016, the Group had other contingent liabilities but disclosure of such was not practical because the
amounts of liabilities could not be reliably estimated and were not material in aggregate.
Notes to the Consolidated Financial Statements (continued)
Notes (continued):
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Transactions with significant related parties (continued)
Notes (continued):
(v)
(vi)
On 12 August 2016, the Company and CGB renewed an insurance agency agreement to distribute insurance
products. All individual insurance products suitable for distribution through bancassurance channels are included
in the agreement. CGB provides agency services, including the sale of insurance products, and collecting premiums
and paying benefits. The Company paid the agency commission by multiplying the net amount of total premiums
received from the sale of each category individual insurance products after deducting the withdrawn policy
premiums in the hesitation period, by the responding fixed commission rate. The commission rates for various
insurance products sold by CGB are agreed based on arm's length transactions. The commissions are payable on a
monthly basis. The agreement is effective for two years starting from the signing date and is subject to an automatic
one-year renewal with no limitation of times if no objections were raised by either party upon expiry.
On 23 March 2016, the Company and CGB signed another insurance agency agreement to distribute group
insurance products. The group insurance products suitable for distribution through bancassurance channels
are included in the agreement. CGB provides agency services, including the sale of group insurance products,
collecting premiums and paying benefits, and so on. The Company paid the agency commission by multiplying the
net amount of total premiums received from the sale of each category group insurance product after deducting the
withdrawn policy premiums in the hesitation period, by the responding fixed commission rate. The commission
rates for various insurance products sold by CGB are agreed by referring to comparable quoted market prices
of independent third-parties. The commissions are payable on a monthly basis. The agreement is effective on 1
January 2016 for two years and is subject to an automatic one-year renewal if no objections were raised by either
party upon expiry.
On 26 October 2016, the Company and CL Ecommerce renewed a one year agreement for managing the regional
telemarketing centre, which was effective from 1 January 2016 and expired on 31 December 2016. The agreement
is subject to an automatic one-year renewal if no objections are raised by both parties. On 1 January 2017, the
agreement was automatically renewed for one year. Pursuant to the agreement, the Company entrusted CL
Ecommerce to manage the operation of its telemarketing centre, and paid the management fee accordingly. The
total amount of the management fee is not expected to exceed RMB100 million, but is still pending for negotiation
between the two parties based on the actual circumstance.
China Life Insurance Company Limited
Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Financial Report
As at 31 December 2017
Policyholder dividends payable
As at 31
December 2017
17
37,998
Securities sold under agreements to repurchase
40(n)
85,316
81,039
Bonds payable
Annuity and other insurance balances payable
39,038
Premiums received in advance
18,505
35,252
Other liabilities
40(0)
44,820
87,725
83,910
195,706
Statement of financial position (continued)
As at 31 December 2017
As at 31
December 2017
Notes
RMB million
As at 31
December 2016
RMB million
LIABILITIES AND EQUITY
Liabilities
Insurance contracts
14
2,025,133
1,847,986
Investment contracts
15
232,500
39,678
30,556
Deferred tax liabilities
40(p)
7,791
Reserves
40(r)
144,240
144,116
Retained earnings
110,863
100,840
Total equity
291,159
281,012
Total liabilities and equity
2,831,375
December 2017
RMB million
2,645,487
28,265
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
28,265
7,791
Other equity instruments
3,991
7,543
6,081
1,141
20
282
491
Current income tax liabilities
Statutory insurance fund
Total liabilities
Equity
2,540,216
2,364,475
Share capital
34
40(q)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
40(e)
716,346
594,054
Loans
40(f)
381,253
221,535
Term deposits
40(g)
444,279
535,361
Statutory deposits-restricted
40(h)
5,653
5,653
Held-to-maturity securities
Available-for-sale securities
76,427
40(d)
Notes
RMB million
As at 31
December 2016
RMB million
Property, plant and equipment
40(a)
36,313
29,722
Investment properties
40(b)
1,401
Investments in subsidiaries
40(c)
39,662
27,353
Investments in associates and joint ventures
104,039
ASSETS
40(i)
758,802
Total assets
12
3,046
2,134
40(m)
30,480
14,252
44,186
62,606
2,831,375
2,645,487
Financial Report
China Life Insurance Company Limited
Annual Report 2017
247
Cash and cash equivalents
797,108
Other assets
13,421
Securities at fair value through profit or loss
40(j)
127,544
204,046
Securities purchased under agreements to resell
40(k)
35,761
43,100
Accrued investment income
40(1)
50,183
55,774
Premiums receivable
11
14,121
Reinsurance assets
As at 31
December 2016
RMB million
1,927
529
3,218
Appropriation to reserves
(7,912)
(847)
21
(7,086)
3,300
Other comprehensive income for the year
7
27,241
28,225
30,166
(738)
5,100
145,007
8,445
Others
135
Pursuant to the relevant PRC laws, the Company appropriated 10% of its net profit under Chinese Accounting Standards
("CAS") to statutory reserve which amounted to RMB3,218 million for the year ended 31 December 2017 (2016:
RMB1,927 million).
(c)
(b)
145,675
(840)
30,541
30,152
33,384
(717)
(1,986)
1,281
53,860
(a)
As at 31 December 2017
135
1,146
53,860
As at 1 January 2017
145,007
Other comprehensive income for the year
163,381
25,239
24,787
28,239
180
29,963
1,113
53,860
As at 1 January 2016
(c)
(b)
(a)
RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
Total
(24,863)
Approved at the Annual General Meeting in May 2017, the Company appropriated RMB1,927 million to the
discretionary reserve fund for the year ended 31 December 2016 based on net profit under CAS (2016: RMB3,438
million).
(918)
Appropriation to reserves
27,241
28,225
30,166
(738)
5,100
1,146
53,860
As at 31 December 2016
33
33
Others
7,367
2,002
3,438
1,927
(25,774)
Pursuant to "Financial Standards of Financial Enterprises - Implementation Guide" issued by the Ministry of Finance of the
PRC on 30 March 2007, for the year ended 31 December 2017, the Company appropriated 10% of net profit under CAS
which amounted to RMB3,218 million to the general reserve for future uncertain catastrophes, which cannot be used for
dividend distribution or conversion to share capital increment (2016: RMB1,927 million). In addition, pursuant to the
CAS, the Group appropriated RMB82 million to the general reserve of its subsidiaries attributable to the Company in the
consolidated financial statements (2016: RMB75 million).
Under related PRC law, dividends may be paid only out of distributable profits. Any distributable profits that are
not distributed in a given year are retained and available for distribution in subsequent years.
244
of consolidated structured entities
Changes arising from losing control
(497)
(497)
Foreign exchange movement
(33,558)
(5,671)
764
6,228
(38,000)
3,121
Changes from financing cash flows
141,557
813
5,488
Interest expense
81,088
2
18,794
248
588
493
As at 31
December
2016
RMB million
RMB million
As at 31
December
2017
Pending lawsuits
The following is a summary of the significant contingent liabilities:
PROVISIONS AND CONTINGENCIES
112,482
127
6,252
87,309
4,987
4,985
At 31 December 2017
operations
37,998
At 1 January 2017
Other liability -
and debt
trust schemes
consolidated
holders of
liability -
payable to
third party
Other
Securities
Interest-
38
Changes in liabilities arising from financing activities
37 NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
interest payable
related to
16,170
bearing
loans and
RMB million
RMB million
RMB million
Total
activities
schemes
repurchase
RMB million
RMB million
RMB million
payable
borrowings
financing
investment
agreements to
Bonds
sold under
reserve
fund
fund
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
241
Financial Report
China Life Insurance Company Limited Annual Report 2017
The total compensation package for the Company's key management personnel for the year ended 31
December 2017 has not yet been finalised in accordance with regulations of the relevant PRC authorities.
The final compensation will be disclosed in a separate announcement when determined. The compensation
of 2016 has been approved by the relevant authorities. The total compensation of 2016 was RMB28 million,
including a deferred payment about RMB6 million.
28
18
Salaries and other benefits
RMB million
RMB million
2016
ended 31 December
year
2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the
(j)
Under IAS 24 Related Party Disclosures ("IAS 24"), business transactions between state-owned enterprises
controlled by the PRC government are within the scope of related party transactions. CLIC, the ultimate
holding company of the Group, is a state-owned enterprise. The Group's key business is insurance and
investment related and therefore the business transactions with other state-owned enterprises are primarily
related to insurance and investment activities. The related party transactions with other state-owned
enterprises were conducted in the ordinary course of business. Due to the complex ownership structure, the
PRC government may hold indirect interests in many companies. Some of these interests may, in themselves
or when combined with other indirect interests, be controlling interests which may not be known to the
Group. Nevertheless, the Group believes that the following captures the material related parties and has
applied IAS 24 exemption and disclosed only qualitative information.
Owned by other equity holders
Owned by CLIC (i)
As at 31 December 2017, the Company's share capital was as follows:
28,265
28,264,705,000
28,265
28,264,705,000
Ordinary shares of RMB1 each
Registered, authorised, issued and fully paid
RMB million
As at 31 December 2016
No. of shares
RMB million
As at 31 December 2017
No. of shares
34 SHARE CAPITAL
As at 31 December 2017, most of the bank deposits of the Group were with state-owned banks; the issuers
of corporate bonds and subordinated bonds held by the Group were mainly state-owned enterprises. For the
year ended 31 December 2017, a large portion of its group insurance business of the Group were with state-
owned enterprises; the majority of bancassurance commission charges were paid to state-owned banks and
postal offices; and the majority of the reinsurance agreements of the Group were entered into with a state-
owned reinsurance company.
Transactions with state-owned enterprises
Including: Domestic listed
(i) Key management personnel compensation
(604)
330
199
26,342
33,385
2
2
(206)
(265)
12
9
(6)
332
428
47
122
1,041
(4)
365
592
(207)
(17)
(19)
47
57
Amount due to AMC HK
Amount due to AMC
Amount due to Pension Company
(66)
(17)
མྱེ❁པུË
(78)
6
8
643
(31)
420
Overseas listed (ii)
(i)
Notes to the Consolidated Financial Statements (continued)
Financial Report
China Life Insurance Company Limited Annual Report 2017 243
Financial Report
Refer to Note 32 for the information of distribution to other equity instruments holders of the Company
for the year ended 31 December 2017. As at 31 December 2017, there were no accumulated distributions
unpaid attributable to other equity instrument holders of the Company.
4,027
4,377
4,027
4,377
7,791
7,791
295,830
313,142
303,621
320,933
For the year ended 31 December 2017
As at 31
December 2016
RMB million
36 RESERVES
Share of other
foreign
General
reserve
reserve
the equity
method
for-sale
securities
reserves
Other
Share
premium
translating
Statutory Discretionary
under
available-
Exchange
differences on
Unrealised comprehensive
gains/
income
of investees
(losses) from
Total
As at 31
December 2017
RMB million
Equity attributable to ordinary equity holders of the Company
Equity attributable to other equity instruments holders of the Company
Equity attributable to non-controlling interests
242
(ii) Overseas listed shares are traded on the Stock Exchange of Hong Kong Limited and the New York Stock
Exchange.
28,265
28,264,705,000
7,441
7,441,175,000
1,500
1,500,000,000
8,941
8,941,175,000
19,324
19,323,530,000
As at 31 December 2017
RMB million
No. of shares
All shares owned by CLIC are domestic listed shares.
China Life Insurance Company Limited Annual Report 2017
Equity attributable to ordinary equity holders of non-controlling interests
Notes to the Consolidated Financial Statements (continued)
35 OTHER EQUITY INSTRUMENTS
Equity attributable to equity holders of the Company
(b) Equity attributable to equity holders
The Company issued Core Tier 2 Capital Securities at par with the nominal value of USD1,280 million on
3 July 2015, and obtained an approval to list such securities on the Stock Exchange of Hong Kong Limited,
effective on 6 July 2015. The Securities are issued in the specified denomination of USD200,000 and
integral multiples of USD1,000 in excess thereof. After a deduction of the issue expense, the total amount
of the proceeds raised from this issuance was USD1,274 million or RMB7,791 million. The issued capital
securities have a term of 60 years, extendable upon expiry. The initial distribution rate for the first five
interest-bearing years is 4.00%, and the Company may redeem the securities at its option at the end of the
fifth year after issuance. If the Company does not exercise this option, the rate of distribution will be reset
based on comparable US treasury yield plus a margin of 2.294% at the end of the fifth year and every five
years thereafter.
7,791
7,791
7,791
Total
7,791
Core Tier 2 Capital Securities
As at 31
December 2017
RMB million
Decrease
RMB million
Increase
RMB million
December 2016
RMB million
As at 31
(a) Basic information
For the year ended 31 December 2017
China Life Insurance Company Limited Annual Report 2017
1,247
2,415
After one year but within five years
Within one year
Contractual maturity schedule:
(h) Statutory deposits - restricted
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
As at 31 December 2017, the term deposits of RMB14.691 billion (2016: RMB13.2 billion) applying for an
overseas borrowing backed by domestic deposits business are restricted to use. Please refer to Note 9.3 for
the details.
535,361
444,279
7,700
Total
344,790
95,155
346,324
2,800
RMB million
As at 31
December 2016
As at 31
December 2017
RMB million
221,535
381,253
17,500
31,517
24,303
90,350
69,753
130,913
182,871
As at 31
December 2017
As at 31
December 2016
RMB million
Wealth management products
16,708
13,495
Subordinated bonds/debts
187,287
195,244
Corporate bonds
146,310
157,689
Government agency bonds
21,198
24,230
As at 31
December 2016
RMB million
December 2017
RMB million
As at 31
Government bonds
Debt securities
Available-for-sale securities, at fair value
(i) Available-for-sale securities
Insurance companies in China are required to deposit an amount that equals to 20% of their registered
capital with banks in compliance with regulations of the CIRC. These funds may not be used for any
purpose other than for paying off debts during liquidation proceedings.
5,653
5,653
4,053
2,100
1,600
3,553
RMB million
109,979
128,473
RMB million
RMB million
(g)
256
(f) Loans
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
255
Annual Report 2017
China Life Insurance Company Limited
Financial Report
594,054
716,346
260,547
292,913
231,391
288,260
71,502
112,788
30,614
22,385
RMB million
As at 31
December 2016
As at 31
December 2017
RMB million
Total
After ten years
After five years but within ten years
Policy loans
11,000
Other loans
Maturing:
December 2016
As at 31
221,535
As at 31
December 2017
381,253
129,093
273,296
92,442
107,957
RMB million
RMB million
As at 31
December 2016
As at 31
December 2017
Total
After five years but within ten years
years
After one year but within five
Within one year
Maturing:
Term deposits
Total
After ten years
years
After five but within ten years
years
After one year but within five
Within one year
Total
years
Others (i)
11,683
32,941
41,765
RMB million
As at 31
December 2016
As at 31
December 2017
RMB million
China Life Insurance Company Limited Annual Report 2017
Total
After ten years
After five years but within ten years
years
After one year but within five
Within one year
149,895
Maturing:
Unlisted debt securities include those traded on the Chinese interbank market and those not publicly
traded. Unlisted equity securities include those not traded on stock exchanges, which are mainly open-
ended funds with public market price quotation and wealth management products.
758,802
797,108
364,616
353,905
248,594
218,917
232
132
25,034
41,507
90,756
Debt securities - Contractual maturity schedule
143,840
163,319
113,161
The fair value of investment properties of the Company as at 31 December 2017 amounted to RMB2,688
million (as at 31 December 2016: RMB2,377 million), which was estimated by the Company having regards
to valuations performed by an independent appraiser. The investment properties were classified as Level 3 in
the fair value hierarchy.
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(c) Investments in subsidiaries
Unlisted investments at cost
As at
31 December
2017
As at
31 December
2016
RMB million
RMB million
39,662
27,353
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December
2017:
Place of incorporation
Name
and operation
Percentage of
equity interest held
Registered capital
Principal activities
AMC
394,186
443,203
104,244
88,224
93,349
394,186
443,203
357,495
20,759
20,759
Others (i)
Equity securities
Available-for-sale securities, at cost
343,857
333,146
Subtotal
29,885
41,123
Others (i)
81,544
40,119
Wealth management products
27,880
31,651
Preferred stocks
100,116
129,388
Common stocks
104,432
90,865
Funds
Equity securities
394,186
443,203
Subtotal
Total
52,545
797,108
Financial Report
398,875
36,691
44,328
As at 31
December 2016
RMB million
RMB million
As at 31
December 2017
Total
Subtotal
Unlisted
Listed overseas
Listed in Hong Kong, PRC
Listed in Mainland, PRC
Equity securities
Subtotal
Unlisted
Listed in Mainland, PRC
Debt securities
258
Other available-for-sale securities mainly include unlisted equity investments and private equity
funds, etc. The Company did not guarantee or provide any financing support for other available-for-
sale securities, and considers that the carrying value of other available-for-sale securities represents its
maximum risk exposure.
(i)
(i) Available-for-sale securities (continued)
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
Annual Report 2017 257
China Life Insurance Company Limited
758,802
2,377
After one year but within five
Maturing:
Not applicable
100.00% indirectly
The British Virgin Islands
The British Virgin Islands
New Capital Wisdom Limited
New Fortune Wisdom Limited
Wisdom Forever Limited
Partnership
Investment
Not applicable
99.997% directly
PRC
Investment
USD2 million
100.00% indirectly
PRC
Investment
Health management
100.00% directly
PRC
Franklin Shenzhen Company
Guo Yang Guo Sheng
CL Health
Investment
Not applicable
100.00% indirectly
The British
Cayman Islands
Century Core Fund
Investment
Not applicable
100.00% directly
RMB1,730 million
100.00% indirectly
Not applicable
Investment
China Life Insurance Company Limited Annual Report 2017
Financial Report
Non-controlling interests in subsidiaries are not significant to the Company.
Investment
Not applicable
99.98% directly
PRC
Bai Ning
Investment
Not applicable
99.998% directly
PRC
Wan Sheng
Investment
Not applicable
99.98% directly
PRC
Yuan Shu Yuan Pin
Investment
Not applicable
99.98% directly
PRC
Yuan Shu Yuan Jiu
Investment
Not applicable
100.00% indirectly
The British
Cayman Islands
The British Virgin Islands
Investment
Not applicable
100.00% directly
100.00% directly
Hong Kong, PRC
Golden Phoenix Tree Limited
Investment in
retirement properties
Fund management
Financial service
Asset management
Asset management
Pension and annuity
RMB200 million
Not applicable
RMB1,991 million
100.00% indirectly
PRC
CL Wealth
RMB588 million
85.03% indirectly
PRC
CL AMP
100.00% directly
PRC
Suzhou Pension Company
50.00% indirectly
Hong Kong, PRC
AMC HK
and indirectly
RMB3,400 million
74.27% directly
PRC
Pension Company
RMB4,000 million
Not applicable
253
Investment
The British Jersey Island
The British Virgin Islands
Investment
Not applicable
100.00% directly
The British Virgin Islands
Investment
Not applicable
100.00% directly
USA
Investment
Not applicable
100.00% directly
Hong Kong, PRC
Glorious Fortune
Forever Limited
CL Hotel Investor, L.P.
Golden Bamboo Limited
Sunny Bamboo Limited
Fortune Bamboo Limited
Investment
Not applicable
100.00% directly
Hong Kong, PRC
Investment
RMB6,800 million
100.00% directly
PRC
New Aldgate Limited
Rui Chong Company
Investment
Not applicable
100.00% indirectly
King Phoenix Tree Limited
Within one year
Financial Report
For the year ended 31 December 2017
Debt securities
(e) Held-to-maturity securities
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
76,427
104,039
48,617
27,612
27,810
76,427
RMB million
Government bonds
RMB million
2017
China Life Insurance Company Limited Annual Report 2017
254
As at 31 December
Investments in associates and joint ventures
As at 1 January
(d) Investments in associates and joint ventures
Investment management
RMB5,000 million
99.98% directly
Jiao Yin Guo Xin CLI – China
Nonferrous Metal Collective
Fund Trust Scheme
Group Loan Collective Fund
Trust Scheme
2016
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Debt securities-Contractual maturity schedule
Unlisted debt securities include those traded on the Chinese interbank market.
The estimated fair value of all held-to-maturity securities was RMB692,282 million as at 31 December 2017
(as at 31 December 2016: RMB618,436 million).
594,054
716,346
529,862
624,715
64,192
91,631
594,054
716,346
150,089
148,494
177,768
200,178
169,001
241,808
97,196
125,866
RMB million
RMB million
As at 31
December 2016
As at 31
December 2017
Total
Listed in Mainland, PRC
Unlisted
Debt securities
Total
Investment management
RMB5,000 million
99.98% directly
Kun Lun Trust • Jizhong Energy
RMB10,000 million
99.99% directly
Jiao Yin Guo Xin China Aluminium
Debt-to-Equity Swap Investment
Scheme
Investment management
RMB10,000 million
100.00% directly
Investment management
RMB10,000 million
100.00% directly
China Life-China Hua Neng
Trust Loan Collective Funds
Trust Scheme
Communications Construction
No. 1 Collective Fund Trust Scheme
Shan Guo Tou Jing Tou Corporate
Investment management
RMB10,001 million
99.99% directly
Investment management
RMB11,099 million
88.02% directly
Shang Xin-Ningbo Wu Lu Si Qiao
PPP Collective Fund Trust Scheme
Kun Lun Trust Tianjin Urban
Trust/investments received
Percentage of shares held
Name
Principal activities
(ii) The table below presents the basic information of the Company's major consolidated structured
entities as at 31 December 2017:
(c) Investments in subsidiaries (continued)
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
Investment management
Notes to the Consolidated Financial Statements (continued)
Co., Ltd. Supply-side Reform
Collective Fund Trust Scheme
Jiao Yin Guo Xin Shaanxi Coal and
Chemical Industry Group Co., Ltd.
Debt-to-Equity Swap Collective
RMB10,000 million
Trust Scheme
Rights Investment Collective Fund
Investment management
RMB5,400 million
99.98% directly
CITIC Trust CGB Trust Beneficial
Debt Investment Scheme
Investment management
RMB6,000 million
100.00% directly
China Life - Yanzhou Coal Mining
Trust Scheme
Group Loans Collective Fund
Investment management
RMB6,000 million
100.00% directly
Zhong Xin Jing Cheng Tianjin Port
Fund Trust Scheme
Debt-to-Equity Swap Collective
Qing Hai Yellow River
Investment management
RMB8,000 million
100.00% directly
Chongqing Trust Fund⚫ China Life
Fund Trust Scheme
and indirectly
Investment management
75.00% directly
60.00% directly
PRC
1,296
1,694
22,606
As at 31 December 2017
29,722
477
10,387
422
1,860
16,576
As at 1 January 2017
Net book value
(24)
(24)
As at 31 December 2017
Disposals
year
Charge for the
(24)
(24)
As at 1 January 2017
Impairment
(16,107)
(1,179)
(940)
(4,990)
(8,998)
As at 31 December 2017
691
46
443
(14,941)
(1,857)
10,951
36,313
(8)
256
(1,438)
1,174
Transfers upon completion
40,262
1,282
7,544
1,368
6,481
23,587
As at 1 January 2016
RMB million
Total
construction improvements
Leasehold
Assets
under
Motor
vehicles
fixtures
Buildings
Office
equipment
furniture and
Cost
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
249
China Life Insurance Company Limited Annual Report 2017
Financial Report
619
Additions
(1,048)
(177)
444
170
416
70
Additions
(86)
312
(7,365)
49
6,918
Transfers upon completion
44,687
1,525
10,387
1,247
6,682
24,688
As at 1 January 2017
RMB million
Total
construction improvements
Leasehold
Assets
under
Motor
vehicles
Office
equipment
furniture and
fixtures
Buildings
Cost
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
8,280
186
9
Transfers into investment
15
Disposals
(143)
(612)
(925)
year
Charge for the
(983)
(4,822)
(8,088)
As at 1 January 2017
Accumulated depreciation
52,444
1,798
10,951
1,383
6,684
31,628
As at 31 December 2017
(897)
(48)
(146)
(192)
(463)
(48)
Disposals
(205)
(205)
properties
8,945
31
1,405
177
1,247
(317)
(51)
(266)
1,718
1,513
205
Buildings
RMB million
As at 31 December 2017
As at 1 January 2017
Fair value
As at 31 December 2017
As at 1 January 2017
Net book value
As at 31 December 2017
year
As at 1 January 2017
Charge for the
Accumulated depreciation
As at 31 December 2017
Additions
As at 1 January 2017
Cost
(b) Investment properties
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
250
29,722
477
1,401
10,387
2,377
Financial Report
631
(266)
(49)
(217)
1,513
1,513
Buildings
RMB million
As at 31 December 2016
Fair value
As at 31 December 2016
As at 1 January 2016
Net book value
As at 31 December 2016
year
Charge for the
As at 1 January 2016
Accumulated depreciation
As at 31 December 2016
Additions
As at 1 January 2016
Cost
252
(b) Investment properties (continued)
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
251
China Life Insurance Company Limited Annual Report 2017
2,688
422
As at 1 January 2016
16,576
(129)
(596)
(875)
year
Charge for the
(13,817)
(926)
(990)
(4,652)
(7,249)
As at 1 January 2016
Accumulated depreciation
44,687
1,525
10,387
1,405
6,682
24,688
As at 31 December 2016
(1,173)
(26)
(473)
(140)
(430)
Disposals
5,606
13
1,860
4,754
(144)
(1,744)
(104)
36
Disposals
As at 31 December 2016
356
26,421
378
1,829
16,314
As at 1 January 2016
Net book value
(24)
(24)
As at 31 December 2016
Disposals
year
7,544
(24)
Charge for the
136
620
As at 31 December 2016
(8,088)
(4,822)
22
426
(1,048)
(14,941)
Impairment
As at 1 January 2016
(983)
(24)
1,148.0
Miao Ping
RMB thousand
in total
Pension
scheme
Total
included
Actual paid
1,148.0
payment
included
in total
in kind contributions
688.8
688.8
125.6
119.2
2,540.8
1,852.0
Shi Xiangming
571.6
786.5
1,358.1
190.2
110.1
2,296.0
Benefits
1,655.8
payment
87.6
1,658.4
1,364.6
1,253.7
195.2
127.2
1,576.1
796.7
129.0
79.2
1,004.9
1,341.7
379.2
196.4
117.7
46.8
493.9
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December
2016 are as follows:
Deferred
Deferred
Basic
Performance
related
Name
salaries
bonuses
Subtotal of
salary
income salary income
included in
1,658.4
Basic salaries, housing allowances, other allowances and benefits in kind
Pension scheme contributions
Zhan Zhong
The emoluments fell within the following bands:
RMB0RMB1,000,000
RMB1,000,001 - RMB2,000,000
RMB2,000,001 - RMB3,000,000
RMB3,000,001 - RMB4,000,000
RMB4,000,001 - RMB4,500,000
2017
RMB thousand
2016
RMB thousand
7,060
508
6,861
565
7,568
7,426
Number of individuals
For the year ended 31 December
2017
2016
5
5
For the year ended 31 December 2017, no emoluments have been paid by the Company to the directors,
chief executive, supervisors or any of the five highest paid individuals as an inducement to join or upon
joining the Company or as compensation for loss of office (2016: Nil).
The emoluments of the five highest paid individuals are the total emoluments paid to them during the year.
There was no arrangement under which a director, chief executive or supervisor waived or agreed to waive
any remuneration during the year.
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
129.0
Total
Xiong Junhong
268
For the year ended 31 December 2017, the five individuals whose emoluments were the highest in the
Company include one director and three supervisors (2016: one director and four supervisors).
593.6
1,007.0 1,600.6
189.8
114.7
1,905.1
1,905.1
Wang Cuifei
527.5
640.4
1,167.9
191.4
101.5
1,460.8
1,460.8
The compensation amounts disclosed above for these supervisors for the year ended 31 December 2016 were
restated based on the finalised amounts determined during 2017.
The supervisors received the compensation amounts disclosed above during their term of office in 2017 and
2016.
Financial Report
China Life Insurance Company Limited
Annual Report 2017
267
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
41 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
(c) Five highest paid individuals
Details of the remuneration of the five highest paid individuals are as follows:
1,148.0
320.0
Total
2,800
840.0
125.7
119.9
3,045.6
840.0
2,205.6
Miao Jianmin
Zhang Xiangxian
Wang Sidong
Anthony Francis Neoh
125.0
25.0
150.0
150.0
150.0
Chang Tso Tung Stephen
250.0
70.0
320.0
320.0
Huang Yiping
41.7
11.6
53.3
1,400.0
53.3
1,400.0
Yang Mingsheng
For the year ended 31 December 2017
41 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
(a) Directors' and chief executive's emoluments (continued)
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the
ended 31 December 2016 are as follows:
year
Basic
Performance
related
Subtotal of
salary
Deferred
payment
included in
Pension
Deferred
payment
Actual paid
Benefits
scheme
included
included
Name
salaries
bonuses
income salary income
in kind contributions
Total
in total
in total
RMB thousand
Lin Dairen
RMB thousand
53.3
1,134.0
266.7
266.7
Leung Oi-Sie Elsie
125.0
25.0
150.0
150.0
150.0
266
The compensation amounts disclosed above for these directors and the chief executive for the year ended 31
December 2016 were restated based on the finalised amounts determined during 2017.
The directors and chief executive received the compensation amounts disclosed above during their term of
office in 2017 and 2016.
In addition to the directors' emoluments disclosed above, certain directors of the Company receive
emoluments from CLIC, the amounts of which have not been apportioned between their services to the
Company and their services to CLIC.
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
41 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
(b) Supervisors' emoluments
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December 2017 are as
follows:
Name
Miao Ping
Shi Xiangming
Xiong Junhong
Zhan Zhong
Wang Cuifei
Li Guodong
Remuneration
paid
Benefits in kind
Pension scheme
contributions
266.7
Xu Hengping
58.4
Tang Xin
1,134.0
2,268.0
680.4
125.6
119.2
2,512.8
680.4
1,832.4
Xu Haifeng
1,134.0
1,134.0
2,268.0
680.4
125.3
116.5
2,509.8
680.4
1,829.4
Liu Jiade
Robinson Drake Pike
250.0
70.0
320.0
320.0
320.0
208.3
Financial Report
67.9
For the year ended 31 December 2017
Appropriation to reserves
(24,848)
(24,848)
161,672
25,027
24,787
28,191
29,807
53,860
income for the year
Other comprehensive
As at 1 January 2016
RMB million
1,927
RMB million
reserve
reserve fund
RMB million
General
Discretionary
Statutory
reserve fund
RMB million
securities
RMB million
premium
RMB million
Share available-for-sale
Unrealised
gains/(losses)
from
(r) Reserves
Refer to Note 32 for the information of distribution to other equity instruments holders for the year ended
31 December 2017. As at 31 December 2017, there were no accumulated distributions unpaid attributable
to other equity instruments holders.
7,791
273,221
Total
7,791
3,438
7,292
30,152
33,336
(3,280)
53,860
As at 31 December 2017
8,363
3,218
1,927
3,218
Appropriation to reserves
(8,239)
(8,239)
income for the year
1,927
Other comprehensive
26,954
28,225
30,118
4,959
53,860
As at 1 January 2017
144,116
26,954
28,225
30,118
4,959
53,860
As at 31 December 2016
144,116
283,368
Equity attributable to other equity instruments holders of the Company
Equity attributable to ordinary equity holders of the Company
- deferred tax assets to be recovered within 12 months
- deferred tax assets to be recovered after 12 months
Deferred tax assets:
The analysis of deferred tax assets and deferred tax liabilities during the year is as follows:
(3,991)
2,266
(1,401)
4,148
480
4,148
(6,737)
(1,401)
(ii)
Subtotal
As at 31 December 2017
available-for-sale securities
- Portion of fair value changes on
- Available-for-sale securities
comprehensive income
(Charged)/credited to other
805
731
(998)
1,072
(Charged)/credited to net profit
(7,543)
1,535
(2,670)
attributable to participating
policyholders
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
Equity attributable to equity holders of the Company
281,012
291,159
RMB million
As at 31
December 2016
As at 31
December 2017
RMB million
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(q) Other equity instruments
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
262
(7,543)
(3,991)
Net deferred tax liabilities
(13,862)
(10,116)
Subtotal
(1,310)
(2,133)
(12,552)
(7,983)
- deferred tax liabilities to be settled after 12 months
- deferred tax liabilities to be settled within 12 months
Deferred tax liabilities:
6,319
6,125
3,561
4,410
2,758
1,715
30,172
(6,408)
144,240
Provisions and contingencies
Liu Huimin (iii)
Liu Jiade (ii)
Miao Jianmin (i)
1,618.8
87.6
131.2
1,400.0
Lin Dairen
Yang Mingsheng
RMB thousand
Total
Pension scheme
contributions
Benefits in kind
Yin Zhaojun (iv)
paid
Name
year
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the
ended 31 December 2017 are as follows:
(a) Directors' and chief executive's emoluments
The total compensation package for the directors, supervisors, chief executive and senior management for the year
ended 31 December 2017 in accordance with the related measures for compensation management of the Company
has not yet been finalised. The amount of the compensation not provided for is not expected to have a significant
impact on the Group's 2017 consolidated financial statements. The final compensation will be disclosed in a
separate announcement when determined.
41 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
542
344
10
9
324
Remuneration
177
Wang Sidong
320.0
Notes to the Consolidated Financial Statements (continued)
Annual Report 2017
China Life Insurance Company Limited
Financial Report
(iv) Yin Zhaojun was appointed as non-executive director on 31 July 2017.
(iii) Liu Huimin was appointed as non-executive director on 31 July 2017.
Liu Jiade resigned as non-executive director on 8 August 2017.
(ii)
(i) Miao Jianmin resigned as non-executive director on 7 April 2017.
300.0
300.0
Leung Oi-Sie Elsie
320.0
Chang Tso Tung Stephen
320.0
320.0
320.0
Robinson Drake Pike
1,350.6
87.6
129.0
1,134.0
Xu Haifeng
1,350.6
87.6
129.0
1,134.0
320.0
Tang Xin
208
158
RMB million
As at 31
December 2016
RMB million
As at 31
December 2017
RMB million
Operating lease commitments - as lessee
Total
Others
Property, plant and equipment
Investments
Contracted, but not provided for
Capital commitments of the Company relating to property development projects and investments:
(ii)
(i) Capital commitments
264
(t) Commitments
265
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
Notes to the Consolidated Financial Statements (continued)
Financial Report
263
Annual Report 2017
China Life Insurance Company Limited
Financial Report
588
493
As at 31
December 2016
RMB million
December 2017
RMB million
As at 31
Pending lawsuits
The following is a summary of the significant contingent liabilities:
For the year ended 31 December 2017
86,926
40,804
4,588
As at 31
December 2016
As at 31
December 2017
RMB million
China Life Insurance Company Limited Annual Report 2017
Total
Later than one year but not later than five years
Later than five years
Not later than one year
The future minimum rentals receivable under non-cancellable operating leases are as follows:
1,379
1,873
27
44
761
1,080
591
749
RMB million
RMB million
As at 31
December 2016
As at 31
December 2017
(iii) Operating lease commitments - as lessor
Total
years
Later than one year but not later than five
Later than five years
Not later than one year
The future minimum lease payments under non-cancellable operating leases are as follows:
45,053
91,514
1
4,248
(s)
As at 1 January 2017
Xu Hengping
1,535
Disbursements
Automated policy loans
Land use rights
Investments receivable
(m) Other assets
Total
Current
Non-current
Total
Others
Debt securities
Bank deposits
Accrued investment income
Total
Due from related parties
After 90 days
Maturing:
(1)
(k) Securities purchased under agreements to sell
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
259
China Life Insurance Company Limited Annual Report 2017
Financial Report
Unlisted debt securities include those traded on the Chinese interbank market and those not publicly traded.
Unlisted equity securities include those not traded on stock exchanges, which are mainly open-ended funds
with public market price quotation.
204,046
127,544
Within 30 days
50,092
Others
Current
Non-current
11,142
5,822
44,632
44,361
55,774
50,183
2,528
4,116
17,613
21,288
35,633
24,779
RMB million
Total
RMB million
December 2017
As at 31
43,100
35,761
43,100
35,631
130
RMB million
RMB million
As at 31
December 2016
As at 31
December 2017
China Life Insurance Company Limited Annual Report 2017
260
Total
As at 31
December 2016
50,699
10,395
6,587
8,682
153,954
76,845
3,133
4,323
143,871
61,516
6,578
8,985
372
2,021
RMB million
RMB million
14,093
As at 31
December 2016
Common stocks
Funds
Equity securities
Subtotal
Others
Corporate bonds
Government agency bonds
Government bonds
Debt securities
Securities at fair value through profit or loss
(j)
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(7,543)
Subtotal
42,017
35,999
50,699
6,284
7,187
74
79
33,339
36,846
Total
Subtotal
Unlisted
Listed overseas
Listed in Hong Kong, PRC
Listed in Mainland, PRC
Equity securities
Subtotal
153,954
76,845
89
134,379
51,579
Unlisted
292
Listed overseas
19,486
24,974
Listed in Mainland, PRC
Debt securities
Total
204,046
127,544
50,092
50,183
55,774
As at 31
December 2017
RMB million
Financial Report
261
Annual Report 2017
China Life Insurance Company Limited
Financial Report
30,556
39,678
Total
30,556
39,678
Non-current
Current
30,556
Notes to the Consolidated Financial Statements (continued)
39,678
7,652
9,046
Others
810
78
Interest payable of debt instruments
620
639
Tax payable
654
833
Stock appreciation rights (Note 31)
1,611
Total
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(p) Deferred tax liabilities
(2,670)
(6,408)
As at 31
December 2017
As at 31 December 2016
(4,343)
(4,343)
policyholders
available-for-sale securities
- Portion of fair value changes on
12,626
12,626
- Available-for-sale securities
comprehensive income
(16,883)
1,057
463
1,208
1,072
(16,504)
(1,451)
(614)
Total
RMB million
Others
RMB million
Investments
RMB million
Insurance
RMB million
(Charged)/credited to other
(Charged)/credited to net profit
As at 1 January 2016
Deferred tax assets/(liabilities)
The movements in deferred tax assets and liabilities during the year are as follows:
(i)
1,906
Agent deposits
attributable to participating
2,633
Stock exchange market
Interbank market
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(n) Securities sold under agreements to repurchase
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
14,252
30,480
5,768
5,694
8,484
24,786
14,252
30,480
Total
2,320
846
876
1,718
2,704
2,814
3,050
5,671
5,605
15,466
As at 31
1,024
December 2016
RMB million
2,779
Maturing:
883
Total
Payable to constructors
6,466
3,713
9,270
8,006
Within 30 days
9,614
Salary and welfare payable
Interest payable to policyholders
As at 31
December 2016
RMB million
As at 31
December 2017
RMB million
(o) Other liabilities
For debt repurchase transactions through the stock exchange, the Company is required to deposit certain
exchange-traded bonds into a collateral pool with fair value converted at a standard rate pursuant to the
stock exchange's regulation which should be no less than the balance of the related repurchase transaction.
As at 31 December 2017, the carrying value of securities deposited in the collateral pool was RMB139,314
million (as at 31 December 2016: RMB81,280 million). The collateral is restricted from trading during the
period of the repurchase transaction.
Brokerage and commission payable
As at 31 December 2017, bonds with a carrying value of RMB78,140 million (as at 31 December 2016:
RMB76,157 million) were pledged as collateral for financial assets sold under agreements to repurchase
resulted from repurchase transactions entered into by the Company in the interbank market.
65,430
85,316
81,039
85,316
81,039
85,316
15,609
11,633
81,039
73,683
RMB million
RMB million
5,659
As at 31
December 2016
As at 31
December 2017
Mr. Cui Yu.
The cover photo of the printed version of this report was photographed by
成己为人
In case of any discrepancy between the Chinese version and the English version of
this report, the Chinese version shall prevail; in case of any discrepancy between
成人达己
the printed version and the website version of this report, the website version shall
prevail.
80
4,368
Single
811
1,064
First-year business of long-term insurance
15,191
18,586
Other Channels¹
18,782
20,840
Short-term insurance business
703
Single
999
Renewal business
859
943
First-year regular
3,425
90
4,571
5,430
First-year regular
Exclusive Individual Agent Channel. During the Reporting Period, the exclusive individual agent
channel maintained a strong growth with its business structure continuously optimized and the
quality of its sales force further enhanced. Gross written premiums from the exclusive individual
agent channel amounted to RMB353,668 million, an increase of 25.4% year-on-year. In particular,
first-year regular premiums from the exclusive individual agent channel increased by 21.1% year-
on-year, first-year regular premiums with ten years or longer payment duration increased by 26.9%
year-on-year, and the percentages of first-year regular premiums with five years or longer payment
duration and first-year regular premiums with ten years or longer payment duration in first-year
regular premiums were 86.50% and 65.16%, respectively. Short-term insurance premiums increased
721
0
28,193
2016
First-year business of long-term insurance
11.5%
31,444
2017
(RMB million)
exclusive individual agent channel
First-year regular premiums from the
by 26.1% year-on-year. Renewal premiums from the exclusive individual agent channel increased
by 26.9% year-on-year, which significantly drove gross written premiums from this channel. With
adherence to the development strategy of improving the quality and expanding the size of its sales
force, the Company upgraded its system of cultivation for new agents and agent managers and put
more efforts in the improvement of their quality while maintaining the steady growth of its sales
force. As at the end of the Reporting Period, the number of exclusive individual agents reached 1.578
million, a 5.6% increase from the end of 2016, and the average productive agents on a quarterly basis
in the exclusive individual agent channel increased by 29.8% year-on-year, showing a positive trend
for the quality of its sales force.
China Life Insurance Company Limited Annual Report 2017
Other channels mainly include supplementary major medical expenses insurance business, tele-sales, etc.
The Company's channel premium breakdown was presented based on the separate groups of sales personnels
including exclusive individual agent team, group insurance sales representatives, bancassurance sales team
and other distribution channels.
430,498
511,966
2.
1.
Notes:
Total
13,220
15,881
Short-term insurance business
1,160
1,641
Renewal business
984
24,915
74,813
Group Insurance Channel
Single
90,629
First-year business of long-term insurance
282,136
353,668
Exclusive Individual Agent Channel
2016
2017
RMB million
For the year ended 31 December
Gross written premiums categorized by channel
2.
24
Management Discussion
and Analysis
23
Annual Report 2017
Management Discussion
and Analysis
China Life Insurance Company Limited
80,000
70,000
10,000
60,000
50,000
389
26,207
283
90,240
561
894
Short-term insurance business
21,813
31,880
Renewal business
17,835
20,954
First-year regular
68,047
59,777
Single
85,882
80,731
First-year business of long-term insurance
108,256
113,505
Bancassurance Channel
7,497
9,453
Short-term insurance business
199,826
253,586
Renewal business
74,530
First-year regular
20,000
100,000
26.9%
20,000
15,000
10,000
5,000
0
Group Insurance Channel. By closely following national
strategies, the group insurance channel actively played
the role in offering services for people's livelihood,
consistently promoted the diversification of business
development, and effectively pushed forward the steady
development of its various businesses. During the
Reporting Period, gross written premiums from the
group insurance channel amounted to RMB26,207
million, an increase of 5.2% year-on-year. Short-
term insurance premiums from the group insurance channel amounted to RMB20,840 million, an
increase of 11.0% year-on-year. As at the end of the Reporting Period, the number of direct sales
representatives reached over 0.104 million, an increase of 21.4% from the end of 2016.
6,133
18,782
12.5%
11.0%
5,367
25,000
20,840
Gross written premiums from the
group insurance channel
2016
2017
Bancassurance Channel. In 2017, the bancassurance
channel put more efforts in business transformation.
While further controlling the scale of single premium
business, the Company strengthened the development
of regular premium business to improve the value
contributed by bancassurance channel. During the
Reporting Period, gross written premiums from the
bancassurance channel were RMB113,505 million,
an increase of 4.8% year-on-year. In particular, single
premiums were RMB59,777 million, a decrease of
12.2% year-on-year, first-year regular premiums were RMB20,954 million, an increase of 17.5%
year-on-year, and renewal premiums were RMB31,880 million, an increase of 46.2% year-on-year.
First-year regular premiums with ten years or longer payment duration were RMB6,139 million,
an increase of 46.3% year-on-year. The percentage of first-year regular premiums with five years or
longer payment duration in first-year regular premiums was 55.9%. The value of one year's sales of
the bancassurance channel increased by 150.4% year-on-year, with a rise of 5.6 percentage points
of its proportion in the value of one year's sales of the Company. The bancassurance channel kept
on expanding the electronic bank sales channels, such as online banking, self-service terminals and
mobile banking, etc., to enhance its service network, as a result of which the regular premium business
operated through the channels of major banks and postal offices achieved a fast growth. As at the end
of the Reporting Period, the number of sales representatives in the bancassurance channel reached
0.339 million, an increase of 43.9% from the end of 2016. The average active insurance planners on a
monthly basis in the bancassurance channel increased by 11.3% year-on-year.
■Single premiums ■First-year regular premiums ■Renewal premiums
120,000
80,000
17,835 21,813
46.2%
17.5%
60,000
(RMB million)
30.000
Short-term insurance premiums
■Long-term insurance premiums
Comprehensive
investment yield
40.000
Net
investment yield
Gross
investment yield
0.00%
2.43%
1.00%
2.00%
3.00%
4.00%
4.55%
4.66%
4.61%
5.00%
4.91%
5.16%
Investment yield
6.00%
In 2017, the global economy continued to recover with ongoing expansion and mild inflation in general,
and the developed economies were inclined to tighten their monetary policies. The Chinese economy
maintained a stable growth with its structure continuously optimized and both quality and efficiency
further improved. In the context of preventing risks and deleveraging in the financial industry, the Chinese
government maintained a prudent and moderate monetary policy and intensely introduced a variety of
regulatory policies. Bond yield increased significantly, and A Share market experienced obvious structural
differentiation. In 2017, the Company seized the opportunity of the interest rate hike and increased its
allocation in bonds with long duration and debt-type financial products. The Company maintained its
allocation in equity investment in the open market at a reasonable level and seized structural opportunities,
and also attached great importance to the value of allocation of stocks in the Hong Kong market. The
Company actively pursued good investment opportunities, such as infrastructure, supply-side reforms and
debt-to-equity swap, etc., to broaden the sources of its incomes. As at the end of the Reporting Period, the
Company's investment assets reached RMB2,591,652 million, an increase of 5.6% from the end of 2016. In
2017, the Company's gross investment income reached RMB129,021 million, an increase of RMB20,870
million from 2016 and an increase of 19.3% year-on-year; and the gross investment yield was 5.16%, an
increase of 0.55 percentage point from 2016; the net investment yield was 4.91%, an increase of 0.25
percentage point from 2016; the gross investment yield including net share of profit of associates and joint
ventures was 5.16%, an increase of 0.47 percentage point from 2016; the comprehensive investment yield
taking into account the current net fair value changes of available-for-sale securities recognised in other
comprehensive income³ was 4.55%, an increase of 2.12 percentage points from 2016.
(III) Asset Management
and Analysis
Management Discussion
China Life Insurance Company Limited Annual Report 2017
26
26
Other Business Channels. During the Reporting Period, gross written premiums from other channels were
RMB18,586 million, an increase of 22.3% year-on-year. The Company actively and steadily developed its
supplementary major medical expenses insurance business and basic social healthcare programs entrusted
by local governments, maintaining its leading position in the market. In particular, 31 branches at the
provincial level carried out more than 260 supplementary major medical expenses insurance programs,
providing services to 420 million urban and rural residents, and carried out administration for over 400
basic social healthcare programs, covering more than 90 million people. The Company actively responded
to the pilot long-term care insurance programs and won the bids for seven projects. In addition, the
Company actively promoted the pilot program of tax-advantaged health insurance throughout China and
carried out online sales with the premiums and number of policies from internet sales increasing rapidly.
40,000
58,796
20,000
68,047
■First-year regular premiums with payment
duration less than 5 years
■First-year regular premiums with payment
■First-year regular premiums with 10 years or longer payment
duration
65.16%
62.17%
24.03%
2016
13.80%
21.34% 2017
13.50%
duration from 5 to 9 years
agent
Structure breakdown of first-year regular
■First-year regular premiums with 10 years or longer payment
duration
100,000
90.000
80,000
■First-year regular premiums with payment
duration less than 10 years
60.000 70,000
50.000
40,000
30,000
46,337
premiums from the exclusive individual
channel
Size expansion and quality improvement of the
exclusive individual agents
2017
12.2%
31,880
20,954
59,777
(RMB million)
bancassurance channel
Long-term premiums from the
2016
2017
Management Discussion
and Analysis
25
Management Discussion
and Analysis
China Life Insurance Company Limited Annual Report 2017
quarterly basis in the exclusive
individual agent channel increased
by 29.8% year-on-year
the average productive agents on a
increased by 5.6%
the number of exclusive
individual agents
21.1%
1.578 million in total
Company was
agents of the
exclusive individual
the number of
0
30,000
652,057
2.46
10,000
Policy Persistency Rate (14 months) (%)
Policy Persistency Rate (26 months) (%)
375
410
2,610
6,536
Group insurance channel
Bancassurance channel
46,326
53,170
channel
agent
Note 2
Including: Exclusive individual
60,117
Value of one year's sales Note 1
19,127
32,253
Net profit attributable to equity holders of the Company
108,151
129,021
Gross investment income
51,378
66,003
years or longer payment duration
49,311
Note 2
90.90
90.20
Continuous improvement in business value. In
2017, the value of one year's sales of the Company
was RMB60,117 million, an increase of 21.9% year-
on-year. As at 31 December 2017, the embedded
value of the Company was RMB734,172 million,
an increase of 12.6% year-on-year; the Company
had approximately 268 million long-term insurance
policies in-force, an increase of 8.9% year-on-year;
and the surrender rate was 4.13%, an increase
of 0.59 percentage point year-on-year. During
the Reporting Period, the Policy Persistency Rate (14 months and 26 months) reached 90.90% and 85.70%,
respectively.
21.9%
60,117
Value of one year's sales
(RMB million)
2017
Management Discussion
and Analysis
21
Annual Report 2017
China Life Insurance Company Limited
Management Discussion
and Analysis
The Persistency Rate for long-term individual life insurance policy is an important operating performance indicator for
life insurance companies. It measures the ratio of in-force policies in a pool of policies after a certain period of time. It
refers to the proportion of policies that are still effective during the designated month in the pool of policies whose issue
date was 14 or 26 months ago.
734,172
2.68
31 December 2017 31 December 2016
As at
As at
2.
Numbers may not be additive due to rounding.
1.
Notes:
Number of in-force policies (hundred million)
Embedded value
85.90
85.70
First-year regular premiums with ten
Constant optimization in premiums structure.
During the Reporting Period, out of the premiums
from new policies, first-year regular premiums
amounted to RMB113,121 million, an increase of
93,945
Including: First-year regular premiums
3
In 2017, facing the complicated and changing external environment and fierce market competition, the Company
actively implemented an innovation-driven development strategy, adhered to the value-oriented principle, adopted
multiple measures, sped up business development and promoted transformation and upgrade by adhering to the
operating guideline of “prioritizing value, strengthening sales force, optimizing business structure, achieving stable
growth and safeguarding against risks". The Company operated in a generally sound and prudent manner, with
its business maintaining a rapid growth and its sales force expanding with better quality. During the Reporting
Period, the Company's gross written premiums were RMB511,966 million, an increase of 18.9% year-on-year.
The Company's market share³ was approximately 19.7%, maintaining the first place in life insurance industry in
China. With the investment yield growing steadily and the business value and profitability improving significantly,
the Company achieved sound and fast development.
From left to right: Mr. Zhan Zhong, Mr. Zhao Peng, Mr. Zhao Lijun, Mr. Xu Haifeng, Mr. Lin Dairen, Mr. Xu Hengping,
Mr. Li Mingguang, Mr. Xiao Jianyou, Mr. Ruan Qi, Ms. Yang Hong
中国人寿保险股份有限公司
China Life Insurance Company Limited
Management Discussion
and Analysis
42
Future Prospect and Risk Analysis
42
Social Responsibility
Performance of the Corporate
2017
40
31
20
20
Other Analysis
Statements
Consolidated Financial
Analysis of Major Items of the
Operations in 2017
Review of Business
Management
Discussion and Analysis
■2016 ■2017
40
2016
Gross written premiums
(RMB million)
511,966
206,996
223,860
Premiums from new policies
430,498
511,966
Gross written premiums
2016
2017
RMB million
(I) Key Performance Indicators
REVIEW OF BUSINESS OPERATIONS IN 2017
I.
China Life Insurance Company Limited Annual Report 2017
20
20
Calculated according to the premium data of life insurance companies in 2017 released by the CIRC.
18.9%
600,000
500,000
400,000
300.000
200.000
100,000
0
430,498
113,121
2016
49,311
0
21,869
26,863
Renewal business
6,289
7,721
First-year regular
25,852
33,124
Single
32,141
40,845
Accident Insurance Business
First-year business
67,708
Health Insurance Business
201,315
260,913
Renewal business
87,617
105,256
First-year regular
72,973
63,653
160,590
54,010
14,436
14,583
First-year business
0
25.4%
54,010
67,708
2016
2017
(RMB million)
insurance business
Gross written premiums from the health
During the Reporting Period, gross written premiums from the life insurance business of the
Company amounted to RMB429,822 million, an increase of 18.8% year-on-year. In particular,
first-year regular premiums were RMB105,256 million, an increase of 20.1% year-on-year, and the
percentage of first-year regular premiums in first-year premiums was 62.32%, an increase of 7.76
percentage points year-on-year. Single premiums were RMB63,653 million, a decrease of 12.8% year-
on-year, and renewal premiums were RMB260,913 million, an increase of 29.6% year-on-year. Gross
written premiums from the health insurance business amounted to RMB67,708 million, an increase
of 25.4% year-on-year. Gross written premiums from the accident insurance business amounted to
RMB14,436 million, basically remaining at the same level of 2016.
Note: Single premiums in the above table include premiums from short-term insurance business.
430,498
511,966
Total
318
330
Renewal business
39
144
First-year regular
14,226
13,962
Single
14,265
14,106
168,909
361,905
429,822
Single
20.4% year-on-year, and single premiums amounted
to RMB63,671 million, a decrease of 12.8% year-
on-year. First-year regular premiums with ten years
or longer payment duration reached RMB66,003
million, an increase of 28.5% year-on-year. Renewal
premiums amounted to RMB288,106 million, an
increase of 28.9% year-on-year. The percentage of first-year regular premiums in long-term first-year premiums,
the percentage of first-year regular premiums with ten years or longer payment duration in first-year regular
premiums and the percentage of renewal premiums in gross written premiums increased by 7.71, 3.66 and 4.35
percentage points, respectively. The first-year regular business and renewal business became stronger driving forces,
which further optimized the premium structure and reinforced the sustainable development of the Company.
Single premiums
■First-year regular premiums with 10 years or longer payment
duration
Short-term premiums
Renewal premiums
350,000
300,000
250,000
200.000
150,000
100,000
50.000
450,000
First-year regular premiums with payment
duration less than 10 years
500,000
400.000
28.9%
288,106
223,502
72,991 40,060 42,567 51,378
28.5%
12.8% 17.5% 10.7%
0
2016
63,671 47,068 47,118 66,003
2017
Gross written premiums structure
(RMB million)
10,000 20,000 30,000 40,000 50,000 60,000 70,000
2017
20.000
Gross investment income
(RMB million)
19.3%
First-year business
Life Insurance Business
2016
2017
RMB million
year ended 31 December
For the
1.
Gross written premiums categorized by business
(II) Insurance Business
China Life Insurance Company Limited Annual Report 2017
22
22
Surrender rate = Surrender payment/(Liability of long-term insurance contracts at the beginning of the period + Premium
income of long-term insurance contracts during the period)
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
108,151
2016
Significant increase in the Company's profit. In
2017, interest income from investment portfolios
achieved a stable growth, and the net fair value
gains through profit or loss increased greatly.
The Company's gross investment income was
RMB129,021 million, an increase of 19.3% year-
on-year. Due to the impact of a fairly fast increase
in investment income and the update on the
discount rate assumption for reserves of traditional insurance contracts, net profit attributable to equity holders of
the Company during the Reporting Period was RMB32,253 million, an increase of 68.6% year-on-year.
129,021
Comprehensive investment yield = (Gross investment income - Interest paid for securities sold under agreements to repurchase
+ Current net fair value changes of available-for-sale securities recognised in other comprehensive income)/((Investment assets at
the beginning of the period - Securities sold under agreements to repurchase at the beginning of the period + Investment assets
at the end of the period - Securities sold under agreements to repurchase at the end of the period)/2)
94,515
27
0.05%
1,191
0.12%
3,064
Investment properties
3.23%
79,390
3.64%
Other equity investments
3.34%
81,854
1.56%
40,327
products
Bank wealth management
4.89%
119,973
3.91%
101,236
Funds⭑
5.71%
Cash and others
140,166
84,771
110,584
China Life Insurance Company Limited Annual Report 2017
China Life Insurance Company Limited Annual Report 2017
Cash and others include cash, cash at banks, short-term bank deposits and securities purchased under
agreements to resell.
Other equity investments include private equity funds, unlisted equities, preference shares, equity
investment plans, and specialized asset management plans, etc.
million, respectively.
Funds include equity funds, bond funds and money market funds, etc. In particular, the balances of money
market funds as at 31 December 2017 and 31 December 2016 were RMB6,942 million and RMB13,609
Other fixed-maturity investments include policy loans, statutory deposits-restricted, bank wealth
management products, and interbank certificates of deposits, etc.
Debt-type financial products include debt investment schemes, equity investment plans, trust schemes,
project asset-backed plans, credit asset-backed securities, specialized asset management plans, and asset
management products, etc.
The figures as at the end of last year were adjusted on the same basis.
6.
5.
4.
3.
2.
1.
Notes:
100.00%
2,453,283
100.00%
2,591,652
4.51%
3.27%
6.69%
Total
Common stocks
Term deposits
78.27%
1,920,125
80.81%
2,094,289
Fixed-maturity investments
Percentage
Amount
Percentage
Amount
As at 31 December 2017
RMB million
Investment category
As at the end of the Reporting Period, our investment assets categorized by investment object are set
out as below:
Investment Portfolios
1.
28
Management Discussion
and Analysis
173,450
22
449,400
17.34%
As at 31 December 2016¹
21.94%
17.17%
421,383
538,325
15.80%
409,528
Equity investments
5.32%
5.96%
154,522
investments³
Other fixed-maturity
130,532
5.38%
131,880
11.65%
301,761
Debt-type financial products²
45.63%
1,119,388
45.86%
1,188,606
Bonds
4.
3.
2.
Notes:
5.16%
and Analysis
Management Discussion
4.69%
Gross investment yield including net share
of profit of associates and joint ventures
5.
4.61%
6.
China Life Insurance Company Limited Annual Report 2017
The figures for the same period of last year were adjusted on the same basis.
Net investment income includes interest income from debt investments, interest income from deposits,
dividend and bonus from equity investments, interest income from loans, and net income from investment
properties, etc.
Gross investment income = Net investment income + Net realized gains on financial assets + Net fair value
gains through profit or loss
Gross investment income including net share of profit of associates and joint ventures = Gross investment
income + Net share of profit of associates and joint ventures
-
Net investment yield = (Net investment income Interest paid for securities sold under agreements to
repurchase)/((Investment assets at the beginning of the period
Securities sold under agreements to
repurchase at the beginning of the period + Investment assets at the end of the period – Securities sold under
agreements to repurchase at the end of the period)/2)
Gross investment yield = (Gross investment income - Interest paid for securities sold under agreements
to repurchase)/((Investment assets at the beginning of the period - Securities sold under agreements to
repurchase at the beginning of the period + Investment assets at the end of the period – Securities sold under
agreements to repurchase at the end of the period)/2)
Gross investment yield including net share of profit of associates and joint ventures = (Gross investment
income + Net share of profit of associates and joint ventures – Interest paid for securities sold under
agreements to repurchase)/((Investment assets at the beginning of the period + Investments in associates
and joint ventures at the beginning of the period - Securities sold under agreements to repurchase at
the beginning of the period + Investment assets at the end of the period + Investments in associates and
joint ventures at the end of the period - Securities sold under agreements to repurchase at the end of the
period)/2)
29
and Analysis
5.16%
Management Discussion
7.
Gross investment yield
2017
4.91%
3.
6,333
In 2017, by seizing the opportunity of the interest rate hike, the Company increased its allocation
in fixed income assets and increased moderately in stock investments. Among the major types of
investments, the percentage of investment in bonds increased to 45.86% from 45.63% as at the end
of 2016, the percentage of term deposits changed to 17.34% from 21.94% as at the end of 2016, the
percentage of investment in stocks and funds (excluding money market funds) increased to 10.33%
from 10.05% as at the end of 2016, and the percentage of investment in debt-type financial products
increased to 11.65% from 5.38% as at the end of 2016.
2.
Investment Income
For the year ended 31 December
RMB million
2016¹
Net investment income²
122,796
109,207
+Net realized gains on financial assets
42
6,038
+Net fair value gains through profit or loss
6,183
(7,094)
Gross investment income³
129,021
108,151
+Net share of profit of associates and joint ventures
7,143
5,855
Gross investment income including net share
of profit of associates and joint ventures
136,164
114,006
Net investment yield'
4.66%
The balances of the Company's fixed income investment and equity investment increased along
with the continuous expansion of its investment scale. In 2017, the interest income from investment
portfolios grew steadily, the net fair value gains through profit or loss increased, and the gross
investment income increased by 19.3% from 2016. During the Reporting Period, the Company's net
investment income was RMB122,796 million, an increase of RMB13,589 million from 2016, and the
net investment yield was 4.91%, an increase of 0.25 percentage point from 2016; the gross investment
income was RMB129,021 million, an increase of RMB20,870 million from 2016, and the gross
investment yield was 5.16%, an increase of 0.55 percentage point from 2016; the
gross investment
(7,094)
Major Investments
14,320
13,991
2.4%
business
Investment income*
122,727
Net realised gains
42
109,147
6,038
12.4%
-99.3%
on financial assets
Please refer to the table below
A decrease in spread income of
stocks and funds in available-for-
sale securities
Accident insurance
Net fair value gains through
6,333
N/A
profit or loss
Other income
7,493
6,460
16.0%
An increase in spread income and
fair value of stocks in securities at
fair value through profit or loss
An increase in commission fees
earned from CLP&C
China Life Insurance Company Limited
and Analysis
Management Discussion
Annual Report 2017
6,183
oriented businesses
Rapid development in protection-
25.2%
During the Reporting Period, there was no material equity investment or non-equity investment of the
Company that is subject to disclosure requirements.
(IV) Operational Support and Customer Services
Adhering to the “customer-oriented” operating concept, the Company has consistently pushed forward the
product diversification development strategy and made greater efforts in developing protection-oriented and
long-term saving products so as to meet multifarious insurance demands of customers. In 2017, through
construction of the “New Generation of Integrated Business Processing System”, the Company focused
on the critical needs of customer service and key problems restricting the improvement of management
efficiency, optimized 159 sub-processes, established a customer experience management system and greatly
pushed forward transformation of its operational service system into a more digitalized and intelligent one.
The efficiency and convenience of customer services was significantly improved. 95% of policy services
could be processed online and the percentage of policy conservation through online channels increased
by 15 percentage points year-on-year. Mobile claims settlements were available at all service centers, with
the number of the claims settled increased by nearly 10 times year-on-year. As the Company adopted fast-
track claims settlement, the number of claims settled increased by 4.5 times year-on-year. The use of the
"Smart Voice Navigation” system has shortened customers' waiting time by 65%, and the launch of “Smart
Customer Service" system enabled quick responses to customer service requests. 19.16 million return visits
were made by customers via WeChat or “China Life E-Bao”, which replaced 50.3% of return visits by
telephone, and 15.98 million policy receipts were sent via WeChat, which replaced 86% of receipts delivered
by agents. The Company actively participated in the offsite settlement and reimbursement for medical
services across provinces under the New Village Cooperative Medical Scheme launched by the National
Health and Family Planning Commission, facilitating offsite settlement for patients by building a unified
settlement platform. The Company continued to introduce various services to customers. It took the lead
in the industry in rolling out intelligent robots to provide various smart services to customers at counter,
which integrated insurance services with artificial intelligence. The Company put more efforts in carrying
out activities of customer care services by building the “China Life Health Platform”, launching new services
such as chronic disease management, in-patient and out-patient consulting and health consulting services,
and organizing nearly 20,000 online and offline activities on a variety of topics such as health, sports and
parents-children relationship. In addition, the Company continued to broaden the scope for the global
emergency assistance services and VIP services in order to satisfy the multi-layer and personalized demands
of customers.
30
China Life Insurance Company Limited Annual Report 2017
II. ANALYSIS OF MAJOR ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS
(I) Analysis of Major Items of the Consolidated Statement of Comprehensive Income
1. Revenues
For the
year ended 31 December
RMB million
2017
2016
Change
Main Reasons for Change
Net premiums earned
506,910
426,230
Life insurance business
429,267
361,649
18.9%
18.7%
-
Fast growth in renewals and first-
year regular premiums
Health insurance business
63,323
50,590
yield including net share of profit of associates and joint ventures was 5.16%, an increase of 0.47
percentage point from 2016; the comprehensive investment yield taking into account the current
net fair value changes of available-for-sale securities recognised in other comprehensive income was
4.55%, an increase of 2.12 percentage points from 2016.
0
Dividends paid to policyholders
Investment properties
31 December
As at
RMB million
31 December
2017
As at
Note
Including: Residual margin^
Total of insurance contracts
Accident insurance
Health insurance
Life insurance
Insurance Contracts
2016
*
36
Interest-bearing loans and other borrowings include a five-year bank loan of GBP275 million with a
maturity date on 17 June 2019, a three-year bank loan of USD970 million with a maturity date on 27
September 2019, a three-year bank loan of USD940 million with a maturity date on 30 September 2019
and a one-month bank loan of EUR100 million with a maturity date on 11 January 2018. All the above
are fixed rate loans. A three-year loan of EUR400 million with a maturity date on 6 December 2020,
which is floating rate loan.
Note:
Affected by a decrease in the
fair value of available-for-sale
securities
-37.3%
7,768
4,871
Deferred tax liabilities
debts
Redemptions of subordinated
N/A
37,998
China Life Insurance Company Limited Annual Report 2017
1,914,597
102,190
8,346
1,762,363
77,837
China Life Insurance Company Limited Annual Report 2017
38
We believe that our sources of liquidity are sufficient to meet our current cash requirements.
Our principal cash outflows primarily relate to the payables for the liabilities associated with our
various life insurance, annuity, accident insurance and health insurance products, operating expenses,
income taxes and dividends that may be declared and paid to our equity holders. Cash outflows arising
from our insurance activities primarily relate to benefit payments under these insurance products, as
well as payments for policy surrenders, withdrawals and policy loans.
Liquidity Uses
2.
Our investment portfolio also provides us with a source of liquidity to meet unexpected cash outflows.
We are also subject to market liquidity risk due to the large size of our investments in some of the
markets in which we invest. In some circumstances, some of our holdings of investment securities
may be large enough to have an influence on the market value. These factors may adversely affect our
ability to sell these investments or sell them at a fair price.
Our cash and bank deposits can provide us with a source of liquidity to meet normal cash outflows. As
at the end of the Reporting Period, the balance of cash and cash equivalents was RMB48,586 million.
In addition, the vast majority of our term deposits in banks allow us to withdraw funds on deposits,
subject to a penalty interest charge. As at the end of the Reporting Period, the amount of term
deposits was RMB449,400 million.
Our cash inflows mainly come from insurance premiums, income from non-insurance contracts,
interest income, dividend and bonus, and proceeds from sales and maturity of investment assets. The
primary liquidity risks with respect to these cash inflows are the risk of surrender by contract holders
and policyholders, as well as the risks of default by debtors, interest rate fluctuations and other market
volatilities. We closely monitor and manage these risks.
Liquidity Sources
1.
(III) Analysis of Cash Flows
Management Discussion
and Analysis
Annual Report 2017 37
China Life Insurance Company Limited
Management Discussion
and Analysis
As at the end of the Reporting Period, equity holders' equity was RMB320,933 million, a 5.7%
increase from the end of 2016. This was primarily due to the combined impact of total comprehensive
income and profit distribution during the Reporting Period.
Equity Holders' Equity
3.
As at the date of the statement of financial position, the reserves of various insurance contracts of the
Company passed the liability adequacy test.
Note: The residual margin is a component of insurance contract reserve, which results in no Day 1 gain at the
initial recognition of an insurance contract. The residual margin is set to zero if it is negative. The growth
of residual margin arises mainly from new business.
515,374
1,847,986
2,025,133
607,941
7,786
Bonds payable
restricted
An increase in borrowings in
foreign currency
other borrowings
1,847,986
2,025,133
Insurance contracts*
Main Reasons for Change
Change
As at 31
December
2016
December
2017
As at 31
RMB million
Major Liabilities
2.
Management Discussion
9.6%
and Analysis
35
Annual Report 2017
China Life Insurance Company Limited
New investments in associates
and joint ventures
34.8%
119,766
161,472
Investments in associates
and joint ventures
An increase in investment
properties
157.3%
1,191
3,064
55
The accumulation of insurance
Investment contracts
232,500
16.2%
16,170
18,794
Interest-bearing loans and
balances payable
An increase in maturities payable
14.8%
39,038
44,820
Annuity and other insurance
dividends payable
31
-4.3%
87,725
83,910
Policyholder
management
An increase in the scale of certain
investment contract accounts
The needs for liquidity
business and renewal business
liabilities from new insurance
agreements to repurchase
7.7%
81,088
87,309
Securities sold under
18.8%
195,706
Note
and Analysis
1.
32
business
RMB million
Main Reasons for Change
The impact of a fairly fast
increase in investment income
and the update on the discount
rate assumption for reserves of
traditional insurance contracts
An increase in investment income
Health insurance
business
3,246
2,093
55.1%
Accident insurance
528
852
-38.0%
business
Fluctuation in claims expenses of
certain businesses
Other businesses
8,582
6,165
39.2%
Affected by an increase in net
share of profit of associates and
joint ventures
4.
Income Tax
5.
During the Reporting Period, income tax of the Company was RMB8,919 million, a year-on-
year increase of 109.5%. This was primarily due to the combined impact of the taxable income and
deferred tax.
Net Profit
During the Reporting Period, net profit attributable to equity holders of the Company was
RMB32,253 million, a year-on-year increase of 68.6%. This was primarily due to the impact of a
fairly fast increase in investment income and the update on the discount rate assumption for reserves
of traditional insurance contracts.
China Life Insurance Company Limited Annual Report 2017
99.0%
(II) Analysis of Major Items of the Consolidated Statement of Financial Position
14,732
Life insurance
1,068
1,048
1.9%
fund contribution
An increase in investment yield
from participating accounts
An increase in underwriting costs
for regular premium business due
to the growth of the Company's
business and the optimization of
its business structure
A decrease in interest paid due
to redemptions of subordinated
debts
The growth of business
Payable to third party holders
of consolidated structured
entities and the change of foreign
exchange rates applicable to the
currency for foreign assets and
liabilities
The growth of insurance business
China Life Insurance Company Limited
Annual Report 2017
33
and Analysis
Management Discussion
34
3.
Profit before Income Tax
For the year ended 31 December
2017
2016
Change
Profit before income tax
41,671
23,842
74.8%
29,315
1.
Major Assets
RMB million
profit or loss
Securities purchased
36,185
43,538
-16.9%
A decrease in the scale of
commercial papers
fair value through profit or loss
The needs for liquidity
in bonds at
under agreements
management
to resell
Cash and cash
48,586
67,046
-27.5%
The needs for liquidity
equivalents
management
Loans
383,504
226,573
69.3%
An increase in the allocation of
trust schemes in loans
Statutory deposits -
value through
-34.6%
209,124
136,809
As at 31
December
2017
As at 31
December
2016
Change
Main Reasons for Change
Investment assets
2,591,652
Term deposits
449,400
2,453,283
538,325
5.6%
-16.5%
The maturity of certain term
deposits
Held-to-maturity
Statutory insurance
717,037
20.6%
securities
Management Discussion
Available-for-sale
810,734
766,423
5.8%
An increase in the allocation
securities
of stocks in available-for-sale
securities
and Analysis
Management Discussion
Securities at fair
594,730
32.2%
An increase in the allocation of
financial bonds
16,320
2.
Management Discussion
and Analysis
China Life Insurance Company Limited Annual Report 2017
12.4%
109,147
122,727
Total
-23.2%
971
746
Other investment income
from loans
35.8%
12,018
Investment income
from bank deposits
Benefits, Claims and Expenses
-14.4%
For the year ended 31 December
2017
25.0%
40,513
50,624
Health insurance business
An increase in the scale of life
13.4%
360,922
409,410
Life insurance business
claims expenses
14.5%
407,045
466,043
Insurance benefits and
Main Reasons for Change
Change
2016
RMB million
An increase in the scale of health
insurance business
27,851
Investment income
An increase in dividend
profit or loss
A decrease in interest income
resulting from the reducing
scale of commercial papers in
bonds at fair value through
Main Reasons for Change
RMB million
through profit or loss
securities at fair value
-26.9%
6,210
4,538
Investment income from
Change
2016
2017
For the year ended 31 December
Investment Income
*
income from available-for-sale
equity investment
23,827
An increase in interest income
resulting from the growth of
allocation in financial bonds
An increase in interest income
securities
held-to-maturity
23.4%
24,854
30,669
Investment income from
securities
available-for-sale
25.2%
37,243
46,627
Investment income from
agreements to resell
securities purchased under
A decrease in the scale of
trust schemes
from the increasing scale of
A decrease in interest income
resulting from the reducing
scale of deposits
Accident insurance
insurance business
5,610
52,022
24.5%
policy acquisition costs
Finance costs
4,601
4,767
64,789
-3.5%
35,953
31,854
12.9%
6,426
4,859
6,009
Administrative expenses
Underwriting and
Other expenses
resulting from
participation in profits
business
8,076
5,316
51.9%
Fluctuation in claims expenses of
Investment contract benefits
An increase in the scale of
37.7%
certain businesses
15,883
7.1%
Policyholder dividends
investment contracts
21,871
Net assets, defined as assets less corresponding policy liabilities and other liabilities valued; and
China Life Insurance Company Limited prepares financial statements to public investors in accordance with the relevant
accounting standards. An alternative measure of the value and profitability of a life insurance company can be provided
by the embedded value method. Embedded value is an actuarially determined estimate of the economic value of the life
insurance business of an insurance company based on a particular set of assumptions about future experience, excluding
the economic value of future new business. In addition, the value of one year's sales represents an actuarially determined
estimate of the economic value arising from new life insurance business issued in one year based on a particular set of
assumptions about future experience.
“Adjusted net worth” is equal to the sum of:
The embedded value of a life insurer is defined as the sum of the adjusted net worth and the value of in-force business
allowing for the cost of required capital.
Net-of-tax adjustments for relevant differences between the market value and the book value of assets, together
with relevant net-of-tax adjustments to certain liabilities.
Embedded Value
45
China Life Insurance Company Limited Annual Report 2017
The values shown below do not consider the future financial impact of transactions between the Company and CLIC,
CLI, AMC, Pension Company, CLP&C, and etc.
Also, the calculation of embedded value and value of one year's sales involves substantial technical complexity and
estimates can vary materially as key assumptions are changed. Therefore, special care is advised when interpreting
embedded value results.
It is important to note that actuarial standards with respect to the calculation of embedded value are still evolving. There
is still no universal standard which defines the form, calculation methodology or presentation format of the embedded
value of an insurance company. Hence, differences in definition, methodology, assumptions, accounting basis and
disclosures may cause inconsistency when comparing the results of different companies.
China Life Insurance Company Limited believes that reporting the Company's embedded value and value of one
year's sales provides useful information to investors in two respects. First, the value of the Company's in-force business
represents the total amount of shareholders' interest in distributable earnings, in present value terms, which can be
expected to emerge over time, in accordance with the assumptions used. Second, the value of one year's sales provides
an indication of the value created for investors by new business activity based on the assumptions used and hence the
potential of the business. However, the information on embedded value and value of one year's sales should not be
viewed as a substitute of financial measures under the relevant accounting basis. Investors should not make investment
decisions based solely on embedded value information and the value of one year's sales.
DEFINITIONS OF EMBEDDED VALUE AND VALUE OF ONE YEAR'S SALES
E
Embedded Value
Embedded Value
43
Value of In-Force Business after Cost of Required Capital (B+ C)
363,673
302,530
Embedded Value (A + D)
734,172
652,057
F
Value of One Year's Sales before Cost of Required Capital
64,627
The market value of assets can fluctuate significantly over time due to the impact of the prevailing market environment.
Hence the adjusted net worth can fluctuate significantly between valuation dates.
53,952
BACKGROUND
The "value of in-force business" and the “value of one year's sales” are defined here as the discounted value of the
projected stream of future shareholders' interest in distributable earnings for existing in-force business at the valuation
date and for one year's sales in the 12 months immediately preceding the valuation date.
2017
PREPARATION AND REVIEW
G
(29,787)
(35,050)
Cost of Required Capital
C
332,317
D
398,723
Value of In-Force Business before Cost of Required Capital
B
349,528
370,500
Adjusted Net Worth
A
2016
31 December
31 December
ITEM
RMB million
Components of Embedded Value and Value of One Year's Sales
Table 1
The embedded value as at 31 December 2017 and the value of one year's sales for the 12 months ended 31 December
2017, the corresponding results as at 31 December 2016 are shown below:
SUMMARY OF RESULTS
China Life Insurance Company Limited Annual Report 2017
46
Other operating assumptions such as mortality, morbidity, lapses and expenses are based on the Company's recent
operating experience and expected future outlook.
Economic assumptions: The calculations are based upon assumed corporate tax rate of 25% for all years. The investment
return is assumed to be 5%. 13% grading to 17% (remaining level thereafter) of the investment return is assumed to be
exempt from income tax. These investment return and tax exempt assumptions are based on the Company's strategic
asset mix and expected future returns. The risk-adjusted discount rate used is 10%.
ASSUMPTIONS
The embedded value and the value of one year's sales were prepared by China Life Insurance Company Limited
in accordance with the “CAA Standards of Actuarial Practice: Appraisal of Embedded Value” issued by the China
Association of Actuaries ("CAA") in November 2016. Willis Towers Watson, an international firm of consultants,
performed a review of China Life's embedded value. The review statement from Willis Towers Watson is contained in
the "Willis Towers Watson's review opinion report on embedded value" section.
The value of in-force business and the value of one year's sales have been determined using a traditional deterministic
discounted cash flow methodology. This methodology makes implicit allowance for the cost of investment guarantees
and policyholder options, asset/liability mismatch risk, credit risk, the risk of operating experience's fluctuation and the
economic cost of capital through the use of a risk-adjusted discount rate.
Cost of Required Capital
2017
(4,641)
Table 3
New Business Margin of One Year's Sales by Channel
48
Channel
Exclusive Individual Agent Channel
Bancassurance Channel
Group Insurance Channel
By FYP
By APE
31 December
31 December
31 December
31 December
2017
2016
2017
2016
47.2%
51.1%
47.3%
51.2%
8.0%
3.0%
23.2%
10.2%
1.1%
1.0%
1.1%
1.1%
The new business margin of one year's sales for the 12 months ended 31 December 2017 by channel is shown below:
(4,510)
410
60,117
375
H
Value of One Year's Sales after Cost of Required Capital (F + G)
60,117
49,311
Note: Numbers may not be additive due to rounding.
Embedded Value
China Life Insurance Company Limited
Annual Report 2017
47
Embedded Value
VALUE OF ONE YEAR'S SALES BY CHANNEL
The value of one year's sales for the 12 months ended 31 December 2017 by channel is shown below:
China Life Insurance Company Limited Annual Report 2017
Table 2
Value of One Year's Sales by Channel
Channel
RMB million
31 December
2017
31 December
2016
Exclusive Individual Agent Channel
Bancassurance Channel
Group Insurance Channel
Total
Note: Numbers may not be additive due to rounding.
53,170
46,326
6,536
2,610
49,311
It is expected that the Company will have sufficient capital to meet its insurance business expenditures
and new investment needs in general in 2018. At the same time, if there is any further capital demand, the
Company will make corresponding financing arrangements based on capital market conditions to further
implement its future business development strategies.
RMB million
Secondly, risks relating to investments and profitability. In the event that the domestic and international
economies do not develop as expected, the volatility of financial markets may become greater and the
market risks relating to investment portfolios and credit risk may rise. The Company may develop new
investment channels, utilize new investment vehicles or appoint new investment managers, which may
expose the Company to new risks. All of the above factors may affect the Company's investment income
and the book value of its assets. Moreover, some of the Company's assets are held in foreign currencies,
which may give rise to the risk of exchange gains and losses arising from exchange rate fluctuations. In
addition, the operational and financial risks of associated enterprises and the fluctuation in their profitability
may undermine the expected returns on investment, which may have certain impacts on the Company's
profitability.
and Analysis
Management Discussion
III. OTHER ANALYSIS
(I) Solvency Ratio
An insurance company shall have the capital commensurate with its risks and business scale. According
to the nature and capacity of loss absorption by capital, the capital of an insurance company is classified
into the core capital and the supplementary capital. The core solvency ratio is the ratio of core capital
to minimum capital, which reflects the adequacy of the core capital of an insurance company. The
comprehensive solvency ratio is the ratio of the sum of core capital and supplementary capital to minimum
capital, which reflects the overall capital adequacy of an insurance company. The following table shows our
solvency ratios as at the end of the Reporting Period:
Core capital
Actual capital
Minimum capital
Core solvency ratio
RMB million
As at 31 December As at 31 December
2017
2016
For the year ended 31 December
Management Discussion
39
and Analysis
3. Consolidated Cash Flows
706,516
639,396
706,623
677,768
254,503
228,080
277.61%
280.34%
277.65%
297.16%
Comprehensive solvency ratio
Note: The China Risk Oriented Solvency System was formally implemented on 1 January 2016. This table is compiled
according to the rules of the system.
The Company has established a cash flow testing system, and conducts regular tests to monitor the
cash inflows and outflows under various scenarios and adjusts the asset portfolio accordingly to ensure
sufficient sources of liquidity.
Annual Report 2017
China Life Insurance Company Limited
104.0%
2016
Change
Main Reasons for Change
Net cash inflows/(outflows)
from operating activities
200,990
89,098
125.6%
The change in the scale of
Net cash inflows/(outflows)
(173,676)
(104,703)
65.9%
from investing activities
Net cash inflows/(outflows)
(45,595)
6,270
N/A
from financing activities
securities at fair value through
profit or loss
The adjustment of investment
asset structure and an increase in
the allocation of bonds with long
duration and debt-type financial
products
Change in account balance of
securities sold under agreements
to repurchase from time to
time as a result of liquidity
management activities
Foreign exchange gains/
(losses) on cash and
cash equivalents
Net decrease in cash
and cash equivalents
(179)
285
N/A
(18,460)
(9,050)
As at the end of the Reporting Period, the Company's comprehensive solvency ratio decreased by 19.51
percentage points from the end of 2016. The decrease in the Company's solvency ratio was due to the
impact of various factors, including the development of the Company's insurance business and the
redemptions of subordinated debts.
(II) Sale of Material Assets and Equity
During the Reporting Period, there was no sale of material assets and equity of the Company.
40
Management Discussion
China Guangfa Bank
Co., Ltd.
The businesses approved by the China Banking
Regulatory Commission including commercial
banking businesses such as public and private
deposits, loans, payment and settlement, and
capital business
15,402
43.686% 2,072,915 113,846
10,204
Note: For details, please refer to Note 8 and Note 33(e) in the Notes to the Consolidated Financial Statements in this
annual report.
(IV) Structured Entities Controlled by the Company
Details of structured entities controlled by the Company is set out in the Note 40(c) to the Consolidated
Financial Statements in this annual report.
China Life Insurance Company Limited Annual Report 2017
41
and Analysis
Management Discussion
IV. PERFORMANCE OF THE CORPORATE SOCIAL RESPONSIBILITY
V.
For the performance by the Company of its corporate social responsibility during the Reporting Period, please
refer to the 2017 Corporate Social Responsibility Report separately disclosed by the Company on the website of
the SSE (http://www.sse.com.cn) and the HKExnews website of the Hong Kong Exchanges and Clearing Limited
(http://www.hkexnews.hk).
FUTURE PROSPECT AND RISK ANALYSIS
(I) Market environment
The
year 2018 marks the 40th anniversary of China's reform and opening-up. With the focus on changes in
major social contradiction, China will promote changes in quality, efficiency and motivation according to
the requirement of high-quality development. It is expected that China's economic development will remain
stable in general with structures becoming more balanced. In particular, it is expected that China will make
steady progresses in prevention and mitigation of major risks, targeted poverty alleviation and pollution
prevention and control, and achieve a healthy social and economic development, which will provide a
stable and good development environment for the insurance industry. In the new era, people's demands
for insurance protections and wealth management increase rapidly, with their focus on more diversified
insurance products. Online and offline purchases are further integrated, and more differentiated and
personalized services are required with people's increased demands on their service experiences. The Chinese
government highly values the development of modern service industries such as pension and health, attaches
more importance to the use of insurance mechanism to support and supplement public services, increases the
protection level of supplementary major medical expenses insurance and basic medical insurances, actively
promotes tax preferential health insurances, and carries out pilot long-term care insurance programs and
pilot individual income tax deferred pension insurance programs, which enables the insurance industry
to play a more important role in economic improvement in terms of quality and efficiency, people's well-
being protection and social governance. Aiming to serve the real economy, safeguard against risks and push
forward in-depth reforms, the regulatory authorities strive to promote the development of market standards
in an orderly manner and to constantly improve the capabilities of the industry to better serve economic and
social development by strengthening supervision and promoting transformation.
(II) Development strategies and business plans
In 2018, the Company will firmly stick to the general keynote of “making steady progress" and the due role
of insurance in protection. With the “13th Five-Year Plan” of the Company as its guideline, the Company
will adhere to the operating guideline of “prioritizing value, strengthening sales force, optimizing business
structure, achieving stable growth and safeguarding against risks” in accordance with the requirement of
high-quality development, and implement the innovation-driven development strategy. The Company will
push forward the “Three Strategies” in relation to the development of individual insurance and markets in
large-and medium-sized cities and rural areas, and make great efforts to accomplish the five major tasks of
"transforming sales management model, adjusting business structure, revitalizing and taking lead in large
and medium-sized cities, building technology-driven China Life and preventing and controlling risks”, so as
to achieve all the targets set for the year. The Company will seek to maintain steady business development
and its leading market position, achieve a fast growth of protection-oriented products, and further optimize
its business structure. The Company will strive to achieve a steady growth in the number of productive
agents with the quality of sales force further improved, continuously improve the operational and service
capabilities with deepened technology innovation, and ensure stable and healthy operation by effectively
preventing and controlling risks, thus facilitating the Company's progress in all aspects with high-quality
development.
China Life Insurance Company Limited Annual Report 2017
42
and Analysis
Management Discussion
(III) Major potential risks and measures in relation thereto
In 2018, the Company will consistently strengthen its analysis of macro-economic trends and complex risk
factors, and strive to maintain its continuous and healthy growth. The major risk factors which may have an
impact on the Company's future development strategy and business objectives are set below:
Firstly, risks relating to business. Since 2016, the Chinese financial regulatory authorities launched a
series of stringent regulations to deal with irregularities with unprecedented efforts. In long term, the
“stringent supervision” will further regulate the industry and create a favorable environment for the healthy
development of the industry; in short term, the Company will face greater pressure in its transformation
and risk prevention and control. With the market interest rate remaining at a high level and cross-sector
competition existing in the financial market, the competitiveness of savings-type insurance products will
decline. The Company will be under certain pressures in maintaining a faster business growth, and may face
more uncertainties and complexities.
and Analysis
As such, the Company will keep a close eye on market development, maintain its strategic consistency
and tactical flexibility, consider development as its first priority, put more efforts in pushing forward
transformation and upgrade and consolidating its development foundation, conduct its business in strict
compliance with laws and regulations, and properly address challenges from all aspects, so as to ensure a
stable and healthy development of the Company.
20
79,601 20,463
China Life Insurance Company Limited Annual Report 2017
(III) Business Operations of Our Main Subsidiaries and Affiliates
Company Name
Major Business Scope
RMB million
Registered
Capital
Shareholding
Total
Assets Net Assets Net Profit
4,000
60%
9,237
8,339
1,126
China Life Asset
Management
Company Limited
China Life Pension
Company Limited
China Life Property
and Casualty
Insurance Company
Limited
Management and utilization of proprietary funds;
acting as agent or trustee for asset management
business; consulting business relevant to the above
businesses; other asset management business
permitted by applicable PRC laws and regulations
Group pension insurance and annuity; individual
pension insurance and annuity; short-term health
insurance; accident insurance; reinsurance of the
above insurance businesses; business for the use of
insurance funds that are permitted by applicable
PRC laws and regulations; pension insurance asset
management product business; management of
funds in RMB or foreign currency as entrusted
by entrusting parties for the retirement benefit
purpose; other businesses permitted by the CIRC
Property loss insurance; liability insurance; credit
insurance and bond insurance; short-term health
insurance and accident insurance; reinsurance of
the above insurance businesses; business for the use
of insurance funds that are permitted by applicable
PRC laws and regulations; other business
permitted by the CIRC
3,400
Note: FYP (First Year Premium) is the written premium used for calculation of the value of one year's sales and APE (Annual Premium
Equivalent) is calculated as the sum of 100 percent of first year regular premiums and 10 percent of single premiums.
3,922
3,086
14
held by the
Company, and
3.53% is held
by AMC
15,000
40%
820
China Life Insurance Company Limited Annual Report 2017
70.74% is
3.
Investment return -50bps
4.
68,690
425,453
Investment return +50bps
3.
302,186
62,964
Risk discount rate -50bps
2.
57,470
347,884
Risk discount rate +50bps
1.
380,622
60,117
51,558
10% increase in expenses
and 10% increase in mortality rate for annuity products
10% decrease in mortality rate for non-annuity products
8.
59,400
361,113
and 10% decrease in mortality rate for annuity products
5.
10% increase in mortality rate for non-annuity products
63,356
368,460
10% decrease in expenses
6.
56,878
358,884
7.
363,673
Base case scenario
Required Capital
Reflects the gains or losses due to changes in exchange rate.
H
Change in the market value adjustment from the beginning of year 2017 to 31 December 2017 and other
adjustments.
G
Reflects the effects of appraisal methodology and model enhancement, and assumption changes.
F
I
Compares actual with expected investment returns during 2017.
Reflects the difference between actual operating experience in 2017 (including mortality, morbidity, lapse, and
expenses etc.) and the assumptions.
D
Value of one year's sales for the 12 months ended 31 December 2017.
C
Reflects expected impact of covered business, and the expected return on investments supporting the 2017 opening
net worth.
734,172
E
Reflects dividends distributed to shareholders during 2017.
J
Other miscellaneous items.
Sales after Cost of
Required Capital
Value of One Year's
Value of In-Force
Business after Cost of
RMB million
Sensitivity Results
Table 5
Sensitivity tests were performed using a range of alternative assumptions. In each of the sensitivity tests, only the
assumption referred to was changed, with all other assumptions remaining unchanged. The results are summarized
below:
SENSITIVITY RESULTS
50
50
Embedded Value
49
Embedded Value
China Life Insurance Company Limited Annual Report 2017
366,227
(1,625)
60,835
10% increase in lapse rates
China Life Insurance Company Limited Annual Report 2017
56
For the year ended 31 December 2017, the investment management service fee, floating
management fee and performance-based bonus paid by the Company to CLI amounted to
RMB395.82 million. As at 31 December 2017, the contractual amount of the assets entrusted
by the Company to CLI for investment and management was RMB246,193.00 million, among
which, for the year of 2017, the contractual amount of the assets newly entrusted by the
Company was RMB112,267.00 million (including the contractual amount of RMB0 million
for the subscription of the related financial products, and the contractual amount of the
assets newly entrusted by the Company of RMB0 million in its co-investment with CLIC and
CLP&C).
The contractual amount of the assets entrusted by the Company to CLI for investment and
management will not exceed RMB550,000 million or its equivalent in foreign currency
(including the contractual amount of the assets already entrusted prior to the execution of
the agreement and the contractual amount of the assets newly entrusted during the term of
the agreement) as at the expiry date of the agreement. In particular, the annual cap on the
contractual amount of the assets newly entrusted for investment and management for 2017
is RMB200,000 million or its equivalent in foreign currency (including the annual cap of
RMB80,000 million or its equivalent in foreign currency for the subscription of the related
financial products, and the annual cap of RMB100,000 million or its equivalent in foreign
currency in respect of the contractual amount of the assets newly entrusted by the Company
in its co-investments with CLIC and CLP&C), and the annual cap on the amount of the
investment management service fee, floating management fee and performance-based bonus
is RMB630 million or its equivalent in foreign currency; the annual cap on the contractual
amount of the assets newly entrusted for investment and management for 2018 is RMB200,000
million or its equivalent in foreign currency (including the annual cap of RMB80,000 million
or its equivalent in foreign currency for the subscription of the related financial products, and
the annual cap of RMB100,000 million or its equivalent in foreign currency in respect of the
contractual amount of the assets newly entrusted by the Company in its co-investments with
CLIC and CLP&C), and the annual cap on the amount of the investment management service
fee, floating management fee and performance-based bonus is RMB990 million or its equivalent
in foreign currency.
Significant Events
China Life Insurance Company Limited Annual Report 2017 55
Significant Events
Asset Management Agreement for Alternative Investments between the Company and CLI
Since 22 March 2013, the Company and CLI have from time to time entered into asset
management agreements for alternative investments. The renewed agreement between the
parties expired on 30 June 2017. As approved by the 2016 Annual General Meeting of the
Company, the Company and CLI entered into the 2017-2018 asset management agreement
for alternative investments on 30 June 2017, with retrospective effect from 1 January 2017
until 31 December 2018. Pursuant to the agreement, CLI agreed to invest and manage assets
entrusted to it by the Company (including equity, real estate, related financial products and
securitization financial products), on a discretionary basis, within the scope of utilization of
insurance funds as specified by regulatory authorities and in accordance with the requirements
of applicable laws and regulations and the investment guidelines given by the Company, and the
Company agreed to pay CLI an investment management service fee, a floating management fee
and a performance-based bonus. For details as to the method of calculation of the investment
management service fee, floating management fee and performance-based bonus, please refer to
Note 33 in the Notes to the Consolidated Financial Statements. In addition, the assets entrusted
by the Company to CLI will also be partially used for the subscription of the related financial
products established and issued by CLI or of which CLI has participated in the establishment
and issuance, and such related financial products will be limited to infrastructure investment
schemes and project asset-backed schemes.
For the
Since 30 November 2003, CLIC and AMC have from time to time entered into asset
management agreements. The renewed agreement between the parties expired on 31 December
2015. On 30 December 2015, CLIC and AMC entered into the 2016 asset management
agreement, with an entrustment term from 1 January 2016 to 31 December 2018. Pursuant
to the agreement, AMC agreed to invest and manage assets entrusted to it by CLIC, on a
discretionary basis, subject to the investment guidelines and instructions given by CLIC. In
consideration of AMC's services in respect of investing and managing assets entrusted to it by
CLIC under the agreement, CLIC agreed to pay AMC a service fee. For details as to the method
of calculation of the service fee, please refer to Note 33 in the Notes to the Consolidated
Financial Statements. The annual caps for the three years ending 31 December 2018 are
RMB320 million, RMB310 million and RMB300 million, respectively.
(3)
(2) Asset Management Agreement between CLIC and AMC
Significant Events
China Life Insurance Company Limited Annual Report 2017
year ended 31 December 2017, CLIC paid AMC a service fee of RMB106.79 million.
54
4.
Since 18 November 2008, the Company and CLP&C have from time to time entered into insurance
sales framework agreements. The renewed agreement between the parties expired on 7 March 2015.
On 8 March 2015, the Company and CLP&C entered into the 2015 insurance sales framework
agreement, with a term of two years from 8 March 2015. The agreement was automatically extended
for another year after its expiry in accordance with its terms. Pursuant to the agreement, CLP&C
entrusted the Company to act as an agent to sell selected insurance products within the authorized
regions, and agreed to pay an agency service fee to the Company in consideration of the services
provided. For details as to the method of calculation of the agency service fee, please refer to Note
33 in the Notes to the Consolidated Financial Statements. The original annual caps for the three
years ended 31 December 2017 were RMB1,386 million, RMB1,738 million and RMB2,222
million, respectively. With the approval given at the eighth meeting of the fifth session of the Board,
the Company revised the annual caps for the two years ended 31 December 2017 under the 2015
insurance sales framework agreement to RMB3,000 million and RMB5,000 million, respectively. The
Company and CLP&C entered into the 2018 insurance sales framework agreement on 31 January
2018, with a term of three years from 8 March 2018 to 7 March 2021. Pursuant to the agreement,
CLP&C will continue to entrust the Company to act as an agent to sell selected insurance products
within the authorized regions. The annual caps for the three years ending 31 December 2020 were
RMB4,260 million, RMB5,540 million and RMB7,050 million, respectively.
For the year
ended 31 December 2017, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB534.07 million, the redemption price and
corresponding redemption fee for the redemption of fund products was RMB1,750.70 million,
the sales commission fee and client maintenance fee paid by AMP was RMB0 million, the
management fee and performance-based fee paid by Pension Company for the asset management
for specific clients was RMB0 million, and the fees for other daily transactions were RMBO
million.
China Life Insurance Company Limited Annual Report 2017
(2)
For the year ended 31 December 2017, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB10,310.12 million, the redemption price and
corresponding redemption fee for the redemption of fund products was RMB12,017.20 million,
the sales commission fee and client maintenance fee paid by AMP was RMB0 million, the
management fee and performance-based fee paid by the Company for the asset management for
specific clients was RMB23.45 million, and the fees for other daily transactions were RMB0.68
million.
58
58
Insurance Sales Framework Agreement
Significant Events
China Life Insurance Company Limited Annual Report 2017
The Company and AMP entered into the “Framework Agreement in relation to Subscription
and Redemption of Fund Products, Sale of Funds, Asset Management for Specific Clients and
Other Daily Transactions" on 30 May 2014. The agreement expired on 31 December 2016. As
approved by the First Extraordinary General Meeting 2016 of the Company, the 2017-2019
framework agreement was entered into between the Company and AMP on 30 December 2016
for a term of three years from 1 January 2017 to 31 December 2019. Pursuant to the agreement,
the Company and AMP will continue to conduct certain daily transactions, including
subscription and redemption of fund products, sales agency services, asset management for
specific clients and other daily transactions permitted by laws and regulations. Pricing of the
transactions under the agreement shall be determined by the parties through arm's length
negotiations with reference to the industry practices. For the three years ending 31 December
2019, the annual cap of the subscription price and corresponding subscription fee for the
subscription of fund products is RMB72,600 million; the annual cap of the redemption price
and corresponding redemption fee for the redemption of fund products is RMB72,600 million;
the annual caps of the sales commission fee and client maintenance fee payable by AMP are
RMB700 million, RMB800 million and RMB900 million, respectively; the annual caps of the
management fee and performance-based fee payable by the Company for the asset management
for specific clients are RMB300 million, RMB400 million and RMB500 million, respectively;
and the annual cap of the fees for other daily transactions is RMB100 million.
Framework Agreement between the Company and AMP
(1)
Framework Agreements with AMP
For the year ended 31 December 2017, CLP&C paid the Company an agency service fee of
RMB3,030.41 million.
57
For the year ended 31 December 2017, the Company paid AMC a service fee of RMB1,153.58
million.
Since 30 November 2003, the Company and AMC have from time to time entered into asset
management agreements. The renewed agreement between the parties expired on 31 December
2015. On 29 December 2015, the Company and AMC entered into the 2016 asset management
agreement, with a term of three years from 1 January 2016 to 31 December 2018. Pursuant
to the agreement, AMC agreed to invest and manage assets entrusted to it by the Company,
on a discretionary basis, within the scope granted by the Company and in accordance with the
requirements of applicable laws and regulations, regulatory requirements and the investment
guidelines given by the Company. In consideration of AMC's services in respect of investing and
managing various categories of assets entrusted to it by the Company under the agreement, the
Company agreed to pay AMC a service fee. For details as to the method of calculation of the
service fee, please refer to Note 33 in the Notes to the Consolidated Financial Statements. The
annual cap for each of the three years ending 31 December 2018 is RMB1,500 million.
Asset Management Agreement between the Company and AMC
61,235
368,448
10% decrease in morbidity rates
12.
58,997
358,936
13.
10% increase in morbidity rates
61,030
364,137
10% decrease in lapse rates
10.
59,149
363,021
11.
Using 2016 EV appraisal assumptions
357,052
60,114
(1)
Asset Management Agreements
For the year ended 31 December 2017, the service fee paid by CLIC to the Company amounted to
RMB739.56 million.
Since 30 September 2003, the Company and CLIC have from time to time entered into policy
management agreements. The renewed agreement between the parties expired on 31 December
2014. On 29 December 2014, the Company and CLIC entered into the 2015 policy management
agreement, with a term from 1 January 2015 to 31 December 2017. Pursuant to the agreement, the
Company agreed to provide policy administration services to CLIC relating to the non-transferred
policies. The Company acted as a service provider under the agreement and did not acquire any
rights or assume any obligations as an insurer under the non-transferred policies. For details as to
the method of calculation of the service fee, please refer to Note 33 in the Notes to the Consolidated
Financial Statements. The annual cap for each of the three years ended 31 December 2017 was
RMB1,037 million. The Company and CLIC entered into the 2018 policy management agreement
on 26 December 2017, with a term from 1 January 2018 to 31 December 2020. Pursuant to the
agreement, the Company will continue to accept CLIC's entrustment to provide policy administration
services relating to the non-transferred policies. The annual cap for each of the three years ending 31
December 2020 is RMB708 million.
Policy Management Agreement
2.
1.
scope
Our
Scope of work
China Life has engaged Towers Watson Management Consulting (Shenzhen) Co. Ltd. Beijing Branch ("Willis Towers
Watson") to review its EV Results. This report is addressed solely to China Life in accordance with the terms of our
engagement letter, and sets out the scope of our work and our conclusions. To the fullest extent permitted by applicable
law, we do not accept or assume any responsibility, duty of care or liability to anyone other than China Life for or in
connection with our review work, the opinions we have formed, or for any statement set forth in this report.
China Life Insurance Company Limited (“China Life") has prepared embedded value results as at 31 December 2017
("EV Results"). The disclosure of these EV Results, together with a description of the methodology and assumptions that
have been used, are shown in the Embedded Value section.
To The Directors of China Life Insurance Company Limited
WILLIS TOWERS WATSON'S REVIEW OPINION REPORT ON EMBEDDED VALUE
China Life Insurance Company Limited Annual Report 2017
9.
Pension Company and AMP entered into the “Framework Agreement in relation to
Subscription and Redemption of Fund Products, Sale of Funds and Other Daily Transactions"
on 4 September 2014. The agreement expired on 31 December 2016. As approved by the First
Extraordinary General Meeting 2016 of the Company, the 2017-2019 framework agreement
was entered into between Pension Company and AMP on 23 December 2016 for a term of three
years from 1 January 2017 to 31 December 2019. Pursuant to the agreement, Pension Company
and AMP will continue to conduct certain daily transactions, including subscription and
redemption of fund products, sales agency services, asset management for specific clients and
other daily transactions permitted by laws and regulations. Pricing of the transactions under the
agreement shall be determined by the parties through arm's length negotiations with reference
to the industry practices. For the three years ending 31 December 2019, the annual cap of the
subscription price and corresponding subscription fee for the subscription of fund products is
RMB10,000 million; the annual cap of the redemption price and corresponding redemption
fee for the redemption of fund products is RMB10,000 million; the annual cap of the sales
commission fee and client maintenance fee payable by AMP is RMB100 million; the annual cap
of the management fee and performance-based fee payable by Pension Company for the asset
management for specific clients is RMB100 million; and the annual cap of the fees for other
daily transactions is RMB100 million.
(7,164)
(11,549)
(459)
Undertakings
53
53
68
69
Restriction on Major Assets
69
Their Performance
Significant Events
I.
MATERIAL LITIGATIONS OR ARBITRATIONS
During the Reporting Period, the Company was not involved in any material litigation or arbitration.
II. MAJOR CONNECTED TRANSACTIONS
(I) Continuing Connected Transactions
During the Reporting Period, the following continuing connected transactions were carried out by the
Company pursuant to Rule 14A.76(2) of the Rules Governing the Listing of Securities on the HKSE
(the “Listing Rules”), including the policy management agreement between the Company and CLIC, the
asset management agreement between the Company and AMC, the insurance sales framework agreement
between the Company and CLP&C, the framework agreements entered into by CLWM with the Company,
CLIC, CLP&C, China Life Insurance (Overseas) Company Limited (“CLO”) and CLI, respectively, and
the framework agreement between CLI and AMP. These continuing connected transactions were subject
to the reporting, announcement and annual review requirements but were exempt from the independent
shareholders' approval requirement under the Listing Rules. CLIC, the controlling shareholder of the
Company, holds 60% of the equity interest in CLP&C and 100% of the equity interest in each of CLO and
CLI. Therefore, each of CLIC, CLP&C, CLO and CLI constitutes a connected person of the Company.
AMC is held as to 60% and 40% by the Company and CLIC, respectively, and is therefore a connected
subsidiary of the Company. Each of CLWM and AMP is a subsidiary of AMC, and is therefore a connected
subsidiary of the Company.
During the Reporting Period, the continuing connected transactions carried out by the Company that were
subject to the reporting, announcement, annual review and independent shareholders' approval requirements
under Chapter 14A of the Listing Rules included the framework agreements entered into by AMP with
the Company, Pension Company, CLIC and CLP&C, respectively, the asset management agreement for
alternative investments between the Company and CLI, and the “Framework Agreement in relation to the
Subscription and Redemption of Trust Products and Other Daily Transactions” between the Company and
Chongqing International Trust Inc. (“"Chongqing Trust”). Such agreements and the transactions thereunder
have been approved by the independent shareholders of the Company. Chongqing Trust is an associate of
CLIC and CLP&C by virtue of its acting as the trustee of a trust scheme of which CLP&C is a beneficiary,
and is therefore also a connected person of the Company pursuant to Rule 14A.13(2) of the Listing Rules.
During the Reporting Period, the Company also carried out certain continuing connected transactions,
including the asset management agreement between CLIC and AMC, which were exempt from the
reporting, announcement, annual review and independent shareholders' approval requirements under
Chapter 14A of the Listing Rules.
Significant Events
The Company has complied with the disclosure requirements under Chapter 14A of the Listing Rules in
respect of the above continuing connected transactions. When conducting the above continuing connected
transactions during the Reporting Period, the Company has followed the pricing policies and guidelines
formulated at the time when such transactions were entered into.
Material Contracts and
Material Litigations or Arbitrations
of work covered:
a review of the methodology used to develop the embedded value and value of one year's sales as at 31 December
2017, in accordance with the "CAA Standards of Actuarial Practice: Appraisal of Embedded Value" issued by the
China Association of Actuaries ("CAA") in November 2016;
a review of the economic and operating assumptions used to develop the embedded value and value of one year's
sales as at 31 December 2017;
a review of the results of China Life's calculation of the EV Results.
In carrying out our review, we have relied on the accuracy of audited and unaudited data and information provided by
China Life.
Embedded Value
Opinion
Based on the scope of work above, we have concluded that:
Major Connected Transactions
the embedded value methodology used by China Life is in accordance with the “CAA Standards of Actuarial
Practice: Appraisal of Embedded Value” issued by the CAA;
the operating assumptions used by China Life have been set with appropriate regard to past, current and expected
future experience; and
the EV Results have been prepared, in all material respects, in accordance with the methodology and assumptions
set out in the Embedded Value section.
For and on behalf of Willis Towers Watson
Michael Freeman
22 March 2018
Benjamin Chen
China Life Insurance Company Limited Annual Report 2017 51
Significant Events
the economic assumptions used by China Life are internally consistent, have been set with regard to current
economic conditions, and have made allowance for the company's current and expected future asset mix and
investment strategy;
China Life Insurance Company Limited Annual Report 2017 53
Framework Agreement between Pension Company and AMP
In addition, after the Reporting Period, the Company also carries out certain continuing connected
transactions, including the framework agreements entered into by CLWM with Pension Company and
China Life E-commerce Company Limited ("CLEC”), respectively, and the framework
652,057
RMB million
B
Items B through J are explained below:
2)
Methodology, Model and Assumption Changes
Notes: 1)
Embedded Value as at 31 December 2017 (sum A through J)
52,472
Shareholder Dividend Distribution and Capital Injection
Other
J
I
Exchange Gains or Losses
H
Market Value and Other Adjustments
G
Significant Events
K
60,117
Numbers may not be additive due to rounding.
(4,280)
agreement between
CLWM and Chongqing Trust, which are subject to the reporting, announcement and annual review
requirements but are exempt from the independent shareholders' approval requirement under the Listing
Rules. As CLIC holds the entire equity interest in CLEC, CLEC is a connected person of the Company.
529
The following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period:
Table 4
Analysis of Embedded Value Movement in 2017
ITEM
A
Embedded Value at the Start of Year
B
MOVEMENT ANALYSIS
C
Value of New Business in the Period
D
Operating Experience Variance
E
Investment Experience Variance
F
Expected Return on Embedded Value
(5,926)
transactions.
China Life Insurance Company Limited Annual Report 2017
67
(III) Statement on Claims, Debt Transactions and Guarantees etc. with Connected Parties
outside the Course of its Business
During the Reporting Period, the Company was not involved in claims, debt transactions or guarantees with
connected parties outside the course of its business.
III. MATERIAL CONTRACTS AND THEIR PERFORMANCE
1. During the Reporting Period, the Company neither acted as trustee, contractor or lessee of other companies'
assets, nor entrusted, contracted or leased its assets to other companies, the profit or loss from which
accounted for 10% or more of the Company's profits for the Reporting Period, nor were there any such
matters that occurred in previous periods but subsisted during the Reporting Period.
4.
The Company neither gave external guarantees nor provided guarantees to its non-wholly owned subsidiaries
during the Reporting Period.
3. Entrusted wealth management during the Reporting Period or any wealth management occurred in previous
periods but subsisted during the Reporting Period: Investment is one of the principal businesses of the
Company. The Company has adopted the mode of entrusted investment for management of its investment
assets, and established a diversified framework of entrusted investment management with China Life's
internal managers playing the key role and the external managers offering effective supports. The internal
managers include AMC and its subsidiaries, and CLI. The external managers comprise both domestic and
overseas managers, including fund companies, securities companies and other professional investment
management institutions. The Company selected different investment managers based on the purpose of
allocation of various types of investments, their risk features and the expertise of different managers, so as
to establish a great variety of investment portfolios and improve the efficiency of capital utilization. The
Company entered into entrusted investment management agreements with all managers and supervised
the managers' daily investment performance through the measures such as investment guidelines, asset
entrustment and performance appraisals. The Company also adopted risk control measures in respect of
specific investments based on the characteristics of different managers and investment products.
Except as otherwise disclosed in this annual report, the Company had no other material contracts during the
Reporting Period.
Significant Events
68
China Life Insurance Company Limited Annual Report 2017
Each of Fund GP and China Life Properties is an associate of CLIC and therefore a connected
person of the Company. The transactions regarding the formation of the partnerships as described
above constituted connected transactions of the Company that were subject to the reporting
and announcement requirements but were exempt from the independent shareholders' approval
requirement under Rule 14A.76(2) of the Listing Rules. The Company has complied with the
disclosure requirements under Chapter 14A of the Listing Rules in respect of such connected
2.
The Company (as the limited partner) and China Life Properties (as the general partner) entered
into the partnership agreement on 19 December 2017 for the formation of Shanghai Wansheng
Industrial Partnership (Limited Partnership) (the “Partnership”). The total capital amount of the
Partnership is RMB4,160.1 million, of which RMB4,160 million is contributed by the Company and
RMB0.1 million is contributed by China Life Properties. The capital raised by the Partnership will
be used to acquire 21.4% equity interest in Shanghai Rui Hong Xin Cheng Co., Ltd. from Hollyfield
Holdings Limited, through which the Partnership will obtain 49.5% interest in the land use rights
corresponding to Lot 10, Lot 3 shopping mall (Hall of the Moon), Lot 6 shopping mall (Hall of the
Stars) and phase II shopping mall within the territory of the Rui Hong Xin Cheng Project held by
Shanghai Rui Hong Xin Cheng Co., Ltd.
(3)
The Company (as the limited partner) entered into the special fund partnership agreement and
its supplemental agreement with Fund GP (as the general partner) on 27 November 2017 for
the formation of Ningbo Meishan Bonded Port Area Baining Investment Partnership (Limited
Partnership) (the “Special Fund Partnership”). The total capital amount raised by the Special Fund
Partnership from the limited partner is RMB5,600 million, all of which is contributed by the
Company. Following the establishment of the Special Fund Partnership, the Special Fund Partnership
and Baidu, Inc. (each as a limited partner) entered into the Baidu fund partnership agreement with
Fund GP (as the general partner) on 27 November 2017 for the formation of Ningbo Meishan
Bonded Port Area Baishan Investment Management Partnership (Limited Partnership) (the "Baidu
Fund Partnership”). The total capital of the Special Fund Partnership will be invested in the Baidu
Fund Partnership. The Baidu Fund Partnership will primarily make equity investment or quasi equity
investment in private equity projects at the middle to later stages in the internet sector, including
internet, mobile internet, artificial intelligence, internet finance, consumption upgrade, and internet+.
CLWM and Chongqing Trust entered into the “Framework Agreement in relation to Daily
Connected Transactions" on 29 December 2017, with a term from 1 January 2018 to 31
December 2019. Pursuant to the agreement, CLWM and Chongqing Trust will conduct the
subscription of trust products, asset management services, advisory services and other daily
transactions permitted by laws and regulations in their ordinary course of business and on
normal commercial terms. Pricing of the transactions under the agreement shall be determined
by the parties through arm's length negotiations with reference to the industry practices. For
each of the two years ending 31 December 2019, the annual cap of the subscription amount of
the trust products is RMB10,000 million (including the trustee's remuneration of no more than
RMB150 million per year to be received by Chongqing Trust from the trust assets); the annual
cap of the management fee for the asset management services is RMB150 million; the annual
cap of the advisory fee for the advisory services is RMB150 million; and the annual cap of the
fees for other daily transactions is RMB100 million.
Framework Agreement between CLWM and Chongqing Trust
For the year ended 31 December 2017, the subscription amount of the trust products was
RMB8,174.00 million, the redemption amount of the trust products was RMB0 million, and
the fees for other daily transactions were RMB0 million.
As approved by the 2016 Annual General Meeting of the Company, the Company and
Chongqing Trust entered into the "Framework Agreement in relation to the Subscription and
Redemption of Trust Products and Other Daily Transactions” on 21 June 2017. The agreement
became effective upon signing by the parties and will expire on 31 December 2019. Pursuant
to the agreement, the Company and Chongqing Trust will conduct the subscription and
redemption of trust products and other daily transactions permitted by laws and regulations in
their ordinary course of business and on normal commercial terms. Pricing of the transactions
under the agreement shall be determined by the parties through arm's length negotiations with
reference to the industry practices. For the three years ending 31 December 2019, the annual
сар of the subscription amount of the trust products is RMB50,000 million (including the
trustee's remuneration of no more than RMB500 million per year to be received by Chongqing
Trust from the trust assets); the annual cap of the redemption amount of the trust products
is RMB4,500 million; and the annual cap of the fees for other daily transactions is RMB100
million.
Framework Agreement between the Company and Chongqing Trust
(2)
(1)
CLEC and CLWM entered into the "Framework Agreement in relation to Daily Connected
Transactions" on 29 December 2017, pursuant to which CLEC will conduct certain
transactions with CLWM during the period from 1 January 2018 to 31 December 2020,
including the asset management services, advisory services and other daily transactions permitted
by laws and regulations. For the three years ending 31 December 2020, the annual caps of
the management fee payable by CLEC for the asset management services are RMB5 million,
RMB10 million and RMB15 million, respectively; the annual caps of the advisory fee payable
by CLEC for the advisory services are RMB5 million, RMB10 million and RMB15 million,
respectively; and the annual caps of the fees for other daily transactions are RMB200 million;
RMB300 million and RMB400 million, respectively.
Framework Agreement between CLEC and CLWM
(7)
6.
Significant Events
China Life Insurance Company Limited Annual Report 2017
64
Pension Company and CLWM intended to enter into the “Framework Agreement in relation
to Daily Connected Transactions”, pursuant to which CLI will conduct certain transactions
with CLWM during the period from 1 January 2018 to 31 December 2020, including the
asset management services, advisory services and other daily transactions permitted by laws and
regulations. For the three years ending 31 December 2020, the annual caps of the management
fee payable by Pension Company for the asset management services are RMB100 million,
RMB150 million and RMB200 million, respectively; the annual caps of the advisory fee payable
by Pension Company for the advisory services are RMB40 million, RMB80 million and RMB90
million, respectively; and the annual caps of the fees for other daily transactions are RMB90
million; RMB180 million and RMB270 million, respectively.
Framework Agreement between Pension Company and CLWM
agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee, were RMB0 million; and the fees for other daily transactions were RMBO
million.
China Life Insurance Company Limited Annual Report 2017
Formation of Partnership with China Life Properties Investment Management Company Limited
("China Life Properties")
65
Confirmation by auditor
1. Formation of Partnership with Ningbo Meishan Bonded Port Area Baiyi Investment Management
Partnership (Limited Partnership) ("Fund GP")
(II) Other Major Connected Transactions
Significant Events
China Life Insurance Company Limited Annual Report 2017
66
(4) the amounts of the above transactions have not exceeded the relevant annual caps.
the transactions were entered into in accordance with the agreements governing those continuing
connected transactions, and the terms are fair and reasonable and in the interests of shareholders of the
Company as a whole; and
(2) the transactions were conducted on normal commercial terms;
(1) the transactions were entered into in the ordinary and usual course of business of the Company;
The Company's Independent Directors have reviewed the above continuing connected transactions which
were subject to the reporting, announcement and/or independent shareholders' approval requirements, and
confirmed that:
Confirmation by Independent Directors
(4) nothing has come to the auditors' attention that causes them to believe that the amounts of the
continuing connected transactions have exceeded the total amount of the annual caps set by the
Company.
(3) nothing has come to the auditors' attention that causes them to believe that the transactions were
not entered into, in all material respects, in accordance with the relevant agreements governing such
transactions; and
for transactions involving the provision of goods or services by the Company, nothing has come to the
auditors' attention that causes them to believe that the transactions were not, in all material respects,
in accordance with the pricing policies of the Company;
(2)
(1) nothing has come to the auditors' attention that causes them to believe that the disclosed continuing
connected transactions have not been approved by the Company's Board of Directors;
The Board has received a comfort letter from the auditor of the Company with respect to the above
continuing connected transactions which were subject to the reporting, announcement and/or independent
shareholders' approval requirements, and the letter stated that during the Reporting Period:
Significant Events
Framework Agreements with Chongqing Trust
2.
(3)
(2)
(3)
Framework Agreement between CLIC and CLWM
CLIC and CLWM entered into the “Framework Agreement in relation to Asset Management
Services" on 26 January 2016. The agreement became effective upon signing by the parties
and expired on 31 December 2017. Pursuant to the agreement, CLIC subscribed for the asset
management products, in respect of which CLWM acted as the manager, according to its
needs of asset allocation. Pricing of the transactions under the agreement was determined by
the parties through arm's length negotiations with reference to the industry practices. For the
three years ended 31 December 2017, the annual caps of the management fee payable by CLIC
for the asset management services were RMB40 million, RMB70 million and RMB80 million,
respectively. CLIC and CLWM entered into the 2018 framework agreement on 27 December
2017, pursuant to which CLIC will continue to conduct certain transactions with CLWM
during the period from 1 January 2018 to 31 December 2020, including the asset management
services and advisory services. For the three years ending 31 December 2020, the annual caps
of the management fee payable by CLIC for the asset management services are RMB50 million,
RMB120 million and RMB180 million, respectively; and the annual caps of the advisory fee
payable by CLIC for the advisory services are RMB50 million, RMB80 million and RMB120
million, respectively.
For the year ended 31 December 2017, the management fee paid by CLIC for the asset
management services was RMB0.73 million.
Framework Agreement between CLP&C and CLWM
CLP&C and CLWM entered into the "Framework Agreement in relation to Asset Management
Services and Other Daily Transactions" on 9 March 2016. The agreement became effective
upon signing by the parties and expired on 31 December 2017. Pursuant to the agreement,
CLP&C and CLWM entered into certain daily transactions, including asset management
services, sales agency services for asset management products and other daily transactions
permitted by laws and regulations. Pricing of the transactions under the agreement was
determined by the parties through arm's length negotiations with reference to the industry
practices. For the three years ended 31 December 2017, the annual caps of the management
fee payable by CLP&C for the asset management services were RMB5 million, RMB180
million and RMB300 million, respectively; the annual caps of fees in connection with the sales
agency services payable by CLWM, including the sales commission fee, client maintenance
fee, handling fee and intermediary fee, were RMB2 million, RMB150 million and RMB200
million, respectively; and the annual caps of the fees for other daily transactions were RMB5
million, RMB50 million and RMB50 million, respectively. CLP&C and CLWM entered
into the 2018 framework agreement on 29 December 2017, pursuant to which CLP&C will
continue to conduct certain transactions with CLWM during the period from 1 January 2018 to
31 December 2020, including the asset management services, advisory services and other daily
transactions permitted by laws and regulations. For the three years ending 31 December 2020,
the annual caps of the management fee payable by CLP&C for the asset management services
are RMB50 million, RMB150 million and RMB240 million, respectively; the annual caps of the
advisory fee payable by CLP&C for the advisory services are RMB40 million, RMB80 million
and RMB120 million, respectively; and the annual caps of the fees for other daily transactions
are RMB150 million, RMB400 million and RMB700 million, respectively.
62
China Life Insurance Company Limited Annual Report 2017
Significant Events
(4)
For the year ended 31 December 2017, the management fee paid by CLP&C for the asset
management services was RMB5.83 million; the fees in connection with the sales
agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee, were RMB0 million; and the fees for other daily transactions were RMB0.04
million.
Framework Agreement between CLO and CLWM
CLO and CLWM entered into the “Framework Agreement in relation to Asset Management
Services and Other Daily Transactions" on 30 December 2015. The agreement became effective
upon signing by the parties and expired on 31 December 2017. Pursuant to the agreement,
CLO and CLWM entered into certain daily transactions, including asset management services,
sales agency services for asset management products and other daily transactions permitted
by laws and regulations. Pricing of the transactions under the agreement was determined by
the parties through arm's length negotiations with reference to the industry practices. For
the three years ended 31 December 2017, the annual caps of the management fee payable by
CLO for the asset management services were RMB10 million, RMB30 million and RMB50
million, respectively; the annual caps of fees in connection with the sales agency services payable
by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee, were RMB5 million, RMB5 million and RMB10 million, respectively; and
the annual caps of the fees for other daily transactions were RMB5 million, RMB5 million and
RMB10 million, respectively.
For the year ended 31 December 2017, there was no relevant transaction between CLO and
CLWM.
China Life Insurance Company Limited
Annual Report 2017
63
Significant Events
(5)
(6)
Framework Agreement between CLI and CLWM
CLI and CLWM entered into the “Framework Agreement in relation to Asset Management
Services and Other Daily Transactions” on 3 February 2016. The agreement became effective
upon signing by the parties and expired on 31 December 2017. Pursuant to the agreement, CLI
and CLWM entered into certain daily transactions, including asset management services, sales
agency services for asset management products and other daily transactions permitted by laws
and regulations. Pricing of the transactions under the agreement was determined by the parties
through arm's length negotiations with reference to the industry practices. For the three years
ended 31 December 2017, the annual caps of the management fee payable by CLI for the asset
management services were RMB20 million (including the management fee in an amount of
RMB0.4 million paid by CLI to CLWM for the provision of asset management services prior to
the execution of the framework agreement), RMB30 million and RMB50 million, respectively;
the annual caps of fees in connection with the sales agency services payable by CLWM,
including the sales commission fee, client maintenance fee, handling fee and intermediary fee,
were RMB10 million, RMB40 million and RMB80 million, respectively; and the annual caps of
the fees for other daily transactions were RMB10 million, RMB40 million and RMB80 million,
respectively. CLI and CLWM entered into the 2018 framework agreement on 20 December
2017, pursuant to which CLI will continue to conduct certain transactions with CLWM
during the period from 1 January 2018 to 31 December 2020, including the asset management
services, advisory services and other daily transactions permitted by laws and regulations. For
the three years ending 31 December 2020, the annual caps of the management fee for the asset
management services are RMB40 million, RMB80 million and RMB120 million, respectively;
the annual caps of the advisory fee for the advisory services are RMB40 million, RMB80 million
and RMB120 million, respectively; and the annual caps of the fees for other daily transactions
are RMB20 million, RMB80 million and RMB160 million, respectively.
For the year ended 31 December 2017, the management fee paid by CLI for the asset
management services was RMB1.15 million; the fees in connection with the sales
Significant Events
61
Significant Events
For the year ended 31 December 2017, the management fee paid by the Company for the asset
management services was RMB1.80 million; the fees in connection with the sales agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee, were RMB0 million; and the fees for other daily transactions were RMB5.49
million.
For the
CLI and AMP entered into the “Framework Agreement in relation to Subscription and
Redemption of Fund Products, Asset Management for Specific Clients and Other Daily
Transactions" on 20 December 2017. The agreement became effective upon signing by the
parties and will expire on 31 December 2019. Pursuant to the agreement, CLI and AMP
will conduct certain daily transactions, including the subscription and redemption of fund
products, asset management for specific clients and other daily transactions permitted by laws
and regulations. Pricing of the transactions under the agreement shall be determined by the
parties through arm's length negotiations with reference to the industry practices. For the three
years ending 31 December 2019, the annual caps of the subscription price and corresponding
subscription fee for the subscription of fund products are RMB5,000 million, RMB7,000
million and RMB7,000 million, respectively; the annual caps of the redemption price and
corresponding redemption fee for the redemption of fund products are RMB5,000 million,
RMB7,000 million and RMB7,000 million, respectively; the annual cap of the management
fee and performance-based fee payable by CLI for the asset management for specific clients is
RMB50 million; and the annual cap of the fees for other daily transactions is RMB50 million.
Framework Agreement between CLI and AMP
For the year ended 31 December 2017, the subscription price for the fund products was RMBO
million, the redemption price for the fund products was RMB66.61 million, the subscription
fee for the fund products was RMB0 million, the redemption fee for the fund products was
RMB0.10 million, the sales commission fee and client maintenance fee paid by AMP was
RMB0 million, the management fee and performance-based fee paid by CLP&C for the asset
management for specific clients was RMB2.30 million, and the fees for other daily transactions
were RMB0.07 million.
Significant Events
59
Annual Report 2017
China Life Insurance Company Limited
CLP&C and AMP entered into the “Cooperation Framework Agreement” on 6 June 2014.
The agreement expired on 31 December 2016. As approved by the First Extraordinary General
Meeting 2016 of the Company, the 2017-2019 framework agreement was entered into between
CLP&C and AMP on 22 December 2016 for a term of three years from 1 January 2017 to
31 December 2019. Pursuant to the agreement, CLP&C and AMP will continue to conduct
certain daily transactions, including subscription and redemption of fund products, sales
agency services, asset management for specific clients and other daily transactions permitted by
laws and regulations. Pricing of the transactions under the agreement shall be determined by
the parties through arm's length negotiations with reference to the industry practices. For the
three years ending 31 December 2019, the annual cap of the subscription price for the fund
products is RMB10,000 million; the annual cap of the redemption price for the fund products
is RMB10,000 million; the annual cap of the subscription fee for the fund products is RMB100
million; the annual cap of the redemption fee for the fund products is RMB100 million; the
annual cap of the sales commission fee and client maintenance fee payable by AMP is RMB100
million; the annual cap of the management fee and performance-based fee payable by CLP&C
for the asset management for specific clients is RMB100 million; and the annual cap of the fees
for other daily transactions is RMB100 million.
Framework Agreement between CLP&C and AMP
For the year ended 31 December 2017, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB4,082.23 million, the redemption price and
corresponding redemption fee for the redemption of fund products was RMB7,617.19 million,
and the management fee and performance-based fee paid by CLIC for the asset management for
specific clients was RMB20.41 million.
CLIC and AMP entered into the “Framework Agreement in relation to Subscription and
Redemption of Fund Products" on 30 May 2014. The agreement expired on 31 December
2016. As approved by the First Extraordinary General Meeting 2016 of the Company, the
2017-2019 framework agreement was entered into between CLIC and AMP on 16 December
2016 for a term of three years from 1 January 2017 to 31 December 2019. Pursuant to the
agreement, CLIC and AMP will continue to conduct certain daily transactions, including
subscription and redemption of fund products and asset management for specific clients. Pricing
of the transactions under the agreement shall be determined by the parties through arm's length
negotiations with reference to the industry practices. For the three years ending 31 December
2019, the annual cap of the subscription price and corresponding subscription fee for the
subscription of fund products is RMB10,000 million; the annual cap of the redemption price
and corresponding redemption fee for the redemption of fund products is RMB10,000 million;
and the annual cap of the management fee and performance-based fee payable by CLIC for the
asset management for specific clients is RMB100 million.
(4)
China Life Insurance Company Limited Annual Report 2017
Framework Agreement between CLIC and AMP
Framework Agreements with CLWM
Framework Agreement between the Company and CLWM
(1)
Significant Events
5.
China Life Insurance Company Limited Annual Report 2017
60
management
ended 31 December 2017, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB688.02 million, the redemption price and
corresponding redemption fee for the redemption of fund products was RMB0 million, the
management fee and performance-based fee paid by CLI for the asset management for specific
clients was RMB0 million, and the fees for other daily transactions were RMB0 million.
year
The Company and CLWM entered into the “Framework Agreement in relation to Asset
Management Services and Other Daily Transactions" on 30 December 2015. The agreement
became effective upon signing by the parties and expired on 31 December 2017. Pursuant to
the agreement, the Company and CLWM entered into certain daily transactions, including
asset management services, sales agency services for asset management products and other daily
transactions permitted by laws and regulations. Pricing of the transactions under the agreement
was determined by the parties through arm's length negotiations with reference to the industry
practices. For the three years ended 31 December 2017, the annual of the
caps
fee payable by the Company for the asset management services were RMB55 million, RMB180
million and RMB240 million, respectively; the annual caps of fees in connection with the sales
agency services payable by CLWM, including the sales commission fee, client maintenance fee,
handling fee and intermediary fee, were RMB25 million, RMB50 million and RMB100 million,
respectively; and the annual caps of the fees for other daily transactions were RMB25 million,
RMB50 million and RMB100 million, respectively. The Company and CLWM entered into
the 2018 framework agreement on 28 December 2017, pursuant to which the Company will
continue to conduct certain transactions with CLWM during the period from 1 January 2018
to 31 December 2020, including the asset management services, the sales agency services for
asset management products and other daily transactions permitted by laws and regulations. For
the three years ending 31 December 2020, the annual cap of the management fee payable by
the Company for the asset management services is RMB240 million; the annual cap of fees in
connection with the sales agency services payable by CLWM, including the sales commission
fee, client maintenance fee, handling fee and intermediary fee, is RMB100 million; and the
annual cap of the fees for other daily transactions is RMB100 million.
Mr. Tang Xin, Mr. Chang Tso Tung Stephen, Mr. Xu Haifeng, Mr. Xu Hengping, Mr. Lin Dairen, Mr. Yang Mingsheng,
Mr. Yuan Changqing, Mr. Liu Huimin, Mr. Yin Zhaojun, Mr. Robinson Drake Pike, Ms. Leung Oi-Sie Elsie
From left to right:
Report of the Board of Directors
71
55
Directors of the Company during the Reporting Period and up to the date of this report were as follows:
85
82
Non-executive Directors
Independent Directors
Yuan Changqing
Miao Jianmin
108
Xu Haifeng
Yang Mingsheng (Chairman)
Lin Dairen
Xu Hengping
Corporate Governance
Executive Directors
89
3.
Management and Employees
V.
ACQUIRERS, DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT OR OTHER
RELATED PARTIES WHICH ARE EITHER GIVEN OR EFFECTIVE DURING THE
REPORTING PERIOD
Prior to the listing of the Company's A Shares (30 November 2006), land use rights were injected by CLIC into
the Company during its reorganization. Out of these, four pieces of land (with a total area of 10,421.12 square
meters) had not had its formalities in relation to the change of ownership completed. Further, out of the properties
injected into the Company, there were six properties (with a gross floor area of 8,639.76 square meters) in respect
of which the formalities in relation to the change of ownership had not been completed. CLIC undertook to
complete the above-mentioned formalities within one year of the date of listing of the Company's A Shares, and in
the event that such formalities could not be completed within such period, CLIC would bear any potential losses
to the Company due to the defective ownership.
CLIC strictly followed these commitments. As at the end of the Reporting Period, save for the two properties and
related land of the Company's Shenzhen Branch, the ownership registration formalities of which had not been
completed due to historical reasons, all other formalities in relation to the change of land and property ownership
had been completed. The Shenzhen Branch of the Company continues to use such properties and land, and no
other parties have questioned or hindered the use of such properties and land by the Company.
The Company's Shenzhen Branch and the other co-owners of the properties have issued a letter to the governing
department of the original owner of the properties in respect of the confirmation of ownership of the properties,
requesting it to report the ownership issue to the State-owned Assets Supervision and Administration Commission
of the State Council (“SASAC”), and requesting the SASAC to confirm the respective shares of each co-owner in
the properties and to issue written documents in this regard to the department of land and resources of Shenzhen,
so as to assist the Company and the other co-owners to complete the formalities in relation to the division of
ownership of the properties.
Given that the change of ownership of the above two properties and related land use rights were directed by the
co-owners, and all formalities in relation to the change of ownership were proceeded slowly due to reasons such
as issues rooted in history and government approvals, CLIC, the controlling shareholder of the Company, made
further commitment as follows: CLIC will assist the Company in completing, and urge the co-owners to complete,
the formalities in relation to the change of ownership in respect of the above two properties and related land use
rights as soon as possible. If the formalities cannot be completed due to the reasons of the co-owners, CLIC will
take legally practicable measures to resolve the issue and will bear potential losses suffered by the Company as a
result of the defective ownership.
RESTRICTION ON MAJOR ASSETS
The major assets of the Company are financial assets. During the Reporting Period, there was no major asset of the
Company being seized, detained or frozen that is subject to the disclosure requirements.
China Life Insurance Company Limited
Wang Sidong
Annual Report 2017
69
Corporate
Governance
Report of the Board of Directors
Report of the Supervisory
Committee
Changes in Ordinary Shares
and Shareholders Information
Directors, Supervisors, Senior
Corporate Governance
Liu Jiade
(appointed as Director with effect from 31 July 2017)
(appointed as Director with effect from 31 July 2017)
Chang Tso Tung Stephen
Robinson Drake Pike
Tang Xin
By deeply exploring customers' requirements, the Company optimized basic services and made innovation in
value-added services to consistently improve customer experience. In 2017, the Company further promoted
the global VIP care services, and constantly improved the services including the international travel and
medical emergency services, domestic medical emergency services, 12-hour health consultation hotlines
and global VIP benefit services. The Company organized the 11th “Hand-in-Hand with China Life” value-
added service activities, holding nearly 20,000 online and on-site activities with the theme of health, sports,
and parent-child activities. By organizing a variety of outdoor running and hiking activities, the Company
provided its customers with scientific activities to help them better enjoy healthy life; by organizing the
7th “Little Painters of China Life” activities, the Company was consistently concerned about the growth
of teenagers and children; by conducting the China Life customer festival activities on 16 June 2017, the
Company promoted the application of intelligent services and upgraded its customer experience. The
Company also broadened its service scope and deepened the customers' understanding through a variety of
value-added service activities, thus maintaining good interaction with its customers.
The Company was committed to offering convenient and professional services to its customers by adopting
innovative form of customer services and actively applying technologies such as artificial intelligence and big
data, in a bid to enhance the intelligent service capability of the contact center, increase its service efficiency
and optimize customer experience. In addition, the Company enhanced its protection of the rights and
interests of insurance customers by consistently improving a mechanism for protection of such rights and
interests, and intensified its supervisory function through assessment.
(V) Relationship between the Company and its employees
The Company created a harmonious labor relationship according to law and entered into employment
contracts with its employees in a timely manner. The Company strengthened the management of employees
in all aspects by establishing the following three mechanisms: an employee team management mechanism
with the characteristics of basic level orientation, combination of training and utilization of employees,
hierarchical responsibility and unified regulation; a performance management mechanism that is result-
oriented, adopts vertical assessment and horizontal ranking, and focuses on application; and a remuneration
distribution mechanism that is based on the principles of salary determined by position, remuneration
paid based on performance, emphasis on incentives and preference to the local level. The Company was
concerned about the overall development of employees, and actively facilitated the career development of
employees through various means, such as education and training, mentoring, job rotation and exchange
of opinions, practice at local branches, assessment of competent staff, base platform training, and talent
cultivation under the Spark Program. The Company attached importance to humanistic concern by
safeguarding the legitimate rights and interest of employees in a practical manner and encouraging
employees to arrange vacations and annual leave in a scientific way, with an aim to achieve work-life balance.
Corporate Governance
74
China Life Insurance Company Limited Annual Report 2017
Corporate Governance
3.
The Company actively promoted the construction of a democratic management system with employee
representative meetings as its basic form to protect the democratic rights of employees and to facilitate
the joint development between employees and enterprise. Its head office and provincial branches have
fully established the system of employee representative meetings, organized their respective employees to
perform democratic management and supervisory role according to law, and inspected and monitored
the implementation of resolutions adopted by employee representative meetings, thus carrying out the
supervisory functions in a serious manner and constantly improving democratic management. The second
meeting of the second session of the Employee Representative Meeting of the Company was held in Beijing
on 18 April 2017. According to the spirit of alleviating poverty proposed at the Central Poverty Alleviation
and Development Conference, the Company consistently implemented the special plan for warm homes for
2016-2018 in great depth. In particular, 34 warm homes meeting the criteria of provincial branches and 185
warm homes meeting the criteria of local branches were preliminarily approved for establishment in 2017.
For details regarding the Company's employees (including the number of employees, composition of
professionals, educational levels, remuneration policy and training program), please refer to the section
"Directors, Supervisors, Senior Management and Employees” in this annual report.
FORMULATION AND IMPLEMENTATION OF PROFIT DISTRIBUTION POLICY
In accordance with Article 211 of the Articles of Association, the basic principles of the Company's profit
distribution are as follows:
(I)
(II)
1.
2.
The Company shall take the investment return for investors into full account and allocate the required
percentage of the Company's realized distributable profits to shareholders as dividends each year;
The Company shall maintain a sustainable and steady profit distribution policy and at the same time
take into consideration the Company's long-term interest, general interest of all the shareholders and
the sustainable development of the Company;
3. The Company shall give priority to cash dividends as its profit distribution manner.
In accordance with Article 212 of the Articles of Association, the Company's profit distribution policy is as
follows:
1. Profit distribution modes: The Company may distribute dividends in the form of cash or shares or a
combination of cash and shares. If practicable, the Company may distribute interim dividends. The
Company's dividends shall not bear interest, save in the case where the Company fails to distribute the
dividends to the shareholders on the day when dividends were due to have been distributed;
2.
Conditions for and percentage of distribution of cash dividends: If the Company makes profits in a
given year and the cumulative undistributed profit is positive, the Company shall distribute dividends
in the form of cash and the cumulative profits distributed in cash over the past three years by the
Company shall be no less than thirty percent (30%) of the average annual distributable profits in
recent three years;
China Life Insurance Company Limited Annual Report 2017
75
73
China Life Insurance Company Limited Annual Report 2017
With regard to "1+4” series of documents released by the CIRC, “1” stands for the “Circular of the CIRC on Further
Strengthening Insurance Regulation and Maintaining the Stable and Healthy Development of the Insurance Industry”, which
represents the overall concept of the current regulatory work; “4” stands for four implementing documents, namely, the
"Circular of the CIRC on Further Strengthening Risk Prevention and Control for the Insurance Industry", the "Circular of the
CIRC on Strengthening Insurance Regulation, Clamping Down on Illegalities and Violations and Governing Irregular Practices
in the Market”, the “Circular of the CIRC on Remedying Regulatory Deficiencies and Establishing a Stringent and Effective
Insurance Regulatory System", and the “Guiding Opinions of the CIRC on Supporting the Development of Real Economy by
the Insurance Industry".
6
Leung Oi-Sie Elsie
(appointed as Director with effect from 11 February 2018)
(resigned with effect from 7 April 2017 due to adjustment
of working arrangements)
(resigned with effect from 12 January 2018 due to adjustment
of working arrangements)
(resigned with effect from 8 August 2017 due to adjustment
of working arrangements)
China Life Insurance Company Limited Annual Report 2017 71
1.
2.
PRINCIPAL BUSINESS
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, providing
products and services such as individual and group life insurance, accident and health insurance. 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.
BUSINESS REVIEW
(I) Overall operation of the Company during the Reporting Period
For details of the overall operation of the Company during the Reporting Period, the future development of
its business and the principal risks faced by it, please refer to the section headed “Management Discussion
and Analysis" in this annual report. These discussions form part of the “Report of the Board of Directors".
Liu Huimin
Yin Zhaojun
(II) Environmental policies and performance of the Company
The Company strictly complied with 15 national and local laws and regulations, including the "Energy
Conservation Law of the People's Republic of China” and the “13th Five-Year' Energy Saving and Emission
Reduction Comprehensive Work Plan", and formulated the "Provisional Measures for the Administration
of Energy Saving and Emission Reduction of China Life Insurance Company Limited” to define the duties
and functions of the Company's energy management committee with “strengthening the awarenesses on
efficiency and costs" as the starting point, in order to comprehensively draw up the Company's overall plan
for the work of energy saving and emission reduction.
The Company launched an electronic office reviewing resolutions, dealing with affairs to be considered at
meetings and checking meeting files online, and also put online all ordinary electronic invoices for value-
added tax. The Company developed an electronic service platform to provide convenient services to its
customers while slashing the consumption of paper materials as much as possible. As at the end of 2017, the
Company had issued over 130 million electronic invoices on a cumulative basis. The launch of electronic
services helped reduce approximately 1,453.25 tonnes of paper. Through the adoption of electronic
insurance policies, the Company cut down its consumption of paper materials by approximately 1,420
million pages for the year. "China Life E-Bao”, as the intelligent service platform vigorously developed by
China Life, has adopted a highly efficient model designed for paperless services. Information technology has
made outstanding contribution to green energy saving and environmental protection. The adoption of a new
type of standard electronic equipment for energy saving and consumption reduction enabled the Company
to reduce its power consumption by approximately 165 million KWh for the
year.
IV. UNDERTAKINGS OF THE COMPANY, SHAREHOLDERS, EFFECTIVE CONTROLLERS,
72
China Life Insurance Company Limited Annual Report 2017
Corporate Governance
With the integration of functions such as data processing, research and development, and educational
training, China Life Science and Technology Park adopts various technologies and measures on energy
saving and consumption reduction, including an energy storage air-conditioning system, photovoltaic
thermal system, rainwater collection system, reclaimed water treatment system, LED lighting and control,
natural lighting and planted roof, which will significantly reduce its operating costs. It is expected that the
running costs will be saved by a range between 20% and 30% as compared to similar ordinary buildings.
(III) Compliance by the Company with the relevant laws and regulations that have a significant impact
The Company adhered to the code of conduct of “being trustworthy, assuming risks, emphasizing on
services and being legal compliant", adopted the business compliance concepts of “starting from the top
level, having responsibility for all to be compliant, and creating value from compliance", and strictly
observed and effectively implemented applicable laws and regulations and regulatory requirements,
such as the Insurance Law, the Company Law and the “Regulations for the Administration of Insurance
Companies". The Company strictly implemented the requirements of “1+4” series of documents released by
the CIRC and major regulatory documents on product development and design, retrospective administration
of sales practices and investment supervision, etc., strictly implemented the requirements of the CIRC with
respect to the special action of “combating sales chaos and cracking down upon illegal business” relating to
personal insurance, conducted rectifications in great depth with a focus on sales, channel and product chaos
as well as illegal business activities, so as to consolidate the foundation for the Company's development and
prevent systemic risks. The Company constantly improved the relevant rules and mechanisms concerning
product design, business operation and risk control, and offered full cooperation, support and protection for
the three strategic missions of the Company - speedy development, transformation and upgrade, and risk
prevention and control.
(IV) Relationship between the Company and its customers
While actively performing its obligations to insurance policies, the Company bears in mind the core
mission of an enterprise to provide high quality services to its customers. The Company regards customer
satisfaction and customer experience as the basic standards for assessing its services, and pushes forward
the establishment of a customer-oriented business model in order to create value for its customers. The
Company has provided insurance services for more than 500 million customers. The evaluation results of
customer satisfaction and customer loyalty increased by 2.03% and 3.25% year-on-year, respectively.
The ecological environment relates to the future of our race and people's well-being. The Company, based
on its features of energy consumption, strived to cut down its energy consumption and carbon emissions
at each operating segment by means of electronic office processing system, technological innovation and
adoption of new environment-friendly materials. The Company actively promoted and applied the spirits
of diligence and thrift to consistently increase the awareness of its employees on performing energy saving
measures, with a view to making contribution to the speedy reform for the system of ecological civilization
and the construction of a beautiful China.
Corporate Governance
Significant Events
The total amount of charitable donations made by the Company during the Reporting Period was approximately
RMB171 million.
The changes in accounting estimates of the Company during the Reporting Period are set out in Note 3 in the
Notes to the Consolidated Financial Statements in this annual report.
CHANGES IN ACCOUNTING ESTIMATES
34%
34,699
11,871
35%
19,127
6,784
35%
32,253
11,306
statements
cash dividends
(including tax)
(shares)
Amount of
consolidated
to equity
holders of the
Company in the
Percentage of
amount of
cash dividends
in net profit
attributable
for the year in
statements
Company in the
consolidated
RESERVES
6.
7.
Details of the reserves of the Company are set out in Note 36 in the Notes to the Consolidated Financial
Statements in this annual report.
China Life Insurance Company Limited Annual Report 2017
78
Corporate Governance
14. INTERESTS OF DIRECTORS AND SUPERVISORS (AND THEIR CONNECTED
ENTITIES) IN MATERIAL TRANSACTIONS, ARRANGEMENTS OR CONTRACTS
None of the Directors or Supervisors (and their connected entities) is or was materially interested, directly
or indirectly, in any transaction, arrangement or contract of significance entered into by the Company or its
controlling shareholders or any of their respective subsidiaries at any time during the Reporting Period or subsisted
at the end of the Reporting Period.
None of the Directors or Supervisors has entered into any service contract with the Company and its subsidiaries
that is not terminable within one year or can only be terminated by the Company with payment of compensation
(other than statutory compensation).
13. DIRECTORS' AND SUPERVISORS' SERVICE CONTRACTS
Details of the Board meetings and the Board's performance of its duties during the Reporting Period are set out in
the section headed "Corporate Governance” in this annual report.
12. DAY-TO-DAY OPERATIONS OF THE BOARD
No H Share Stock Appreciation Rights of the Company were granted or exercised in 2017. The Company will
deal with such rights and related matters in accordance with the PRC governmental policies.
11. H SHARE STOCK APPRECIATION RIGHTS
holders of the
During the Reporting Period, the Company and its subsidiaries did not purchase, sell or redeem any of the
Company's listed securities.
INFORMATION OF TAX DEDUCTION FOR HOLDERS OF LISTED SECURITIES
Shareholders are taxed and/or enjoy tax relief for the dividend income received from the Company in accordance
with the Individual Income Tax Law of the PRC, the Enterprise Income Tax Law of the PRC, and relevant
administrative rules, governmental regulations and guiding documents. Please refer to the announcement
published by the Company on the website of the SSE on 12 June 2017 for the information on income tax in
respect of the dividend distributed to A Share shareholders during the Reporting Period, and the announcement
published by the Company on the HKExnews website of the Hong Kong Exchanges and Clearing Limited on 31
May 2017 for the information on income tax in respect of the dividend distributed to H Share shareholders during
the Reporting Period.
Details of the movement in share capital of the Company are set out in Note 34 in the Notes to the Consolidated
Financial Statements in this annual report.
9.
8. SHARE CAPITAL
77
China Life Insurance Company Limited Annual Report 2017
Corporate Governance
Details of the movement in property, plant and equipment of the Company are set out in Note 6 in the Notes to
the Consolidated Financial Statements in this annual
report.
PROPERTY, PLANT AND EQUIPMENT
CHARITABLE DONATIONS
10. PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S SECURITIES
to equity
which dividends
were distributed
4.2
4.
China Life Insurance Company Limited Annual Report 2017
76
76
year.
No public reserve capitalization is provided for in the profit distribution plan for the current financial
In accordance with the profit distribution plan for the year 2017 approved by the Board on 22 March
2018, with the appropriation to its discretionary surplus reserve fund of RMB3,218 million (10%
of the net profit for 2017), the Company, based on 28,264,705,000 shares in issue, proposed to
distribute cash dividends amounting to RMB11,306 million to all shareholders of the Company at
RMB0.40 per share (inclusive of tax). The foregoing profit distribution plan is subject to the approval
by the 2017 Annual General Meeting to be held on 6 June 2018 (Wednesday). Dividends payable to
domestic shareholders are declared, valued and paid in RMB. Dividends payable to shareholders of
the Company's foreign-listed shares are declared and valued in RMB and paid in the currency of the
jurisdiction in which the foreign-listed shares are listed (if the Company is listed in more than one
jurisdiction, dividends shall be paid in the currency of the Company's principal jurisdiction of listing
as determined by the Board). The Company shall pay dividends to shareholders of foreign-listed shares
in conformity with the PRC regulations on foreign exchange control. If no such regulations are in
place, the applicable exchange rate is the average closing rate published by the People's Bank of China
one week before the declaration of the distribution of dividends.
5.
of 2017
1. Profit distribution plan or public reserves capitalization plan for the
(IV) Profit distribution plan and public reserves capitalization plan
Corporate Governance
Net profit
attributable
(III) In accordance with Article 213 of the Articles of Association, the procedures of reviewing the Company's
profit distribution proposal is as follows:
In addition, the Company's profit distribution is required to comply with relevant regulatory requirements.
If the Company's core solvency ratio or comprehensive solvency ratio does not meet the minimum
requirements, the CIRC may adopt regulatory measures against the Company due to its failure to meet the
minimum requirements, which may restrict the Company's ability to distribute dividends to its shareholders.
Conditions for distribution of share dividends: If the Company's operation is sound and the Board
of Directors is of the opinion that share dividends distribution is in the interest of all the Company's
shareholders since the Company's stock price does not match the Company's share capital, the
Company may propose a share dividends distribution plan if the conditions for cash dividends listed
above are satisfied.
year
2.
The Company's profit distribution proposal shall be reviewed by the Board of Directors. The Board of
Directors shall have a sufficient discussion of the reasonableness of the profit distribution proposal. After
a special resolution regarding the proposal is reached and independent opinions have been given by the
Company's Independent Directors, the proposal shall be submitted to the Company's general meeting for
approval. In reviewing the profit distribution proposal, the Company shall provide Internet-based voting
mechanism to the shareholders. When deliberating on specific cash dividend proposal by the Company's
general meeting, the Company shall make active communication with shareholders, especially small and
medium-sized shareholders, through various channels. The Company shall also fully solicit opinions and
appeals from small-and medium-sized shareholders, and give timely reply to concerns of small-and medium-
sized shareholders.
The dividend distribution of the Company for the recent 3 years is as follows:
The profit distribution policy of the Company complied with the Articles of Association and the
examination and approval procedures of the Company, clearly defined the dividend distribution
standards and percentage and the decision-making procedures and system. Small-and medium-sized
shareholders of the Company have sufficient opportunities to express their opinions and appeals, and
their legitimate rights have been well protected. The Independent Directors diligently considered the
profit distribution policy and expressed their independent opinion in this regard.
2.4
4.0
2015
2017
share capital
per ten shares
reserve into
Amount of Transfer of public
dividends
per ten shares
(RMB)
(including tax)
2016
(shares)
distributed
Number of
bonus stocks
per ten shares
were
Year in which
dividends
Unit: RMB million
100%
Major businesses
Shareholdings in other
subsidiaries and affiliates listed
in China or abroad during the
Reporting Period
China Life Insurance (Group) Company
Yang Mingsheng
21 July 2003 (CLIC was formerly known as China Life Insurance Company, a
company approved and formed by the State Council in January 1999. With the
approval of the CIRC in 2003, China Life Insurance Company was restructured as
CLIC).
86
As at 31 December 2017, CLIC held 1,785,098,644 H shares of Town Health
International Medical Group Limited, representing 23.7% of its total shares.
Ministry of Finance of the PRC
China Life Insurance Company Limited Annual Report 2017
The effective controller of the Company is the Ministry of Finance of the People's Republic of China. The
equity and controlling relationship between the Company and its effective controller is set out in below:
Date of incorporation
68.37%
China Life Insurance (Group) Company
Insurance services including receipt of premiums and payment of benefits in
respect of the in-force life, health, accident and other types of personal insurance
business, and the reinsurance business; holding or investing in domestic and
overseas insurance companies or other financial insurance institutions; funds
application business permitted by national laws and regulations or approved by the
State Council of PRC; other businesses approved by insurance regulatory agencies.
Legal representative
85
Annual Report 2017
Name of
China Life Insurance Company Limited
China International Television Corporation and China National Nuclear Corporation became the top 10 shareholders of the Company through the strategic
placement during the initial public offering of A Shares of the Company in December 2006. The trading restriction period of the shares from the strategic
placement was from 9 January 2007 to 9 January 2008.
Industrial and Commercial Bank of China Limited - China Southern Flexible Allocation of Consumption and Vitality of Hybrid Securities Investment
Fund and Industrial and Commercial Bank of China Limited – SSE 50 Exchange Traded Index Securities Investment Fund have Industrial and Commercial
Bank of China Limited as their fund depositary. China Universal Asset Management Co., Ltd - Industrial and Commercial Bank of China Limited -
China Universal - Tianfu Bull No. 53 Asset Management Plan has Industrial and Commercial Bank of China Limited as its asset trustee. Save as above, the
Company was not aware of any connected relationship and concerted parties as defined by the "Measures for the Administration of the Takeover of Listed
Companies" among the top ten shareholders of the Company.
(II) Information relating to the Controlling Shareholder and Effective Controller
3.
Details of shareholders
2.
company
HKSCC Nominees Limited is a company that holds shares on behalf of the clients of the Hong Kong stock brokers and other participants of the CCASS
system. The relevant regulations of the HKSE do not require such persons to declare whether their shareholdings are pledged or frozen. Hence, HKSCC
Nominees Limited is unable to calculate or provide the number of shares that are pledged or frozen.
Corporate Governance
55
China Life Insurance Company Limited
Corporate Governance
0
12,400,000
The controlling shareholder of the Company is CLIC, and its relevant information is set out below:
1.
During the Reporting Period, there was no change to the controlling shareholder and the effective controller
of the Company. As at the end of the Reporting Period, there was no other corporate shareholder holding
more than 10% of the shares in the Company.
7.27%
So far as is known to the Directors, Supervisors and the chief executive of the Company, as at 31 December 2017,
the following persons (other than the Directors, Supervisors and the chief executive of the Company) had interests
or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the
Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register
required to be kept by the Company pursuant to Section 336 of the SFO, or as otherwise notified to the Company
and the HKSE:
1.91%
Save as disclosed above, the Directors, Supervisors and the chief executive of the Company are not aware that there
is any party who, as at 31 December 2017, had an interest or short position in the shares and underlying shares of
the Company which were recorded in the register required to be kept by the Company pursuant to Section 336 of
the SFO.
BlackRock, Inc. held by way of attribution a short position as defined under Part XV of the SFO in 4,209,000 H
Shares (0.06%). Of these 4,209,000 H Shares, 1,448,000 H Shares were cash settled unlisted derivatives.
BlackRock, Inc. was interested in a total of 541,161,285 H Shares in accordance with the provisions of Part
XV of the SFO. Of these shares, BlackRock Investment Management, LLC, BlackRock Financial Management,
Inc., BlackRock Institutional Trust Company, National Association, BlackRock Fund Advisors, BlackRock
Advisors, LLC, BlackRock Japan Co., Ltd., BlackRock Asset Management Canada Limited, BlackRock Investment
Management (Australia) Limited, BlackRock Asset Management North Asia Limited, BlackRock (Netherlands)
B.V., BlackRock Advisors (UK) Limited, BlackRock International Limited, BlackRock Asset Management Ireland
Limited, BLACKROCK (Luxembourg) S.A., BlackRock Investment Management (UK) Limited, BlackRock Asset
Management Deutschland AG, BlackRock Fund Managers Limited, BlackRock Life Limited, BlackRock (Singapore)
Limited and BlackRock Asset Management (Schweiz) AG were interested in 3,711,000 H Shares, 4,697,000 H
Shares, 104,470,234 H Shares, 178,053,000 H Shares, 1,618,000 H Shares, 42,351,491 H Shares, 893,000 H
Shares, 3,709,000 H Shares, 30,752,026 H Shares, 1,074,000 H Shares, 5,247,389 H Shares, 3,347,700 H Shares,
53,517,031 H Shares, 43,306,825 H Shares, 28,510,653 H Shares, 477,000 H Shares, 23,795,364 H Shares,
11,026,572 H Shares, 562,000 H Shares and 42,000 H Shares respectively. All of these entities are either controlled
or indirectly controlled subsidiaries of BlackRock, Inc. Of these 541,161,285 H Shares, 850,595 H Shares were cash
settled unlisted derivatives.
(Note 1):
Corporate Governance
Corporate Governance
888
87
Annual Report 2017
China Life Insurance Company Limited
The letter "L" denotes a long position. The letter “S” denotes a short position.
0.01%
0.06%
541,161,285 (L)
4,209,000 (S)
0.04%
H Shares
Interest in controlled
corporation
(Note 1)
Class of
Name of substantial shareholder
Capacity
shares
Number of shares held
Percentage of
the respective
class of shares
Percentage of the
total number of
IV. INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES
OF THE COMPANY HELD BY SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS
UNDER HONG KONG LAWS AND REGULATIONS
shares in issue
Beneficial owner
A Shares
19,323,530,000 (L)
92.80%
68.37%
(Group) Company
BlackRock, Inc.
China Life Insurance
State-owned legal
person
From left to right:
China National Nuclear
Currently, the fifth session of the Supervisory Committee comprises Mr. Miao Ping, Mr. Shi Xiangming,
Mr. Luo Zhaohui, Ms. Wang Cuifei and Mr. Song Ping, with Mr. Miao Ping acting as the Chairman
of the Supervisory Committee. Of the members of the Supervisory Committee, Mr. Miao Ping, Mr. Shi
Xiangming and Mr. Luo Zhaohui are Non-employee Representative Supervisors, and Ms. Wang Cuifei
and Mr. Song Ping are Employee Representative Supervisors. In August 2017, Mr. Zhan Zhong resigned
from his position as an Employee Representative Supervisor due to adjustment of work arrangements. In
January 2018, Mr. Li Guodong resigned from his position as an Employee Representative Supervisor due
to adjustment of work arrangements. In February 2018, Ms. Xiong Junhong resigned from her position
Non-employee Representative Supervisor due to adjustment of work arrangements.
(I)
I.
ACTIVITIES OF THE SUPERVISORY COMMITTEE
Mr. Song Ping, Mr. Luo Zhaohui,
Mr. Miao Ping, Mr. Shi Xiangming,
Ms. Wang Cuifei
Corporate Governance
Report of the Supervisory Committee
81
as a
Annual Report 2017
22 March 2018
Beijing, China
By Order of the Board
Yang Mingsheng
Chairman
At the 2017 Annual General Meeting to be held on 6 June 2018, the Board will propose a resolution to continue
to appoint Ernst & Young Hua Ming LLP as the PRC auditor and the auditor for US Form 20-F of the Company
for the year 2018, and Ernst & Young as the Hong Kong auditor of the Company for the year 2018.
60.27
1.66
11.14
58.61
China Life Insurance Company Limited
Fees (RMB million)
(II) Attending meetings of the Supervisory Committee and diligently discharging their duties. Pursuant to the
regulatory requirements of the jurisdictions where the Company is listed, the Articles of Association and
the "Procedural Rules for Supervisory Committee Meetings" of the Company, and in accordance with the
work arrangement of the Supervisory Committee, the Supervisory Committee convened its regular meetings
in a timely manner, at which it considered and approved proposals in relation to the Company's financial
reports, periodic reports, internal control, and risk management. In 2017, the fifth session of the Supervisory
Committee held five meetings, at which the Supervisors earnestly expressed their views, actively participated
in discussions and diligently discharged their duties, thereby providing valuable advice for the business
development of the Company.
China Life Insurance Company Limited Annual Report 2017
Corporate Governance
(V) Internal control system and self-evaluation report on internal control. During the Reporting Period, the
Company sought to improve its internal control system, and continued to improve the effectiveness of such
system. The Supervisory Committee of the Company reviewed the self-evaluation report on the Company's
internal control systems and did not raise any objection against the self-evaluation report of the Board
regarding the Company's internal control systems.
(IV) Connected transactions. During the Reporting Period, the connected transactions of the Company were
on commercial terms. The Supervisory Committee is not aware of any acts harming the interests of the
Company.
(III) Acquisition and sale of assets. During the Reporting Period, the prices for acquisition and sale of assets were
fair and reasonable. The Supervisory Committee is not aware of any insider trading, any acts harming the
interests of shareholders or incurring any loss to the Company's assets.
(II) The authenticity of the financial report. The Company's annual financial report truly and completely
reflected the Company's financial position and operating results. Ernst & Young Hua Ming LLP and
Ernst & Young have performed audits and have issued unqualified auditors' reports for the year ended
2017 in accordance with the China Standards on Auditing of PRC Certified Public Accountants and the
International Standards on Auditing, respectively.
The Company's operational compliance with the law. During the Reporting Period, the Company's
operations were in compliance with the law. The Company's operations and decision-making procedures
were in compliance with the Company Law and the Articles of Association. All Directors and senior
management of the Company maintained strict principles of diligence and integrity and performed their
duties conscientiously. The Supervisory Committee is not aware of any of them having violated any law,
regulation, or any provision in the Articles of Association or harmed the interests of the Company in the
course of discharging their duties.
(I)
During the Reporting Period, the Supervisory Committee of the Company performed its supervisory duties in a
diligent manner in accordance with the requirements of the Company Law, the Articles of Association and the
"Procedural Rules for Supervisory Committee Meetings”.
82
INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON CERTAIN MATTERS
333
83
China Life Insurance Company Limited Annual Report 2017
(VI) Actively participating in the meetings and activities organized by China Association for Public Companies.
In 2017, Mr. Miao Ping, the Chairman of the Supervisory Committee, was the vice chairman of the
professional committee of the second session of the supervisory committee of China Association for Public
Companies and attended the meeting for the change of members of the professional committee of the second
session of the supervisory committee of China Association for Public Companies in Shanghai, during which,
the "Work Plan of the Second Session of the Supervisory Committee” and the “2017 Work Plan of the
Supervisory Committee”, etc. were discussed. In order to strengthen the internal control compliance, audit
supervision and risk management of the Company, the Supervisory Committee of the Company participated
in the activity of the "Subject Study of the Supervisory Committees of Listed Companies" organized by
China Association for Public Companies, and submitted the "Study on the Issues Concerning the Work
Allocation between the Supervisory Committee and Independent Directors” as its subject of the study.
(V) Attending training courses and constantly enhancing duty performance of the Supervisors. In 2017, the
members of the Supervisory Committee attended the first and sixth special training courses of 2017 for
directors and supervisors of listed companies within the territory of Beijing as organized by the Listed
Companies Association of Beijing and the first seminar of 2017 for the chairmen of the supervisory
committees of listed companies as organized by China Association for Public Companies, which gave them
the opportunity to learn and understand the regulatory overview of listed companies within the territory of
Beijing, the latest regulatory policies of listed companies and the analysis of cases in relation thereto.
(IV) Actively conducting research and investigation activities and examining and understanding the business
operation of local branches. Mr. Miao Ping, the Chairman of the Supervisory Committee, together with Ms.
Xiong Junhong and Ms. Wang Cuifei, the members of the Supervisory Committee, carried out investigation
and research on local branches of the Company in Guangxi Province. The investigation and research team
successively listened to business reports from the local branches in Guangxi and Liuzhou and the local sub-
branch of the Company in Luzhai, held in-depth conferences with their respective key management, visited
field offices and communicated with the frontline employees at counters of the customer service center of
Liuzhou branch and Luzhai sub-branch. Through investigation and research, all Supervisors comprehended
the working situation of local branches in great depth and examined the effectiveness of the implementation
of decisions of the Board and the management, thus further enhancing the legal compliance and risk
prevention of the Company in a practical manner.
(III) Attending and participating in corporate governance meetings and actively exercising their supervisory
role. In 2017, the Supervisory Committee attended the 2016 Annual General Meeting and the First
Extraordinary General Meeting 2017 of the Company, and participated in the regular meetings of the
Board. All members of the Supervisory Committee participated in the meetings of the Nomination and
Remuneration Committee, the Risk Management Committee, and the Strategy and Investment Decision
Committee, respectively, in accordance with the work allocation among Supervisors determined by the
Supervisory Committee, with a focus on the meetings of the Audit Committee. By attending these meetings,
all Supervisors diligently discharged their duties, oversaw the procedures for convening meetings, carefully
listened to the matters considered at the meetings, and participated in discussions when necessary, thus
bringing positive effects on further enhancement of corporate governance.
Corporate Governance
II.
Total
Non-audit services fee
Including: Internal control audit fee
the Company has expressly provided in its Articles of Association the level of authority required for
approving external guarantees and the approval procedures.
the Company's internal control system regarding external guarantees is in compliance with laws, regulations,
and the requirements under the “Notice in relation to the Standardization of Capital Flows between
Listed Companies and Connected Parties and Issues in relation to External Guarantees Granted by Listed
Companies"; and
3.
2.
during the Reporting Period, the Company did not provide any external guarantee;
1.
Independent Directors of the Company have rendered their independent opinions on the Company's external
guarantees, and are of the view that:
19. MATERIAL GUARANTEES
China Life Insurance Company Limited Annual Report 2017
No management or administration contracts for the whole or substantial part of any business of the Company
were entered into during the Reporting Period.
According to the Articles of Association and relevant PRC laws, there is no provision for any pre-emptive rights of
the shareholders of the Company. At present, the Company does not have any arrangement for share options.
17. PRE-EMPTIVE RIGHTS AND ARRANGEMENTS FOR SHARE OPTIONS
As at the end of the Reporting Period, none of the Directors, Supervisors and the chief executive of the Company
had any interests or short positions in the shares, underlying shares or debentures of the Company or its associated
corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws
of Hong Kong) (the “SFO")) that were required to be recorded in the register of the Company required to be kept
pursuant to Section 352 of the SFO or which had to be notified to the Company and the HKSE pursuant to the
Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix
10 to the Listing Rules. In addition, the Board has created a code of conduct in relation to the sale and purchase
of the Company's securities by Directors and Supervisors, which is no less stringent than the Model Code. Upon
specific inquiry by the Company, the Directors and Supervisors have confirmed observation of the Model Code
and the Company's own code of conduct in the year of 2017.
16. DISCLOSURE OF INTERESTS OF DIRECTORS, SUPERVISORS AND THE CHIEF
EXECUTIVE IN THE SHARES OF THE COMPANY
No arrangements to which the Company, any of its subsidiaries or holding companies, or any subsidiary of the
Company's holding companies is a party, and whose objects are, or one of whose objects is, to enable Directors
or Supervisors (including their spouses and children under the age of 18) to acquire benefits by means of the
acquisition of shares in, or debentures of, the Company or any other body corporate, subsisted at any time during
the Reporting Period or at the end of the Reporting Period.
15. DIRECTORS' AND SUPERVISORS' RIGHTS TO ACQUIRE SHARES
Corporate Governance
88
18. MANAGEMENT CONTRACTS
79
20. RESPONSIBILITY STATEMENT OF DIRECTORS ON FINANCIAL REPORTS
The Directors are responsible for overseeing the preparation of the financial report for each financial period which
gives a true and fair view of the Company's financial position, performance results and cash flows for that period.
To the best knowledge of the Directors, there was no material event or condition during the Reporting Period that
might have a material adverse effect on the continuing operation of the Company.
Audit, review and agreed-up procedures fee
Service/Nature
Corporate Governance
Remuneration paid by the Company to the auditors in 2017 was as follows:
Remuneration paid by the Company to the auditors is subject to approval at the shareholders' general meeting,
pursuant to which the Board is authorized to determine the amount and make payment. Audit fees paid by the
Company to the auditors will not affect the independence of the auditors.
A resolution was passed at the 2016 Annual General Meeting to engage Ernst & Young Hua Ming LLP as the PRC
auditor and the auditor for US Form 20-F of the Company for the year 2017, and Ernst & Young as the Hong
Kong auditor of the Company for the year 2017, who will hold office until the conclusion of the 2017 Annual
General Meeting. Ernst & Young Hua Ming LLP and Ernst & Young have been serving as the Company's auditors
for five consecutive years.
25. AUDITORS
China Life Insurance Company Limited Annual Report 2017
80
80
Corporate Governance
The Company has applied the principles of the Corporate Governance Code (the “CG Code") as set out in
Appendix 14 to the Listing Rules, and has complied with all code provisions of the CG Code during the Reporting
Period.
24. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
Based on the information publicly available to the Company and within the knowledge of the Directors as at the
Latest Practicable Date (22 March 2018), not less than 25% of the issued share capital of the Company (being the
minimum public float applicable to the shares of the Company) was held in public hands.
23. SUFFICIENCY OF PUBLIC FLOAT
In 2017, the gross written premiums received from the Company's five largest customers accounted for less than
30% of the Company's gross written premiums for the year. There is no related party of the Company among the
five largest customers.
22. MAJOR CUSTOMERS
In accordance with the requirements of the "Standard Regulations on Corporate Internal Control", the Board
conducted an assessment on internal control relating to the Company's financial reporting functions, and
confirmed that its internal control was effective as at 31 December 2017.
21. BOARD'S STATEMENT ON INTERNAL CONTROL
84
Corporation
China Life Insurance Company Limited Annual Report 2017
Miao Ping
0.08%
Overseas legal person
Hong Kong Securities Clearing
Company Limited
Industrial and Commercial Bank of
China Limited China Southern Flexible
Allocation of Consumption and Vitality
of Hybrid Securities Investment Fund
-4,398,849
54,985,761
0.19%
Other
22,976,187
0
0.42%
State-owned legal person
+22,190,586
594,502,502
2.10%
State-owned legal person
China Securities Finance Corporation Limited
Central Huijin Asset Management Limited
+5,220,506
119,719,900
-4,314,048
China International Television Corporation
State-owned legal person
Securities Investment Fund
Limited SSE 50 Exchange Traded Index
+440,300
12,788,337
0.05%
Other
Industrial and Commercial Bank of China
No. 53 Asset Management Plan
Universal - Tianfu Bull
Bank of China Limited - China
Co., Ltd Industrial and Commercial
0
15,015,845
0.05%
Other
China Universal Asset Management
0
18,452,300
0.07%
7,319,236,460
By Order of the Supervisory Committee
25.90%
HKSCC Nominees Limited
No. of A Share
shareholders: 120,420
No. of H Share
shareholders: 28,825
Period
end of the Reporting
shareholders as at the
ordinary share
Total number of
(I) Total number of shareholders and their shareholdings
III. INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER
Particulars of top ten shareholders of the Company
As at the end of the Reporting Period, the Company had not issued any securities in the last three years. During
the Reporting Period, there was no change in the total number of shares and the share structure of the Company
due to bonus issues or placings, nor were there any internal employees' shares.
During the Reporting Period, there was no change in the total number of shares and the share capital of the
Company.
CHANGES IN SHARE CAPITAL
II.
I.
Changes in Ordinary Shares and Shareholders Information
22 March 2018
Beijing, China
Chairman of the Supervisory Committee
ISSUE AND LISTING OF SECURITIES
Overseas legal person
Total number of ordinary
share shareholders as at
the end of the month
prior to the disclosure of
this annual report
Unit: Shares
0
19,323,530,000
68.37%
State-owned legal person
China Life Insurance (Group) Company
Number of
shares pledged
or frozen
restrictions
to selling
No. of A Share
shareholders: 138,231
No. of H Share
shareholders: 28,362
the Reporting
Period
Percentage of
shareholding
shareholder
Name of shareholder
Nature of
shares subject
Number of
Increase/
decrease during
as at the end of
Number of
shares held
the Reporting
Period
China Life Insurance Company Limited Annual Report 2017
Supervisors
Changes in Ordinary
In the calculation of the investment yield of the year 2023, the average investment assets as the denominator exclude the fair value changes of investment
in debt instruments at fair value through other comprehensive income, so as to reflect the strategic intention of the Company for the management of assets
and liabilities. In the calculation of the investment yield of the year 2022, the data of investment businesses related to IFRS 17 - Insurance Contracts has
been restated, while the data of investment businesses related to IFRS 9 - Financial Instruments has not been restated. The formula used for calculating
the investment yield of the year 2022 is the same as that of previous years.
Report of the Board of
52
08 Annual Report 2023 | Prelude
Note: The items significantly affected by IFRS 9 - Financial Instruments are not presented because of no comparability with the same items last year.
The Company actively balanced long-term
value and short-term benefits, continued
to strengthen cost control and
underwriting management. However, due
to the combined impact of changes of
accounting standards and the continued
low performance of the equity market, the
net profit of the Company decreased
Due to the combined effect of changes in
profit before income tax and non-taxable
income
An increase in the net profits of certain
associates and joint ventures
equity holders of the
Company
-30.7%
66,680
46,181
Net profit attributable to
N/A
1,948
(2,971)
Income tax
associates and joint
ventures
RMB million
103.0%
3,979
8,079
Investment income from
Main reasons for change
43
Report of the Board of
Directors
GOVERNANCE
CORPORATE
122
Financial Position
Alleged Violation of Laws
42
and Regulations, Penalties
Consolidated Statement of
124
Imposed and Rectification
Comprehensive Income
Restriction on Major Assets
42
Change
Consolidated Statement of
Changes in Equity
Other Matters
42
Consolidated Statement of
127
Cash Flows
Notes to the Consolidated
129
43
Financial Statements
06
126
2022
2023
comprehensive income
-47.0%
46,126
24,431
Deferred tax assets.
Main reasons for change
Change
31 December
2022
2023
financial position
31 December
consolidated statement of
A decrease in deductible temporary
differences
As at
Major items of the
RMB million
MAJOR ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS WITH
CHANGE OF OVER 30% AND THE REASONS FOR CHANGE Note
07
Annual Report 2023 | Prelude
In calculating the percentage changes of the "Earnings per share (basic and diluted)", "Equity holders' equity per share", "Ordinary share holders' equity
per share" and "Net cash inflow/(outflow) from operating activities per share", the tail differences of the basic figures have been taken into account.
Gearing ratio = Total liabilities/Total assets
In 2023, the net profit attributable to equity holders of the Company under IFRSS was RMB46,181 million, an increase of
RMB25,071 million comparing with the data under ASBE. As at 31 December 2023, the equity holders' equity under IFRSS
was RMB477,093 million, an increase of RMB16,983 million comparing with the data under ASBE.
366,021
23,819
(93,967)
N/A
As at
Consolidated Statement of
Financial assets purchased
38,533
consolidated statement of
Major items of the
comprehensive income and profit
distribution during the Reporting Period
Due to the combined impact of changes
of accounting standards, total
For the year ended 31 December
30.3%
366,021
477,093
Equity holders' equity
An increase in the scale of commercial
pension products of subsidiaries
value through profit or loss
19,759
315.0%
13,878
Financial liabilities at fair
agreements to repurchase
The needs for liquidity management
45.6%
148,958
216,851
Financial assets sold under
under agreements to resell
The needs for liquidity management
-48.7%
3,344
436,169
41
116
4.
5.
There is no need for the Company to restate and present any comparative information for the years from 2019 to 2021 in accordance with IFRS 9 -
Financial Instruments and IFRS 17 - Insurance Contracts.
As at 31 December 2023, Investment assets = Cash and cash equivalents + Financial assets at fair value through profit or loss + Investment in debt
instruments at fair value through other comprehensive income + Investment in equity instruments at fair value through other comprehensive income +
Investment in debt instruments at amortised cost + Term deposits + Financial assets purchased under agreements to resell + Statutory deposits-restricted
+ Investment properties + Investments in associates and joint ventures. As at 31 December 2022, Investment assets = Cash and cash equivalents +
Securities at fair value through profit or loss + Available-for-sale securities + Held-to-maturity securities + Term deposits + Financial assets purchased
under agreements to resell + Loans (excluding policy loans) + Statutory deposits-restricted + Investment properties + Investments in associates and joint
ventures
C
中国人寿保险股份有限公司
China Life Insurance Company Limited
Stock Code 2628
CASAS H
私諧中國
20
S
ωρ
2
3
Annual
Report
The Company was established in Beijing, China
on 30 June 2003 according to the Company Law
and the Insurance Law of the People's Republic
of China. The Company was successfully listed
overseas in December 2003 and returned to the
domestic market as an A-share listed company in
January 2007. 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 2023, the
Company had approximately 328 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.
CONTENTS
01
PRELUDE
3.
2.
1.
Notes:
11.3%
10.13
10.76
10.12
activities per share³
Major financial ratios
Weighted average ROE (%)
9.65
17.26 A decrease
10.92
11.81
Core Competitiveness
Honors and Awards
Business Highlights
16.46
Gearing ratio (%)
91.61
Gross investment yield 5 (%)
2.43
92.52 A decrease
of 0.91
percentage
point
3.90 A decrease
of 1.47
percentage
points
90.04
89.24
89.00
4.98
5.30
5.24
of 7.61
percentage
points
2
235
Financial Summary
55
Information on Delisting and
Deregistration of American
Depositary Shares
55
35
Basic Information of the
Company
110
Index of Information
112
Disclosure Announcements
Definitions and Material
115
35
Risk Alert
35
55
Arbitrations
Major Connected Transactions
35
08 FINANCIAL REPORT
116
Material Contracts and Their
41
Performance
Independent Auditor's Report
Material Litigations or
Undertakings
SIGNIFICANT EVENTS
110
6
02
CHAIRMAN'S
STATEMENT
9
03
DISCUSSION AND
ANALYSIS
12
MANAGEMENT
Review of Business
Operations
12
Business Analysis
05
15
24
27
Technology Capabilities,
Operations and Services
Future Prospect
06
28
28
04
EMBEDDED VALUE
29
07
OTHER INFORMATION
Analysis of Specific Items
12.22
(4,307)
477,093
460,110
1,260,567
Embedded value
EXT
|Ж
million
5,659,250
Investment
assets
million
5,802,086
Total assets
million
641,380
Gross written
premiums
(
Ж
BUSINESS HIGHLIGHTS
Annual Report 2023 | Prelude
04
"2023 China Corporate ESG 'Golden Responsibility Award""
Sina Finance
"Best Insurance Company for
Responsible Investment"
"Assessment and Selection of the 3rd Investment Golden Bull Awards for China's Insurance Industry"
China Securities Journal
million
Value of one
year's sales
36,860
million
Change
2022
2023
Major financial data
Under International Financial Reporting Standards (IFRSS)
RMB million
MAJOR FINANCIAL DATA AND INDICATORS FOR THE PAST FIVE YEARS¹
The Company has prepared the annual report in accordance with International Financial Reporting Standards ("IFRSS"),
amendments to IFRSS and interpretations issued by the International Accounting Standards Board. Since 1 January 2023,
the Company has adopted IFRS 9 - Financial Instruments and IFRS 17 - Insurance Contracts. The Company has restated
and presented the comparative information of the previous year associated with insurance contracts in accordance with
IFRS 17 Insurance Contracts, and there is no need to restate and present any comparative information of the previous
year associated with financial instruments in accordance with IFRS 9 - Financial Instruments.
FINANCIAL SUMMARY
05
Annual Report 2023 | Prelude
for the Insurance Industry"
hundred million
Number of long-term
in-force policies
million
49.522
First-year regular premiums
with a payment duration of
ten years or longer
million
112,573
First-year
regular premiums
Ж
+K
218.54%
Comprehensive
solvency ratio
3.28
"Investment Golden Bull Award
Chinatimes.net.cn
"2023 Financial Institution with High-quality Development"
02
During the long course of its development, the Company has accumulated a wealth of experience in
operation and management and has a stable and professional management team that is well versed in
the art of management in China's life insurance market. The Company's core management team and key
personnel comprise those who have in-depth knowledge and understanding of the life insurance market
in China, including the Company's senior management, experienced underwriting personnel, insurance
actuaries, investment managers and risk management teams. During the Reporting Period, there was no
change of the above personnel which might have a material impact on the Company. The Company has
been pushing forward the reform of the market-oriented remuneration system, continuously stimulating
its internal vitality, and building a talent team that matches its high-quality development.
stable core
team
Professional
and
The Company implements the "Technology-driven China Life" development strategy in great depth by
adhering to the leading concept of technological innovation. The Company has established digital platforms
closely integrating online and offline resources with teams and outlets as the support and industry-leading
hybrid clouds as the base, creating an open, win-win and diversified digital insurance ecosystem, facilitating
the Company's digital transformation in all aspects, and accelerating the replacement of old growth drivers
with new ones, through which the Company's business operation is empowered in all aspects, and the
Company is able to provide smart, convenient, efficient and well-targeted comprehensive financial and
insurance services to the public.
Leading
technologies
and
innovation
empowerment
The Company adheres to the service concept of "honest and trustworthy, professional and efficient,
customer-oriented, and first-class experience", develops the operation model of "multiple accesses at
the front-end, intelligent centralisation at the headquarters, and comprehensive sharing for operations",
and has established a customer-oriented digital operation and service system. The Company keeps
considering and catering to demands of its customers, devoting itself to improve customer experience,
and providing customers with "convenient, quality and caring" services. The Company also adheres to
the concept of “people-oriented, caring for life, creating value and serving the community", with the aim
to consistently contribute to the protection of people's good life.
Convenient
services
and superb
customer
experience
The Company sticks to the original role of insurance and further explores the huge potentials of the life
insurance market. The Company has a sound institutional and services network, with its business outlets
and services counters covering both urban and rural areas across China, which forms a powerful distribution
and services network and through which the Company maintains its leading position in China's life insurance
market and becomes the life insurance service provider within the reach of customers. Through the long-term
development and accumulation, China Life has solid financial strength comparable to world-class enterprises
in the world, with its total assets ranking No. 1 in the life insurance industry in China. As one of the largest
institutional investors in China, the Company becomes one of the largest insurance asset management
companies in China through its controlling shareholding in China Life Asset Management Company Limited.
Prominent
principal
business
and sound
financial
strength
The predecessor of the Company, one of the first batch of enterprises to underwrite insurance business in
China, was approved by the Chinese Government for establishment in October 1949. After the restructuring
and reorganisation, the Company was successively listed overseas and domestically. The Company has
been playing the role of an explorer and pioneer in China's life insurance industry, and through long-term
and continuous brand building, China Life has become one of the famous and strong brands in the world
with growing brand value and influence.
Annual Report 2023 | Prelude
Long history
and
excellent
brand
Governance
33
73
Report of Corporate
Employees
Senior Management and
59
Directors, Supervisors,
Information
Shares and Shareholders
56
CORE COMPETITIVENESS
2021
HONORS AND AWARDS
Forbes
Wind
"2023 Top 100 Chinese Listed Companies with ESG Best
Practices selected by Wind"
China Corporate Governance Experts 50 Forum
Chinese Listed Company Governance"
"2023 Top 50 List of
"2023 Assessment and Selection of the 'Golden Wealth Management""
Shanghai Securities News
"Annual Protection-oriented Insurance Product Award"
"Annual Insurance Service Award"
"Annual Insurance Protection Brand Award"
03
Annual Report 2023 | Prelude
"2023 Forbes Global 2000", ranking 62nd
"2023 Forbes China ESG Innovative Enterprise"
"2023 China Golden Tripod Awards"
"Excellent Life Insurance Company
of the Year"
"2023 Excellent Insurance Company"
"2023 Digital Transformation Institution"
21st Century Business Herald
"Assessment and Selection of the Ark Prizes for China's Insurance
Industry in 2023"
Securities Times
"Ark Prize for Innovation in the Insurance Industry in 2023"
"Ark Prize for Excellent Social Responsibility in the Insurance
Industry in 2023"
"Ark Prize for Insurance Company with High-quality
Development in 2023"
"2023 Gold Medal List of Chinese Financial Institution
- Golden Dragon Award"
Financial Times
"Best Listed Insurance Company of the Year"
Fortune China
"2023 Fortune China 500 List”, ranking 12th
National Business Daily
198,144
(176,854)
2020
For the year ended
RMB million
The reconciliations of net profit attributable to equity holders of the Company for the years 2023 and 2022 and equity
holders' equity as at 31 December 2023 and 31 December 2022 from the consolidated financial statements prepared under
ASBE to those under IFRSS are as follows:
Under Accounting Standards for Business Enterprises ("ASBE"), the Company adopts the transition plan for the new
accounting standards for insurance contracts. In 2023, the Company continued to apply ASBE No. 25 - Direct Insurance
Contracts (Caikuai [2006] No. 3), ASBE No. 26 - Reinsurance Contracts (Caikuai [2006] No. 3), Regulations regarding the
Accounting Treatment of Insurance Contracts (Caikuai [2009] No. 15), ASBE No. 22 - Recognition and Measurement of
Financial Instruments (Caikuai [2006] No. 3), ASBE No. 23 - Transfer of Financial Assets (Caikuai [2006] No. 3), ASBE No.
24-Hedging (Caikuai [2006] No. 3), ASBE No. 37 - Presentation of Financial Instruments (Caikuai [2014] No. 23) and other
relevant accounting standards.
INFORMATION ON THE DIFFERENCE BETWEEN THE FINANCIAL STATEMENTS
PREPARED UNDER ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
AND INTERNATIONAL FINANCIAL REPORTING STANDARDS
Annual Report 2023 | Prelude
Net cash inflow/(outflow) from operating
per share³
14.03
15.95
16.95
30.3%
12.95
16.88
Ordinary share holders' equity
14.31
15.95
16.95
30.3%
12.95
16.88
Equity holders' equity per share³
2.05
1.77
2023
2022
Net profit attributable to equity holders of the Company under ASBE
Reconciling items:
21,110
Equity holders' equity under IFRSS
Deferred tax effects
Adjustment related to IFRS 17
Adjustment related to IFRS 9
Reconciling items:
Equity holders' equity under ASBE
2022
31 December
31 December
2023
As at
As at
1.80
66,680
Net profit attributable to equity holders of the Company under IFRSS
(11,415)
(7,837)
46,013
39,593
Deferred tax effects
Adjustment related to IFRS 17
N/A
(6,685)
Adjustment related to IFRS 9
32,082
46,181
-30.7%
2.36
1.63
46,181
Net profit attributable to ordinary
holders of the Company
58,251
50,221
50,766
-30.7%
66,680
46,181
Net profit attributable to equity
59,758
66,680
54,440
-36.4%
70,060
44,576
Profit before income tax
729,503
805,049
824,933
-7.0%
370,861
344,746
Total revenue
50,340
2019
-30.7%
50,020
Earnings per share (basic and diluted)³
Per share (RMB)
404,448
450,688
479,061
30.3%
366,021
477,093
Equity holders' equity
15.8% 4,892,480 4,253,544 3,727,686
17.6% 4,716,420 4,095,541 3,573,257
14.7% 4,405,346 3,795,975 3,317,658
4,635,095
50,766
5,659,250 4,811,893
5,315,052
Including: Investment assets²
5,802,086 5,010,068
Total assets
As at 31 December
286,008
303,990
286,446
11.3%
384,366 345,284
share holders of the Company
Net cash inflow/(outflow) from
operating activities
57,857
Total liabilities
13.60
attend
Number of
One proposal, namely the "Report on the Situation Relevant to the
Assets and Liabilities Management of the Company for the Year
2022", was considered and approved.
Five proposals, including the "Proposal in relation to the Business
Plan of the Company for the Years from 2023 to 2025", were
considered and approved.
Description
Fifteenth meeting of the Strategy and Assets
and Liabilities Management Committee of
the seventh session of the Board
14 December 2023
Fourteenth meeting of the Strategy and Assets
and Liabilities Management Committee of
the seventh session of the Board
Four proposals, including the "Proposal in relation to the Results of
Performance Appraisal of the Company for the Year 2022", were
considered and approved.
22 November 2023
25 October 2023
Twelfth meeting of the Strategy and Assets
and Liabilities Management Committee
of the seventh session of the Board
22 August 2023
Eleventh meeting of the Strategy and Assets
and Liabilities Management Committee
of the seventh session of the Board
26 April 2023
Tenth meeting of the Strategy and Assets
and Liabilities Management Committee
of the seventh session of the Board
Thirteenth meeting of the Strategy and Assets
and Liabilities Management Committee of
the seventh session of the Board
28 March 2023
One proposal, namely the "Proposal in relation to the Amendments to
the 'Measures for the Administration of Investments of the Company'
and the 'Measures for the Administration of Asset Allocation of the
Company", was considered and approved.
Eight proposals, including the "Proposal in relation to the Management
Guidelines on the Investment by China Life Investment Management
Company Limited under the Entrustment of the Company for the
Year 2024", were considered and approved.
Name of member
During the Reporting Period, five meetings were held by the Connected Transactions Control Committee of the Board of
the Company. Attendance records of individual members are as follows:
Meetings and Attendance
94 Annual Report 2023 | Corporate Governance
The principal duties of the Connected Transactions Control
Committee are to confirm connected parties of the Company,
manage, examine and approve connected transactions to
control risks relating to connected transactions, and focus
on the compliance, fairness and necessity of connected
transactions, which provide an important basis for the Board's
decision-making in connected transactions management.
The Company established its Connected Transactions Control
Committee on 29 October 2019. In October 2019, the
"Proposal in relation to the Establishment of the Connected
Transactions Control Committee of the Board of Directors"
was reviewed and approved at the twentieth meeting of
the sixth session of the Board, pursuant to which a new
Connected Transactions Control Committee was established
under the Board of the Company. Currently, the Connected
Transactions Control Committee of the seventh session of
the Board comprises Ms. Chen Jie, Mr. Lam Chi Kuen, Mr.
Zhai Haitao and Mr. Huang Yiping, all being Independent
Directors, with Ms. Chen Jie acting as the Chairperson.
Two proposals, namely the "Proposal in relation to Project Huizhi"
and the "Proposal in relation to the Issue of Capital Supplementary
Bonds by the Company", were considered and approved.
CONNECTED TRANSACTIONS CONTROL
COMMITTEE
Discussing the Company's development plans and major
strategic projects. The Strategy and Assets and Liabilities
Management Committee reviewed the proposals on the
medium- and long-term development plan and sustainable
development strategy of the Company, including the
business plan of the Company for the years from 2023 to
2025, evaluation report on the outline of the "14th Five-
Year" development plan of the Company for the year 2022,
and the environmental, social and governance (ESG) and
social responsibility report, as well as the proposals on
Project Huizhi and the issue of capital supplementary bonds
by the Company.
Reviewing annual asset allocation plan and entrusted
investments of the Company. The Strategy and Assets and
Liabilities Management Committee reviewed the proposals
on the asset allocation plans of the Company, including
the investment plan for self-use real estate for the year
2023 and related authorisation, the management guidelines
on the investment by CLI under the entrustment of the
Company for the year 2024, the authorisation of investment
in financial products for the year 2024, the authorisation of
investment in equity investment funds for the year 2024,
the authorisation of investment in non self-use real estate
for the year 2024, the authorisation of investment in single
asset management plan for the year 2024, and the overseas
investment plan for the year 2024 and related authorisation
of investment.
In 2023, the Strategy and Assets and Liabilities Management
Committee of the Board of the Company performed its
relevant duties and functions in strict compliance with the
"Procedural Rules for the Strategy and Assets and Liabilities
Management Committee Meetings". All members of the
Strategy and Assets and Liabilities Management Committee
proactively performed their obligations, reviewed the
proposals on the three-year business plan of the Company,
annual investment plan and authorisation, major investment
projects, relevant rules on assets and liabilities management,
and sustainable development strategies (including ESG
and social responsibility report), and listened to the annual
report on the situation relevant to the assets and liabilities
management. Members of the Strategy and Assets and
Liabilities Management Committee diligently performed their
duties. During meetings of the Strategy and Assets and
Liabilities Management Committee, all members actively
participated in discussions and gave professional advices
on the proposals considered and discussed at the meetings.
Performance of Duties by the Strategy and Assets
and Liabilities Management Committee
93
Annual Report 2023 | Corporate Governance
Reviewing the systems of the Company concerning assets
and liabilities management. The Strategy and Assets and
Liabilities Management Committee assisted the Board
in optimising the systems of the Company concerning
investments and asset allocation, reviewed and approved
the proposals on the statement of the Company on risk
preference for the year 2023, the amendments to the rules
on enterprise-wide risk management of the Company, the
amendments to the measures for the administration of asset
allocation of the Company, the amendments to the measures
for the administration of assets and liabilities management of
the Company, and the formulation of the measures for the
administration of risk preference system of the Company,
etc., and submitted its review opinions to the Board.
Meetings convened
The meetings convened are as follows:
Annual Report 2023 | Corporate Governance
Name of member
Attendance record of the resigned Director at meetings is as follows:
Non-executive Director, member of the Strategy
and Assets and Liabilities Management Committee
of the seventh session of the Board
Wang Junhui
2/3
Executive Director, member of the Strategy and
Assets and Liabilities Management Committee of
the seventh session of the Board
Zhao Peng
Li Mingguang
4/6
0/6
6/6
required to
attend
meetings
attended by
proxies/Number
of meetings
Number of
2/6
Notes:
13
1/3
92
Directors who were unable to attend any meeting of specialised Board committees authorised other Directors to attend and vote at the meeting on their
behalf.
4.
The number of meetings attended in person includes meetings attended on-site and by way of telephone or video conference.
3.
Mr. Li Mingguang became a member of the Strategy and Assets and Liabilities Management Committee in September 2023.
2.
1. Mr. Zhao Peng ceased to be a member of the Strategy and Assets and Liabilities Management Committee from August 2023.
1/2
1/2
Number of meetings
attended by proxies/
Number of meetings
required to attend
Number of meetings
attended in person/
Number of meetings
required to attend
46
4/6
2/6
Position
Chen Jie
Independent Director, Chairperson of the
Connected Transactions Control Committee of the
seventh session of the Board
Number of
Approving framework agreements for daily connected
transactions. The Connected Transactions Control Committee
reviewed the proposals on the framework agreements for
daily connected transactions, such as the execution of the
"Agreement for Entrusted Investment and Management
and Operating Services with respect to Alternative
Investments with Insurance Funds" between the Company
and CLI, the execution of the "Cooperation Agreement for
Business Current Deposits" and the "Agreement Deposit
Contract for RMB" between the Company and CGB, the
termination by the Company of the "Cooperation Agreement
for Concurrent Insurance Agency Business (Package
Transactions Agreement)" with CGB, and the execution of
the "Agreement for Package Transactions in relation to the
Entrustment of the Company as an Agent to Sell Property
and Casualty Insurance Products" between the Company
and CLP&C, and fully reviewed the necessity, compliance
and fairness of the daily connected transactions of the
Company, which offered professional support to the Board's
decision-making in a scientific manner.
Approving connected transactions. The Connected
Transactions Control Committee reviewed the proposals
on major connected transactions, such as the investment by
the Company in CLI – Xingan No. 1 Equity Investment Plan,
the investment by the Company in CLI – Beijing MTR Equity
Investment Plan, the investment by the Company in Project
Huacang, and the capital reduction of National Pipe Network
Group Sichuan East Natural Gas Transmission Pipeline
Co., Ltd. by the Company, fully discussed the necessity,
feasibility and major risks of the connected transactions,
and made recommendations to the Board in respect thereof.
-
Confirming connected parties of the Company. The
Connected Transactions Control Committee reviewed the
"Report on Confirming the List of Connected Parties of the
Company as of 31 December 2022" and the "Report on
Confirming the List of Connected Parties of the Company
as of 30 June 2023", and reported to the Board in respect
thereof.
In 2023, the Connected Transactions Control Committee
performed its duties and functions in strict compliance
with the "Procedural Rules for the Connected Transactions
Control Committee Meetings". All members performed
their obligations in a responsible manner and reviewed the
proposals in relation to the connected transactions of the
Company. During meetings of the Connected Transactions
Control Committee, all members actively participated in
discussions and gave guiding opinions on the proposals
considered and discussed at the meetings.
Performance of Duties by the Connected
Transactions Control Committee
Reviewing the implementation of the system for connected
transactions management. The Connected Transactions
Control Committee reviewed the implementation of the
Company's system for connected transactions management
and the report on connected transactions, and reviewed the
report on the overall status of connected transactions of the
Company for the year 2022.
96 Annual Report 2023 | Corporate Governance
Fourteenth meeting of the Connected
Transactions Control Committee of the
seventh session of the Board
14 December 2023
One report, namely the "Report on Confirming the List of Connected
Parties of the Company as of 30 June 2023", was debriefed.
Thirteenth meeting of the Connected
Transactions Control Committee of the
seventh session of the Board
22 August 2023
Three proposals, including the "Proposal in relation to the Execution of
the 'Cooperation Agreement for Business Current Deposits' between
the Company and China Guangfa Bank Co. Ltd." and the "Proposal
in relation to the Execution of the 'Agreement Deposit Contract for
RMB' between the Company and China Guangfa Bank Co. Ltd.", were
considered and approved.
One proposal, namely the "Proposal in relation to the Execution of the
'Agreement for Package Transactions in relation to the Entrustment
of the Company as an Agent to Sell Property and Casualty Insurance
Products' between the Company and China Life Property and Casualty
Insurance Company Limited", was considered and approved.
INDEPENDENCE OF THE COMPANY FROM ITS
CONTROLLING SHAREHOLDER
Employees: The Company is independent in the aspects
of employment, human resources and remuneration
management.
Assets: The Company owns all assets relating to the operation
of its principal business. At present, the Company does not
provide any guarantee for its shareholders. The Company's
assets are independent, complete, and independent of the
shareholders of the Company and other related parties.
98 Annual Report 2023 | Corporate Governance
The Company has set up the "Investor Relations" section
on its official website at www.e-chinalife.com to facilitate
investors to access announcements, operating results
materials and other information for public disclosure as
published by the Company on the stock exchanges of its listed
jurisdictions in the PRC and overseas. In addition, investors
may call the investor relations hotline of the Company at 86-
10-63631241 or email to the investor relations email address
at ir@e-chinalife.com if they have any further inquiries. The
Company will respond to such inquiries in a timely manner.
The Company has established a well-developed, effective
and practical information disclosure management system in
strict compliance with the regulatory laws and regulations,
relevant rules and self-regulatory requirements of its
listed jurisdictions and the insurance industry, focused on
enhancing the quality of information disclosure on the basis
of strict compliance with laws and regulations, and continued
to improve the effectiveness of information disclosure, so
as to ensure that domestic and overseas investors obtain
true, accurate and complete information in a compliant
and effective manner. The Company has attached great
importance to its contact and communication with domestic
and overseas investors, and proactively developed investor
relations by offering various channels to facilitate such
investors to keep abreast of any major business development
of the Company in a timely manner.
INFORMATION DISCLOSURE AND INVESTOR
RELATIONS
In accordance with the Articles of Association, when the
Company convenes the shareholders' general meeting,
shareholders individually or in aggregate holding 3% or more
of the shares of the Company shall have the right to submit
proposals to the Company. The Company should include
such matters that fall into the scope of the functions and
powers of the shareholders' general meeting in the agenda
of the meeting. Shareholders individually or in aggregate
holding 3% or more of the shares of the Company may
submit provisional proposals in writing to the convenor
sixteen days prior to the shareholders' general meeting.
The provisional proposals shall fall into the scope of the
functions and powers of the shareholders' general meeting
and specify explicit topics and specific resolution matters.
Shareholders may put forward enquiries to the Board
through the Board Secretary or the Company Secretary, or
put forward proposals at shareholders' general meetings
through their proxies. The Company has made available its
contact details in its correspondence with shareholders to
enable such enquiries or proposals to be properly directed.
If the number of Directors is less than the number stipulated
in the Company Law or two-thirds of the number specified by
the Articles of Association, or the uncovered losses incurred
amount to one-third of the Company's total share capital, or
if the Board or the Board of Supervisors deems necessary,
or more than half of the Directors (including at least two
Independent Directors) request, or shareholders holding
10% or more shares of the Company make a requisition, the
Board shall convene an extraordinary shareholders' general
meeting within two months. Where shareholders holding
10% or more shares request an extraordinary shareholders'
general meeting, such shareholders shall make a request
in writing to the Board with a clear agenda. The Board
shall, upon receipt of such a written request, convene a
meeting as soon as possible. If the Board fails to convene
a meeting within 30 days of the receipt of such a written
request, shareholders making such a request may convene
a meeting by themselves at the cost of the Company within
four months of the receipt by the Board of such a written
request.
To safeguard shareholders' interests, in addition to the
right to participate in the Company's affairs by attending
shareholders' general meetings, shareholders have the right
to convene extraordinary shareholders' general meetings
under certain circumstances.
SHAREHOLDERS' INTERESTS
The remuneration for senior management mainly comprises
position compensation, performance rewards, welfare
benefits and medium- and long-term incentives. A mechanism
for the recovery and deduction of performance-based
remuneration is also established to balance the relationships
between the current and long-term needs as well as the
revenue and risk by making full use of remuneration tools.
The Company implements a term-of-service and target-
related responsibility system for senior management.
Performance target contracts are entered into between the
Chairman of the Board and the President, and between the
President and other senior management of the Company.
The performance target contract system is an important tool
in disassembling the strategic goals of the Company in a
scientific manner, which is conducive towards the breakdown
of targets and transmission of responsibility, enhancing the
implementation capability of the Company and ensuring
the successful completion of its annual business targets.
The performance appraisal criteria listed in the individual
performance target contracts of senior management are
partially linked to the business targets of the Company
and partially formulated with reference to the duties and
functions of their respective positions.
PERFORMANCE APPRAISAL AND INCENTIVES
FOR SENIOR MANAGEMENT
Annual Report 2023 | Corporate Governance 97
Business operations: The Company independently develops
personal insurance businesses, including life insurance, health
insurance and accident insurance businesses; reinsurance
relating to the above insurance businesses; funds application
business permitted by applicable PRC laws and regulations
or approved by the State Council; as well as all types of
personal insurance services, consulting business and agency
business; sale of securities investment funds; and other
businesses approved by the insurance administrative and
regulatory authorities of the PRC. The Company currently
possesses the "Insurance Permit" (institution number:
000005) issued by an insurance administrative and regulatory
authority. The Company is independently engaged in the
businesses as prescribed in its business scope according
to law, has separate sales and agency channels and is
licensed to use licensed trademarks without consideration.
The completeness and independence of the Company's
business operations will not be adversely affected by its
relationship with related parties.
Organisation: The Company has established a well-developed
organisational system, under which internal bodies such as
the Board of Directors and the Board of Supervisors operate
separately. There is no subordinate relationship between
such internal bodies and the functional departments of the
Company's controlling shareholder.
Finance: The Company has established a separate financial
department, and developed an independent financial
accounting system and financial management system;
further, the Company makes financial decisions on its own;
it employs separate financial personnel, opens separate
accounts with banks and does not share bank accounts
with CLIC; the Company, as a separate taxpayer, pays taxes
individually according to law.
Three proposals, including the "Proposal in relation to the Execution
of the 'Agreement for Entrusted Investment and Management and
Operating Services with respect to Alternative Investments with
Insurance Funds' between the Company and China Life Investment
Management Company Limited", were considered and approved.
meetings
attended in
person/Number
of meetings
required to
Four proposals, including the "Proposal in relation to the Investment
by the Company in CLI - Xingan No. 1 Equity Investment Plan", were
considered and approved, and one report, namely the "Report on
Confirming the List of Connected Parties of the Company as of 31
December 2022", was debriefed.
Twelfth meeting of the Connected
Transactions Control Committee of the
seventh session of the Board
0/5
5/5
Independent Director, member of the Connected
Transactions Control Committee of the seventh
session of the Board
Zhai Haitao
0/5
5/5
Huang Yiping
Independent Director, member of the Connected
Transactions Control Committee of the seventh
session of the Board
0/5
5/5
required to
attend
meetings
attended by
proxies/Number
of meetings
Number of
meetings
attended in
person/Number
of meetings
required to
attend
Lam Chi Kuen
Independent Director, member of the Connected
Transactions Control Committee of the seventh
session of the Board
4/5
1/5
28 June 2023
Eleventh meeting of the Connected
Transactions Control Committee of the
seventh session of the Board
26 April 2023
Tenth meeting of the Connected
Transactions Control Committee of the
seventh session of the Board
28 March 2023
Meetings convened
The meetings convened are as follows:
95
Annual Report 2023 | Corporate Governance
Directors who were unable to attend any meeting of specialised Board committees authorised other Directors to attend and vote at the meeting on their
behalf.
The number of meetings attended in person includes meetings attended on-site and by way of telephone or video conference.
2.
1.
Notes:
15
Description
Independent Director, member of the Strategy and
Assets and Liabilities Management Committee of
the seventh session of the Board
Meetings convened
During the Reporting Period, five meetings were held by the Risk Management and Consumer Rights Protection Committee
of the Board of the Company. Attendance records of individual members are as follows:
Non-executive Director, member of the Risk
Management and Consumer Rights Protection
Committee of the seventh session of the Board
0/4
Chen Jie
Independent Director, member of the Risk
Management and Consumer Rights Protection
Committee of the seventh session of the Board
5/5
0/5
Notes:
1.
2.
3.
4.
Mr. Li Mingguang ceased to be a member of the Risk Management and Consumer Rights Protection Committee from September 2023. During the period
when Mr. Li Mingguang served as a member of the Risk Management and Consumer Rights Protection Committee in 2023, the Risk Management and
Consumer Rights Protection Committee convened two meetings and Mr. Li Mingguang attended the two meetings in person.
Ms. Zhuo Meijuan became a member of the Risk Management and Consumer Rights Protection Committee in June 2023.
The number of meetings attended in person includes meetings attended on-site and by way of telephone or video conference.
Directors who were unable to attend any meeting of specialised Board committees authorised other Directors to attend and vote at the meeting on their
behalf.
Zhuo Meijuan
Annual Report 2023 | Corporate Governance
4/5
1/5
Meetings and Attendance
Independent Director, Chairman of the Strategy
and Assets and Liabilities Management Committee
of the seventh session of the Board
Name of member
Position
Huang Yiping
Independent Director, Chairman of the Risk
Management and Consumer Rights Protection
Committee of the seventh session of the Board
Number of
meetings
attended in
person/Number
of meetings
required to
attend
Number of
meetings
attended by
proxies/Number
of meetings
required to
attend
3/5
2/5
Wang Junhui
Non-executive Director, member of the Risk
Management and Consumer Rights Protection
Committee of the seventh session of the Board
15
89
4/4
28 March 2023
Reviewing the risk analysis on major matters concerning
the business operations and management of the Company.
The Risk Management and Consumer Rights Protection
Committee reviewed the risk analysis on major matters
concerning the business operations and management of
the Company, and reviewed and approved the proposals in
relation to, among others, the business plan of the Company
for the years from 2023-2025, the risk analysis on the issue
of capital supplementary bonds by the Company and the
authorisation for investment for the year 2024, and gave
guiding opinions on risk control for major matters concerning
the business operations and management of the Company
in accordance with the regulatory requirements of the NFRA
on the China Risk Oriented Solvency System (C-ROSS).
Reviewing the assessment reports on business risk and
internal control of the Company. The Risk Management and
Consumer Rights Protection Committee closely monitored
and controlled and effectively prevented internal and external
risks of the Company, and assisted the Board in reviewing
the assessment reports on business risk and internal control
of the Company, according to the national and international
regulatory requirements. The Risk Management and
Consumer Rights Protection Committee reviewed in advance
the reports on risk management such as the annual and
quarterly reports on the enterprise-wide risk management
of the Company, work summary on anti-money laundering
for the year 2022 and the work plan for the year 2023, the
report on case prevention for the year 2022, the reputational
risk management report for the year 2022, the statement
on risk preference for the year 2023, the audit report on
the solvency risk management system for the year 2023
and the work report on fraud risk management for the year
2023, which offered professional support to the Board's
decision-making in a scientific manner.
Reviewing the reports in relation to consumer rights protection
on a regular basis. In accordance with the "Guiding Opinions
of the China Banking and Insurance Regulatory Commission
on Banking and Insurance Institutions Strengthening the
Building of Working Systems and Mechanisms for Protection
of Consumer Rights and Interests", the Risk Management
and Consumer Rights Protection Committee reviewed the
report on the consumer rights protection of the Company
for the year 2022 and the work proposal for consumer rights
protection of the Company for the year 2023.
Optimising the system of the Company in relation to internal
control and risk management. The Risk Management and
Consumer Rights Protection Committee assisted the Board in
optimising the system of the Company in relation to internal
control and risk management, considered the proposals in
relation to seven amendment rules on risk management
such as the rules on enterprise-wide risk management
of the Company, the formulation of the measures for the
administration of risk preference system of the Company
and the formulation of the measures for the administration
of internal control of the Company. Further, the Company
regularly notified the Risk Management and Consumer
Rights Protection Committee of its integrated risk rating
results given by the NFRA.
STRATEGY AND ASSETS AND LIABILITIES
MANAGEMENT COMMITTEE
The Strategy and Assets and Liabilities Management
Committee of the Company is mainly responsible for
the drawing-up of long-term development strategies of
the Company, conducting studies on important matters
concerning assets and liabilities management and the
relevant policies and systems, the system for the application
and management of insurance funds, major strategic
investment decisions and major asset strategic allocation
plan, and making recommendations in respect thereof.
Annual Report 2023 | Corporate Governance
91
Meetings and Attendance
During the Reporting Period, six meetings were held by the Strategy and Assets and Liabilities Management Committee
of the Board of the Company. Attendance records of individual members are as follows:
Name of member
Position
Zhai Haitao
The meetings convened are as follows:
Huang Yiping
In 2023, the Risk Management and Consumer Rights
Protection Committee of the Board of the Company.
performed its duties and functions in strict compliance
with the "Procedural Rules for the Risk Management
and Consumer Rights Protection Committee Meetings".
All members of the Risk Management and Consumer
Rights Protection Committee performed their obligations
in a responsible manner and reviewed the proposals in
relation to the internal control system of the Company, its
risk management and consumer rights protection. During
meetings of the Risk Management and Consumer Rights
Protection Committee, all members actively participated
in discussions and gave guiding opinions on the proposals
considered and discussed at the meetings.
Performance of Duties by the Risk Management and
Consumer Rights Protection Committee
The Company established the Strategy Committee on 30
June 2003. In October 2010, the proposal to establish the
Strategy and Investment Decision Committee on the basis
of the Strategy Committee was reviewed and approved
at the ninth meeting of the third session of the Board.
In June 2018, the proposal to establish the Strategy and
Assets and Liabilities Management Committee on the
basis of the Strategy and Investment Decision Committee
was reviewed and approved at the twenty-fourth meeting
of the fifth session of the Board. Currently, the Strategy
and Assets and Liabilities Management Committee of the
seventh session of the Board comprises Mr. Zhai Haitao and
Mr. Huang Yiping, both being Independent Directors, Mr. Li
Mingguang, an Executive Director, and Mr. Wang Junhui,
a Non-executive Director, with Mr. Zhai Haitao acting as
the Chairman.
Eight proposals, including the "Proposal in relation to the Authorisation
for the Company's Investment in Financial Products for the Year 2024",
were considered and approved, and one report, namely the "Audit
Report on the Solvency Risk Management System of the Company
for the Year 2023", was debriefed.
Ninth meeting of the Risk Management
and Consumer Rights Protection Committee
of the seventh session of the Board
90 Annual Report 2023 | Corporate Governance
Eleven proposals, including the "Proposal in relation to the Business
Plan of the Company for the Years from 2023 to 2025", the "Proposal
in relation to the Amendments to the 'Measures for the Administration
of Liquidity Risks of the Company'" and the "Proposal in relation to
the 'Work Report on Consumer Rights Protection of the Company for
the Year 2022'", were considered and approved, and three reports,
including the "Report on the Case Prevention of the Company for the
Year 2022", were debriefed.
22 August 2023
Tenth meeting of the Risk Management
and Consumer Rights Protection Committee
of the seventh session of the Board
25 October 2023
Eleventh meeting of the Risk Management
and Consumer Rights Protection Committee
of the seventh session of the Board
Description
Twelfth meeting of the Risk Management
and Consumer Rights Protection Committee
of the seventh session of the Board
14 December 2023
Thirteenth meeting of the Risk Management
and Consumer Rights Protection Committee
of the seventh session of the Board
Three proposals, including the "Proposal in relation to the Amendments
to the 'Measures for the Administration of Strategic Risks of the
Company'", were considered and approved.
Two proposals, including the "Proposal in relation to the Amendments to
the 'Measures for the Administration of Market Risks of the Company"",
were considered and approved.
Two proposals, namely the "Proposal in relation to Project Huizhi"
and the "Proposal in relation to the Risk Analysis on the Issue of
Capital Supplementary Bonds by the Company", were considered
and approved.
22 November 2023
Strategic risk refers to the risk of mismatch between
strategies, market conditions and capabilities of the Company
arising from ineffective formulation or implementation of
strategies or changes in operational environment.
The Company set up a relatively well-developed system for
strategic risk management, and established an organisational
system for strategic risk management with the ultimate
responsibility assumed by the Board, under the direct
leadership of the management and with the division of labour
and collaboration among the relevant functional departments.
The Company also optimised the work mechanism and
process for strategic study, formulation, implementation
and assessment. By taking into full account various factors
such as market conditions, risk preference, capital position
and its own capabilities, the Company made planning for
its medium- and long-term development and put the same
into practice in annual business plan and work plans, so as
to strengthen the formulation, approval, implementation and
evaluation of whole process management of strategic and
development planning. Meanwhile, the Company equipped
with a professional team of talents and developed a scientific
and efficient system for performance appraisal to strengthen
the management of both business and investment strategies.
The Company also created an indicator system for the daily
monitoring of strategic risks to monitor and analyse strategic
risks on a regular basis, which ensured an effective execution
of the Company's strategic risk management. In 2023, the
soundness of the Company's strategic risk management
system and the effectiveness of its implementation were
maintained, and the strategic risks were controllable in
general.
106 Annual Report 2023 | Corporate Governance
Reputational Risk
Reputational risk refers to the risk of negative comments on
the Company from stakeholders, the public and the media
as a result of the behaviours of the Company's divisions at
all levels, practitioners or external events, thereby causing
losses, damaging brand value, being detrimental to the
normal operation of the Company, and even affecting
market and social stability. Reputational risk may exist in any
aspect of the Company's operation and management. The
Company highly values its reputation and has incorporated
reputational risk management into the corporate governance
and comprehensive risk management system to prevent
reputational risk.
In 2023, the Company made further improvement to its
system for reputational risk management to enhance the
standard of reputational risk management on an ongoing
basis. For the improvement of systems and mechanisms, the
measures for the administration of reputational risks of the
Company was optimised to strengthen the system for the
evaluation and responsibility attribution of reputational risks
and to consolidate the main management responsibilities.
By practising the reputational risk management concept
focusing on precaution, the Company conducted the source
control over reputational risk, and mitigated reputational
risks and hidden dangers in an active and effective manner,
which avoided the occurrence of significant reputational risk
incidents. The Company regularly reviewed and reported on
reputational risk management by conducting evaluations
and inspections on a rolling basis with more sophisticated
management methods, and advanced the development of
whole-process management online through the introduction
of tech-empowered management tools, thus contributing
to an improvement of reputational risk management in
both quality and efficiency. The Company constantly
proceeded with all tasks throughout the process, such as
the identification, evaluation and disposal of reputational risk,
so as to properly address and dispose of any reputational
incidents and effectively protect brand reputation. The
Company also offered training courses and exercises on
reputational risk management in all aspects to cultivate a
culture of reputational risk management.
Liquidity Risk
Information safety risk refers to the operational, legal and
reputational risks caused by natural factors, human factors,
technological loopholes or management defects in the
process of applying information technology in the Company.
The Company established a system for liquidity risk
management to define the organisational structure and
responsibilities of liquidity risk management. Further,
the Company developed the processes covering the
identification, evaluation, monitoring, response and disposal,
reporting, and rectification of liquidity risk, and organised
regular emergency exercises on liquidity risks. Overall,
the liquidity risk of the Company was insignificant. The
Company will constantly step up its effort on liquidity risk
management pursuant to the regulatory requirements and its
own provisions to ensure the performance of its obligation
to give insurance benefits as scheduled.
Information Safety Risk
Annual Report 2023 | Corporate Governance 107
The Company attached great importance to information safety
risk management. Firstly, the Company set up organisations
to offer protection for information safety. It established
an internet security and informationisation commission as
the body for leading and organising the development of
internet security and informationisation of the Company in
all aspects. An information safety professional committee
was set up under the internet security and informationisation
commission to take the lead in the risk management of
information safety of the Company. A working group of
information safety was established at the headquarters
level for the daily operation of information safety of the
Company, whereas a leading group and working group
of information safety were established at the level of
branches and the divisions directly under the Company
for the specific implementation of information safety. By
assigning the duties of information safety to its different
levels for implementation, the Company consolidated the
responsibility of maintaining information safety at each
level. Secondly, the Company developed various systems
and strictly implemented such systems to ensure the
standardisation of information management. Thirdly, the
Company optimised the safety management requirements
for the full life cycle of its IT system. By conducting safety
tests and quality checks on the IT system before and after
it was put online, the Company consistently enhanced
the safety of such system. The Company also formulated
contingency plans of the IT system for regular exercises to
enhance its emergency response capability to address cyber
attacks or safety accidents. Through the application of new
cutting-edge technologies such as cloud computing and big
data in all aspects, the Company built a security situational
awareness platform and developed an automatic joint control
mechanism focusing on joint prevention and coordination for
the entire network with the help from the enterprise general
control center, thus achieving the centralised analysis and
coordinated disposal of various safety risks. In addition,
the Company constantly stepped up efforts on, among
others, awareness training, promotion and education, and
phishing simulation for the information safety awareness of
employees to foster a corporate culture of "everyone places
emphasis on safety". In 2023, there was no circumstance
where the Company's operation was affected due to the
breakdown of computers or security breach.
In 2023, the Company actively implemented the legal
provisions of national laws such as the "Data Security
Law" and the "Personal Information Protection Law" to
strictly protect major data and personal information, so as to
safeguard the legitimate rights and interests of customers.
It continued to optimise its data governance structure and
data management system and mechanism, refined the
responsibilities of divisions at all levels for data management,
established the unified standards for the management of
data classification and categorisation and a strategy for data
security protection to define the targets to be protected for
data security and the key areas for protection, implemented
the classified security protection measures for the full life
cycle such as the collection, transmission and storage of data
in an efficient manner, and developed a 3-dimensional data
security protection system. Moreover, with the increased
efforts on developing its data management capability, the
Company was awarded the highest level certification under
the Data Management Capability Maturity Assessment Model
(DCMM), and consistently strengthened the management
and control of data security, in order to ensure that the data
of the Company was manageable and controllable.
ESG Risk
Strategic Risk
Liquidity risk refers to the risk that the Company does not
have access to sufficient funds in time or at reasonable
costs to meet its liabilities or other payment obligations as
they become due.
operational risks and taking relevant control measures against
them; (4) conducting self-assessments on operational risks
and their control measures on a regular basis and identifying
any areas in the management and control of operational
risks that were vulnerable, with a view to constantly
increasing the capability of the Company in operational risk
management; and (5) fostering a culture of operational risk
management by organising and conducting training courses
on operational risk management. In 2023, the operational
risk management of the Company was satisfactory, and
losses from operational risks were controllable. As the
management foundation of the Company for operational
risks was consistently solidified, the quality and efficiency
of its risk management were further enhanced.
Insurance risk refers to the risk that exposes insurance
companies to unexpected losses due to the adverse deviation
of the actual situation from the projections of assumptions
such as loss ratio, expense rate and lapse rate.
Operational risk refers to the risk of losses arising from
the issues found in internal procedures, employees and IT
systems, as well as external events.
The Company assesses ESG material issues once a year in
view of the external economic, social and macro environment
as well as its own development strategy, discusses and
determines the risks and opportunities faced by it in relation
to ESG, and regards the management and escalation of key
issues as its priority of work in ESG for the year. The Board
reviews and confirms the assessment results, taking into
consideration the key issues as part of its formulation of an
overall strategy, and supervising the management of such
issues and their performance. In 2023, the Company further
strengthened its ESG risk management, through which
top five ESG risks were identified as follows: information
safety, climate change, corruption, human resources and
customer relationship management, and talent attraction
and retention. The Company has devised the management
strategy against the above risks in order to keep track with
the risk development trend in a timely manner.
The Company assessed and monitored insurance risks
through sensitivity analysis and other actuarial appraisal
methods, with a focus on the impact of mortality rate,
morbidity rate, lapse rate, expense rate and other relevant
assumptions on the Company's operating results. The
Company managed insurance risks through the following
mechanisms and processes: (1) establishing an organisational
structure and a system for insurance risk management, so
that insurance risk management can be performed within
a scientific, comprehensive and effective management
system; (2) devising a system for risk limit indicators and
carrying out normal monitoring analysis, so as to contain
risks within a controllable range; (3) implementing an
effective product development and management system
to strictly control product pricing risks, and strengthening
empirical analysis to offer support to pricing assumptions
and assessing assumptions, in order to prevent and control
insurance risks from the front end of products; (4) effectively
guarding against adverse selection risks and insurance
frauds through the establishment and implementation of a
well-developed system for verification of insurance policies
and claims, as well as the practical operation regulations;
(5) transferring and mitigating insurance risks through a
scientific and reasonable reinsurance arrangement; and
(6) strengthening expenses management and enhancing
efficiency in resource utilisation. In 2023, the Company
managed insurance risks in a regulated and orderly manner,
with sufficient and reasonable provisions of minimum capital
for insurance risks. The Company will continuously keep
a watch on the development trend of insurance risks and
further enhance its capability of managing insurance risks.
104 Annual Report 2023 | Corporate Governance
Market Risk
Market risk refers to the risk that exposes the Company to
unexpected losses due to adverse movement in (amongst
others) interest rate, equity prices, real estate prices and
exchange rate.
In order to address the market risks, the Company continued
to pay attention to the risk exposures of interest rate, equity
prices, real estate prices and exchange rate, monitored
value at risk/mark to market (VaR/MTM), yield volatility,
duration and other key market risk indicators on a regular
basis, set up a 2-tier risk limit indicator and corresponding
threshold values, carried out sensitivity analyses and stress
tests to measure the risk losses to the Company under
stress scenarios, gave pre-warning of market risks and
formulated contingency plans for emergencies. Currently,
the proportion of each investment asset is in line with the
requirements of the NFRA and the internal management
provisions of the Company. According to the results of the
risk indicator monitoring and stress tests, the market risk
of the Company was within a normal controllable range.
The Company primarily adopted the following risk control
measures in 2023: (1) stepping up efforts on the study of
macro economy, currency and financial policies to assess
domestic and international economic and market trends in
a timely manner; (2) reviewing the risks of major assets
categories and the characteristics of their returns on a
regular basis, so as to constantly optimise the model of asset
allocation; (3) carrying out the effective management of open
market equity exposure and making reasonable allocations;
(4) increasing investment in interest rate bonds with long
duration when appropriate opportunities arose, with a view
to extending the duration of assets and narrowing the gap.
arising from the duration mismatch of assets and liabilities;
(5) facilitating the advancement of systems to improve risk
monitoring and pre-warning functions and simultaneously
strengthening the emergency response mechanism for major
emergencies in investment management; and (6) reinforcing
efforts to identify and monitor investment concentration risk
and diversifying risks in a reasonable manner.
Credit Risk
Credit risk refers to the risk that exposes the Company to
unexpected losses due to non-performance or delay in the
performance of contractual obligations by counterparties, or
adverse changes in their credit standings.
The credit risks that the Company is exposed to mainly
relate to investment deposits, bond investments, non-
standard financial product investments and reinsurance
arrangements, etc.
Credit Risk of Investment Business
To address the credit risks of investment business, the
Company developed and continuously improved the
organisational structure of credit risk management,
and constantly optimised the process for credit risk
management. Meanwhile, the Company established
and made amendments to the management system
and strengthened the implementation of such system
pursuant to the regulatory requirements and management
practices, strengthened the research on risks and kept
on improving risk analysis, assessment, monitoring, pre-
warning and emergency response standard. By relying on
information technology, the Company consistently enhanced
the standard of quantitative analysis on credit risks and
diversified the methods used for risk management and
control. The Company primarily adopted the following
measures in 2023: (1) further improving the centralised credit
rating process and system functions to enhance the credit
risk management standard; (2) optimising the credit risk limit
management system in multiple dimensions to improve the
mechanism for prevention of credit risks prior to investment;
(3) strengthening the monitoring of credit risk indicators for
the purposes of indicating risk exposure and any change of
risk distribution in an effective manner and closely tracking
down negative information; and (4) deepening efforts on
the research of key industries and the credit risk outlook to
enhance the capability of the Company in risk management
and control during and after investment.
Annual Report 2023 | Corporate Governance 105
Reinsurance Credit Risk
Reinsurance credit risk refers to the credit risk that may
possibly be faced by the Company in connection with the
obligations to be undertaken by reinsurers due to their
failure to perform reinsurance contracts. To address the
reinsurance credit risks, the Company adopted the following
measures: (1) properly setting self-retained risk limits through
an effective reinsurance management system, and using
reinsurance as an effective tool to transfer risks to reinsurers
with a high level of solvency; (2) reviewing the relevant
information of a reinsurer in the reinsurance registration
system in strict compliance with the regulatory requirements
prior to the execution of a reinsurance contract to ensure
that the reinsurer in cooperation with the Company satisfies
with the regulatory requirements; and (3) conducting credit
assessments on reinsurers through internal rating to select
reinsurers that have higher credit standing to mitigate credit
risks.
Operational Risk
The Company consistently implemented regulatory
requirements and its operational risk management strategies,
optimised the operational risk management system, and
regulated the operational risk management processes,
so as to enhance the effectiveness of operational risk
management on an ongoing basis. The Company established
an operational risk management system that combines three
management tools, namely self-assessment of operational
risk and its control, loss database for operational risks, and
key risk indicators, and further reinforced the operational risk
management at all levels of branches, in order to facilitate
the vertical expansion of operational risk management
network and achieve the integration of operational risk
management and control with its business development. The
operational risk control measures adopted by the Company
mainly included the following: (1) developing an operational
risk management process and method compatible with the
nature, scale and risk characteristics of the Company's
business, including the identification, assessment, control,
monitoring and reporting mechanisms; (2) establishing a
loss database for operational risks to carry out the loss
data collection and analysis of operational risks on a regular
basis; (3) establishing a key indicator room for operational
risks to conduct regular monitoring of the key indicators for
108 Annual Report 2023 | Corporate Governance
The major risks of the Company in the course of business
operation and management include insurance risk, market
risk, credit risk, operational risk, strategic risk, reputational
risk, liquidity risk, information safety risk, ESG risk and
fraud risk.
In 2023, the Company vigorously promoted the informatisation
of risk management, actively applied the latest advanced
technologies such as big data and artificial intelligence,
and further optimised and upgraded the intelligent
application of anti-money laundering in great depth, thus
making significant progress in the intelligent identification
of illegal fund-raising risks, monitoring of sales risk pre-
warning, and integrated risk management platform. The
informatisation and intellectualisation of risk management
improved significantly, and the risk management capability
of the Company was enhanced on an ongoing basis, which
provided a strong support to the high-quality development
of the Company.
It is the responsibility of the Board of the Company to establish
and effectively implement well-established internal control
systems, assess their effectiveness and disclose the report
on the internal control assessment. The Board and its Audit
Committee are responsible for leading the implementation
of internal control measures of the Company, and the Board
of Supervisors supervises the internal control assessments
performed by the Board. The Company has established
the Risk Management Department in its headquarters
and branches, conducting tests on the management level,
assessing the effectiveness of the establishment and
implementation of internal control systems in accordance
with the regulatory requirements of the jurisdictions where
the Company is listed, and reporting to the Board, the Audit
Committee and the management.
Pursuant to the requirements of the "Notice on the
Proper Preparation for Disclosure of 2023 Annual Reports
of Companies Listed on the Main Board" and the "Self-
Regulatory Guide for Listed Companies No. 2 — Business
Process" promulgated by the SSE, the Company shall release
an internal control self-assessment report simultaneously
with the publication of its 2023 annual report. The Company
has completed internal control self-assessment as required
by the SSE for the year ended 31 December 2023. Such
assessment is conducted on an annual basis and in two
stages, namely, interim assessment and supplementary
test. The Company has confirmed after the assessment
that the relevant internal controls were effective. The
Company has also received from its independent auditors
an unqualified opinion on the effectiveness of its internal
controls in relation to financial reporting as at 31 December
2023. The Company's assessment report and the report of
its independent auditors will be included as an attachment
to its annual report to be submitted to the SSE.
The Company has been devoting significant effort towards
the promotion of internal control and the establishment of
internal control related systems. In accordance with the
requirements of the "Standard Regulations on Corporate
Internal Control", the "Implementation Guidelines for
Corporate Internal Control", the "Rules Governing the Listing
of Securities on The Stock Exchange of Hong Kong Limited",
and the "Basic Standards of Internal Control for Insurance
Companies" issued by the NFRA, the Company has carried
out a lot of work on its internal control system establishment,
rules implementation and risk management by centering on
its corporate governance structure. The Company has also
formulated and issued the "Internal Control Implementation
Manual of China Life Insurance Company Limited (2023
Edition)" to strengthen the implementation of internal
control standards and internal control assessments, and
actively promoted the culture and philosophy of internal
control, thereby continuously enhancing the internal control
of the Company.
Internal Control
INTERNAL CONTROL AND RISK MANAGEMENT
The Company has consistently proceeded with tasks in
compliance with the regulatory requirements of relevant
regulatory authorities, such as the SSE and the HKSE, with
respect to corporate internal control.
Mr. Heng Victor Ja Wei, the Company Secretary, took no
less than 15 hours of relevant professional training in 2023,
satisfying the requirements under the Listing Rules.
In compliance with regulatory requirements and having
considered the characteristics of its business and
management requirements, the Company has established
and implemented a series of internal control measures and
procedures with respect to currency and funds, insurance
business, external investments, physical assets, information
technology, financial reporting and information disclosure
to ensure the safety and integrity of its assets. By strictly
complying with relevant PRC laws and regulations as well
as the internal rules and regulations of the Company, the
quality of accounting information has been improved.
TRAINING OF COMPANY SECRETARY
CHANGES OF THE ARTICLES OF ASSOCIATION
99
Annual Report 2023 | Corporate Governance
In 2023, the Company won various awards, including
the "Best Practice of 2022 Annual Report Presentation
Meetings" by the China Association for Public Companies,
the "Top 50 in the Market Capitalisation List (Full List) of
Chinese Listed Companies" and the "Top 5 of the Insurance
Industry" by Wind, and the "Best Investor Relations Project"
and the "Best Leader Award" in the 7th Excellent IR in
China.
The Company developed investor relations in a proactive
Iway with its stringent attitude and innovative thinking. It
kept abreast of the pace of technological development and
consistently made innovation in its communications with
and services to investors, which constantly enhanced the
efficiency of communication between the Company and
capital market. The works conducted by the Company for
investor relations mainly included holding shareholders'
general meetings, results briefings and investor presentation
meetings, organising open days for the Company, embarking
on global non-deal roadshows, holding online and offline
conferences with investors and analysts, attending investors'
meetings, frequently updating information on its investor
relations website, and timely responding to enquiries from
investors and analysts. In 2023, the Company communicated
with more than 3,700 investors and analysts, including nearly
1,200 investors who attended results briefings online and
offline. The Company held 247 online and offline meetings
with more than 2,500 investors and analysts for the year,
attended a total of 51 offline investors' meetings, and
convened 39 onsite investigation and research meetings and
50 telephone or video conferences. It also communicated
with investors by holding 107 offline roadshow meetings
during the non-deal roadshows for annual and interim
results. In addition, the Company focused on the protection
of medium and small investors, actively responded to any
enquiries from them, kept in close contact with investors
by various means such as email, phone and internet, and
recorded a clickthrough rate of over 150,000 person-times for
the live video streaming of results briefings. The Company
reviews its policy for communication with shareholders once
a year and considers that such policy remains effective based
on the feedbacks received from investors and the capital
market on investor relations.
In 2023, the Company continued to improve the effectiveness
of disclosure and the transparency of information. For the
disclosure of provisional announcements, the Company
promptly fulfilled its obligation of information disclosure
by publishing timely announcements with respect to the
progress of such matters as significant matters, major
investments and connected transactions on the websites
of the stock exchanges in its listed jurisdictions, the media
satisfying the conditions prescribed by the CSRC, the official
website of the Company and the website of Insurance
Association of China, etc. For the disclosure of periodic
reports, the Company continued to deeply engage in making
disclosure of information that had significant impacts on
investors' value judgment and investment decisions,
enriched the contents of information for voluntary disclosure
with its focus primarily on investor concerns, and provided
the capital market and investors with simple and clear,
more targeted and effective information, for the purpose of
facilitating investors, especially medium and small investors,
to better understand the Company's strategies and business
highlights. The Company also regularly organised training
courses and promotion activities relating to the relevant
rules of information disclosure and corporate governance.
It properly arranged information disclosure on the basis that
the differences between the laws and regulations of its listed
jurisdictions in the PRC and overseas, and the differences
between the regulatory requirements of its listed jurisdictions
and the insurance industry, are well defined. The Company
strictly managed its inside information and carried out the
registration and filing procedures on persons who have
knowledge of inside information in compliance with law,
strengthened the confidentiality of inside information, and
safeguarded the legitimate rights and interests of investors,
with a view to maintaining the fairness, impartiality and
openness of information disclosure of the Company. In 2023,
the Company was awarded Grade A in the assessment by
the SSE of information disclosure of listed companies for
the year of 2022-2023.
During the Reporting Period, no amendment was made to
the Articles of Association by the Company.
Risk Identification and Control
100 Annual Report 2023 | Corporate Governance
-
Annual Report 2023 | Corporate Governance 103
The Company followed the requirements under anti-
money laundering laws and regulations, kept on improving
the system for money-laundering risk management and
performed the anti-money laundering obligations under the
law, with a view to enhancing both the quality and efficiency
of its anti-money laundering work. Meanwhile, pursuant to
external regulatory requirements, the Company conducted
special governance on illegal fund-raising activities and
carried out the self-inspection and rectification in key risk
areas, which effectively improved the Company's precaution
capability in key risk areas.
Pursuant to the requirements of the NFRA on the China
Risk Oriented Solvency System (C-ROSS), the Company
pushed forward the establishment of a solvency risk
management system, and built a "1+7+N" comprehensive
risk management system with the "Comprehensive Risk
Management Rules" as the general principles, seven types
of risks (including insurance risk, market risk, credit risk,
operational risk, strategic risk, reputational risk and liquidity
risk) as the key focuses, and having reliance on a series of
implementing rules for business such as the "Measures
for the Administration of Risk Preference System". The
Company consistently reinforced the mechanism for
formation, transmission and application of the risk preference
system, creating a system for the normal management of
risk preference with the statement on risk preference as
the carrier, and the risk tolerance and limit indicators as
the focus. Through the combination of risk preference with
various lines of operation and management, the Company
maintained a good interaction between risk management
and business development. The Company conducts a self-
assessment on solvency risk management capability every
year so as to assess all work in relation to risk management
in two dimensions: the soundness of the system and the
effectiveness of its implementation. The Company took
specific rectification measures against its own shortcomings
and weaknesses, which enhanced its risk management
standard in all aspects. In the SARMRA under the C-ROSS
(Phase II) Regulation conducted by the NFRA, the Company's
capability of solvency risk management ranked among the
top of life insurance companies.
Work in relation to Risk Management
The Company has established an organisational system
for comprehensive risk management with the ultimate
responsibility assumed by the Board, under the direct
leadership of the management, having reliance on the risk
management departments and with the close cooperation
among the relevant functional departments, and developed a
5-tier organisational structure for risk management covering
the corporate governance level, the headquarters level, the
provincial branches level, the local or city branches level,
and the county sub-branches level. With the reliance on the
5-tier risk management and control structure, the Company
has put in place three lines of defense that focus on risk
management: the first line of defense consists of branches
and sub-branches at all levels and various functional
departments that identify, assess, address, monitor and
report risks at the front end of business; the second line
of defense is composed of the Risk Management and
Consumer Rights Protection Committee of the Board, as
well as the Risk Management Committee and the Risk
Management Department of the Company that take lead
in formulating the system, standard and limit for a variety
of risks and make recommendations to address such risks;
the third line of defense comprises the Audit Committee
of the Board, as well as the internal audit department,
the Office of the Discipline Inspection Committee and
other departments of the Company that supervise the risk
management workflows established by the Company and
the procedures and actions for control of various risks. The
three lines of defense have been coordinated with each
other in a proactive manner to organise and commence any
work in relation to risk management. By establishing the
organisational structure of risk control, the Company has
gradually established a criss-cross network of risk control
system, with the risk management departments at all levels
as leading bodies, the relevant functional departments as
main bodies, the vertical decision-making control system and
horizontal interactive collaboration mechanism as supporting
systems and the comprehensive risk management as focus,
thus laying a strong foundation for the Company to achieve a
comprehensive risk management system with full coverage,
all-employee participation and effective workflows.
Risk Management System
A relatively well-developed internal control system has been
established in terms of team-building, sales and operations,
and system management for the sales channels, such as
individual insurance, bancassurance, group insurance and
health insurance. This internal control system regulates
the relevant authorisations and operational workflows, and
effectively adopts the measures to prevent and manage risks
relating to the operation of exclusive agents. The Company
has promulgated clear regulations for the workflows and
authorisations relating to the verification of insurance policies,
insurance claims and insurance preservation. The Company
has also formulated business operation standards and
service quality standards, developed systems of business,
document and file management, and further regulated the
management of business approval authority to strengthen
its control over business risk and improve the quality of its
services.
Risk Management
audits closely related to the Company's business objectives,
and conducted a variety of special audits on anti-money
laundering, connected transactions, assets and liabilities
management, solvency risk management system, application
of funds, protection of consumers' rights and interests,
reputational risk management, risk management of financial
derivative transactions, compliance of intermediary business,
and insurance fraud risk management pursuant to regulatory
requirements. Meanwhile, the Company has put more efforts
on the application of audit results, consistently strengthened
the supervision and direction of rectification measures
for any issues identified in audit, handover of the issues
concerned and the responsibility attribution, proceeded with
the integration of rectification measures, further improved
the closed-loop management of internal audits, and facilitated
its standardised management and compliance operation. The
Company has constantly optimised three lines of defense
for compliance management to vigorously establish a
sound and effective compliance management system and
to improve a mechanism for compliance management on an
ongoing basis, with a view to identifying, guarding against
and mitigating material compliance risks. The Company
has also played an active role in advocating the business
philosophy of "creating value from compliance" and made
a serious effort towards fostering the corporate culture of
"being compliant on a proactive basis, starting from the
top level and having responsibility for all to be compliant",
thus successfully obtaining the national standard GB/T
35770-2022 and the international standard ISO 37301:2021
compliance management system certificates at the end
of 2023. The Company will continue to deeply engage in
building a law-based company by upholding the compliance
objective of managing itself according to law and practising
the compliance philosophy of good faith business operations,
strengthen systems management and construction with
enhanced management and control of compliance risks,
and introduce multiple measures concurrently to further
reinforce an internal impetus to compliance operation, for
the purpose of ensuring the achievement of its goal of high-
quality development.
The Risk Management Department, the Audit Department
and the Legal and Compliance Department of the Company
are responsible for the supervision and inspection of the
Company's internal control measures. The Company identifies
issues in the areas of system design, control implementation
and risk management in a timely manner through the
adoption of various measures such as walk-through test,
control test and risk analysis. It also eliminates loopholes,
guards against risks and reduces losses by adopting various
measures to improve systems, enhance legal compliance
and pursue accountability. In 2023, the Company actively
adapted to the stringent regulatory environment in the
PRC and overseas financial industry and strictly complied
with the regulatory requirements to constantly improve
the organisational structure of internal audit, and further
strengthened the mechanism for internal audit management,
which effectively performed the supervisory role of audit.
The Company carried out the economic responsibility audit
on its key responsible persons at all levels and the senior
management audit on deputy heads of its branches at the
provincial level, organised and performed a series of special
The Company has established a comprehensive information
technology system to cover all aspects of IT work and
formed a closed-loop control mechanism focusing on
centralised review and publication, periodic inspection and
continuous improvement. By conducting measures such
as the inspection and evaluation of system implementation
on a regular basis, the Company has facilitated the
effective implementation of the system and enhanced the
standardisation and normalisation of various IT work. Further,
the Company has constantly promoted the construction
of the systems of information safety and risk control, and
formulated and implemented a series of effective information
safety control measures at various stages of the life cycle
of the IT system, thereby effectively ensuring the safe and
steady operation of the Company. In 2023, the Company
conducted several internal and external risk assessments
to promote construction by inspection, with a view to
consistently enhancing its capability in management and
control of information safety risks.
Annual Report 2023 | Corporate Governance 101
The Company has established a well-developed system
relating to investment decisions in accordance with the
relevant laws and regulations and based on the actual
situation of investment management. The system defines
the approval and decision-making authority, authorisation
mechanism and specific decision-making procedures for
investment management. All major investment decisions
shall be approved and implemented in strict compliance with
the internal decision-making process of the Company and the
requirements of its investment management system. The
Investment Decisions Committee is a permanent body of the
Company for investment decisions, which is responsible for
reviewing major investments and providing support to any
investment decisions made by the management.
The Company has created a rigorous information disclosure
system with well-developed workflows, including the
provisions governing the basic responsibilities of periodic
report disclosures, the major errors in periodic report
disclosures and the responsibility attribution as set forth in
the "Measures for the Administration of the Accountability
System for Major Errors in Periodic Report Disclosures of
China Life Insurance Company Limited". As at 31 December
2023, there was no major error in periodic report disclosures
of the Company. The "Measures for the Administration of
Registration of Persons Who Have Knowledge of Inside
Information of China Life Insurance Company Limited" has
been introduced to enhance the confidentiality of inside
information of the Company and to register and submit
information concerning persons who have knowledge of
inside information. The relevant requirements under the
"System of Internal Reporting of Material Information of China
Life Insurance Company Limited" have been incorporated
into the indicator system under the internal control report
of the Company. Persons responsible for reporting material
information obtain and identify potential material information
at the level of operation and management by making use
of various information technologies, and submit and report
such information to the President and the Board of the
Company as earlier as possible. The Board then makes the
final decision on whether to release the material information,
and discloses the same to such extent as it considers
reasonable and practicable.
In accordance with relevant laws and regulations such as
the "Accounting Law of the People's Republic of China" and
the "Enterprise Accounting Standards Basic Standards"
and specific standards and taking into account the needs
of the Company for its business development, operation
and management, the Company has formulated and issued
the "Accounting System of China Life Insurance Company
Limited" and the "Accounting Practices of China Life
Insurance Company Limited". The accounting units of the
Company at all levels have implemented them in strict
compliance with the requirements of the accounting system
and various basic systems to regulate works relating to
financial accounting and preparation of financial reports. The
accounting units of the Company at all levels have assigned
positions in a reasonable manner, clearly defined duties and
responsibilities of such positions and their scope of authority
on management, and strictly prohibited employees from
serving incompatible positions concurrently, thus exercising
the control over financial risks in an efficient manner.
102 Annual Report 2023 | Corporate Governance
Insurance Risk
We focus on the valuation of the liabilities for remaining
coverage for insurance contracts not using the premium
allocation approach as this requires significant management
judgement in the selection and application of complex
methodologies. These liabilities also require management's
significant judgements in determining the assumptions
related to mortality rates, morbidity rates, lapse rates,
coverage unit, discount rates, expense assumptions and
policy dividend assumptions. Changes in these assumptions
could have significant effects on the above liabilities and
revenue being recognised. As part of our audit, we also
focus on the transition of IFRS 17 for the liabilities for
remaining coverage insurance contracts not using the
premium allocation approach.
The insurance revenue recognition for insurance contracts
not using the premium allocation approach relies primarily
on the measurement of significant components of the
related liabilities, including estimates of the present value
of future cash flows, risk adjustment for non-financial risk
and contractual service margin.
Material Risk Alert:
Notification Letter and Request Form to Non-registered Shareholders
2023/5/23
39
Announcement of Premium Income
2023/6/9
40
Announcement - Resignation of Supervisor
2023/6/21
41
41
Announcement - Resolutions Passed at the Annual General Meeting and Distribution of
Final Dividend
2023/6/28
42
43
23
Announcement - Approval of Qualification as Director and Supervisor by the NFRA
2023/6/28
38
44
2023/5/23
37
33
Briefing on IFRS17 & IFRS9 Updates
Announcement of Premium Income
Date of disclosure
2023/5/8
2023/5/10
-
34
Announcement Election of Employee Representative Supervisor
Reports of Board of Directors & Board of Supervisors for 2022, Financial Report
& Profit Distribution Plan for 2022, Remuneration of Directors & Supervisors,
Appointment of Auditors for 2023, Formulation of the Provisional Measures of
Performance-Based Remuneration of Directors, Supervisors, Senior Management
& Personnel in Key Positions, CCT under the Agreement for Entrusted Investment
& Management & Operating Services with respect to Alternative Investments with
Insurance Funds & Notice of AGM
2023/5/12
2023/5/23
35
Notice of Annual General Meeting
2023/5/23
36
Form of Proxy of Holders of H Shares for use at the Annual General Meeting of the
Company to be held on Wednesday, 28 June 2023
2023/5/23
Notification Letter and Change Request Form to Registered Shareholders
45
46
47
62
Summary of Solvency Quarterly Report of Insurance Company (Second Quarter of
2023)
2023/8/23
53
Announcement of Premium Income
2023/9/11
54
2023 Interim Report
2023/9/13
55
Notification Letter and Change Request Form to Registered Shareholders
2023/9/13
56
57
58
Notification Letter and Request Form to Non-registered Shareholders
Announcement - Change of Composition of the Special Committees of the Board
Announcement of Premium Income
52
2023/8/23
Announcement of Unaudited Interim Results for the Six Months Ended 30 June 2023
51
Final Dividend for the Year Ended 31 December 2022 (Updated)
Announcement - Resignation of Supervisor
Announcement of Premium Income
Announcement - Change of President and Chief Actuary
Announcement - Nomination of Directors
2023/6/28
2023/6/29
2023/8/4
32
2023/8/4
Announcement of Premium Income
2023/8/9
49
Notice of Board Meeting
2023/8/10
50
Voluntary Announcement - Convening of 2023 Interim Results Briefing
2023/8/15
48
2023/9/13
31
112 Annual Report 2023 | Other Information
Announcement of Results for the Year Ended 31 December 2022
2023/3/29
13
China Life Insurance Company Limited 2022 Environmental, Social and Governance &
Social Responsibility Report
2023/3/29
14
-
15
Summary of Solvency Quarterly Report of Insurance Company (Fourth Quarter of 2022)
Announcement
Investment Plan
2023/3/29
Connected Transaction - Investment in Partnership through Equity
2023/3/29
16
Overseas Regulatory Announcement - China Life Insurance Company Limited -
Announcement on Changes in Accounting Estimates
2023/3/29
17
Final Dividend for the Year Ended 31 December 2022
12
2023/3/29
2023/3/20
11
2023/2/1
2023/2/13
Announcement - Approval of Qualification of Person in Charge of Finance by the
60
2023/3/3
CBIRC
7
8
Announcement - Change of Board Secretary and Authorised Representative
Announcement of Premium Income
2023/3/3
2023/3/13
9
Clarification Announcement in relation to Premium Income
2023/3/13
10
Notice of Board Meeting
2023/3/14
Voluntary Announcement - Convening of 2022 Annual Results Briefing
18
Announcement of Premium Income
2023/4/10
26
Announcement Connected Transaction - Investment in Partnership through Equity
Investment Plan
2023/4/27
27
27
Announcement - Connected Transaction - Investment in Partnership through Equity
Investment Plan
2023/4/27
28
Summary of Solvency Quarterly Report of Insurance Company (First Quarter of 2023)
2023/4/27
29
29
Overseas Regulatory Announcement - China Life Insurance Company Limited.
Announcement on Changes in Accounting Estimates
2023/4/27
30
Announcement in relation to Relevant Representation on the Implementation of IFRS17
& IFRS9
2023/5/8
-
26
2023/4/27
Announcement - Continuing Connected Transactions under the Agreement for
Entrusted Investment and Management and Operating Services with respect to
Alternative Investments with Insurance Funds
19
Notice of Board Meeting
2023/4/17
22222
20
Annual Report 2022
2023/4/19
21
Serial No. Items
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-registered Shareholders
2023/4/19
23
24
Voluntary Announcement - Convening of 2023 First Quarter Results Briefing
2023 First Quarter Report
2023/4/19
2023/4/27
25
25
2023/4/19
2023/9/21
2023/10/11
59
China Life Investment Management Company Limited, a wholly-owned subsidiary of
CLIC
China Life Capital Investment Company Limited, an indirect wholly-owned subsidiary
of CLIC
Ministry of Finance of the People's Republic of China
National Financial Regulatory Administration, the predecessor of which is China
Banking and Insurance Regulatory Commission
China Securities Regulatory Commission
The Stock Exchange of Hong Kong Limited
Shanghai Stock Exchange
Company Law of the People's Republic of China
Insurance Law of the People's Republic of China
Securities Law of the People's Republic of China
Articles of Association of China Life Insurance Company Limited
Solvency Regulatory Rules II for Insurance Companies
Solvency Aligned Risk Management Requirements and Assessment
For the purpose of this report, "China" or "PRC" refers to the People's Republic
of China, excluding the Hong Kong Special Administrative Region, Macau Special
Administrative Region and Taiwan region
Environmental, Social and Governance
Renminbi Yuan
The risks faced by the Company primarily include risks relating to macro trends, insurance risk, market risk, credit risk,
operational risk, strategic risk, reputational risk, liquidity risk, information safety risk, ESG risk and fraud risk, etc. The Company
has adopted various measures to manage and control different risks effectively. For details, please refer to the "Future
Prospect" in the section headed "Management Discussion and Analysis" and the "Internal Control and Risk Management"
in the section headed "Corporate Governance" of this report.
6
Except for "the Company" referred to in the Consolidated Financial Statements.
China Life Property and Casualty Insurance Company Limited, a non-wholly owned
subsidiary of CLIC
Annual Report 2023 | Other Information 115
China Guangfa Bank Co., Ltd., an associate of the Company
China Life Insurance (Group) Company, the controlling shareholder of the Company
China Life Asset Management Company Limited, a non-wholly owned subsidiary of
the Company
CLP&C
CLI
China Life Capital
Ministry of Finance
NFRA
CSRC
HKSE
SSE
Company Law
Insurance Law
Securities Law
Articles of Association
C-ROSS (Phase II) Regulation
SARMRA
China or PRC
ESG
RMB
China Life Insurance Company Limited and its subsidiaries
China Life Pension Company Limited, a non-wholly owned subsidiary of the Company
China Life AMP Asset Management Company Limited, an indirect non-wholly owned
subsidiary of the Company
Independent Auditor's Report
FINANCIAL
REPORT
pwc
We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including
International Independence Standards) issued by the International Ethics Standards Board for Accountants ("IESBA Code"),
and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Key audit matters identified in our audit are summarised as follows:
•
Valuation of liabilities for remaining coverage and insurance revenue recognition for insurance contracts not using the
premium allocation approach
Fair value of level 3 financial assets
Annual Report 2023 Financial Report
117
Independent Auditor's Report (continued)
KEY AUDIT MATTERS (continued)
Key Audit Matter
Valuation of liabilities for remaining coverage and insurance
revenue recognition for insurance contracts not using the
premium allocation approach
Refer to Notes 2.8, 14 and 20 to the consolidated financial
statements.
IFRS 17 "Insurance contracts" sets out the requirements in
accounting for insurance contracts issued and reinsurance
contracts held. Starting from 1 January 2023, the Group
has adopted IFRS 17 with comparatives restated from 1
January 2022 (the transition date). This is a new standard
which requires significant judgements in the use of complex
methodologies and assumptions in particular for valuation
of liabilities for remaining coverage.
At 31 December 2023, the Group had liabilities for remaining
coverage for insurance contracts not using the premium
allocation approach of RMB4,790.02 billion, accounting for
90.12% of the Group's total liabilities. In 2023, the amount
of insurance revenue recognised for contracts not using
the premium allocation approach is RMB160.30 billion,
accounting for 46.50% of the Group's total revenue.
The Group uses the discounted cash flow method to
estimate the above liabilities, including estimates of the
present value of future cash flows, risk adjustment for
non-financial risk, contractual service margin and loss
component.
Independence
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We conducted our audit in accordance with International Standards on Auditing ("ISAS"). Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
section of our report.
BASIS FOR OPINION
To the Shareholders of China Life Insurance Company Limited
(incorporated in the People's Republic of China with limited liability)
OPINION
What we have audited
The consolidated financial statements of China Life Insurance Company Limited (the "Company") and its subsidiaries (the
"Group") which are set out on pages 122 to 272, comprise:
•
the consolidated statement of financial position as at 31 December 2023;
•
the consolidated statement of comprehensive income for the year then ended;
CGB
the consolidated statement of changes in equity for the year then ended;
Independent Auditor's Report (continued)
OPINION (continued)
What we have audited (continued)
•
the consolidated statement of cash flows for the year then ended; and
• the notes to the consolidated financial statements, comprising material accounting policy information and other explanatory
information.
Our opinion
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of
the Group as at 31 December 2023, and of its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with IFRS Accounting Standards and have been properly prepared in compliance with the
disclosure requirements of the Hong Kong Companies Ordinance.
116 Annual Report 2023 | Financial Report
China Life AMP
Pension Company
AMC
2023/10/30
99
66
Materials for the China Life 2023 Corporate Day: Progress Intergration Prospects -
Individual Sales System Reform
2023/10/30
67
67
Election of Ms. Liu Hui and Mr. Ruan Qi as Executive Directors of the Seventh Session
of the Board of Directors, Election of Mr. Li Bing as a Non-Executive Director of the
Seventh Session of the Board of Directors and Notice of the First Extraordinary General
Meeting 2023
2023/11/8
68
Notice of the First Extraordinary General Meeting 2023
2023/11/8
69
Form of Proxy of Holders of H Shares for use at the First Extraordinary General
Meeting 2023 of the Company to be held on Friday, 15 December 2023
2023/11/8
70
71
Materials for the China Life 2023 Corporate Day: Insurance + Senior Care Make Life
Better China Life's Distinctive Senior Care Ecosystem
-
65
2023/10/30
Notice of Board Meeting
2023/10/13
60
61
Voluntary Announcement - Convening of 2023 Third Quarter Results Briefing
2023 Third Quarter Report
2023/10/18
2023/10/26
62
237
Summary of Solvency Quarterly Report of Insurance Company (Third Quarter of 2023)
Annual Report 2023 | Other Information 113
Serial No. Items
63
Announcement in relation to the Disclosure of Relevant Representation on the 2023
Corporate Day
Date of disclosure
2023/10/30
64
Materials for the China Life 2023 Corporate Day: Past Experiences Herald a Promising
Future - China Life 2023 Corporate Day
2023/10/26
Forfeiture of Unclaimed Dividends
72
2023/11/8
80
Announcement
-
Resolutions Passed at the First Extraordinary General Meeting 2023
2023/12/15
81
Announcement - Renewal of Continuing Connected Transactions under the Insurance
Sales Framework Agreement
2023/12/15
62
82
Announcement - Supplementary Information regarding Compensation of Directors,
Supervisors and Senior Management Members in 2022
2023/12/15
114 Annual Report 2023 | Other Information
DEFINITIONS AND MATERIAL RISK ALERT
In this report, unless the context otherwise requires, the following expressions have the following meanings:
China Life, the Company
CLIC
2023/12/11
Announcement of Premium Income
79
NFRA
2023/11/8
2023/11/9
73
74
Announcement - Approval of Qualification as President of the Company by the NFRA
Supplemental Notice of the First Extraordinary General Meeting 2023
2023/11/10
2023/11/29
75
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-registered Shareholders
Announcement of Premium Income
75
67
76
Supplemental Form of Proxy of Holders of H Shares for use at the First Extraordinary
General Meeting 2023 of the Company to be held on Friday, 15 December 2023
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-registered Shareholders
Announcement - Approval of Qualification as Chief Actuary of the Company by the
2023/11/29
2023/11/29
2023/11/29
78
2023/12/1
77
2023/1/16
2023/7/10
2023/1/13
86-10-63633333
100033
16 Financial Street, Xicheng District, Beijing, P.R. China
Bai Tao
China Life Insurance Company Limited ("China Life")
中國人壽保險股份有限公司(簡稱「中國人壽」)
Telephone
Hong Kong office address
Email
Website
Fax
Customer service hotline
Investor relations hotline
Telephone
Postal code
Registered name in Chinese
Registered name in English
Legal representative
Registered office address/
Current office address
BASIC INFORMATION OF THE COMPANY
INFORMATION
OTHER
=
Annual Report 2023 | Corporate Governance 109
It should be stated that the risk management and internal
control of the Company are designed with the objectives
to reasonably ensure the legal compliance of business
operation and management, safety of assets, truthfulness
and completeness of financial reports and relevant
information, improvement of operating efficiency and effect,
and accomplishment of development strategy. Given the
inherent limitations on risk management and internal control,
the Company can only provide reasonable assurance with
respect to the accomplishment of the above objectives.
For other analysis on the insurance risk, market risk, credit
risk and liquidity risk of the Company, please refer to the
"Risk Management" section in the Notes to the Consolidated
Financial Statements of this annual report.
and control of the Company was effectively improved.
The Company promoted the fraud risk management on
an ongoing basis, played an active role in increasing the
awareness of fraud risk prevention, and proceeded with all
tasks against frauds in an effective manner. The Company
has established an organisational system for fraud risk
management with the ultimate responsibility assumed by
the Board, under the direct leadership of fraud risk managers
and with the close cooperation among the functional
departments. With its implementation of comprehensive
risk management, the Company identified control points
in a variety of business activities for fraud risks. The
Company also proceeded with all tasks against frauds in
active cooperation with regulatory authorities and industry
associations, and attached great importance to fostering
anti-fraud culture through education on anti-fraud alert and
promotion. As a result, the capability of fraud risk prevention
86-10-66575112
ir@e-chinalife.com
86-10-63631241
Securities Representative
95519
www.e-chinalife.com
Fraud Risk
118 Annual Report 2023 | Financial Report
Based on the above procedures, we found the methodologies,
significant assumptions and judgements used in relation to
the valuation of liabilities recorded for remaining coverage
and insurance revenue recognised for insurance contracts not
using the premium allocation approach were supportable by
the evidence we gathered.
Performing an independent actuarial modelling and
recalculation of the estimates of the present value of
future cash flows, risk adjustment for non-financial risk,
contractual service margin, loss component and insurance
revenue recognised in the current period on a sample basis
and comparing our results to the results from the Group's
actuarial models.
Testing the relevance, completeness and accuracy of the
underlying insurance policy data used in the valuation and
measurement on a sample basis;
Assessing the reasonableness of the significant actuarial
assumptions by considering the Group's rationale for the
actuarial judgements applied along with comparison to
industry data and historical experience;
Assessing the reasonableness of methodologies used by
the Group;
•
.
.
With the assistance of our internal actuarial experts, we
performed the following audit procedures for the valuation
of liabilities for remaining coverage, including those at the
transition date, and insurance revenue recognition for insurance
contracts not using the premium allocation approach:
We obtained an understanding, evaluated the design and tested
the key internal controls over the valuation of the Group's
liabilities for remaining coverage and insurance revenue
recognition for insurance contracts not using the premium
allocation approach, including controls over management's
review of the actuarial methodologies, the actuarial models,
the actuarial assumptions and the data inputs used.
How our audit addressed the Key Audit Matter
2023/1/16
86-10-63631241
16 Financial Street, Xicheng District,
Beijing, P.R. China
Board Secretary
Email
Fax
Telephone
Office address
Name
CONTACT INFORMATION
110 Annual Report 2023 | Other Information
852-29192628
16/F, Tower A, China Life Centre, One Harbour Gate, 18 Hung Luen Road,
Hung Hom, Kowloon, Hong Kong
ir@e-chinalife.com
86-10-66575722
Li Yinghui
Zhao Guodong
86-10-63631191
Computershare Hong Kong
Investors Services Limited
King & Wood Mallesons
Latham & Watkins LLP
Domestic auditor
PricewaterhouseCoopers
Zhong Tian LLP
Address: 11/F,
PricewaterhouseCoopers Center,
2 Link Suqare, 202 Hubin Road,
Huangpu District, Shanghai, PRC
Name of the Signing Auditors:
Zhou Xing, Huang Chen
Address: Shops 1712-1716, 17th Floor,
Hopewell Centre, 183 Queen's Road
East, Wanchai, Hong Kong
Debevoise & Plimpton LLP
Overseas auditor
PricewaterhouseCoopers
Address: 22/F, Prince's Building,
Central, Hong Kong
Name of the Certified Auditor:
Yip Siu Foon, Linda
Announcement
Annual Report 2023 | Other Information
16 Financial Street, Xicheng District,
Beijing, P.R. China
Date of disclosure
Election of Language and Means of Receipt of Corporate Communication
Reply Form
Announcement of Premium Income
5
4
3
2
1
Serial No. Items
INDEX OF INFORMATION DISCLOSURE ANNOUNCEMENTS
Announcement of Premium Income
Auditors of the Company
International legal advisers
111
H Share registrar and
transfer office
The Company's website at www.e-chinalife.com
HKExnews website of Hong Kong Exchanges and
Clearing Limited at www.hkexnews.hk
Domestic legal adviser
www.sse.com.cn
Tower A, China Life Plaza, 16 Financial Street, Xicheng District, Beijing,
P.R. China
Shanghai Securities News (www.cnstock.com)
Securities Times (www.stcn.com)
Securities Daily (www.zqrb.cn)
The Company's annual report
may be obtained at
The Company's H Share
disclosure websites
Media and websites for the
Company's A Share disclosure
INFORMATION DISCLOSURE AND PLACE FOR OBTAINING THE REPORT
STOCK INFORMATION
* Ms. Li Yinghui, Securities Representative of
the Company, is also the main contact person
of the external Company Secretary engaged by
the Company
liyh@e-chinalife.com
CSRC's designated website for the
Company's annual report disclosure
A Share
2628
Stock type
The Stock Exchange of Hong Kong
Limited
601628
Shanghai Stock Exchange
China Life
OTHER RELEVANT INFORMATION
Stock short name
Exchanges on which the stocks
are listed
H Share
86-10-66575112
Stock code
China Life
1,366
Basic and diluted earnings per share
1,432
Consolidated Statement of Financial Position
46,181
27 March 2024
Annual Report 2023 Financial Report
121
As at 31 December 2023
30
66,680
RMB1.63
Other comprehensive income that may be reclassified to profit or loss
in subsequent periods:
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
Gains or losses from changes in fair value of available-for-sale securities
Less: Amounts transferred to net profit from other comprehensive
income
N/A
(892)
N/A
(7,774)
N/A
82,617
Less: Amounts transferred to profit or loss from other comprehensive
income
Changes in fair value of investment in debt instruments at fair value
through other comprehensive income
(69,257)
RMB2.36
(21,741)
(21,699)
RMB million
(Restated,
Note 2.1.1.b)
RMB million
2022
2023
Other comprehensive income attributable to equity holders of the
Company (net of tax)
Other comprehensive income
For the year ended 31 December 2023
Consolidated Statement of Comprehensive Income (continued)
124 Annual Report 2023 | Financial Report
(69,341)
Allowance for credit losses on investment in debt instruments at fair
value through other comprehensive income
55,632
As at
68,112
13,193
13,374
10
258,760
262,488
258,933
11.1
413,255
485,567
12,753
47,547
2,971
70,060
44,576
22
529,488
11.2
6,520
6,333
6,333
N/A
(1,948)
Notes
9
1,810
As at
31 December
2023
31 December
2022
As at
1 January
2022
RMB million
RMB million
(Restated,
Note 2.1.1.b)
RMB million
(Restated,
Note 2.1.1.b)
2,518
ASSETS
Right-of-use assets
Investment properties
Investments in associates and joint ventures
Term deposits
Statutory deposits - restricted
7
53,710
54,559
8
1,480
Property, plant and equipment
(62,849)
- Non-controlling interests
(8,371)
(1,450)
Total transactions with shareholders
11,613
(31,435)
(469)
(20,291)
(1,450)
As at 31 December 2022 (Restated,
Note 2.1.1.b)
99,033
238,723
8,952
374,973
Impact of initial application of IFRS 9
(Note 2.1.1.a)
28,265
74
(74)
(469)
66,680
1,432
68,112
(69,257)
(84)
(69,341)
- (69,257)
66,680
1,348
(1,229)
13,137
(13,137)
(18,372)
(18,372)
(469)
60,751
396,493
39,351
100,108
Dividends to non-controlling interests
Transactions with shareholders
Appropriation to reserves (Note 35)
Dividends declared (Note 32)
Reserves to retained earnings (Note 35)
Others
7,604
(7,604)
25,848
(13,850)
(13,850)
(425)
(94)
380
94
380
Total transactions with shareholder
7,890
(425)
1,408
46,181
(21,741)
As at 1 January 2023
28,265
159,784
278,074
8,958
475,081
Net profit
46,181
1,366
47,547
Other comprehensive income
(21,741)
42
(21,699)
Total comprehensive income
6
N/A
8,073
156,677
under the equity method
Financial changes in insurance contracts
(487)
Non-controlling interests
42
(84)
(1,636)
Total comprehensive income for the year, net of tax
(1,229)
Attributable to:
- Equity holders of the Company
24,440
1,408
(2,577)
1,348
25,848
660
Share of other comprehensive income of associates and joint ventures
N/A
Share of other comprehensive income of associates and joint ventures
under the equity method
(51)
(3,015)
Exchange differences on translating foreign operations
325
1,102
Financial changes in insurance contracts
(97,940)
4,967
Financial changes in reinsurance contracts
679
545
Other comprehensive income that may not be reclassified to profit or
loss in subsequent periods:
Changes in fair value of investment in equity instruments at fair value
through other comprehensive income
1,122
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
203,478
Annual Report 2023 Financial Report 125
For the year ended 31 December 2023
Net profit
Other comprehensive income
Total comprehensive income
Transactions with shareholders
Appropriation to reserves (Note 35)
Dividends declared
Dividends to non-controlling interests
Reserves to retained earnings (Note 35)
Others
28,265
As at 1 January 2022 (Restated, Note
249,755
8,073
487,134
(93,078)
2,437
(90,641)
28,265
201,041
Impact of initial application of IFRS 17 (Note
2.1.1.b)
As at 31 December 2021
2.1.1.b)
Attributable to equity holders of the Company
Share
capital
Retained
Non-
controlling
Reserves
earnings
interests
Total
RMB million
RMB million
RMB million
RMB million
RMB million
(Note 34)
(Note 35)
Consolidated Statement of Changes in Equity
Investment in debt instruments at amortised cost
Investment in equity instruments at fair value through
211,349
As at
As at
31 December
31 December
2023
2022
RMB million
RMB million
1 January
2022
RMB million
(Restated,
Note 2.1.1.b)
(Restated,
Note 2.1.1.b)
LIABILITIES AND EQUITY
Liabilities
Insurance contract liabilities
14.2
4,859,175
4,266,947
3,809,716
Reinsurance contract liabilities
(21,360)
14.3
188
160
154
Interest-bearing loans and other borrowings
15
12,857
4,665,367
Approved and authorised for issue by the Board of Directors on 27 March 2024.
Bai Tao
Director
24
Net fair value gains through profit or loss
12,707
N/A
23
Net realised gains on financial assets
174,809
(9,375)
22
N/A
122,994
21
182,578
12,774
(Restated,
Note 2.1.1.b)
RMB million
2023
212,445
20
Investment income
Interest income
Insurance revenue
Notes
For the year ended 31 December 2023
Consolidated Statement of Comprehensive Income
Annual Report 2023 | Financial Report 123
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
Li Mingguang
Director
2022
RMB million
N/A
19,222
16
Share capital
Reserves
Retained earnings
Attributable to equity holders of the Company
Non-controlling interests
Total equity
Total liabilities and equity
34
28,265
28,265
28,265
35
145,933
99,033
156,677
302,895
238,723
203,478
477,093
366,021
388,420
9,941
487,034
8,952
374,973
8,073
396,493
5,802,086
5,010,068
Equity
3,416
4,268,874
4,635,095
5,315,052
36,166
34,997
34,994
Other liabilities
17
126,750
117,751
113,133
Deferred tax liabilities
29
272
999
Current tax liabilities
Bonds payable
309
248
Premiums received in advance
48,878
Financial assets sold under agreements to repurchase
18
216,851
49,654
148,958
47,546
239,446
Financial liabilities at fair value through profit or loss
13,878
3,344
Total liabilities
238
11.3
(12,156)
10
Income tax
Profit before income tax
Other expenses
Other impairment losses
Expected credit losses
Finance costs
reinsurance contracts held
Less: Reinsurance finance income/(expenses) from
(4,119)
6,274
(148,700)
(127,923)
26
Insurance finance income/(expenses) from insurance contracts
issued
4,438
Less: Amounts recovered from reinsurers
(4,726)
Allocation of reinsurance premiums paid
1,705,375
(131,614)
(150,353)
25
25
Insurance service expenses
370,861
344,746
N/A
N/A
Held-to-maturity securities
Net profit
Attributable to:
- Equity holders of the Company
- Non-controlling interests
N/A
N/A
Investment in debt instruments at fair value through
11.4
2,744,169
N/A
N/A
other comprehensive income
11.5
138,005
N/A
N/A
other comprehensive income
11.7
Financial assets at fair value through profit or loss
29
28
(15,212)
(18,131)
(3,150)
N/A
1,217
27
27
(4,863)
(5,308)
583
616
11.6
Investment income from associates and joint ventures
N/A
1,533,753
19,759
38,533
12,915
Accrued investment income
51
49,580
48,538
Cash and cash equivalents
149,305
127,594
60,459
Total assets
5,802,086
5,010,068
4,665,367
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
122 Annual Report 2023 | Financial Report
Consolidated Statement of Financial Position (continued)
As at 31 December 2023
Notes
As at
Total revenues
8,944
10,603
Other income
3,979
8,079
11.11
Financial assets purchased under agreements to resell
24,180
46,126
Loans
11.8
N/A
342,083
429,878
Available-for-sale securities
11.9
N/A
1,738,108
1,429,287
Securities at fair value through profit or loss
11.10
N/A
1,574,204
223,790
Reinsurance contract assets
14.3
25,846
24,096
19,327
Other assets
13
37,318
22,004
33,981
Deferred tax assets
29
24,431
206,771
(425)
Certified Public Accountants
As at 31 December 2023
(469)
Payment of lease liabilities
(1,149)
(1,307)
Capital injected into subsidiaries by non-controlling interests
18,035
5,896
Cash received related to other financing activities
750
Cash paid related to other financing activities
(1,769)
Net cash inflow/(outflow) from financing activities
60,273
(120,095)
Foreign exchange gains/(losses) on cash and cash equivalents
64
217
Net increase in cash and cash equivalents
20,467
67,135
Cash and cash equivalents
Beginning of the period
End of the period
127,594
60,459
(418)
148,061
Dividends paid to non-controlling interests
(13,850)
(424,236)
(158,271)
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
Annual Report 2023 | Financial Report 127
Consolidated Statement of Cash Flows (continued)
For the year ended 31 December 2023
2023
RMB million
2022
RMB million
(Restated,
Note 2.1.1.b)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase/(decrease) in financial assets sold under agreements
to repurchase, net
Cash received from borrowings
67,129
43
(90,711)
688
Interest paid
(7,921)
(7,545)
Repayment of borrowings
(577)
(8,275)
Dividends paid to equity holders of the Company
(18,372)
Net cash inflow/(outflow) from investing activities
127,594
Cash at banks and in hand
GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS
RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH
Independent Auditor's Report (continued)
Annual Report 2023 | Financial Report 119
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
The directors of the Company are responsible for the other information. The other information comprises all of the information
included in the annual report other than the consolidated financial statements and our auditor's report thereon.
OTHER INFORMATION
Based on the above procedures, we found that the significant
estimates and judgements involved in determining the fair
value of level 3 financial instruments were supportable by the
evidence we gathered.
Testing the accuracy, on a sample basis, of the fair value
calculations used for level 3 financial assets.
Testing the significant unobservable inputs used by the
Group in determining the fair values and assessing the
reasonableness of these inputs by comparing them to
information available from third-party sources or market
data;
Evaluating the appropriateness of the Group's valuation
techniques and significant assumptions by referring to
industry practices and valuation principles;
With the assistance of our valuation experts, we performed
the following audit procedures:
We obtained an understanding, evaluated the design and
tested the operating effectiveness of internal controls over
the Group's fair value measurement of level 3 financial assets,
including controls over management's review of the valuation
techniques, the significant assumptions and the significant
unobservable inputs used in the fair value measurements.
How our audit addressed the Key Audit Matter
We have identified the fair value of the Group's level 3
financial assets as a key audit matter due to the significant
estimates and judgements involved in the determination
of valuation techniques, significant assumptions and
significant unobservable inputs.
These level 3 financial assets primarily include unlisted
equity securities and unlisted debt securities, which are
accounted for as financial assets at fair value through profit
or loss, investment in debt instruments at fair value through
other comprehensive income or investment in equity
instruments at fair value through other comprehensive
income. The fair values of these financial assets are
measured using valuation techniques based on significant
unobservable inputs.
At 31 December 2023, the Group held level 3 financial
assets measured at fair value, with a carrying value of
RMB607.01 billion, accounting for 10.46% of the Group's
total assets.
Refer to Note 5.4 to the consolidated financial statements.
Fair value of level 3 financial assets
Key Audit Matter
KEY AUDIT MATTERS (continued)
Independent Auditor's Report (continued)
(13,895)
The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true
and fair view in accordance with IFRS Accounting Standards and the disclosure requirements of the Hong Kong Companies
Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Analysis of balances of cash and cash equivalents
In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. We
report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept
liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
Short-term bank deposits
147,453
123,142
4,452
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
128 Annual Report 2023 | Financial Report
Hong Kong
PricewaterhouseCoopers
The engagement partner on the audit resulting in this independent auditor's report is Yip Siu Foon, Linda.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
concern.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going
•
FINANCIAL STATEMENTS (continued)
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
Independent Auditor's Report (continued)
120 Annual Report 2023 | Financial Report
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal
control.
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS
(198)
608
34,330
(174,809)
(122,994)
N/A
(1,217)
N/A
3,150
N/A
(551)
460,499
458,817
5,016
5,291
381
(8,079)
(3,979)
69
Decrease/(increase) in securities at fair value through profit or loss, net
N/A
(35,286)
Decrease/(increase) in financial assets at fair value through profit or loss, net
Increase/(decrease) in financial liabilities at fair value through profit or loss, net
Receivables and payables
(13,777)
N/A
(2,187)
3,175
5,877
9,375
12,265
70,060
RMB million
28,265
Cash paid related to other financing activities
145,933
302,895
9,941
487,034
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
126 Annual Report 2023 | Financial Report
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax
Adjustments for:
Investment income
Interest income
Expected credit losses.
Other impairment losses
Net realised and unrealised gains on financial assets
Insurance contracts and reinsurance contracts held
Depreciation and amortisation
Foreign exchange gains/(losses)
Investment income from associates and joint ventures
2023
2022
RMB million
(Restated,
Note 2.1.1.b)
Income tax paid
44,576
982
556,929
513,350
1,051
363
4,395
(881,317)
(519,495)
(836,048)
(819,785)
(4,171)
(3,076)
(4,217)
Property, plant and equipment
(5,436)
80,787
44,273
Decrease/(increase) in financial assets purchased under agreements to resell,
21,837
(27,327)
net
Interest received
145,824
141,680
(1,036)
Dividends received
33,373
Decrease/(increase) in term deposits, net
Equity investments and subsidiaries
Investments in associates and joint ventures
7,317
Interest received – securities at fair value through profit or loss
Dividends received - securities at fair value through profit or loss
N/A
Debt investments
5,401
N/A
699
Interest received - financial assets at fair value through profit or loss
Dividends received - financial assets at fair value through profit or loss
N/A
615
N/A
Net cash inflow/(outflow) from operating activities
384,366
345,284
-
CASH FLOWS FROM INVESTING ACTIVITIES
Disposals of subsidiaries
Disposals of property, plant and equipment
Disposals of equity investments
251,226
168,656
309,801
210,688
Maturities of debt investments
Disposals of debt investments
Disposals and maturities:
Purchases:
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorised
within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the
asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available
to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
The principal or the most advantageous market must be accessible by the Group at the measurement date.
The Group adopted IFRS 17 for the preparation and disclosure of financial reports on 1 January 2023, and the comparative
financial statements of the Group have been restated. This is mainly due to these changes in IFRS 17 compared to IFRS
4, as follows:
2.1.1.b IFRS 17 - Insurance Contracts
In May 2017, the IASB issued IFRS 17 Insurance Contracts, a comprehensive new accounting standard for insurance
contracts covering recognition, measurement, presentation and disclosure, which replaces IFRS 4 Insurance Contracts. In
June 2020, the IASB issued the amendments to IFRS 17 which include a deferral of the effective date of IFRS 17 to annual
reporting periods beginning on or after 1 January 2023. Insurers qualifying for the deferral of IFRS 9 can apply both IFRS
17 and IFRS 9 for the first time to annual reporting periods beginning on or after 1 January 2023.
Notes to the Consolidated Financial Statements (continued)
It provides a comprehensive general model for insurance contracts, and the measurement is based on the building blocks
of expected present value of future cash flows, a risk adjustment for non-financial risk and a contractual service margin
representing the unearned profit of the insurance contracts. It also provides the variable fee approach for insurance
contracts with direct participation features and the premium allocation approach mainly for short-duration;
Annual Report 2023 | Financial Report 137
in the absence of a principal market, in the most advantageous market for the asset or liability.
For assets and liabilities that are measured at fair value on a recurring basis, the Group determines whether transfers
have occurred between each level in the hierarchy by re-assessing categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each reporting period.
the market price of the equity securities was more than 20% below their cost for a period of at least six months at the
reporting date; and
136 Annual Report 2023 | Financial Report
.
The Group measures financial instruments, such as securities at fair value through profit or loss and available-for-sale
securities, at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. The fair value measurement of
assets and liabilities is based on the presumption that the transaction to sell the asset or transfer the liability takes place
either:
(iii) Accounting policy for financial instruments related to IAS 39 applicable as of 31 December 2022 (continued)
Fair value measurement
2.1.1.a IFRS 9 – Financial Instruments (continued)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2023 (continued)
2.1 Basis of preparation (continued)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
When the decline in value is considered impairment, held-to-maturity debt securities are written down to their present value
of estimated future cash flows discounted at the securities' effective interest rates, available-for-sale debt securities and
equity securities are written down to their fair value, and the change is recorded in net realised gains on financial assets in
the period the impairment is recognised. The impairment losses are reversed through net profit if in a subsequent period the
fair value of a debt security increases and the increase can be objectively related to an event occurring after the impairment
losses were recognised through net profit. The impairment losses recognised in net profit on equity instruments are not
reversed through net profit.
the market price of the equity securities was below their cost for a period of more than one year (including one year)
at the reporting date.
the market price of the equity securities was more than 50% below their cost at the reporting date;
For the year ended 31 December 2023
in the principal market for the asset or liability, or
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
398
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2023 (continued)
324
In evaluating whether a decline in value is impairment for equity securities, the Group also considers the extent or the
duration of the decline. The quantitative factors include the following:
324
8
8
398
2,343
(2,343)
Provision for impairment of other assets
639
21
138 Annual Report 2023 | Financial Report
The equity of the Group as at 1 January 2022 decreased by RMB90,641 million due to the initial application of IFRS 17.
Refer to Note 2.8 for relevant accounting policies.
For insurance contracts with accounting treatments that are inconsistent with the provisions of IFRS 17 prior to 1 January
2023, the Group adopted the retrospective approach. When full retrospective approach is impracticable, the Group adopted
the modified retrospective approach or fair value approach.
Extensive disclosures are required to provide information on the recognised amounts from insurance contracts and the
nature and extent of risks arising from these contracts.
Insurance revenue, insurance service expenses and insurance finance income and expenses are presented separately;
and
An entity may simplify the measurement of a group of insurance contracts using the premium allocation approach if
and only if the entity reasonably expects that such simplification would produce a measurement of the liabilities for
remaining coverage for the group that would not differ materially from the one that would be produced applying the
general model or the coverage period of each contract in the group is one year or less at the inception of the group;
Variable fee approach should be adopted for insurance contracts with direct participation features where policyholders
share in the returns from underlying items. When applying the variable fee approach, the entity's share of the fair value
changes of the underlying items is included in the contractual service margin;
Investment component is the amounts that an insurance contract requires the Group to repay to a policyholder in all
circumstances, regardless of whether an insured event occurs. Insurance revenue and insurance service expenses
presented in profit or loss has excluded any investment components;
The recognition of insurance revenue and insurance service expenses is made in the statement of comprehensive
income based on the services provided during the period;
The discount rate assumption is determined based on observable current market situation that reflect the characteristics
of the insurance contracts. The effect of changes in discount rates will be reported in either profit or loss or other
comprehensive income, determined by an accounting policy choice;
Certain changes in the fulfilment cash flows relating to future service adjust the carrying amount of the contractual
service margin at the end of the reporting period, and thereby will be recognised in profit or loss over the remaining
coverage period;
A contractual service margin represents the unearned profit of the insurance contracts and will be recognised in profit
or loss over the coverage period;
The fulfilment cash flows include the expected present value of future cash flows and a risk adjustment for non-financial
risk, remeasured every reporting period;
•
•
•
•
2.1.1.b IFRS 17 - Insurance Contracts (continued)
2.1 Basis of preparation (continued)
• the disappearance of an active market for that financial asset because of financial difficulties.
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
•
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2023 (continued)
2.1.1.a IFRS 9 – Financial Instruments (continued)
(iii) Accounting policy for financial instruments related to IAS 39 applicable as of 31 December 2022:
Financial assets
Classification
The Group classifies its financial assets into the following categories: securities at fair value through profit or loss, held-
to-maturity securities, loans and receivables and available-for-sale securities. Management determines the classification
of its financial assets at initial recognition which depends on the purpose for which the assets are acquired. The Group's
investment in securities fall into the following four categories:
(a) Securities at fair value through profit or loss
This category has two sub-categories: securities held for trading and those designated as at fair value through profit or
loss at inception. Securities are classified as held for trading at inception if acquired principally for the purpose of selling in
the short-term or if they form part of a portfolio of financial assets in which there is evidence of taking short-term profit.
The Group may classify other financial assets as at fair value through profit or loss if they meet the criteria in IAS 39 and
designated as such at inception.
(b) Held-to-maturity securities
Held-to-maturity securities are non-derivative financial assets with fixed or determinable payments and fixed maturities that
the Group has the positive intention and ability to hold to maturity and do not meet the definition of loans and receivables
nor designated as available-for-sale securities or securities at fair value through profit or loss.
(c) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market other than those that the Group intends to sell in the short-term or held as available-for-sale. Loans and
receivables mainly comprise term deposits, loans, securities purchased under agreements to resell, accrued investment
income and premium receivables as presented separately in the statement of financial position.
(d) Available-for-sale securities
Available-for-sale securities are non-derivative financial assets that are either designated in this category or not classified
in any of the other categories.
Recognition and measurement
Purchase and sale of investments are recognised on the trade date, when the Group commits to purchase or sell assets.
Investments are initially recognised at fair value plus, in the case of all financial assets not carried at fair value through
profit or loss, transaction costs that are directly attributable to their acquisition. Investments are derecognised when the
rights to receive cash flows from the investments have expired or when they have been transferred and the Group has
also transferred substantially all risks and rewards of ownership.
Securities at fair value through profit or loss and available-for-sale securities are carried at fair value. Equity investments that
do not have a quoted price in an active market and whose fair value cannot be reliably measured are carried at cost, net
of allowance for impairments. Held-to-maturity securities are carried at amortised cost using the effective interest method.
Investment gains and losses on sales of securities are determined principally by specific identification. Realised and unrealised
gains and losses arising from changes in the fair value of the securities at fair value through profit or loss category, and the
change of fair value of available-for-sale debt securities due to foreign exchange impact on the amortised cost are included
in net profit in the period in which they arise. The remaining unrealised gains and losses arising from changes in the fair
value of available-for-sale securities are recognised in OCI. When securities classified as available-for-sale securities are
sold or impaired, the accumulated fair value adjustments are included in net profit as realised gains on financial assets.
Annual Report 2023 | Financial Report 135
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
2.1 Basis of preparation (continued)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2023 (continued)
other comprehensive income - debt instruments
Provision for impairment of fair value through
1,390
751
(2,343)
Provision for impairment of loans
For the year ended 31 December 2023
it becomes probable that the issuer or debtor will enter into bankruptcy or other financial reorganisation; and
Notes to the Consolidated Financial Statements (continued)
4,015
a breach of contract, such as a default or delinquency in payments;
•
significant financial difficulty of the issuer or debtor;
•
Financial assets other than those accounted for as at fair value through profit or loss are adjusted for impairment, where
there are declines in value that are considered to be impaired. In evaluating whether a decline in value is an impairment for
these financial assets, the Group considers several factors including, but not limited to, the following:
Impairment of financial assets other than securities at fair value through profit or loss
The Group purchases securities under agreements to resell substantially identical securities. These agreements are classified
as secured loans and are recorded at amortised cost, i.e., their costs plus accrued interests at the end of the reporting period,
which approximates fair value. The amounts advanced under these agreements are reflected as assets in the consolidated
statement of financial position. The Group does not take physical possession of securities purchased under agreements
to resell. Sale or transfer of the securities is not permitted by the respective clearing house on which they are registered
while the lent capital is outstanding. In the event of default by the counterparty, the Group has the right to the underlying
securities held by the clearing house.
Loans are carried at amortised cost, net of allowance for impairment.
Term deposits primarily represent traditional bank deposits which have fixed maturity dates and are stated at amortised cost.
Recognition and measurement (continued)
(iii) Accounting policy for financial instruments related to IAS 39 applicable as of 31 December 2022 (continued):
Financial assets (continued)
2.1.1.a IFRS 9 – Financial Instruments (continued)
investment
Provision for impairment of available-for-sale
securities
Sub-total
Total
1,739
886
2,625
18,588
(18,588)
18,588
(16,849)
886
2,625
21,570
(19,192)
1,637
134 Annual Report 2023 | Financial Report
instruments at amortised cost
Add: Transfer from loans
Provision for impairment of term deposits
Provision for impairment of statutory deposits
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2023 (continued)
2.1.1.a IFRS 9 – Financial Instruments (continued)
(i) As at 1 January 2023, the Group adjusted the carrying amount of original financial assets to the carrying amount under
IFRS 9 based on the measurement category under IFRS 9 (continued):
6. Financial assets at fair value through profit or loss
31 December 2022
Add: Transfer from securities at fair value through profit or loss
Add: Transfer from available-for-sale securities
Add: Transfer from loans
Remeasurement: From amortised cost to fair value
Remeasurement: From cost to fair value
Presentation adjustments: Interest receivable
For the year ended 31 December 2023
1 January 2023
31 December 2022
Less: Transfer to investment in debt instruments at amortised cost
Less: Transfer to investment in debt instruments at fair value through other comprehensive
income
1 January 2023
8. Loans
31 December 2022
Less: Transfer to financial assets at fair value through profit or loss
Less: Transfer to investment in debt instruments at amortised cost
Less: Transfer to investment in debt instruments at fair value through other comprehensive
income
1 January 2023
9. Available-for-sale securities
Carrying amount
RMB million
7. Held-to-maturity securities
Notes to the Consolidated Financial Statements (continued)
132 Annual Report 2023 | Financial Report
As at 31 December 2022, the total carrying amount of unlisted equity securities, preferred stocks and perpetual bonds measured at fair value held
by the Group was RMB119,913 million.
Add: Transfer from available-for-sale securities
7,808
Add: Transfer from loans
220,914
Remeasurement: From fair value to amortised cost
(92)
Remeasurement: ECL
(398)
Presentation adjustments: Interest receivable
1,680
1 January 2023
231,896
4. Investment in debt instruments at fair value through other comprehensive income
31 December 2022
Add: Transfer from available-for-sale securities
529,652
83,236
Add: Transfer from held-to-maturity securities
1,572,220
Presentation adjustments: Interest receivable
28,225
Remeasurement: From amortised cost to fair value
128,631
1 January 2023
2,341,964
5. Investment in equity instruments at fair value through other comprehensive income
31 December 2022
Add: Transfer from available-for-sale securities (note)
1 January 2023
119,913
119,913
Note:
223,790
1,080,735
37,933
1,535
3,632
Remeasurement: Interest payable
1 January 2023
12. Bonds payable
31 December 2022
Remeasurement: Interest payable
1 January 2023
13. Financial assets sold under agreements to repurchase
31 December 2022
Remeasurement: Interest payable
1 January 2023
223,790
(223,790)
12,774
8
12,782
34,997
1,170
36,167
148,958
64
149,022
(ii) As at 1 January 2023, reconciliation of the Group from the provision for impairment under IAS 39 to impairment provision
under IFRS 9 is as below:
Measurement categories
Impairment
provision under
Presentation
Impairment
provision under
IAS 39
adjustment Remeasurement
IFRS 9
RMB million
31 December 2022
Provision for impairment of investment in debt
11. Interest-bearing loans and other borrowings
31 December 2022
6,123
1,353,748
1,574,204
(1,984)
(1,572,220)
342,083
(37,933)
(220,914)
(83,236)
31 December 2022
1,738,108
Less: Transfer to financial assets at fair value through profit or loss
Less: Transfer to investment in debt instruments at amortised cost
Less: Transfer to investment in debt instruments at fair value through other comprehensive
income
(1,080,735)
(7,808)
(529,652)
Less: Transfer to investment in equity instruments at fair value through other comprehensive
income
(119,913)
1 January 2023
Annual Report 2023 | Financial Report 133
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2023 (continued)
2.1.1.a IFRS 9 – Financial Instruments (continued)
-
(i) As at 1 January 2023, the Group adjusted the carrying amount of original financial assets to the carrying amount under
IFRS 9 based on the measurement category under IFRS 9 (continued):
Carrying amount
RMB million
10. Securities at fair value through profit or loss
Less: Transfer to financial assets at fair value through profit or loss
1 January 2023
2,982
660
6,445
IFRS 9 replaces the "incurred loss" model with the "expected credit loss" model which is designed to include forward-
looking information. The Group expects that the provision for debt instruments of the Group under the "expected credit
loss" model would be larger than that under the previous "incurred loss" model.
Impairment
2.1.1.a IFRS 9 – Financial Instruments (continued)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2023 (continued)
2.1 Basis of preparation (continued)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
Hedge accounting
For the year ended 31 December 2023
130 Annual Report 2023 | Financial Report
Equity instruments would generally be measured at fair value through profit or loss unless the Group elects to measure at
FVOCI for certain equity investments not held for trading. The unrealized gains and losses of the other comprehensive income
("OCI") on equity instruments previously classified as available-for-sale securities recognised in income. If the Group elects
to measure equity investments at FVOCI, gains and losses would be recognised in retained earnings when the instruments
are disposed, except for the received dividends which do not represent a recovery of part of the investment cost.
IFRS 9 requires that the Group classifies debt instruments based on the combined effect of application of business models
(hold to collect contractual cash flows, hold to collect contractual cash flows and sell financial assets or other business
models) and contractual cash flow characteristics (solely payments of principal and interest on the principal amount
outstanding or not). Debt instruments not giving rise to cash flows that are solely payments of principal and interest on
the principal amount outstanding would be measured at fair value through profit or loss. Other debt instruments giving rise
to cash flows that are solely payments of principal and interest on the principal amount outstanding would be measured
at amortised cost, fair value through other comprehensive income ("FVOCI") or fair value through profit or loss, based on
their respective business models.
Classification and measurement
2.1.1.a IFRS 9 Financial Instruments
(i) The final version of IFRS 9 was issued by the IASB in July 2014, which introduces new requirements for classification and
measurement, impairment, and hedge accounting. The standard is effective for periods beginning on or after 1 January
2018, with early adoption permitted. The Group had adopted the temporary exemption permitted in the Amendments
to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts ("IFRS 4 Amendment") to apply IAS
39 rather than IFRS 9, until the effective date of IFRS 17. Therefore, the Group adopted IFRS 17 and IFRS 9 for the first
time on 1 January 2023.
Notes to the Consolidated Financial Statements (continued)
The Group does not apply hedge accounting currently, so the Group expects that the new hedge accounting model under
IFRS 9 will have no impact on the Group's consolidated financial statements.
The Group adopted IFRS 9 on 1 January 2023. Refer to Note 2.4 Financial Instruments for the accounting policies under
IFRS 9.
Impact of initial application of IFRS 9 – Financial Instruments
498,294
123
Investment in debt instruments at amortised cost
Statutory deposits - restricted
Term deposits
RMB million
As at
31 December
2022
1 January
2023
RMB million
As at
Notes
Including:
Assets
STATEMENT OF FINANCIAL POSITION
The following table presents the carrying amounts of financial instruments of the Group as at 1 January 2023 classified and
measured under IAS 39 and IFRS 9, respectively.
In accordance with the transitional provisions in IFRS 9, there is no need to restate the comparative information. The impact
of adoption of IFRS 9 at the initial application date are included in retained earnings and reserves at the beginning of the
period upon adjustment, with a corresponding increase of RMB100,108 million in shareholders' equity as at 1 January 2023.
In alignment with the above treatment, the Group only discloses relevant information for the current period.
Except for IFRS 9 and IFRS 17, the above amendments to the standards did not have any significant impact on the
consolidated financial statements of the Group for the year ended 31 December 2023.
Definition of Accounting Estimates
IFRS Practice Statement 2
Amendments to IAS 8
Amendments to IAS 1 and
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 129
The Group has prepared these consolidated financial statements in accordance with International Financial Reporting Standards
("IFRSS"), amendments to IFRSS and interpretations issued by the International Accounting Standards Board ("IASB"). These
consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the applicable disclosure requirements of
the Hong Kong Companies Ordinance. The Group has prepared the consolidated financial statements under the historical cost
convention, except for financial assets and liabilities measured at fair value, insurance contracts and reinsurance contracts
held for assets or liabilities, certain property, plant and equipment at deemed cost as part of the restructuring process. The
preparation of financial statements in compliance with IFRSS requires the use of certain material estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated
financial statements are disclosed in Note 4.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.
2.1 Basis of preparation
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES
These consolidated financial statements are presented in millions of Renminbi ("RMB million") unless otherwise stated. These
consolidated financial statements have been approved and authorised for issue by the Board of Directors on 27 March 2024.
In August 2022, the Company has applied for the voluntary delisting of its American depositary shares ("ADSS") from the
New York Stock Exchange (the "NYSE"). The last day of trading of the Company's ADSs on the NYSE was 1 September 2022
(U. S. Eastern time) and the delisting of the Company's ADSs has taken effect on 2 September 2022 (U. S. Eastern time).
On 13 November 2023, the Company filed a Form 15F with the SEC to deregister the ADSS and the underlying H Shares
and terminate its reporting obligations under the U. S. Securities Exchange Act of 1934, as amended. The deregistration
and termination of reporting obligations became effective on 12 February 2024 (U. S. Eastern time).
The Company is a joint stock company incorporated in the PRC with limited liability. The address of its registered office is
16 Financial Street, Xicheng District, Beijing, the PRC. The Company is listed on the Stock Exchange of Hong Kong Limited,
and the Shanghai Stock Exchange.
China Life Insurance Company Limited (the "Company") was established in the People's Republic of China ("China" or
the "PRC") on 30 June 2003 as a joint stock company with limited liability as part of a group restructuring of China Life
Insurance (Group) Company ("CLIC", formerly China Life Insurance Company) and its subsidiaries (the "Restructuring").
The Company and its subsidiaries are hereinafter collectively referred to as the "Group". The Group's principal activities are
the underwriting of life, health, accident and other types of personal insurance business; reinsurance for personal insurance
business; fund management business permitted by national laws and regulations or approved by the State Council of the
People's Republic of China, etc.
1 ORGANISATION AND PRINCIPAL ACTIVITIES
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements
Sub-total
1,984
2.1 Basis of preparation (continued)
485,567
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2023
IFRS 9
Amendments to IAS 12
1 January 2023
1 January 2023
1 January 2023
International Tax Reform - Pillar Two Model Rules
Disclosure of Accounting Policies
1 January 2023
1 January 2023
1 January 2018(i)
Effective for
annual periods
beginning on or after
Deferred Tax related to Assets and Liabilities arising
from a Single Transaction
Insurance Contracts
Financial Instruments
Content
Amendments to IAS 12
IFRS 17
Standards/Amendments
6,445
231,896
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
N/A
(i) As at 1 January 2023, the Group adjusted the carrying amount of original financial assets to the carrying amount under
IFRS 9 based on the measurement category under IFRS 9:
-
2.1.1.a IFRS 9 – Financial Instruments (continued)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2023 (continued)
2.1 Basis of preparation (continued)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 131
3,344
3,344
148,958
149,022
13
34,997
1. Term deposits
36,167
31 December 2022
1 January 2023
120
6,333
(8)
6,333
498,294
(324)
13,051
485,567
Carrying amount
RMB million
31 December 2022
3. Investment in debt instruments at amortised cost
1 January 2023
Presentation adjustments: Interest receivable
Remeasurement: ECL
31 December 2022
2. Statutory deposits - restricted
Presentation adjustments: Interest receivable
Remeasurement: ECL
12
Add: Transfer from held-to-maturity securities
12,782
Liabilities
Securities at fair value through profit or loss
Available-for-sale securities
Loans
Held-to-maturity securities
Financial assets at fair value through profit or loss
N/A
119,913
5
LO
Investment in equity instruments at fair value through other
comprehensive income
N/A
12,774
4
Investment in debt instruments at fair value through other
comprehensive income
Including:
8
2,341,964
1,353,748
=23
67% 10
Financial assets sold under agreements to repurchase
Financial liabilities at fair value through profit or loss
11
223,790
N/A
1,738,108
N/A
Interest-bearing loans and other borrowings
9
N/A
N/A
1,574,204
Bonds payable
N/A
342,083
The Group recognises credit losses the basis of the ECL for cash and cash equivalents, term deposits, statutory deposits,
financial assets purchased under agreements to resell, investment in debt instrument at amortised cost, investment in debt
instrument at fair value through other comprehensive income, as well as other receivables, etc.
Expected credit losses ("ECL") refer to the weighted average of credit losses with the respective risks of a default occurring
as the weights. Credit loss refers to the difference between all contractual cash flows discounted at the original effective
interest rate or credit-adjusted effective interest rate for credit-impaired financial assets and receivable under the contract
and all cash flows expected to be received, which is the present value of all cash shortfalls.
Giving consideration to reasonable and supportable information on past events, current conditions and forecasts of future
economic conditions weighted by the probability of default, the Group recognises the ECL as the probability-weighted
amount of the present value of the difference between the cash flows receivable from the contract and the cash flows
expected to be collected.
At each reporting date, the ECL of financial instruments at different stages is measured respectively. 12-month ECL is
recognised for financial instruments in Stage 1 which do not have a significant increase in credit risk since initial recognition;
lifetime ECL is recognised for financial instruments in Stage 2 which have had a significant increase in credit risk since initial
recognition but are not deemed to be credit-impaired; and lifetime ECL is recognised for financial instruments in Stage 3
that has been credit-impaired.
For the financial instruments in Stage 1 and Stage 2, the Group calculates the interest income by applying the effective
interest rate to the gross carrying amount (before net of expected credit losses). For the financial instruments in Stage 3,
the interest income is calculated by applying the effective interest rate to the amortised cost (net of expected credit losses).
144 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.4 Financial instruments (continued)
Impairment
When an investment in equity instruments measured at fair value through other comprehensive income is derecognised, the
difference between the carrying amount and the consideration received as well as any cumulative gain or loss previously
recognised in other comprehensive income are recognised in retained earnings. For other financial assets, when they are
derecognised, their cumulative gains or losses previously recognised in other comprehensive income should be transferred
out and recognised in profit or loss.
For other receivables that are classified into groups, the Group calculates the ECL with reference to historical credit loss
experience, current conditions, and forecasts of future economic conditions, and based on the exposure at default and the
lifetime ECL rates.
The Group recognises the impairment gain or loss into profit or loss for the period. For debt instruments classified as fair
value through other comprehensive income, the Group recognises the loss allowance in profit or loss, meanwhile adjusts
other comprehensive income, which does not decrease the carrying amount of the financial assets.
Derecognition
A financial asset is derecognised when one of the following criteria is met: (i) the contractual rights to receive the cash
flows from the financial asset has expired, (ii) the financial asset has been transferred and the Group transfers substantially
all the risks and rewards of ownership of the financial asset to the transferee, or (iii) the financial asset has been transferred
and the Group has not retained control of the financial asset, although the Group neither transfers nor retains substantially
all the risks and rewards of ownership of the financial asset.
Equity instruments classified as financial assets at fair value through profit or loss. After the initial confirmation, gains or
losses arising from changes in the fair value of such financial assets (including dividend income earned and exchange gains
or losses) are recognised in profit or loss for the period and shown in investment income. Dividend income from equity
instruments is generally determined by the amount distributed by the investee and is recognised when the Group's right
to receive dividends is established.
2.4.2 Financial liabilities
Financial liabilities are classified into financial liabilities at amortised cost and financial liabilities at fair value through profit
or loss at initial recognition.
Financial liabilities at amortised cost consist primarily of interest-bearing loans and other borrowings, financial assets
sold under agreements to repurchase, bonds payable and liabilities arising from certain investment contracts without a
discretionary participation feature (presented in other liabilities). Such financial liabilities are initially recognised at fair value,
net of transaction costs incurred, and using the effective interest rate method for subsequent measurement.
Financial liabilities at fair value through profit or loss mainly include liabilities arising from certain investment contracts without
discretionary participation features (pension annuity products that do not transfer insurance risk), which are designated on
initial recognition for subsequent measurement at fair value, with all realized or unrealized gains and losses recognised in
profit or loss.
The Group retains substantially all the risk and rewards of ownership of securities sold under agreements to repurchase
which generally mature within 180 days from the transaction date. Therefore, securities sold under agreements to repurchase
are classified as secured borrowings. The Group may be required to provide additional collateral based on the fair value of
the underlying securities. Securities sold under agreements to repurchase are recorded at amortised cost, i.e., their cost
plus accrued interest at the end of the reporting period. It is the Group's policy to maintain effective control over securities
sold under agreements to repurchase which includes maintaining physical possession of the securities. Accordingly, such
securities continue to be carried on the consolidated statement of financial position.
Bonds payable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
rate method. Amortised cost is calculated by taking into account any discount or premium at acquisition and transaction costs.
Annual Report 2023 | Financial Report 145
Notes to the Consolidated Financial Statements (continued)
2.4.1 Financial assets (continued)
Impairment (continued)
All equity instruments held by the Group are subsequently measured at fair value, and gains or losses are recognised in
profit or loss. However, on initial recognition of an equity investment that is not held for trading, the Group may irrevocably
elect to present subsequent changes in the instrument's fair value in other comprehensive income, and no provision for
impairment is required. Dividend income is recognised in profit or loss for the period (except for those clearly represent
a recovery of part of the cost of the investments). Other net gains and losses (including exchange gains and losses). are
recognised in other comprehensive income, and may not be subsequently transferred to profit or loss. Changes in the
fair value of equity instruments measured at fair value through profit and loss, including any dividend income and foreign
exchange gains and losses, are recognised in profit or loss within investment income. Dividend incomes on these equity
instruments, which are generally determined at the amounts to be distributed by the investees, are recognised when the
Group's right to receive the payment is established.
For the year ended 31 December 2023
Equity instruments
Starting from 1 January 2023, the Group has adopted IFRS 9 and adjusted the accounting policies accordingly. The newly
revised accounting policies are set out below:
For the year ended 31 December 2023
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity. A financial asset or a financial liability is recognised when the Group becomes a party to the
contractual provisions of the instrument.
Purchase and sale of investments are recognised on the trade date, when the Group commits to purchase or sell assets.
At initial recognition, financial assets or financial liabilities not at fair value through profit or loss are measured at fair value
plus or minus transaction costs (such as related charges and commissions) that are directly attributable to the acquisition
or issue of such financial assets or financial liabilities. For financial assets and financial liabilities at fair value through profit
or loss, transaction costs are recognised in profit or loss.
142 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.4 Financial instruments (continued)
2.4.1 Financial assets
Classification and measurement
Based on the Group's business model for managing the financial assets and the contractual cash flow characteristics of the
financial assets, financial assets are classified as: financial assets at amortised cost, investment in debt instruments at fair
value through other comprehensive income, investment in equity instruments at fair value through other comprehensive
income, and financial assets at fair value through profit or loss. When, and only when, the Group changes the business
model for managing financial assets, the Group shall reclassify all affected financial assets.
Debt instruments
Debt instruments are those financial instruments that meet the definition of a financial liability from the issuer's perspective.
Classification and subsequent measurement of debt instruments depend on:
(a) the Group's business model for managing assets; and
Based on these factors, the Group classifies its debt instruments into the following three measurement categories:
i. Financial assets at amortised cost
The financial asset is held within a business model whose objective is to collect the contractual cash flows, and the
contractual cash flow characteristics are consistent with a basic lending arrangement, which gives rise on specified dates
to the contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, and
the financial assets are not designated as at fair value through profit or loss, so they are measured at amortised cost.
The interest income of such financial assets is recognised using the effective interest rate method. Impairment losses
and foreign exchange gains or losses are recognised in profit or loss. The gains or losses arising from derecognition are
recognised directly in profit or loss.
ii. Investment in debt instruments at fair value through other comprehensive income
The financial asset is held within a business model whose objectives are both collecting the contractual cash flows and
selling such financial assets, and the contractual cash flow characteristics are consistent with a basic lending arrangement. In
addition, the financial assets are not designated as at fair value through profit or loss. Such financial assets are measured at
fair value through other comprehensive income, and interest income is recognised using the effective interest rate method.
Impairment losses and foreign exchange gains or losses are recognised in profit or loss for the current period. When such
financial assets are derecognised, the cumulative changes in fair value recognised in other comprehensive income are
carried forward to profit or loss for the current period.
iii. Financial assets at fair value through profit or loss
Debt instruments held by the Group that are not measured at amortised cost or fair value through other comprehensive
income are classified as financial assets at fair value through profit or loss. These financial assets are subsequently
measured at fair value. Net gains or losses, including any interest or dividend income, are recognised in profit or loss within
investment income. The interest income represents the interest accrual on these financial assets which is calculated using
the coupon rate.
Annual Report 2023 | Financial Report 143
Notes to the Consolidated Financial Statements (continued)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.4 Financial instruments (continued)
2.4.1 Financial assets (continued)
Classification and measurement (continued)
Equity instruments are financial instruments that meet the definition of equity instruments when analysed from the issuer's
perspective.
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
For the year ended 31 December 2023
2.4.2 Financial liabilities (continued)
Notes to the Consolidated Financial Statements (continued)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.8 Insurance Contracts (continued)
2.8.1 Definition (continued)
Reinsurance contract is an insurance contract issued by the reinsurer to compensate the cedent for claims arising from
one or more insurance contracts issued by the cedent.
The Group adopts different models for different types of insurance contracts. Insurance contracts with direct participation
features are measured using the variable fee approach. The Group simplifies the measurement using the premium allocation
approach for insurance contracts and reinsurance contracts with coverage of one year or less or contract groups where
there is no significant difference between the results of measuring liabilities for remaining coverage using the premium
allocation approach and the results of measuring such liabilities using general measurement model. Other types of insurance
contracts and reinsurance contracts are measured using the general measurement model.
The Group assesses the classification of contracts using its expectations at inception of the contracts and does not reassess
the conditions afterwards, unless the contracts are modified.
2.8.2 Combination
The Group treats a series of insurance contracts with the same counterparty or related counterparties which may achieve
an overall commercial effect, as a whole in order to report the substance of such contracts.
2.8.3 Separation
An insurance contract may contain one or more components, the Group separates the following components:
(a) embedded derivatives meeting the separation conditions of accounting policies for financial instruments under IFRS
Financial Instruments;
Annual Report 2023 | Financial Report 147
9
(c) promises to transfer distinct goods or services other than insurance contract services.
Investment component is the amount that an insurance contract requires to repay to policyholders regardless of whether
an insured event occurs.
After the Group identifies and separates the non-insurance components that meet the above conditions for separation, the
Group applies the accounting policies related to insurance contracts to the remaining portion.
2.8.4 Classification
The Group identifies portfolios of insurance contracts as contracts subject to similar risks and are managed together.
A group of insurance contracts consists of one or more insurance contracts issued within a period of no longer than one
year and with similar levels of profitability.
The Group divides a portfolio of insurance contracts into a minimum of the following groups:
(a) a group of contracts that is onerous at initial recognition;
(b) a group of contracts that at initial recognition has no significant possibility of becoming onerous subsequently;
(c) a group of the remaining contracts in the portfolio.
148 Annual Report 2023 | Financial Report
2.4 Financial instruments
(b) distinct investment components, but the investment components that meet the definition of investment contracts with
discretionary participation features are still accounted for applying the accounting policies for insurance contracts;
(c) a substantial proportion of any change in the amounts to be paid to the policyholder is expected to vary with the change
in fair value of the underlying items.
(b) an amount equal to a substantial share of the fair value returns on the underlying items is expected to be paid to the
policyholder; and
(a) the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;
A financial liability is derecognised or partly derecognised when the underlying present obligation is discharged or partly
discharged. The difference between the carrying amount of the derecognised part of the financial liability and the consideration
paid is recognised in profit or loss for the current period.
2.5 Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement of assets and liabilities is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either:
•
in the principal market for the asset or liability, or
in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the
asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available
to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorised
within the fair value hierarchy, described in Notes 5.4, 9 and 12 based on the lowest level input that is significant to the
fair value measurement as a whole.
For assets and liabilities that are measured at fair value on a recurring basis, the Group determines whether transfers
have occurred between each level in the hierarchy by re-assessing categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each reporting period.
2.6 Cash and cash equivalents
Cash amounts represent cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments
with original maturities of 90 days or less, whose carrying value approximates fair value.
2.7 Financial assets purchased under agreements to resell
The Group purchases securities under agreements to resell substantially identical securities. These agreements are classified
as secured loans and are recorded at amortised cost, i.e., their costs plus accrued interests at the end of the reporting
period, which approximates fair value. The amounts advanced under these agreements are reflected as assets in the
consolidated statement of financial position. The Group does not take physical possession of financial assets purchased
under agreements to resell. Sale or transfer of the securities is not permitted by the respective clearing house on which
they are registered while the lent capital is outstanding. In the event of default by the counterparty, the Group has the right
to the underlying securities held by the clearing house.
146 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.8 Insurance Contracts
2.8.1 Definition
The contracts issued by the Group are classified into insurance contracts and investment contracts.
An insurance contract is a contract under which the issuer of the contract accepts significant insurance risk from the
policyholder by agreeing to compensate the policyholder if a specified insured event adversely affects the policyholder. The
Group assesses the extent to which insurance risk is transferred within a contract, conducting a test for the presence of
significant insurance risk, thereby determining whether the contract should be classified as an insurance contract. Insurance
contracts are those contracts that transfer significant insurance risk.
When the Group performs tests on significant insurance risk, it determines that a contract transfers significant insurance
risk if the following conditions are met:
(a) at least in one scenario that has commercial substance, an insured event specified by the contract could cause the
Group to pay significant additional amounts, even if the insured event is extremely unlikely, or even if the expected
present value of the contingent cash flows is a small proportion of the expected present value of the remaining cash
flows from the insurance contract. Absence of discernible effect on the economics of the transaction indicates lack of
commercial substance. The additional amounts refer to the present value of amounts payable if an insured event occurs
that exceed those that would be payable if no insured event had occurred (including claims handling and assessment
costs).
(b) at least in one scenario that has commercial substance, an insured event specified by the contract could cause the
Group to incur a loss on a present value basis. However, even if a reinsurance contract does not expose the issuer to
the possibility of a significant loss, that contract is deemed to transfer significant insurance risk if it transfers to the
reinsurer substantially all the insurance risk relating to the reinsured portions of the underlying insurance contracts.
Investment contracts issued by the Group have the legal form of insurance contracts but do not transfer significant insurance
risks. The Group accounts for the investment contract with discretionary participation features applying the accounting
treatments for insurance contracts. An investment contract with discretionary participation features is a financial instrument
that provides a particular investor with the contractual right to receive guaranteed and additional amounts. The additional
amounts are subject to the returns on a specified pool of items at the discretion of the issuer, and are expected to be a
significant portion of the total contractual benefits. For liabilities arising from investment contracts without discretionary
participation features, the Group accounts for these contracts according to note 2.4.2.
An insurance contract is an insurance contract with direct participation features if all the following conditions are met at
the inception of the contracts:
2.4 Financial instruments (continued)
The Group determines at each reporting date whether there is any objective evidence that the investments in associates and
joint ventures are impaired. If this is the case, an impairment loss is recognised for the amount by which the investment's
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the investment's fair value less
costs of disposal and value in use. The impairment of investments in the associates and joint ventures is reviewed for
possible reversal at each reporting date.
(b) cash flow characteristics of financial assets (whether the cash flows are solely payments of principal and interest on
the principal amount outstanding).
The Group's share of post-acquisition profit or loss of its associates and joint ventures is recognised in net profit, and its
share of post-acquisition movements in OCI is recognised in the consolidated statement of comprehensive income. The
cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group's
share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint venture, including
any other unsecured receivables, the Group does not recognise further losses unless it has obligations to make payments
on behalf of the associate or joint venture.
1 January 2024
1 January 2025
The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
2.2 Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year
ended 31 December 2023. Subsidiaries are those entities which are controlled by the Group (including the structured
entities controlled by the Group). Control is achieved when the Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically,
the Group controls an investee if and only if the Group has:
•
power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);
exposure, or rights, to variable returns from its involvement with the investee; and
•
1 January 2024
No mandatory effective
date yet determined but
available for adoption
the ability to use its power over the investee to affect its returns.
•
the contractual arrangement with the other vote holders of the investee;
•
rights arising from other contractual arrangements; and
•
the Group's voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over
the subsidiary and ceases when the Group loses control of the subsidiary.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant
facts and circumstances in assessing whether it has power over an investee, including:
1 January 2024
1 January 2024
beginning on or after
Unrealised gains on transactions between the Group and its associates or joint ventures are eliminated to the extent of the
Group's interests in the associates or joint ventures. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Associates and joint ventures' accounting policies have been changed
where necessary to ensure consistency with the policies adopted by the Group. The Group adjusts the financial statements
of its associates and joint ventures for insurance companies that have not adopted IFRS 9 and IFRS 17 in accordance with
the Group's accounting policies and recognises investment income and other comprehensive income, etc. accordingly.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable
assets of acquired associates or joint ventures at the date of acquisition. Goodwill on acquisitions of associates and joint
ventures is included in investments in associates and joint ventures and is tested for impairment as part of the overall
balance. Impairment losses on goodwill are not reversed. Gains or losses on the disposal of an entity take into consideration
the carrying amount of goodwill relating to the entity sold.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.2 New accounting standards and amendments that are not yet effective and have not been early
adopted by the Group for the financial year beginning on 1 January 2023
Effective for
annual periods
Standards/Amendments
Amendments to IAS 1
Amendments to IAS 1
Amendments to IFRS 16
Amendments to IFRS 10 and
IAS 28
Amendments to IAS 7, 'Cash
Flow Statement' and IFRS
7, 'Financial Instruments:
Disclosures'
Amendments to IAS 21
Content
Sale or Contribution of Assets between an Investor or
its Associate or Joint Venture
Financing Arrangements of Supplier
Lack of Convertibility
Annual Report 2023 | Financial Report 139
Notes to the Consolidated Financial Statements (continued)
Classification of Liabilities as Current or Non-current
Non-current Liabilities with Covenants
Lease Liability in a Sale and Leaseback
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.2 Consolidation (continued)
The excess of the aggregate of the consideration transferred, the fair value of any non-controlling interest in the acquiree,
and the fair value of any previous equity interest in the acquiree at the acquisition date over the fair value of the net
identifiable assets acquired and liabilities assumed is recorded as goodwill. If this is less than the fair value of the net assets
of the subsidiary acquired in the case of a bargain purchase, the Group re-assesses whether it has correctly identified all
of the assets acquired and all of the liabilities assumed, and reviews the procedures used to measure the amounts to be
recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired
over the aggregate consideration transferred, then the gain is recognised in profit or loss. Goodwill is tested annually for
impairment and carried at cost less accumulated impairment losses. If there is any indication that goodwill is impaired,
recoverable amount is estimated and the difference between carrying amount and recoverable amount is recognised as an
impairment charge. Impairment losses on goodwill are not reversed in subsequent periods. Gains or losses on the disposal
of an entity take into consideration the carrying amount of goodwill relating to the entity sold.
The investments in subsidiaries are accounted for only in the Company's statement of financial position at cost less
impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost
also includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the
basis of dividends received and receivable.
Transactions with non-controlling interests
The Group treats transactions with non-controlling interests that do not result in loss of controls as equity transactions.
For shares purchased from non-controlling interests, the difference between any consideration paid and the relevant share
acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposal of shares
to non-controlling interests are also recorded in equity.
When the Group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair
value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the
purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition,
any amounts previously recognised in OCI in respect of that entity are accounted for as if the Group had directly disposed
of the related assets or liabilities. This may mean that amounts previously recognised in OCI are reclassified to profit or loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the
amounts previously recognised in OCI is reclassified to profit or loss as appropriate.
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.3 Associates and joint ventures
Investments in associates and joint ventures are accounted for using the equity method of accounting and are initially
recognised at cost.
Annual Report 2023 | Financial Report 141
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
For the year ended 31 December 2023
2.3 Associates and joint ventures (continued)
Joint ventures are the type of joint arrangements whereby the parties that have joint control of the arrangement have
rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement,
which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
For the year ended 31 December 2023
Associates are entities over which the Group has significant influence, generally accompanying a shareholding of between
20% and 50% of the voting rights of the investee. Significant influence is the power to participate in the financial and
operating policy decisions of the investee, but is not control or joint control over those policies.
140 Annual Report 2023 | Financial Report
Profit or loss and each component of OCI are attributed to the equity holders of the Company and to the non-controlling
interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made
to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies. All
intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of
the Group are eliminated in full upon consolidation.
Notes to the Consolidated Financial Statements (continued)
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If
the Group loses control over a subsidiary, it:
•
derecognises the assets (including goodwill) and liabilities of the subsidiary;
2.2 Consolidation (continued)
derecognises the carrying amount of any non-controlling interests;
•
derecognises the cumulative translation differences recorded in equity;
•
recognises the fair value of the consideration received;
recognises the fair value of any investment retained;
recognises any surplus or deficit in profit or loss; and
reclassifies the Group's share of components previously recognised in OCI to profit or loss or retained earnings, as
appropriate, as if the Group had directly disposed of the related assets or liabilities.
The consolidated financial statements incorporate the financial statements of the combining entities or businesses in
business combination under common control as if they had been combined from the date when the combining entities
or businesses first came under the control of the ultimate holding company. The net assets of the combining entities or
businesses are consolidated using the carrying amount from the ultimate holding company's perspective. No amount is
recognised for goodwill or excess of the Group's interest in the book value of the net assets over cost at the time of the
common control combination, to the extent of the continuation of the ultimate holding company's interest. The consolidated
statement of comprehensive income includes the results of each of the combining entities or businesses from the earliest
date presented or since the date when the combining entities or businesses first came under common control, where this
is a shorter period, regardless of the date of the common control combination.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group, other than
common control combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred and the equity interest issued by the Group. The consideration transferred includes the fair
value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed
as incurred. Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair value at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises
any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the
acquiree's net assets.
•
The comparative financial data have been restated to reflect the business combinations under common control occurred during
this year. Transaction costs, including professional fees, registration fees, costs of furnishing information to shareholders,
costs or losses incurred in combining operations of the previously separate businesses and other costs incurred in relation
to the common control combination that is to be accounted for by using the merger accounting method are recognised as
expenses in the period in which they are incurred.
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
The insurance contract liabilities are subsequently measured by the Group at the reporting date at the total of the liabilities
for remaining coverage and the liabilities for incurred claims.
The liabilities for remaining coverage include the fulfilment cash flows related to unexpired coverage period allocated to the
group at the financial position date and the contractual service margin of the group at that date.
The liabilities for incurred claims include the fulfilment cash flows related to claims and other related expenses incurred
allocated to the group at the financial position date.
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 151
For the year ended 31 December 2023
2.8 Insurance Contracts (continued)
For insurance contracts without direct participation features, the carrying amount of the contractual service margin of a
group of insurance contracts at the reporting date is adjusted by the Group to reflect the effect of the following changes
at the group of contracts level:
Subsequent measurement
(b) be consistent with observable current market prices for financial instruments with cash flows whose characteristics are
consistent with those of the insurance contracts, excluding the effect of factors that influence such observable market
prices but do not affect the future cash flows of the insurance contracts.
(c) any cash flows arising from the contracts in the group at that date.
(b) the derecognition at the date of initial recognition of any asset for insurance acquisition cash flows and any other asset
or liability previously recognised for cash flows related to the group of contracts;
(a) the fulfilment cash flows;
On initial recognition, the contractual service margin is an amount arising from:
The contractual service margin is a component of the liabilities for the group of insurance contracts that represents the
unearned profit the Group will recognise as provides insurance contract services in the future.
The risk adjustment for non-financial risk is applied to the present value of the estimated future cash flows, to reflect the
compensation that the Group requires for bearing the uncertainty about the amount and timing of the cash flows that arises
from non-financial risk.
(a) reflect the time value of money, the characteristics of the cash flows and the liquidity characteristics of the insurance
contracts; and
The Group uses appropriate discount rate to adjust the estimates of future cash flows to reflect the time value of money
and the financial risks related to those cash flows, to the extent that the financial risks are not included in the estimates
of cash flows. The discount rates applied to the estimates of the future cash flows shall:
Initial measurement (continued)
2.8.6 Measurement of insurance contracts (continued)
(i) General provisions (general measurement model) (continued)
If the total amount represents net cash inflows, the Group recognises it as contractual service margin. If the total amount
represents net cash outflows, the Group recognises a loss.
(i) General provisions (general measurement model) (continued)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(a) the effect of any new contracts added to the group;
2.8.6 Measurement of insurance contracts (continued)
For groups of insurance contracts measured using the variable fee approach, the carrying amount of the contractual service
margin of a group of contracts at each reporting date equals the carrying amount at the start of the reporting period adjusted
for:
The variable fee reflects the consideration received by the Group for providing investment-related services by managing the
underlying items on behalf of the policyholder, and is equal to the Group's share of the fair value of the underlying items
less the fulfilment cash flows that do not vary based on the return on the underlying items.
The Group applies the variable fee approach to measure the insurance contracts with direct participation features. The Group
estimates the fulfilment cash flows of the groups of insurance contracts with direct participation features at the difference
between the fair value of the underlying items and the variable fee.
The measurement of variable fee approach is consistent with the general measurement model except for the accounting
policies listed below.
(ii) Measurement of groups of insurance contracts with direct participation features (variable fee approach)
2.8.6 Measurement of insurance contracts (continued)
2.8 Insurance Contracts (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
152 Annual Report 2023 | Financial Report
Subsequent measurement (continued)
(e) changes in risk adjustment for non-financial risk that relate to future service.
(c) differences between the amount of investment components that were expected to be payable in the period and the
amount of investment components that actually became payable;
(b) changes in estimates of the present value of future cash flows in the liabilities for remaining coverage, measured at the
discount rates determined on initial recognition, except for those that relate to the effects of the time value of money,
financial risk and changes therein;
(a) experience adjustments arising from premiums received in the period that related to future services and related cash
flows, measured at the discount rates determined on initial recognition;
Changes in fulfilment cash flows that related to future services mainly comprise:
The Group rationally determines the coverage units of the groups of contracts in each period of the coverage period based
on the pattern of provision of insurance contract services, and recognises insurance revenue accordingly over the current
and future periods by amortising the carrying amount of the contractual service margin as adjusted for (a) to (d) above.
(e) the amount recognised as insurance revenue because of the services provided in the period.
(d) the effect of any currency exchange differences on the contractual service margin; and
the above changes adjust the loss component within the liabilities for remaining coverage with correspondence to
insurance service expenses. When the changes exceed the amount of loss component, the loss component should be
reduced to zero. The remaining should be reinstating the contractual service margin.
when the changes result in a decrease in the carrying amount of the contractual service margin, and the changes
exceed the carrying amount of the contractual service margin. The contractual service margin is reduced to zero, and
the excess is recognised in insurance service expenses and a loss component is recognised within the liabilities for
remaining coverage;
(c) changes relating to future service; except for
(b) interest accreted on the carrying amount of the contractual service margin for contracts measured using the general
measurement model. Interest accreted on the contractual service margin is measured at the locked-in discount rates.
The locked-in discount rates are determined at the date of initial recognition of a group of contracts, applied to nominal
cash flows that do not vary based on the returns on any underlying items;
(d) differences between the amount of policy loans that were expected to be receivable in the period and the amount of
policy loans that actually became receivable;
2.8 Insurance Contracts (continued)
(c) when it becomes onerous.
For the year ended 31 December 2023
Initial measurement
(i) General provisions (general measurement model)
2.8.6 Measurement of insurance contracts
(b) the date the Group recognises an onerous group of underlying insurance contracts.
(a) the later of the beginning of the coverage period or that any underlying insurance contract is initially recognised;
For the reinsurance contracts held that provide proportionate coverage, they are recognised from the earliest of the following:
(b) the date the Group recognises an onerous group of underlying insurance contracts.
(a) the beginning of the coverage period of the group of reinsurance contracts held; and
Reinsurance contracts held are recognised from the earliest of the following:
(a) the effect of any new contracts added to the group;
(b) the date when the first payment from a policyholder becomes due, or the date when the first payment is received by
the Group if there is no contractual due date;
On initial recognition, the Group measures a group of insurance contracts at the total of the fulfilment cash flows and the
contractual service margin.
(a) the beginning of the coverage period of the group of contracts, the coverage period refers to the period during which
the Group provides insurance contract services;
2.8.5 Recognition
These groups represent the level of aggregation at which insurance contracts are initially recognised and measured. The
Group does not reassess the composition of the groups subsequently.
The Group classifies reinsurance contracts held within a period of no longer than one year into the same group of reinsurance
contracts held.
(b) a group of contracts for which, at initial recognition, there is no significant possibility of a net gain arising subsequently;
(c) a group of the remaining contracts in the portfolio.
(a) a group of contracts for which there is a net gain at initial recognition;
The Group divides a portfolio of reinsurance contracts held into at least the following groups:
Portfolios of reinsurance contracts held are assessed for aggregation separately from portfolios of insurance contracts issued.
2.8.4 Classification (continued)
2.8 Insurance Contracts (continued)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
For the year ended 31 December 2023
The Group recognises a group of insurance contracts it issues from the earliest of the following:
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
Annual Report 2023 | Financial Report 149
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
150 Annual Report 2023 | Financial Report
(b) the Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contains the contract
and, as a result, can set a price or level of benefits that fully reflects the risk of that portfolio; and the pricing of the
premiums up to the date when the risks are reassessed does not take into account the risks that relate to periods after
the reassessment date.
(a) the Group has the practical ability to reassess the risks of the particular policyholder and, as a result, can set a price or
level of benefits that fully reflects those risks; or
A substantive obligation to provide insurance contract services ends when:
Cash flows are within the boundary of an insurance contract if the Group has the right to require policyholders to pay
premiums or has a substantial obligation to provide policyholders with insurance contract services.
The Group includes in the measurement of a group of insurance contracts all the future cash flows within the boundary of
each contract in the group and does not measure future cash flows outside the boundary of the contract group.
(d) are estimated separately from adjustment for the time value of money and financial risk, unless the most appropriate
measurement technique combines these estimates.
(c) reflect conditions existing at the reporting date; and
(b) reflect the perspective of the Group, provided that the estimates of any relevant market variables are consistent with
observable market prices for those variables;
(a) estimates of future cash flows are unbiased probability-weighted averages;
Notes to the Consolidated Financial Statements (continued)
The estimates of future cash flows:
The Group defines insurance acquisition cash flows as cash flows arising from the costs of selling, underwriting and starting
a group of insurance contracts that are directly attributable to the portfolio of insurance contracts to which the group belongs.
The fulfilment cash flows do not reflect the non-performance risk of the Group.
(c) a risk adjustment for non-financial risk.
(b) an adjustment to reflect the time value of money and the financial risks; and
(a) estimates of future cash flows directly related to the insurance contract;
Fulfilment cash flows comprise the following:
Initial measurement (continued)
(i) General provisions (general measurement model) (continued)
2.8.6 Measurement of insurance contracts (continued)
2.8 Insurance Contracts (continued)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
The Group may estimate the future cash flows at a higher level of aggregation and then allocate the resulting fulfilment
cash flows to individual groups of contracts.
(b) the change in the amount of the Group's share of the fair value of the underlying items, except to the extent that:
If, at any time during the coverage period, relevant facts and circumstances indicate that a group of insurance contracts is
onerous, the Group will recognise a loss in profit or loss and increase the liabilities for remaining coverage.
the increase in the amount of the Group's share of the fair value of the underlying items reverses the loss component
of the liabilities for remaining coverage.
.
.
.
the modified contract would have been excluded from the scope of the accounting policies related to insurance contracts;
the Group would have separated different components from the host insurance contract, resulting in a different insurance
contract to which the accounting policies related to insurance contracts would have applied;
the modified contract would have had a substantially different contract boundary; or
the modified contract would have been included in a different group of contracts.
(b) the original contract met the definition of an insurance contract with direct participation features, but the modified
contract no longer meets that definition, or vice versa; or
(c) the Group applied the premium allocation approach to the original contract, but the modifications mean that the contract
no longer meets the eligibility criteria for that approach.
If a contract modification meets none of the conditions above, the Group treats changes in cash flows caused by the
modification as changes in estimates of fulfilment cash flows.
The Group derecognises an insurance contract when it is extinguished, i.e., when the obligation specified in the insurance
contract expires or is discharged or cancelled.
158 Annual Report 2023 | Financial Report
156 Annual Report 2023 | Financial Report
When the Group measures the groups of reinsurance contracts held, it adjusts the loss-recovery component to reflect
changes in the loss components of the onerous underlying insurance contracts, with the carrying amount of the loss-recovery
component not exceeding the portion of the carrying amount of the loss components of the onerous underlying insurance
contracts that the Group expects to recover from the group of reinsurance contracts held.
The Group recognises the amount calculated above as an adjustment to contractual service margin and simultaneously as
recoveries of insurance service expenses from reinsurers in profit or loss of the period.
(b) the percentage of claims on the underlying insurance contracts the Group expects to recover from the group of reinsurance
contracts held.
(a) the loss recognised on the underlying insurance contracts; and
If the reinsurance contract held is entered into before or at the same time as the onerous underlying insurance contracts are
recognised, when the Group recognises a loss on initial recognition of an onerous group of underlying insurance contracts
or on addition of onerous underlying insurance contracts to a group, the Group recognises a loss-recovery component of
the asset for remaining coverage for such groups of reinsurance contracts held by multiplying:
The asset for incurred claims includes the fulfilment cash flows related to recovery of claims and other related expenses
incurred allocated to the group of reinsurance contracts held at the financial position date.
The asset for remaining coverage includes the fulfilment cash flows related to unexpired coverage period allocated to the
group of reinsurance contracts held at the financial position date and the contractual service margin of the group at that date.
The asset for reinsurance contracts held is subsequently measured by the Group at each financial position date at the total
of the asset for remaining coverage and the asset for incurred claims.
The Group recognises any net cost or net gain of the above total amounts as a contractual service margin.
(d) loss-recovery component of assets for remaining coverage of reinsurance contracts held.
(a) if the modified terms had been included at contract inception:
If the terms of an insurance contract are modified, the Group derecognises the original contract and recognises the modified
contract as a new contract, if any of the conditions below are satisfied:
2.8.9 Modification and derecognition
(c) the allocation of the contractual service margin is modified so that the Group recognises the contractual service margin
over the duration of the group of contracts in a systematic way that reflects the transfer of investment services under
the contract.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.8 Insurance Contracts (continued)
2.8.7 Measurement of groups of reinsurance contracts held (continued)
The Group measures the contractual service margin at each financial position date for a group of reinsurance contracts held
as the carrying amount determined at the start of the reporting period, adjusted for:
(a) the effect of contracts added to the group of contracts in the period on the contractual service margin;
(b) interest accreted on the carrying amount of the contractual service margin, measured at the discount rates determined
at the date of initial recognition of a group of contracts, to nominal cash flows that do not vary based on the returns on
any underlying items;
(c) the loss-recovery component of the asset for remaining coverage recognised on initial recognition of an onerous group
of underlying insurance contracts or on addition of onerous underlying insurance contracts to a group, and reversals of
a loss recovery component of the asset for remaining coverage to the extent those reversals are not changes in the
fulfilment cash flows of the group of reinsurance contracts held;
(d) the changes in the fulfilment cash flows relating to future service, other than the change resulting from a change in
fulfilment cash flows allocated to a group of underlying insurance contracts that does not adjust the contractual service
margin for the group of underlying insurance contracts, or the change resulting from recognition or reversal of losses
from onerous groups of underlying contracts measured applying the premium allocation approach;
(e) the effect of any currency exchange differences in the period arising on the contractual service margin;
(c) any cash flows arising from the reinsurance contracts held in the group at that date;
(f) the amortisation of the contractual service margin in the period. The Group rationally determines the coverage units
of the group of reinsurance contracts held in each period of the coverage period based on the pattern of receipt of
insurance contract services, and recognises profit or loss accordingly over the current and future periods by amortising
the carrying amount of the contractual service margin as adjusted for (a) to (e) above.
The Group applies the same principles to measure the groups of insurance contracts issued and the groups of reinsurance
contracts held using the premium allocation approach.
When a group of reinsurance contracts held is measured using the premium allocation approach, for the amount recognised
and reversed by the loss-recovery component of asset for remaining coverage recovered from reinsurers, the Group adjusts
the carrying amount of asset for remaining coverage recovered from reinsurers in the group of reinsurance contracts while
recognising the amounts recovered from reinsurers.
Annual Report 2023 | Financial Report 157
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.8 Insurance Contracts (continued)
2.8.8 Investment contracts with discretionary participation features
In addition to the requirements for insurance contracts set out above, the recognition and measurement for investment
contract with discretionary participation features are modified as follows:
(a) the date of initial recognition is the date the Group becomes party to the contract;
(b) the contract boundary is modified so that cash flows are within the contract boundary if they result from a substantive
obligation of the Group to deliver cash at a present or future date. The Group has no substantive obligation to deliver
cash if the Group has the practical ability to set a price for the promise to deliver the cash that fully reflects the amount
of cash promised and related risks;
(ii) Groups of reinsurance contracts measured using the premium allocation approach
the decrease in the amount of the Group's share of the fair value of the underlying items exceeds the carrying amount
of the contractual service margin, giving rise to a loss;
(b) the amount derecognised at that date of any asset or liability previously recognised for cash flows related to the group
of reinsurance contracts held;
On initial recognition for a group of reinsurance contracts held, the Group calculates the sum of:
After the Group has recognised a loss on an onerous group of insurance contracts, the subsequent measurements are:
(a) for any subsequent increases relating to future service in fulfilment cash flows allocated to the group arising from
changes in estimates of future cash flows and the risk adjustment for non-financial risk, and any subsequent decreases
in the amount of the Group's share of the fair value of the underlying items, the Group recognises a loss as insurance
service expenses in profit or loss and increases the liabilities for remaining coverage;
revenue.
Any amounts allocated to the loss component of the liabilities for remaining coverage do not be recognised as insurance
(b) changes in the risk adjustment for non-financial risk recognised in profit or loss because of the release from risk; and
(c) insurance finance income or expenses.
(a) estimates of the present value of future cash flows for claims and expenses released from the liabilities for remaining
coverage because of incurred insurance service expenses;
After a loss is recognised, the Group allocates the subsequent changes in fulfilment cash flows of the liabilities for remaining
coverage specified as follows on a systematic basis between the loss component and the liabilities for remaining coverage
excluding the loss component:
(b) for a group of insurance contracts with direct participation features, the decrease in the amount of the Group's share
of the fair value of the underlying items exceed the carrying amount of the contractual service margin.
(a) the amount of unfavorable changes relating to future service in the fulfilment cash flows changes in estimates of future
cash flows and the risk adjustment for non-financial risk exceed the carrying amount of the contractual service margin;
A group of insurance contracts becomes onerous (or more onerous) on subsequent measurement if meets one of the following
conditions, the Group recognises a loss as insurance service expenses in profit or loss and increases loss component of
the liabilities for remaining coverage:
(iii) Measurements for onerous insurance contracts (continued)
2.8.6 Measurement of insurance contracts (continued)
2.8 Insurance Contracts (continued)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 153
If a group of insurance contracts is onerous at the date of initial recognition, or if additional loss caused by contracts added
to the group of onerous contracts, the Group recognises a loss as insurance service expenses in profit or loss for the net
outflow for the group of onerous contracts, resulting in the carrying amount of the liabilities for the group being equal to
the fulfilment cash flows and the contractual service margin of the group being zero.
(iii) Measurements for onerous insurance contracts
(e) the amount recognised as insurance revenue because of the services provided in the period. The Group identifies the
coverage units of the groups of contracts for the coverage period in accordance with the insurance contract service
provided, and recognised in the insurance revenue of the current period and subsequent periods accordingly by allocating
the carrying amount of the contractual service margin as adjusted for (a) to (d) above.
such decreases in the fulfilment cash flows are allocated to the loss component of the liabilities for remaining coverage.
(d) the effect of any currency exchange differences on the contractual service margin; and
•
• such increases in the fulfilment cash flows exceed the carrying amount of the contractual service margin, giving rise to
a loss;
(c) the changes in fulfilment cash flows relating to future service and do not vary based on the returns of the fair value of
underlying items, except to the extent that:
(b) for any subsequent decreases relating to future service in fulfilment cash flows allocated to the group arising from
changes in estimates of future cash flows and the risk adjustment for non-financial risk, and any subsequent increases
in the amount of the Group's share of the fair value of the underlying items, the Group reverses the insurance service
expenses in profit or loss and decreases the loss component of the liabilities for remaining coverage until that component
is reduced to zero, the Group adjusts the contractual service margin only for the excess of the decrease over the amount
allocated to the loss component.
(iv) Simplified approach for measurement of groups of insurance contracts (premium allocation approach)
The Group uses the premium allocation approach for measuring the group of insurance contracts with a coverage period
of each contract in the group is one year or less, or the Group reasonably expects that the measurement of the liabilities
for remaining coverage for the group using the premium allocation approach would not differ materially from the one that
would be produced using general measurement model.
154 Annual Report 2023 | Financial Report
(i) Groups of reinsurance contracts not measured using the premium allocation approach (continued)
2.8.7 Measurement of groups of reinsurance contracts held (continued)
2.8 Insurance Contracts (continued)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 155
The cash flows are within the contract boundary if they arise from substantive rights and obligations of the Group that exist
during the reporting period in which the Group is obligated to pay premiums to the reinsurer or in which the Group has a
substantive right to receive services from the reinsurer.
The fulfilment cash flows for the group of reinsurance contracts held include estimates of future cash flows an adjustment
to reflect the time value of money and the financial risks and a risk adjustment for non-financial risk which relate directly to
fulfil insurance contracts. The Group determines the risk adjustment for non-financial risk so that it represents the amount
of risk being transferred by the holder of the group of reinsurance contracts to the issuer of those contracts.
'
On initial recognition, the Group measures a group of reinsurance contracts held at the total of the fulfilment cash flows and
the contractual service margin. The contractual service margin represents the net cost or net gain the Group will recognise
as it receives insurance contract services from the reinsurer.
(a) the fulfilment cash flows;
(i) Groups of reinsurance contracts not measured using the premium allocation approach
The Group recognises the liabilities for incurred claims of the insurance contracts as the amount of fulfilment cash flow
related to the incurred compensation.
At the reporting date, the carrying amount of the liabilities for remaining coverage is the carrying amount at the start of
the reporting period plus the premiums received in the period, minus insurance acquisition cash flows, plus any amounts
relating to the amortisation of insurance acquisition cash flows recognised as insurance service expenses in the reporting
period, plus any adjustment to a financing component, minus the amount recognised as insurance revenue for services
provided in that period, and minus any investment component paid or transferred to the liabilities for incurred claims.
The carrying amount of a group of insurance contracts issued at the reporting date is the sum of the liabilities for remaining
coverage and the liabilities for incurred claims.
Subsequent measurement
On initial recognition, the Group measures the liabilities for remaining coverage based on the premiums received minus the
insurance acquisition cash flows, minus (or add) the amount of the assets for insurance acquisition cash flows and other
related assets or liabilities that is derecognised at the initial recognition.
(iv) Simplified approach for measurement of groups of insurance contracts (premium allocation approach) (continued)
Initial measurement
2.8.6 Measurement of insurance contracts (continued)
2.8 Insurance Contracts (continued)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
2.8.7 Measurement of groups of reinsurance contracts held
(i) Groups of reinsurance contracts not measured using the premium allocation approach (continued)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
For the year ended 31 December 2023
3 SUMMARY OF OTHER ACCOUNTING POLICIES (continued)
3.5 Leases (continued)
As a lessee (continued)
Subsequent measurement (continued)
The Group uses a constant periodic rate of interest to calculate interest on the lease liability in each period during the lease
term and recognises the interest in profit or loss.
Variable lease payments not included in the measurement of the lease liability are recognised in profit or loss in the period
in which the event or condition that triggers the payment occurs.
After the commencement date of a lease, when there is a change in substance fixed payments, a change in the amounts
expected to be payable under a residual value guarantee, a change in future lease payments resulting from a change in an
index or a rate used to determine those payments, a change in the assessment or actual exercise situation of a purchase
option, an extension option or a termination option, the Group uses the changed present value of lease payments to
remeasure the lease liability and adjust the carrying amount of right-of-use asset accordingly. If the carrying amount of the
right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Group
recognises any remaining amount of the remeasurement in profit or loss.
As a lessor
At the commencement date of the lease, leases in which the Group does not transfer substantially all the risks and rewards
incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-
line basis over the lease terms and is included in revenue in the statement of profit or loss.
3.6 Investment properties
Investment properties are interests in land use rights and buildings that are held to earn rental income and/or for capital
appreciation, rather than for the supply of services or for administrative purposes.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment
properties are stated at cost less accumulated depreciation and any impairment loss.
Depreciation is computed on the straight-line basis over the estimated useful lives. The estimated useful lives of investment
properties are 15 to 35 years.
Overseas investment properties, that are held by the Group in the form of property ownership, equity investment, or other
forms, have expected useful lives not longer than 50 years, determined based on the usage in their locations.
The useful lives and depreciation method are reviewed periodically to ensure that the method and period of depreciation
are consistent with the expected pattern of economic benefits from the individual investment properties.
An investment property is derecognised when either it has been disposed of or when the investment property is permanently
withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or
disposal of an investment property are recognised in the statement of comprehensive income in the year of retirement or
disposal. A transfer to, or from, an investment property is made when, and only when, there is evidence of a change in use.
Annual Report 2023 | Financial Report 165
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
3 SUMMARY OF OTHER ACCOUNTING POLICIES (continued)
Notes to the Consolidated Financial Statements (continued)
168 Annual Report 2023 | Financial Report
164 Annual Report 2023 | Financial Report
Subsequent measurement
Estimated useful lives
15 to 35 years
3 to 11 years
4 to 8 years
Over the shorter of the remaining term of the lease and
the useful lives
The residual values, depreciation method and useful lives are reviewed periodically to ensure that the method and period of
depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment.
Assets under construction mainly represent buildings under construction, which are stated at cost less any impairment
losses and are not depreciated, except for those acquired prior to 30 June 2003, which are stated at deemed cost less any
accumulated impairment losses. Cost comprises the direct costs of construction and capitalised borrowing costs on related
borrowed funds during the period of construction. Assets under construction are reclassified to the appropriate category of
property, plant and equipment, investment properties or other assets when completed and ready for use.
Annual Report 2023 | Financial Report 163
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
3 SUMMARY OF OTHER ACCOUNTING POLICIES (continued)
3.4 Property, plant and equipment (continued)
Impairment and gains or losses on disposals
Property, plant and equipment are reviewed for impairment losses whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised in net profit for the amount by which
the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset's net selling price and
value in use.
The gain or loss on disposal of an item of property, plant and equipment is the difference between the net sales proceeds
and the carrying amount of the relevant asset, and is recognised in net profit.
3.5 Leases
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset for a period of a time, the Group
assesses whether, throughout the period of use, the lessee has the right to obtain substantially all of the economic benefits
from use of the identified asset and the right to direct the use of the identified asset.
As a lessee
Initial measurement
At the commencement date of the lease, the Group recognises right-of-use assets representing the right to use the leased
assets, including buildings. The Group measures the lease liability at the present value of the lease payments that are not
paid at that date, except for short-term leases and leases of low-value assets. For short-term leases with a lease term of not
more than 12 months and low-value asset leases with a lower value when the individual asset is new, the Group chooses
not to recognise the right of use assets and lease liabilities and recognises the relevant rental expenses in profit or loss or
the cost of the relevant asset on a straight-line basis over each period of the lease term. In calculating the present value
of the lease payments, the lease payments are discounted using the interest rate implicit in the lease. If that rate cannot
be readily determined, the Group uses its own incremental borrowing rate.
The lease term is the non-cancellable period of a lease when the Group has the right to use lease assets. When the Group
has an option to extend a lease and is reasonably certain to exercise that option to extend a lease, the lease term also
comprises the periods covered by the option to extend the lease. When the Group has an option to terminate the lease
and is reasonably certain not to exercise that option, the lease term also comprises the periods covered by the option to
terminate the lease. The Group reassesses whether it is reasonably certain to exercise an extension option, to exercise a
purchase option or not to exercise a termination option, upon the occurrence of either a significant event or a significant
change in circumstances that are within the control of the Group and affects whether the Group is reasonably certain to
exercise the commensurate options.
The Group applies the straight-line method in depreciating the right-of-use assets. If it is reasonably certain that ownership
of a leased asset transfers to the Group at the end of the lease term, the leased asset is depreciated under the remaining
useful life of the asset. If it cannot be reasonably determined that ownership of a leased asset transfers to the Group at
the end of the lease term, the Group depreciates the right-of-use asset from the commencement date to the earlier of the
end of the lease term or the end of the useful life of the right-of-use asset.
Significant judgements made by the Group in the classification of financial assets include business model and analysis on
contractual cash flow characteristics.
4.2.1 Classification of financial assets
The Group's principal investments are debt investments, equity investments, term deposits, etc. The critical estimates and
judgements are those associated with the recognition of impairment and the measurement of fair value.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint
ventures except where the timing of the reversal of the temporary difference can be controlled and it is probable that the
temporary difference will not be reversed in the foreseeable future.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements. Substantively enacted tax rates
are used in the determination of deferred income tax.
3.10 Current and deferred income taxation (continued)
3 SUMMARY OF OTHER ACCOUNTING POLICIES (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
166 Annual Report 2023 | Financial Report
Current income tax assets and liabilities for the current period are calculated on the basis of the tax laws enacted or
substantively enacted at the end of each reporting period in the jurisdictions where the Company and its subsidiaries
operate and generate taxable income. Management periodically evaluates positions taken with respect to situations in
which applicable tax regulations are subject to interpretation.
Income tax expense for the period comprises current and deferred tax. Income tax is recognised in net profit, except to
the extent that it relates to items recognised directly in OCI where the income tax is recognised in OCI.
3.10 Current and deferred income taxation
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of equity instruments are shown
in equity as a deduction, net of tax, from the proceeds.
3.9 Share capital
The advance premiums received by the Group are mainly premiums received for insurance contracts that have not yet met
the criteria for initial recognition.
3.8 Premiums received in advance
Compensation under the stock appreciation rights is measured based on the fair value of the liabilities incurred and is
expensed over the vesting period. Valuation techniques including option pricing models are used to estimate fair value of
relevant liabilities. The liability is re-measured at the end of each reporting period to its fair value until settlement. Fair value
changes in the vesting period are included in administrative expenses and changes after the vesting period are included in
net fair value gains through profit or loss in net profit. The related liability is included in other liabilities.
Stock appreciation rights
All full-time employees of the Group are entitled to participate in various government-sponsored housing funds. The Group
contributes on a monthly basis to these funds based on certain percentages of the salaries of the employees. The Group's
liability in respect of these funds is limited to the contributions payable in each year.
Housing benefits
Full-time employees of the Group are covered by various government-sponsored pension plans, under which the employees
are entitled to a monthly pension based on certain formulae. These government agencies are responsible for the pension
liability to these employees upon retirement. The Group contributes on a monthly basis to these pension plans. All
contributions made under the government-sponsored pension plans described above are fully attributable to employees
at the time of the payment and the Group is unable to forfeit any amounts contributed by it to such plans. In addition to
the government-sponsored pension plans, the Group established an employee annuity fund plan pursuant to the relevant
laws and regulations in the PRC, whereby the Group is required to contribute to the plan at fixed rates of the employees'
salary costs. Contributions made by the Group under the annuity fund plan that is forfeited in respect of those employees
who resign from their positions prior to the full vesting of the contributions will be recorded in the public account of the
annuity fund and shall not be used to offset any contributions to be made by the Group in the future. All funds in the
public account will be attributed to the employees whose accounts are in normal status after the approval procedures are
completed as required. Under these plans, the Group has no legal or constructive obligation for retirement benefit beyond
the contributions made.
3.7 Employee benefits
Pension benefits
Notes to the Consolidated Financial Statements (continued)
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to
be utilised. Conversely, previously unrecognised deferred tax assets are reassessed by the end of each reporting period
and are recognised to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised.
Deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off
current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income tax
levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to
settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in
each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
3.11 Provisions and contingencies
4.2 Financial instruments
The description of the above assumptions is detailed in Note 14.1.
The judgments and estimates used in the valuation process will affect the amount recognised in the consolidated financial
statements for insurance contracts and reinsurance contracts held.
Fulfilment cash flows are determined on the basis of the Group's estimates of future benefits, premiums and related
expenses, taking into account the risk adjustment for non-financial risk. The mortality rate, morbidity rate, lapse rate, discount
rate, expense assumption and policy dividend assumption used for the estimation of future cash flows are determined
according to the latest empirical analysis and current and future economic conditions.
4.1.4 Estimates of future benefit payments and premiums arising from insurance contracts not using
the premium allocation approach
The Group's unit of coverage is determined by considering the benefits provided by each contract and its expected duration
of insurance coverage. For policies that include investment return services or investment-related services, the amount
corresponding to the investment return service or investment-related service is the investment component or one of the
amounts that the policyholder is entitled to recover.
The Group has established rules to unbundle non-distinct investment components. Generally, for relevant contracts, the
Group determines the non-distinct investment components based on cash surrender values and similar contractual terms.
4.1.2 Investment components
The Group identifies portfolios of insurance contracts as contracts subject to similar risks and are managed together. The
Group makes judgments about whether it has similar risk factors and management methods.
4.1.1 Portfolios of contracts
Leasehold improvements
4.1 Insurance contracts
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates and
judgements are continually evaluated and based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. The Group exercises significant judgement in making
appropriate assumptions.
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 167
Dividend distribution to the Company's equity holders is recognised as a liability in the Group's consolidated financial
statements in the year in which the dividends are approved by the equity holders of the Company.
3.12 Dividend distribution
A contingent liability is not recognised in the consolidated statement of financial position but is disclosed in the notes to the
consolidated financial statements. When a change in the probability of an outflow occurs so that such outflow is probable
and can be reliably measured, it will then be recognised as a provision.
A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by
the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It
can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of
economic resources will be required, or the amount of obligation cannot be measured reliably.
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Areas susceptible to changes in critical estimates and judgements, which affect the carrying amount of assets and liabilities,
are set out below. It is possible that actual results may be different from the estimates and judgements referred to below.
The actual result may have significant differences in accordance with changes in accounting estimates and professional
judgement.
Office equipment, furniture and fixtures
Motor vehicles
4.1.3 Determination of coverage unit
Depreciation is computed on a straight-line basis to write down the cost of each asset to its residual value over its estimated
useful lives as follows:
Annual Report 2023 | Financial Report 159
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.8 Insurance Contracts (continued)
2.8.10 Presentation (continued)
(ii) Insurance service expenses
The Group recognises the increase in the liabilities for incurred claims because of claims and expenses incurred in the
period and any subsequent changes in fulfilment cash flows relating to incurred claims and incurred expenses as insurance
service expenses.
Insurance service expenses include the following:
(a) claims and other related expenses incurred in the period, excluding investment components;
(b) amortisation of insurance acquisition cash flows;
(c) changes that relate to past service – changes in the fulfilment cash flow relating to the liabilities for incurred claims;
and
(d) changes that relate to future service - onerous contract losses or reversals of those losses.
For contracts not measured using the premium allocation approach, amortisation of insurance acquisition cash flows is
reflected in insurance service expenses in the same amount as insurance acquisition cash flows recovery reflected within
insurance revenue. For contracts measured using the premium allocation approach, amortisation of insurance acquisition
cash flows is based on the passage of time.
(iii) Allocation of reinsurance premiums paid
The Group recognises the reduction in the asset for remaining coverage because of insurance contract services received
from the reinsurer in the period as allocation of reinsurance premiums paid. The Group treats amounts from the reinsurer
that it expects to receive that are not contingent on claims of the underlying contracts as the reduction to the allocation
of reinsurance premiums paid. Allocation of reinsurance premiums paid excludes any investment components of the
reinsurance contracts held.
(iv) Amounts recovered from reinsurers
The increase in the carrying amount of the incurred claims for reinsurance contracts held incurred due to the incurred claims
and other directly attributable expenses in the current period, as well as the subsequent changes in the related fulfilment
cash flows, are recognised as the amounts recovered from reinsurers. The Group does not include the investment component
of the reinsurance contracts held when recognising the amounts recovered from reinsurers.
(v) Financial changes in insurance contracts
Insurance finance income or expenses comprises the change in the carrying amount of the group of insurance contract
liabilities and reinsurance contract assets arising from:
(a) the effect of the time value of money and changes in the time value of money;
For groups of insurance contracts measured using the premium allocation approach, the Group recognises insurance revenue
based on the passage of time over the coverage period of a group of contracts.
(b) the effect of financial risk and changes in financial risk.
(b) The Group determines insurance service expenses related to insurance acquisition cash flows in a systematic way on
the basis of the passage of time. The Group recognises the same amount as insurance revenue to reflect the portion
of the premiums that relate to recovering those cash flows.
•
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
Buildings
2.8 Insurance Contracts (continued)
2.8.10 Presentation
(i) Insurance revenue
The Group recognises the reduction in the liabilities for remaining coverage because of services provided in the period as
insurance revenue.
The amount of insurance revenue recognised in the reporting period depicts the transfer of promised services at an amount
that reflects the portion of consideration that the Group expects to be entitled to in exchange for those services.
For contracts not measured using the premium allocation approach, insurance revenue includes the following:
(a) Amounts related to the changes in the liabilities for remaining coverage;
•
•
claims and other related expenses incurred in the period measured at the amounts expected at the beginning of the
period, excluding:
-
- amounts allocated to the loss component;
- repayments of investment components;
- amounts that relate to transaction-based taxes collected on behalf of third parties; and
- insurance acquisition cash flows.
the changes in the risk adjustment for non-financial risk, excluding:
- changes included in insurance finance income or expenses;
- changes that relate to future service that adjust the contractual service margin; and
- amounts allocated to the loss component.
• other.
160 Annual Report 2023 | Financial Report
amounts of the contractual service margin amortised; and
For the year ended 31 December 2023
For contracts with direct participation features, the Group determines the contractual service margin or loss component of
the liabilities for remaining coverage at the transition date as:
(a) based on the amount that fair value of the underlying items minus the fulfilment cash flows at transition date and
appropriately adjusted the relevant cash flow and non-financial risk adjustment before transition date;
(b) if (a) result in a contractual service margin, the amount of the contractual service margin recognised in profit or loss
before transition date was determined by comparing the remaining coverage units at transition date with the coverage
units provided under the group of contracts before that date;
(c) if (a) result in a loss component, the Group adjust the loss component to nil and increase the liabilities for remaining
coverage excluding the loss component by the same amount.
(ii) Fair value approach
For the groups of contracts that are measured using the fair value approach, the Group determines the contractual service
margin or loss component of the liabilities for remaining coverage at transition date as the difference between the fair value
of a group of contracts at that date and the fulfilment cash flows at that date.
The fair value of the group of contracts is calculated using the present value method, based on reasonable and supportable
information available at the transition date.
3 SUMMARY OF OTHER ACCOUNTING POLICIES
3.1 Segment reporting
3.2 Foreign currency translation
Contracts with direct participation features
The Company's functional currency is RMB. Each entity in the Group determines its own functional currency and items
included in the financial statements of each entity are measured using that functional currency. The reporting currency of
the consolidated financial statements of the Group is RMB. Transactions in foreign currencies are translated at the exchange
rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at
the exchange rates ruling at the end of the reporting period. Exchange differences arising in these cases are recognised
in net profit.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
3 SUMMARY OF OTHER ACCOUNTING POLICIES (continued)
3.3 Derivative instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
re-measured at their fair value. The resulting gain or loss of derivative financial instruments is recognised in net profit. All
derivatives are carried as financial assets when fair value is positive and as financial liabilities when fair value is negative.
Embedded derivatives that are not closely related to their host contract (which is not an asset regulated by the Financial
Instruments Standard) and that meet the definition of a derivative are separated and fair valued through profit or loss.
3.4 Property, plant and equipment
Property, plant and equipment, are stated at historical costs less accumulated depreciation and any accumulated impairment
losses, except for those acquired prior to 30 June 2003, which are stated at deemed cost less accumulated depreciation
and any accumulated impairment losses.
Notes to the Consolidated Financial Statements (continued)
The historical costs of property, plant and equipment comprise its purchase price, including import duties and non-refundable
purchase taxes, and any directly attributable costs of bringing the asset to its working condition and location for its intended
use. Expenditure incurred after terms of property, plant and equipment have been put into operation, such as repairs and
maintenance, is normally charged to the statement of comprehensive income in the period in which it is incurred. In situations
where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount
of the assets as a replacement. Where significant parts of property, plant and equipment are required to be replaced at
intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.
Depreciation
162 Annual Report 2023 | Financial Report
(i) Modified retrospective approach (continued)
The Group's operating segments are presented in a manner consistent with the internal management reporting provided
to the operating decision maker - president office for deciding how to allocate resources and for assessing performance.
Operating segment refers to the segment within the Group that satisfies the following conditions: i) the segment generates
income and incurs costs from daily operating activities; ii) management evaluates the operating results of the segment to
make resource allocation decision and to evaluate the business performance; and iii) the Group can obtain relevant financial
information of the segment, including financial condition, operating results, cash flows and other financial performance
indicators.
2.8 Insurance Contracts (continued)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.8 Insurance Contracts (continued)
2.8.10 Presentation (continued)
2.8.12 Transition date approach (continued)
(v) Financial changes in insurance contracts (continued)
The Group disaggregates the financial changes in insurance contracts into insurance finance income or expenses from insurance
contracts issued reinsurance finance income or expenses from reinsurance contracts held and other comprehensive income.
For the contracts not measured using the variable fee approach, the changes in carrying amount of insurance contract
liabilities arising from the financial risk changing, such as discount rate, are recognised in other comprehensive income; For
the contracts measured using the variable fee approach, insurance finance income or expenses equal to the amounts that
can eliminate accounting mismatches arising from profit or loss from underlying items, and the remainders are recognised
in other comprehensive income.
For the treatment result of accounting estimates for insurance contracts and reinsurance contracts held made in interim
financial statements, the Group has elected to adjust it in subsequent interim periods or in the annual reporting period.
2.8.12 Transition date approach
As at 1 January 2022, the Group applied IFRS 17 retroactively. When it was impracticable to use the full retrospective
approach, the modified retrospective approach or the fair value approach were adopted by the Group. In accordance with
IFRS 17, the comparative financial statements of the Group have been restated.
(i) Modified retrospective approach
2.8.11 The effect of accounting estimates made in interim financial statements
For contracts without direct participation features, the Group determines the contractual service margin or loss component
of the liabilities for remaining coverage at the transition date as:
(a) the Group estimates the future cash flows at the date of initial recognition of a group of insurance contracts as the
amount of the future cash flows at the transition date, adjusted by the cash flows that occurred between the date of
initial recognition of a group of insurance contracts and the transition date;
(b) the risk adjustment for non-financial risk on initial recognition was determined by adjusting the amount at transition date
or earlier date (if applicable) for the expected release of risk before transition date. The expected release of risk was
determined with reference to the release of risk for similar insurance contracts that the Group issued at transition date;
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
(c) When the Group recognises contractual service margin at initial recognition, interest accreted on the carrying amount
of the contractual service margin during the period, measured at the discount rates determined on initial recognition.
The amount of the contractual service margin recognised in profit or loss before transition date was determined by
comparing the remaining coverage units at transition date with the coverage units provided under the group of contracts
before that date; and
(d) When the Group recognises the loss component at initial recognition, the amount allocated to the loss component before
transition date is determined on a systematic and rational basis.
Annual Report 2023 | Financial Report 161
Contracts without direct participation features
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
The sensitivity analysis for interest rate risk illustrates how changes in interest income, the fair value of future cash flows of
a financial instrument, insurance contract liabilities and other items will fluctuate because of changes in market interest rates.
As at 31 December 2023, if market interest rates were 50 basis points higher or lower with all other variables held constant,
profit before income tax for the year would have been RMB6,026 million or RMB14,179 million (as at 31 December 2022:
RMB8,633 million or RMB15,191 million) higher or lower, respectively, mainly as a result of higher or lower interest
income on floating rate cash and cash equivalents, term deposits, statutory deposits-restricted and debt investments and
the fair value gains or losses on debt investments at fair value through profit or loss and changes in insurance contract
liabilities. Other comprehensive income before income tax would have been RMB9,899 million or RMB20,803 million (as
at 31 December 2022: RMB126,190 million or RMB137,367 million) higher or lower, respectively, mainly as a result of the
fair value gains or losses on investment in debt instruments at fair value through other comprehensive income, and the
change of insurance contract liabilities.
176 Annual Report 2023 | Financial Report
The Group's activities are exposed to a variety of financial risks. The key financial risk is that proceeds from the sale of
financial assets will not be sufficient to fund the obligations arising from the Group's insurance and investment contracts.
The most important components of financial risk are market risk, credit risk and liquidity risk.
The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the financial performance of the Group. Risk management is carried out by a designated
department under policies approved by management. The responsible department identifies, evaluates and manages
financial risks in close cooperation with the Group's operating units. The Group provides written principles for overall risk
management, as well as written policies covering specific areas, such as managing market risk, credit risk, and liquidity risk.
The Group manages financial risk by holding an appropriately diversified investment portfolio as permitted by laws and
regulations designed to reduce the risk of concentration in any one specific industry or issuer. The structure of the investment
portfolio held by the Group is disclosed in Note 11.
(i) Interest rate risk
5.2.1 Market risk
Interest rate risk refers to the risk that the value of financial instruments and the measurement results of insurance
contracts will fluctuate due to changes in market interest rates. The Group's financial assets are principally comprised of
term deposits, debt investments which are exposed to interest rate risk. Changes in the level of interest rates could have
a significant impact on the Group's investment return, as well as an impact on the measurement of the Group's insurance
contracts and reinsurance contracts held.
The Group manages interest rate risk through adjustments to portfolio structure and duration, and, to the extent possible,
by monitoring the mean duration of its assets and liabilities.
5.2 Financial risk
The sensitivity analyses below are based on a change in an assumption while holding all other assumptions constant. In
practice this is unlikely to occur, and changes in some of the assumptions may be correlated, such as change in interest
rate and change in market price.
5 RISK MANAGEMENT (continued)
7
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 175
24,821
1,773
Total liabilities for incurred claims
risk adjustment for non-financial
risk and discounting, etc.
Effect of indirect claims expenses,
before 2019
Total liabilities - Accident years
21,417
Notes to the Consolidated Financial Statements (continued)
23,041
For the year ended 31 December 2023
For the year ended 31 December 2023
20,928
5.2 Financial risk (continued)
64,840
1,173
1,074
1,426
541
40,871
RMB million
Total
Others
EUR
GB pound
US dollar HK dollar
5 RISK MANAGEMENT (continued)
Investment in equity instruments at fair
Financial assets at fair value through profit
Equity investments
Financial assets
As at 31 December 2023
The following table summarises primary financial assets and financial liabilities denominated in currencies other than RMB
as at 31 December 2023 and 31 December 2022, expressed in RMB equivalent:
Currency risk is the volatility of fair value or future cash flows of financial instruments resulted from changes in foreign
currency exchange rates. The Group's currency risk exposure mainly arises from cash and cash equivalents, term deposits,
debt investments, equity investments, interest-bearing loans and other borrowings denominated in currencies other than
the functional currency, such as US dollar, HK dollar, GB pound and EUR.
(iii) Currency risk
As at 31 December 2023, if the prices of all the Group's equity investments had increased or decreased by 10% with all
other variables held constant, profit before income tax for the year would have been RMB68,496 million or RMB68,842
million (as at 31 December 2022: RMB4,047 million or RMB4,618 million) higher or lower, respectively, mainly as a result of
the fair value gains or losses on equity investments at fair value through profit or loss and the change of insurance contract
liabilities. Other comprehensive income before income tax would have been RMB1,775 million or RMB1,795 million lower
or higher (as at 31 December 2022: RMB43,381 million or RMB43,857 million higher or lower), respectively, mainly as a
result of fair value gains or losses on investment in equity instruments at fair value through other comprehensive income,
and the change of insurance contract liabilities.
The Group manages price risk by holding an appropriately diversified investment portfolio as permitted by laws and regulations
designed to reduce the risk of price concentration in any one specific industry or issuer.
Price risk arises mainly from the volatility of prices of equity investments held by the Group. Prices of equity investments
are determined by market forces. The Group is subject to increased price risk mainly because China's capital markets are
relatively volatile. The Group's insurance contracts using the variable fee approach are exposed to price risk.
(ii) Price risk
5.2.1 Market risk (continued)
or loss
320
before 2019
29
2023
RMB million
2022
2021
2020
2019
Contracts measured using the premium allocation approach (accident year)
The following table indicates the claim development for contracts measured using the premium allocation approach with
taking into account the impacts of ceded business:
26,721
2,610
Total liabilities for incurred claims
risk and discounting, etc.
Total
risk adjustment for non-financial
7
Total liabilities - Accident years
24,104
21,973
1,659
339
104
29
2019 to 2023
Total liabilities - Accident years from
(253,961)
value through other comprehensive
income
Effect of indirect claims expenses,
Estimated accumulated undiscounted
claims expenses (after reinsurance)
Year end
2019 to 2023
Total liabilities - Accident years from
(248,363)
(39,479)
(51,521)
(55,075)
(51,132)
(51,156)
Accumulated claims expenses paid
51,185
4 years later
51,234
51,570
3 years later
55,395
51,938
51,540
2 years later
60,896
53,416
52,694
56,125
52,405
51,611
1 year later
56,651
52,774
50,012
102
8,886
28,318
Debt investments
2,176
2,176
Term deposits
314
3
7
8
296
Securities at fair value through profit or loss
6,692
6,692
Available-for-sale securities
Cash and cash equivalents
1,278
Loans
206
206
Held-to-maturity securities
Debt securities
7,595
874
1,212
394
614
4,501
Securities at fair value through profit or loss
1,278
68,733
2,849
62
178 Annual Report 2023 | Financial Report
Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. The Group manages credit
risk through in-house research and analysis of the Chinese economy and the underlying obligors and transaction structures.
Where appropriate, the Group obtains collateral in the form of rights to cash, securities, property, equipment and so on to
lower the credit risk.
Credit risk is the risk that one party of a financial transaction or the issuer of a financial instrument will fail to discharge its
obligation and cause another party to incur a financial loss. Because the Group's investment portfolio is restricted to the
types of investments as permitted by the National Financial Regulatory Administration ("NFRA") and a significant portion
of the portfolio is in government bonds, government agency bonds, corporate bonds with higher credit rating and term
deposits with the state-owned commercial banks, the Group's overall exposure to credit risk is relatively low.
As at 31 December 2023, if RMB had strengthened or weakened by 10% against US dollar, HK dollar, GB pound, EUR
and other foreign currencies, with all other variables held constant, profit before income tax for the year would have been
RMB7,738 million (as at 31 December 2022: RMB927million) lower or higher, respectively, mainly as a result of foreign
exchange losses or gains on translation of US dollar, HK dollar, GB pound, EUR and other foreign currencies denominated
financial assets and financial liabilities other than equity instruments at fair value through other comprehensive income
included in the table above. Other comprehensive income before tax recognised in equity instruments at fair value through
other comprehensive income would have been RMB889 million (31 December 2022: RMB6,820 million) lower or higher due
to the foreign exchange. The actual exchange losses in 2023 were RMB380 million (2022: exchange losses in RMB69 million).
5.2.2 Credit risk
12,255
12,255
3,192
2,307
3,192
2,307
6,756
Total
62
6,756
Financial liabilities
90,256
884
1,355
610
59,089
(40,438)
Total
3,262
7
136
208
Interest-bearing loans and other borrowings
58,413
10,320
Available-for-sale securities
614
49,856
33,174
Total
2,830
2
102
52
99
2,575
Cash and cash equivalents
2,850
1,542
2,850
189
189
amortised cost
Investment in debt instruments at
237
237
through other comprehensive income
Investment in debt instruments at fair value
- 21 14 5 6,43
6,395
or loss
Financial assets at fair value through profit
Term deposits
1,081
86,267
Financial liabilities
Equity securities
Financial assets
RMB million
Total
Others
EUR
GB pound
HK dollar
US dollar
As at 31 December 2022
(iii) Currency risk (continued)
5.2.1 Market risk (continued)
5.2 Financial risk (continued)
5 RISK MANAGEMENT (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 177
12,857
12,857
3,378
2,495
3,378
2,495
6,984
Total
6,984
Interest-bearing loans and other borrowings
8,886
(53,220)
5,540
(51,939)
Fu Lu Shuang Xi Participating Endowment (c)
3,053
2.67%
Sheng Shi Zun Xiang Annuity (d)
7,157
6.25%
0.02%
5.78%
Mei Man Yi Sheng Annuity (e)
Others (f)
2,854
94,723
82.79%
114,430
100.00%
1111
Total
2.49%
6,618
contracts (i)
1.39%
19
0.00%
14
0.00%
509,867
Xin Xiang Wei Lai Participating Endowment (a)
Kang Ning Whole Life (b)
90.26%
94.43%
564,877
100.00%
540,926
100.00%
Insurance benefits of life insurance
510,789
5,453
3,800
6.27%
4.37%
0.58%
2,616
74,594
4
0.00%
Kang Ning Whole Life (b)
392,552
9.24%
386,218
0.68%
10.06%
184,863
4.35%
181,523
4.73%
Sheng Shi Zun Xiang Annuity (d)
48,176
Fu Lu Shuang Xi Participating Endowment (c)
28,876
Xin Xiang Wei Lai Participating Endowment (a)
Liabilities of life insurance contracts (i)
3.01%
85.77%
86,964
100.00%
Annual Report 2023 | Financial Report 171
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
5.1 Insurance risk (continued)
5.1.2 Concentration of insurance risks (continued)
As at 31 December 2023
As at 31 December 2022
RMB million
%
RMB million
%
7,492
1.13%
0.01%
1.73%
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
4.4 Income tax
The Group is subject to income tax in numerous jurisdictions. During the normal course of business, certain transactions
and activities for which the ultimate tax determination is uncertain, the Group needs to exercise significant judgement when
determining the income tax. If the final settlement results of the tax matters are different from the amounts recorded,
these differences will impact the final income tax expense and deferred tax for the period.
4.5 Determination of control over investee
Annual Report 2023 | Financial Report 169
The Group applies its judgement to determine whether the control indicators set out in Note 2.2 indicate that the Group
controls structured entities such as funds and asset management products.
5 RISK MANAGEMENT
Risk management is carried out by the Company's Risk Management Committee under policies approved by the Company's
Board of Directors.
The Group issues contracts that transfer insurance risk or financial risk or both. This section summarises these risks and
the way the Group manages them.
5.1 Insurance risk
5.1.1 Types of insurance risks
The risk under any one insurance contract is the possibility that an insured event occurs and the uncertainty about the
amount of the resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable.
For a portfolio of insurance contracts where the theory of probability is applied to the pricing and provisioning, the main
risk to the Group is that actual claims are paid in excess of the carrying value of the insured liability. This occurs when the
frequency or severity of claims and benefits exceeds the estimates. Insurance events are random, and the actual number
of claims and the amount of benefits paid will vary each year from estimates established using statistical techniques.
The Group issues certain structured entities (e. g. funds and asset management products), and acts as a manager for such
entities according to the contracts. In addition, the Group may be exposed to variability of returns as a result of holding
shares of the structured entities. Determining whether the Group controls such structured entities usually focuses on the
assessment of the aggregate economic interests of the Group in the entities (including any carried interests and expected
management fees) and the decision-making rights on the entity. As at 31 December 2023, the Group has consolidated
some funds issued and managed by the Company's subsidiary, China Life AMP Asset Management Company ("CL AMP"),
some debt investment schemes and asset management products issued and managed by the Company's subsidiary, China
Life Asset Management Company Limited ("AMC") and some trust schemes and debt investment schemes issued and
managed by third parties in the consolidated financial statements. Please refer to Note 33(b) for the details.
The business of the Group mainly comprises life insurance contracts and non-life insurance contracts. For life insurance
contracts, the most significant factor is constant improvement in medical and social conditions that would help prolong
life span. Insurance risk is also affected by policyholders' rights to terminate contracts, reduce premiums, refuse to pay
premiums or exercise annuity conversion rights. Thus, insurance risk is also subject to policyholders' behaviours and
decisions. For non-life insurance contracts, the significant factors that could increase the overall frequency of claims are
epidemics, profound changes in lifestyles, natural disasters, and accidents resulting in earlier or more claims than expected.
The Group manages insurance risk through underwriting strategies, reinsurance arrangements and claims handling.
The Group assesses whether there are any indicators of impairment for investments in associates and joint ventures at
the end of each reporting period. Investments in associates and joint ventures are tested for impairment when there are
indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value of investments
in associates and joint ventures exceeds its recoverable amount, which is the higher of its fair value less costs of disposal
and its value in use. The calculation of the fair value less costs of disposal is based on available data from binding sales
transactions in an arm's length transaction of similar assets or observable market prices less incremental costs for disposing
of investments in associates and joint ventures. When value in use calculations are undertaken, the Group must estimate
the expected future cash flows from investments in associates and joint ventures and choose a suitable discount rate in
order to calculate the present value of those cash flows.
For the description of valuation techniques, please refer to Note 5.4. Using different valuation techniques and parameter
assumptions may lead to some differences of fair value estimations.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
4.2 Financial instruments (continued)
4.2.1 Classification of financial assets (continued)
The Group's assessment of the business model is performed on a financial asset portfolio basis, and determined on the basis
of scenarios which are reasonably expected to occur, taking into account: how cash flows were realised in the past, how the
performance are evaluated and reported to the entity's key management personnel; the risks that affect the performance
and the way in which those risks are assessed and managed; and how managers of the business are compensated, etc.
4.3 Impairment of investments in associates and joint ventures
When assessing whether contractual cash flow characteristics of financial assets are consistent with basic lending
arrangement, key judgements made by the Group include: the possibility of changes in timing or amount of the principal
during the duration due to reasons such as early repayment; whether interest only includes considerations for time value
of money, credit risks, other basic lending risks, costs and profits. For example, whether the prepayment amount only
reflects the principal outstanding and the interest on the principal outstanding, as well as the reasonable compensation for
the early termination of the contract.
The Group calculates ECL through default risk exposure and ECL rate, and determines the ECL rate based on default
probability and default loss rate. In determining the ECL rate, the Group uses data such as internal historical credit loss
experience, and adjusts historical data based on current conditions and forward-looking information.
4.2.3 Fair value of financial instruments
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. When the fair values of financial assets and liabilities cannot be measured
based on quoted prices in active markets, their fair value is measured using valuation techniques which require a degree
of judgements. The methods and assumptions used by the Group in measuring the fair value of financial instruments are
as follows:
Debt investments: fair values are generally based upon current bid prices. Where current bid prices are not readily available,
fair values are estimated using either prices observed in recent transactions, values obtained from current bid prices of
comparable investments or valuation techniques when the market is not active.
Equity investments: fair values are generally based upon current bid prices. Where current bid prices are not readily available,
fair values are estimated using either prices observed in recent transactions or commonly used market pricing models.
Financial assets purchased under agreements to resell, term deposits, interest-bearing loans and other borrowings, and
financial assets sold under agreements to repurchase: the carrying amounts of these assets in the statement of financial
position approximate fair value.
4.2.2 Measurement of ECL
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
Mei Man Yi Sheng Annuity (e)
Others (f)
Total
38,632
6.84%
5
Sheng Shi Zun Xiang Annuity (d)
0.00%
1.99%
13,247
2.45%
5,065
0.90%
9,379
11,233
Fu Lu Shuang Xi Participating Endowment (c)
Xin Xiang Wei Lai Participating Endowment (a)
Kang Ning Whole Life (b)
Premiums of life insurance contracts (i)
5.1 Insurance risk (continued)
5.1.1 Types of insurance risks (continued)
Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability of the expected
outcome will be. In addition, a more diversified portfolio is less likely to be affected across the board by a change in any
subset of the portfolio. The Group has developed its insurance underwriting strategy to diversify the types of insurance
risks accepted and within each of these categories to achieve a sufficiently large population to reduce the variability of the
expected outcome.
The Group manages insurance risks through two types of reinsurance agreements, ceding on a quota share basis or a
surplus basis, to cover insurance liability risk. Reinsurance contracts cover almost all products, which contain risk liabilities.
The products reinsured include: life insurance, accident and health insurance or death, disability, accident, illness and
assistance in terms of product category or function, respectively. These reinsurance agreements spread insured risk to a
certain extent and reduce the effect of potential losses to the Group. However, the Group's direct insurance liabilities to
the policyholder are not eliminated because of the credit risk associated with the failure of reinsurance companies to fulfil
their responsibilities.
5.1.2 Concentration of insurance risks
Currently, the Group's insurance operation is mainly located in the PRC. There are no significant differences among the
regions where the Group underwrites insurance contracts.
The major products of the Group's life insurance contracts are listed below:
Product name
For the year ended 31 December
2023
2022
RMB million
%
RMB million
%
61
54,528
1.42%
Mei Man Yi Sheng Annuity (e)
Others (f)
(5,562)
(5,340)
(918)
(672)
(3,508)
(3,315)
(2,322)
Sensitivity analysis of contracts measured using the premium allocation approach
If holding all other variables constant, the Group considers the following expected effect of changes in claim ratios assumption
on consolidated profit before income tax for the year.
Without considering the ceded business, holding all other variables constant, if claim ratios are 100 basis points higher or
lower than the current assumption, the consolidated pre-tax profit is expected to be RMB249 million (as at 31 December
2022: RMB266 million) lower or higher, respectively; With consideration of ceded business, holding all other variables
constant, if claim ratios are 100 basis points higher or lower than the current assumption, the consolidated pre-tax profit is
expected to be RMB238 million (as at 31 December 2022: RMB252 million) lower or higher, respectively.
174 Annual Report 2023 Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
Changes in factors such as the amount of contractual claims measured using the premium allocation approach have the
potential to affect changes in the assumed level of the reserve for outstanding claims, which in turn affects the simultaneous
changes in the liabilities for incurred claims.
5.1 Insurance risk (continued)
(2,606)
Lapse rate
4,920
3,563
3,734
2,388
Lapse rate
Increase by 10%
Decrease by 10%
2,499
5,505
5,294
762
529
3,468
3,285
2,229
5.1.3 Sensitivity analysis (continued)
Sensitivity analysis of contracts measured using the premium allocation approach (continued)
The following table indicates the claim development for contracts measured using the premium allocation approach without
taking into account the impacts of ceded business:
52,248
53,202
57,642
54,879
52,197
52,769
62,411
56,890
52,239
52,043
4 years later
51,842
Accumulated claims expenses paid
(51,813)
3 years later
55,256
57,727
53,369
Contracts measured using the premium allocation approach (accident year)
Estimated accumulated undiscounted
claims expenses (before
reinsurance)
2019
2020
2021
2022
RMB million
2023
Total
Year end
1 year later
2 years later
50,564
3,471
5,299
3,651
Decrease by 10%
5.1 Insurance risk (continued)
5.1.2 Concentration of insurance risks (continued)
(c) Fu Lu Shuang Xi Participating Endowment is a participating insurance contract with the options for regular premium
of 3 years, 5 years and 10 years paid annually, semi-annually, quarterly or monthly. Its insured period extends from the
effective date of the insurance contract to the corresponding date of the year when the policyholders turn 75-year-old.
This product is applicable to healthy policyholders between 30-day-old and 60-year-old. Starting from the effective date
of the insurance contract, the survival benefit is paid every two policy years on the corresponding date at 10% of the
basic sum insured. If death incurred over insured period, the contract terminates and death benefit is paid at death
benefit amount. If the policyholders live to the annual corresponding effective date of the expiration period, the contract
terminates and maturity benefit is paid at maturity benefit amount.
(d) Sheng Shi Zun Xiang Annuity is an annuity insurance contract with the options for regular premium of 3 years or 5 years
paid annually or monthly. The insurance period is 20 years. This product is applicable to healthy policyholders between
28-day-old and 70-year-old. If the insured survives on the first and second annual effective dates after the contract has
been in force for five policy years, a special survival benefit shall be paid according to the following provisions: for a
premium payment period of three years, a special survival benefit shall be paid according to 48% and 12% of the annual
premium determined by the contract's basic insurance amount; for a premium payment period of five years, a special
survival benefit shall be paid according to 60% and 40% of the annual premium determined by the contract's basic
insurance amount. If the insured survives until the effective date of the contract, the annuity shall be paid at the basic
insurance amount every year from the first effective date of the contract after the contract has been in force for seven
policy years until the expiration of the insurance period of the contract. If the insured survives until the effective date
of the year in which the insurance period of the contract expires, the contract shall terminate, and the maturity benefit
shall be paid according to the premiums paid (excluding interest). If the insured dies during the insurance period, the
contract shall terminate, and the death benefit shall be paid according to the greater value of the premiums paid at the
time of the insured's death (excluding interest) minus the sum of the special survival benefit paid and the cash value.
(e) Mei Man Yi Sheng Annuity is a participating annuity insurance contract with annual premium payment method and four
types of premium payment periods: 3 years, 5 years, 8 years and 12 years. The insurance period is from the effective
date of the contract to the effective date of the year when the insured reaches the age of 75. Any person between
30 days and 60 years old and in good health can be the insured person. From the effective date of the contract to the
date corresponding to the effective date of the year when the insured reaches the age of 74. If the insured is alive, the
annuity of care will be paid every year on the effective date of the contract according to the following provisions: The
annuity of care is the basic insurance amount multiplied by the period of payment (number of years) multiplied by 1%.
The contract shall be terminated on the effective date of the year in which the insured survives until he reaches the age
of 75, and the expiration benefit shall be paid according to the following provisions: The expiration benefit is the basic
insurance amount multiplied by the payment period (number of years). If the insured dies due to illness within 2 years
from the effective (or re-effective) date of the contract, the death benefit shall be paid according to the premium paid
(without interest), and the contract shall terminate. If the insured dies due to accidental injury or dies due to illness 2
years after the effective (or re-effective) date of the contract, the death benefits shall be paid in accordance with the
following provisions and the contract shall be terminated. The death benefit is the basic insurance amount multiplied
by the number of years paid at the time of death multiplied by 110%.
(f) Others consist of various life insurance contracts with no significant concentration.
Annual Report 2023 | Financial Report 173
5 RISK MANAGEMENT (continued)
Notes to the Consolidated Financial Statements (continued)
5 RISK MANAGEMENT (continued)
5.1 Insurance risk (continued)
5.1.3 Sensitivity analysis
Sensitivity analysis of contracts not measured using the premium allocation approach
Significant assumptions involved in calculation of insurance contract liabilities include mortality, morbidity, lapse rate and
discount rate, etc.
If holding all other variables constant, the Group considers the expected effect of changes in assumptions on mortality,
morbidity and lapse rate on consolidated profit before income tax and consolidated other comprehensive income before
income tax for the year, and considers the effect of risk mitigation on insurance contracts and reinsurance contracts held,
as follows. For effect of changes in assumption on discount rate, please refer to Note 5.2.1(i).
For the year ended 31 December 2023
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
172 Annual Report 2023 | Financial Report
154,698
3.64%
158,469
4.13%
Total
3,440,644
4,249,809
80.96%
3,060,157
79.66%
100.00%
3,840,899
100.00%
(i) The premiums, the current amount of insurance benefits and the ending balance of liabilities are data under the Chinese
Accounting Standards for Business Enterprises ("ASBE").
(a) Xin Xiang Wei Lai Participating Endowment is a participating endowment insurance contract. It provides two options
with regards to payment of premiums, i.e., one-off payment or regular payments in 3 years or 5 years. The insurance
period is divided into 8 years and 10 years. This product is applicable to healthy policyholders between 28-day-old
and 72-year-old. From the first effective date after the fifth policy year to the expiration period, if the insured lives to
the annual corresponding effective date, a survival benefit shall be paid according to the following provisions: If the
payment is made in the form of single premium, 20% of the annual premium as determined by the contract's basic
insurance amount shall be paid. If the payment period is three years, 60% of the annual premium as determined by the
contract's basic insurance amount shall be paid. If the payment period is five years, 100% of the annual premium paid
as determined by the contract's basic insurance amount shall be paid. If the insured lives to the annual corresponding
effective date of the expiration period, the contract shall terminate, and the maturity benefit shall be paid at the basic
sum insured. If the insured dies from the effective date of the contract to the effective date of the year in which the
insured reaches the age of 18, the death benefit shall be paid at the greater value of the insurance premium (excluding
interest) and cash value paid by the insured at the time of death. If the insured dies on the effective date of the year
in which the insured reaches the age of 18, the contract shall terminate, and the death benefit shall be paid according
to the following provisions: if the insured dies before the effective date of the year in which the insured reaches the
age of 41, the death benefit shall be paid at 160% of the insurance premium (excluding interest) paid at the time of the
insured's death; from the effective date of the year in which the insured reaches the age of 41 to the effective date
of the year in which the insured dies before the effective date of the year in which the insured reaches the age of 61,
the death benefit shall be paid at 140% of the insurance premium (excluding interest) paid at the time of the insured's
death; the death benefit shall be paid at 120% of the insurance premium (excluding interest) paid at the time of the
insured's death on and after the effective date of the year in which the insured reaches the age of 61.
(b) Kang Ning Whole Life is a whole life insurance contract with the options for single premium or regular premium of 10
years or 20 years and the payment methods of insurance are divided into single payment, annual payment, and semi-
annual payment. This product is applicable to healthy policyholders under 70-year-old. The critical illness benefit is paid
at 200% of the basic sum insured. If the critical illness benefits are paid within the payment period, the insurance
premium of each subsequent period shall be exempted, and the contract shall continue to be valid from the date of the
payment of the critical illness benefits. Both death and disability benefits are paid at 300% of the basic sum insured
less any critical illness benefits paid.
For the year ended 31 December
(56,551)
2023
Assumptions
reinsurance
RMB million
RMB million
Mortality/Morbidity rate
Increase by 10%
(5,407)
After
(3,556)
(3,184)
(4,773)
(3,436)
(3,509)
(2,219)
Mortality/Morbidity rate
(4,928)
Before
reinsurance
reinsurance
reinsurance
Changes in
assumptions
Effect on profit before
income tax
Effect on other comprehensive
income before income tax
Effect on profit before
Effect on other comprehensive
income tax
income before income tax
Before
After
reinsurance
reinsurance
Before
reinsurance
After
reinsurance
Before
After
2022
170 Annual Report 2023 | Financial Report
(13,878)
Later than 3
years but not
later than 5
years
5.2 Financial risk (continued)
5.2.3 Liquidity risk (continued)
As at 31 December 2022
Contractual and expected cash flows (undiscounted)
Without
maturity
Not later than
1 year
Later than 1
year but not
later than 3
years
Later than 3
years but not
later than 5
years
Later than 5
years
RMB million
Financial and insurance assets
Equity securities
890,926
Debt securities
264,690
467,372
422,088
Loans
The Group's debt securities investment mainly includes government bonds, government agency bonds, corporate bonds and
subordinated bonds. As at 31 December 2023, 99.9% (as at 31 December 2022: 99.9%) of the corporate bonds held by the
Group or the issuers of these corporate bonds had credit ratings of AA/A-2 or above. As at 31 December 2023,100% (as
at 31 December 2022: 100%) of the subordinated bonds held by the Group either had credit ratings of AA/A-2 or above, or
were issued by national commercial banks. The bonds issuers' credit ratings are assigned by a qualified appraisal institution
in the PRC and updated at each reporting date.
137,926
78,902
3,306,607
118,063
Term deposits
195,048
226,337
100,235
Statutory deposits - restricted
Reinsurance contract assets
5 RISK MANAGEMENT (continued)
4,063
For the year ended 31 December 2023
182 Annual Report 2023 | Financial Report
355,437
(24)
14,374
(7)
(317,979)
(6)
(8,454,552)
(54)
Financial assets sold under
agreements to repurchase
(217,237)
Financial liabilities at fair value
through profit or loss
(13,878)
Interest-bearing loans and other
borrowings
(13,259)
Bonds payable
(36,498)
Lease liabilities
(757)
(580)
Sub-total
(13,878)
87,662
Net cash inflow/(outflow)
1,085,723
874,057
13,787
826,711
(89)
(318,074)
309,829
(22)
(8,454,628)
(4,310,312)
Notes to the Consolidated Financial Statements (continued)
Reinsurance contract liabilities
988
2,988
(273,556)
(7,787,599)
(145)
(149,004)
(3,344)
(3,675)
(9,426)
(97)
(317)
(328)
(36,498)
(919)
(790)
(98)
(20)
(3,344)
887,582
153,125
(19,630)
(273,757)
(7,788,081)
1,173,091
816,271
332,233
(4,324,023)
The cash flows from various insurance contracts presented in the table above are the expected future net cash flows from
existing insurance policies, which consist primarily of cash flows from premiums, claims, expense payments and policy loans,
and do not take into account future net cash flows from new business. The excess cash inflows from matured financial
assets will be reinvested to cover any future liquidity exposures. The estimate is subject to assumptions including mortality,
morbidity, the lapse rate, and expense assumption, etc. Actual experience may differ from estimates.
As at 31 December 2023, the carrying amount of the Group's insurance contract liabilities was RMB4,859,175 million (as
at 31 December 2022: RMB4,266,947 million), while the amount that the policyholder can demand reimbursement at any
time was RMB3,795,388 million (as at 31 December 2022: RMB3,317,324 million).
Annual Report 2023 | Financial Report 183
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
27,090
(6)
4,604
8
Net cash inflow/(outflow)
1,718
3,047
39,388
Securities purchased under
agreements to resell
Accrued investment income
38,548
52,161
290
Cash and cash equivalents
127,594
Sub-total
890,926
1,019,966
835,901
605,990
3,464,058
Financial and insurance
liabilities
Insurance contract liabilities
Reinsurance contract liabilities
Securities sold under
agreements to repurchase
Financial liabilities at fair value
through profit or loss
Interest-bearing loans and other
borrowings
Bonds payable
Lease liabilities
Sub-total
307,043
Insurance contract liabilities
Financial and insurance liabilities
4,144,316
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
5.2 Financial risk (continued)
5.2.2 Credit risk (continued)
Criteria for judging significant changes in credit risk (continued)
Forward-looking information and management overlay
The determinations of 12 months and the lifetime ECL also incorporates forward-looking information. The Group has
performed historical data analysis and identified the key macroeconomic variables associated with credit risk and expected
credit losses for each portfolio, including gross domestic product, the amount of exports and the amount of fixed asset
investment completed, etc. The Group has developed macroeconomic forward looking adjustment model by establishing
a pool of macro-economic indicators, preparing data, filtering model factors, etc.
During the reporting period, the Group adjusted the predicted values of forward-looking economic indicators by synthesis of
available data and considered the possibility of each scenario to determine the final macroeconomic scenarios and weights
for measuring the relevant expected credit loss. The impact of these economic indicators on PD and LGD varies to different
businesses. The Group comprehensively considers internal and external data, statistical analysis to determine the relationship
between these economic indicators with PD and LGD. The Group evaluates and forecasts these economic indicators at least
annually, provides the best estimates for the future, and regularly evaluates the results. Similar to other economic forecasts,
the estimates of economic indicators have high inherent uncertainties, actual results may have significant difference with
estimates. The Group considered the estimates above represented the optimal estimation of possible outcomes.
In the year 2023, the Group updated the forward-looking parameters used in the measurement of ECL in response to
changes in the macroeconomic environment. The cumulative year-on-year growth rate of GDP is expected to range between
3.9% to 5.5% under the base, optimistic, and adverse scenarios for 2024. The optimistic and adverse scenarios are equally
weighted and the base scenario is more weighted in each scenario.
The following table presents the credit risk exposures of financial instruments under the scope of expected credit loss.
Carrying amount
Stage 1
Stage 2
Stage 3
RMB million
Cash and cash equivalents
149,305
Financial assets purchased under agreements to
resell
19,759
Term deposits
413,255
Statutory deposits
restricted
6,520
Investment in debt instruments at amortised
cost
211,349
--
Notes to the Consolidated Financial Statements (continued)
Investment in debt instruments at fair value
180 Annual Report 2023 | Financial Report
Purchase or originate a financial asset at a significant discount that reflects the fact that a credit loss has occurred.
As at 31 December 2023, 96.5% (as at 31 December 2022: 95.6%) of the Group's bank deposits are with the four largest
state-owned commercial banks, other national commercial banks and China Securities Depository and Clearing Corporation
Limited ("CSDCC") in the PRC. The main reinsurance contracts were entered into with state-owned reinsurance companies.
The Group believes these commercial banks, CSDCC and reinsurance companies have a high credit quality. As a result,
the Group concludes that the credit risk associated with term deposits, statutory deposits, cash and cash equivalents and
reinsurance contracts held has not caused a material impact on the Group's consolidated financial statements as at 31
December 2023 and 2022.
Measurement of ECL
The Group formulates the credit losses of investment in debt instruments at amortised cost, investment in debt financial
instruments at fair value through other comprehensive income, etc., using expected credit loss models according to IFRS
9 requirements. For other receivables, the Group applies the simplified approach to recognise a loss allowance based on
lifetime ECLs. The Group integrates factors such as asset type and market segment into a combination of items with similar
credit risk characteristics.
Parameters for measuring expected credit losses
The parameters and assumptions involved in ECL model are described below:
The Group considers the credit risk characteristics of different financial instruments when determining if there is significant
increase in credit risk. For financial instruments with or without significant increase in credit risk, 12-month or lifetime
expected credit losses are provided respectively. The expected credit loss is the result of discounting the product of EAD,
PD and LGD.
Annual Report 2023 | Financial Report 179
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
5.2 Financial risk (continued)
5.2.2 Credit risk (continued)
Measurement of ECL (continued)
Exposure at Default (EAD): EAD is based on the amounts the Group expects to be owed at the time of default, over the
next 12 months or over the remaining lifetime.
Probability of Default (PD): The PD represents the likelihood of a borrower defaulting on its financial obligation, either over
the next 12 months (12M PD), or over the remaining lifetime (Lifetime PD) of the obligation.
Loss Given Default (LGD): LGD represents the Group's expectation of the extent of loss on a defaulted exposure. LGD
varies by type of counterparty, type and seniority of claim and availability of collateral or other credit support.
Criteria for judging significant changes in credit risk
When considering the impairment stages for financial assets, the Group evaluates the credit risk at initial recognition and
whether there is any significant increase in credit risk for each reporting period. The Group considers various reasonable
supporting information to judge if there is significant increase in credit risk, including the forward-looking information.
The Group sets quantitative and qualitative criteria to judge whether the credit risk has significant increase in credit risk after
initial recognition. The judgement criteria mainly include the PD changes of the debtors, changes of credit risk categories and
other indicators of significant increase in credit risk. In the judgement of whether the financial instruments have significant
increase in credit risk after initial recognition, the Group considers the 30 days past due as one of criteria of significant
increase in credit risk, in accordance with the standard.
Definition of financial assets that are credit-impaired
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash
flows of that financial asset have occurred. On each reporting date, the Group mainly considers but is not limited to the
following factors when assessing whether the debtor has incurred credit impairment:
•
•
Significant financial difficulty of the issuer or counterparty; or
A breach of contract, such as a default or past due event; or
The lender gives the borrower concessions for economic or contractual reasons due to the debtor financial difficulties,
where such concessions are normally reluctant to be made by the borrower; or
It becoming probable that the borrower will enter bankruptcy or financial re-organisation; or
•
•
Disappearance of an active market for that financial asset because of financial difficulties; or
The credit impairment of financial assets may be caused by the joint effects of multiple events, and may not be caused
by separately identifiable events.
through other comprehensive income
Other assets
2,735,577
8,592
Without Not later than
maturity
1 year
Later than 1
year but not
later than 3
years
Later than 5
years
RMB million
Financial and insurance assets
Equity investments
Debt investments
Term deposits
Statutory deposits - restricted
Reinsurance contract assets
Financial assets purchased
under agreements to resell
Cash and cash equivalents
1,099,601 122 664719
422,558
664,719
188,436
144,278
499,102
120,329
4,111,034
706
5,590
1,128
2,799
5,461
3,011
33,282
19,800
149,305
Sub-total
1,099,601
786,395
812,924
627,903
As at 31 December 2023
Contractual and expected cash flows (undiscounted)
The following table shows the undiscounted cash flows of insurance assets and insurance liabilities, financial assets and
financial liabilities for contracts not using the premium allocation approach:
In the normal course of business, the Group attempts to match the maturity of financial assets to the maturity of insurance
and financial liabilities to reduce liquidity risk.
Total
37,241
3,573,006
8,592
Maximum
credit risk
exposure
149,305
19,759
413,255
6,520
211,349
77
2,744,169
37,318
77
Financial assets purchased under agreements to resell are pledged by counterparties' debt securities or term deposits of
which the Group could take the ownership if the owner of the collateral defaults. These structured entities that the Group
has interest in are guaranteed by third parties with higher credit ratings, or by pledging, or by having the fiscal budget
income as the source of repayment, or by borrowers with higher credit ratings.
Collateral and other credit enhancements
5.2 Financial risk (continued)
The carrying amount of financial assets included on the consolidated statement of financial position represents the maximum
credit risk exposure at the reporting date without taking account of any collateral held or other credit enhancements attached.
As at 31 December 2023, the Group's maximum credit risk exposure of insurance contracts and reinsurance contracts held
was RMB18,627 million (as at 31 December 2022: RMB19,810 million). The Group had no credit risk exposure relating to
off-statement financial position items as at 31 December 2023 and 31 December 2022.
5.2.2 Credit risk (continued)
5.2 Financial risk (continued)
5 RISK MANAGEMENT (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
3,581,675
The Group internally grades the financial instruments based on the credit quality and risk characteristics. The credit rating of
the financial instruments could further be classified into the different levels according to the internal rating scale. As at 31
December 2023, the debt investments held by the Group have sufficient evidence to show that the asset is not expected
to default, or there is no reason to suspect that the asset had incurred default. The related credit risk has not caused a
material impact on the Group's consolidated financial statements as at 31 December 2023.
Annual Report 2023 | Financial Report 181
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
5.2 Financial risk (continued)
5.2.3 Liquidity risk
Liquidity risk is the risk that the Group is unable to obtain funds at a reasonable funding cost when required to meet a
repayment obligation and fund its asset portfolio within a certain time.
Credit risk exposure
5.2.4 Capital management
333,258
The Group is also subject to other local capital requirements, such as statutory deposits – restricted requirement, statutory
insurance fund requirement, statutory reserve fund requirement and general reserve requirement discussed in detail in
Note 11.2, Note 19 and Note 35, respectively.
or loss
Equity investments
Funds
Common stocks
Others
Debt investments
Government bonds
Government agency bonds.
The Group's objectives for managing capital are to comply with the insurance capital requirements based on the minimum
capital and actual capital required by the NFRA, prevent risk in operation and safeguard the Group's ability to continue as a
going concern so that it can continue to provide returns for equity holders and benefits for other stakeholders. The Group
replenishes capital to improve the solvency ratio by issuing Core Tier 2 Capital Securities and bonds for capital replenishment
according to the relevant laws and the approval of the relevant authorities.
Corporate bonds
Fair value measurement using
Quoted prices
in active
Significant
observable
Significant
unobservable
markets
Level 1
inputs
Level 2
inputs
Level 3
Total
RMB million
RMB million
RMB million
RMB million
206,682
281
206,963
400,172
15,241
Financial assets at fair value through profit
415,413
The following table presents the Group's quantitative disclosures of the fair value measurement hierarchy for assets and
liabilities measured at fair value as at 31 December 2023:
5 RISK MANAGEMENT (continued)
46,458
Others managed by affiliated entities Note 2
87,959
13,067
13,067
Others managed by third parties Note 2
Note1
100,892
100,892
service fee
Investment income
Investment income and
Investment income
service fee
Note 1: Funds, trust schemes, debt investment schemes and others managed by third parties were sponsored by third party financial institutions and the
information related to size of these structured entities were not publicly available.
Note 2: Others included wealth management products, special asset management schemes, asset-backed plans, etc.
(ii) The unconsolidated structured entities that the Group has sponsored but does not have interest in
As at 31 December 2023, the size of the unconsolidated structured entities that the Group sponsored but had no interest was
RMB623,539 million (as at 31 December 2022: RMB608,027 million), which were mainly funds, special asset management
schemes, pension security products and pension products, etc., sponsored by the Group to generate management service
fee income. In 2023, the management service fee from these structured entities was RMB1,651 million (2022: RMB1,731
million), which was recorded as other income. The Group did not transfer assets to these structured entities.
5.4 Fair value hierarchy
Level 1 fair value is based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can obtain at the measurement date.
Other than Level 1 quoted prices, Level 2 fair value is based on valuation techniques using significant inputs, that are
observable for the asset being measured, either directly or indirectly, for substantially the full term of the asset through
corroboration with observable market data. Observable inputs generally used to measure the fair value of investments
classified as Level 2 include quoted market prices for similar assets in active markets; quoted market prices in markets that
are not active for identical or similar assets and other market observable inputs. This level includes the debt investments
for which quotations are available from pricing services providers. Fair values provided by pricing services providers are
subject to a number of validation procedures by management. These procedures include a review of the valuation models
utilised and the results of these models, as well as the recalculation of prices obtained from pricing services at the end of
each reporting period.
186 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
5.4 Fair value hierarchy (continued)
Under certain conditions, the Group may not receive a price quote from independent third-party valuation service providers.
In this instance, the Group's valuation team may choose to apply an internally developed valuation method to the assets
or liabilities being measured, determine the main inputs for valuation, and analyse the change of the valuation and report
it to management. Key inputs involved in internal valuation services are not based on observable market data. They reflect
assumptions made by management based on judgements and experiences. The assets and liabilities valued by this method
are generally classified as Level 3.
As at 31 December 2023, assets classified as Level 1 accounted for 28.17% of assets measured at fair value on a recurring
basis. Fair value measurements classified as Level 1 include certain debt investments, equity investments that are traded
in an active exchange market or interbank market and open-ended funds with public market price quotations. The Group
considers a combination of certain factors to determine whether a market for a financial instrument is active, including the
occurrence of trades within the specific period, the respective trading volume, and the degree to which the implied yields
for debt investments for observed transactions differs from the Group's understanding of the current relevant market rates
and information. Trading prices from the Chinese interbank market are determined by both trading counterparties and can
be observed publicly. The Group adopted this price of the debt investments traded on the Chinese interbank market at
the reporting date as their fair market value and classified the investments as Level 1. Open-ended funds also have active
markets. Fund management companies publish the net asset value of these funds on their websites on each trade date.
Investors subscribe for and redeem units of these funds in accordance with the funds' net asset value published by the
fund management companies on each trade date. The Group adopted the unadjusted net asset value of the funds at the
reporting date as their fair market value and classified the investments as Level 1.
As at 31 December 2023, assets classified as Level 2 accounted for 58.60% of assets measured at fair value on a recurring
basis. They primarily include certain debt securities and equity securities. Valuations are generally obtained from third-party
valuation service providers for identical or comparable assets, or through the use of valuation methodologies using observable
market inputs, or recent quoted market prices. Valuation service providers typically gather, analyse and interpret information
related to market transactions and other key valuation model inputs from multiple sources, and through the use of widely
accepted internal valuation models, provide a theoretical quote on various securities. Debt securities are classified as Level
2 when they are valued at recent trading prices from the Chinese interbank market or from valuation service providers.
As at 31 December 2023, assets classified as Level 3 accounted for 13.23% of assets measured at fair value on a recurring
basis. They primarily include unlisted equity securities and unlisted debt securities. Fair values are determined using valuation
techniques, including discounted cash flow valuations and the comparable companies approach. The determination of Level
3 is primarily based on the significance of certain unobservable inputs used for measurement of the asset's fair value.
For the accounting policies regarding the determination of fair values of financial assets and liabilities, see Note 4.2.
Annual Report 2023 | Financial Report 187
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
5.4 Fair value hierarchy (continued)
70,539
58,131
210,550
Investment in debt instruments at fair value
through other comprehensive income
Government bonds
250,592
Government agency bonds
184,458
244,238
1,533,140
494,830
1,717,598
Corporate bonds
Subordinated bonds/debts
9,452
484
399,469
408,921
Others
22,268
2,631
22,752
Total
1,292,496
2,688,048
97,437
607,005
100,068
4,587,549
Liabilities measured at fair value
Financial liabilities at fair value through
profit or loss
Total
188 Annual Report 2023 | Financial Report
(13,878)
(13,878)
72,773
29,617
10,579
32,577
339,220
409
3,213
3,622
682
6,131
6,813
7,785
179,308
45
187,138
114,391
201,044
-
46,458
315,435
218,911
230,771
Subordinated bonds
Others
Investment in equity instruments at fair
value through other comprehensive income
Common stocks
14,273
514
14,787
Preferred stocks
50,445
50,445
Others
11,860
Note 1
Credit quality
Investment income and
service fee
Investment income and
9,794
9,794
175,402
Funds managed by affiliated entities
RMB million
Interest held by
the Group
Maximum
exposure
of assets
RMB million
RMB million
Size
Carrying amount
Unconsolidated structured entities
As at 31 December 2023
(i) The unconsolidated structured entities that the Group has interest in
The Group did not guarantee or provide any financing support for the structured entities that the Group had interest in or
sponsored.
The Group's interests in unconsolidated structured entities are accounted for in investment in financial assets at fair value
through profit or loss and debt instruments at fair value through other comprehensive income. These structured entities
typically raise funds by issuing securities or other beneficiary certificates. The purpose of these structured entities is primarily
to generate management service fees, or provide finance to public and private infrastructure construction. Refer to Note
4.5 for the Group's consolidation judgements related to structured entities.
5.3 Disclosures about interest in unconsolidated structured entities
According to the Supervision Information System of the China Risk Oriented Solvency System, the latest Integrated Risk
Rating result of the Company was Category A.
service fee
iv) Category D: solvency ratios do not meet the requirements or solvency ratios meet the requirements but one or several
risks in operation, strategy, reputation and liquidity are severe.
iii) Category C: solvency ratios do not meet the requirements or solvency ratios meet the requirements but one or several
risks in operation, strategy, reputation and liquidity are high;
5.2.4 Capital management (continued)
5.2 Financial risk (continued)
5 RISK MANAGEMENT (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
184 Annual Report 2023 | Financial Report
Funds managed by third parties
Note 1
174,195
174,195
Debt investment schemes managed by third parties
103,825
103,825
Note1
Others managed by third parties Note 2
Investment income
Investment income and
9,211
9,211
40,116
45,544
45,544
Note 1
Debt investment schemes managed by third parties.
Others managed by affiliated entities Note 2
service fee
ii) Category B: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational risk and liquidity
risk are low;
Investment income and
31,035
73,722
Debt investment schemes managed by affiliated
entities
Investment income
56,551
56,551
Note1
Trust schemes managed by third parties
Investment income
1,284
1,284
2,090
Trust schemes managed by affiliated entities
Investment income
31,035
i) Category A: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational risk and liquidity
risk are very low;
The Group believes that the maximum exposure approximates the carrying amount of interest in these unconsolidated
structured entities. The size of unconsolidated structured entities as well as the Group's carrying amount of the assets
recognised in the consolidated financial statements relating to its interest in unconsolidated structured entities and the
Group's maximum exposure are shown below:
207%
of assets
RMB million
exposure
RMB million
Interest held by
the Group
The Group manages capital to ensure its continuous and full compliance with the regulations mainly through monitoring its
quarterly solvency ratios, as well as the solvency ratio based on annual stress testing.
Funds managed by affiliated entities
185,894
10,096
10,096
Investment income and
service fee
Funds managed by third parties
Trust schemes managed by affiliated entities
Trust schemes managed by third parties
According to the solvency ratios results mentioned above, and the unquantifiable evaluation results of operational risk,
strategic risk, reputational risk and liquidity risk of insurance companies, the NFRA evaluates the comprehensive solvency
of insurance companies and supervises insurance companies by classifying them into four categories:
RMB million
126,573
Investment income
1,992
1,295
1,295
Investment income
Note1
47,674
47,674
Investment income
(13,878)
Debt investment schemes managed by affiliated
entities
60,850
22,781
22,781
126,573
Size
Note 1
Carrying amount
144%
Maximum
219%
158%
487,290
449,160
699,688
1,007,601
981,594
710,527
RMB million
2023
31 December
As at
As at
31 December
2022
RMB million
For the year ended 31 December 2023
Comprehensive solvency ratio
(i) The unconsolidated structured entities that the Group has interest in (continued)
5.3 Disclosures about interest in unconsolidated structured entities (continued)
5 RISK MANAGEMENT (continued)
Notes to the Consolidated Financial Statements (continued)
As at 31 December 2022
Annual Report 2023 | Financial Report 185
The former China Banking and Insurance Regulatory Commission ("Former CBIRC") issued the "Solvency Regulatory
Rules II for Insurance Companies" at the end of 2021. The NFRA issued the "Circular of NFRA on Optimization of
Solvency Supervision Standards for Insurance Companies" in September 2023. The Company has calculated the core and
comprehensive solvency ratio, core capital, actual capital and minimum capital as of 31 December 2023 in accordance with
these requirements, as listed below:
Core capital
Actual capital
Minimum capital
Core solvency ratio
Investment income
Unconsolidated structured entities
First-year business
First-year regular
First-year business
Single
Accident insurance business
Renewal business
First-year regular
First-year regular
First-year business
Health insurance business
Renewal business
Single
Renewal business
Single
Total
65,655
2023
Life insurance business
65,777
115,329
114,023
380,351
381,783
RMB million
14,018
109,112
105,291
130,839
485,642
512,622
2022
21,727
For the year ended 31 December
First-year
Figures of Gross Written Premiums
2022
2023
641,380
615,190
Premiums from new policies
210,813
184,767
Including: First-year regular premiums
112,573
96,426
First-year regular premiums with a payment duration of
ten years or longer
49,522
RMB million
41,821
430,567
430,423
Value of one year's sales1
36,860
32,944
Including: Individual agent business sector¹
34,646
31,385
Policy persistency rate (14 months) 2 (%)
90.40
83.00
Policy persistency rate (26 months) 2 (%)
Surrender rate³ (%)
Renewal premiums
Key Performance Indicators of 2023
Mr. Bai Kai, Mr. Ruan Qi, Mr. Li Mingguang, Ms. Liu Hui, Mr. Zhao Guodong
From left to right:
We continued to provide insurance services for the
people and made consistent efforts to improve our
performance in serving the overall interests of national
development. We steadfastly put people as the first priority
and deeply engaged in building a multi-tiered social security
system for the people's wellbeing. We made significant
improvement to inclusive insurance services in terms of
coverage and accessibility, with the supplementary major
medical expenses insurance programs covering nearly 350
million people and the long-term care insurance programs
providing services to more than 38 million people. The
number of the city-customised insurance projects undertook
by us hit a record high, and our capacity of supplying
insurance protection for new urban residents and new
business practitioners was constantly enhanced. We
contributed to the improvement of the multi-tiered pension
insurance system and made tremendous efforts to advance
the pilot program of the third-pillar private pension insurance
business while the commercial pension insurance business
thrived. We paid special attention to the enhancement of
Annual Report 2023 | Chairman's Statement 09
the risk protection for the senior people, and the senior-care
service system and ecosystem was constantly optimised.
Meanwhile, we actively performed our roles as the main
force for serving the real economy and maintaining financial
stability, and realigned the direction of capital investment,
with our existing investments in real economy and in green
investments amounted to over RMB4 trillion and RMB460
billion, respectively. We took effective actions to support
rural revitalisation in all aspects, and helped create a new
paradigm for integrated urban and rural development. The
"rural revitalisation insurance" became the only project in
the insurance industry that was listed in the "4th Global
Best Poverty Reduction Practices". We further reinforced
the buildup of the ESG system and were awarded the "2023
Forbes China ESG Innovative Enterprise" by Forbes.
We strengthened asset-liability management and
consistently enhanced our capability in business value
creation. We conducted an in-depth analysis of new changes
in both assets and liabilities and kept researching on the
interest rate trend. Prioritising business value growth, we
reinforced systematic, holistic and long-term thinking and
incorporated the concept of asset-liability management into
all aspects including product supply, business development,
asset allocation and risk prevention and control, so as to
further improve the refined management and balance the
relationships between assets and liabilities and between long-
term value and short-term benefits, in order to consistently
enhance our capabilities of sustainable development. While
realising a growth in the insurance business, we saw our
business structure being optimised further. In 2023, we
hit a record high in terms of gross written premiums, with
a double-digit increase in the value of one year's sales.
Our industry leading position in terms of gross written
premiums, value of one year's sales and embedded value
were further consolidated, and our solvency ratios remained
at relatively high levels. We practised the philosophy of long-
term investment, value investment and prudent investment,
consistently strengthened our professional capability in
investment, made allocation to major assets categories
from the cross-cycle and long-term perspective, proactively
took positions in industries with medium- and long-term
growth potentials at a low level of the capital market, and
strengthened the management and control of investment
risks, striving to stabilise our investment income.
We advanced reforms in greater depth and continued
to bring together the internal driving forces for
development. Following the policy direction and responding
to market demands, we gave full play to our own advantages
and pushed forward a series of reforms (including the "Eight
Reform Programs"), so as to enhance the precise delivery
of products and services and facilitate the upgrading of
our business models. The sales system reforms achieved
breakthroughs. The three transformation measures in relation
to the upgrading of the existing sales force, establishment
of new sales force and sales force empowerment were
implemented at an accelerated pace, speeding up the
transformation and upgrading of a specialised, professional
and integrated sales force. Regarding the healthcare and
senior-care ecosystem as our long-term development
strategy, we made tremendous efforts to expand product
and service supply through diverse models and created a
closed-loop system of "products - services - payment", thus
making significant achievements in "insurance + services".
Taking data and technology as the key production factors, we
deepened the integration of digitalisation and business and
focused on technology-driven initiatives, further enhancing
the convenience and competitiveness of our insurance
services. We forged China Life's good services, which
are "convenient, quality and caring", and ranked among
the top of the industry in the assessment of protection
of consumers' rights and interests as conducted by the
industry regulator.
We coordinated business development and risk control,
and consistently fortified the cornerstone for our healthy
business operations. The insurance industry is an industry
operating and managing risks. Taking risk prevention and
control as our permanent task and upholding the concept of
sound and prudent business operation, we struck a balance
between stable growth and risk control and firmly held
onto the bottom line that no systemic risks arose. We
enhanced our business operations in compliance with laws
and regulations, fully implemented the requirements under
the C-ROSS (Phase II) Regulation, put into practice a series
of new rules on "aligning sales practices with regulatory
filings" in a stringent manner, ensured security while seeking
development and vice versa. As a result, the Company's risk
prevention and control measures were performed effectively.
We continued to optimise the compliance management
system and successfully obtained certifications under both
domestic and international standards in this regard. The
Company continuously maintained the rating of Class A in
the integrated risk rating for insurance companies, and was
among the top-ranked life insurance companies as evaluated
by SARMRA under the C-ROSS (Phase II) Regulation.
2023 also marked the 20th anniversary for China Life's
shareholding reform and public listing. Twenty years ago,
we were the first life insurance company listed overseas
in China, and attracted close attention from worldwide
investors, creating a splendid record of the world's largest
IPO of that year. Looking back on the changes over the past
two decades, the rapid growth of China's economy created
favourable external conditions and significant opportunities
for the insurance industry in China. Setting our mission and
vision as "safeguarding people's wellbeing and building
a world-class life insurance company", we established
sound and effective corporate governance structures and
10 Annual Report 2023 | Chairman's Statement
internal governance mechanisms. Maintaining a close bond
with the nation, we adhered to the rules of life insurance
business and advanced reforms and innovations along the
course of internal and external development. We maintained
the industry leadership position and became the largest
life insurance company globally, with our total assets,
investment assets, embedded value and gross written
premiums achieving growth of several times or even dozens
of times. While we pursued our high-quality development
to create long-term value, we have always attached great
importance to investor returns. We have made dividend
distributions of over RMB190 billion in total since our listing.
Looking ahead to our new journey, we will draw inspiration
and propulsion from our valuable experiences in the past
twenty years, and pool all efforts to forge ahead in the future.
We will continue to strengthen Party leadership in optimising
our corporate governance, promote the governance
effectiveness of modern financial corporation with Chinese
characteristics to be further manifested, pursue our own
business development to catering to people's demands,
and create a new paradigm for high-quality development,
thereby contributing to building the country into a financial
powerhouse and serving the Chinese-style modernisation.
2024 marks the 75th anniversary of the founding of the
People's Republic of China and is also the critical year for
implementing the "14th Five-Year Plan". We will steadfastly
march toward the direction where we aspire. Currently, the
life insurance industry is at a crucial stage for transformation
and development. We will focus on five major areas,
namely technology finance, green finance, inclusive finance,
pension finance and digital finance, properly manage the
relationships between stability and progress, establishment
and abolishment, scale and profitability, assets and liabilities,
as well as development and security, and balance the short-
term profit with long-term value, with a view to enhancing
our business performance. Having the confidence to be a
pioneer, we will constantly deepen supply-side reforms,
strengthen business foundation, improve on services,
transform and upgrade traditional driving forces, and
accelerate the cultivation of new driving forces, so as to
contribute to the buildup of a modern financial system with
Chinese characteristics.
By Order of the Board
bitha'
Bai Tao
Chairman
27 March 2024
Annual Report 2023 | Chairman's Statement 11
MANAGEMENT
DISCUSSION
AND ANALYSIS
REVIEW OF BUSINESS OPERATIONS
2023 was a year of economic recovery and development
following the transition of COVID-19 pandemic prevention
and control measures. China's economy rebounded with a
positive outlook, and the life insurance industry also saw a
steady recovery and growth as a whole.
The Company maintained the strategic consistency of
"achieving stable growth, prioritising business value,
optimising structure, strengthening sales force, promoting
reforms and guarding against risks", and took proactive
actions to promote growth model transformation, structural
adjustments, as well as quality and efficiency improvement
by seizing development opportunities arising from the
continued recovery of the industry, so as to make itself
stronger with excellent performance. As a result, the
Company made satisfactory achievements for high-quality
development, recorded a good performance with sound
momentum in business growth and further enhanced its
comprehensive strengths with its industry leading position
remaining solidified. As at the end of the Reporting Period,
the Company's total assets and investment assets reached
RMB5.80 trillion and RMB5.66 trillion, respectively, hitting
new record highs again. Its embedded value reached
RMB1.26 trillion, an increase of 5.6% under the same basis,
which remained at the industry leadership position. The core
solvency ratio increased by 14.60 percentage points from
the end of 2022 to 158.19%, maintaining at a relatively high
level. The number of long-term in-force policies held by the
Company reached 328 million.
1
The Company continued to lead the industry in both business
value and scale, and realised a strong growth in its insurance
business with its business structure continuously optimised.
During the Reporting Period, the Company's gross written
premiums reached a record high of RMB641,380 million,
a year-on-year increase of 4.3%, maintaining the industry
leadership position. The key business performance indicators
achieved a rapid growth. Premiums from new policies
reached RMB210,813 million, a year-on-year increase of
14.1%. First-year regular premiums were RMB112,573
million, increasing by 16.7% year on year. In particular,
first-year regular premiums with a payment duration of
ten years or longer reached RMB49,522 million, a year-on-
year increase of 18.4%, and its proportion in the first-year
regular premiums rose by 0.62 percentage point, showing
a significant improvement in business structure. The value
of one year's sales was RMB36,860 million, a year-on-
year increase of 11.9% over the 2022 corresponding data
restated under the new economic assumptions (the value
of one year's sales under the 2022 economic assumptions
was RMB41,035 million, a year-on-year increase of 14.0%
under the same basis), continuing to lead the industry.
In 2023, the Company incorporated the concept of asset-
liability management into every aspect of business operations
and management, actively balanced long-term value and
short-term benefits, continued to strengthen cost control
and underwriting management, and strived to stabilise the
overall income level. The net profit attributable to equity
holders of the Company was RMB46,181 million.
The data regarding premiums (including gross written premiums, premiums from new policies, first-year regular premiums, first-year regular premiums
with a payment duration of ten years or longer, renewal premiums, single premiums and short-term insurance business premiums, etc.) in this annual
report are relevant data under ASBE.
12
Annual Report 2023 | Management Discussion and Analysis
79.10
Gross Written Premiums Categorised by Business
74.20
0.95
430,567
Renewal premiums
430,423
2023
Short-term
insurance premiums
76,503
Value of one year's sales (RMB million)
2023
regular premiums
112,573
2022
36,860
32,944 ▼
21,737
Single premiums
Short-term
insurance premiums
74,264
Embedded value (RMB million)
First-year
regular premiums
96,426
As at 31 December 2023
2022
As at 31 December 2022
1,260,567
5.6%
1,194,220
In 2023, the Company fully launched a series of reforms
(including the "Eight Reform Programs"), focusing on
the key areas for reform to accelerate changes in quality,
efficiency and growth drivers. The sales system reforms
achieved initial results, and the direction for transforming
sales force to become more specialised, professional and
integrated was further clarified. The existing sales force
of the Company were upgraded at an accelerated pace
with a focus on six major measures such as structural
adjustments, foundation consolidation, reinforcement in
urban areas and deep engagement in counties. As at the
end of 2023, the size of its sales force was stabilised first
in the industry. The number of agents of the individual
agent business sector was 634,000, and the productivity
of the sales force was improved steadily with the monthly
average first-year regular premiums per agent rising by
28.6% year on year. The Company proactively promoted
the deployment of new sales models, and launched the
"Seed Program" on a pilot basis to build a team of financial
and insurance planners. As at the end of 2023, the pilot
program had been rolled out in eight cities. The buildup of
the senior-care ecosystem was accelerated. By upholding
the philosophy of building a senior-care ecosystem that
"gives children peace of mind, and reassures the senior
people" and sticking to the four principles of long-termism,
customer-centric approach, market-oriented operations and
business development on a rolling basis, the Company laid
down its medium- and long-term objectives and planning for
the development of a senior-care services ecosystem with
China Life characteristics, carried out dynamic assessments
of strategy implementation and optimised its development
measures on an ongoing basis. The Company strengthened
14 Annual Report 2023 | Management Discussion and Analysis
its service supply through diverse models to accelerate
the projects deployment in key cities. Operations and
customer services were further upgraded. The national
centralised and shared business mode of operations,
which was first of its kind in the industry, was applied to
all aspects of operations, and the operations efficiency was
improved by over 27.0%. The Company further optimised
the operation standard specification system, laying a solid
foundation of its operations and services characterised with
"standardisation and specialisation". The "convenient and
caring" services of claims settlement won wide recognition,
and innovative service models such as "Advanced Claims.
Payment" and the reminder services on claims notification
of electronic invoices for medical charges were consistently
promoted. The creation of a "comprehensive consumer
protection" paradigm featuring all-employee participation,
full coverage and whole-chain management was completed,
and the Company ranked among the top of the industry
in the assessment of protection of consumers' rights and
interests as conducted by the industry regulator. FinTech
and digitalisation were advanced in all aspects,
consistently driving the iterative upgrading of the Company's
technological capabilities. Container cloud began to take
shape, and a platform with terabyte level data processing
capability was fully constructed. The Company was among
the first batch of companies to implement new accounting
standards for insurance contracts in China. The intelligent
and digital risk control system effectively facilitated the
moving forward of risk prevention and control points. The
in-depth integration of technology and business empowered
all aspects of operations and management of the Company,
achieving remarkable results in the data-driven initiatives.
BUSINESS ANALYSIS
14,077
Renewal premiums
Single premiums
breakdown (RMB million)
As at
As at
31 December
31 December
2023
2022
Embedded value¹
Number of long-term in-force policies (hundred million)
Gross investment income4
Net profit attributable to equity holders of the Company
1,260,567
3.28
1,194,220
3.25
2023
2022
123,082
46,181
176,277
66,680
Notes:
1.
2.
3.
4.
The corresponding results for the year 2022 have been restated using 2023 embedded value economic assumptions.
The persistency rate for long-term individual life insurance policy is an important operating performance indicator for life insurance companies. It measures
the ratio of in-force policies in a pool of policies after a certain period of time. It refers to the proportion of policies that are still effective during the
designated month in the pool of policies whose issue date was 14 or 26 months ago.
Surrender rate, which is for long-term insurance business, is the proportion of the surrender payment to the sum of the reserves at the beginning of the
period and the premiums. Items such as surrender payment, reserves and premiums are relevant data under ASBE.
For the year 2022, the data of investment businesses related to IFRS 17 - Insurance Contracts has been restated and presented, while the data of
investment businesses related to IFRS 9 - Financial Instruments has not been restated and presented. Therefore, relevant data is not comparable.
Annual Report 2023 | Management Discussion and Analysis 13
Gross written premiums
1.11
Gross written premiums
91,273
5,149
Analysis of Insurance Business
In 2023, the Company kept on pursuing high-quality
development, and attained remarkable achievements
in its insurance businesses with its industry leading
position consolidated further. Sales system reforms were
implemented to facilitate the upgrading of the Company's
existing sales force and the deployment of its new sales
models, which further consolidated the foundation for the
Company's business development. The Company continued
to enhance its day-to-day sales force management. The
size of its sales force was stabilised first in the industry,
with optimised structure and enhanced quality, and its
productivity was improved substantially. As at the end of
the Reporting Period, the number of its total sales force
was approximately 694,000.
Individual Agent Business Sector
The individual agent business sector adhered to the strategy
of "productive agents-driven business", focused on value
creation, and deepened business channel transformation.
A rapid growth was achieved in all indicators for the new
business, and the business structure was significantly
optimised. During the Reporting Period, gross written
premiums from the sector grew by 1.9% year on year to
reach RMB501,580 million, within which renewal premiums
were RMB391,218 million. First-year regular premiums were
RMB91,807 million, an increase of 12.6% year on year.
In particular, first-year regular premiums with a payment
Gross written premiums of individual
agent business sector (RMB million)
2023
2022
Insurance Business
▼ 91,807
▼ 81,508
First-year regular premiums
Agents of individual
agent business sector
634,000
501,580 ▼
1.9%
492,439 ▼
12.6%
16 Annual Report 2023 | Management Discussion and Analysis
1. Gross written premiums of individual agent business sector mainly include premiums of the general sales team and the upsales team, etc.
2. Gross written premiums of other channels mainly include premiums of government-sponsored health insurance business and online sales, etc.
Notes:
32,898
32,003
First-year business of long-term insurance
46
21
16
2
30
19
3
29
Short-term insurance business
32,849
31,953
Total
641,380
615,190
duration of ten years or longer were RMB49,503 million,
an increase of 18.4% year on year, and its proportion in
the first-year regular premiums was 53.92%, an increase
of 2.64 percentage points year on year. In 2023, the value
of one year's sales of the sector was RMB34,646 million,
an increase of 10.4%² year on year.
In 2023, the individual agent business sector upheld
the concept of "team construction based on customer
resources", accelerated the establishment of a customer
management-centric business operation and management
system in the sector, and consistently proceeded with "6+1"
key tasks to strive for the high-quality development of the
Company. The sector made consistent efforts to enhance
the professional competence of the existing sales force,
optimised agent recruitment and development on an ongoing
basis, and created an integrated cultivation system for newly
recruited agents that coordinated recruitment and cultivation.
Programs, such as the "Regular Operation 4.0 System for
the Team Building of the Individual Agent Business Sector",
the "Zhongxin Project" and the "Foundation Strengthening
Program", were carried out to further stabilise the sales
force. The exploration of new sales models was transitioned
to the pilot stage from the research and development stage,
and the "Seed Program" was launched under the deployment
of new sales models to build a "specialised, value-oriented
and integrated" team of financial and insurance planners,
aiming for cultivating new driving forces for growth in the
future. Sales force empowerment was further advanced as
scenario-based technological applications empowered the
development of sales force, and digital sales offices were
also established to improve sales effectiveness. As at the
end of the Reporting Period, the number of agents of the
sector was 634,000, including 410,000 agents from the
general sales team and 224,000 agents from the upsales
team. The quality of sales force continued to improve, with
an increase in both the number and proportion of high-
performance agents. Meanwhile, the productivity of the
sales force was improved substantially, with the monthly
average first-year regular premiums per agent increasing by
28.6% year on year.
Diversified Business Sector
The diversified business sector pushed forward specialised
business operation in great depth, concentrating on both
business scale and value, and advancing the high-quality
development of the Company. In 2023, the sector carried
out more refined channels management, made new
achievements in specialised business operation as well as
transformation and upgrading, and recorded an increase in
value contribution to the Company. The value of one year's
sales of the sector was RMB2,214 million, rising significantly
by 42.0% year on year.
3.8%
3.0%
24,059 ▼27,333▼
2022
78,748 ▼
Short-term insurance premiums
24.2%
63,415 ▼
18 Annual Report 2023 | Management Discussion and Analysis
Direct sales representatives of
group insurance channel
37,000
Proportion of
high-performance
personnel rose by
from the end of 2022
4.7
percentage
points
2023 was the opening year for fully implementing the
guidelines of the 20th CPC National Congress and also a
year of economic recovery and development following the
transition of the three-year COVID-19 pandemic prevention
and control measures. Looking back to the past year, as
China's economy rebounded with sound momentum and
market demands were gradually improving, the life insurance
industry saw a remarkable recovery trend. Centering on
serving the overall interests of national development, China
Life gave full play to the functions of insurance as a "shock
absorber" for economic operation and a "stabiliser" for
social development and steadfastly pushed forward its
development in finance with Chinese characteristics. With
building a world-class life insurance company as its goal, the
Company worked hard to pursue high-quality development
with concerted efforts. As a result, the Company achieved
a steady progress while maintaining stability in its business
development and further enhanced its comprehensive
strengths with its market leading position remaining
solidified. It has been awarded Grade A in the evaluation
of operations of insurance companies by the Insurance
Association of China for eight consecutive years, and ranked
62nd and 12th by Forbes Global 2000 and Fortune China 500,
respectively. Embracing the "investor-oriented" concept,
the Board has proposed to distribute a cash dividend of
RMB4.30 per 10 shares (inclusive of tax), and such proposal
will be submitted to the 2023 Annual General Meeting for
review and discussion.
23,000
Renewal business
Account managers of
bancassurance channel
2022
2
The growth rate is calculated based on the restated results for 2022 using the 2023 embedded value economic assumptions.
3
The growth rate is calculated based on the restated results for 2022 using the 2023 embedded value economic assumptions.
Annual Report 2023 | Management Discussion and Analysis
17
Bancassurance Channel The bancassurance channel
strengthened the cooperation with banks, accelerated
business development, and achieved a rapid growth in both
the scale of its premiums and business value. During the
Reporting Period, gross written premiums from the channel
amounted to RMB78,748 million, an increase of 24.2%
year on year. First-year regular premiums were RMB20,735
million, an increase of 39.4% year on year. First-year regular
premiums with a payment duration of five years or longer
were RMB9,877 million. Renewal premiums amounted
to RMB38,112 million (a year-on-year increase of 5.3%),
accounting for 48.40% of gross written premiums from the
channel. The bancassurance channel constantly enhanced
the professional and technological capabilities of its account
manager team, the quality of which was improved steadily.
As at the end of the Reporting Period, the number of account
managers of the bancassurance channel reached 23,000, and
the quarterly average active managers recorded a year-on-
year growth of 8.5%, with the productivity in terms of regular
premiums per account manager increasing substantially year
on year.
Group Insurance Channel The group insurance channel
coordinated business scale and profitability, and pushed
forward stable development in all business lines. During
the Reporting Period, gross written premiums from the
channel were RMB28,154 million, an increase of 3.0%
year on year. In particular, short-term insurance premiums
from the channel were RMB24,974 million, an increase of
3.8% year on year. As at the end of the Reporting Period,
the number of direct sales representatives of the channel
was approximately 37,000, among which the proportion of
high-performance personnel rose by 4.7 percentage points
from the end of 2022, with the productivity per direct sales
representative increasing steadily.
Gross written premiums of
group insurance channel (RMB million)
2023
24,974 ▼28,154 ▼
Gross written premiums of
bancassurance channel (RMB million)
20,735 ▼
2023
39.4%
14,879 ▼
First-year regular premiums
3,460
Single
Other channels²
For the year ended 31 December
RMB million
2023
2022
Individual agent business sector¹
501,580
492,439
Gross Written Premiums Categorised by Channel
First-year business of long-term insurance
81,732
First-year regular
91,807
81,508
Single
320
224
92,127
15
Annual Report 2023 | Management Discussion and Analysis
During the Reporting Period, gross written premiums from the life insurance business of the Company amounted to
RMB512,622 million, a year-on-year increase of 5.6%. Gross written premiums from the health insurance business were
RMB114,023 million, a year-on-year decrease of 1.1%. Gross written premiums from accident insurance business were
RMB14,735 million, a year-on-year increase of 3.6%.
62,195
60,628
48,368
49,552
14,735
14,219
14,319
13,699
1
4
14,318
13,695
416
520
641,380
615,190
Note: Single premiums in the above table include premiums from short-term insurance business.
Renewal business
391,218
392,849
Short-term insurance business
28,154
First-year business of long-term insurance
1,946
27,333
1,929
First-year regular
15
37
Single
1,931
1,892
Renewal business
1,234
1,345
Short-term insurance business
24,974
24,059
Group insurance channel
First-year regular
394
Short-term insurance business
18,235
17,858
Bancassurance channel
78,748
63,415
First-year business of long-term insurance
40,191
26,821
First-year regular
20,735
14,879
Single
19,456
11,942
Renewal business
38,112
36,200
445
CHAIRMAN'S
STATEMENT
11.9%
5
5,280
Statutory deposits
261,179
27,089
561
14,880
218,649
Long-term equity investments
1,574,204
2,312
3,766
99,919
1,468,207
Held-to-maturity investments
1,738,108
359
16,252
14
6,333
3,112
or loss
Financial liabilities at fair value through profit
II. Liabilities
120,415
5,251,984
Total
Other assets
Undistributable assets
5,131,569
63,110
12,279
328,884
4,727,296
Total distributable asset
Separate account assets
680
212
4,126
1,608,279
736
774
||
295
441
Claim reserves receivable from reinsurers
Reserves for life insurance receivables from
reinsurers
48
726
Unearned premium reserves receivable from
reinsurers
19,697
463
10,966
8,268
Premiums receivables
52,309
603
109,451
603
receivables from reinsurers
Available-for-sale financial assets
485,567
6,732
1,147
30,438
447,250
Term deposits
596,490
1,971
815
29,727
563,977
Loans
4,294
4,294
Reserves for long-term health insurance
270
8
3,344
Including: Investment income from
905
217,775
707
520
13,949
202,599
Investment income
748
157
reserves
Change in unearned premium
2,287
299,569
4,194,074
Total distributable liabilities
34,504
associates and joint ventures
Other distributable liabilities
3,909
Other gains
(37)
(21)
176
65
3,628
(557)
॰ 'དྲེས༔
59
871
Foreign exchange gains/(losses)
(554)
(8,139)
Fair value gains/(losses)
7
104
266
12
7
Separate account liabilities
18,999
355,743
Policyholder deposits
60,819
314
3,327
57,178
Claims payable
148,954
1,465
353
9,375
137,761
repurchase
Financial assets sold under agreements to
374,742
7
Unearned premium reserves
3,634
12,774
12,774
Long-term borrowings
233,663
233,663
Reserves for long-term health insurance
3,607,236
1,467
3,605,769
Reserves for life insurance
26,153
3,921
22,232
Claim reserves
13,108
9,474
(8,751)
125
48,606
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
5.4 Fair value hierarchy (continued)
The following table presents the changes in Level 3 financial instruments for the year ended 31 December 2023:
Opening balance
Purchases
Transferred into Level 3
Transferred out of Level 3
Total gains/(losses) recorded in profit
or loss
Total gains/(losses) recorded in other
comprehensive income
Disposals or exercised
Settlement
Closing balance
Notes to the Consolidated Financial Statements (continued)
69
Financial assets purchased under
983
Elimination
Total
RMB million
I. Assets
Cash fund
114,111
7,766
293
6,783
128,953
Financial assets at fair value through profit
or loss
208,103
14,162
534
223,782
Others
comprehensive comprehensive
income
(9,110)
(553)
(26,013)
(19,302)
(45,868)
80,062
(8,270)
(437)
(6,695)
(1,138)
Less: Premiums ceded to reinsurers
615,190
14,219
115,329
485,642
(934)
Investment
in debt
instruments
at fair value
through other
(8,176)
6,872
RMB million
income
RMB million
Financial assets
at fair value
through profit
or loss- Equity
RMB million
79,678
82,833
32,703
161,537
55,341
Financial assets
at fair value
through profit
or loss- Debt
RMB million
Total
RMB million
205,281
24,385
529,329
112,429
1,042
1,848
9,526
12,416
937
7,809
3,308
Accident
Life
(31)
(21,396)
III. Operating profit
11,758
7,446
1,943
3,236
24,383
Add: Non-operating income
94
6
8
108
Less: Non-operating expenses
(413)
(51)
(28)
(1,358)
Impairment losses
Interest receivables
38,533
38
92
2,447
35,956
agreements to resell
(1,572)
3,199
(30,387)
Including: inter-segment transactions
(2,988)
(203)
(8)
3,199
(19,956)
Health
(2)
IV. Net profit before income tax
RMB million
Operating income: 826,055
N/A
Net profit before income tax: 24,047
N/A
(455,194)
46,013
Total revenue: 370,861
Profit before income tax: 70,060
Annual Report 2023 Financial Report
195
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
6 SEGMENT INFORMATION (continued)
As at 31 December 2022
Item
IFRS 17
(444)
IFRS 9
Adjustment
Supplementary Information:
Depreciation and amortisation expenses
11,439
7,424
1,942
3,242
24,047
3,028
1,126
327
810
5,291
The reconciliation of segment information to the consolidated statement of comprehensive income is as follows:
Segment information
For the year ended 31 December 2022
Consolidated statement of
comprehensive income
2
(1,001)
(69)
286
83
Disposals
(3,351)
(335)
(118)
(819)
(2,079)
Charge for the year
(23,097)
(1,671)
(996)
(5,786)
(14,644)
As at 1 January 2022
43
Accumulated depreciation
282
As at 31 December 2022
(24)
As at 31 December 2022
As at 1 January 2022
Net book value
As at 31 December 2022
Disposals
Charge for the year
(24)
As at 1 January 2022
Impairment
(25,754)
(1,724)
(1,071)
(6,319)
(16,640)
694
(1)
80,338
5,026
(69)
93
(3,622)
286
3,174
Transfers upon completion
78,754
2,433
6,790
1,311
8,394
59,826
As at 1 January 2022
RMB million
Total
Additions
2,206
64
1
1,268
8,884
62,954
31 December 2022
(773)
(320)
(44)
(299)
(110)
Disposals
(266)
(266)
Transfers into investment properties
2,692
2,124
503
construction improvements
45,158
46,290
315
(424,827)
(36,662)
285
6,720
(461,204)
(33)
91
253
311
Policyholder dividends resulting from
participation in profits
(20,566)
(119)
(20,685)
Tax and surcharges
(900)
Increase in insurance contracts reserve
Less: Insurance reserves recoverable from
reinsurers
(204)
301
406
(13,088)
(7,007)
3,199
(801,672)
Surrenders
(35,268)
(1,835)
(19)
(37,122)
Claims expense
(77,609)
(56,803)
(6,271)
(140,683)
Less: Claims recoverable from reinsurers
6,013
2,608
(21)
(1,261)
(3,183)
(672)
198 Annual Report 2023 | Financial Report
As at 31 December 2023, the net book value of buildings above which were in process to obtain title certificates was
RMB4,617 million (as at 31 December 2022: RMB6,459 million).
(25)
(25)
EIE
54,559
482
5,025
197
2,565
55,632
762
6,789
(28,159)
(136)
Other operating expenses
23
Underwriting and policy acquisition costs
(37,731)
(11,396)
(4,165)
(1,485)
(54,777)
Administrative expenses
(25,505)
(10,174)
(2,751)
(3,783)
(42,213)
Less: Expenses recoverable from reinsurers
284
718
1,025
vehicles
fixtures
Buildings
Total
vehicles construction improvements
Leasehold
Motor Assets under
Office
equipment,
furniture and
fixtures
Buildings
Cost
7 PROPERTY, PLANT AND EQUIPMENT
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Assets: 5,010,068
Liabilities: 4,635,095
23,819
(171,768)
(265,735)
N/A
N/A
RMB million
RMB million
As at 1 January 2023
8,884
2,220
189
1,020
114
Additions
(8)
192
(2,063)
244
1,619
Transfers upon completion
80,338
2,206
5,026
1,268
62,954
3,543
of financial position
Consolidated statement
II. Operating expenses
122
(1)
8
115
Gains/(losses) on disposal of assets
(3,199)
3,199
Including: inter-segment transactions
8,977
(3,199)
10,510
98
1,568
Other operating income
(669,864)
Impact of
Deferred tax
(114,912)
36,875
Adjustment
IFRS 17
IFRS 9
196 Annual Report 2023 | Financial Report
Liabilities: 4,806,863
Assets: 5,251,984
Segment information
As at 31 December 2022
The reconciliation of segment information to the consolidated statement of financial position is as follows:
4,806,863
Total
289,188
Non-distributable liabilities
Other liabilities
4,517,675
14,251
9,781
84
Disposals
(1,201)
(185)
2,565
46,290
As at 1 January 2023
Net book value
(23)
2
(1)
(25)
EE
(22)
As at 31 December 2023
2
Disposals
-
Charge for the year
197
(1)
5,025
54,559
Leasehold
Motor Assets under
Office
equipment,
furniture and
Cost
7 PROPERTY, PLANT AND EQUIPMENT (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 197
53,710
416
5,182
288
2,702
45,122
As at 31 December 2023
482
(24)
As at 1 January 2023
Impairment
(1,071)
(6,319)
(16,640)
As at 1 January 2023
Accumulated depreciation
82,192
2,215
5,183
1,345
9,963
63,486
As at 31 December 2023
(1,681)
(183)
(112)
(1,724)
(25,754)
Charge for the year
(2,107)
(28,459)
(1,799)
(1,057)
(7,261)
(18,342)
As at 31 December 2023
857
Premium income
165
178
405
Disposals
(3,562)
(240)
(95)
(1,120)
109
607,825
Investment
in equity
instruments
at fair value
through other
108,791
Health insurance business relates primarily to the sale of health insurance policies, including those health insurance policies
without significant insurance risk transferred.
(iii) Accident insurance business (Accident)
Accident insurance business relates primarily to the sale of accident insurance policies.
(iv) Other businesses (Others)
Other businesses relate primarily to income and cost of the agency business in respect of transactions with CLIC, etc., as
described in Note 33, as well as income and expenses of subsidiaries.
-
(ii) Health insurance business (Health)
The segment information submitted by the Group to the operating decision-maker is prepared in accordance with ASBE,
among which insurance contracts-related data is prepared in accordance with ASBE No. 25 Direct Insurance Contracts
(Caikuai [2006] No. 3), ASBE No. 26 - Reinsurance Contracts (Caikuai [2006] No. 3) and Regulations regarding the Accounting
Treatment of Insurance Contracts (Caikuai [2009] No. 15), and financial instruments-related data is prepared in accordance
with ASBE No. 22 - Recognition and Measurement of Financial Instruments (Caikuai [2006] No. 3), ASBE No. 23 - Transfer
of Financial Assets (Caikuai [2006] No. 3), ASBE No. 24 - Hedging (Caikuai [2006] No. 3) and ASBE No. 37 - Presentation
of Financial Instruments (Caikuai [2014] No. 23).
Investment income, fair value change gain or loss, exchange gain or loss, etc., are allocated to each segment in proportion
to the average insurance contract reserve and insured deposit and investment funds of the corresponding segment at the
beginning and end of the period. Business and management fees are allocated to each segment based on the unit cost of
products in each corresponding operating segment.
6.3 Allocation basis of assets and liabilities
In addition to premiums receivable, reinsurance reserves receivable, insured loans pledged, separate account assets,
claims payable, insured reserves and investment funds, reserves for various insurance contracts, and separate account
liabilities, which are directly recognised to each segment, other financial assets and financial liabilities shall be apportioned
to each segment in proportion to the average insurance contract reserves and insured reserves and investment funds of
the corresponding segments at the beginning and end of the period.
192 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
6.2 Allocation basis of income and expenses
Life insurance business relates primarily to the sale of life insurance policies, including those life insurance policies without
significant insurance risk transferred.
(i) Life insurance business (Life)
The Group operates in the life insurance business segment, the health insurance business segment, the accident insurance
business segment and other business segment:
Discounted cash flow
method
Discount rate
Range
as at 31 December 2023:
15%-33%
as at 31 December 2022:
12%-30%
as at 31 December 2023:
1.57%-16.70%
as at 31 December 2022:
2.41%-10.55%
Relationships between fair
value and unobservable
inputs
The fair value is inversely
related to the discounts for
lack of marketability
The fair value is inversely
related to discount rate
Annual Report 2023 | Financial Report 191
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
6 SEGMENT INFORMATION
6.1 Operating segments
6 SEGMENT INFORMATION (continued)
For the year ended 31 December 2023
Life
Health
114,023
14,735
641,380
Less: Premiums ceded to reinsurers
(1,267)
(6,110)
(618)
(7,995)
Change in unearned
premium reserves
(1,156)
(88)
(1,244)
Investment income
177,373
512,622
unobservable inputs
Discounts for lack of
marketability
Premium income
14,029
Accident
Others
Elimination
Total
RMB million
I. Operating income
695,053
119,459
14,424
12,655
(3,732)
837,859
Premiums earned
511,355
106,757
632,141
Significant
Valuation techniques
Comparable companies
method
The table below presents information about the significant unobservable inputs used for primary financial instruments at
fair value classified as Level 3 as at 31 December 2023 and 31 December 2022:
Total
(3,351)
190 Annual Report 2023 | Financial Report
(3,344)
(3,351)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
5.4 Fair value hierarchy (continued)
The following table presents the changes in Level 3 financial instruments for the year ended 31 December 2022:
Securities at fair
value through
Available-for-sale securities
Debt securities
RMB million
profit or loss
Equity securities
Debt securities
profit or loss
RMB million
Investment contracts at fair value through
profit or loss
3,018
149,284
45
152,347
Others
129
Total
782,037
25,521
766,574
2,105
27,755
396,153
1,944,764
Liabilities measured at fair value
Financial liabilities at fair value through
(3,344)
12,287
RMB million
14,530
(600)
(10,778)
(11,378)
Maturity
(34,255)
(748)
(35,003)
Ending balance
173,302
220,701
2,150
396,153
For the assets and liabilities measured at fair value on a recurring basis, during the year ended 31 December 2023,
RMB69,953 million (2022: RMB4,993 million) debt investments were transferred from Level 1 to Level 2 within the fair
value hierarchy, whereas RMB22,570 million (2022: RMB46,485 million) debt investments were transferred from Level 2 to
Level 1. RMB11,851 million equity investments were transferred from Level 1 to Level 2 (2022: RMB3,478 million), whereas
RMB15,174 million equity investments were transferred from Level 2 to Level 1 (2022: RMB23,470 million).
For the years ended 31 December 2023 and 2022, there were no significant changes in the business or economic
circumstances that affected the fair value of the Group's financial assets and liabilities. There were also no representations
of financial assets.
As at 31 December 2023 and 31 December 2022, significant unobservable inputs such as discount rate and discounts for
lack of marketability were used in the valuation of primary assets and liabilities at fair value classified as Level 3.
Disposals or exercised
Total
RMB million
(1,997)
(1,829)
Purchases
160,499
49,497
188,583
44,778
45
2,671
349,127
96,946
Transferred out of Level 3
(10)
(10)
Total gains/(losses) recorded in profit or loss
(1,714)
182
(1,532)
Total gains/(losses) recorded in other
comprehensive income
(168)
386
581
190,627
(2,059)
(10,592)
(24,825)
Administrative expenses
(63,092)
(1,718)
(4,260)
(9,833)
(47,281)
Underwriting and policy acquisition costs
(1,417)
(305)
(21)
(202)
(889)
(3,600)
Tax and surcharges
(41,076)
376
3,732
(8)
(240)
(3,484)
Including: inter-segment transactions
(32,591)
3,732
(3,103)
(353)
(2,629)
(30,238)
Other operating expenses
728
10
342
Less: Expenses recoverable from reinsurers
Impairment losses
(11,695)
(11,614)
(48,740)
(22)
(2,335)
(46,383)
Claims expense
Surrenders
(825,618)
3,732
(8,876)
(13,625)
(117,405)
(689,444)
II. Operating expenses
73
(1)
(103,907)
(81)
(63,894)
Less: Claims recoverable from reinsurers
participation in profits
Policyholder dividends resulting from
287
39
151
97
reinsurers
7,009
(407,211)
(174,819)
(170)
339
6,164
(31,089)
(375,952)
Increase in insurance contracts reserve
Less: Insurance reserves recoverable from
506
(7,018)
Corporate bonds
(49,334)
(110)
I co-
-
51
8
(1)
144
4,169
(557)
(381)
1
12,582
(3,732)
11,086
Including: inter-segment transactions
3,732
(3,732)
125
Gains/(losses) on disposal of assets
2,110
11
Including: Investment income from
associates and joint ventures
8,816
607
19
(916)
8,526
Other gains
87
6
Fair value gains/(losses)
3,894
268
Foreign exchange gains/(losses)
165
Other operating income
(3,407)
For the year ended 31 December 2023
Operating income: 837,859
(425)
94
7
6
81
12,241
3,779
799
2,054
5,609
Less: Non-operating expenses
Add: Non-operating income
III. Operating profit
(53,001)
(150)
(29)
Net profit before income tax: 11,878
(1)
(457)
Segment information
The reconciliation of segment information to the consolidated statement of comprehensive income is as follows:
5,016
861
233
1,118
2,804
11,878
3,784
798
2,031
5,265
Depreciation and amortisation expenses
Supplementary Information:
IV. Net profit before income tax
(2)
9,622
Opening balance
2,387
5,888,479
Total
138,972
Other assets
Undistributable assets
5,749,507
70,317
11,784
373,294
5,294,112
Total distributable assets
8,416
8,409
7
Separate account assets
II. Liabilities
7,235
Financial liabilities at fair value through profit
5,106
66,592
311
5,302
60,979
Claims payable
216,704
2,100
436
13,800
200,368
repurchase
Financial assets sold under agreements to
5,469
11
352
or loss
Policyholder deposits
680
364
Available-for-sale financial assets
404,131
6,658
808
25,560
371,105
Term deposits
603,639
1,982
673
30,172
570,812
Loans
4,573
4,573
2,099,921
11
144,633
13,924
5,278
Statutory deposits
257,606
27,098
468
14,823
215,217
Long-term equity investments
1,706,441
2,394
3,462
109,581
1,591,004
Held-to-maturity investments
2,263,047
4,569
466,619
19,864
486,483
Notes to the Consolidated Financial Statements (continued)
194 Annual Report 2023 | Financial Report
Liabilities: 5,315,052
Assets: 5,802,086
(5,856)
(1,549)
(102,426)
590
Liabilities: 5,418,437
(279,280)
198,743
Assets: 5,888,479
RMB million
Consolidated statement of
financial position
Impact of
Deferred tax
IFRS 17
For the year ended 31 December 2023
IFRS 9
6 SEGMENT INFORMATION (continued)
Life
484,504
Premiums earned
826,055
(3,199)
10,243
15,031
122,358
681,622
I. Operating income
RMB million
Total
Elimination
Others
Accident
Health
For the year ended 31 December 2022
Segment information
Adjustment
As at 31 December 2023
266,376
266,376
Reserves for long-term health insurance
3,983,433
1,705
3,981,728
Reserves for life insurance
24,461
3,853
20,608
Claim reserves
14,220
3,730
10,490
Unearned premium reserves
Long-term borrowings
Separate account liabilities
7
12,719
8,409
The reconciliation of segment information to the consolidated statement of financial position is as follows:
295,457
5,418,437
Total
Non-distributable liabilities
Other liabilities
5,122,980
23,228
10,117
receivables from reinsurers
38,107
2,291
339,083
4,750,552
Total distributable liabilities
35,745
Other distributable liabilities
8,416
12,719
71
Reserves for long-term health insurance
6,333
700
· Debt securities
RMB million
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds
Others
Securities at fair value through profit or loss
131,897
--
131,897
396,163
17,985
414,148
50,522
Others
50,522
Preferred stocks
Funds
in active
markets
observable
Significant
unobservable
inputs
inputs
Level 1
Level 2
Level 3
Total
RMB million
RMB million
RMB million
Assets measured at fair value
Available-for-sale securities
- Equity securities
Common stocks
Significant
45,525
700
358
13,444
Common stocks
Others
17,280
92
1,272
18,552
173
265
Debt securities
Government bonds
661
1,144
1,805
Government agency bonds
13,086
29,260
Funds
174,398
244,964
36,945
10,243
47,188
77,982
235,288
313,270
3,678
184,885
188,563
53,194
102,830
156,024
1,096
173,302
- Equity securities
Quoted prices
170,179
The following table presents the Group's quantitative disclosures of the fair value measurement hierarchy for assets and
liabilities measured at fair value as at 31 December 2022:
274
103
3,254
47,248
Interest receivables
122
35
1,117
16,213
agreements to resell
Financial assets purchased under
1,270
513
16,244
235,852
Premiums receivables
Financial assets at fair value through profit
or loss
12,939
Unearned premium reserves receivable from
reinsurers
Fair value measurement using
reinsurers
647
642
21,521
50,879
17,487
253,879
149,566
II
334
313
Claim reserves receivable from reinsurers
Reserves for life insurance receivables from
56
586
463
7,506
8,119
9,135
(432,368)
IFRS 17
Consolidated statement of
comprehensive income
(6,895)
(60,745)
97,437
210,550
218,956
607,005
Annual Report 2023 | Financial Report 189
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
289
5.4 Fair value hierarchy (continued)
Total revenue: 344,746
39,593
Adjustment
IFRS 9
RMB million
Profit before income tax: 44,576
132,636
Cash fund
I. Assets
RMB million
Total
Others
As at 31 December 2023
Accident
Elimination
Life
Item
6 SEGMENT INFORMATION (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 193
Health
By place of listing:
Trust schemes
Total
Impairment provision
Sub-total
Others (i)
Debt investment plans
11.3 Investment in debt instruments at amortised cost
6,520
Notes to the Consolidated Financial Statements (continued)
206 Annual Report 2023 | Financial Report
Insurance companies in China are required to deposit an amount that equals 20% of their registered capital with banks in
compliance with regulations of the NFRA. These funds may not be used for any purpose other than for paying off debts
during liquidation proceedings.
6,527
6,333
6,333
(7)
Listed in Mainland, PRC
11 FINANCIAL ASSETS (continued)
Listed in Hong Kong, PRC
Over ten years
Unlisted (ii)
As at
2,400
31 December
Total
After five years but within ten years
After one year but within five years
Within one year
Maturing:
Contractual maturity schedule
Total
Others
Debt investment plans
Trust schemes
Fair value hierarchy
(i) Other Investment in debt instruments at amortised cost mainly include large-denomination certificates of deposits.
(ii) Unlisted debt investments mainly include non-publicly traded trust schemes and debt investment plans.
For the year ended 31 December 2023
Total
Listed overseas
6,010
Sub-total
517
238,951
183,832
174,513
RMB million
RMB million
2022
2023
31 December
31 December
As at
As at
Impairment provision
Total
After one year but within five years
Within one year
Maturing:
11.1 Term deposits
2023
301,735
3,933
413,464
(209)
RMB million
RMB million
31 December
2022
2023
31 December
As at
As at
Total
Impairment provision
Sub-total
After one year but within five years
Within one year
contractual maturity schedule:
11.2 Statutory deposits - restricted
As at 31 December 2023, the Group's term deposits of RMB1,506 million were deposited in banks for risk reserves of
enterprise annuity fund investments and risk reserves of personal endowment security management business, which are
restricted to use (as at 31 December 2022, the Group's term deposits of RMB2, 175 million were deposited in banks for
risk reserves of enterprise annuity fund investments, risk reserves of personal endowment security management business
and backing overseas borrowings, which are restricted to use).
485,567
413,255
485,567
RMB million
9,688
53,255
Impairment provision
Total
Over ten years
After five years but within ten years
After one year but within five years
Within one year
Maturing:
Contractual maturity schedule
Total
Unlisted (ii)
Listed overseas
Listed in Hong Kong, PRC
Listed in Mainland, PRC
By place of listing:
Total
Others (i)
Subordinated bonds
As at
Corporate bonds
31 December
494,830
1,717,598
11 FINANCIAL ASSETS
208 Annual Report 2023 | Financial Report
(i) Other investment in debt instruments at fair value through other comprehensive income mainly include trust schemes and debt investment plans.
(ii) Unlisted debt investments include those traded on the Chinese interbank market and those not publicly traded.
(1,432)
2,744,169
1,965,497
207,198
398,475
172,999
2,744,169
2,348,743
179
58
395,189
2,744,169
22,752
100,068
408,921
2023
RMB million
Government agency bonds
Government bonds
11.4 Investment in debt instruments at fair value through other comprehensive income
128,994
128,994
55,494
RMB million
Total
Level 3
RMB million
As at 31 December 2023
Level 2
RMB million
RMB million
Level 1
211,349
210,523
57
132
637
211,349
(350)
211,699
34,448
55,494
178
2,437
32,276
11 FINANCIAL ASSETS (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 207
211,349
7,329
67,097
92,002
123,996
44,921
2023
31 December
As at
219,379
216,764
2,437
178
34,891
RMB million
For the year ended 31 December 2023
154,370
Annual Report 2023 | Financial Report 205
As at 31 Percentage Accumulated
Provision
for
equity
Dividends
profit or
Change of
January
December
December
Accounting
method
Other
Share of
As at 1
As at 31
Movements in the current year
262,488
Investment
cost
2022
2023
98,085
98,085
53,201
Equity method
China Guangfa Bank Co., Ltd. ("CGB") (i)
Associates
RMB million
RMB million
2.1.1.b)
(Restated, Note
impairment
amount of
of equity
interest
2023
declared movements impairment
loss
the cost
258,760
(3,150)
(4,778)
1,302
Under the market comparison approach and income approach, an increase (decrease) in the comprehensive adjustment
coefficient will result in an increase (decrease) in the fair value of investment properties.
The Group uses the weighted average of market comparison approach and income approach as its valuation method to
estimate the fair value of its investment properties. Under the market comparison approach, the estimated fair value of
a property is based on the average sale price of comparable properties recently sold; the income approach is to convert
projected future incomes of investment properties into value by rate of return, rate of capitalization or income multiplier.
According to the calculation results of the above two valuation approaches, with consideration of the comprehensive
adjustment coefficient, which is composed of a number of adjusting factors, including the time and the conditions of sale,
the geographical location, age, decoration, floor area, lot size of the property and other factors.
The fair value of investment properties of the Group as at 31 December 2023 amounted to RMB16,677 million (as at
31 December 2022: RMB16,854 million), which was estimated by the Group having regards to valuations performed by
independent appraisers. The investment properties were classified as Level 3 in the fair value hierarchy.
As at 31 December 2023, the Group had no investment properties for which the title certificates were in process to obtain
(as at 31 December 2022: nil).
The Group has no restrictions on the use of its investment properties and no contractual obligations to each investment
property purchased, constructed or developed or for repairs, maintenance and enhancements.
The Company leases part of its investment properties to its subsidiaries and charges rentals based on the areas occupied by
the respective entities. These properties are categorised as property, plant and equipment of the Group in the consolidated
statement of financial position.
16,854
16,626
13,193
13,374
(2,033)
1
(437)
(1,597)
15,226
(11)
14,971
266
Annual Report 2023 | Financial Report 201
6,061
Notes to the Consolidated Financial Statements (continued)
10 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
(5,373)
(4,854)
3,979
8,079
12,877
(8,252)
262,485
RMB million
RMB million
2022
2023
As at 31 December
Change of provision for impairment
Other equity movements
Dividends declared
Share of profit or loss
As at 1 January
Change of the cost
For the year ended 31 December 2023
(742)
244
1,241
(505)
62,683
100
1,438 (1,545)
720
(9,280)
208,160 208,157
156,641
Sub-total
61,973 61,970
59,055
Equity method
Others (iv)
Limited ("China Unicom") (iii)
10.03%
23,052
66
(390)
7,494 (3,492)
360
1,400
(6,367)
(230)
(298)
3,553 3,553
7,656
Equity method
Mapleleaf Century Limited ("MCL")
("Joy City")
5,414 66.67%
162
(162)
293
23
5,283 5,283
6,281
Equity method
Joy City Commercial Property Fund L. P.
Joint ventures
204,279
Buildings
RMB million
774
22,602 22,602
137
1,737
1,737
1,339
Equity method
COFCO Futures Company Limited
("Sino-Ocean") (ii)
(5,862)
29.59%
(2,194)
2,194
2,194
11,245
Equity method
Sino-Ocean Group Holding Limited
43.686%
104,645
83
14
26
1
21,801
Equity method
China United Network Communications
Company")
Gas Pipeline Co., Ltd. ("Pipeline
43.86%
12,104
(8)
(789)
21,569 (10,000) 1,332
21,569
10,000
Equity method
China Pipe Group Sichuan to East China
("COFCO Futures")
35.00%
1,795
(26)
3,025
For the year ended 31 December 2023
As at 1 January 2022
21
5,370
639
Additions
As at 1 January 2022
Cost
RMB million
Total
5,372
Others
1,480
1
1,479
1,810
1
1,809
(2,094)
Buildings
Deductions
(1,808)
640
(1,808)
(2,392)
1,599
1,599
Deductions
(1,139)
(1)
(1,138)
Charge for the year
(2,854)
(1)
(2,853)
As at 1 January 2022
Accumulated depreciation
4,204
3
4,201
31 December 2022
(2,394)
(939)
1,239
(2)
21 13
(3)
Charge for the year
As at 1 January 2023
Accumulated depreciation
As at 31 December 2023
Deductions
Additions
As at 1 January 2023
Cost
RMB million
Total
Others
Buildings
For the year ended 31 December 2023
(a) Right-of-use assets
8 LEASES
Notes to the Consolidated Financial Statements (continued)
Notes to the Consolidated Financial Statements (continued)
4,201
(2,394)
636
3,570
(2,091)
1,239
(938)
3,574
4
637
(1,267)
4,204
31
As at 31 December 2023
As at 1 January 2023
Net book value
As at 31 December 2023
As at 1 January 2023
Impairment
As at 31 December 2023
Deductions
(2,392)
(1,267)
As at 31 December 2022
Impairment
As at 1 January 2022
1
(437)
(2,033)
15,222
(5)
1
15,226
As at 31 December 2023
As at 1 January 2023
Fair value
As at 31 December 2023
As at 1 January 2023
Net book value
As at 31 December 2023
Deductions
As at 1 January 2023
Additions
Accumulated depreciation
(2,469)
As at 31 December 2023
13,193
16,854
Fair value
As at 31 December 2022
As at 1 January 2022
Net book value
As at 31 December 2022
Deductions
As at 1 January 2022
Additions
Accumulated depreciation
31 December 2022
Deductions
Additions
As at 1 January 2022
Cost
9 INVESTMENT PROPERTIES (continued)
Notes to the Consolidated Financial Statements (continued)
200 Annual Report 2023 | Financial Report
16,677
12,753
As at 31 December 2022
Deductions
As at 1 January 2023
Interest on lease liabilities
(b) The amounts recognised in profit or loss in relation to leases are as follows:
8 LEASES (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 199
The Group's right-of-use assets include the above assets and land use rights disclosed in Note 13.
The Group had neither significant profit from subleasing right-of-use assets nor profit or loss from sale and leaseback
transactions for the year ended 31 December 2023 (2022: same).
1,810
1
2,518
1
2,517
1,809
As at 31 December 2022
As at 1 January 2022
Net book value
As at 31 December 2022
Depreciation charge of right-of-use assets
Expense relating to short-term leases
Additions
Expense relating to leases of low-value assets
(except for short-term lease liabilities)
9 INVESTMENT PROPERTIES
Cost
RMB million
Buildings
1,537
1,313
1
324
319
74
1,139
939
54
RMB million
RMB million
2022
31 December
As at
As at 31
December
2023
Total
75.00%
258,933
Equity method
644,687
37,315
29,306
246,072
3,417,906
Total assets
MCL
RMB million
9,710
Joy City
RMB million
RMB million
RMB million
RMB million
Company China Unicom
Pipeline
COFCO
Futures
Sino-Ocean
RMB million RMB million
23,957
Total liabilities
3,156,057
216,858
holders of the associates and
joint ventures
Total equity attributable to equity
11,184
9,688
347,274
35,946
3,417
47,886
261,849
Total equity
12,773
22
297,413
1,369
25,889
198,186
CGB
The following table illustrates the financial information of the Group's major associates and joint ventures as at 31 December
2022 and for the year ended 31 December 2022:
10 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
For the year ended 31 December 2023
(20,985)
16,019
Net profit/(loss)
973
155
379,643
6,213
3,779
43,380
69,678
Total revenues
3,025
5,414
23,052
12,104
1,795
104,645
239
31,747
3,030
141
Notes to the Consolidated Financial Statements (continued)
204 Annual Report 2023 | Financial Report
(73)
141
19,032
3,030
242
(21,228)
18,860
Total comprehensive income
(444)
319
3
(243)
2,841
Other comprehensive income
371
18,713
investments
3,407
11,184
219
(15,650)
15,528
Net profit/(loss)
883
(145)
361,123
3,128
6,097
42,447
75,154
Others (iv)
3,553
5,283
22,602
21,569
3,222
16,651
(164)
774
The Group had no contingent liabilities with the associates and joint ventures as at 31 December 2023 and 31 December
2022. The Group had a capital contribution commitment of RMB13,638 million with associates and joint ventures as at 31
December 2023 (as at 31 December 2022: RMB15,231 million). The capital contribution commitment amount has been
included in the capital commitments in Note 38.
(i) Total adjustments include accounting policy difference adjustments, fair value adjustments and other adjustments.
(976)
(154)
16,841
3,128
225
(21,836)
12,763
Total comprehensive income
(1,750)
10
190
6
(6,186)
(2,765)
Other comprehensive income
1,737
2,194
98,085
investments
4,737
7,924
170,408
36,330
3,407
23,957
217,227
joint ventures after adjustments
holders of the associates and
Total equity attributable to equity
(6,447)
(1,764)
16,038
384
(7,790)
369
Total adjustments (i)
Proportion of the Group's
35,946
ownership
29.59%
Net carrying value of the
(5,862)
Impairment
3,553
5,283
22,602
21,569
1,737
8,056
98,085
investments
Gross carrying value of the
75.00%
66.67%
10.03%
43.86%
35.00%
43.686%
Net carrying value of the
Total revenues
Impairment provision
As at 31 December 2022, the major associates and joint ventures of the Group are as follows:
66.67%
75.00%
The British Virgin Islands
The British Cayman Islands
10.03%
PRC
43.86%
Place of incorporation
PRC
PRC
29.59%
Hong Kong, PRC
43.686%
PRC
Percentage of equity
interest held
Place of incorporation
35.00%
Percentage of equity
interest held
Name
Associates
10.03%
PRC
43.86%
PRC
35.00%
PRC
29.59%
Hong Kong, PRC
43.686%
PRC
MCL
Joint ventures
Joy City
China Unicom
Pipeline Company
COFCO Futures
Sino-Ocean
CGB
MCL
Joy City
Joint ventures
China Unicom
262,488
220,699
Total
54,481
(98)
585 (1,362)
1,028
54,328 54,328
64,058
Sub-total
46,042
132
590 (1,200)
1,028
45,492 45,492
(5,862)
50,121
262,485
The British Cayman Islands
The British Virgin Islands
8,079 (4,854) 1,302
(6,367)
Pipeline Company
COFCO Futures
Sino-Ocean
CGB
Associates
Name
As at 31 December 2023, the major associates and joint ventures of the Group are as follows:
(v) There is no significant restriction for the Group to dispose of its associates and joint ventures.
(iv) The Group invested in real estate, industrial logistics assets and other industries through these enterprises.
On 31 December 2023, the stock price of China Unicom was RMB4.38 per share.
(iii) The 2022 final dividend of RMB0.0427 in cash per ordinary share was approved and declared in the Annual General
Meeting of China Unicom on 29 June 2023. The Company received a cash dividend of RMB136 million. The 2023 interim
dividend of RMB0.0796 in cash per ordinary share was approved and declared in the Annual General Meeting of China
Unicom on 9 August 2023. The Company received a cash dividend of RMB254 million.
10 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
202 Annual Report 2023 | Financial Report
(ii) The Group made adjustments to the profit or loss on the basis of the statement of comprehensive income and the
statement of changes in equity for 2023 provided by Sino-Ocean Group. The profit and loss adjustment amount for 2023
is RMB -2,194 million, and the carrying amount of Sino-Ocean held by the Group as at 31 December 2023 was 0.
(i) The 2022 final dividend of RMB0.078 in cash per ordinary share was approved and declared in the Annual General
Meeting of CGB on 20 June 2023. The Company received a cash dividend of RMB742 million.
258,760
66.67%
75.00%
(8,252)
Notes to the Consolidated Financial Statements (continued)
14,746
3,571
16,543
232,244
joint ventures after adjustments
holders of the associates and
Total equity attributable to equity
(7,267)
(1,501)
15,565
362
9,514
251
Total adjustments (i)
11,301
9,622
159,241
174,806
14,384
8,121
Proportion of the Group's
5,414
3,025
Annual Report 2023 | Financial Report 203
23,052
12,104
1,795
5,862
104,645
investments
Gross carrying value of the
75.00%
66.67%
43.86%
35.00%
29.59%
43.686%
ownership
4,034
3,571
10.03%
231,993
21,814
26,169
206,172
3,509,522
Total liabilities
Total assets
MCL
RMB million
RMB million RMB million RMB million RMB million RMB million RMB million
Joy City
China
Unicom
COFCO
Futures
Sino-Ocean
CGB
The following table illustrates the financial information of the Group's major associates and joint ventures as at 31 December
2023 and for the year ended 31 December 2023:
10 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
7,029
For the year ended 31 December 2023
662,845
9,629
Pipeline
Company
3,232,537
24,127
11,301
9,622
357,935
Total equity attributable to equity
3,584
holders of the associates and
joint ventures
20,792
276,985
14,384
Total equity
12,826
7
304,910
7,430
22,585
185,380
(2,343)
Government agency bonds
Government bonds
Debt securities
Available-for-sale securities, at fair value
11.9 Available-for-sale securities
212 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
344,426
(i) Under IFRS 17 Insurance Contracts, policy loans are no longer accounted for as a separate financial asset and should be accounted for as fulfilment cash
flow of the relevant policies.
342,083
13,670
11 FINANCIAL ASSETS (continued)
Corporate bonds
For the year ended 31 December 2023
Others (i)
Sub-total
Equity securities
1,700,806
Funds
As at
31 December
2022
RMB million
47,188
As at
156,024
313,270
188,563
Subordinated bonds
180,686
Maturing:
RMB million
(Restated (i))
31 December
2022
174,398
RMB million
33,961
160,527
83,894
1,295,822
1,574,204
Annual Report 2023 | Financial Report 211
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
11 FINANCIAL ASSETS (continued)
11.8 Loans
Loans
Impairment
Net value
52,989
Within one year
After five years but within ten years
Over ten years
Total
Impairment
Net value
As at
31 December
2022
RMB million
(Restated (i))
344,426
(2,343)
342,083
As at
31 December
2022
After one year but within five years
879,443
94
Preferred stocks
85,450
38
793,861
879,443
420,287
59,495
59
378,824
858,665
1,738,108
(i)
Other available-for-sale securities mainly include unlisted equity investments, private equity funds, trust schemes and perpetual bonds.
(ii) Unlisted debt securities are those traded on the Chinese interbank market and those not publicly traded. Unlisted equity securities include those not traded
on stock exchanges, which are mainly open-ended funds with public market price quotations, wealth management products and private equity funds.
Debt securities
Maturing:
RMB million
-
contractual maturity schedule
After one year but within five years
After five years but within ten years
Over ten years
Total
214 Annual Report 2023 | Financial Report
As at
31 December
2022
RMB million
118,373
206,086
15,993
879,443
239,004
315,980
Within one year
Common stocks
2022
As at
Others (i)
Sub-total
Available-for-sale securities, at cost
Equity securities
Others (i)
Total
131,897
414,148
50,522
244,964
841,531
17,134
1,738,108
Annual Report 2023 | Financial Report 213
31 December
Notes to the Consolidated Financial Statements (continued)
11 FINANCIAL ASSETS (continued)
11.9 Available-for-sale securities (continued)
Debt securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted (ii)
Sub-total
Equity securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted (ii)
Sub-total
Total
For the year ended 31 December 2023
1,354,739
Total
15,993
Government agency bonds
Corporate bonds
Subordinated bonds
Others (i)
Sub-total
Equity investments
Funds
Common stocks
Others (ii)
Sub-total
Total
Debt investments
Listed in Mainland, PRC
Unlisted (iii)
Government bonds
Sub-total
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted (iii)
Sub-total
As at
31 December
2023
RMB million
3,622
6,813
187,138
315,435
230,771
743,779
206,963
Equity investments
415,413
Debt investments
11 FINANCIAL ASSETS (continued)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
11 FINANCIAL ASSETS (continued)
11.5 Investment in equity instruments at fair value through other comprehensive income
Common stocks
Preferred stocks
Others (i)
Total
By place of listing:
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Unlisted (ii)
Total
(i)
Other investment in equity instruments at fair value through other comprehensive income mainly include perpetual bonds.
(ii) Unlisted equity investments include those not traded on stock exchanges, which are mainly perpetual bonds.
11.6 Financial assets at fair value through profit or loss
As at
31 December
RMB million
14,787
50,445
72,773
138,005
56,962
8,891
72,152
138,005
In 2023, the Group disposed of investment in equity instruments at fair value through other comprehensive income amounted
to RMB2,713 million, and the net cumulative gains of RMB96 million on disposal was transferred from other comprehensive
income to retained earnings.
The dividends income of investment in equity instruments at fair value through other comprehensive income recognised
during the year are described in Note 22.
Annual Report 2023 | Financial Report 209
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
2023
339,220
961,596
1,705,375
231,704
144
62
1,342,294
1,574,204
As at 31 December 2022 there was no provision for impairment of held-to-maturity securities held by the Group.
Debt securities - fair value hierarchy
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds
Total
Debt securities - contractual maturity schedule
Maturing:
1,574,204
Within one year
After five years but within ten years
Over ten years
Total
As at 31 December 2022
Level 1
RMB million
Level 2
RMB million
Total
RMB million
240,597
104,751
719
177,217
976,103
417,814
1,080,854
185,426
186,145
After one year but within five years
378,105
1,004,162
178,203
13,734
RMB million
2022
50,058
693,721
743,779
422,464
41,877
10,230
487,025
961,596
1,705,375
(i) Other debt investments under financial assets at fair value through profit or loss mainly include trust schemes and debt investment plans.
(ii) Other equity investments under financial assets at fair value through profit or loss mainly include perpetual bond, private equity funds and unlisted equities.
(iii) Unlisted debt investments include those traded on the Chinese interbank market and those not publicly traded. Unlisted equity investments refer to
investments that are not traded on stock exchanges, mainly perpetual bonds, private equity funds and open-ended funds with public market price quotations.
210 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
11 FINANCIAL ASSETS (continued)
11.7 Held-to-maturity securities
(i)
Debt securities
Government bonds
31 December
As at
For the year ended 31 December 2023
Unlisted debt securities refer to debt securities traded in Chinese interbank market.
Total
Unlisted (i)
346,067
Listed overseas
Listed in Mainland, PRC
Debt securities
Total
Subordinated bonds
Corporate bonds
Government agency bonds.
Listed in Hong Kong, PRC
11 FINANCIAL ASSETS (continued)
97,081
Debt securities
The fair values of the underlying items of the Group's Insurance contracts with direct participation features are as follows:
As at
31 December
As at
31 December
2023
2022
RMB million
RMB million
Cash and cash equivalents
Term deposits
47,693
34,993
131,206
197,000
Investment in debt instruments at amortised cost
12,163
N/A
Investment in debt instruments at fair value through other comprehensive
income
1,077,916
N/A
Investment in equity instruments at fair value through other comprehensive
income
61,599
N/A
Financial assets at fair value through profit or loss
589,031
N/A
Loans
Held-to-maturity securities
Available-for-sale securities, at fair value
12 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
216 Annual Report 2023 | Financial Report
38,533
resell
Cash and cash equivalents
149,305
127,594
149,305
127,594
Financial liabilities at fair value through profit or
(13,878)
(3,344)
(13,878)
(3,344)
loss
Financial assets sold under agreements to
Securities at fair value through profit or loss
(216,851)
(216,851)
(148,958)
repurchase
Bonds payable
(36,166)
(34,997)
(36,278)
(35,387)
Interest-bearing loans and other borrowings
(12,857)
(12,774)
(12,857)
(12,774)
(i) The estimates and judgements to determine the fair value of financial assets are described in Note 4.2.
(ii) The fair values of investment in debt instruments at amortised cost, held-to-maturity securities and loans are determined by reference with the debt
securities which are measured by fair value. Please refer to Note 5.4.
(148,958)
Other miscellaneous items
Total
N/A
1,005
963
77
171
15,930
8,373
37,318
22,004
(i)
The Group's right-of-use assets include the above land use rights and right-of-use assets disclosed in Note 8.
(ii) As at 31 December 2023, other items in the Group's other assets were mainly subsidiary real estate related assets.
During the year ended 31 December 2023, the Group recognised an expected credit loss of RMB65 million on other
receivables (2022: an assets impairment loss of RMB36 million), and at 31 December 2023, the provision for impairment
of other receivables is RMB720 million (As at 31 December 2022: RMB639 million).
Annual Report 2023 | Financial Report 217
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
3,299
14 INSURANCE CONTRACTS
All of the future cash flows within the boundary of each group of contracts are included in the measurement of each group
of insurance contracts.
The Group estimates cash flows which are expected in the future and the timing and probability that they will occur based
on the information available at the reporting date. In making these expectations, the Group uses information about past
events, current conditions and forecasts of future conditions. The Group's estimate of future cash flows is the probability-
weighted mean of a range of scenarios that reflect the full range of possible outcomes.
The Group adjusts the estimates of future cash flows to reflect the time value of money.
Assumptions used to develop estimates about future cash flows are reassessed by the Group at the reporting date and
adjusted where required.
Significant actuarial assumptions used are discussed below:
Discount rates
Based on the information available at the reporting date, the Group; applies the bottom-up approach in determining the
the risk-free yield curve. The assumed spot discount rates are as follows:
As at 31 December 2023
As at 31 December 2022
218 Annual Report 2023 | Financial Report
Discount rate assumptions
2.57% 4.80%
2.59% 4.80%
11.10 Securities at fair value through profit or loss
14.1 Significant actuarial assumptions
(1) Estimates of future cash flows
19,759
4,662
7,765
564,510
N/A
178,972
N/A
715,824
N/A
59,482
167,942
186,876
2,087,550
1,937,657
13 OTHER ASSETS
Land use rights (i)
Investments receivable and prepaid
1,029
Disbursements
Prepayments to constructors
Tax prepaid
Others (ii)
Total
As at
As at
31 December
2022
31 December
2023
RMB million
RMB million
(Restated, Note
2.1.1.b)
7,861
8,092
Due from related parties
38,533
95
Financial assets purchased under agreements to
13,444
18,552
265
32,261
223,790
36,455
21
293
154,760
191,529
16,901
637
4,233
10,490
32,261
191,529
223,790
(ii) Unlisted debt securities are those traded on the Chinese interbank market and those not publicly traded. Unlisted equity securities are those not traded
on stock exchanges, which are mainly open-ended funds with public market price quotations.
Annual Report 2023 | Financial Report 215
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
11 FINANCIAL ASSETS (continued)
11.11 Financial assets purchased under agreements to resell
Maturing:
Within 30 days
Above 30 days
Total
As at
As at
31 December
31 December
(i) Other debt securities at fair value through profit or loss mainly include inter-bank certificates of deposits.
2023
27,755
9,622
Government bonds
19,759
Government agency bonds.
Corporate bonds
Others (i)
Sub-total
Equity securities
Funds
Common stocks
Others
Subtotal
Total
Debt securities
Listed in Mainland, PRC
152,347
Listed in Hong Kong, PRC
Sub-total
Equity securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted (ii)
Sub-total
Total
For the year ended 31 December 2023
As at
31 December
2022
RMB million
1,805
Unlisted (ii)
2022
Listed overseas
RMB million
2,744,169
N/A
138,005
N/A
138,005
N/A
1,705,375
N/A
1,705,375
N/A
Held-to-maturity securities (ii)
N/A
1,574,204
N/A
N/A
1,700,806
N/A
342,083
N/A
351,285
Available-for-sale securities, at fair value
1,720,974
N/A
1,720,974
Securities at fair value through profit or loss
N/A
223,790
RMB million
223,790
N/A
Loans (ii)
2,744,169
N/A
cost (ii)
77
19,759
38,215
318
38,533
Investment in debt instruments at fair value
through other comprehensive income
Investment in equity instruments at fair value
through other comprehensive income
Financial assets at fair value through profit or
loss
19,682
12 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The table below presents the carrying amount and estimated fair value of major financial assets and liabilities:
Estimated fair value (i)
As at
As at
31 December
2023
RMB million
31 December
2022
RMB million
As at
31 December
2023
RMB million
As at
Carrying amount
485,567
6,333
N/A
219,379
211,349
413,255
6,520
6,333
31 December
485,567
413,255
6,520
Investment in debt instruments at amortised
Statutory deposits - restricted
Term deposits
RMB million
2022
N/A
at 31 December 2023
6,251
798
Premiums received
578
33,770
Insurance contract liabilities as
222 Annual Report 2023 | Financial Report
26,143
(3,277)
Claims and other expenses paid
25,665
(66,101)
(66,101)
62,824
Total cash flows
(16,857)
(16,857)
paid
Insurance acquisition cash flows
79,681
Notes to the Consolidated Financial Statements (continued)
79,681
(66,101)
For the year ended 31 December 2023
Excluding loss
14.2 Insurance contract liabilities (continued)
31,225
699
(25,665)
3,766
RMB million
Total
risk
non-financial
adjustment for
Present value
of future cash
flows
component
component
Loss
Risk
liabilities for
incurred claims
approach at transition
the modified retrospective
Contracts measured using
at 1 January 2022
Insurance contract liabilities as
liabilities for remaining
coverage
Contracts measured using the premium allocation approach (continued)
(1) Reconciliation of the liabilities for remaining coverage and the liabilities for incurred claims for
insurance contracts issued (continued)
14 INSURANCE CONTRACTS (continued)
Investment components
Changes to liabilities for
(146)
incurred claims
689
689
losses on onerous contracts
Losses and reversals of
16,531
16,531
acquisition cash flows
Amortisation of insurance
38,045
518
39,196
(1,669)
expenses
Incurred claims and other
(52,147)
(52,039)
(108)
(52,147)
Total insurance revenue
(52,039)
693
Other contracts
Total insurance service
1,175
(3,250)
(3,934)
36,620
(980)
(34,319)
comprehensive income
Total amounts recognised in
1,991
20
674
1,297
contracts
Financial changes in insurance
(816)
(166)
35,946
(980)
(35,616)
Insurance service result
51,331
(166)
35,946
(980)
16,531
expenses
(684)
36,383
59,392
(18,160)
14 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 223
35,872
724
29,959
1,778
3,411
at 31 December 2022
Insurance contract liabilities as
779
(58,613)
(58,613)
(58,613)
Total cash flows
Claims and other expenses paid
(16,913)
(16,913)
paid
Insurance acquisition cash flows
76,305
76,305
Premiums received
14.2 Insurance contract liabilities (continued)
22,770
(2) Reconciliation of fulfilment cash flows and contractual service margin for insurance contracts issued
Contracts not measured using the premium allocation approach
Present value adjustment for
of future cash non-financial
(108)
(6,658)
(6,658)
(6,658)
(1,771)
(1,771)
Changes relating to current service
Current experience adjustment
financial risk
(65,689)
(65,689)
4,231,075
783,473
Change in the risk adjustment for non-
the service provided
Contractual service margin recognised for
34,186
3,413,416
2023
Insurance contract liabilities as at 1 January
Total
Contractual
risk service margin
RMB million
flows
Risk
(18,160)
(22,770)
(1,290)
(3,783)
incurred claims
Changes to liabilities for
1,770
1,770
losses on onerous contracts
Losses and reversals of
17,045
17,045
acquisition cash flows
Amortisation of insurance
37,675
648
37,718
(691)
expenses
Incurred claims and other
(55,407)
(55,407)
Total insurance revenue
(37,247)
(37,247)
Other contracts
(634)
Investment components
(4,417)
expenses
31
34,577
1,079
(36,977)
comprehensive income
Total amounts recognised in
2,044
17
642
1,385
contracts
Financial changes in insurance
Insurance service result
(3,334)
14
33,935
1,079
(38,362)
52,073
14
33,935
1,079
17,045
Total insurance service
approach at transition
704,912
Contracts measured using
195,893
46,618
10,735
138,540
income
Total amounts recognised in comprehensive
257,169
449
256,720
Financial changes in insurance contracts
(61,276)
46,618
10,286
(118,180)
Insurance service result
99,022
46,618
10,286
42,118
Total insurance service expenses
247
247
Changes to liabilities for incurred claims
Investment components
12,595
(209,261)
Premiums received
14.2 Insurance contract liabilities (continued)
14 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
220 Annual Report 2023 | Financial Report
4,825,405
35,387
30,904
4,759,114
31 December 2023
Insurance contract liabilities as at
398,437
(255,365)
653,802
Total cash flows
(255,365)
(255,365)
Claims and other expenses paid
(51,110)
(51,110)
Insurance acquisition cash flows paid
704,912
(1,771)
209,261
(1) Reconciliation of the liabilities for remaining coverage and the liabilities for incurred claims for
insurance contracts issued (continued)
12,595
Losses and reversals of losses on onerous
component
Excluding loss
Liabilities for remaining
coverage
Contracts not measured using the premium allocation approach
(1) Reconciliation of the liabilities for remaining coverage and the liabilities for incurred claims for
insurance contracts issued
14.2 Insurance contract liabilities
14 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 219
The risk adjustment for non-financial risk is calculated at the Group level and then allocated down to each group of contracts
in accordance with their risk profiles. The Group determines non-financial risk adjustments based on the confidence interval
method and at a 75% confidence level.
(2) Risk adjustment for non-financial risk
The policy dividend assumption is uncertainty and is affected by factors such as the expected investment returns, the Group's
dividend policy, and the reasonable expectations of policyholders. The Group is obliged to pay 70% or a higher percentage
as agreed in the insurance policy of the cumulative distributable income to the participating insurance policyholders.
Policy dividend assumption
The lapse rates are affected by certain factors, such as future macro-economy, availability of financial substitutions, and
market competition, which bring uncertainty to these assumptions. The lapse rates are determined with reference to
creditable past experience, current conditions, future expectations and other information.
Lapse rates
Expense assumptions are based on the information available at the reporting date with the consideration of previous
expense studies and future trends. Expense assumptions are affected by certain factors such as future inflation and market
competition which bring uncertainty to these assumptions.
Expense assumptions
The Group bases its morbidity assumptions for critical illness products on analysis of historical experience and expectations
of future developments. There are two main sources of uncertainty. Firstly, wide-ranging lifestyle changes could result in
future deterioration in morbidity experience. Secondly, future development of medical technologies and improved coverage
of medical facilities available to policyholders may bring forward the timing of diagnosing critical illness, which demands
earlier payment of the critical illness benefits.
The Group bases its mortality assumptions on the China Life Insurance Mortality Table (2010-2013), adjusted where
appropriate to reflect the Group's recent historical mortality experience. The main source of uncertainty with insurance
contracts is that epidemics and wide-ranging lifestyle changes could result in deterioration in future mortality experience.
Similarly, continuing advancements in medical care and social conditions may push forward improvements in longevity.
The mortality and morbidity assumptions are based on the Group's historical mortality and morbidity experience. The
assumed mortality rates and morbidity rates vary with the age of the insured and contract type.
(1) Estimates of future cash flows (continued)
Mortality/Morbidity
14.1 Significant actuarial assumptions (continued)
Loss Liabilities for
component incurred claims
contracts
Total
Insurance contract liabilities as at
1 January 2023
42,118
42,118
flows
Amortisation of insurance acquisition cash
44,062
46,371
(2,309)
Incurred claims and other expenses
(160,298)
(160,298)
Total insurance revenue
(16,727)
(16,727)
Other contracts
(20,943)
(20,943)
(122,628)
(122,628)
Contracts measured using the modified
retrospective approach at transition
Contracts measured using the fair value
approach at transition
4,231,075
34,873
20,169
4,176,033
RMB million
Contracts not measured using the premium allocation approach (continued)
Liabilities for remaining
coverage
Excluding loss
34,873
20,169
4,176,033
31 December 2022
Insurance contract liabilities as at
365,340
(212,884)
578,224
Total cash flows
(212,884)
(212,884)
Claims and other expenses paid
(43,884)
(43,884)
Insurance acquisition cash flows paid
622,108
622,108
Premiums received
171,236
(171,236)
Investment components
92,402
43,041
4,231,075
9,920
Annual Report 2023 | Financial Report 221
For the year ended 31 December 2023
35,872
724
29,959
1,778
3,411
at 1 January 2023
component component
Total
adjustment
for non-
financial risk
of future cash
flows
RMB million
Loss
Present value
Risk
incurred claims
liabilities for
Excluding loss
coverage
liabilities for remaining
Insurance contract liabilities as
Contracts measured using the premium allocation approach
(1) Reconciliation of the liabilities for remaining coverage and the liabilities for incurred claims for
insurance contracts issued (continued)
14.2 Insurance contract liabilities (continued)
14 INSURANCE CONTRACTS (continued)
Notes to the Consolidated Financial Statements (continued)
39,441
income
Total amounts recognised in comprehensive
(127,171)
(127,171)
Total insurance revenue
(2,515)
(2,515)
Other contracts
(17,179)
(17,179)
(107,477)
(107,477)
Contracts measured using the modified
retrospective approach at transition
Contracts measured using the fair value
approach at transition
3,773,333
33,480
10,249
3,729,604
1 January 2022
Insurance contract liabilities as at
RMB million
Total
component incurred claims
component
Liabilities for
Loss
Incurred claims and other expenses
(1,125)
42,532
41,407
140,032
399
139,633
Financial changes in insurance contracts
(47,630)
43,041
9,521
(100,192)
Insurance service result
79,541
43,041
the modified retrospective
9,521
Total insurance service expenses
509
509
Changes to liabilities for incurred claims
10,646
10,646
contracts
Losses and reversals of losses on onerous
26,979
26,979
Amortisation of insurance acquisition cash
flows
26,979
(65,689)
1,495
Impact of insurance contracts initially
the modified
retrospective
approach at the
measured using
Insurance
contracts
Insurance
769,137
74,734
136,909
557,494
As at 31 December 2023
22,944
1,901
3,932
17,111
Financial changes in insurance contracts
28,409
38,581
11,175
(21,347)
Changes relating to future service
(22,684)
(12,512)
11,175
contracts
(21,347)
transition date
Other contracts
(36,736)
Changes relating to future service
(48,825)
(10,873)
(1,216)
(36,736)
contractual service margin
Changes in estimates with adjustment to
47,966
47,966
the period
Impact of insurance contracts initially recognised in
(43,273)
(463)
(7,643)
(35,167)
Changes relating to current service
805,433
139,178
666,255
As at 1 January 2022
RMB million
Total
measured using
the fair value
approach at the
transition date
(1,216)
contractual service margin
51,093
(5) Reconciliation of contractual service margin for insurance contracts not measured using the
premium allocation approach
14.2 Insurance contract liabilities (continued)
14 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
769,137
285,163
194,653
105,156
119,844
64,321
As at
31 December
2023
RMB million
226 Annual Report 2023 | Financial Report
Total
3-5 years (including 5 years)
510 years (including 10 years)
More than 10 years
1 - 3 years (including 3 years)
1 year or less (including 1 year)
Number of years until expected to be amortised
The expected amortisation of contractual service margin provided in the table below represents the amount by which the
carrying value of the Group's contractual service margin at 31 December 2023 is expected to be apportioned to future years
on the basis of the unit of coverage, which does not include contractual service margin for future new business, accrued
interest, etc., and therefore there may be differences with the amortisation of contractual service margin in future years.
(4) Expected amortisation of contractual service margin
772
772
521
Insurance
contracts
Changes in estimates with adjustment to
measured using
retrospective
51,093
the period
Impact of insurance contracts initially recognised in
(65,689)
(3,131)
(12,088)
(50,470)
Changes relating to current service
783,473
37,383
133,890
612,200
As at 1 January 2023
RMB million
Total
transition date Other contracts
transition date
approach at the
approach at the
the fair value
measured using
contracts
Insurance
the modified
521
37,093
Financial changes in insurance contracts
6,694
6,694
Reinsurance premiums paid
1,674
(1,674)
Investment components
1,937
4,441
300
(2,804)
income
Total amounts recognised in comprehensive
1,444
107
1,337
493
4,441
193
(4,141)
Gains or losses on reinsurance contracts
Financial changes in reinsurance contracts held
4,634
4,441
193
Incurred claims and other expenses recovered
696
from reinsurers
(5,868)
14 INSURANCE CONTRACTS (continued)
Notes to the Consolidated Financial Statements (continued)
228 Annual Report 2023 | Financial Report
(123)
19
(142)
December 2023
Reinsurance contract liabilities as at 31
24,420
7,087
2,290
15,043
December 2023
Reinsurance contract assets as at 31
24,297
7,106
2,290
14,901
Net assets/(liabilities) of reinsurance contract
as at 31 December 2023
826
(5,868)
6,694
Total cash flows
(5,868)
(859)
696
389
Reinsurance contract assets as at 1 January
2023
RMB million
Total
loss-recovery Loss-recovery recovered from
component component
reinsurers
incurred claims
Assets for
Excluding
Assets for remaining coverage
recovered from reinsurers
(1) Reconciliation of remaining coverage and incurred claims for reinsurance contracts held
Contracts not measured using the premium allocation approach
14.3 Reinsurance contract assets/(liabilities)
14 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 227
783,473
37,383
133,890
612,200
As at 31 December 2022
22,172
753
3,571
17,848
12,842
389
1,990
21,669
3,549
3,745
(196)
Amounts recovered from reinsurers
recovered from reinsurers
Changes to assets for incurred claims
Recognition and reversals of loss-recovery
component
expenses
Recovery of incurred claims and other
(4,141)
(4,141)
Allocation of reinsurance premiums paid
21,534
6,859
1,990
12,685
as at 1 January 2023
Net assets/(liabilities) of reinsurance contract
(135)
22
(157)
January 2023
Reinsurance contract liabilities as at 1
6,837
(74,118)
Total
47,966
37,884
2,930,016
2022
Insurance contract liabilities as at 1 January
RMB million
Total
Contractual
risk service margin
Risk
adjustment for
non-financial
Present value
of future cash
flows
Contracts not measured using the premium allocation approach (continued)
(2) Reconciliation of fulfilment cash flows and contractual service margin for insurance contracts
issued (continued)
14.2 Insurance contract liabilities (continued)
14 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
224 Annual Report 2023 | Financial Report
4,825,405
769,137
36,928
4,019,340
Insurance contract liabilities as at 31
December 2023
398,437
398,437
805,433
Total cash flows
3,773,333
the service provided
53,731
contractual service margin
Changes in estimates with adjustment to
772
47,966
1,790
(48,984)
recognised in the period
Impact of insurance contracts initially
(58,785)
(43,273)
(2,017)
(13,495)
Changes relating to current service
(13,495)
(13,495)
Current experience adjustment
(2,017)
(2,017)
financial risk
Change in the risk adjustment for non-
(43,273)
(43,273)
Contractual service margin recognised for
(4,906)
(255,365)
Claims and other expenses paid
5
242
Changes to liabilities for incurred claims
12,595
28,409
1,939
(17,753)
Changes relating to future service
12,074
661
11,413
contractual service margin
Changes in estimates without adjustment to
(22,684)
29
22,655
contractual service margin
Changes in estimates with adjustment to
521
51,093
1,249
(51,821)
recognised in the period
247
(255,365)
Changes relating to past service
5
(51,110)
(51,110)
Insurance acquisition cash flows paid
704,912
704,912
Premiums received
195,893
(14,336)
2,742
207,487
income
Total amounts recognised in comprehensive
257,169
22,944
2,569
231,656
Financial changes in insurance contracts
(61,276)
(37,280)
173
(24,169)
Insurance service result
247
242
47,966
(48,825)
contractual service margin
54,854
1,649
53,205
Insurance acquisition cash flows
(737,251)
(22,061)
(715,190)
(787,451)
(14,355)
(773,096)
future cash inflows
Estimates of the present value of
RMB million
Total
Onerous
contracts
contracts
Total
Non-onerous
Onerous
contracts
RMB million
Non-onerous
contracts
2022
2023
(3) Impact of the initial recognition of the insurance contracts issued in the current period
Contracts not measured using the premium allocation approach
44,060
14.2 Insurance contract liabilities (continued)
2,610
Others
1,790
17
1,773
1,249
51,093
51,093
Contractual service margin
10
1,239
Risk adjustment for non-financial risk
688,267
22,816
665,451
735,630
14,866
720,764
future cash outflows
Estimates of the present value of
641,597
20,206
621,391
680,776
13,217
667,559
46,670
Changes in estimates without adjustment to
14 INSURANCE CONTRACTS (continued)
Notes to the Consolidated Financial Statements (continued)
116,365
Financial changes in insurance contracts
(47,630)
(44,132)
(5,193)
1,695
Insurance service result
509
3
506
Changes relating to past service
509
3
506
Changes to liabilities for incurred claims
10,646
(859)
(3,179)
14,684
Changes relating to future service
9,874
(63)
9,937
22,172
For the year ended 31 December 2023
140,032
income
Annual Report 2023 | Financial Report 225
4,231,075
783,473
34,186
3,413,416
December 2022
Insurance contract liabilities as at 31
365,340
365,340
Total cash flows
(212,884)
(212,884)
Claims and other expenses paid
(43,884)
(43,884)
Insurance acquisition cash flows paid
622,108
622,108
Premiums received
92,402
(21,960)
(3,698)
118,060
Total amounts recognised in comprehensive
For the year ended 31 December 2023
257
Changes relating to current service
Notes to the Consolidated Financial Statements (continued)
1,146
RMB million
RMB million
50,712
54,925
1,779
1,994
65,689
43,273
42,118
26,979
160,298
52,147
55,407
212,445
182,578
Gains or losses on reinsurance
1,019
5
979
35
115
(6)
121
2022
I
2023
238 Annual Report 2023 | Financial Report
148,958
As at 31 December 2023, bonds with a carrying amount of RMB182,528 million (as at 31 December 2022: RMB110,104
million) were pledged as collateral for financial assets sold under agreements to repurchase resulting from repurchase
transactions entered into by the Group in the interbank markets.
For debt repurchase transactions through the stock exchange, the Group is required to deposit certain exchange-traded
bonds into a collateral pool with fair value converted at a standard rate pursuant to the stock exchange's regulation which
should be no less than the balance of the related repurchase transaction. As at 31 December 2023, the carrying amount
of securities deposited in the collateral pool was RMB310,320 million (as at 31 December 2022: RMB269,925 million). The
collateral is restricted from trading during the period of the repurchase transaction.
Annual Report 2023 | Financial Report 237
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
19 STATUTORY INSURANCE FUND
As required by the former CIRC Order [2008] No. 2, "Measures for Administration of Statutory Insurance Fund", all insurance
companies have to pay the statutory insurance fund contribution from 1 January 2009 to 31 December 2022.
Since January 1,2023, the Group has paid the Insurance Protection Fund in accordance with the "Measures for the
Administration of the Insurance Security Fund" (Issued by Order no.7 [2022] Former CBIRC, the Ministry of Finance of the
People's Republic of China and the People's Bank of China) and the "Notice of the General Office of the China Banking
and Insurance Regulatory Commission on Matters related to the Payment of Insurance Protection Fund" (No. 2 [2023] of
the General Office of the China Banking and Insurance Regulatory Commission).
The fund contribution is equal to the product of the business income and the fund rate, which is composed of the base
rate and the risk differential rate, and is equal to the sum of the base rate and the risk differential rate.
(1) Benchmark Interest Rate
Short-term health insurance and accident insurance shall be paid at 0.8% of business income;
Life insurance, long-term health insurance and annuity insurance shall be paid at 0.3% of business income; Among them,
investment-linked insurance shall be paid at 0.05% of business income;
(2) Risk differential rate
The risk differential rate is based on the results of the comprehensive solvency risk rating. When the rating is A (including
AAA, AA and A), B (including BBB, BB and B), C and D, the applicable rate is -0.02%,0%, 0.02% and 0.04%, respectively.
When the life insurance protection fund reaches 1% of the total assets of the industry, payment will be suspended. The
total assets of the industry shall be subject to the data determined by the State Financial Supervision and Regulation.
20 INSURANCE REVENUE
Contracts not measured using the premium allocation approach
Amounts relating to the changes in the liabilities for remaining coverage
Expected incurred claims and other expenses
Change in the risk adjustment for non-financial risk
Contractual service margin recognised for the service provided
Amortisation of insurance acquisition cash flows
Sub-total
Contracts measured using the premium allocation approach
Total
For the year ended 31 December
216,851
59
Amounts recovered from reinsurers
1,269
7
1,013
20
229
at 1 January 2022
Reinsurance contract liabilities as
January 2022
Reinsurance contract assets as at 1
RMB million
Total
risk
Assets for incurred claims
recovered from reinsurers
Present value Risk adjustment
for non-financial
of future cash
flows
component
component
Loss-recovery
Excluding
loss-recovery
Assets for remaining coverage
recovered from reinsurers
(1) Reconciliation of remaining coverage and incurred claims for reinsurance contracts held (continued)
Contracts measured using the premium allocation approach (continued)
14.3 Reinsurance contract assets/(liabilities) (continued)
14 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2023
(111)
59
3
(30)
reinsurers
claims recovered from
Changes to assets for incurred
recovery component
Recognition and reversals of loss-
other expenses
845
11
858
(24)
Recovery of incurred claims and
(696)
.1
$)
(696)
Allocation of reinsurance premiums
paid
1,239
7
1,091
23
118
reinsurance contract as at 1
January 2022
Net assets/(liabilities) of
78
Notes to the Consolidated Financial Statements (continued)
148,958
Total
2022
RMB million
22 March 2019
Total
22 March 2029
4.28%
35,000
35,000
35,000
35,000
The fair value of bonds payable is based on the valuation results of China Central Depository & Clearing Co., Ltd.
On 20 March 2019, the Company issued a bond in the national inter-bank bond market at a principal amount of RMB35
billion, and completed the issuance on 22 March 2019. The bond has a 10-year maturity and a fixed coupon rate of 4.28%
per annum. The Company has a conditional right to redeem the bonds at the end of the fifth year. If the Company does not
redeem the bonds at the end of the fifth year, the coupon rate per annum for the remaining 5 years will be raised to 5.28%.
On 18 February 2024, the Company issued the "Notice of Exercise of Redemption Option of China Life Insurance Company
Limited 2019 Bonds for Capital Replenishment (Bond Pass-Through) " and on 22 March 2024, the Company redeemed the
capital supplementary Bond in full.
Bonds payable are measured at amortised cost as described in Note 2.4.2.
236 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
17 OTHER LIABILITIES
Payable to the third-party holders of consolidated structured entities
Salary and welfare payable
Brokerage and commission payable
Payable to constructors
Interest payable of debt instruments
Agency deposits
Tax payable
RMB million
Stock appreciation rights (Note 31)
2023
Maturity date
25 June 2024
773
742
2,605
2,450
2,495
2,307
6,984
6,756
436
15 June 2034
15 June 2034
51
32
12,857
12,774
(i) The adjustment date is 1 January of each year.
16 BONDS PAYABLE
As at 31 December 2023, all bonds payable were the bonds for capital replenishment (the "Bond") with a total carrying
amount of RMB36,166 million (as at 31 December 2022: RMB34,997 million), and the fair value of RMB36,278 million (as
at 31 December 2022: RMB35,387 million). The fair value of the Bond was classified as level 2 in the fair value hierarchy.
The following table presents the par value of the bonds payable:
As at
31 December
As at
31 December
Issue date
Interest rate p. a.
216,579
272
Others
As at
126,750
117,751
18 FINANCIAL ASSETS SOLD UNDER AGREEMENTS TO REPURCHASE
As at
As at
31 December
31 December
2023
2022
RMB million
RMB million
Interbank markets
150,028
101,641
Stock exchange markets
66,823
47,317
216,851
148,958
Total
Maturing:
Within 30 days
More than 30 days within 90 days
21,318
Total
23,509
181
As at
31 December
31 December
2023
2022
RMB million
RMB million
(Restated,
Note 2.1.1.b)
84,295
73,845
8,404
11,735
4,780
4,664
2,189
2,606
1,451
1,241
1,107
1,298
834
704
340
8 March 2024
230 Annual Report 2023 | Financial Report
(6
(2,833)
3,384
Total cash flows
(2,833)
(2,833)
from reinsurers
Incurred claims and other expenses recovered
3,384
3,384
Reinsurance premiums paid
1,604
(1,604)
Investment components
3,049
5,103
223
(2,277)
income
Total amounts recognised in comprehensive
1,217
71
Financial changes in reinsurance contracts held
1,832
551
5,103
Net assets/(liabilities) of reinsurance contract
12,685
loss-recovery
Excluding
Assets for remaining coverage
recovered from reinsurers
(1) Reconciliation of remaining coverage and incurred claims for reinsurance contracts held (continued)
Contracts measured using the premium allocation approach
14.3 Reinsurance contract assets/(liabilities) (continued)
14 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 229
(135)
22
(157)
December 2022
Reinsurance contract liabilities as at 31
21,669
6,837
1,990
12,842
December 2022
Reinsurance contract assets as at 31
21,534
6,859
1,990
as at 31 December 2022
Loss-recovery
152
Gains or losses on reinsurance contracts
(132)
January 2022
Reinsurance contract liabilities as at 1
18,058
2,977
1,767
13,314
2022
RMB million
Total
Assets for
incurred claims
recovered from
reinsurers
component
component
Loss-recovery
Excluding
loss-recovery
recovered from reinsurers
Reinsurance contract assets as at 1 January
Assets for remaining coverage
(1) Reconciliation of remaining coverage and incurred claims for reinsurance contracts held (continued)
Contracts not measured using the premium allocation approach (continued)
14.3 Reinsurance contract assets/(liabilities) (continued)
14 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
8
(3,423)
(124)
as at 1 January 2022
5,255
5,103
152
834
834
268
268
Amounts recovered from reinsurers
recovered from reinsurers
Changes to assets for incurred claims
Recognition and reversals of loss-recovery
component
4,153
4,269
(116)
expenses
Recovery of incurred claims and other
(3,423)
(3,423)
Allocation of reinsurance premiums paid
17,934
2,985
1,767
13,182
Net assets/(liabilities) of reinsurance contract
(65)
component
Assets for incurred claims
recovered from reinsurers
Present value Risk adjustment
of future cash
flows
RMB million
recovered from reinsurers
Incurred claims and other expenses
1,714
1,714
Reinsurance premiums paid
1,283
(1,283)
Investment components
(704)
(2)
(128)
(29)
(545)
comprehensive income
Total amounts recognised in
77
37
I
40
contracts held
Financial changes in reinsurance
(781)
(2)
Total cash flows
(165)
1,714
(2,051)
100
1
(166)
at 31 December 2023
Reinsurance contract liabilities as
1,426
10
1,790
28
(402)
31 December 2023
Reinsurance contract assets as at
1,361
10
10
1,890
29
29
(568)
December 2023
reinsurance contract as at 31
Net assets/(liabilities) of
(337)
(2,051)
(2,051)
component
(29)
(196)
2,402
12
2,786
58
(454)
January 2023
reinsurance contract as at 1
Net assets/(liabilities) of
(25)
2,427
12
2,757
29
1
(55)
at 1 January 2023
Reinsurance contract liabilities as
57
(399)
January 2023
Reinsurance contract assets as at 1
Total
for non-
financial risk
Allocation of reinsurance premiums
(585)
paid
(585)
(2)
21
(165)
(29)
(810)
(11)
(799)
contracts
Gains or losses on reinsurance
30
30
Amounts recovered from reinsurers
reinsurers
claims recovered from
Changes to assets for incurred
recovery component
Recognition and reversals of loss-
584
9
634
(59)
other expenses
Recovery of incurred claims and
(585)
8 March 2024
127,171
E
For the year ended 31 December 2023
14 INSURANCE CONTRACTS (continued)
14.3 Reinsurance contract assets/(liabilities) (continued)
(5) Reconciliation of contractual service margin for reinsurance contracts held not measured using
the premium allocation approach
As at 1 January 2023
Changes relating to current service
Impact of reinsurance contracts initially recognised in
the period
Changes in estimates with adjustment to contractual
service margin
Changes relating to future service
Financial changes in reinsurance contracts held
As at 31 December 2023
As at 1 January 2022
Changes relating to current service
Impact of reinsurance contracts initially recognised in
the period
Changes in estimates with adjustment to contractual
service margin
Changes relating to future service
Financial changes in reinsurance contracts held
As at 31 December 2022
Reinsurance
contracts held
measured using
the modified
retrospective
approach at the
transition date
10,716
Other contracts
4,629
1,308
36
62
(1,040)
62
Contractual service margin
(36)
9
(27)
(170)
2
(168)
Total
(4) Expected amortisation of contractual service margin
The expected amortisation of contractual service margin provided in the table below represents the amount by which the
carrying value of the Group's contractual service margin at 31 December 2023 is expected to be apportioned to future
years on the basis of the unit of coverage, which does not include contractual service margin of reinsurance contracts held
for future new business, accrued interest, etc., and therefore there may be differences with amortisation of contractual
service margin in future years.
Number of years until expected to be amortised
1 year or less (including 1 year)
1 - 3 years (including 3 years)
3-5 years (including 5 years)
510 years (including 10 years)
More than 10 years
Total
234 Annual Report 2023 | Financial Report
As at
31 December
2023
RMB million
797
1,587
2,395
9
Total
(13,806)
857
(168)
(168)
11,973
(357)
11,616
11,973
(525)
11,448
(1,000)
(4)
(1,004)
(13,806)
(524)
(14,330)
Annual Report 2023 | Financial Report 235
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
257
257
Current experience adjustment
(344)
(344)
financial risk
819
RMB million
5
814
(524)
(14,330)
857
(27)
(27)
2,962
435
3,397
2,962
408
3,370
(598)
(15)
(613)
(10,585)
(131)
(10,716)
Reinsurance
contracts held
measured using
the modified
retrospective
approach at the
transition date
Other contracts
RMB million
Total
(25,593)
(25,593)
27
Risk adjustment for non-financial risk
(6)
Changes relating to past service
834
834
Gains or losses on reinsurance contracts held
Financial changes in reinsurance contracts held
Total amounts recognised in comprehensive
income
(9,276)
(1,159)
12,267
1,832
1,842
379
(1,004)
1,217
(7,434)
(780)
11,263
3,049
Reinsurance premiums paid
3,384
3,384
Incurred claims and other expenses recovered
from reinsurers
(2,833)
(2,833)
834
Total cash flows
834
Changes to assets for incurred claims
(344)
819
732
Impact of reinsurance contracts held initially
recognised in the period
106
62
(168)
Changes in estimates with adjustment to
contractual service margin
(10,729)
(887)
11,616
Changes in estimates without adjustment to
contractual service margin
256
10
266
Changes relating to future service
(10,367)
(815)
11,448
266
recovered from reinsurers
551
551
Net assets/(liabilities) of reinsurance contract
as at 31 December 2022
contracts
with a net
gain
contracts
with a net
cost
Reinsurance
contracts with contracts with
Reinsurance
Total
a net gain
RMB million
a net cost
RMB million
Total
future cash inflows
560
191
751
1,142
4
1,146
Estimates of the present value of
future cash outflows
(551)
(209)
(760)
(1,034)
Reinsurance
Reinsurance
2022
2023
27,934
7,930
(14,330)
21,534
Reinsurance contract assets as at 31
December 2022
27,998
7,870
(14,199)
21,669
Reinsurance contract liabilities as at 31
Change in the risk adjustment for non-
December 2022
60
(131)
(135)
Annual Report 2023 | Financial Report 233
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
14 INSURANCE CONTRACTS (continued)
14.3 Reinsurance contract assets/(liabilities) (continued)
(3) Impact of the initial recognition of the reinsurance contracts in the current period
Contracts not measured using the premium allocation approach
Estimates of the present value of
For the year ended 31 December
6M SOFR+1.15%
LPR (i)
LPR+0.53% (i)
LPR+0.63% (i)
819
(64)
the service provided
14 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 231
(25)
29
1
(55)
at 31 December 2022
Reinsurance contract liabilities as
2,427
12
2,757
57
67
(399)
31 December 2022
Reinsurance contract assets as at
2,402
12
2,786
58
(454)
14.3 Reinsurance contract assets/(liabilities) (continued)
December 2022
(2) Reconciliation of fulfilment cash flows and contractual service margin for reinsurance contracts held
Contracts not measured using the premium allocation approach
Present value adjustment for
of future cash non-financial
the service provided
Contractual service margin recognised for
21,534
(14,330)
7,930
27,934
as at 1 January 2023
Net assets/(liabilities) of reinsurance contract
(135)
(131)
60
(64)
January 2023
Reinsurance contract liabilities as at 1
21,669
(14,199)
7,870
27,998
2023
Reinsurance contract assets as at 1 January
Total
Contractual
risk service margin
RMB million
flows
Risk
857
reinsurance contract as at 31
747
323
5
LO
979
35
(696)
contracts
15 INTEREST-BEARING LOANS AND OTHER BORROWINGS
As at
As at
31 December
31 December
Maturity date
Interest rate
2023
2022
RMB million
RMB million
Guaranteed loans
Guaranteed loans
Credit loans
Credit loans
Mortgages loans
Mortgages loans
Mortgages loans
Total
27 September 2024
15 June 2034
EURIBOR+2.8%
EURIBOR+2.8%
3.08%
819
Financial changes in reinsurance
Net assets/(liabilities) of
contracts held
|
(1,359)
2,106
(1,359)
(1,359)
2,106
Total cash flows
recovered from reinsurers
Incurred claims and other expenses
2,043
| |
2,106
Reinsurance premiums paid
(2,043)
Investment components
416
1,011
35
(635)
comprehensive income
Total amounts recognised in
93
9
32
61
857
5
financial risk
232 Annual Report 2023 | Financial Report
(123)
(80)
35
(78)
December 2023
Reinsurance contract liabilities as at 31
24,420
(10,636)
7,859
27,197
December 2023
Reinsurance contract assets as at 31
24,297
(10,716)
7,894
27,119
Net assets/(liabilities) of reinsurance contract
as at 31 December 2023
826
826
Total cash flows
(5,868)
(5,868)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
14 INSURANCE CONTRACTS (continued)
14.3 Reinsurance contract assets/(liabilities) (continued)
Contractual service margin recognised for
Change in the risk adjustment for non-
17,934
(25,593)
8,710
34,817
as at 1 January 2022
Net assets/(liabilities) of reinsurance contract
(124)
(22)
57
from reinsurers
(159)
Reinsurance contract liabilities as at 1
18,058
(25,571)
8,653
34,976
Reinsurance contract assets as at 1 January
2022
Total
Contractual
risk service margin
Present value Risk adjustment
of future cash for non-financial
flows
Contracts not measured using the premium allocation approach (continued)
(2) Reconciliation of fulfilment cash flows and contractual service margin for reinsurance contracts
held (continued)
January 2022
Incurred claims and other expenses recovered
RMB million
6,694
389
25
364
Changes relating to future service
contractual service margin
Changes in estimates without adjustment to
3,397
(302)
(3,095)
contractual service margin
Changes in estimates with adjustment to
(2,740)
(27)
recognised in the period
Impact of reinsurance contracts held initially
(352)
(1,097)
(592)
857
(352)
(1,097)
Changes relating to current service.
(1,097)
6,694
Current experience adjustment
(352)
(9)
(241)
36
389
1,937
3,370
Reinsurance premiums paid
3,614
(36)
(1,641)
1,444
557
1,500
493
4,227
(613)
(3,141)
Changes to assets for incurred claims
recovered from reinsurers
(593)
696
Changes relating to past service
696
696
696
Gains or losses on reinsurance contracts held
Financial changes in reinsurance contracts held
Total amounts recognised in comprehensive
income
6,993
initial As at 1 January
application of
2022
Recognised in
IFRS 17 (Restated, Note profit or loss in
(Note 2.1.1.b)
2.1.1.b) the current year
Recognised
in other
comprehensive
income in the
current year
(418)
7,596
As at
31 December
(Restated, Note
2021
7,596
2.1.1.b)
RMB million
Provision for asset impairment
(603)
2022
31 December
Net value
Impact of
852
securities
Accrued payroll
Fair value changes on available-for-sale
(852)
Others
1,147
1,147
45,854
(33,024)
12,830
527
4,212
1,670
7,389
24,431
As at
2,883
(22,927)
(534)
(7,360)
(169)
Others
Net value
(22,927)
23,779
852
(534)
1,190
491
1,147
30,541
23,181
418
242
45,854
22,431
securities
2,883
Fair value changes on available-for-sale
2,440
2,714
Insurance contract liabilities
7,644
30,541
38,185
(9,801)
(1,839)
26,545
Deductible losses
7,185
7,185
Fair value changes in securities reflecting
changes in fair value through net profit
(2,022)
(2,022)
418
changes in fair value through net profit
(c) As at 31 December 2023 and 31 December 2022, the amounts of deferred tax assets and liabilities are as follows
(continued):
(62,540)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
29 TAXATION (continued)
As at 31 December 2023 and 31 December 2022, the deferred taxation was calculated in full on temporary differences
under the statement of financial position liability method using the principal tax rate of 25%. The movements in deferred
tax assets and liabilities during the year are as follows:
As at
31 December
2022
(Restated, Note
244 Annual Report 2023 | Financial Report
Impact of
initial
application of
2.1.1.b)
IFRS 9 As at 1 January
(Note 2.1.1.a)
profit or loss in
2023
the current year
Recognised
in other
comprehensive
income in the
current year
Recognised in
(272)
46,126
24,431
As at
31 December
Unrecognised deductible tax losses of the Group amounted to RMB7,116 million as at 31 December 2023 (as at 31
December 2022: RMB3, 183 million).
As at
31 December
2023
2022
RMB million
RMB million
(Restated, Note
2.1.1.b)
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets
Net deferred tax liabilities
86,971
48,703
(62,540)
(2,849)
As at
31 December
2023
RMB million
Provision for asset impairment
7,185
5,170
12,355
Changes in fair value of the financial
assets at fair value through profit or
loss
10,356
10,356
9,147
19,503
Changes in fair value of the financial
assets at fair value through other
comprehensive income
(37,052)
(37,052)
(25,488)
7,185
Fair value changes in securities reflecting
Deductible losses
32,583
Accrued payroll
6,993
(5,058)
1,935
(324)
298
1,909
2,714
2,714
(851)
1,863
Insurance contract liabilities
26,545
26,545
(9,457)
49,671
Annual Report 2023 | Financial Report 245
Glorious Fortune Forever Limited
For the year ended 31 December 2023
100.00%
indirectly
RMB200 million
Asset
management
Golden Phoenix Tree Limited
Company") (i)
PRC
King Phoenix Tree Limited
New Aldgate Limited
Hong Kong, PRC
The British
Jersey Island
100.00% directly
Not applicable
Investment
100.00%
Shanghai Rui Chong Investment Co., Limited ("Rui Chong
China Life Wealth Management Company Limited ("CL
Wealth") (i)
management
Fund
Hong Kong, PRC
74.27% directly RMB3,400 million
and indirectly
50.00% indirectly
Pension and
Not applicable
annuity
Asset
management
China Life (Suzhou) Pension and Retirement Investment
Company Limited ("Suzhou Pension Company") (i)
PRC
100.00% directly RMB3,236 million
and indirectly
Investment in
retirement
properties
China Life AMP Asset Management Co., Ltd. ("CL AMP") (i)
PRC
85.03% indirectly RMB1,288 million
Not applicable
Investment
indirectly
PRC
Not applicable
Investment
The British
100.00% directly
Not applicable
Investment
Virgin Islands
Fortune Bamboo Limited
The British
100.00% directly
Not applicable
Investment
248 Annual Report 2023 | Financial Report
Virgin Islands
(c) As at 31 December 2023 and 31 December 2022, the amounts of deferred tax assets and liabilities are as follows:
100.00% directly
China Life Franklin Asset Management Company Limited
("AMC HK")
The British
Virgin Islands
Golden Bamboo Limited
100.00% directly RMB6,100 million
Investment
Hong Kong, PRC
100.00% directly
Not applicable
Investment
Hong Kong, PRC
100.00% directly
Not applicable
Investment
CL Hotel Investor, L. P.
USA
100.00% directly
Not applicable
Investment
Sunny Bamboo Limited
PRC
Asset
management
activities
86,971
48,703
Deferred tax liabilities:
- deferred tax liabilities to be settled after 12 months
(60,691)
(1,396)
- deferred tax liabilities to be settled within 12 months
Sub-total
(1,849)
(1,453)
(62,540)
(2,849)
Net deferred tax assets/(liabilities)
24,431
45,854
30 EARNINGS PER SHARE
8,930
There is no difference between the basic and diluted earnings per share. The basic and diluted earnings per share for the
year ended 31 December 2023 are calculated based on the net profit for the year attributable to ordinary equity holders of
the Company and the weighted average of 28,264,705,000 ordinary shares (2022: same).
6,384
80,587
29 TAXATION (continued)
(d) The analysis of net deferred tax assets and deferred tax liabilities is as follows:
As at
As at
31 December
31 December
2023
2022
RMB million
RMB million
(Restated, Note
2.1.1.b)
Deferred tax assets:
- deferred tax assets to be recovered after 12 months
- deferred tax assets to be recovered within 12 months
Sub-total
39,773
Notes to the Consolidated Financial Statements (continued)
31 STOCK APPRECIATION RIGHTS
Stock appreciation rights have been awarded in units, with each unit representing the value of one H share. No shares
of common stock will be issued under the stock appreciation rights plan. According to the Company's plan, all stock
appreciation rights will have an exercise period of five years from the date of award and will not be exercisable before the
fourth anniversary of the date of award unless specific market or other conditions have been met. On 26 February 2010,
the Board of Directors of the Company approved the Proposal on Extension of the Effective Period of Stock Appreciation
Rights to extend the exercise period of all stock appreciation rights, which is also subject to government policy.
Immediate and
ultimate holding
company
Annual Report 2023 | Financial Report 247
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(b) Subsidiaries
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December
2023:
Place of
incorporation
Percentage of
equity interest
Name
China Life Asset Management Company Limited ("AMC") (i)
China Life Pension Company Limited ("Pension Company") (i)
and operation
PRC
Registered
held
capital
60.00% directly RMB4,000 million
Principal
Legal
representative
Bai Tao
The Board of Directors of the Company approved, on 5 January 2006, an award of stock appreciation rights of 4.05 million
units and on 21 August 2006, another award of stock appreciation rights of 53.22 million units to eligible employees. The
exercise prices of the two awards were HKD5.33 and HKD6.83, respectively, the average closing price of shares in the
five trading days prior to 1 July 2005 and 1 January 2006, the dates for vesting and exercise price setting purposes of this
award. Upon the exercise of stock appreciation rights, exercising recipients will receive payments in RMB, subject to any
withholding tax, equal to the number of stock appreciation rights exercised times the difference between the exercise price
and market price of the H shares at the time of exercise.
Nature of
ownership
State-owned
Insurance services including receipt of
premiums and payment of benefits in respect
of the in-force life, health, accident and other
types of personal insurance business, and the
reinsurance business; holding or investing in
domestic and overseas insurance companies
or other financial insurance institutions; fund
management business permitted by national
laws and regulations or approved by the State
Council of the People's Republic of China;
and other businesses approved by insurance
regulatory agencies.
As at 31 December 2023, there were 55.01 million units outstanding and exercisable (as at 31 December 2022: same). As
at 31 December 2023, the amount of intrinsic value for the vested stock appreciation rights was RMB168 million (as at 31
December 2022: RMB327 million).
246 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
31 STOCK APPRECIATION RIGHTS (continued)
The fair value of the stock appreciation rights is estimated at each reporting date using lattice-based option valuation models
based on expected volatility from 32% to 54%, an expected dividend yield of no higher than 5.34% and a risk-free interest
rate ranging from 2.43% to 4.69%.
The Company recognised a gain of RMB159 million in the net fair value through profit or loss in the consolidated comprehensive
income representing the fair value change of the rights during the year ended 31 December 2023 (2022: The Company
recognised a loss of RMB49 million in the net fair value through profit or loss in the consolidated comprehensive income
representing the fair value change of the rights). RMB168 million and RMB13 million were included in salary and staff welfare
payable included under other liabilities for the units not exercised and exercised but not paid as at 31 December 2023 (as
at 31 December 2022: RMB327 million and RMB13 million), respectively. There was no unrecognised compensation cost
for the stock appreciation rights as at 31 December 2023 (as at 31 December 2022: same).
32 DIVIDENDS
Pursuant to the shareholders' approval at the Annual General Meeting on 28 June 2023, a final dividend of RMB0.49 (inclusive
of tax) per ordinary share totalling RMB13,850 million in respect of the year ended 31 December 2022 was declared and paid
in 2023. The dividend has been recorded in the consolidated financial statements for the year ended 31 December 2023.
Pursuant to a resolution passed at the meeting of the Board of Directors on 27 March 2024, a final dividend of RMB0.43
(inclusive of tax) per ordinary share totalling approximately RMB12,154 million for the year ended 31 December 2023 was
proposed for shareholders' approval at the forthcoming Annual General Meeting. The dividend has not been recorded in
the consolidated financial statements for the year ended 31 December 2023.
33 SIGNIFICANT RELATED PARTY TRANSACTIONS
(a) Related parties with control relationship
Information of the parent company is as follows:
Name
CLIC
Location of
registration
Beijing, China
Principal business
Relationship with
the Company
(i) Non-taxable income mainly includes interest income from government bonds, and dividend income from applicable equity investments. Expenses not
deductible for tax purposes mainly include retiree wages that do not meet the criteria for deduction according to the relevant tax regulations.
Net realised gains on financial assets
(2,971)
CONTRACTS
26 NET INVESTMENT RETURNS AND FINANCIAL CHANGES IN INSURANCE
131,614
150,353
52,073
51,331
Net investment returns
79,541
509
247
10,646
12,595
26,979
42,118
99,022
Returns on investment recognised in profit or loss
For the year ended 31 December
2023
Realised gains or losses (i)
Impairment (ii)
Sub-total
Equity securities
Realised gains or losses (i)
Impairment (ii)
Sub-total
Total
For the year ended
31 December
2022
RMB million
7,344
Interest income
2022
RMB million
RMB million
41,407
44,062
2022
RMB million
RMB million
24 NET FAIR VALUE GAINS THROUGH PROFIT OR LOSS
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
240 Annual Report 2023 | Financial Report
(ii) During the year ended 31 December 2022, the Group recognised an impairment charge of RMB2,644 million on available-for-sale funds, an impairment
charge of RMB15,486 million on available-for-sale stock securities, an impairment charge of RMB1,701 million on available-for-sale other equity securities,
an impairment reversal of RMB145 million on available-for-sale debt securities, for which the Group determined that objective evidence of impairment
existed. The Group recognised no impairment charge on loans and an impairment reversal of RMB1,476 million on loans during the period.
(i) Realised gains or losses were generated mainly from available-for-sale securities.
12,707
3,742
(19,831)
23,573
8,965
1,621
(9,375)
N/A
174,809
N/A
Debt securities
Equity securities
Debt securities
Stock appreciation rights
25 INSURANCE SERVICE EXPENSES
2023
For the year ended 31 December
Total
Contracts measured using the premium allocation approach
Sub-total
Losses and reversals of losses on onerous contracts
Changes to liabilities for incurred claims
Amortisation of insurance acquisition cash flows
Contracts not measured using the premium allocation approach
Incurred claims and other expenses
(12,156)
462
(1,613)
(10,956)
(49)
RMB million
2022
31 December
For the year ended
Financial liabilities at fair value through profit or loss
Total
Net fair value gains through profit or loss
23 NET REALISED GAINS ON FINANCIAL ASSETS
1,948
RMB million
Dividends and interest income
Dividends
Financial assets at fair value through profit or loss
Investment in equity instruments at fair value through other comprehensive income
Interest income
23,893
5,224
2023
Financial assets at fair value through profit or loss
Sub-total
54,691
Realised gains/(losses)
Financial assets at fair value through profit or loss
(41,676)
Investment in debt instruments at fair value through other comprehensive income
Sub-total
25,574
31 December
For the year ended
22 INVESTMENT INCOME
Notes to the Consolidated Financial Statements (continued)
21 INTEREST INCOME
Interest income from financial assets measured at amortised cost (i)
For the year ended 31 December 2023
Interest income from investment in debt instruments at fair value through other
comprehensive income
Total
For the year ended
31 December
2023
RMB million
33,908
89,086
122,994
(i) Interest income from financial assets measured at amortised cost mainly includes interest income arising from cash and cash equivalents, financial assets
purchased under agreements to resell, investment in debt instruments at amortised cost and term deposits.
Interest income is recognised using the effective interest rate method.
10,396
(31,280)
Unrealised gains/(losses)
Financial assets at fair value through profit or loss
Financial liabilities at fair value through profit or loss
Stock appreciation rights
Financial assets purchased under agreements to resell
Total
For the year ended
31 December
2022
RMB million
(Restated (i))
62,883
32,079
5,174
28,934
770
25,161
19,095
713
174,809
(i)
Loans
For the year ended 31 December 2022, interest income included in investment income was RMB145,105 million. Interest
income was mainly accrued using the effective interest method.
Bank deposits
- available-for-sale securities
Sub-total
(33,074)
129
159
Total
(32,786)
(9,375)
Annual Report 2023 | Financial Report 239
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
22 INVESTMENT INCOME (continued)
Debt securities
- held-to-maturity securities
- available-for-sale securities
- at fair value through profit or loss
Equity securities
- at fair value through profit or loss
N/A
Under IFRS 17 Insurance Contracts, policy loans should be accounted for as fulfilment cash flow of the relevant policies, therefore its interest is no longer
recognised as interest income.
Investment income from associates and joint ventures
(18,206)
18,131
15,212
The disclosure above does not include underwriting and policy acquisition costs in the fulfilment cash flows.
29 TAXATION
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax relates to the same tax authority.
(17,388)
(a) The amount of taxation charged to net profit represents:
Deferred taxation
Taxation charges
For the year ended 31 December
2023
2022
RMB million
Current taxation - Enterprise income tax
(19,719)
(19,151)
22,636
Amounts recognised in insurance service expenses
For the year ended 31 December
2023
2022
RMB million
RMB million
15,105
17,681
7,471
7,476
5,016
5,291
65
53
27,013
RMB million
(Restated, Note
2.1.1.b)
2,190
(242)
RMB million
RMB million
(Restated, Note
2.1.1.b)
44,576
70,060
11,144
17,515
(10)
(18,522)
(246)
(15,932)
171
4,034
212
311
33
267
12,707
(12,156)
2022
Less: Expenses directly attributable to insurance contracts
Insurance acquisition cash flows recognised in liabilities for
remaining coverage
2023
Deductible losses for which no deferred tax asset was recognised
Others
(2,971)
1,948
Annual Report 2023 | Financial Report 243
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
29 TAXATION (continued)
(b) The reconciliation between the Group's effective tax rate and the statutory tax rate of 25% in the PRC (2022: same)
is as follows:
For the year ended 31 December
Profit before income tax
Income tax computed at the statutory tax rate
Adjustment on current income tax of previous period
Non-taxable income (i)
Investment income
122,994
Expenses not deductible for tax purposes (i)
Income tax at the effective tax rate
Remuneration in respect of audit services provided by auditors
Others
1,241
(4,212)
Social security and other benefits
26 NET INVESTMENT RETURNS AND FINANCIAL CHANGES IN INSURANCE
CONTRACTS (continued)
Financial changes in insurance contracts
Changes in fair value of underlying items of insurance contracts with
direct participation features
Interest expense
Changes in interest rates and other financial assumptions
Total financial changes in insurance contracts
Recognised in profit or loss
Recognised in other comprehensive income
Total
27 EXPECTED CREDIT LOSSES
For the year ended 31 December
2023
2022
Notes to the Consolidated Financial Statements (continued)
RMB million
Annual Report 2023 | Financial Report 241
223,824
8,079
Depreciation and amortisation
3,979
Net expected credit losses
1,217
N/A
Other impairment losses
(3,150)
Sub-total
122,915
176,189
Returns/(losses) on investment recognised in other comprehensive income
100,909
(101,161)
Total
75,028
RMB million
For the year ended 31 December 2023
66,193
Investment in debt instruments at amortised cost
Term deposits
Statutory deposits - restricted
Other receivables
Total
(59)
(115)
(1)
65
(1,217)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
28 PROFIT BEFORE INCOME TAX
Profit before income tax is stated after charging the following:
Salary and bonus
(1,107)
RMB million
242 Annual Report 2023 | Financial Report
259,160
2023
73,487
104,897
42,896
142,076
88,070
148,700
127,923
(6,624)
259,160
142,076
Investment in debt instruments at fair value through other comprehensive income
For the year
ended 31
December
131,237
25,693
PRC
Wuhu Yuanxiang Tianyi Investment
("Yuanxiang Tianfu") (ii)
100.00%
99.98%
Not
applicable
Investment
Not
Xi'an Shengyi Jingsheng Real Estate Co., Ltd.
Management Partnership (Limited Partnership)
directly
applicable
("Yuanxiang Tianyi") (ii)
PRC
directly
Investment
Management Partnership (Limited Partnership)
100.00%
PRC
RMB831
PRC
Principal
activities
RMB484
Investment
indirectly
Shanghai Wansheng Industry Partnership
99.98%
PRC
million
Not
Investment
(Limited Partnership) ("Shanghai Wansheng")
directly
applicable
(ii)
Wuhu Yuanxiang Tianfu Investment
99.98%
Investment
China Life Xing Wan (Tianjin) Enterprise
indirectly
Fund (Limited Partnership) ("CL Pension
directly
Not
applicable
Investment
Industry") (ii)
China Life Qihang Phase I (Tianjin) Equity
PRC
Investment Fund Partnership (Limited
99.99%
directly
Not
applicable
Investment
Partnership) ("CL Qihang Fund I") (ii)
PRC
Management Partnership (Limited Partnership)
Registered
capital
99.90%
PRC
Beijing China Life Pension Industry Investment
Guang De") (ii)
CBRE Global Investors U. S. Investments I, LLC
USA
99.99%
million
Not
Investment
("CG Investments")
directly
("Shengyi Jingsheng") (i)
applicable
PRC
99.95%
Not
Investment
Fund Partnership (Limited Partnership) ("CL
directly
applicable
China Life Guangde (Tianjin) Equity Investment
Percentage
of equity
interest held
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(b) Subsidiaries (continued)
Dalian Hope Building Company Ltd. ("Hope
Building") (i)
100.00% directly RMB1,530 million
Health
management
PRC
100.00%
indirectly
RMB100 million
Investment
PRC
89.997% directly
Not applicable
Investment
The British
100.00%
Not applicable
Investment
PRC
New Capital Wisdom Limited
Ningbo Meishan Bonded Port Area Guo Yang Guo Sheng
Investment Partnership ("Guo Yang Guo Sheng") (ii)
China Life Franklin (Shenzhen) Private Equity Investment
Fund Management Co., Limited ("Franklin Shenzhen
Company") (i)
99.98%
indirectly
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December
2023 (continued):
Place of
incorporation
Percentage of
equity interest
Name
Virgin Islands
China Century Core Fund Limited
held
The British
Cayman
Islands
100.00%
indirectly
Registered
capital
Not applicable
Principal
activities
Investment
China Life (Beijing) Health Management Co., Limited ("CL
Health") (i)
and operation
and operation
indirectly
Wisdom Forever Limited Partnership
Not applicable
Investment
PRC
99.98% directly
Not applicable
Investment
Partnership (Limited Partnership) ("Yuan Shu Yuan Jiu") (ii)
Annual Report 2023 | Financial Report 249
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(b) Subsidiaries (continued)
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December
2023 (continued):
Place of
incorporation
Name
99.98% directly
PRC
Investment
Not applicable
The British
100.00%
Not applicable
Investment
Virgin Islands
indirectly
The British
New Fortune Wisdom Limited
100.00%
Investment
Cayman
indirectly
Islands
Ningbo Meishan Bonded Port Area Bai Ning Investment
Partnership (Limited Partnership) ("Bai Ning") (ii)
Shanghai Yuan Shu Yuan Pin Investment Management
Partnership (Limited Partnership) ("Yuan Shu Yuan Pin") (ii)
Shanghai Yuan Shu Yuan Jiu Investment Management
PRC
99.98% directly
Not applicable
Not
applicable
(f) Transactions with significant related parties
("CL Xingwan") (ii)
indirectly
indirectly
CL Jiayuan
RMB300
99.99%
RMB300
99.99%
99.99%
indirectly
Tianjin Pension Company
RMB1,216
99.99%
RMB1,216
99.99%
indirectly
indirectly
indirectly
RMB65
99.99%
RMB65
CL Qihang Fund I
RMB6,915
99.99% directly
RMB57
RMB6,972
99.99% directly
CL Xingwan
RMB3,765
99.98%
RMB3,765
99.98%
indirectly
indirectly
CL Nianfeng
90.81% directly
90.81% directly
CL Hangzhou
CL Qingdao (i)
RMB210
RMB210
100.00%
2023
2022
Note
RMB million
RMB million
9,806
12,941
(i)
463
463
(ii.a)
141
150
Agency fee received from CLP&C
(iii)
1,706
Rental and a service fee received from CLP&C
For the year ended 31 December
RMB3,987 99.90% directly
CLP&C
Distribution of dividends from the Company and AMC to
CLIC
indirectly
CL Qinhuangdao (i)
100.00%
indirectly
Zhuhai Xinwan (i)
RMB3,322
49.00%
indirectly
RMB4,344
RMB7,666
100.00%
indirectly
In 2023, CL Qingdao, CL Qinhuangdao and Zhuhai Xinwan were newly included in the consolidation scope.
254 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
CLIC
Policy management fee received from CLIC
Asset management fee received from CLIC
Dividends from CLP&C
RMB1,595
RMB2,392
indirectly
indirectly
Yuan Shu Yuan Jiu
RMB540
99.98% directly
Yuan Shu Yuan Pin
RMB540
Partnership
99.98% directly
RMB505
99.98% directly
RMB505
99.98% directly
Shanghai Wansheng
RMB4,036
99.98% directly
RMB35
RMB35
100.00%
USD452
100.00%
(e) Percentages of holding of related parties with control relationship and changes during the year
(continued)
(i)
Subsidiaries (continued)
As at 31 December 2022
Amount
Percentage of
holding
Increase
Decrease
Amount
As at 31 December 2023
Percentage of
holding
million
million
million
million
Wisdom Forever Limited
USD452
RMB12
RMB4,048 99.98% directly
Bai Ning
RMB1,680
RMB1,093
100.00%
RMB479
RMB1,093
99.98% directly
100.00%
indirectly
indirectly
CG Investments
RMB4,111
99.99% directly
CL Guang De
RMB1,316
99.95% directly
RMB120
RMB4,111 99.99% directly
RMB1,436 99.95% directly
CL Pension Industry
Shengyi Jingsheng
99.90% directly
RMB23
RMB502
99.98% directly
RMB1,680
99.98% directly
Hope Building
RMB484
100.00%
RMB484
100.00%
indirectly
indirectly
Yuanxiang Tianfu
RMB502
99.98% directly
RMB23
RMB479
99.98% directly
Yuanxiang Tianyi
99.98% directly
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Asset management fee received from CLIC
2868
83
475
(v)
30
57
40
75
241
76
1,888
264
120
700
57
850
12
1,595
248
549
483
Capital contribution to Golden Phoenix Tree Limited
Capital contribution to China Life Guangde
Capital contribution to China Life Qihang Fund I
Capital contribution to Shanghai Wansheng
Capital reduction of subsidiaries (Note 33(e))
Capital contribution to Yuanshu Yuanjiu
Capital contribution to Yuanshu Yuanpin
Capital contribution to Yuanxiang Tianfu
Capital contribution to Yuanxiang Tianyi
Transaction between the consolidated structured entities
and the Company
Distribution of profits from the consolidated structured
entities to the Company
256 Annual Report 2023 | Financial Report
2022
RMB million
3,265
2,872
11
18
5
94
12
35
31
35
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(f) Transactions with significant related parties (continued)
Notes (continued):
(ii.f) On 29 December 2021, the Company and AMC HK renewed an Insurance Funds Entrusted Investment Management Agreement, which is effective from
1 January 2022 to 31 December 2024. In accordance with the agreement, the Company entrusted AMC HK to manage and make investments for its
insurance funds and paid AMC HK an asset management fee on a semi-annual basis. The management fee is determined by market-oriented pricing, and
the maximum investment management fee paid annually is RMB30 million. Asset management fees charged to the Company by AMC HK are eliminated
in the consolidated statement of comprehensive income.
(iii)
(iv)
(v)
(vi)
On 31 January 2018, CLP&C and the Company signed a Framework Agreement for Mutual Insurance Sales Business Agency (the Company as the Agent),
whereby CLP&C entrusted the Company to act as an agent to sell designated P&C insurance products in certain authorised jurisdictions. The agency fee
was determined based on cost (tax included) plus a margin. The agreement was effective for three years, from 8 March 2018 to 7 March 2021. On 20
February 2021, CLP&C and the Company renewed the agreement, effective for two years, from 8 March 2021 to 7 March 2023. This agreement was
automatically renewed for one year to 7 March 2024 upon the expiration of the term.
On 11 July 2023, the Company and CGB signed an insurance agency agreement to distribute insurance products. All individual insurance products suitable
for distribution through bancassurance channels are included in the agreement. CGB provides agency services, including the sale of insurance products,
collecting premiums and paying benefits. The Company paid the agency commission by multiplying the net amount of total premiums received from the
sale of each category individual insurance products after deducting the surrender premiums in the hesitation period, by the responding fixed commission
rate. The commission rates for various insurance products sold by CGB are agreed based on arm's length transactions. The commissions are payable on
a monthly basis. The agreement was effective from the signing date to 31 December 2025.
On 27 December 2021, the Company and CGB renewed a Cooperation Agreement for Agency of Corporate Group Insurance Products. All corporate group
insurance products suitable for distribution through bancassurance channels are included in the agreement. The Company paid the agency commission by
multiplying the net amount of total premiums received from the sale of each category group insurance product after deducting the surrender premiums,
by the responding fixed commission rate. The commission rates for various insurance products sold by CGB are agreed by reference to comparable
market prices of independent third-parties. The commissions are payable on a monthly basis. The agreement is effective for one year from 1 January
2022, with an automatic one-year renewal, no more than twice, if no objections were raised by either party upon expiry. In 2023, both parties agreed
that the agreement continued to be effective..
On 29 December 2021, the Company and Pension Company renewed an Entrusted Agency Agreement for Pension Business Acted by China Life. The
agreement is effective from 1 January 2022 to 31 December 2024. The business means that Pension Company entrusted the Company to cooperate in
selling enterprise annuity funds, pension security business, occupational pension business and the third-pillar pension financial business. According to
the agreement, the commissions for the cooperative service of enterprise annuity fund management, which is the core business of Pension Company,
are calculated at 50% to 70% of the annual entrusting management fee revenues, depending on the duration of the agreement. The commissions for
cooperative account management service are calculated at 60% of the first year's account management fee and were only charged for the first year,
regardless of the duration of the agreement. The commissions for cooperative investment management services, in accordance with the duration of
the agreement, are calculated at 35% to 60% of the annual investment management fee (excluding risk reserves for investment). For pension security
business, the commissions of the group pension plan are, in accordance with the duration of the contracts, calculated at 50% to 3% of the annual
investment management fee, decreasing annually; the commissions of the personal pension plan are calculated at 30% to 50% of the annual investment
management fee according to the various rates of the daily management fee applied to the various individual pension management products in all of the
management years; the cooperative commissions of occupation annuity and third-pillar pension financial business should be determined by both parties
on a separate occasion. The commissions charged to Pension Company by the Company are eliminated in the consolidated statement of comprehensive
income of the Group.
On 31 December 2021, the Company and CLHI renewed an aged-care projects management service agreement, effective from 1 January 2022 to 31
December 2022. In 2023, both parties agreed to automatically renew this agreement for one year as along as this would not go against Listing Rules
and the regulations of the NFRA. In accordance with the agreement, the Company entrusted CLHI to operate and manage existed aged-care projects
and paid CLHI a management service fee. The management service fee was calculated and payable on a quarterly basis, by multiplying the total amount
of the investments under management (based on the daily weighted average investment amount) by the annual rate of 2%.
258
Annual Report 2023 Financial Report
Annual Report 2023 | Financial Report 257
Capital contribution to Pension Industry Fund
(ii.e) On 1 January 2023, the Company and AMC renewed an Insurance Funds Entrusted Investment Management Agreement, effective from 1 January
2023 to 31 December 2025. In accordance with the agreement, the Company entrusted AMC to manage and make investments for its insurance funds
and paid AMC a fixed investment management service fee and a variable investment management service fee. The daily accrued fixed service fee was
calculated and payable on a quarterly basis, by multiplying the net value of the total investment assets on the day by the variety-based annual investment
management fee rate divided by 360; the variable investment management service fee was calculated by multiplying 7.5% of the current year's fixed
investment management service fee with the payment ratio determined based on the Company's annual assessment of AMC and is payable on an annual
basis. Asset management fees charged to the Company by AMC were eliminated in the consolidated statement of comprehensive income.
(ii.c) On 10 February 2021, CLP&C renewed an Insurance Funds Entrusted Investment Management Agreement with AMC, entrusting AMC to manage and
make investments for its insurance funds, effective from 1 January 2021 to 31 December 2023. In accordance with the agreement, CLP&C paid AMC
a fixed service fee and a variable service fee. The fixed service fee was calculated on a monthly basis and payable on an annual basis, by multiplying
the average net asset value of assets of each category under management at the beginning and the end of any given month by the responding annual
investment management fee rate, divided by 12. The variable service fee was payable on an annual basis, and linked to investment performance.
31
23
46
23
46
2 2 ww
20,616
15,686
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(f) Transactions with significant related parties (continued)
Notes:
(i)
On 31 December 2021, the Company and CLIC renewed an Insurance Agency Agreement, effective from 1 January 2022 to 31 December 2024. The
Company performs its duties of insurance agents in accordance with the agreement, but does not acquire any rights and profits or assume any obligations,
losses and risks as an insurer of the non-transferable policies. The policy management fee is payable annually, and is equal to the sum of (1) the number
of policies in force as at the last day of the period, multiplied by RMB14.0 per policy and (2) 2.5% of the actual premiums and deposits received during
the period, in respect of such policies. The policy management fee income is included in other income in the consolidated statement of comprehensive
income.
(ii.a) In December 2022, CLIC renewed an Asset Management Agreement with AMC, entrusting AMC to manage and make investments for its insurance
funds. The agreement is effective from 1 January 2023 to 31 December 2025. In accordance with the agreement, CLIC paid AMC a basic service fee for
the management of insurance funds. The fixed investment management service fee applicable to various investment products (mainly bonds, deposits,
stocks, funds, public real estate investment trusts, financial products, unlisted equity, equity investment funds, derivatives, liquidity management and
domestic securities lending) was between 0.02% and 0.3%. The service fee was calculated on a monthly basis and payable on a quarterly basis, by
multiplying the average book value of the assets under management (net of the funds and interests of positive repurchase transactions, and of book
balances of products issued by AMC, for which management fee has been paid) at the beginning and the end of any given month by the rate, divided by
12. The rate applicable to assets issued by AMC, for which management fee has been paid, is subject to relevant legal documents on financial products,
and no additional management fees shall be paid. At the end of each year, CLIC assessed the investment performance of the assets managed by AMC,
compared the actual results against benchmark returns and made adjustment to the basic service fee.
(ii.b) In 2018, CL Overseas renewed an investment management agreement with AMC HK, effective from 1 January 2018 to 31 December 2022. In accordance
with the agreement, CL Overseas entrusted AMC HK to manage and make investments for its insurance funds and paid AMC HK a basic investment
management fee and an investment performance fee. The basic investment management fee was accrued by multiplying the weighted average total funds
by the basic fee rate. The investment performance fee was calculated based on the difference between the total actual annual yields and predetermined
net realised yield. The basic investment management fee was calculated and payable on a semi-annual basis. The investment performance fee was payable
according to the total actual annual yield at the end of each year. Upon expiration, the agreement is automatically one-year renewal, if no objections were
raised by either party upon expiry. The agreement remains effective until 31 December 2023, with no disputes from both parties in 2023.
(ii.d) On 30 June 2023, the Company and CLI renewed an Entrusted Investment Management and Operation Service Agreement of Alternative Investment
of Insurance Funds, effective from 1 July 2023 to 31 December 2024. The agreement shall be automatically renewed for one year unless either party
gives written notice to the other party not to renew it 90 business days prior to the expiration of this agreement. The company entrusts CLI with the
investment and management of the company's entrusted assets and provides operational services for the equity/real estate funds that the company
entrusts it to manage and operate. The Company paid CLI an asset management fee, product management fee, real estate operation management
service fee, a performance related bonus and consignment operation fee based on the agreement. According to the agreement, the annual investment
management service fee for the new project is 0.08% of the balance of funds paid in real time and not withdrawn, and the stock item is calculated
according to the applicable agreement at the time of investment and the relevant rate of investment guidelines. The fee rate for product management
does not exceed 0.6% per year. The fee for real estate operation and management services is 3% to 6% of the EBITDA of the related real estate
project. Regarding performance bonuses, for existing non-fixed return projects, 15% of the amount exceeding the threshold (8% IRR) will be extracted;
For amounts exceeding 10% IRR, an additional 20% will be extracted. The entrusted operation fee is 0.02% of the actual contributed capital balance
of the entrusted operation projects. In addition, the Company adjusts the investment management fees for fixed-income projects and non-fixed-income
projects based on the annual evaluation results on CLI's performance. The adjustment (variable management fee) ranges from negative 2% to positive
2% of the investment management fee in the current period.
(ii.c)
Capital increase in subsidiaries (Note 33(e))
Rental received
Asset management fee received from CLIC
(ii.b)
102
108
Transactions with associates and joint ventures
CGB
Interest received on deposits
CL Overseas
Dividends from CGB
Rental fee from CGB
Sino-Ocean
Interest of corporate bonds received from Sino-Ocean
Transaction between other associates and joint ventures
and the Group
Dividends from other associates and joint
ventures (Note 10)
Commission expenses charged by CGB
96
96
14
1,516
99
80
जै४
99
75
42
43
CLI
Payment of asset management fee to CLI
(ii.d)
542
637
CLHI
Payment of operation management service fee to CLHI
(vi)
74
Transaction between EAP and the Group
Contribution to EAP
For the year ended 31 December
2023
Note
Transactions between other subsidiaries and the Company
Payment of an asset management fee
For the year ended 31 December
2023
Note
RMB million
Payment of an asset management fee to AMC
(ii.e)
Payment of an asset management fee to AMC HK
(ii.f)
Payment of an asset management fee to Pension Company
Dividends from subsidiaries
Dividends from AMC
Dividends from Pension Company
Dividends from the other subsidiaries
Agency fee received
Agency fee from Pension Company
(f) Transactions with significant related parties (continued)
Rental received from Pension Company
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Notes to the Consolidated Financial Statements (continued)
RMB million
2022
RMB million
2,453
742
2,747
774
(iv)
252
218
163
173
37
7
4,032
4,463
1,051
1,355
Annual Report 2023 | Financial Report 255
For the year ended 31 December 2023
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 253
Investment
management
Jiao Yin Guo Xin China Aluminium Co., Ltd. Supply-side Reform
Collective Fund Trust Scheme
99.99% directly
RMB10,000 million
Bai Rui Heng Yi No.817 Collective Fund Trust Scheme (Zhong Guo
Guo Xin)
90.00% directly and
RMB10,000 million
RMB10,000 million
indirectly
89.00% directly
Investment
management
Investment
management
RMB10,000 million
Investment
management
Chongqing Trust Fund • Guo Rong No.4 Collective Fund
.
Guang Da Hui Ying No. 8 Collective Fund
98.40% directly
Shan Guo Tou Jing Tou Corporate Trust Loan Collective Funds Trust
Scheme
•
RMB21,799 million
China Life-Yunnan Guoqi Reform And Development Equity
Investment Plan |
China Life- Hufa No.1 Equity
CL Investment-China Eastern Airlines Group Equity
100.00% directly
RMB13,000 million
Investment
management
Investment
management
99.15% directly
RMB11,798 million
Investment
management
100.00% directly
RMB11,000 million
Investment
management
China Life-China Hua Neng Debt-to-Equity Swap
100.00% directly
RMB10,000 million
Investment
management
Jiao Yin Guo Xin Jing Tou Corporate Collective Funds
Zhong Hang Trust Fund Tian Qi [2020] No.372 China Eastern
85.00% directly
RMB9,992 million
management
Annual Report 2023 | Financial Report 251
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(c) Other related parties
Significant related parties
China Life Real Estate Co., Limited ("CLRE")
China Life Insurance (Overseas) Company Limited ("CL Overseas")
China Life Investment Management Company Limited (Formerly known as
"China Life Investment Holding Company Limited")("CLI")
China Life Ecommerce Company Limited ("CL Ecommerce")
China Life Healthcare Investment company limited ("CLHI")
China Life Enterprise Annuity Fund ("EAP")
China Life Property & Casualty Insurance Company Limited ("CLP&C")
CGB
Sino-Ocean Group
Relationship with the Company
Under common control of CLIC
Under common control of CLIC
Under common control of CLIC
Under common control of CLIC
Under common control of CLIC
A pension fund jointly set up by the
Company and others
An associate of the Company
An associate of the Company
An associate of the Company
Investment
72.78% directly
RMB8,000 million
Jiang Su Trust Xin Bao Sheng No.144 (Jing Tou)
Investment
management
91.98% directly
RMB9,970 million
Investment
management
99.99% directly
RMB9,000 million
Airlines Equity Instrument Investment Collective Fund Trust
Scheme
Investment
management
Zhong Hang Trust Fund ⚫Tian Qi 21A No.155 China Eastern Airlines
Perpetual Bonds Investment Collective Fund Trust Scheme
Kun Lun Trust China Metallurgical No.1 Collective Fund
99.38% directly
RMB8,000 million
Investment
management
86.25% directly
RMB8,000 million
Investment
management
84.00% directly
Associated enterprises and joint ventures of the basic and important information related to see note 10.
(d) Registered capital of related parties with control relationship and changes during the year
CL Asset-Yuanliu No.3 Insurance Asset Management Product
Investment
Company Limited ("CL Jiayuan")(i)
indirectly
China Life (Tianjin) Pension & Retirement
PRC
Investment Company Limited ("Tianjin
99.99%
indirectly
million
RMB1,551
Health
consultation
million
management
Pension Company")(i)
China Life (Qingdao) Health Management Co.,
PRC
Ltd. ("CL Qingdao") (i)
99.50%
indirectly
Investment
RMB1,500
99.99%
PRC
China Life Nianfeng Insurance Agency Co., Ltd.
PRC
90.81%
("CL Nianfeng") (i)
directly
RMB544
million
Insurance
China Life (Hangzhou) Hotel Co., Ltd. ("CL
PRC
99.99%
RMB65
agent
Hotel
Hangzhou")(i)
indirectly
million
management
China Life Jiayuan (Xiamen) Health Management
RMB211
Health
million
management
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December
2023 (continued):
Notes:
(i) The above subsidiaries are registered as limited companies in accordance of the Company Law of the People's Republic
of China.
(ii) The above subsidiaries are registered as limited liability partnerships in accordance of the Law of the People's Republic
of China on Partnerships.
Non-controlling interests in subsidiaries are not significant to the Company.
(ii) The table below presents the basic information of the Company's major consolidated structured
entities as at 31 December 2023:
Percentage of shares
Trust/investments
Name
CL Asset-Yuanliu No.1 Insurance Asset Management Product
CL Asset-Yuanliu No.2 Insurance Asset Management Product
held
68.75% directly
received
RMB112,779 million
Principal activities
Investment
management
75.88% directly
RMB23,648 million
(b) Subsidiaries (continued)
management
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Notes to the Consolidated Financial Statements (continued)
China Life Qinhuangdao Health and Elderly Care
PRC
100.00%
RMB33
Elderly care
Service Co., Ltd. ("CL Qinhuangdao") (i)
Zhuhai Xinwan Real Estate Co., Ltd. ("Zhuhai
Xinwan") (i)
indirectly
million
PRC
100.00%
RMB6,800
indirectly
million
services
Real estate
management
250 Annual Report 2023 | Financial Report
For the year ended 31 December 2023
As at
31 December
As at
31 December
60.00% directly
74.27% directly
and indirectly
50.00%
indirectly
million
RMB1,680
RMB2,746
60.00% directly
74.27% directly
and indirectly
-- HKD130
50.00%
indirectly
HKD130
RMB2,181 100.00% directly
RMB1,095
85.03%
RMB1,095
indirectly
RMB200
100.00%
- RMB200
indirectly
RMB2,181 100.00% directly
RMB2,746
RMB1,680
holding
68.37%
Subsidiaries
As at 31 December 2022
Percentage of
holding
AMC
Pension Company
China Life Franklin Asset
Management Company
Limited
Suzhou Pension Company
CL AMP
CL Wealth
Golden Phoenix Tree Limited
King Phoenix Tree Limited
As at 31 December 2023
Percentage of
Amount
million
Increase
million
Decrease
million
Amount
85.03%
indirectly
100.00%
indirectly
RMB2,359 100.00% directly
RMB2,435 100.00% directly
USD1,125
100.00%
indirectly
RMB1,530 100.00% directly
RMB100
100.00%
indirectly
RMB2,835 89.9
RMB2,835 89.997% directly
RMB1,530 100.00% directly
RMB100
100.00%
indirectly
RMB2,835 89.997% directly
100.00%
indirectly
100.00%
indirectly
---
100.00%
indirectly
100.00%
indirectly
100.00%
indirectly
RMB19,324
RMB2,435 100.00% directly
USD1,125
RMB3,101 100.00% directly
RMB264
RMB264 100.00% directly
100.00%
indirectly
100.00%
indirectly
Rui Chong Company
New Aldgate Limited
Glorious Fortune Forever
Limited
CL Hotel Investor, L. P.
Golden Bamboo Limited
Sunny Bamboo Limited
Fortune Bamboo Limited
China Century Core Fund
Limited
CL Health
Franklin Shenzhen Company
Guo Yang Guo Sheng
New Capital Wisdom Limited
New Fortune Wisdom Limited
RMB6,100 100.00% directly
RMB1,167 100.00% directly
100.00% directly
RMB6,100 100.00% directly
RMB1,167 100.00% directly
100.00% directly
RMB285 100.00% directly
RMB285 100.00% directly
RMB3,101 100.00% directly
RMB2,359 100.00% directly
68.37%
RMB19,324
million
RMB1,288
RMB1,288
CL Wealth
RMB200
RMB200
Rui Chong Company
RMB6,100
RMB6,100
CL Health
RMB1,530
Franklin Shenzhen Company
RMB100
Shengyi Jingsheng Company
RMB831
Hope Building
RMB484
CL Nianfeng
CL AMP
RMB544
RMB3,236
RMB2,181
Name of related party
2022
million
Increase
million
Decrease
2023
million
million
CLIC
RMB4,600
RMB4,600
AMC
RMB4,000
RMB4,000
Pension Company
RMB3,400
RMB3,400
Suzhou Pension Company
RMB1,055
Investment
CL Hangzhou
CL Jiayuan
252 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(e) Percentages of holding of related parties with control relationship and changes during the year
Shareholder
As at 31 December 2022
CLIC
Amount
Percentage of
holding
Increase
Decrease
Amount
As at 31 December 2023
Percentage of
holding
million
million
million
RMB6,800
RMB65
RMB211
RMB33
RMB700
RMB1500
RMB1,530
RMB100
RMB831
RMB484
RMB544
RMB65
RMB1,500
Tianjin Pension Company
CL Qingdao
CL Qinhuangdao
Zhuhai Xinwan
RMB1,551
RMB211
RMB33
RMB6,800
The table above does not include the partnerships and the subsidiaries which were not set up or invested in Mainland
China that having control relationship with the Group. These partnerships and subsidiaries do not have related information
about registered capital.
RMB851
Transactions with CLIC and its subsidiaries
comprehensive contracts and
Unrealised
insurance
45,511
for-sale
securities (i)
under the equity
method
to profit or
loss
Statutory
reserve fund
Discretionary
reserve fund
General
foreign
under the equity
to profit or
reserve
operations
method
loss
Total
RMB million RMB million
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Amounts due from/to significant related parties
The following table summarises the balances due from and to significant related parties. The balances of the Group are all
unsecured. The balances of the Group are non-interest-bearing and have no fixed repayment dates except for deposits with
CGB, wealth management products and other securities of CGB, and corporate bonds issued by Sino-Ocean.
As at
As at
31 December
reserves
Other
Share
premium
reclassifiable
266 Annual Report 2023 | Financial Report
(i)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Reserves
Other
Financial
changes in
insurance
Financial
Unrealised
gains/(losses)
comprehensive contracts and
income reinsurance
Other
comprehensive
31 December
changes in
reclassifiable
contracts
Exchange
differences
income non-
contracts
reclassifiable
non-
from available-
to profit or loss
reclassifiable
on translating
to profit or loss
changes in
2023
2022
RMB million
8,027
Amount due to CGB
(74)
(66)
Corporate bonds of Sino-Ocean
234
648
Amount due from CL Ecommerce
3
4
Amount due to CL Ecommerce
(18)
8,059
(29)
Amount due from CL Hotel Investors, L. P.
6,241
6,137
Amount due from Pension Company
36
43
Amount due from Rui Chong Company
Amount due to AMC
Amount due to Pension Company
Amount due to AMC HK
10
274
Amounts due from and to subsidiaries of the Company
The Company has elected to account for its investments in associates and joint ventures in separate financial statements under
the equity method starting from 1 January 2023 in accordance with IAS 27 Separate Financial Statement with retrospective
adjustment. This retrospection resulted in an increase in investments in associates and joint ventures of RMB52,352 million,
an increase in retained earnings of RMB49,488 million and an increase in reserves of RMB2,961 million as at 1 January
2022. Also it resulted in an increase in investments in associates and joint ventures of RMB45,476 million, an increase in
retained earnings of RMB49,207 million and a decrease in reserves of RMB1,090 million as at 31 December 2022.
Wealth management products and other securities of CGB
43,707
RMB million
Amounts due from and to related parties of the Group
Amount due from CLIC
Amount due from CL Overseas
549
539
109
118
Amount due from CLP&C
335
293
Amount due to CLP&C
Amount due from CLI
57,904
Amount due to CLI
(68)
(53)
5
5
(483)
(528)
4
4
Amount due to CLHI
(30)
(61)
Amount deposited with CGB
Amount due from CLRE
(1,771)
4,551,587
5,665,649
28,098
Deferred tax assets
23,020
45,939
24,059
Financial assets purchased under agreements to resell
13,155
35,816
3,463
Accrued investment income
70
47,159
47,159
Cash and cash equivalents
135,645
119,036
53,593
Total assets
5,665,649
4,903,878
4,551,587
Annual Report 2023 | Financial Report 265
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Statement of financial position (continued)
22,778
29,627
Other assets
19,327
117,711
N/A
N/A
Financial assets at fair value through profit or loss
1,462,090
N/A
N/A
Held-to-maturity securities
N/A
1,571,892
1,531,640
Loans
LIABILITIES AND EQUITY
N/A
410,789
Available-for-sale securities
N/A
1,644,704
1,370,035
Securities at fair value through profit or loss
N/A
93,657
120,191
Reinsurance contract assets
25,846
24,096
324,557
As at
As at
As at
203,605
140,591
232,496
Total liabilities
5,183,796
4,532,209
4,165,173
Equity
Share capital
28,265
28,265
28,265
agreements to repurchase
Reserves (Note 39(b))
Total equity
Total liabilities and equity
147,745
95,578
152,959
RMB million RMB million RMB million
305,843
247,826
205,190
481,853
371,669
386,414
Retained earnings
4,903,878
Financial assets sold under
49,654
31 December
2023
31 December
2022
1 January
2022
RMB million
RMB million
(Restated, Note
2.1.1.b)
RMB million
(Restated, Note
2.1.1.b)
Liabilities
Insurance contract liabilities
Reinsurance contract liabilities
4,859,175
4,266,947
47,546
3,809,716
160
154
Bonds payable
36,166
34,997
34,994
Other liabilities
35,784
39,860
40,267
Premiums received in advance
48,878
188
other comprehensive income
(782)
(123)
fair value
contracts
income non-
insurance
Financial
changes in
Other
comprehensive
Exchange
differences
income reinsurance
assets at
and
comprehensive
Financial
contracts
Other
insurance
changes in
Financial
Impact of initial application
(Restated, Note
2.1.1.b)
As at 31 December 2022
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Reserves (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
95,578
Annual Report 2023 | Financial Report 267
reclassifiable contracts
on
reclassifiable
non-
53,360
RMB million RMB million RMB million
RMB million RMB million RMB million
RMB million RMB million RMB million
RMB million
RMB million RMB million
Total
loss
method
under the equity to profit or
foreign
operations
reserve
(1,615)
reserve fund
General
Discretionary
reserve
under the equity to profit or
method loss
Other comprehensive
income
reserves
Share
premium
to profit or loss reclassifiable
translating
Statutory
to profit or loss reclassifiable
through other
fund
Under IFRS 17 Insurance Contracts, changes in the fair value of available-for-sale securities attributable to policyholders are no longer measured and
accounted for separately and are measured and accounted for within contract liabilities.
(646)
664g6
67,201
1,580
53,360
Other comprehensive
Appropriation to reserves
income
Other comprehensive
(Restated, Note
2.1.1.b)
As at 1 January 2022
(93,078)
(112,671)
(4) (112,671)
(4)
2.1.1.b)
of IFRS 17 (Note
Impact of initial application
246,037
47,409
RMB million
50,573
47,604
1,580
53,360
As at 31 December 2021
(Restated, Note
39(a))
RMB million RMB million RMB million
19,597
934
50,573
47,409
99
(56)
51,341
50,607
(107,159) 54,505
(1,817)
(4,578)
934
53,360
(646)
2.1.1.b)
(Restated, Note
45,511
As at 31 December 2022
earnings
income to retained
12,960
3,932
5,096
3,932
(69,639)
(1,559)
5,512
(1,813)
(71,779)
152,959
Others
(73)
(4,578)
(107,159) 54,505
Total
Overseas listed (ii)
(i)
All shares owned by CLIC are domestic listed shares.
(ii) Overseas listed shares are traded on the Stock Exchange of Hong Kong Limited.
260 Annual Report 2023 | Financial Report
28,265 28,264,705,000
As at 31 December 2023
28,265
No. of shares
RMB million
19,323,530,000
19,324
8,941,175,000
8,941
1,500,000,000
1,500
7,441,175,000
7,441
28,264,705,000
28,265
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
35 RESERVES
(i)
Including: Domestic listed
Owned by other equity holders
Owned by CLIC (i)
As at 31 December 2023, the Company's share capital is as follows:
(5)
(7)
(h) Key management personnel compensation
Salaries and other benefits
For the year ended 31 December
2023
2022
RMB million
RMB million
18
37
The total compensation package for the Company's key management personnel has not yet been finalised in accordance
with regulations of the relevant PRC authorities. The compensation listed above is the tentative payment.
Financial
changes in
Annual Report 2023 | Financial Report 259
For the year ended 31 December 2023
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(i) Transactions with state-owned enterprises
Under IAS 24 Related Party Disclosures, business transactions between state-owned enterprises controlled by the PRC
government are within the scope of related party transactions. CLIC, the ultimate holding company of the Group, is a state-
owned enterprise. The Group's key business is insurance and investment related and therefore the business transactions with
other state-owned enterprises are primarily related to insurance and investment activities. The related party transactions with
other state-owned enterprises are conducted in the ordinary course of business. Due to the complex ownership structure,
the PRC government may hold indirect interests in many companies. Some of these interests may, in themselves or when
combined with other indirect interests, be controlling interests which may not be known to the Group. Nevertheless, the
Group believes that the following captures the material related party transactions and has applied IAS 24 exemption and
disclosed only qualitative information.
As at 31 December 2023, most of the bank deposits of the Group were with state-owned banks; the issuers of corporate
bonds and subordinated bonds held by the Group were mainly state-owned enterprises. For the year ended 31 December 2023,
a large portion of group insurance business of the Group were with state-owned enterprises; the majority of bancassurance
commission charges were paid to state-owned banks and postal offices; and the majority of the reinsurance agreements
of the Group were entered into with state-owned reinsurance companies.
34 SHARE CAPITAL
As at 31 December 2023
No. of shares
RMB million
As at 31 December 2022
No. of shares
RMB million
Registered, authorised, issued and fully paid
Ordinary shares of RMB1 each
28,264,705,000
Notes to the Consolidated Financial Statements (continued)
Financial
Other insurance
Other
17753
1,753
406 (98,034)
76,279
Others
earnings
income to retained
Other comprehensive
Appropriation to reserves
income
Other comprehensive
51,341
3,932
50,607
116,736
934
53,360
As at 1 January 2023
28 (55,453)
121,314
2.1.1.a)
of IFRS 9 (Note
95,578
(1,615)
51,341
50,607
(1,789) (162,612) 54,505
(1,817)
1,753
65,889
268 Annual Report 2023 | Financial Report
(420) 147,745
(1,012)
13
53,094
54,539
56,258
(1,383) (260,646)
192,944
64
2
64
998
753
53,360
(96)
67
62
(92)
7,438
(21,128)
(487)
695
31
13
161,467
(1,615)
As at 31 December 2023
Investment in equity instruments at fair value through
RMB million RMB million RMB million
N/A
380
(94)
67
51
380
Others
(92)
retained earnings
Other comprehensive income to
7,604
.
1,919
3,932
1,753
Appropriation to reserves
(487) (21,741)
660
325
(51) (97,261)
75,073
Other comprehensive income
159,784
(1,587)
(275)
52,429
As at 31 December 2023
53,905
28
188,476
assets
sold under
Interest-
bearing loans
liabilities-
to the
Financial
Other
payable
Other
liabilities-
36 NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
Changes in liabilities arising from financing activities
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
262 Annual Report 2023 | Financial Report
50,607
Under related PRC law, dividends may be paid only out of distributable profits. Any distributable profits that are not distributed
in a given year are retained and available for distribution in the subsequent years.
(b) Approved at the Annual General Meeting in 28 June 2023, the Company appropriated RMB3,932 million to the discretionary reserve fund for the year
ended 31 December 2022 based on net profit under CAS (2022: RMB5,096 million).
(a) Pursuant to the relevant PRC laws, the Company appropriated 10% of its net profit under Chinese Accounting Standards ("CAS") to statutory reserve
which amounted to RMB1,753million for the year ended 31 December 2023 (2022: RMB3,932 million).
145,933
351,424
(420)
(1,019)
50
54,348
54,539
56,306
(259,873)
(407)
(c) Pursuant to "Financial Standards of Financial Enterprises - Implementation Guide" issued by the Ministry of Finance of the PRC on 30 March 2007, for
the year ended 31 December 2023, the Company appropriated 10% of net profit under CAS which amounted to RMB1,753 million to the general reserve
for future uncertain catastrophes, which cannot be used for dividend distribution or conversion to share capital increment (2022: RMB3,932 million).
In addition, pursuant to the CAS, the Group appropriated RMB166 million to the general reserve of its subsidiaries attributable to the Company in the
consolidated financial statements (2022: RMB177 million).
54,553
(162,612)
(356)
Total
loss
operations equity method
reserve
reserve fund
fund
loss
equity method
income
reserves
to profit or
foreign loss under the
RMB million RMB million
General
to profit or
loss under the
Other comprehensive
Share
premium
to profit or reclassifiable
translating
Statutory
to profit or reclassifiable
through other
non-
reclassifiable
on
Discretionary
third-party
RMB million
RMB million RMB million
113,472
(352)
53,905
As at 1 January 2023
60,751
28 (55,453)
116,176
IFRS 9 (Note 2.1.1.a)
Impact of initial application of
99,033
(1,587)
(275)
RMB million RMB million RMB million
52,429
54,553
(107,159)
(384)
(2,704)
(352)
53,905
(Restated, Note 2.1.1.b)
As at 31 December 2022
(c)
(b)
(a)
RMB million RMB million RMB million RMB million
50,607
reclassifiable contracts
interest
payable
(1,149)
(1,500)
(1,073)
Changes from financing cash flows
273,474
73,934
149,022
1,569
36,167
12,782
At 1 January 2023
1,259
(72)
89
64
1,170
8
IFRS 9
Impact of initial application of
272,215
72
73,845
148,958
1,569
34,997
64,330
10,361
70,969
Foreign exchange movement
N/A
84,295
216,851
1,255
36,166
12,857
At 31 December 2023
592
621
(29)
Others
5,104
12,774
2,882
1,499
669
Interest expense
(4)
810
810
New leases
(4)
entities
of consolidated structured
Changes arising from losing control
479
479
54
At 31 December 2022
272,215
72
364,065
359
67,862
239,446
2,182
34,994
19,222
At 1 January 2022
RMB million
RMB million
RMB million
RMB million
Changes from financing cash flows
RMB million
RMB million
Total
activities
entities
repurchase
financing
related to
to structured
agreements consolidated
Lease
liabilities
Bonds
payable
and other
borrowings
RMB million
holders of
(7,587)
(90,711)
73,845
148,958
1,569
34,997
12,774
At 31 December 2022
26
223
(197)
Others
4,863
4,786
(1,307)
74
Interest expense
817
817
New leases
of consolidated structured
entities
Changes arising from losing control
1,139
1,139
Foreign exchange movement
(98,695)
(5,073)
5,983
3
fair value
reserve
income non-
(b) Operating lease commitments
As at
As at
31 December
31 December
2023
2022
RMB million
RMB million
86,590
1,466
91,727
1,408
88,056
93,135
As lessor, the future minimum rentals receivable under non-cancellable operating leases are as follows:
Not later than one year
Later than one year but not later than five years
Later than five years
Total
264 Annual Report 2023 | Financial Report
As at
As at
31 December
31 December
2023
Total
Property, plant and equipment
Investments
Contracted, but not provided for
contracts
income non-
Exchange
income reinsurance
gains/
insurance
comprehensive
Annual Report 2023 | Financial Report 263
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
37 PROVISIONS AND CONTINGENT LIABILITIES
The following is a summary of the significant contingent liabilities:
contracts
2022
As at
31 December
2023
2022
RMB million
RMB million
583
531
Pending lawsuits
The Group involves in certain lawsuits arising from the ordinary course of business. In order to accurately disclose the
contingent liabilities for pending lawsuits, the Group analyses all pending lawsuits on a case by case basis at the end of
each interim and annual reporting period. A provision will only be recognised if management determines, based on third-
party legal advice, that the Group has present obligations and the settlement of which is expected to result an outflow of
the Group's resources embodying economic benefits, and the amount of such obligations could be reasonably estimated.
Otherwise, the Group will disclose the pending lawsuits as contingent liabilities. As at 31 December 2023 and 31 December
2022, the Group had other contingent liabilities but disclosure of such was not practical because the amounts of liabilities
could not be reliably estimated and were not material in aggregate.
38 COMMITMENTS
(a) Capital commitments
The Group had the following capital commitments relating to property development projects and investments:
31 December
RMB million
914
1,413
RMB million
Investment properties
6,063
6,266
6,191
Investments in subsidiaries
315,929
246,115
170,387
Investments in associates and joint ventures
Term deposits
Statutory deposits - restricted
217,717
222,069
2,239
216,315
442,690
491,332
5,801
5,653
5,653
Investment in debt instruments at amortised cost
32,206
N/A
N/A
Investment in debt instruments at fair value through
other comprehensive income
2,908,332
322,298
(losses) from
1,595
51,116
893
1,478
198
160
2,525
2,531
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS
(a) Statement of financial position
As at
31 December
1,364
2023
As at
1 January
2022
RMB million
RMB million
(Restated, Note
2.1.1.b)
RMB million
(Restated, Note
2.1.1.b)
ASSETS
Property, plant and equipment
Right-of-use assets
48,775
49,856
As at
31 December
2022
reclassifiable
As at
differences
(Restated Note 2.1.1.b)
As at 31 December 2022
(1,450)
(1,450)
Others
(74)
(74)
retained earnings
Other comprehensive income to
13,137
4,109
5,096
contracts
Appropriation to reserves
(69,257)
(1,636)
1,102
5,512
(3,015)
(71,220)
Other comprehensive income
156,677
123
(1,377)
48,320
53,905
(352)
(2,704)
(384)
differences
income reinsurance
assets at
insurance
Exchange comprehensive
and
Financial comprehensive
changes in
Other
contracts
Other
Financial
45,511
insurance
Financial
35 RESERVES (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 261
Under IFRS 17 Insurance Contracts, changes in the fair value of available-for-sale securities attributable to policyholders are no longer measured and
accounted for separately and are measured and accounted for within insurance contract liabilities.
99,033
(1,587)
(275)
50,607 52,429
54,553
(107,159)
changes in
50,621
3,932
2,631
loss
equity method
operations
reserve
reserve fund
reserve fund
to profit or
loss under the
foreign
General
Discretionary
Statutory
Total
(112,671)
under the equity
for-sale
securities (i)
Other
reserves
Share
premium
reclassifiable
to profit or
on translating
reclassifiable
to profit or loss
available-
non-
reclassifiable
method
RMB million RMB million RMB million
to profit or
loss
RMB million RMB million
RMB million RMB million RMB million
68,516
1,098
53,905
(Restated, Note 2.1.1.b)
As at 1 January 2022
(93,078)
249,755
(4)
19,597
IFRS 17 (Note 2.1.1.b)
Impact of initial application of
123
(112,671)
RMB million
(1,377)
RMB million RMB million RMB million
(a)
(c)
53,905
1,098
As at 31 December 2021
2,635
50,621
45,511
48,320
48,919
272 Annual Report 2023 | Financial Report
||32 I
There was no arrangement under which a director, chief executive or supervisor waived or agreed to waive any remuneration
during the year.
The emoluments of the five highest paid individuals are the total emoluments paid to them during the year.
For the year ended 31 December 2023, no emoluments were paid by the Company to the directors, chief executive,
supervisors or any of the five highest paid individuals as an inducement to join or upon joining the Company or compensation
for loss of office as a director of any member of the Group or of any other office in connection with the management
(2022: nil).
2
Number of individuals
IIIGI
2022
2023
For the year ended 31 December
In case of any discrepancy between the Chinese version and the English version of this report,
the Chinese version shall prevail; in case of any discrepancy between the printed version and
the website version of this report, the website version shall prevail.
5
中国人寿保险股份有限公司
China Life Insurance Company Limited
FSC™ C008061
Telephone
Website
E-mail
16 Financial Street, Xicheng District, Beijing, P. R. China
TM
: 86-10-63633333
: www.e-chinalife.com
ir@e-chinalife.com
MIX
Paper | Supporting
responsible forestry
FSC
www.fsc.org
14,121.4
Office Address :
8,008.0
50.0
1,136.0
621.8
485.4
62.4
87.8
635.6
452.3
62.4
100.1
614.8
1,021.9
125.5
218.0
1,365.4
(i) Ye Yinglan was appointed as employee representative supervisor in June 2023.
(ii) Hu Zhijun and Wang Xiaoqing resigned as employee representative supervisor in June 2023
(iii) Niu Kailong did not receive remuneration from the Company.
(iv) The above remuneration was calculated based on the relevant employment period during the reporting period.
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December 2022 are as
follows:
Performance
Name
Basic salaries related bonuses
Subtotal of
salary income
Deferred
payment
included in
salary income Benefits in kind
Pension scheme
contributions
91.4
Deferred
payment
65.3
1,645.0
The compensation amounts disclosed above for these directors and the chief executive for the year ended 31 December
2022 were restated based on the finalised amounts determined during 2023.
The directors and chief executive received the compensation amounts disclosed above during their term of office in 2023
and 2022.
In addition to the directors' emoluments disclosed above, certain directors of the Company received emoluments from CLIC,
the amounts of which were not apportioned between their services to the Company and their services to CLIC.
270 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION (continued)
(b) Supervisors' emoluments
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December 2023 are as
follows:
Name
Cao Weiqing
Ye Yinglan (i)
Hu Zhijun (ii)
Wang Xiaoqing (ii)
Lai Jun
Niu Kailong (iii)
Remuneration
Benefits in
paid
kind
Pension
scheme
contributions
Total
RMB thousand
1,267.9
151.9
225.2
465.1
Actual paid
Total included in total included in total
RMB thousand
Hu Zhijun (ii)
306.7
381.2
687.9
152.5
52.9
77.4
818.2
152.5
665.7
Wang Xiaoqing
695.3
1,176.8
1,872.1
470.7
117.7
209.0
2,198.8
470.7
1,728.1
Lai Jun
768.8
1,370.0
2,138.8
548.0
1,054.5
274.1
1,328.6
115.8
Jia Yuzeng (i)
1,148.6
584.7
1,733.3
350.8
113.5
237.6
2,084.4
350.8
1,733.6
Cao Weiging (i)
104.4
(vii) The above remuneration was calculated based on the relevant employment period during the reporting period, and there is no performance remuneration
recovery and deduction in 2022.
83.5
50.1
1,301.2
23.4
225.8
50.1
175.7
Cao Qingyang (ii)
461.2
685.2
1,146.4
274.1
66.4
187.9
(vi) Tang Xin resigned as independent director in March 2022 and continued to perform as independent director until July 2022. Leung Oi-Sie Elsie resigned
as independent director in July 2022. Huang Yiping and Chen Jie were appointed as independent directors of the Company in July 2022.
(v) Wang Junhui is a non-executive director and does not receive any remuneration from the Company.
(iv) Huang Xiumei resigned as executive director in November 2022 and did not receive any remuneration from the Company from October 2022.
(v) Zhuo Meijuan was appointed as non-executive director in June 2023 and did not receive any remuneration from the Company.
(vi) The above remuneration was calculated based on the relevant employment period during the reporting period.
420.0
420.0
420.0
420.0
Annual Report 2023 | Financial Report 269
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION (continued)
(a) Directors' and chief executive's emoluments (continued)
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the year ended 31
December 2022 are as follows:
Performance
Name
Basic salaries related bonuses
Subtotal of
salary income
Deferred
payment
included in
salary income Benefits in kind
Pension scheme
contributions
Deferred
payment
Total included in total
Actual paid
included in total
RMB thousand
Bai Tao (i)
Zhao Peng (ii)
Su Hengxuan (iii)
Li Mingguang
(iv) Wang Junhui is a non-executive director and does not receive any remuneration from the Company.
(iii) Li Mingguang did not receive remuneration from the Company from May 2023.
Bai Tao was appointed as the chairman and executive director in May 2022 and did not receive remuneration from the Company.
(ii) Zhao Peng did not receive remuneration from the Company, and resigned as executive director in August 2023.
(i)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION
The total compensation package for the directors, supervisors, chief executive and senior management for the year ended 31
December 2023 in accordance with the related measures for compensation management of the Company has not yet been
finalised. The amount of the compensation not provided for is not expected to have a significant impact on the Group's 2023
consolidated financial statements. The final compensation will be disclosed in a separate announcement when determined.
(a) Directors' and chief executive's emoluments
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the year ended 31
December 2023 are as follows:
Name
Bai Tao (i)
Zhao Peng (ii)
Li Mingguang (iii)
Wang Junhui (iv)
Zhuo Meijuan (v)
Lam Chi Kuen
Zhai Haitao
Huang Yiping
Chen Jie
1,432.0
Pension
Benefits in
paid
kind
scheme
contributions
Total
RMB thousand
417.7 50.3 84.2 552
552.2
420.0
420.0
420.0
420.0
Remuneration
117.3
1,145.6
687.4
175.0
70.0
245.0
Huang Yiping (vi)
125.0
50.0
175.0
Chen Jie (vi)
125.0
175.0
420.0
420.0
420.0
420.0
245.0
245.0
245.0
245.0
175.0
175.0
175.0
175.0
(i)
Bai Tao was appointed as the chairman and executive director in May 2022 and did not receive remuneration from the Company.
(ii) Zhao Peng was appointed as executive director in October 2022 and did not receive any remuneration from the Company.
(iii) Su Hengxuan and other non-executive directors did not receive remuneration from the Company. Su Hengxuan resigned as executive director in August
2022 and Yuan Changqing resigned as non-executive director in June 2022.
Leung Oi-Sie Elsie (vi)
245.0
70.0
175.0
144.3
288.2
3,010.1
687.4
2,322.7
Huang Xiumei (iv)
939.8
728.3
1,668.1
437.0
108.6
194.2
2,577.6
1,970.9
1,533.9
Yuan Changqing (i)
Wang Junhui (v)
Lam Chi Kuen
300.0
120.0
420.0
Zhai Haitao
300.0
120.0
420.0
Tang Xin (vi)
437.0
210.6
14.5
271
6,872.0
RMB thousand
RMB thousand
2022
2023
For the year ended 31 December
RMB4,000,001 - RMB4,500,000
RMB1,000,001 - RMB2,000,000
RMB2,000,001 - RMB3,000,000
RMB3,000,001 - RMB4,000,000
RMBO - RMB1,000,000
The emoluments fell within the following bands:
Total
Basic salaries, housing allowances, other allowances and benefits in kind
Pension scheme contributions
Details of the remuneration of the five highest paid individuals are as follows:
For the year ended 31 December 2023, the five individuals whose emoluments were the highest in the Company include
one supervisor (2022: one director and one supervisor).
548.0
1,918.7
Niu Kailong (iii)
(i) Cao Weiqing was appointed as Chairman of the Board of Supervisors in November 2022. Jia Yuzeng resigned as the Chairman of the Supervisory Board.
(ii) Hu Zhijun was appointed as employee representative supervisor in July 2022, while Cao Qingyang resigned as employee representative supervisor.
(iii) Niu Kailong did not receive remuneration from the Company.
(iv) The above remuneration was calculated based on the relevant employment period during the reporting period, and there is no performance remuneration
recovery and deduction in 2022.
Annual Report 2023 Financial Report
(c) Five highest paid individuals
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION (continued)
(b) Supervisors' emoluments (continued)
12,820.2
The compensation amounts disclosed above for these supervisors for the year ended 31 December 2022 were restated
based on the finalised amounts determined during 2023.
The supervisors received the compensation amounts disclosed above during their term of office in 2023 and 2022.
2,466.7
The Company's cash inflows mainly come from insurance
premiums received, interest, dividend and bonus, and
proceeds from sale and maturity of investment assets. The
primary liquidity risks with respect to these cash inflows are
the risk of surrender by contract holders and policyholders,
as well as the risks of default by debtors, interest rate
fluctuations and other market volatilities. The Company
closely monitors and manages these risks.
(120,095)
60,273
Net cash inflow/(outflow) from
168.0%
(158,271)
(424,236)
Net cash inflow/(outflow) from
investing activities
11.3%
345,284
384,366
Net cash inflow/(outflow) from
operating activities
Change
2022
2023
RMB million
For the year ended 31 December
The Company has established a cash flow testing system, and conducts regular tests to monitor the cash inflows and
outflows under various scenarios and adjusts the asset portfolio accordingly to ensure sufficient sources of liquidity.
Consolidated Cash Flows
24 Annual Report 2023 | Management Discussion and Analysis
The Company believes that its sources of liquidity are
sufficient to meet its current cash requirements.
The Company's principal cash outflows primarily relate to
the payables for the liabilities associated with its various life
insurance, annuity, accident insurance and health insurance
products, operating expenses, income taxes and dividends
that may be declared and paid to its equity holders. Cash
outflows arising from the Company's insurance activities
primarily relate to benefit payments under these insurance
products, as well as payments for policy surrenders,
withdrawals and policy loans.
Liquidity Uses
The Company's investment portfolio also provides it with
a source of liquidity to meet unexpected cash outflows.
The Company is also subject to market liquidity risk due to
the large size of its investments in some of the markets
in which it invests. In some circumstances, some of its
holdings of investment securities may be large enough to
have an influence on the market value. These factors may
adversely affect its ability to sell these investments or sell
them at a fair price.
The Company's cash and bank deposits can provide it with a
source of liquidity to meet normal cash outflows. As at the
end of the Reporting Period, the balance of cash and cash
equivalents was RMB148,061 million. In addition, the vast
majority of its term deposits in banks allow it to withdraw
funds on deposits, subject to a penalty interest charge. As
at the end of the Reporting Period, the amount of term
deposits was RMB413,255 million.
Analysis of Cash Flows
Liquidity Sources
As at the end of the Reporting Period, the insurance contract liabilities of the Company were RMB4,859,175 million, an
increase of 13.9% from the end of 2022, primarily due to the accumulation of insurance liabilities from new policies and
renewals.
414
-1.8%
ANALYSIS OF SPECIFIC ITEMS
23
Annual Report 2023 | Management Discussion and Analysis
During the Reporting Period, there was no material equity
investment or non-equity investment of the Company that
was subject to disclosure requirements.
Major Investments
The Company insisted on a prudent investment philosophy.
Based on a disciplined and scientific internal rating system
and a multi-dimensional management mechanism of risk
limits, the Company prudently scrutinised credit profiles of
targets and risk exposure concentration before investing and
carried out ongoing tracking after investment, effectively
controlling credit risks through early identification, early
warning, and early disposal. No credit default event in relation
to domestic credit assets occurred for the Company in 2023.
The Company's credit asset investments mainly included
credit bonds and debt-type financial products, which
concentrated on sectors such as banking, transportation,
non-banking finance, public utilities, and energy. As at the
end of the Reporting Period, over 98% of the credit bonds
held by the Company were rated AAA by external rating
institutions, whereas over 99% of the debt-type financial
products were rated AAA by external rating institutions. In
general, the asset quality of the Company's credit investment
products was in good condition, and the credit risks were
well controlled.
Credit Risk Management
Insurance Contract Liabilities
In 2023, the Company's net investment income was
RMB185,866 million, and the net investment yield was
3.70%; the gross investment income of the Company was
RMB123,082 million, and the gross investment yield was
2.43%.
2.
1.
Notes:
3.90%
2.43%
3.96%
21,360
N/A
For the year 2022, the data of investment businesses related to IFRS 17 - Insurance Contracts has been restated and presented, while the data of
investment businesses related to IFRS 9 - Financial Instruments has not been restated and presented. Therefore, relevant data is not comparable.
In the calculation of the investment yield of the year 2023, the average investment assets as the denominator exclude the fair value changes of investment
in debt instruments at fair value through other comprehensive income, so as to reflect the strategic intention of the Company for the management of
assets and liabilities. The formula used for calculating the investment yield of the year 2022 is the same as that of previous years.
Insurance contract liabilities of long-term insurance business
Insurance contract liabilities of short-term insurance business
Total of insurance contract liabilities
Including: Contractual service margin
783,473
769,137
13.9%
4,266,947
4,859,175
-5.9%
35,872
33,770
14.0%
4,231,075
4,825,405
Change
2022
2023
RMB million
31 December
As at
31 December
As at
N/A
Gross investment yield²
financing activities
Foreign exchange gains/(losses) on
Details of structured entities controlled by the Company
are set out in Note 33(b) in the Notes to the Consolidated
Financial Statements in this annual report.
Structured Entities Controlled by the Company
Annual Report 2023 | Management Discussion and Analysis
26
CLP&C has not adopted IFRS 9 - Financial Instruments and IFRS 17 - Insurance Contracts. Therefore, the financial data presented in this table is calculated
in accordance with IFRS 39 - Financial Instruments and IFRS 4 - Insurance Contracts.
For details, please refer to Note 10 and Note 33(b) in the Notes to the Consolidated Financial Statements in this annual report.
2.
1.
Notes:
43.686% 3,509,522 276,985 16,019
21,790
40% 145,623 33,823 1,393
27,800
3.53% is held
by AMC
795
18,015 7,140
70.74% is
held by the
Company, and
3,400
18,083 2,876
21,436
60%
TECHNOLOGY CAPABILITIES,
OPERATIONS AND SERVICES
Technology Capabilities
In 2023, following the technological development trend and
responding to the requirements of high-quality development,
the Company fully launched the FinTech and Digitalisation
Program to optimise technological capabilities, strengthen
technology empowerment and deepen technological
innovation, with the aim to promote the Company's high-
quality development with high-quality supply of technological
capabilities.
Iterative upgrading of technological capabilities. Grasping
the trend of technology, the Company developed its digital
infrastructure with China Life characteristics. It created a
distributed cloud-based multi-active data center, effectively
ensuring the continuity of its business. With the buildup
of the China Life multi-cloud ecosystem, the delivery of
computing and resources storage was achieved within
minutes. The cloud-native transformation of key products
was realised by utilising cloud-native concepts to innovate
its application architecture.
28 Annual Report 2023 | Management Discussion and Analysis
The Company anticipates that it will have sufficient capital to
meet its insurance business expenditures and new general
investment needs in 2024. At the same time, the Company
will make corresponding financing arrangements based
on capital market conditions if it plans to implement any
business development strategies in the future.
China's macro economy still faces difficulties in the short
term, including insufficient effective demands, overcapacity
in certain industries, weak social expectations and increasing
uncertainties in the external environment, and there will
still be some uncertainties in the development of the life
insurance industry. Currently, long-end interest rates remain
at historically low levels, the insufficient supply of quality
assets is likely to continue and the equity market may
continue to be volatile, all of which will create significant
asset-liability matching pressures for the Company. The
transformation and upgrading of the sales force may witness
certain challenges, and the buildup of a "product + services'
model remains at the stage for further exploration. The full
release of the reform dividend will take time.
Potential Risks
In 2024, the Company will pursue the customer-centric
approach, adhere to the guideline of seeking progress while
maintaining stability, promote stability through progress,
and establish new growth drivers before abolishing the
old ones. Specifically speaking, the Company will uphold
the "three consistencies" (strengthening Party building,
promoting reforms and guarding against risks), realise
the "three enhancements" (stabilising business growth,
increasing business value and emphasising on sales force),
and spend extra efforts on the "three breakthroughs"
(optimising services, facilitating integration and cutting
costs). As a result, the Company's Party building, reforms
and innovation, and risk prevention and control will continue
to be strengthened; business scale, business value and
profitability, and quality of the sales force will be effectively
enhanced; services optimisation, integrated development,
and cost reduction and efficiency improvement will see
major breakthroughs. All these advancements will jointly
drive a robust growth of the Company in terms of business
scale, value, profitability and high-performance agents in long
term, and further consolidate its market leading position.
Development Strategies and Business Plans of the
Company
trend with improved quality. As market players are exploring
new fields and new sectors at an accelerated pace, shaping
new advantages and new momentums for business
development, strengthening innovation in aspects such
as specialisation, digitalisation and ecologicalization, and
improving the capability in risk prevention and control, these
will jointly promote the overall high-quality development of
the industry.
Industry Landscape and Development Trends
High-quality development is the key theme of finance
and insurance in the new era. China's economy has
formed good and solid fundamentals over the long-term
development, and its vast market size, ample macro-policy
space and comprehensively deepening reforms bring strong
development momentum to the domestic economy. Further,
the growing demands of people for multi-level, high-quality
healthcare, medical and senior-care services also provide
and create a huge market space and potential for the
development of the life insurance industry. The consensus
that the life insurance industry is at an important stage full
of strategic opportunities remains unchanged. Meanwhile,
with the implementation of various regulatory rules and
regulations in the industry, the fundamentals for the long-
term healthy development of the market will be further
consolidated, and the industry will see a stable development
FUTURE PROSPECT
"
assets assets profit
The Company's protection of consumers' rights and
interests led the industry. The Company formed a
"comprehensive consumer protection" paradigm featuring
all-employee participation, full coverage and whole-chain
management. A digital and intelligent consumer protection
platform was created to enhance the effectiveness of its
consumer protection management. Training programs on
consumer protection covered all employees within the
Company. The Company also innovated the "consumer
protection +' education and promotion model, and the
number of consumers participating in related activities
throughout the year rose by 64.6% year on year. It ranked
among the top of the industry in the assessment of protection
of consumers' rights and interests as conducted by the
industry regulator, and both the life insurance service quality
and customer satisfaction were maintained at high levels.
invoices for medical charges. "Advanced Claims Payment"
delivered heart-warming protection in advance to customers
on medical treatments, benefiting 27,800 customers.
Annual Report 2023 | Management Discussion and Analysis 27
Claims settlement services brought heart-warming
protection. The Company kept developing the "convenient
and caring" claims settlement services, with the average
efficiency for claims settlement being improved to 0.38
day and the claims acceptance rate reaching 99.7%.
The coverage of convenient claims payment was further
expanded. The number of cases in relation to "Claims
Settlement for Critical Illness within One Day" increased
by 31.9% year on year. The whole-process non-manual
claims settlement operation was carried out on a pilot basis,
and the average efficiency for processing each claim case
rising by over 90%. The Company continued to reform its
model of claims settlement services, and provided claims
payments of 567,000 customer-times throughout the year
through reminder services on claims notification of electronic
The quality of operations was solidified due to
professional capabilities. The Company continued to
optimise the operation standard specification system that
covers unified national practices, service standards and job
description, laying a solid foundation of its operations and
services featured with "standardisation and specialisation".
The Company also played an active role in participating in the
formulation of industry and national standards. As the only
insurance company involved, it participated in the formulation
of the national standards for intelligent customer services,
contributing its wisdom to the standardised development in
this regard. 95519 has been named as the "Best Customer
Contact Center in China" by the Customer Contact Center
Standards Committee (CCCS) for 20 consecutive years.
The Company deeply engaged in innovating models for
insurance operations. The "Digital Underwriters" achieved
a replacement rate of 24.9% for manual work in six work
scenarios. The centralised and shared business mode of
operations, which was first of its kind in the industry,
was fully applied to the areas of policy administration,
underwriting and claims settlement, and the efficiency of
these three areas was improved by over 27.0%.
In 2023, pursuing the "people-centric" approach and
focusing on value improvement and service diversification,
the Company deeply engaged in developing more
centralised, digitalised and intelligent, and diversified
business operations and services, so as to accelerate the
construction of a nationwide integrated system of operations
and services. It strengthened the protection of consumers'
rights and interests, and devoted itself to advancing the
Company's high-quality development by capitalising on its
own professional capabilities in operations, aiming to build
its core competitiveness with China Life's good services,
which are "convenient, quality and caring".
Operations and Services
and verification system for anti-money laundering, which
was the first application innovation of "machine learning
+ knowledge graph" in the anti-money laundering field of
the life insurance industry, was awarded the second prize
of the FinTech Development Awards by the People's Bank
of China.
Further strengthened digital risk control. A digital risk
control system based on the big data analytics was created to
quickly identify and accurately capture risks in key business
fields, realising the goals of moving forward risk control
points and dynamic monitoring. The intelligent identification
Significant achievement of technological innovation.
With the full-stack IT application innovation as a
breakthrough, a real-time data service platform, which was
capable of processing data volume at petabytes (PB) level,
was constructed based on the new proprietary distributed
architecture. China Life distributed hybrid cloud was
awarded the special prize of Capital Financial Innovation
Achievements.
Data-driven value advancement. The Company
emphasised on the accuracy, real-time, consistency and
security of data, and empowered the entire value chain
of its insurance business with data factors as the driving
force. With its terabyte level data processing capability,
the Company realised the whole-process systematic
and automated generation of financial statements under
new insurance contracts standards with high quality, and
developed a financial accounting and actuarial measurement
system under the new accounting standards by using more
accurate algorithm, more sophisticated model and more
efficient process, fully ensuring the implementation of the
new accounting standards in a systemic, complete and
accurate manner.
Customer experience was improved with more diversified
services. The coverage of inclusive value-added services was
expanded to multiple fields such as health, sports, women,
parenting and aesthetic education, and feedback on life, and
the number of customers covered by the services grew by
12.1% year on year. A new and upgraded VIP service system
was rolled out, and the number of VIP customers and the
number of customers being provided with the VIP services
grew by 11.9% and 26.0%, respectively, year on year. The
capability of service access through multiple contact points
was further improved. The monthly active users of the
China Life APP and the online customer services grew by
15.8% and 126.5%, respectively, year on year. The Company
created a "green access" for senior people for multi-channel
services, providing the age-friendly services of 25,683,100
customer-times throughout the year.
capital Shareholding
4,000
Total
Registered
710,527
31 December
2022
31 December
2023
As at
As at
RMB million
Comprehensive solvency ratio
Core solvency ratio
Minimum capital
Actual capital
699,688
Core capital
Solvency Ratio
equivalents
-69.5%
67,135
20,467
Net increase in cash and cash
cash and cash equivalents
-70.5%
217
64
An insurance company shall have the capital commensurate with its risks and business scale. According to the nature
and capacity of loss absorption by capital, the capital of an insurance company is classified into the core capital and the
supplementary capital. The core solvency ratio is the ratio of core capital to minimum capital, which reflects the adequacy
of the core capital of an insurance company. The comprehensive solvency ratio is the ratio of the sum of core capital and
supplementary capital to minimum capital, which reflects the overall capital adequacy of an insurance company. The following
table shows the Company's solvency ratios as at the end of the Reporting Period:
Main reasons for change
An increase in the scale of
universal insurance accounts
The needs for investment
management
The needs for liquidity
management
981,594
449,160
China Guangfa Bank Taking public deposits; granting short-term, mid-term and long-
Co., Ltd.
term loans; handling settlements in and out of China; honoring bills
and offering discounting services; issuing financial bonds; issuing,
paying for and underwriting government bonds as an agent; sales
and purchases of negotiable securities such as government bonds
and financial bonds; engaging in inter-bank borrowings; providing
letters of credit service and guarantee; engaging in bank card
business; acting as payment and receipt agent and insurance
agent; providing safe deposit box services; taking deposits and
granting loans in foreign currency; foreign currency remittance;
foreign currency exchange; international settlements; foreign
exchange settlements and sales; inter-bank foreign currency
borrowings; honoring bills of exchange and offering discounting
services in foreign currency; granting foreign currency loans;
granting foreign currency guarantees; sales and purchases of
negotiable securities other than shares in a foreign currency for
itself and as an agent; issuing negotiable securities other than
shares in a foreign currency for itself and as an agent; sales
and purchases of foreign exchange on its own account and on
behalf of its customers; issuing and making payments for foreign
credit card as an agent; offshore financial operations; assets and
credit verification, consultation and notarisation businesses; other
businesses approved by the NFRA and other relevant authorities.
Property loss insurance; liability insurance; credit insurance
and bond insurance; short-term health insurance and accident
insurance; reinsurance of the above insurance businesses;
business for the use of insurance funds that are permitted by
applicable PRC laws and regulations; other businesses permitted
by the NFRA.
Group pension insurance and annuity; individual pension insurance
and annuity; short-term health insurance; accident insurance;
reinsurance of the above insurance businesses; business for the
use of insurance funds that are permitted by applicable PRC laws
and regulations; pension insurance asset management product
business; management of funds in RMB or foreign currency as
entrusted by entrusting parties for the retirement benefit purpose;
other businesses permitted by the NFRA.
Management and utilisation of proprietary funds; acting as agent
or trustee for asset management business; consulting business
relevant to the above businesses; other asset management
business permitted by applicable PRC laws and regulations.
Major business scope
China Life Property
and Casualty
Insurance Company
Limited²
China Life Pension
Company Limited
Company name
China Life Asset
Management
Company Limited
Net
Net
1,007,601
RMB million
25
Annual Report 2023 | Management Discussion and Analysis
During the Reporting Period, there was no sale of material assets and equity of the Company.
Sale of Material Assets and Equity
As at the end of the Reporting Period, the Company's comprehensive solvency ratio was 218.54%, an increase of 11.76
percentage points from the end of 2022, and the Company's core solvency ratio was 158.19%, an increase of 14.60
percentage points from the end of 2022, all continuing to stay at relatively high levels.
206.78%
218.54%
143.59%
158.19%
487,290
Major Subsidiaries and Associates of the Company¹
channel of exclusive
- Impairment losses of investment assets
Net investment yield²
(1,282)
(universal insurance) (diamond version)
China Life Xin Account Endowment Insurance
56
Mainly through the channel of
exclusive individual agents
(universal insurance) (type C)
(國壽鑫尊寶終身壽險(萬能型)(C款))
32,152
China Life Xin Zun Bao Whole Life Insurance
354
Surrender
payment
deposits Major sales channel
36,708 Mainly through the channel of
exclusive individual agents
China Life Xin Zun Bao Whole Life Insurance
(universal insurance) (type A)
(國壽鑫尊寶終身壽險(萬能型)(A款))
Insurance product
Net increase
in policyholder
RMB million
For the year ended 31 December 2023
Top Three Insurance Products in terms of Net Increase in Policyholder Deposits note
Note: Standard premiums are calculated in accordance with the calculation methods set forth in the "Notice on Establishing the Industry Standard of Standard
Premiums in the Life Insurance Industry" (Bao Jian Fa [2004] No. 102) and the "Supplementary Notice of the 'Notice on Establishing the Industry
Standard of Standard Premiums in the Life Insurance Industry'" (Bao Jian Fa [2005] No. 25) of the former China Insurance Regulatory Commission.
(國壽城鄉居民大病團體醫療保險(A型))
Rural and Urban Citizens (type A)
923
individual agents
Mainly through the
channel of exclusive
individual agents
Through other channels
(國壽鑫賬戶兩全保險(萬能型)(鑽石版))
19,564
Mainly through the channel of
exclusive individual agents
321
7.30%
413,255
72.31%
3,479,159
72.78%
4,119,072
Percentage
Amount
As at 31 December 20221
As at 31 December 2023
Amount Percentage
25,517
Bonds
Investment category
RMB million
As at the end of the Reporting Period, the Company's investment assets categorised by investment object are set out as
below:
grade credit bonds, with an aim to stabilise the allocation
of underlying positions. In respect of equity investments,
the Company proceeded with the medium- and long-term
investment deployment by pursuing balanced allocations and
structural optimisation. In respect of alternative investments,
the Company focused on high-quality entities as well as
competitive sectors, and made innovation in investment
models, for the purpose of increasing the size of allocations
in this regard. The Company maintained a stable portfolio
with high-quality assets in general.
Investment Portfolios
In 2023, interest rates were at low levels, the shortage
of quality assets remained unchanged, and the stock
market fluctuated downward with significant structural
differentiation. Under the complicated market environment,
the Company firmly maintained its strategic consistency,
pursued asset-liability matching management and conducted
investment operations in a flexible manner. In respect of
fixed-income investments, the Company proactively made
allocations to long-term interest rate bonds and high-
Investment Business
21
Annual Report 2023 | Management Discussion and Analysis
Note: The data regarding net increase in policyholder deposits and surrender payment are relevant data under ASBE.
Fixed-maturity financial assets
Term deposits
25,517
China Life Critical Illness Group Health Insurance for
(國壽鑫福臨門年金保險)
Gross
written
premiums
Standard
premiums
China Life Xin Xiang Wei Lai Endowment Insurance
(國壽鑫享未來兩全保險)
38,632
from new
policies Note
11,600
Surrender
Major sales channel
payment
Mainly through the
channel of exclusive
97
Insurance product
individual agents
36,629
8
Mainly through the
585
channel of exclusive
individual agents
China Life Xin Yu Jin Sheng Endowment Insurance
(國壽鑫裕金生兩全保險)
35,630
57
Mainly through the
China Life Xin Yao Dong Fang Annuity Insurance
(國壽鑫耀東方年金保險)
485,567
RMB million
Top Five Insurance Products in terms of Gross Written Premiums
10,932
35,278
China Life Xin Fu Lin Men Annuity Insurance
Other Channels During the Reporting Period, gross written
premiums from other channels were RMB32,898 million, an
increase of 2.8% year on year. The Company proactively
participated in a variety of government-sponsored health
insurance businesses and supported the construction of
a multi-tiered medical security system. As at the end of
the Reporting Period, the Company carried out over 200
supplementary major medical expenses insurance programs,
covering nearly 350 million people. It also undertook over
70 policy-sponsored long-term care insurance programs,
providing services to more than 38 million people.
Meanwhile, it implemented over 120 city-customised
commercial medical insurance projects. The Company
actively participated in social governance related to medical
protection and continued to undertake over 600 healthcare
entrusted programs.
Online Insurance Business
The Company continued to promote the development
of the online insurance business by optimising its online
insurance business operation system featuring centralised
operation and unified management, to provide customers
with a quality service experience. In 2023, the online
insurance business grew rapidly. Total premiums of the
online insurance business under the regulatory caliber were
RMB76,020 million, an increase of 20.9% year on year.
The Company further consolidated its foundation for the
development of the online insurance business to enhance
the core operating capabilities and channel value of the
online insurance business.
Integrated Financial Business
The Company actively engaged in the construction of a "Life
Insurance +" integrated financial ecosystem, with a view
to empowering the Company's high-quality development.
In 2023, premiums of CLP&C cross-sold by the Company
through collaboration were RMB23,600 million, with the
number of insurance policies increasing by 6.5% year on
year. Through the cross-sale of property insurance products,
the Company diversified its client contacts and facilitated the
acquisition of new customers and the increase of commission
income of its sales team. The scale of business of Pension
Company cross-sold by the Company through collaboration
were RMB8,655 million. The Company entrusted CGB to
sell its bancassurance products, with the first-year regular
premiums amounting to RMB1,799 million, an increase of
16.6% year on year. The Company also actively explored
the synergy between insurance and investment businesses,
continuously deepened its cooperation with AMC and CLI,
etc., and constantly innovated and explored new insurance-
investment interactive models. Besides, in order to satisfy
the diverse needs of its customers, the Company has carried
out various business operation activities by co-working with
CLP&C and CGB, so as to provide customers with one-
stop and all-round solutions of the high-quality financial and
insurance services.
Inclusive Healthcare and Integrated Senior-care Service
System
For the year ended 31 December 2023
Being customer-centric, the Company actively engaged in
the construction of a multi-tiered social security system and
clarified its medium- and long-term objectives and planning
for the development of a senior-care services ecosystem,
so as to promote the buildup of the inclusive healthcare
and integrated senior-care service system with all efforts.
With respect to the "insurance + senior-care services",
the Company accelerated the senior-care ecosystem
construction by gradually expanding the deployment of
the senior-care services projects in key cities to further
enhance its capability in supplying diversified services, thus
offering its customers with full life-cycle senior-care services
that "give children peace of mind, and reassure the senior
people". In 2023, seven new residential senior-care services
projects were added to the list and the pilot programs
of home-based senior-care services were launched in five
cities. The Company created a new exclusive team of China
Life senior-care services planners and enriched relevant
product system, in order to better satisfy the needs of
customers for senior-care planning and protection with its
specialised services. The Company actively engaged in the
construction of the national third-pillar pension insurance
system, and launched its new products and services on an
ongoing basis. As at the end of the Reporting Period, the
scale of the Company's third-pillar private pension business
ranked among the top of the industry.
4
Including premiums from online insurance business acquired by different sales channels of the Company.
Annual Report 2023 | Management Discussion and Analysis
19
Analysis of Insurance Products
With the "people-centric" approach as the focus of its
insurance products supply, the Company actively served
national strategies and people's livelihood. It consistently
optimised the supply of diverse products and services,
strengthened asset-liability management and interaction,
and carried out in-depth research on product supply, so as
to enhance its capability in supplying high-quality insurance
products. In 2023, the Company newly developed and
upgraded a total of 196 insurance products.
The Company made great efforts to provide pension
financial services, strengthened research and development
of commercial pension insurance products, and enriched
the third-pillar private pension insurance product system,
optimised and upgraded exclusive commercial pension
insurance products. It also implemented the pilot programs
of insurance liability conversion from life insurance to long-
term care insurance, and consistently launched insurance
products offering protection for the senior people such
as pension funds, medical expenses, compensation for
accidental injuries. The Company continued to increase
its support to inclusive finance by expanding insurance
protection supply to such groups as women, children,
new industry practitioners and new urban residents, and
enriching the exclusive product system for specific groups
of people. It also played an active role in promoting FinTech
insurance protection and optimised technology insurance.
product system, offering protection services to customers
such as employees of technology companies. Meanwhile,
in fully serving the Healthy China initiative, the Company
coordinated and promoted the research and development of
products with respect to critical illness insurance, long-term
care insurance and medical insurance, optimised insurance
liabilities, and improved insurance protection functions. It also
deeply engaged in the product supply in the niche markets of
health insurance, and explored and promoted the integrated
development of health protection and health services, for
the purpose of better satisfying the diversified demands of
customers for health protection. The Company continued to
expand the scope of agriculture-related insurance products
and enhanced insurance protection for agriculture-related
population, creating a sound exclusive insurance product
system in relation to rural revitalisation. It innovated regional
products through research and development by launching
insurance products for Hainan Free Trade Port, Guangdong-
Hong Kong-Macao Greater Bay Area and other regions, with
an aim to actively promote coordinated regional development.
20 Annual Report 2023 | Management Discussion and Analysis
In 2023, with respect to the "insurance + healthcare
services", the Company fully consolidated internal and
external quality resources and made consistent efforts
to enhance its capability in health management services,
creating a health management and service system integrating
online and offline operations and with high quality and
efficiency. As at the end of the Reporting Period, more
than a hundred types of services were available on the China
Life Inclusive Healthcare Service Platform, covering seven
categories of health management services such as physical
examination, health consulting, health promotion, disease
prevention, chronic disease management, medical services
and rehabilitation care, and the accumulated registered users
of the platform increased by 20.0% from the end of 2022,
ranking among the top of the industry.
N/A
10.09%
55.83%
Gross investment income
20221
2023
RMB million
For the year ended 31 December
Investment Income
Annual Report 2023 | Management Discussion and Analysis
22
As at the end of the Reporting Period, the Company's investment assets reached RMB5,659,250 million. Among the major
types of investments, the percentage of investment in bonds was 55.83%, the percentage of term deposits was 7.30%,
the percentage of investment in debt-type financial products was 8.57%, and the percentage of investment in stocks and
funds (excluding money market funds) was 11.23%.
Cash and others include cash, cash at banks, short-term deposits, and financial assets purchased under agreements to resell, etc.
6.
Other equity investments include private equity funds, unlisted equities, preference shares and equity investment plans, etc.
5.
Funds include equity funds, bond funds and money market funds, etc. In particular, the balance of money market funds as at 31 December 2023 was
RMB1,597 million.
Other fixed-maturity investments include statutory deposits-restricted and interbank certificates of deposits, etc.
4.
3.
2. Debt-type financial products include debt investment schemes, trust schemes, asset-backed plans, credit asset-backed securities, specialised asset
management plans, and asset management products, etc.
As at 31 December 2022, the data of investment businesses related to IFRS 17 - Insurance Contracts has been restated and presented, while the data
of investment businesses related to IFRS 9 - Financial Instruments has not been restated and presented. Therefore, relevant data is not comparable.
1.
Notes:
Net investment income
Net income from fixed-maturity investments
Net income from equity investments
123,082
176,277
- Expected credit losses of investment assets
(8,751)
(32,786)
+ Unrealised gains or losses
27,518
(31,280)
+ Realised disposal gains
3,979
8,079
Share of profit of associates and joint ventures
100.00%
2,187
Investment income from cash and others
87
102
Net income from investment properties
29,704
29,117
142,913
144,216
178,870
185,866
4,352
4,811,893
100.00%
5,659,250
8.99%
432,700
7.60%
430,200
Common stocks
18.51%
890,926
19.43%
1,099,601
Equity financial assets
Funds4
1.67%
1.08%
61,215
Other fixed-maturity investments³
9.46%
455,026
8.57%
484,828
Debt-type financial products²
51.09%
2,458,440
80,126
3,159,774
206,963
145,341
Total
5.45%
262,488
4.57%
258,760
Investments in associates and joint ventures
3.45%
166,127
2.99%
169,064
3.66%
Cash and others6
13,193
0.23%
12,753
Investment properties
6.50%
312,885
8.17%
462,438
Other equity investments5
3.02%
0.28%
3.70%
1. The corresponding results for the year 2022 have been restated using 2023 EV economic assumptions.
Numbers may not be additive due to rounding.
EMBEDDED
VALUE
577,127
5. 10% increase in expenses
26,112
456,240
4. 10% decrease in investment return
47,644
713,980
3. 10% increase in investment return
33,204
39,263
34,647
555,649
36,860
584,807
2. Risk discount rate -50bps
1. Risk discount rate +50bps
Base case scenario
Sales after Cost
of Required Capital
616,352
6. 10% decrease in expenses
592,487
40,516
574,794
37,701
592,494
Using 2022 Economic Assumptions
13. Allowing for diversification in calculation of VIF
12.10% decrease in morbidity rates
11.10% increase in morbidity rates
10. 10% decrease in lapse rates
36,081
577,213
9. 10% increase in lapse rates
10% increase in mortality rate for annuity products
37,730
589,427
8. 10% decrease in mortality rate for non-annuity products and
10% decrease in mortality rate for annuity products
35,996
580,222
7. 10% increase in mortality rate for non-annuity products and
Value of One Year's
RMB million
Value of In-Force
Business after Cost
of Required Capital
Sensitivity Results
1.
1,260,567
1,462
(13,850)
132
37,044
(40,643)
(73,807)
(624)
36,860
83,473
1,230,519
RMB million
Notes:
K Embedded Value as at 31 December 2023 (sum A through J)
Others
J
|
Shareholder Dividend Distribution and Capital Changes
Numbers may not be additive due to rounding.
35,094
2.
B Reflects expected impact of covered business, and the expected return on investments supporting the 2023 opening net worth.
Sensitivity tests were performed using a range of alternative assumptions. In each of the sensitivity tests, only the assumption
referred to was changed, with all other assumptions remaining unchanged. The results are summarized below:
SENSITIVITY RESULTS
Annual Report 2023 | Embedded Value
32
J Other miscellaneous items.
Reflects dividends distributed to shareholders during 2023.
|
Reflects the gains or losses due to changes in exchange rate.
H
Change in the market value adjustment from the beginning of year 2023 to 31 December 2023 and other adjustments.
G
Reflects the effects of appraisal methodology and model enhancement, and assumption changes.
F
Compares actual with expected investment returns during 2023.
E
Reflects the difference between actual operating experience in 2023 (including mortality, morbidity, lapse, and expenses etc.) and the assumptions.
D
Value of one year's sales for the 12 months ended 31 December 2023.
C
Items B through J are explained below:
595,090
38,628
629,037
For the year ended 31 December 2023, CLIC paid AMC a
service fee of RMB140.82 million.
Asset Management Agreement between CLIC and AMC
CLIC and AMC entered into the 2023-2025 asset management
agreement on 29 December 2022, with a term from 1
January 2023 to 31 December 2025. Pursuant to the 2023-
2025 asset management agreement, AMC agreed to invest
and manage assets entrusted to it by CLIC, on a discretionary
basis, subject to the investment guidelines and instructions
given by CLIC. In consideration of AMC's services in respect
of investing and managing assets entrusted to it by CLIC
under the agreement, CLIC agreed to pay AMC a service
fee. For details as to the method of calculation of the service
fee, please refer to Note 33 in the Notes to the Consolidated
Financial Statements. The annual cap for each of the three
years ending 31 December 2025 is RMB500 million.
Annual Report 2023 | Significant Events
36
For the year ended 31 December 2023, the Company paid
AMC a service fee of RMB3,264.68 million.
The Company and AMC entered into the 2023-2025 asset
management agreement on 1 January 2023, with a term
from 1 January 2023 to 31 December 2025. Pursuant to the
2023-2025 asset management agreement, AMC agreed to
invest and manage assets entrusted to it by the Company,
on a discretionary basis, within the scope granted by the
Company and in accordance with the requirements of
applicable laws and regulations, regulatory requirements
and the investment guidelines given by the Company. In
consideration of AMC's services in respect of investing and
managing various categories of assets entrusted to it by
the Company under the agreement, the Company agreed
to pay AMC a service fee. For details as to the method of
calculation of the service fee, please refer to Note 33 in
the Notes to the Consolidated Financial Statements. The
annual caps for the three years ending 31 December 2025
are RMB4,000 million, RMB5,000 million and RMB6,000
million, respectively.
Asset Management Agreement between the Company
and AMC
Asset Management Agreements
For the year ended 31 December 2023, CLP&C paid the
Company an agency service fee of RMB1,705.64 million.
The Company and CLP&C has entered into the 2024
insurance sales framework agreement on 23 February 2024,
with a term of three years from 8 March 2024 to 7 March
2027. Pursuant to the agreement, CLP&C will continue to
entrust the Company to act as an agent to sell selected
insurance products within the authorised regions, and pay
an agency service fee to the Company in consideration of
the services provided. The annual caps for the three years
ending 31 December 2026 are RMB2,620 million, RMB2,840
million and RMB3,110 million, respectively.
The Company and CLP&C entered into the 2021 insurance
sales framework agreement on 20 February 2021, with a
term of two years from 8 March 2021 to 7 March 2023,
which could be automatically extended for one year to 7
March 2024. Pursuant to the agreement, CLP&C would
entrust the Company to act as an agent to sell selected
insurance products within the authorised regions, and pay
an agency service fee to the Company in consideration
of the services provided. For details as to the method of
calculation of the agency service fee, please refer to Note 33
in the Notes to the Consolidated Financial Statements. The
annual caps for the three years ended 31 December 2023
were RMB3,500 million, RMB3,830 million and RMB4,240
million, respectively.
Insurance Sales Framework Agreement
For the year ended 31 December 2023, the service fee paid
by CLIC to the Company amounted to RMB463.21 million.
The Company and CLIC entered into the 2022-2024 policy
management agreement on 31 December 2021, with a term
from 1 January 2022 to 31 December 2024. Pursuant to the
agreement, the Company will accept CLIC's entrustment
to provide policy administration services relating to the
non-transferred policies. The Company acts as a service
provider under the agreement and does not acquire any
rights or assume any obligations as an insurer under the
non-transferred policies. For details as to the method of
calculation of the service fee, please refer to Note 33 in the
Notes to the Consolidated Financial Statements. The annual
cap in respect of the service fee to be paid by CLIC to the
Company for each of the three years ending 31 December
2024 is RMB491 million.
Policy Management Agreement
The Company has complied with the disclosure requirements
under Chapter 14A of the Listing Rules in respect of the
above continuing connected transactions. When conducting
the above continuing connected transactions during the
Reporting Period, the Company has followed the pricing
policies and guidelines formulated at the time when such
transactions were entered into.
During the Reporting Period, the Company also carried
out certain continuing connected transactions, including
the policy management agreement between the Company
and CLIC, and the asset management agreement between
CLIC and AMC, which were exempt from the reporting,
announcement, annual review and independent shareholders'
approval requirements under Chapter 14A of the Listing
Rules.
During the Reporting Period, the continuing connected
transaction carried out by the Company that was subject to
the reporting, announcement, annual review and independent
shareholders' approval requirements under Chapter 14A of
the Listing Rules included the agreement for entrusted
investment and management and operating services with
respect to alternative investments with insurance funds
between the Company and CLI. Such agreement and
the transactions thereunder have been approved by the
independent shareholders of the Company.
Annual Report 2023 | Significant Events 35
Agreement for Entrusted Investment and Management
and Operating Services with respect to Alternative
Investments with Insurance Funds between the
Company and CLI
During the Reporting Period, the following continuing
connected transactions were carried out by the Company
pursuant to Rule 14A.76(2) of the Rules Governing the
Listing of Securities on the HKSE (the "Listing Rules"),
including the insurance sales framework agreement
between the Company and CLP&C, the asset management
agreement between the Company and AMC, the framework
agreement between the Company and China Life Capital,
and the framework agreements entered into by China Life
AMP with the Company, CLIC and CLI, respectively. These
continuing connected transactions were subject to the
reporting, announcement and annual review requirements
but were exempt from the independent shareholders'
approval requirement under the Listing Rules. CLIC, the
controlling shareholder of the Company, holds 60% of the
equity interest in CLP&C and 100% of the equity interest
in CLI and China Life Capital. Therefore, each of CLIC,
CLP&C, CLI and China Life Capital constitutes a connected
person of the Company. AMC is held as to 60% and 40%
by the Company and CLIC, respectively, and is therefore
a connected subsidiary of the Company. China Life AMP
is a subsidiary of AMC, and is therefore also a connected
subsidiary of the Company.
As approved by the First Extraordinary General Meeting
2021 of the Company, the Company and CLI entered
into the 2022-2024 agreement for entrusted investment
and management and operating services with respect to
alternative investments with insurance funds (the "2022-
2024 Alternative Investment Agreement") on 27 December
2021. The 2022-2024 Alternative Investment Agreement was
for a term from 1 January 2022 to 31 December 2023, and
could be automatically renewed for one year. Pursuant to the
2022-2024 Alternative Investment Agreement, the Company
would entrust CLI to perform services including the entrusted
investment and management and the entrusted operation
with respect to alternative investments. For the entrusted
investment and management, it covered the equity/real
estate direct investments, equity/real estate funds, non-
standard financial products and quasi-securitisation financial
products already entrusted by the Company to CLI for
investment and management under the existing projects,
as well as the non-standard financial products and quasi-
securitisation financial products entrusted for investment
under the new projects. CLI would invest and manage
assets entrusted to it by the Company, on a discretionary
basis, within the scope of utilisation of insurance funds as
specified by the regulatory authorities and in accordance
with the requirements of applicable laws and regulations
and the investment guidelines of the Company, and the
Company would pay CLI the investment management
service fee, product management fee, real estate operation
management service fee and performance reward in respect
As approved by the 2022 Annual General Meeting of the
Company, the Company and CLI entered into the 2023-2025
agreement for entrusted investment and management and
operating services with respect to alternative investments
with insurance funds (the "2023-2025 Alternative Investment
Agreement") on 30 June 2023 to modify the type of assets
entrusted by the Company to CLI for investment and
management under the 2022-2024 Alternative Investment
Agreement, and to set forth the pricing principle for each
type of the products. The 2023-2025 Alternative Investment
Agreement is for a term from 1 July 2023 to 31 December
2024, and can be automatically renewed for one year. The
2022-2024 Alternative Investment Agreement has been
terminated and replaced by the 2023-2025 Alternative
Investment Agreement after the latter came into effect.
Pursuant to the 2023-2025 Alternative Investment
Agreement, CLI will continue to invest and manage assets
entrusted to it by the Company, on a discretionary basis,
within the scope of utilisation of insurance funds as specified
by the regulatory authorities and in accordance with the
requirements of applicable laws and regulations and the
investment guidelines of the Company, and the Company
will pay CLI the investment management service fee,
product management fee, real estate operation management
service fee and performance reward in respect of the
investment and management services provided by CLI to
the Company. The entrusted assets under the 2023-2025
Alternative Investment Agreement include insurance asset
management products, financial products, equity/real estate
funds and public REITs products (which are mainly conducted
by way of strategic fund and restrict to the participation in
strategic placement). In addition, CLI will continue to provide
the operating services to the Company with respect to the
equity/real estate funds invested by the Company at its
own discretion and entrusted by it to CLI for operation and
management, and the Company will pay CLI the entrusted
operation fee in this regard. For details as to the method of
calculation of the fees for the investment and management
services (including the investment management service fee,
product management fee, real estate operation management
service fee and performance reward) and the entrusted
operation fee in relation to the operating services, please
refer to Note 33 in the Notes to the Consolidated Financial
Statements.
2.
31,385
34,646
Notes:
Annual Report 2023 | Significant Events
38
CLIC and China Life AMP entered into the 2023-2025
framework agreement on 9 December 2022, with a term
of three years from 1 January 2023 to 31 December 2025.
Pursuant to the agreement, CLIC will subscribe for or redeem
the fund units of the funds managed by China Life AMP, and
pay the relevant fees. Pricing of the transactions under the
agreement shall be determined by the parties through arm's
length negotiations with reference to industry practices.
For each of the three years ending 31 December 2025,
the annual cap of the subscription price and corresponding
subscription fee for the subscription of fund products is
RMB2,000 million, and the annual cap of the redemption
price and corresponding redemption fee for the redemption
of fund products is RMB2,000 million.
AMP
Framework Agreement between CLIC and China Life
For the year ended 31 December 2023, the subscription price
and corresponding subscription fee for the subscription of
fund products were RMB11,314.00 million, the redemption
price and corresponding redemption fee for the redemption
of fund products were RMB8,130.26 million, and the
management fee paid by the Company for the private asset
management was RMB26.70 million.
The Company and China Life AMP entered into the 2023-
2025 framework agreement on 30 December 2022, with a
term of three years from 1 January 2023 to 31 December
2025. Pursuant to the agreement, the Company and China
Life AMP will conduct certain daily transactions, including
the subscription and redemption of fund products and private
asset management. Pricing of the transactions under the
agreement shall be determined by the parties through arm's
length negotiations with reference to industry practices.
For each of the three years ending 31 December 2025,
the annual cap of the subscription price and corresponding
subscription fee for the subscription of fund products is
RMB20,000 million, the annual cap of the redemption price
and corresponding redemption fee for the redemption of
fund products is RMB20,000 million, and the annual cap of
the management fee payable by the Company for the private
asset management is RMB700 million.
Framework Agreements with China Life AMP
Framework Agreement between the Company and
China Life AMP
For the year ended 31 December 2023, the amount of
subscription by the Company in the capacity of the limited
partner of the fund products of which China Life Capital or
any of its subsidiaries serves as the general partner was
RMB4,000.00 million, and the management fee charged by
China Life Capital as the general partner or the manager of
the fund products was RMB142.20 million.
The Company and China Life Capital entered into the 2023-
2025 framework agreement on 28 December 2022, with a
term from 1 January 2023 to 31 December 2025. Pursuant
to the agreement, the Company will subscribe in the capacity
of the limited partner for the fund products of which China
Life Capital or any of its subsidiaries serves (individually
and jointly with third parties) as the general partner, and/
or the fund products of which China Life Capital serves as
the manager (including the fund manager and co-manager).
For each of the three years ending 31 December 2025,
the annual cap for the subscription by the Company in the
capacity of the limited partner of the fund products of which
China Life Capital or any of its subsidiaries serves as the
general partner is RMB5,000 million, and the annual cap
for the management fee charged by China Life Capital as
the general partner or the manager of the fund products is
RMB500 million.
Cooperation Framework Agreement for Investment
Management with Insurance Funds between the
Company and China Life Capital
For the year ended 31 December 2023, the fees for the
investment and management services (including the
investment management service fee, product management
fee, real estate operation management service fee and
performance reward) and the entrusted operation fee in
relation to the operating services paid by the Company to
CLI amounted to RMB770.49 million, and the contractual
amount of assets newly entrusted by the Company to CLI
for investment and management was RMB76,764.50 million.
For the three years ending 31 December 2025, the annual
caps on the contractual amount of assets newly entrusted
by the Company to CLI for investment and management are
RMB120,000 million (or its equivalent in foreign currency),
RMB140,000 million (or its equivalent in foreign currency)
and RMB150,000 million (or its equivalent in foreign
currency), respectively, and the annual caps on the fees
for the investment and management services payable by
the Company to CLI (including the investment management
service fee, product management fee, real estate operation
management service fee and performance reward) and the
entrusted operation fee in relation to the operating services
are RMB1,500 million (or its equivalent in foreign currency),
RMB1,800 million (or its equivalent in foreign currency) and
RMB2,200 million (or its equivalent in foreign currency),
respectively. The annual cap on the contractual amount of
assets newly entrusted for investment and management,
as well as the annual cap on the fees for the investment
and management services and the entrusted operation fee
for the year ended 31 December 2023 under the 2022-2024
Alternative Investment Agreement were both revised as
the relevant annual caps under the 2023-2025 Alternative
Investment Agreement, after the latter came into effect.
37
Annual Report 2023 | Significant Events
of the investment and management services provided by
CLI to the Company. For the entrusted operation, CLI would
provide the operating services to the Company with respect
to the equity/real estate funds invested by the Company at
its own discretion and within the scope prescribed in the
agreement, and the Company would pay CLI the entrusted
operation fee in this regard.
H Exchange Gains or Losses
MAJOR CONNECTED TRANSACTIONS
Continuing Connected Transactions
MATERIAL LITIGATIONS OR
ARBITRATIONS
a review of the methodology used to develop the
embedded value and value of one year's sales as at 31
December 2023, in accordance with the "CAA Standards
of Actuarial Practice: Appraisal of Embedded Value",
issued by the China Association of Actuaries ("CAA");
Our scope of work covered:
Scope of Work
China Life has retained Deloitte Consulting (Shanghai)
Co., Ltd. to review its EV Results. The task is undertaken
by Deloitte Actuarial and Insurance Solutions of Deloitte
Consulting (Shanghai) Co., Ltd. ("Deloitte Consulting" or
"we").
China Life Insurance Company Limited ("China Life") has
prepared embedded value results as at 31 December 2023
("EV Results"). The disclosure of these EV Results, together
with a description of the methodology and assumptions that
have been used, are shown in the Embedded Value section.
INDEPENDENT ACTUARIES REVIEW
OPINION REPORT ON EMBEDDED
VALUE OF CHINA LIFE INSURANCE
COMPANY LIMITED
33
Annual Report 2023 | Embedded Value
14.0%
5.1%
1,230,519
36,004
1,293,269
41,035
Change
31 December
2022
2023
31 December
RMB million
Value of One Year's Sales after Cost of Required Capital
Embedded Value
a review of the economic and operating assumptions
used to develop embedded value and value of one year's
sales as at 31 December 2023; and
During the Reporting Period, the Company was not involved
in any material litigation or arbitration.
Basis of Opinion, Reliance and Limitation
The determination of embedded value is based on a range
of assumptions on future operations and investment
performance. The future actual experiences are affected
by internal and external factors, many of which are not
entirely controlled by China Life. Hence the future actual
experiences may deviate from these assumptions.
On 22 August 2022, the Company filed a Form 25 with
the United States Securities and Exchange Commission
(the "SEC") to voluntarily delist its American depositary
shares ("ADSs") from the New York Stock Exchange. The
delisting became effective on 2 September 2022 (Eastern
Time in the U.S.). On 13 November 2023, the Company
filed a Form 15F with the SEC to deregister the ADSS
and the underlying H Shares and terminate its reporting
obligations under the U.S. Securities Exchange Act of 1934,
as amended. The deregistration and termination of reporting
obligations became effective on 12 February 2024 (Eastern
Time in the U.S.).
INFORMATION ON DELISTING AND
DEREGISTRATION OF AMERICAN
DEPOSITARY SHARES
SIGNIFICANT
EVENTS
□ □ □
Annual Report 2023 | Embedded Value
34
27 March 2024
Deloitte Consulting (Shanghai) Co., Ltd.
Eric Lu
Yu Jiang
For and on behalf of
The embedded value results are consistent with its
methodology and assumptions used. The overall result
is reasonable.
The operating assumptions used by China Life have taken
into account the past experience and the expectation of
future experience; and
The economic assumptions used by China Life have taken
into account the current investment market conditions
and the investment strategy of China Life;
The embedded value methodology used by China Life
is in line with the "CAA Standards of Actuarial Practice:
Appraisal of Embedded Value" issued by CAA. This
method is commonly used by life and health insurance
companies in China;
•
•
•
Based on the scope of work above, we have concluded that:
Opinion
This report is addressed solely to China Life in accordance
with the terms of our engagement letter. To the fullest
extent permitted by applicable law, we do not accept or
assume any responsibility, duty of care or liability to anyone
other than China Life for or in connection with our review
work, the opinions we have formed, or for any statements
set forth in this report.
We carried out our review work based on "CAA Standards
of Actuarial Practice: Appraisal of Embedded Value", issued
by CAA. In carrying out our review, we have relied on the
completeness and accuracy of audited and unaudited data
and information provided by China Life.
G Market Value and Other Adjustments
a review of China Life's EV Results, including embedded
value, value of one year's sales, analysis of embedded
value movement from 31 December 2022 to 31 December
2023, and the sensitivity results of value of in-force
business and value of one year's sales.
E Investment Experience Variance
31 December
31 December
ITEM
A Adjusted Net Worth
B Value of In-Force Business before Cost of Required Capital
C Cost of Required Capital
D Value of In-Force Business after Cost of Required Capital (B + C)
E Embedded Value (A + D)
F Value of One Year's Sales before Cost of Required Capital
2023
2022
675,760
649,623
648,848
617,721
(73,124)
584,807
544,596
1,260,567
1,194,220
45,184
40,157
G Cost of Required Capital
(8,324)
(7,213)
H Value of One Year's Sales after Cost of Required Capital (F + G)
Including: Value of One Year's Sales of Individual Agent Business Sector
RMB million
36,860
Components of Embedded Value and Value of One Year's Sales
SUMMARY OF RESULTS
China Life Insurance Company Limited believes that
reporting the Company's embedded value and value of one
year's sales provides useful information to investors in two
respects. First, the value of the Company's in-force business
represents the total amount of shareholders' interest in
distributable earnings, in present value terms, which can
be expected to emerge over time, in accordance with the
assumptions used. Second, the value of one year's sales
provides an indication of the value created for investors
by new business activity based on the assumptions used
and hence the potential of the business. However, the
China Life Insurance Company Limited prepares financial
statements to public investors in accordance with the
relevant accounting standards. An alternative measure of
the value and profitability of a life insurance company can be
provided by the embedded value method. Embedded value is
an actuarially determined estimate of the economic value of
the life insurance business of an insurance company based
on a particular set of assumptions about future experience,
excluding the economic value of future new business.
In addition, the value of one year's sales represents an
actuarially determined estimate of the economic value arising
from new life insurance business issued in one year based
on a particular set of assumptions about future experience.
F Methodology, Model and Assumption Changes
information on embedded value and value of one year's sales
should not be viewed as a substitute of financial measures
under the relevant accounting basis. Investors should not
make investment decisions based solely on embedded value
information and the value of one year's sales.
BACKGROUND
It is important to note that actuarial standards with respect to
the calculation of embedded value are still evolving. There is
still no universal standard which defines the form, calculation
methodology or presentation format of the embedded value
of an insurance company. Hence, differences in definition,
methodology, assumptions, accounting basis and disclosures
may cause inconsistency when comparing the results of
different companies.
Also, the calculation of embedded value and value of one
year's sales involves substantial technical complexity and
estimates can vary materially as key assumptions are
changed. Therefore, special care is advised when interpreting
embedded value results.
The values shown below do not consider the future financial
impact of transactions between the Company and CLIC, CLI,
AMC, Pension Company, CLP&C, and etc.
Annual Report 2023 | Embedded Value 29
DEFINITIONS OF EMBEDDED VALUE
AND VALUE OF ONE YEAR'S SALES
The embedded value of a life insurer is defined as the sum
of the adjusted net worth and the value of in-force business
allowing for the cost of required capital.
"Adjusted net worth" is equal to the sum of:
•
Net assets, defined as assets less corresponding policy
liabilities and other liabilities valued; and
Net-of-tax adjustments for relevant differences between
the market value and the book value of assets, together
with relevant net-of-tax adjustments to certain liabilities.
The market value of assets can fluctuate significantly over
time due to the impact of the prevailing market environment.
Hence the adjusted net worth can fluctuate significantly
between valuation dates.
The "value of in-force business" and the "value of one
year's sales" are defined here as the discounted value of
the projected stream of future shareholders' interest in
distributable earnings for existing in-force business at the
valuation date and for one year's sales in the 12 months
immediately preceding the valuation date.
The value of in-force business and the value of one year's
sales have been determined using a traditional deterministic
discounted cash flow methodology. This methodology makes
implicit allowance for the cost of investment guarantees and
policyholder options, asset/liability mismatch risk, credit
risk, the risk of operating experience's fluctuation and the
economic cost of capital through the use of a risk-adjusted
discount rate.
PREPARATION AND REVIEW
The embedded value and the value of one year's sales
were prepared by China Life Insurance Company Limited in
accordance with the "CAA Standards of Actuarial Practice:
Appraisal of Embedded Value" issued by the China Association
of Actuaries ("CAA"). Deloitte Consulting (Shanghai) Co.,
Ltd. performed a review of China Life's embedded value.
The review statement is contained in the "Independent
Actuaries Review Opinion Report on Embedded Value of
China Life Insurance Company Limited" section.
ASSUMPTIONS
Economic assumptions: The calculations are based upon
assumed corporate tax rate of 25% for all years. The
investment return is assumed to be 4.5% per annum. 17%
grading to 21% (remaining level thereafter) of the investment
return is assumed to be exempt from income tax. The
investment return and tax exempt assumptions are based
on the Company's strategic asset mix and expected future
returns. The risk-adjusted discount rate used is 8% per
annum.
Other operating assumptions such as mortality, morbidity,
lapses and expenses are based on the Company's recent
operating experience and expected future outlook.
30 Annual Report 2023 | Embedded Value
The embedded value as at 31 December 2023, the value of one year's sales for the 12 months ended 31 December 2023,
and the corresponding results as at 31 December 2022 are shown below:
32,944
(64,040)
29.9%
31.3%
The new business margin of one year's sales of individual agent business sector for the 12 months ended 31 December
2023 is shown below:
New Business Margin of One Year's Sales of Individual Agent Business Sector
By First Year Premium
By Annual Premium Equivalent
31 December
2023
27.4%
31.0%
Notes:
1.
2.
31 December
2022
Annual Report 2023 | Embedded Value
The corresponding results for the year 2022 have been restated using 2023 EV economic assumptions.
First Year Premium is the written premium used for calculation of the value of one year's sales and Annual Premium Equivalent is calculated as the sum
of 100 percent of first year regular premiums and 10 percent of single premiums.
C Value of New Business in the Period
A Embedded Value at the Start of Year
B Expected Return on Embedded Value
ITEM
Analysis of Embedded Value Movement in 2023
D Operating Experience Variance
MOVEMENT ANALYSIS
31
The following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period:
PENSION PLAN
REPORT OF THE BOARD OF DIRECTORS
Directors of the Company during the Reporting Period and up to the date of this report were as follows:
EXECUTIVE
DIRECTORS
NON-EXECUTIVE
DIRECTORS
INDEPENDENT
DIRECTORS
Bai Tao (Chairman)
Li Mingguang
Zhao Peng
Wang Junhui
Zhuo Meijuan
Lam Chi Kuen
Zhai Haitao
Huang Yiping
Chen Jie
(resigned on 4 August 2023 due to the adjustment of work arrangements)
Annual Report 2023 | Corporate Governance
48
Full-time employees of the Company are covered by various
government-sponsored pension plans, under which the
employees are entitled to a monthly pension based on certain
formulae. These government agencies are responsible for
the pension liability to these employees upon retirement.
The Company contributes on a monthly basis to these
pension plans for full-time employees. All contributions made
under the government-sponsored pension plans described
above are fully attributable to employees of the Company
at the time of the payment and the Company is unable
to forfeit any amounts contributed by it to such plans.
In addition to the government-sponsored pension plans,
the Company established an employee annuity fund plan
pursuant to the relevant laws and regulations in the PRC,
whereby the Company is required to contribute to the plan
at fixed rates of the employees' salary costs. Contributions
Imade by the Company under the annuity fund plan that is
forfeited in respect of those employees who resign from
their positions prior to the full vesting of the contributions
will be recorded in the public account of the annuity fund and
shall not be used to offset any contributions to be made by
the Company in the future. All funds in the public account
will be attributed to the employees whose accounts are in
normal status after the approval procedures are completed
as required. Under these plans, the Company has no legal
or constructive obligation for retirement benefit beyond the
contributions made.
No management or administration contracts for the whole
or substantial part of any business of the Company were
entered into during the Reporting Period.
Profit Distribution Plan and Public Reserves
Capitalisation Plan for the Year 2023
Details of the movement in share capital of the Company
are set out in Note 34 in the Notes to the Consolidated
Financial Statements in this annual report.
SHARE CAPITAL
Details of the movement in property, plant and equipment
of the Company are set out in Note 7 in the Notes to the
Consolidated Financial Statements in this annual report.
PROPERTY, PLANT AND EQUIPMENT
As at the end of 31 December 2023, the distributable
reserves of the Company was RMB207,030 million.
DISTRIBUTABLE RESERVES
The profit distribution policy of the Company complied with
the Articles of Association and the examination and approval
procedures of the Company, clearly defined the dividend
distribution standards and percentage and the decision-
making procedures and system. Small- and medium-sized
shareholders of the Company have sufficient opportunities
to express their opinions and appeals, and their legitimate
rights have been well protected. The Independent Directors
diligently considered the profit distribution policy and
expressed their independent opinions in this regard.
No public reserve capitalisation is provided for in the profit
distribution plan for the year.
In accordance with the profit distribution plan for the year
2023 approved by the Board on 27 March 2024, with the
appropriation to its discretionary surplus reserve fund of
RMB1,753 million (10% of the net profit for 2023), the
Company, based on 28,264,705,000 shares in issue,
proposed to distribute cash dividends amounting to
approximately RMB12,154 million (representing 58% of the
net profit attributable to equity holders of the Company
in the consolidated statements) to all shareholders of the
Company at RMB0.43 per share (inclusive of tax). The
foregoing profit distribution plan is subject to the approval
by the 2023 Annual General Meeting. Dividends payable
to domestic shareholders are declared, valued and paid in
RMB. Dividends payable to shareholders of the Company's
overseas-listed foreign shares are declared and valued in
RMB and paid in the currency of the jurisdiction in which the
overseas-listed foreign shares are listed (if the Company is
listed in more than one jurisdiction, dividends shall be paid
in the currency of the Company's principal jurisdiction of
listing as determined by the Board). The Company shall pay
dividends to shareholders of overseas-listed foreign shares
in conformity with the PRC regulations on foreign exchange
control. If no such regulations are in place, the applicable
exchange rate is the average closing rate published by
the People's Bank of China one week before the date of
declaration of the distribution of dividends.
CORPORATE
GOVERNANCE
shall make active communication with shareholders,
especially small- and medium-sized shareholders, through
various channels. The Company shall also fully solicit
opinions and appeals from shareholders, and give timely
reply to concerns of small- and medium-sized shareholders.
MANAGEMENT CONTRACTS
Annual Report 2023 | Significant Events
The guarantee occurred before the company became a holding subsidiary of the Company in 2023, and did not involve the provision of guarantee for the
Company's shareholders, effective controller or their related parties.
The "Resolution on the Issue of Capital Supplementary
Bonds by the Company" was considered and approved
at the First Extraordinary General Meeting 2023 of the
Company, pursuant to which the Company intended to
issue capital supplementary bonds in the PRC with a total
amount of no more than RMB35 billion in one or more
tranches, depending on market conditions. The proceeds
from the issue of the capital supplementary bonds will be
used for replenishing the supplementary tier 1 capital of
the Company in accordance with applicable laws and the
approvals from regulatory authorities, so as to support the
sustained and steady development of its business. The
issue is still subject to the approval by regulatory authorities.
Investors are advised to pay attention to the announcements
made by the Company in its listed jurisdictions for the further
development in this regard.
(appointed on 21 June 2023)
40
Annual Report 2023 | Significant Events
MATERIAL CONTRACTS AND THEIR
PERFORMANCE
During the Reporting Period, the Company neither acted as
trustee, contractor or lessee of other companies' assets,
nor entrusted, contracted or leased its assets to other
companies, the profit or loss from which accounted for
10% or more of the Company's profits for the Reporting
Period, nor were there any such matters that occurred in
previous periods but subsisted during the Reporting Period.
During the Reporting Period, China Life Insurance Company
Limited neither gave external guarantees nor provided
guarantees to its holding subsidiaries.
As at the end of the Reporting Period, the external guarantee
balance of the holding subsidiaries of the Company was
RMB447 million 5.
Entrusted investment management during the Reporting
Period or any entrusted investment management occurred
in previous periods but subsisted during the Reporting
Period: Investment is one of the principal businesses of
the Company. The Company mainly adopts the mode of
entrusted investment for management of its investment
assets, and has established a diversified framework of
entrusted investment management with China Life's internal
managers playing the key role and the external managers
offering effective supports. The internal managers include
AMC and its subsidiaries, and CLI and its subsidiaries. The
external managers comprise both domestic and overseas
managers, including fund companies, securities companies
and other professional investment management institutions.
The Company selected different investment managers based
on the purpose of allocation of various types of investments,
their risk features and the expertise of different managers,
so as to establish a great variety of investment portfolios
and improve the efficiency of insurance fund utilisation. The
Company entered into entrusted investment management
agreements or asset management contracts with all
managers and supervised the managers' daily investment
performance through the measures such as investment
guidelines, asset custody and performance appraisals. The
Company also adopted risk control measures in respect of
specific investments based on the characteristics of different
managers and investment products.
Except as otherwise disclosed in this report, the Company
had no other material contracts during the Reporting Period.
UNDERTAKINGS MADE BY
THE PARTIES INCLUDING
THE COMPANY'S EFFECTIVE
CONTROLLER, SHAREHOLDERS,
RELATED PARTIES, ACQUIRERS
AND THE COMPANY WHICH ARE
EITHER GIVEN OR EFFECTIVE DURING
THE REPORTING PERIOD
42
Prior to the listing of the Company's A Shares (30 November
2006), land use rights were injected by CLIC into the
Company during its reorganisation. Out of these, four pieces
of land (with a total area of 10,421.12 square meters) had
not had its formalities in relation to the change of ownership
completed. Further, out of the properties injected into the
Company, there were six properties (with a gross floor
area of 8,639.76 square meters) in respect of which the
formalities in relation to the change of ownership had not
been completed. CLIC undertook to assist the Company in
completing the above-mentioned formalities within one year
of the date of listing of the Company's A Shares, and in the
event that such formalities could not be completed within
such period, CLIC would bear any potential losses to the
Company due to the defective ownership.
The Company's Shenzhen Branch and the other co-owners
of the properties have issued a letter to the governing
department of the original owner of the properties in
respect of the confirmation of ownership of the properties,
requesting it to report the ownership issue to the State-
owned Assets Supervision and Administration Commission
of the State Council ("SASAC"), and requesting the SASAC
to confirm the respective shares of each co-owner in the
properties and to issue written documents in this regard to
the department of land and resources of Shenzhen, so as
to assist the Company and the other co-owners to complete
the formalities in relation to the division of ownership of
the properties.
5
Annual Report 2023 | Corporate Governance 47
Annual Report 2023 | Significant Events
41
Given that the change of ownership of the above two
properties and related land use rights were directed by the
co-owners, and all formalities in relation to the change of
ownership were proceeded slowly due to reasons such as
issues rooted in history and government approvals, CLIC,
the controlling shareholder of the Company, made further
commitment as follows: CLIC will assist the Company
in completing, and urge the co-owners to complete, the
formalities in relation to the change of ownership in respect
of the above two properties and related land use rights as
soon as possible. If the formalities cannot be completed
due to the reasons of the co-owners, CLIC will take any
other legally practicable measures to resolve the issue and
will bear any potential losses suffered by the Company as
a result of the defective ownership.
ALLEGED VIOLATION OF LAWS
AND REGULATIONS BY, PENALTIES
IMPOSED ON AND RECTIFICATION
OF THE COMPANY AND ITS
CONTROLLING SHAREHOLDERS,
EFFECTIVE CONTROLLER,
DIRECTORS, SUPERVISORS OR
SENIOR MANAGEMENT
During the Reporting Period, the Company was not
investigated for suspected crimes according to law, and none
of its controlling shareholders, effective controller, Directors,
Supervisors and senior management were subject to any
compulsory measures for suspected crimes according to
law. The Company or its controlling shareholders, effective
controller, Directors, Supervisors and senior management
were not subject to any criminal punishment, investigation
by the CSRC for alleged violation of laws and regulations,
administrative penalty by the CSRC, or material administrative
penalty by other competent authorities, nor were they
detained by the disciplinary inspection and supervision
authorities for alleged serious violation of disciplines or
laws or duty-related crimes which had an impact on their
performance of duties. None of the Company's Directors,
Supervisors and senior management were subject to any
compulsory measures by other competent authorities for
alleged violation of laws and regulations which had an impact
on their performance of duties.
RESTRICTION ON MAJOR ASSETS
The major assets of the Company are financial assets. During
the Reporting Period, there was no major asset of the
Company being seized, detained or frozen that is subject
to the disclosure requirements.
OTHER MATTERS
CLIC strictly followed these commitments. As at the end of
the Reporting Period, save for the two properties and related
land of the Company's Shenzhen Branch, the ownership
registration formalities of which had not been completed
due to historical reasons, all other formalities in relation
to the change of land and property ownership had been
completed. The Shenzhen Branch of the Company continues
to use such properties and land, and no other parties have
questioned or hindered the use of such properties and land
by the Company.
The Company's profit distribution proposal shall be reviewed
by the Board of Directors. The Board of Directors shall have
a sufficient discussion of the reasonableness of the profit
distribution proposal. After a special resolution regarding the
proposal is reached and independent opinions have been
given by the Company's Independent Directors, the proposal
shall be submitted to the Company's general meeting for
approval. In reviewing the profit distribution proposal, the
Company shall provide online voting mechanism to the
shareholders. When deliberating on specific cash dividend
proposal by the Company's general meeting, the Company
Annual Report 2023 | Corporate Governance
In addition, the Company's profit distribution is required
to comply with relevant regulatory requirements. If the
Company's core solvency ratio or comprehensive solvency
ratio does not meet the minimum requirements, the
regulatory authorities may adopt regulatory measures
against the Company due to its failure to meet the minimum
requirements, which may restrict the Company's ability to
distribute dividends to its shareholders.
Relationship between the Company and its
Customers
Being customer-centric all along, the Company was
committed to offering high-quality services to customers,
and provided insurance services and value-added services
for more than 500 million customers on a cumulative basis.
The Company consistently implemented various regulatory
requirements by integrating the protection of consumers'
rights and interests into every aspect of corporate governance
and business operation and management, further optimised
the development of the systems and mechanisms for the
protection of consumers' rights and interests, promoted the
effective operation of various mechanisms for the protection
of consumers' rights and interests such as consumer
protection review and assessment, internal training and
internal audit, etc., and took active actions in transition
from after-event management and control to practising the
consumer protection concept along the whole chain, so as to
create a "comprehensive consumer protection" paradigm. In
2023, the Company carried out over 15,000 educational and
promotion activities in total, with the number of consumers
involved reaching approximately 290 million.
Please also refer to the "Technology Capabilities, Operations
and Services" in the section headed "Management
Discussion and Analysis" in this annual report.
Relationship between the Company and its
Employees
The Company created a harmonious labour relationship
according to law and entered into employment contracts
with its employees in a timely manner. The Company
strengthened the management of employees in all aspects
by establishing the following mechanisms: an employee
management mechanism with the characteristics of focus
on grass roots, combination of training and working of
employees, hierarchical responsibility and unified standard;
a performance management mechanism that was strategy-
based and result-oriented, adopted hierarchical classification,
and focused on application; and a remuneration distribution
mechanism that was based on the principles of salary
determined by position, remuneration paid based on
performance, emphasis on incentives and preference to
the grass roots, and was compatible with the high-quality
development requirements of the Company. The Company
also emphasised on the cultivation and development of
employees by building and optimising a "four-in-one" talent
training system on an ongoing basis, pursued classification
of employees for training with an equal emphasis on full
coverage, strived to apply cultivation and training in the
entire process of growth of cadres and employees, and
continued to focus on empowerment. The Company attached
importance to humanistic concern by constantly improving
the mechanism for communication with employees,
safeguarding the legitimate rights and interests of employees
in a practical manner and encouraging employees to arrange
vacations and annual leave in a scientific way, with an aim
to achieve work-life balance.
The Company actively promoted the construction of a
corporate democratic management system with employee
representative meetings as its basic form to protect the
democratic rights of employees and to facilitate the joint
development between employees and the Company. The
Company and its provincial branches have fully established
the system of employee representative meetings,
safeguarded the right to know, right to propose, right to
decide and right to vote at such meetings according to
law, and inspected and monitored the implementation
of any resolutions adopted by employee representative
meetings, thus carrying out the function of supervising
the implementation of proposals in a serious manner and
constantly improving democratic management. In 2023,
the Company held employee representative meetings for
all employees twice, during which the "Report on the By-
election of Representatives of the Third Session of the
Employee Representative Meeting of the Company", the
"Report on the Review of the Representatives' Qualification",
the "Report on the Candidates for Additional Employee
Representative Supervisors of the Seventh Session of the
Board of Supervisors", the "Report on the Amendments
to the Provisions for Handling of Violations of Regulations
46
Annual Report 2023 | Corporate Governance
by Employees of China Life Insurance Company Limited
(Revised in 2023)", the "Duty Report of the Board of
Supervisors of China Life Insurance Company Limited
for the Year 2022", the "Report on the Amendments to
the Measures for Supplementary Commercial Insurance
Protection for Employees of Branches of China Life Insurance
Company Limited", and the "Report on the Provisional
Measures for the Administration of Professional Personnel
of China Life Insurance Company Limited" were considered
and approved, respectively.
For details regarding the Company's employees (including the
number of employees, professional composition, education
levels, employee diversity, remuneration policy and training
plans), please refer to the section headed "Directors,
Supervisors, Senior Management and Employees" in this
annual report.
For information during the Reporting Period such as the
environmental and social responsibilities of the Company, the
relationship between the Company and its customers, and
the relationship between the Company and its employees,
please also refer to the full text of the 2023 Environmental,
Social and Governance & Social Responsibility Report
separately disclosed by the Company on the website of the
SSE (www.sse.com.cn) and the HKExnews website of Hong
Kong Exchanges and Clearing Limited (www.hkexnews.hk)
simultaneously.
FORMULATION AND IMPLEMENTATION OF
PROFIT DISTRIBUTION POLICY
In accordance with Article 217 of the Articles of
Association, the Basic Principles of the Company's
Profit Distribution Policy are as follows:
•
Companies", the "Notice on Optimising the Solvency
Regulatory Standards for Insurance Companies", the
"Measures for the Administration of Connected Transactions
of Banking and Insurance Institutions", and the "Measures
for the Administration of Banking and Insurance Supervision
and Statistics", consistently improved its systems and
mechanisms, and stringently implemented the spirit and
requirements of major regulatory documents on insurance
product development and design, information disclosure,
sales management, insurance agents management,
protection of consumers' rights and interests and customers'
information, corporate governance, fund utilisation, solvency
management, connected transactions management,
reinsurance management and data governance, etc., as
released by the NFRA, for the purpose of further carrying
out compliance management responsibilities at all levels
and in various lines. The Company consistently optimised
the compliance management framework of "three lines of
defense" to ensure that the three lines of defense performed
their own functions and responsibilities and collaborated
with each other, which formed a joint force in compliance
management. The Company also consolidated its foundation
in all aspects for its steady and healthy development and
firmly held on to the bottom line of the systematic risk,
which guaranteed the healthy and high-quality development
of the Company on an ongoing basis.
Annual Report 2023 | Corporate Governance 45
Compliance by the Company with the Relevant
Laws and Regulations that have a Significant Impact
The Company adhered to the code of conduct of "being
trustworthy, assuming risks, emphasising on services and
being legal compliant" and promoted the compliance culture
and concepts of "being compliant on a proactive basis,
and creating value from compliance", thereby creating the
compliance environment of "starting from the top level and
having responsibility for all to be compliant". The Company
strictly observed and effectively implemented applicable
laws and regulations and regulatory requirements, such as
the Insurance Law, the Company Law, the Securities Law,
the "Personal Information Protection Law", the "Regulations
on Preventing and Dealing with Illegal Fund-raising", the
"Provisions on the Administration of Insurance Companies",
the "Measures of the China Banking and Insurance
Regulatory Commission on Administrative Punishment",
the "Measures for the Administration of the Utilisation of
Insurance Funds", the "Provisions on the Supervision and
Administration of Insurance Agents", the "Rules for the
Information Disclosure of Personal Insurance Products with a
Term of One Year or More", the "Standards for the Corporate
Governance of Banking and Insurance Institutions", the
"Provisions on the Administration of Solvency of Insurance
Companies", the "Solvency Regulatory Rules II for Insurance
In 2023, the Company strengthened its corporate
responsibility, coordinated joint forces from all fronts to
offer assistance, and continued to improve its long-term
mechanism for assistance, so as to make every effort to
enhance the quality and efficiency of finance and insurance
serving rural revitalisation. The Company dispatched 980
cadres staying at villages for assistance, undertook projects
in 1,171 assistance localities, and devoted assistance
funds of RMB33.66 million for the year, helping farmers to
improve both production and income. The Company made
substantial efforts to develop insurance business in response
to the demands of rural residents for diversified insurance
protection and offered risk protection of RMB30.71 trillion
for 280 million rural residents within the year. The claims
payment of RMB15,858 million were made to 4.35 million
people, which helped guard against the bottom line of
poverty. Based on the characteristics of people lifted out
of poverty, the Company commenced targeted insurance
business in relation to rural revitalisation and developed
four new exclusive products to provide multi-level insurance
protections, offering risk protection of RMB1.53 trillion for
the year, a year-on-year increase of 43%. The Company
strived to make innovation in assistance measures, expanded
the coverage for assistance, learned and practiced the
experience acquired from "Ten Million Projects", so as
to enhance the effectiveness of assistance initiatives and
facilitate rural revitalisation in all aspects.
In accordance with Article 219 of the Articles of
Association, the Procedures of Reviewing the
Company's Profit Distribution Proposal are as
follows:
Mr. Huang Yiping, Mr. Lam Chi Kuen, Mr. Wang Junhui, Mr. Bai Tao, Mr. Li Mingguang, Ms. Zhuo Meijuan, Mr. Zhai Haitao, Ms. Chen Jie
PRINCIPAL BUSINESS
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, providing products and services
such as individual and group life insurance, accident and
health insurance. 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 AMC. The Company
also has controlling shareholding in Pension Company.
From left to right:
43
BUSINESS REVIEW
•
Overall Operation of the Company during the
Reporting Period
To consistently carry out the national decisions and
arrangements with respect to promoting green development,
the Company established a green finance system with China
Life characteristics, promoting the high-quality development
of green insurance business. It continued to step up its
support to green, low-carbon and circular economy, and
consistently enhanced the quality and effectiveness of
green insurance business in serving the green transition
of economy and society. Focusing on key fields and
major industries of ecological civilisation construction, the
Company safeguarded the high-quality development in a
green and low-carbon way. In 2023, the Company improved
its capability in supplying green insurance products,
providing insurance protection of RMB603,165 million to
customers from the green industries. It also incorporated
ESG concept into investment management and practices.
As at 31 December 2023, its green investments amounted
to RMB462,788 million.
44 Annual Report 2023 | Corporate Governance
Work on Low-carbon Operation
With the incorporation of the overall environmental goal
of "ensuring a healthy and friendly environment for the
accomplishment of 'carbon neutrality'" into all aspects
of its operations, the Company effectively proceeded
with various tasks such as energy saving and emission
reduction, green operation and green office, prioritising
eco-environmental conservation and green development
with steadfast efforts. In 2023, the Company continued to
improve its online, intensive and intelligent operations and
services, as a result of which over 6,000 tonnes of paper
were saved. The "Measures for the Administration of Energy
Saving and Emission Reduction of China Life Insurance
Company Limited" was revised to strengthen the planning,
organisation, adjustment and control and management of the
energy supply and entire energy process, and a number of
office buildings were awarded LEED platinum certification.
With the construction of a sustainable supply chain as its
goal, the Company considered environmental performance
as one of the key factors for assessment of its suppliers, and
gave priority to the procurement of energy-saving products
and equipments as well as new energy vehicles, practising
an eco-friendly, low-carbon operational model.
Work on Social Responsibility
The Company integrated the concept of "performing social
responsibilities" into its core values, gave full play to the
advantages of the insurance industry, and shouldered
corporate social responsibilities in serving the "National
Priorities". The Company continued to improve its capability
in inclusive financing services and established a senior-
care service supply mode featuring "one main model with
several complementary models". As at 31 December 2023,
the Company carried out over 200 supplementary major
medical expenses insurance programs, covering nearly 350
million people. It also implemented over 120 city-customised
commercial medical insurance projects accumulatively,
covering over 40 million people. Meanwhile, it undertook over
70 long-term care insurance programs, providing services to
more than 38 million people. The third-pillar private pension
business ranked among the top of the industry, with its
investment in the senior-care field amounting to nearly
RMB10 billion. Adhering to the aspiration of sharing the
achievements of corporate development with the society,
the Company devoted itself to public welfare and charitable
undertakings, and organised charitable activities such as
"Art Education Program - Children's Charity Spring Festival
Gala" and "Caring for Women and Protecting their Health".
It donated RMB36 million to China Life Foundation as well
as public welfare insurance policies to 776,700 people-
times. The Company organised volunteer service teams to
take part in volunteer service activities such as "Civilisation
100+", formed over 320 service teams consisting of youth
volunteers, with more than 2,800 registered youth volunteers,
and offered volunteer services of over 540 times.
Specific Work on Consolidation of Achievements in
Poverty Alleviation and Rural Revitalisation Undertakings
For details of the overall operation of the Company during
the Reporting Period, the future development of its business
and the principal risks faced by it, please refer to the
sections headed "Management Discussion and Analysis"
and "Internal Control and Risk Management" in this annual
report. These discussions form part of the "Report of the
Board of Directors".
•
Environmental and Social Responsibilities
Work on Green Finance
The Company shall maintain a sustainable and steady
profit distribution policy and at the same time take into
consideration the Company's long-term interest, general
interest of all the shareholders and the sustainable
development of the Company;
nothing has come to the auditors' attention that causes
them to believe that the transactions were not entered
into, in all material respects, in accordance with the
relevant agreements governing such transactions; and
•
for transactions involving the provision of goods or
services by the Company, nothing has come to the
auditors' attention that causes them to believe that
the transactions were not, in all material respects, in
accordance with the pricing policies of the Company;
•
The Board has received a comfort letter from the auditor
of the Company with respect to the above continuing
connected transactions which were subject to the reporting,
announcement and/or independent shareholders' approval
requirements, and the letter stated that during the Reporting
Period:
Confirmation by Auditor
For the year ended 31 December 2023, the subscription
price and corresponding subscription fee for the subscription
of fund products were RMB140.00 million, the redemption
price and corresponding redemption fee for the redemption
of fund products were RMB140.00 million, and the
management fee paid by CLI and its subsidiaries for the
private asset management was RMBO million.
CLI and China Life AMP entered into the 2023-2025
framework agreement on 29 December 2022, with a term
of three years from 1 January 2023 to 31 December 2025.
Pursuant to the agreement, CLI and its subsidiaries will
conduct certain daily transactions with China Life AMP,
including the subscription and redemption of fund products
and private asset management. Pricing of the transactions
under the agreement shall be determined by the parties
through arm's length negotiations with reference to
industry practices. For each of the three years ending 31
December 2025, the annual cap of the subscription price
and corresponding subscription fee for the subscription of
fund products is RMB2,000 million, the annual cap of the
redemption price and corresponding redemption fee for the
redemption of fund products is RMB2,000 million, and the
annual cap of the management fee payable by CLI and its
subsidiaries for the private asset management is RMB20
million.
Framework Agreement between CLI and China Life
AMP
For the year ended 31 December 2023, the subscription
price and corresponding subscription fee for the subscription
of fund products were RMBO million, and the redemption
price and corresponding redemption fee for the redemption
of fund products were RMB87.91 million.
The Company shall give priority to cash dividends as its
profit distribution manner.
Conditions for distribution of share dividends: If the
Company's operation is sound and the Board of Directors
is of the opinion that share dividends distribution is in
the interest of all the Company's shareholders since the
Company's stock price does not match the Company's
share capital, the Company may propose a share
dividends distribution plan if the conditions for cash
dividends listed above are satisfied.
Conditions for and percentage of distribution of cash
dividends: If the Company makes profits in a given year
and the cumulative undistributed profit is positive, the
Company shall distribute dividends in the form of cash
and the cumulative profits distributed in cash over the
past three years by the Company shall be no less than
thirty percent (30%) of the average annual distributable
profits in recent three years;
Profit distribution modes: The Company may distribute
dividends in the form of cash or shares or a combination
of cash and shares. If practicable, the Company may
distribute interim dividends. The Company's dividends
shall not bear interest, save in the case where the
Company fails to distribute the dividends to the
shareholders on the day when dividends were due to
have been distributed;
In accordance with Article 218 of the Articles of
Association, the Company's Profit Distribution
Policy is as follows:
nothing has come to the auditors' attention that causes
them to believe that the amounts of the continuing
connected transactions have exceeded the total amount
of the annual caps set by the Company.
Confirmation by Independent Directors
nothing has come to the auditors' attention that causes
them to believe that the disclosed continuing connected
transactions have not been approved by the Company's
Board of Directors;
the transactions were entered into in the ordinary and
usual course of business of the Company;
During the Reporting Period, the Company was not involved
in claims, debt transactions or guarantees of a non-operating
nature with related parties.
Statement on Claims, Debt Transactions and
Guarantees etc. of a Non-operating Nature with
Related Parties
The Company has complied with the disclosure requirements
under Chapter 14A of the Listing Rules in respect of the
above one-off connected transactions.
The Company's Independent Directors have reviewed
the above continuing connected transactions which were
subject to the reporting, announcement and/or independent
shareholders' approval requirements, and confirmed that:
As approved by the twenty-third meeting of the seventh
session of the Board of Directors of the Company, the
Company and CLP&C contributed RMB5,000,000,000 and
RMB1,000,000,000, respectively, to the equity investment
plan established by CLI. The Company entered into an
entrustment contract with CLI on 12 May 2023 for such
purpose. All funds under the equity investment plan would
be used for the subscription of limited partnership interest
in Beijing MTR Equity Investment Fund Partnership (Limited
Partnership). The partnership would make equity investment
in Beijing MTR Corporation Ltd. and eventually invest in
the metro projects being developed and operated and to
be developed and operated by such company. CLI had, on
behalf of the equity investment plan and as a limited partner,
entered into a partnership agreement with Beijing Capital
Chuangxin Enterprise Management Co., Ltd. and China Life
Industrial Investment Management Co., Ltd. ("CLIIM") (each
as a general partner and managing partner), and Beijing
Capital Group Co., Ltd. (as a limited partner) in relation to
the formation of the partnership on 18 April 2023. China Life
Capital served as the manager of the partnership.
Investment in Beijing MTR Equity Investment Fund
Partnership (Limited Partnership)
Investment in Jicang (Tianjin) Logistics Equity
Investment Fund Partnership (Limited Partnership)
As approved by the twenty-third meeting of the seventh
session of the Board of Directors of the Company, the
Company contributed RMB999,000,000 to the equity
investment plan established by CLI and entered into an
entrustment contract with CLI on 8 May 2023 for such
purpose. All funds under the equity investment plan would
be used for the subscription of limited partnership interest in
Jicang (Tianjin) Logistics Equity Investment Fund Partnership
(Limited Partnership). The partnership would, directly or
through one- or multi-level investment vehicles, make equity
investment in certain project companies which are engaged
in the operation of logistics real estate located in the PRC
and which are held or to be acquired by Cainiao Network
Technology Co., Ltd. and its designated affiliates. Such
logistics real estate would be the completed projects for
high-standard modernised warehouses with sophisticated
operation that are located in the areas of important logistics
node cities in the Yangtze River Delta where supplies and
demands are relatively healthy. CLI had, on behalf of the
equity investment plan and as a limited partner, entered into
a partnership agreement with Hangzhou Youhu Enterprise
Management Limited and China Life Properties Investment
Management Company Limited ("China Life Properties")
(each as a general partner and managing partner), and
Zhejiang Cainiao Supply Chain Management Co., Ltd.,
Manulife-Sinochem Life Insurance Co., Ltd. and Chasing
Jixiang Life Insurance Co., Ltd. (each as a limited partner) in
relation to the formation of the partnership on 23 February
2023. China Life Capital served as the manager of the
partnership.
Each of CLI, Jiaotou Jinshi, China Life Jinshi, China Life
Properties, China Life Capital and CLIIM is an associate of
CLIC, and therefore a connected person of the Company.
The above transactions constituted one-off connected
transactions of the Company that were subject to the
reporting and announcement requirements but were exempt
from the independent shareholders' approval requirement
under Rule 14A.76(2) of the Listing Rules.
The Company shall take the investment return for
investors into full account and allocate the required
percentage of the Company's realised distributable
profits to shareholders as dividends each year;
Annual Report 2023 | Significant Events
As approved by the twenty-second meeting of the seventh
session of the Board of Directors of the Company, the
Company contributed RMB3,000,000,000 to the equity
investment plan established by CLI and entered into an
entrustment contract with CLI on 27 April 2023 for such
purpose. All funds under the equity investment plan would
be used for the subscription of limited partnership interest
in Jiangxi Jiaotou Expressway Investment Fund (Limited
Partnership). The partnership would primarily invest in
highway projects in Jiangxi Province, the PRC. CLI had, on
behalf of the equity investment plan and as a limited partner,
entered into a partnership agreement with Jiangxi Jiaotou
Jinshi Transportation and Investment Management Co., Ltd.
("Jiaotou Jinshi") (as the general partner and managing
partner), and Jiangxi Communications Investment Group Co.,
Ltd. and Jiangxi Transportation Development Fund (Limited
Partnership) (each as a limited partner) in relation to the
formation of the partnership on 24 November 2022. China
Life Jinshi Asset Management Company Limited ("China Life
Jinshi") served as the manager of the partnership.
the transactions were conducted on normal commercial
terms;
Other Major Connected Transactions
Investment in Jiangxi Jiaotou Expressway
Investment Fund (Limited Partnership)
. the amounts of the above transactions have not exceeded
the relevant annual caps.
• the transactions were entered into in accordance with
the agreements governing those continuing connected
transactions, and the terms are fair and reasonable and
in the interests of shareholders of the Company as a
whole; and
39
0.07%
Other
Limited SSE 50 Exchange Traded Index
Securities Investment Fund
0.41%
44,354,939 +2,694,922
Overseas legal person
Hong Kong Securities Clearing Company
Limited
117,165,585
State-owned legal person
Industrial and Commercial Bank of China
0.16%
0.04% 12,000,000 +12,000,000
Guosen Securities Co., Ltd. - Founder Fubon
State-owned legal person
China National Nuclear Corporation Capital
Holdings Co., Ltd.
Central Huijin Asset Management Limited
Other
National Social Security Fund Portfolio 114
Investment Fund
20,306,703 +6,446,000
0.04% 12,402,733 +5,682,600
Limited Huatai-PineBridge CSI 300
Exchange Traded Index Securities
Industrial and Commercial Bank of China
13,701,912 -7,164,617
0.05%
Other
CSI Insurance Theme Index Securities
Investment Fund
Other
708,240,246
Name of shareholder
China Securities Finance Corporation Limited State-owned legal person
the end of the Reporting No. of H Share shareholders:
Period
24,368
0.04%
Particulars of Top Ten Shareholders of the Company
Total number of ordinary
share shareholders as at
the end of the month prior
to the disclosure of the
annual report
No. of A Share shareholders:
99,815
No. of H Share shareholders:
24,280
decrease
during the
Reporting
Period
Number of
shares subject
to selling
restrictions
Unit: Shares
Number
Total number of ordinary No. of A Share shareholders:
share shareholders as at 107,594
of shares
pledged or
frozen
Nature of shareholder
Percentage of
shareholding
Number of
shares held as
at the end of
the Reporting
Increase/
Period
China Life Insurance (Group) Company
State-owned legal person
68.37% 19,323,530,000
HKSCC Nominees Limited
Overseas legal person
25.92% 7,327,523,802 +1,830,411
2.51%
11,108,837 +11,108,837
Number of
shares held
Annual Report 2023 | Corporate Governance
Class of shares
Percentage of
the respective
class of shares
Percentage of
the total number
of shares in
issue
China Life Insurance
(Group) Company
Beneficial owner
A Shares
19,323,530,000 (L)
92.80%
68.37%
Interest in controlled
corporation
H Shares
449,298,275 (L)
Capacity
6.04%
BlackRock, Inc. (Note 2)
Interest in controlled
corporation
H Shares
436,647,392 (L)
5,692,000 (S)
5.87%
1.54%
0.08%
0.02%
The letter "L" denotes a long position. The letter "S" denotes a short position.
(Note 1): FMR LLC was interested in a total of 449,298,275 H shares of the Company in accordance with the provisions of Part XV of the SFO. Of these
shares, Fidelity Management & Research Company LLC, Fidelity Institutional Asset Management Trust Company and FIAM LLC were interested in
293,895,801 H shares, 46,313,968 H shares and 62,011,759 H shares, respectively. All of these entities are either controlled or indirectly controlled
subsidiaries of FMR LLC.
(Note 2): BlackRock, Inc. was interested in a total of 436,647,392 H shares of the Company in accordance with the provisions of Part XV of the SFO. Of these
shares, BlackRock Investment Management, LLC, BlackRock Financial Management, Inc., BlackRock Institutional Trust Company, National Association,
BlackRock Fund Advisors, BlackRock Advisors, LLC, BlackRock Japan Co., Ltd., BlackRock Asset Management Canada Limited, BlackRock Investment
Management (Australia) Limited, BlackRock Asset Management North Asia Limited, BlackRock (Netherlands) B.V., BlackRock Advisors (UK) Limited,
BlackRock Asset Management Ireland Limited, BLACKROCK (Luxembourg) S.A., BlackRock Investment Management (UK) Limited, BlackRock
Asset Management Deutschland AG, BlackRock Fund Managers Limited, BlackRock Life Limited, BlackRock (Singapore) Limited, BlackRock Asset
Management Schweiz AG and Aperio Group, LLC were interested in 3,201,000 H shares, 7,992,070 H shares, 91,902,736 H shares, 190,345,000
H shares, 268,000 H shares, 8,860,583 H shares, 1,766,000 H shares, 3,354,000 H shares, 15,876,451 H shares, 17,474,402 H shares, 6,958,196
H shares, 58,125,917 H shares, 639,000 H shares, 9,154,628 H shares, 466,000 H shares, 11,221,030 H shares, 684,432 H shares, 5,021,000 H
shares, 101,000 H shares and 3,235,947 H shares, respectively. All of these entities are either controlled or indirectly controlled subsidiaries of
BlackRock, Inc. Of these 436,647,392 H shares, 30,070 H shares were cash settled unlisted derivatives.
Total Number of Shareholders and their Shareholdings
BlackRock, Inc. held by way of attribution a short position as defined under Part XV of the SFO in 5,692,000 H shares (0.08%). Of these 5,692,000
H shares, 4,794,000 H shares were cash settled unlisted derivatives.
1.59%
Name of substantial
shareholder
So far as is known to the Directors, Supervisors and the chief executive of the Company, as at 31 December 2023, the
following persons (other than the Directors, Supervisors and the chief executive of the Company) had interests or short
positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the
provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the
Company pursuant to Section 336 of the SFO, or as otherwise notified to the Company and the HKSE:
INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY
HELD BY SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS UNDER HONG KONG LAWS AND
REGULATIONS
Notes:
1.
2.
3.
4.
The above shares are tradable shares not subject to selling restrictions and do not include shares lent through refinancing.
HKSCC Nominees Limited is a company that holds shares on behalf of the clients of the Hong Kong stock brokers and other participants of the CCASS
system. The relevant regulations of the HKSE do not require such persons to declare whether their shareholdings are pledged or frozen. Hence, HKSCC
Nominees Limited is unable to calculate or provide the number of shares that are pledged or frozen.
Industrial and Commercial Bank of China Limited - SSE 50 Exchange Traded Index Securities Investment Fund and Industrial and Commercial Bank of
China Limited - Huatai-PineBridge CSI 300 Exchange Traded Index Securities Investment Fund have Industrial and Commercial Bank of China Limited as
their fund depositary. Save as above, the Company was not aware of any connected relationship and concerted parties as defined by the "Measures for
the Administration of the Takeover of Listed Companies" among the top ten shareholders of the Company.
As at the end of the Reporting Period, the number of the Company's shares lent through refinancing and not yet returned by Industrial and Commercial
Bank of China Limited - SSE 50 Exchange Traded Index Securities Investment Fund were 154,200 shares, and the number of Company's shares held
in its general accounts and credit accounts, together with the number of the Company' shares lent through refinancing and not yet returned, totalled
20,460,903 shares. The number of the Company's shares lent through refinancing and not yet returned by Industrial and Commercial Bank of China
Limited - Huatai-PineBridge CSI 300 Exchange Traded Index Securities Investment Fund were 20,300 shares, and the number of Company's shares held
in its general accounts and credit accounts, together with the number of the Company' shares lent through refinancing and not yet returned, totalled
12,423,033 shares.
Information relating to the Controlling Shareholder and Effective Controller
The controlling shareholder of the Company is CLIC, and its relevant information is set out below:
Name of company
Legal representative
Date of incorporation
Major businesses
Shareholdings in other
subsidiaries and affiliates
listed in China or abroad
during the Reporting Period
China Life Insurance (Group) Company
Bai Tao
22 August 1996 (CLIC's predecessor was PICC (Life) Co., Ltd. incorporated in August 1996.
It was renamed as China Life Insurance Company, a company approved for formation
by the State Council in January 1999. With the approval of the former China Insurance
Regulatory Commission in 2003, China Life Insurance Company was restructured as CLIC.)
Insurance services including receipt of premiums and payment of benefits in respect of
the in-force life, health, accident and other types of personal insurance business, and the
reinsurance business; holding or investing in domestic and overseas insurance companies
or other financial insurance institutions; funds application business permitted by PRC laws
and regulations or approved by the State Council of the PRC; other businesses approved
by insurance regulatory agencies.
As at 31 December 2023, CLIC held 1,785,098,644 H shares of Town Health International
Medical Group Limited (which is one of the companies listed in China or abroad in which
CLIC has over 5% of the total share capital), representing 26.35% of its total shares.
The effective controller of the Company is the Ministry of Finance. The equity and controlling relationship between the
Company and its effective controller is set out as below:
Ministry of Finance of the PRC
National Council for Social
Security Fund
90%
10%
China Life Insurance
(Group) Company
68.37%
China Life Insurance
Company Limited
During the Reporting Period, there was no change to the controlling shareholder and the effective controller of the Company.
As at the end of the Reporting Period, there was no other corporate shareholder holding more than 10% of the shares in
the Company.
Annual Report 2023 | Corporate Governance 57
56
INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER
RESPONSIBILITY STATEMENT OF DIRECTORS
ISSUE AND LISTING OF SECURITIES
50 Annual Report 2023 | Corporate Governance
AUDITORS
As considered and approved by the shareholders at
the 2022 Annual General Meeting of the Company,
PricewaterhouseCoopers Zhong Tian LLP and
PricewaterhouseCoopers have been appointed as the
domestic and overseas auditors of the Company for the year
2023, who will hold office until the conclusion of the 2023
Annual General Meeting. PricewaterhouseCoopers Zhong
Tian LLP and PricewaterhouseCoopers have been serving
as the Company's auditors for three consecutive years.
Remuneration paid by the Company to the auditors is
subject to the approval at the shareholders' general meeting,
pursuant to which the Board is authorised to determine
the amount and make payment. Audit fees paid by the
Company to the auditors will not affect the independence
of the auditors.
Remuneration paid by the Company to PricewaterhouseCoopers
Zhong Tian LLP and PricewaterhouseCoopers in 2023 was
as follows:
The remuneration paid by the Company to PricewaterhouseCoopers
Zhong Tian LLP and PricewaterhouseCoopers in 2023
increased by 25.5% year on year from 2022. The increase
of the audit fee was attributable to the increased audit
workload as the Company continued to implement the former
standards on insurance contracts and financial instruments
under ASBE, and adopted the new standards on insurance
contracts and financial instruments for the first year for the
preparation and disclosure of financial reports and related
information under IFRSS in 2023.
The Company is taking active actions to proceed with
the selection and appointment of its auditors for the
year 2024, and investors are advised to pay attention to
the announcements made by the Company in its listed
jurisdictions for the further development in this regard.
Service/Nature
Audit, review and agreed-upon
RMB million
Fees
64.18
procedures fee
Based on the information publicly available to the Company
and within the knowledge of the Directors as at the latest
practicable date (27 March 2024), not less than 25% of the
issued share capital of the Company (being the minimum
public float applicable to the shares of the Company) was
held in public hands.
Including: Internal control audit fee
Non-audit services fee (tax services and
0.55
consultation services)
Total
64.73
By Order of the Board
Bai Tao
Chairman
27 March 2024
Annual Report 2023 | Corporate Governance 51
REPORT OF THE BOARD OF SUPERVISORS
From left to right:
Mr. Lai Jun, Mr. Cao Weiqing, Mr. Niu Kailong, Ms. Ye Yinglan
Pursuant to the Company Law and the Articles of Association,
the Company has established a Board of Supervisors.
The Board of Supervisors performs the following duties
in accordance with the Company Law, the Articles of
Association and the "Procedural Rules for the Board of
Supervisors Meetings": to examine the finances of the
Company; to monitor whether the Directors, President, Vice
Presidents and other senior management of the Company
have acted in contravention of laws, regulations, the
Articles of Association and resolutions of the shareholders'
general meetings when discharging their duties; to review
the financial information of the Company such as financial
reports, results reports and profit distribution plans to
be approved by the Board; to propose the convening of
extraordinary shareholders' general meetings, to propose
resolutions at shareholders' general meetings and to perform
any other duties under the laws, regulations and regulatory
rules of the Company's listed jurisdictions.
The Board of Supervisors consists of Non-employee
Representative Supervisors, such as shareholder
representatives, and Employee Representative Supervisors,
of which the Employee Representative Supervisors shall
not be less than one-third of the Board of Supervisors.
Non-employee Representative Supervisors, such as
shareholder representatives, shall be elected and removed
by a shareholders' general meeting while Employee
Representative Supervisors shall be elected and removed
by employees of the Company in a democratic manner.
4.00
SUFFICIENCY OF PUBLIC FLOAT
In 2023, the gross written premiums received from the
Company's five largest customers accounted for less than
5% of the Company's gross written premiums for the year.
There is no related party of the Company among the five
largest customers.
MAJOR CUSTOMERS
Save as disclosed above, the Directors, Supervisors and the chief executive of the Company are not aware of any other
party who, as at 31 December 2023, had an interest or short position in the shares and underlying shares of the Company
which was recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.
INTEREST-BEARING LOANS AND OTHER
BORROWINGS
As at the end of the Reporting Period, the interest-bearing
loans and other borrowings of the Company included a
five-year bank loan of GBP275 million with a maturity date
on 25 June 2024, which is fixed rate bank loan. Interest-
bearing loans and other borrowings also included a five-year
bank loan of USD970 million with a maturity date on 27
September 2024, a three-year bank loan of EUR330 million
with a maturity date on 8 March 2024, and an eighteen-
month bank loan of EUR98 million with a maturity date on
8 March 2024, all of which are floating rate bank loans.
Details of the interest-bearing loans and other borrowings
of the Company are set out in Note 15 in the Notes to the
Consolidated Financial Statements in this annual report.
CHARITABLE DONATIONS
The total amount of charitable donations made by the
Company during the Reporting Period was approximately
RMB37.59 million.
INFORMATION OF TAX DEDUCTION FOR
HOLDERS OF LISTED SECURITIES
Shareholders of the Company are taxed and/or enjoy tax
relief for the dividend income received from the Company
in accordance with the "Individual Income Tax Law of
the People's Republic of China", the "Enterprise Income
Tax Law of the People's Republic of China", and relevant
administrative rules, governmental regulations and regulatory
documents. Please refer to the announcement published by
the Company on the website of the SSE on 7 July 2023 for
the information on income tax in respect of the dividend
distributed to A Share shareholders during the Reporting
Period, and the announcement published by the Company
on the HKExnews website of Hong Kong Exchanges and
Clearing Limited on 28 June 2023 for the information on
income tax in respect of the dividend distributed to H Share
shareholders during the Reporting Period.
PURCHASE, SALE OR REDEMPTION OF THE
COMPANY'S SECURITIES
During the Reporting Period, the Company and its subsidiaries
did not purchase, sell or redeem any of the Company's listed
securities.
H SHARE STOCK APPRECIATION RIGHTS
No H Share stock appreciation rights of the Company were
granted or exercised in 2023. The Company will deal with
such rights and related matters in accordance with the PRC
governmental policies.
DAY-TO-DAY OPERATIONS OF THE BOARD
Details of the Board meetings and the Board's performance
of its duties during the Reporting Period are set out in the
section headed "Report of Corporate Governance" in this
annual report.
DIRECTORS' AND SUPERVISORS' SERVICE
CONTRACTS
None of the Directors or Supervisors has entered into any
service contracts with the Company and its subsidiaries that
are not terminable within one year or can only be terminated
by the Company with payment of compensation (other than
statutory compensation).
INTERESTS OF DIRECTORS AND SUPERVISORS
(AND THEIR CONNECTED ENTITIES) IN
MATERIAL TRANSACTIONS, ARRANGEMENTS
OR CONTRACTS
None of the Directors or Supervisors (and their connected
entities) is or was materially interested, directly or indirectly,
in any transaction, arrangement or contract of significance
entered into by the Company or its controlling shareholders
or any of their respective subsidiaries at any time during the
Reporting Period or subsisted at the end of the Reporting
Period.
DIRECTORS' AND SUPERVISORS' RIGHTS TO
ACQUIRE SHARES
No arrangements to which the Company, any of its
subsidiaries or holding companies, or any subsidiary of the
Company's holding companies is a party, and whose objects
are, or one of whose objects is, to enable Directors or
Supervisors (including their spouses and children under the
age of 18) to acquire benefits by means of the acquisition
of shares in, or debentures of, the Company or any other
body corporate, subsisted at any time during the Reporting
Period or at the end of the Reporting Period.
Annual Report 2023 | Corporate Governance
DISCLOSURE OF INTERESTS OF DIRECTORS,
SUPERVISORS AND THE CHIEF EXECUTIVE IN
THE SHARES OF THE COMPANY
As at the end of the Reporting Period, none of the Directors,
Supervisors and the chief executive of the Company had
any interests or short positions in the shares, underlying
shares or debentures of the Company or its associated
corporations (within the meaning of Part XV of the Securities
and Futures Ordinance (Chapter 571 of the Laws of Hong
Kong) (the "SFO")) that were required to be recorded in the
register of the Company pursuant to Section 352 of the SFO
or which had to be notified to the Company and the HKSE
pursuant to the Model Code for Securities Transactions by
Directors of Listed Issuers (the "Model Code") as set out
in Appendix C3 to the Listing Rules. In addition, the Board
has created a code of conduct in relation to the sale and
purchase of the Company's securities by Directors and
Supervisors, which is no less stringent than the Model Code.
Upon specific inquiry by the Company, the Directors and
Supervisors have confirmed observation of the Model Code
and the Company's own code of conduct in the year of 2023.
PERMITTED INDEMNITY PROVISION
The Company made appropriate insurance arrangement with
respect to legal actions that might be faced by its Directors:
in connection with corporate activities, and such insurance
arrangement was in force during the Reporting Period and
up to the date of this report.
PRE-EMPTIVE RIGHTS AND ARRANGEMENTS
FOR SHARE OPTIONS
According to the Articles of Association and relevant PRC
laws, there is no provision for any pre-emptive rights of the
shareholders of the Company. At present, the Company does
not have any arrangement for share options.
ON FINANCIAL REPORTS
The Directors are responsible for overseeing the preparation
of the financial report for each financial period which gives
a true and fair view of the Company's financial position,
performance results and cash flows for that period. To the
best knowledge of the Directors, there was no event or
condition during the Reporting Period that might have a
material adverse effect on the continuing operation of the
Company.
BOARD'S STATEMENT ON INTERNAL CONTROL
In accordance with the requirements of the "Standard
Regulations on Corporate Internal Control", the Board
conducted an assessment on internal control relating to the
Company's financial reporting functions, and confirmed that
its internal control was effective as at 31 December 2023.
The Board of Supervisors is accountable to the shareholders
and reports its work to the shareholders' general meeting
according to relevant laws. It is also responsible for
appraising the Company's operations, financial reports,
connected transactions and internal control, etc. during the
Reporting Period.
Meetings of the Board of Supervisors are convened by
the Chairman of the Board of Supervisors. According to
the Articles of Association, the Company formulated the
"Procedural Rules for the Board of Supervisors Meetings"
and established protocols for the Board of Supervisors
meetings. Board of Supervisors meetings are categorised
as regular or ad-hoc meetings in accordance with the degree
of pre-planning involved. There are at least three regular
meetings each year, mainly to adopt and review financial
reports and periodic reports, and examine the financial
condition and internal control of the Company. Ad-hoc
meetings are convened when necessary.
Currently, the seventh session of the Board of Supervisors of
the Company comprises Mr. Cao Weiqing, Mr. Niu Kailong,
Mr. Lai Jun and Ms. Ye Yinglan, with Mr. Cao Weiqing
acting as the Chairman of the Board of Supervisors. Mr.
Niu Kailong is a Non-employee Representative Supervisor,
whereas Mr. Cao Weiqing, Mr. Lai Jun and Ms. Ye Yinglan
are Employee Representative Supervisors. In June 2023,
Ms. Wang Xiaoqing and Ms. Hu Zhijun resigned from their
positions as Supervisors of the Company, respectively, due
to the adjustment of work arrangements.
52 Annual Report 2023 | Corporate Governance
2.
222
The number of meetings attended in person includes meetings attended
on-site and by way of telephone or video conference.
Supervisors who were unable to attend any meeting of the Board of
Supervisors authorised other Supervisors to attend and vote at the
meeting on their behalf.
ACTIVITIES OF THE BOARD OF SUPERVISORS
Attending meetings of the Board of Supervisors and
diligently discharging their duties. Pursuant to the regulatory
requirements of the jurisdictions where the Company is
listed, the Articles of Association and the "Procedural Rules
for the Board of Supervisors Meetings" of the Company,
and in accordance with the work arrangement of the Board
of Supervisors, the Board of Supervisors convened its
regular meetings in a timely manner, at which it considered
and approved proposals in relation to the Company's
financial reports, periodic reports, internal control and risk
management, etc. In 2023, the Board of Supervisors held
five meetings in total, at which the Supervisors earnestly
expressed their views, actively participated in discussions and
diligently discharged their duties, thereby providing valuable
advice for the business development of the Company.
Attending and participating in corporate governance meetings
and actively exercising their supervisory role. In 2023, the
Board of Supervisors attended the 2022 Annual General
Meeting and the First Extraordinary General Meeting 2023
of the Company, and participated in the meetings of the
Board. All members of the Board of Supervisors participated
in the meetings of the Audit Committee, the Nomination
and Remuneration Committee, the Risk Management and
Consumer Rights Protection Committee, the Strategy and
Assets and Liabilities Management Committee, and the
Connected Transactions Control Committee, respectively,
in accordance with the work allocation among Supervisors
determined by the Board of Supervisors. By attending these
meetings, all Supervisors diligently discharged their duties,
oversaw the procedures for convening meetings, carefully
listened to the matters considered at the meetings, and
participated in discussions when necessary, thus proactively
pushing forward the further enhancement of corporate
governance.
Annual Report 2023 | Corporate Governance 53
Keeping abreast of the business operations of the Company
on a regular basis and paying attention to any major solvency
risks that might arise in the course of its business operations.
Members of the Board of Supervisors kept abreast of the
business operations of the Company on a regular basis by
reviewing the financial reports of the Company, supervised its
financial operation and paid attention to any major solvency
risks that might arise in the course of its business operations.
Through their participation in meetings of the Board and the
specialised Board committees, all Supervisors understood
the management of solvency risks of the Company and
performed their supervisory function with respect to the
decision-making of the Company on solvency risks.
Supervising the performance of duties by the Board and
senior management in reputational risk management.
Members of the Board of Supervisors listened to an annual
reputational risk management report prepared by the senior
management through participation in the meetings of the
Board and the Risk Management and Consumer Rights
Protection Committee, so as to supervise the performance
of duties by the Board in reputational risk management.
Organising the evaluations of the performance of duties by
Directors and Supervisors. In 2023, the Board of Supervisors
commenced the evaluations of the performance of duties by
Directors and Supervisors in accordance with the "Measures
for the Evaluation of the Performance of Duties by Directors
and Supervisors" of the Company. Based on the performance
of duties by Directors and Supervisors in 2023, the members
of the Board of Supervisors evaluated and scored each of the
Directors of the Company by reference to the information
regarding the performance of duties by Directors obtained
during their participation of meetings of the Board and
various specialised Board committees, and evaluated and
scored each of the Supervisors of the Company through a
combination of self-assessment by and mutual assessment
among Supervisors, and eventually formed evaluation
opinions on individual Directors and Supervisors, which
therefore improved the mechanism for the supervision and
evaluation of duty performance of Directors and Supervisors.
All members of both the Board and the Board of Supervisors
of the Company were evaluated as competent in their
performance of duties in 2023.
Attending investigation and research activities and training
courses and constantly enhancing performance of duties
by the Supervisors. In 2023, according to the work plan of
the Board of Supervisors of the Company, the members
of the Board of Supervisors conducted investigation and
research on Zhejiang Branch and Huzhou Branch with
respect to, among others, the business development of
the Company, expansion of senior-care and healthcare
businesses, risk prevention and control, and governance of
"Five Weaknesses", carried out an on-site inspection of "city
center" retirement apartments project in Hangzhou, and
communicated in person with relevant business lines and
sales representatives of branches at the provincial, city and
country levels for exchange of ideas, which offered support
to the enhancement of performance of duties by the Board
of Supervisors and its decision-making in a scientific manner.
In 2023, the members of the Board of Supervisors further
developed and refreshed their knowledge reserve by actively
attending various special training courses organised by the
securities exchanges of the Company's listed jurisdictions,
listed companies associations and the Company itself, so as
to enhance their performance of duties. All members of the
Board of Supervisors attended the training programs of the
Company on anti-money laundering. Mr. Cao Weiqing and
Mr. Niu Kailong attended a training course on "Performance
of Duties by Supervisors of Listed Companies: Regulations,
Cases and Recommendations" as organised by China
Association for Public Companies. Mr. Cao Weiqing, Mr.
Niu Kailong, Mr. Lai Jun and Ms. Ye Yinglan attended a
special training course on the rules of independent directors
of listed companies as organised by the Listed Companies
Association of Beijing for listed companies within Beijing. Mr.
Cao Weiqing and Ms. Ye Yinglan attended training courses
of the SSE for the first-time directors, supervisors and senior
management of listed companies in 2023 (Sessions II and
V), respectively.
54
Annual Report 2023 | Corporate Governance
INDEPENDENT OPINION OF THE BOARD OF
SUPERVISORS ON CERTAIN MATTERS
During the Reporting Period, the Board of Supervisors of
the Company performed its supervisory duties in a diligent
manner in accordance with the requirements of the Company
Law, the Articles of Association and the "Procedural Rules
for the Board of Supervisors Meetings". The Board of
Supervisors had no objection in respect of the matters
under its supervision during the Reporting Period.
The Company's operations in compliance with law. During
the Reporting Period, the Company's operations were in
compliance with the law. The Company's operations and
decision-making procedures were in compliance with the
Company Law and the Articles of Association. All Directors
and senior management of the Company observed the
principles of diligence and integrity and performed their
duties conscientiously. The Board of Supervisors is not
aware of any of them having violated any law, regulation,
or any provision in the Articles of Association or harmed
the interests of the Company in the course of discharging
their duties.
The authenticity of the financial report. The Company's
annual financial report truly reflected the Company's financial
position and operating results. PricewaterhouseCoopers
Zhong Tian LLP and PricewaterhouseCoopers have performed
audits and have issued standard and unqualified auditors'
reports in respect of the financial statements for the year
2023 in accordance with the China Standards on Auditing
of PRC Certified Public Accountants and the International
Standards on Auditing, respectively.
Acquisition and sale of assets. During the Reporting Period,
the prices for acquisition and sale of assets by the Company
were fair and reasonable. The Board of Supervisors is not
aware of any insider trading, any acts harming the interests
of shareholders or incurring any loss to the Company's
assets.
Connected transactions. During the Reporting Period, the
connected transactions of the Company were on commercial
terms. The Board of Supervisors is not aware of any acts
harming the interests of the Company.
Internal control system and self-evaluation report on internal
control. During the Reporting Period, the Company sought
to improve its internal control system, and continued to
enhance the effectiveness of such system. The Board of
Supervisors of the Company reviewed the self-evaluation
report on the Company's internal control and did not raise
any objection against the self-evaluation report of the Board
regarding the Company's internal control.
Information disclosure. The Company performed its
obligation of information disclosure in strict compliance
with the regulatory requirements, seriously implemented
various information disclosure management systems, and
disclosed information in a timely and fair manner. The Board
of Supervisors is not aware of any false representations,
misleading statements or material omissions during the
Reporting Period.
By Order of the Board of Supervisors
Cao Weiqing
Chairman of the Board of Supervisors
27 March 2024
Annual Report 2023 | Corporate Governance
55
CHANGES IN ORDINARY SHARES AND SHAREHOLDERS INFORMATION
CHANGES IN SHARE CAPITAL
During the Reporting Period, there was no change in the total number of shares and the share capital structure of the
Company.
1.
As at the end of the Reporting Period, the Company had not issued any securities in the last three years. During the
Reporting Period, there was no change in the total number of shares and the share structure of the Company due to bonus
issues or placings, nor were there any internal employees' shares.
Notes:
of meetings
required to attend
0/2
0/2
MEETINGS AND ATTENDANCE
During the Reporting Period, five meetings were held by the
Board of Supervisors of the Company. Attendance records
of individual Supervisors are as follows:
Number of
Number of
meetings attended
in person/Number by proxies/Number
of meetings
required to attend
0/5
meetings attended
Name of Supervisor
Cao Weiqing
of meetings
required to attend
5/5
Niu Kailong
5/5
0/5
Lai Jun
4/5
1/5
Ye Yinglan
2/3
1/3
Attendance records of the resigned Supervisors at the
meetings of the Board of Supervisors are as follows:
Number of
in person/Number by proxies/Number
Number of
meetings attended
meetings attended
Name of Supervisor
of meetings
required to attend
Wang Xiaoqing
2/2
2/2
Hu Zhijun
58 Annual Report 2023 | Corporate Governance
FMR LLC (Note 1)
49
130.49
519.07
Notes:
1.
2.
3.
4.
None of the resigned or retired Directors, Supervisors and senior management of the Company held any shares of the Company during the Reporting
Period.
This table sets out the information of Directors, Supervisors and senior management who resigned or retired during the period from the beginning of the
Reporting Period to the date of this report.
The emoluments are calculated based on the terms of office of the resigned and retired Directors, Supervisors and senior management during the Reporting
Period.
According to the requirements of the relevant remuneration policies of the Company, the final amount of emoluments of the resigned and retired Directors,
Supervisors and senior management of the Company is currently subject to review and approval. The result of the review will be disclosed when the final
amount is confirmed.
388.58
Annual Report 2023 | Corporate Governance
Personal Profile of Current Directors, Supervisors, Senior Management and Company Secretary
DIRECTORS
Mr. Bai Tao, born in 1963, Chinese
Mr. Bai became the Chairman of the Board of Directors of the Company in May 2022. He
has been the Secretary of the Party Committee of China Life Insurance (Group) Company
since January 2022 and the Chairman of China Life Insurance (Group) Company since
March 2022. From 2016 to 2022, he served as a member of the Party Committee and
the Deputy General Manager of China Investment Corporation, the Deputy Secretary
of the Party Committee, the Vice Chairman, the President and an Executive Director of
The People's Insurance Company (Group) of China Limited, and the Chairman and the
Secretary of the Leading Party Members' Group of State Development & Investment
Corp., Ltd. Mr. Bai graduated from Renmin University of China with a doctoral degree
in economics, and is a senior economist.
Mr. Li Mingguang, born in 1969, Chinese
Mr. Li became an Executive Director of the Company in August 2019. He has been the
Secretary of the Party Committee of the Company since July 2023 and the President
of the Company since November 2023. He has been a member of the Party Committee
and a Vice President of China Life Insurance (Group) Company since April 2023 and
November 2023, respectively. He has been the Chairman of China Life Investment
Management Company Limited since July 2023. Mr. Li joined the Company in 1996 and
successively served as the Responsible Actuary, the General Manager of the Actuarial
Department, the Chief Actuary, the Board Secretary, a Vice President and the temporary
Person in Charge of the Company. He graduated from Shanghai Jiaotong University with
a bachelor's degree in 1991, Central University of Finance and Economics with a master's
degree in 1996 and Tsinghua University with an EMBA in 2010. Mr. Li is a Fellow of
the China Association of Actuaries (FCAA) and a Fellow of the Institute and Faculty of
Actuaries (FIA). He was the Chairman of the first session of the China Actuarial Working
Committee and the Secretary-general of both the first and the second sessions of the
China Association of Actuaries. He is currently the Vice Chairman of the China Association
of Actuaries. Mr. Li receives a special government allowance from the State Council.
Mr. Wang Junhui, born in 1971, Chinese
Mr. Wang became a Non-executive Director of the Company in August 2019. He has
been the Chairman of China Life Pension Company Limited since November 2023 and
the Chief Investment Officer of China Life Insurance (Group) Company since August
2016. He has been the Chairman of China Life AMP Asset Management Company
Limited since December 2016 and a Director of China United Network Communications
Limited since March 2021. From 2004 to 2023, he successively served as an Assistant
to the President, a Vice President and the President of China Life Asset Management
Company Limited, and the President of China Life Investment Holding Company Limited.
Mr. Wang graduated from the School of Computer Science of Beijing University of
Technology with a bachelor's degree in software in 1995 and from Chinese Academy of
Fiscal Sciences of the Ministry of Finance of the PRC with a doctoral degree in finance
in 2008, and is a senior economist.
62
Annual Report 2023 | Corporate Governance
Ms. Zhuo Meijuan, born in 1964, Chinese
Ms. Zhuo became a Non-executive Director of the Company in June 2023. She is the
Senior Director of the Strategic Planning Department (General Office for Deepening
Reforms)/Office of the Board of Directors/China Life Institute of Finance of China Life
Insurance (Group) Company. From 2016 to 2023, she served as the Deputy General
Manager (at the department general manager level) and General Manager of the Business
Management Department of China Life Insurance (Group) Company. She served as the
Secretary of the Discipline Inspection Committee and the Deputy General Manager (at the
department general manager level of the head office) of Tianjin Branch of the Company
from 2013 to 2016, and the Deputy General Manager of the Business Management
Department of China Life Insurance (Group) Company from 2006 to 2013. Ms. Zhuo
successively graduated from Fujian Agricultural College and the Open University of Hong
Kong with a master's degree in business administration, and is a senior economist.
61
Total
Yes adjustment of work
arrangements
97.07
December 2021 January 2023
January 2022 - January 2023
Resigned due to the
1
1
No
Liu Fengji
Person in Charge of Audit
Male
68.00
October 1969
December 2021-August 2023
36.12
14.24
50.36
adjustment of work
arrangements
Resigned due to the
No adjustment of work
arrangements
Resigned due to the
Hu Jin
Person in Charge of Finance Female
November 1971
February 2023 March 2024
70.74
26.33
Mr. Lam Chi Kuen, born in 1953, Chinese
January 1968
Mr. Lam became an Independent Director of the Company in June 2021. He is currently
an Independent Non-executive Director of each of China Cinda Asset Management Co.,
Ltd. and Luks Group (Vietnam Holdings) Company Limited. He served as an Independent
Non-executive Director of China Pacific Insurance (Group) Co., Ltd. from 2013 to 2019.
Mr. Lam, a practicing certified public accountant in Hong Kong for approximately 35
years, was a partner and senior consultant of Ernst & Young from 1992 to 2013 and
has extensive experience in accounting, auditing and financial management. Mr. Lam
received a Higher Diploma in Accounting from the Hong Kong Polytechnic College (the
current Hong Kong Polytechnic University). He is a member of the Hong Kong Institute
of Certified Public Accountants and a senior member of the Association of Chartered
Certified Accountants.
Mr. Zhai became an Independent Director of the Company in October 2021. He is
the President and Founding Partner of Primavera Capital Group, and an Independent
Non-executive Director of each of China Everbright Environment Group Limited and
China Everbright Water Limited. From 2000 to 2009, Mr. Zhai worked at and held
various positions in Goldman Sachs Group, including the Managing Director, the Chief
Representative of its Beijing Office, the Director of the Strategic Cooperation Office
between Goldman Sachs Group and Industrial and Commercial Bank of China, and the
Credit Rating Consultant of the Ministry of Finance of the PRC and China Development
Bank. From 1995 to 1998, he was the Deputy Representative of the People's Bank of
China Representative Office for the Americas based in New York. From 1990 to 1995,
Mr. Zhai worked at the International Department of the People's Bank of China. Mr. Zhai
holds a master's degree in international affairs from Columbia University, a master's
degree in business administration from New York University and a bachelor's degree
in economics from Peking University.
Mr. Bai Kai, born in 1974, Chinese
Mr. Bai became a Vice President of the Company in August 2023. He successively
served as the Deputy General Manager, the Deputy General Manager (responsible for
daily operations) and the General Manager of Hubei Branch, and an Assistant to the
President of the Company from 2017 to 2023, and the General Manager of Huanggang
Branch in Hubei province and the Deputy General Manager of Qingdao Branch of the
Company from 2011 to 2017. Mr. Bai graduated from Party School of the CPC Hubei
Provincial Committee, majoring in economics and management, and was a postgraduate.
Mr. Xu Chongmiao, born in 1969, Chinese
Mr. Xu became the Compliance Officer of the Company in July 2018. He has been the
General Manager of the Legal and Compliance Department and the Legal Officer of the
Company since September 2014. From 2006 to 2014, he successively served as the
Deputy General Manager of the Legal Affairs Department, the Deputy General Manager
of the Legal and Compliance Department and the Legal Officer at the general manager
level of the Company. From 2000 to 2006, he successively served as the Deputy Division
Chief of the Regulations Division of the Development and Research Department and
a senior regulations researcher of the Legal Affairs Department of the Company. Mr.
Xu graduated from Fudan University in August 1991, majoring in economic law with a
bachelor's degree in law, and from Renmin University of China in July 1996 and July
2005, respectively, majoring in economic law with master's and doctoral degrees in law.
Mr. Xu is admitted as a lawyer and certified public accountant in the PRC.
68
Annual Report 2023 | Corporate Governance
3.
None of the current Directors, Supervisors and senior management of the Company held any shares of the Company during the Reporting Period.
2. According to the "Procedural Rules for the Board Meetings of China Life Insurance Company Limited", Directors of the Company serve for a term of
three years and may be re-elected. However, Independent Directors may not serve for more than six years. According to the Articles of Association,
Supervisors of the Company serve for a term of three years and may be re-elected.
1.
Notes:
1,272.59
Mr. Zhao became a Vice President of the Company in August 2023. He has been the
Board Secretary of the Company since February 2023. He was an Assistant to the
President of the Company from October 2019 to July 2023. He successively served as
the Deputy General Manager (responsible for daily operations) and the General Manager
of Chongqing Branch, the General Manager of Hunan Branch and the General Manager
of Jiangsu Branch of the Company from 2016 to 2022, the Deputy General Manager
of each of Fujian Branch and Hunan Branch of the Company from 2007 to 2016, and
the Deputy General Manager of Changde Branch and the General Manager of Yiyang
Branch in Hunan province of the Company from 2001 to 2007. Mr. Zhao graduated
from Hunan Computer School in 1988, majoring in computer software, and from China
Central Radio and Television University in 2006, majoring in business administration,
and is a principal senior economist.
272.55
No
Total
Since March 2024
February 1978
Female
Temporary Person in
Charge of Finance
Yuan Ying
No
8.71
3.42
5.29
1,000.04
Mr. Zhao Guodong, born in 1967, Chinese
Annual Report 2023 | Corporate Governance 67
Mr. Ruan became a Vice President of the Company in April 2018. He has been the Chief
Risk Officer of the Company since December 2022, and the Chief Network Security
Officer of the Company since March 2024. Mr. Ruan has been the temporary Person in
Charge and a Director of China Life Ecommerce Company Limited since January 2024
and May 2023, respectively. He has been the Chairman of Wonders Information Co.,
Ltd. since July 2023. He successively served as the General Manager (at the general
manager level of the provincial branches) of the Information Technology Department and
the Chief Information Technology Officer of the Company from 2016 to 2018. Mr. Ruan
served as the General Manager of China Life Data Center and the General Manager (at
the general manager level of the provincial branches) of the Information Technology
Department of the Company from 2014 to 2016, and the Deputy General Manager and
the General Manager of the Information Technology Department of the Company from
2004 to 2014. He successively served as the Deputy Division Chief of the Computer
Division, the Deputy Manager (responsible for daily operations) and the Manager of
the Information Technology Department of Fujian Branch of the Company from 2000
to 2004. Mr. Ruan graduated from Beijing Institute of Posts and Telecommunications
in August 1987, majoring in computer science and communications with a bachelor's
degree in engineering, and from Xiamen University with a master's degree in business
administration for senior management (EMBA) in December 2007, and is a senior
engineer.
Annual Report 2023 | Corporate Governance 63
Mr. Huang Yiping, born in 1964, Chinese
Mr. Huang became an Independent Director of the Company in July 2022. He is the Dean
of the National School of Development, Boya Chair Professor, and the Director of the
Institute of Digital Finance of Peking University. Currently, Mr. Huang also concurrently
serves as a contract research fellow of the Counsellors' Office of The People's Bank
of China, an Executive Director and the Deputy Secretary-general of the China Society
for Finance and Banking, a member of each of China Finance 40 Forum and Chinese
Economists 50 Forum, and the Deputy Editor in Chief of Asian Economic Policy Review.
Mr. Huang has been an Independent Director of Ant Group Co., Ltd. since August 2020.
He served as a member of the Monetary Policy Committee of The People's Bank of
China from June 2015 to June 2018, the Managing Director of the Emerging Market
Headquarters/the Chief Economist of Asian Emerging Markets of Barclays Capital Asia
from August 2011 to June 2013, the Managing Director/the Chief Economist of the Asia-
Pacific region of Citigroup Inc. from May 2000 to February 2009, and a senior lecturer
and the Director of China's economic projects of The Australian National University from
August 1993 to April 2000. Mr. Huang obtained a master's degree in economics from
Renmin University of China and a doctoral degree in economics from The Australian
National University.
Ms. Chen Jie, born in 1970, Chinese
Ms. Chen became an Independent Director of the Company in July 2022. She is the
Director and a researcher of the Commercial Law Research Unit of the Institute of
Law, a professor and doctoral tutor of Chinese Academy of Social Sciences. She is
a member of the Chinese Legal System Committee of China Democratic League, as
well as the Vice Chairman of China Business Law Society, an Executive Director of
each of the Institute of Commercial Law and the Institute of Securities Law of China
Law Society, and a Director of the Institute of Insurance Law of China Law Society.
Ms. Chen is also a member of the Appeal Review Committee of Shenzhen Stock
Exchange, a member of the Expert Advisory Committee of Beijing Financial Court, and
an arbitrator of each of Beijing Arbitration Commission/Beijing International Arbitration
Center, Shenzhen Court of International Arbitration, China International Economic and
Trade Arbitration Commission, Shanghai International Economic and Trade Arbitration
Commission and Shanghai Arbitration Commission. Ms. Chen has been an Independent
Director of Deppon Logistics Co., Ltd. since October 2022. She served as an Independent
Director of Central China Land Media Co., Ltd. from December 2010 to April 2017, an
Independent Director of BOMESC Offshore Engineering Company Limited from January
2016 to January 2019, and an Independent Director of Sino Geophysical Co., Ltd. from
November 2015 to November 2021. Ms. Chen obtained a bachelor's degree in law from
East China College of Political Science and Law, a master's and doctoral degrees in law
from Peking University, and a post-doctoral qualification from the Institute of Law of
Chinese Academy of Social Sciences.
64
Annual Report 2023 | Corporate Governance
SUPERVISORS
Mr. Cao Weiqing, born in 1965, Chinese
Mr. Cao became the Chairman of the Board of Supervisors of the Company in November
2022. He has been a member and the Deputy Secretary of the Party Committee of
the Company since 2022. He successively served as the Secretary of the Discipline
Inspection Committee, the Chairman of the Board of Supervisors and a Vice President
of China Life Asset Management Company Limited from 2016 to 2022. He served as
the Deputy General Manager (at the general manager level of the provincial branches)
of Hebei Branch of the Company from 2014 to 2016, and concurrently acted as the
Secretary of the Discipline Inspection Committee and the Chairman of the Labour Union
of such branch. From 2002 to 2014, he successively served as the Deputy General
Manager of the Personnel Department of China Life Insurance Company, as well as the
Deputy General Manager and General Manager of the Strategic Planning Department
and the General Manager of the Equity Management Department of China Life Insurance
(Group) Company. Mr. Cao graduated from Nankai University with a master's degree in
economics, and is a senior economist.
Mr. Niu Kailong, born in 1974, Chinese
Mr. Niu became a Supervisor of the Company in October 2021. He has been the
General Manager and the President of the Strategic Planning Department (General
Office for Deepening Reforms)/Office of the Board of Directors/China Life Institute
of Finance of China Life Insurance (Group) Company since December 2022. Mr. Niu
successively served as the Person in Charge of the Strategy and Investment Management
Department of China Life Healthcare Investment Company Limited, the Deputy General
Manager (responsible for daily operations) of the Strategic Planning Department of China
Life Insurance (Group) Company, and the General Manager of the Strategic Planning
Department/Office of the Board of Directors (in preparation) and the President of China
Life Institute of Finance of China Life Insurance (Group) Company from June 2020 to
December 2022. He successively served as the Deputy General Manager of the Strategic
Planning Department of The People's Insurance Company (Group) of China Limited, as
well as a Supervisor, the Deputy General Manager (responsible for daily operations) of
the Strategic Planning Department, and the Deputy General Manager (responsible for
daily operations) of the Strategic Planning Department/Office of the Board of Directors
of PICC Reinsurance Company Limited from April 2017 to June 2020. Mr. Niu graduated
from Nankai University with a doctoral degree in finance. He is an associate researcher
(social science) and senior economist.
Annual Report 2023 | Corporate Governance
65
Mr. Lai Jun, born in 1964, Chinese
Mr. Lai became a Supervisor of the Company in October 2021. He is the General Manager
of the Human Resources Department of the Company. Mr. Lai joined the Company in
1984, and successively served as the Deputy General Manager and the Secretary of
the Discipline Inspection Committee of Xinjiang Branch of the Company, the Person in
Charge, the Deputy General Manager (responsible for daily operations) and the General
Manager of Hainan Branch, as well as the General Manager of Xinjiang Branch of
the Company from 2002 to 2021. Mr. Lai graduated from Party School of the Central
Committee of CPC, majoring in economics and management, and is a senior economist.
Ms. Ye Yinglan, born in 1974, Chinese
Ms. Ye became a Supervisor of the Company in June 2023. She has been the General
Manager of the Integrated Finance Department of the Company since June 2023 and
concurrently served as the General Manager of the Asset Management Department of the
Company since November 2023. Ms. Ye joined the Company in 1999 and successively
served as an Assistant to the General Manager and the Deputy General Manager of
the Finance Department, the Deputy General Manager, the Deputy General Manager
(responsible for daily operations) and the General Manager of the Finance Management
Department, and the General Manager of the Fund Sales Management Department
of the Company from 2009 to 2023. Ms. Ye graduated from Wuhan University with a
doctoral degree in economics.
66
Annual Report 2023 | Corporate Governance
SENIOR MANAGEMENT
Mr. Li Mingguang, please see the section "Directors" for his personal profile.
Ms. Liu Hui, born in 1970, Chinese
Ms. Liu became a Vice President of the Company in July 2023. She has been the Chief
Investment Officer of the Company since December 2023. She has been a Director of
the China Guangfa Bank Co., Ltd. since January 2024, a Director of China Life Asset
Management Company Limited since August 2023, and a Director of China Life Franklin
Asset Management Company Limited since April 2023. She was a Director of Wonders
Information Co., Ltd. from July 2023 to January 2024. From 2014 to 2022, Ms. Liu
successively served as a Vice President of China Life Investment Holding Company
Limited, and an Executive Director and a Vice President of China Life Investment
Management Company Limited, and concurrently served as an Executive Director and a
Vice President of Sino-Ocean Group Holding Limited, the President and Chairman of China
Life Capital Investment Company Limited, and an Executive Director and the General
Manager of China Life Real Estate Co., Limited. She served as the General Manager
of the Investment Management Department of the Company from 2009 to 2014, and
successively acted as an Assistant to the General Manager of the Enterprise Annuity
Department, the Deputy General Manager of the Pension and Institutional Business
Department and the General Manager of the Transaction Management Department of
China Life Asset Management Company Limited from 2005 to 2009. She worked at the
Head Office of China Construction Bank from 1992 to 2005. Ms. Liu successively obtained
a bachelor's degree in economics from Renmin University of China and a master's
degree in business administration from Tsinghua University, and is a senior economist.
Mr. Ruan Qi, born in 1966, Chinese
Mr. Zhai Haitao, born in 1969, Chinese
Since November 2023
Female
Zhang Di
Salary/
Remuneration
paid in RMB ten
housing
provident fund
received from the
received
and enterprise
Company during
emolument
Reason for changes
the Reporting
from connected
annuity fund paid
Term
thousands
by the Company
ten thousands
parties of the
Company
in RMB
(before tax)
ten thousands
28 October 2022
Resigned due to the
Zhao Peng
Executive Director
Male
Period in RMB
Date of birth
Gender
Previous position
4.
5.
6.
7.
8.
The positions of the Directors, Supervisors and senior management in this report reflect their positions as at the date of this report. The emoluments are
calculated based on their terms of office during the Reporting Period.
According to the requirements of the relevant remuneration policies of the Company, the final amount of emoluments of the current Directors, Supervisors
and senior management of the Company is currently subject to review and approval. The result of the review will be disclosed when the final amount is
confirmed.
As elected by the Third Extraordinary General Meeting 2022 of the Company and upon approval by the NFRA, Ms. Zhuo Meijuan served as a Non-executive
Director of the seventh session of the Board of Directors from 21 June 2023. On 20 July 2023, Ms. Zhuo Meijuan had obtained the legal advice referred
to in Rule 3.09D of the Listing Rules, and confirmed that she understood her obligations as a director of the Company.
As elected by the tenth extraordinary meeting of the third session of the employee representative meeting of the Company and upon approval by the
NFRA, Ms. Ye Yinglan served as an Employee Representative Supervisor of the seventh session of the Board of Supervisors of the Company from 21
June 2023.
As considered and approved by the twenty-seventh meeting of the seventh session of the Board of Directors of the Company and upon approval by the
NFRA, Mr. Li Mingguang served as the President of the Company from 10 November 2023.
As considered and approved by the twentieth meeting of the seventh session of the Board of Directors of the Company and upon approval by the NFRA,
Ms. Liu Hui served as a Vice President of the Company from 27 July 2023. As considered and approved by the thirty-third meeting of the seventh session
of the Board of Directors of the Company, Ms. Liu Hui served as the Chief Investment Officer of the Company from 15 December 2023.
As considered and approved by the thirty-sixth meeting of the seventh session of the Board of Directors of the Company, Mr. Ruan Qi served as the
Chief Network Security Officer of the Company from 27 March 2024.
As considered and approved by the twenty-seventh meeting of the seventh session of the Board of Directors of the Company, Mr. Zhao Guodong and
Mr. Bai Kai served as Vice Presidents of the Company from 4 August 2023.
As considered and approved by the eighteenth meeting of the seventh session of the Board of Directors of the Company and upon approval by the NFRA,
Mr. Zhao Guodong served as the Board Secretary of the Company from 24 February 2023.
As considered and approved by the twenty-seventh meeting of the seventh session of the Board of Directors of the Company and upon approval by the
NFRA, Ms. Hu Zhijun served as the Person in Charge of Audit of the Company from 28 November 2023.
As considered and approved by the twenty-seventh meeting of the seventh session of the Board of of Directors of the Company and upon approval by
the NFRA, Ms. Hou Jin served as the Chief Actuary of the Company from 28 November 2023.
Ms. Yuan Ying was appointed as the Person in Charge of Finance of the Company at the thirty-sixth meeting of the seventh session of the Board of
Directors of the Company and her qualification as the Person in Charge of Finance of the Company is subject to the approval by the NFRA. The Board
has designated Ms. Yuan Ying as a temporary Person in Charge of Finance of the Company before the approval on her qualification is obtained.
Due to the adjustment of work arrangements, Mr. Li Mingguang ceased to be the Board Secretary of the Company from 24 February 2023, a Vice President
of the Company from May 2023, and the Chief Actuary of the Company from August 2023. Mr. Li Mingguang received remuneration from the Company
during the period from January 2023 to April 2023.
60 Annual Report 2023 | Corporate Governance
Resigned and Retired Directors, Supervisors and Senior Management
Other benefits,
social insurance,
Total
emoluments
Whether
Name
April 1972
Chief Investment Officer
-4 August 2023
adjustment of work
Zhan Zhong
Resigned due to personal
Vice President
Male
April 1968
July 2019-June 2023
62.65
20.27
82.92
No
reasons
arrangements
Resigned due to the
Vice President
Female
February 1967
July 2019 March 2024
125.30
38.38
163.68
No
adjustment of work
arrangements
Assistant to the President
Yang Hong
adjustment of work
No
63.56
President
October 2022-August 2023
arrangements
Resigned due to the
Wang Xiaoqing
Employee Representative
Supervisor
27 December 2019
Female
October 1965
45.23
16.25
61.48
No
adjustment of work
-21 June 2023
arrangements
Resigned due to the
Hu Zhijun
Employee Representative
Supervisor
Female
July 1971
13 July 2022-29 June 2023
48.54
664
15.02
Yes
January 1980
15.79
Chief Actuary
Vice President
ten thousands
during
the Company
parties of
from connected
ten thousands
(before tax)
annuity
fund paid by
enterprise
in RMB
the Company
the Company
Period in RMB
the Reporting
paid in RMB
Term
Date of birth
Gender
Position
Name
emolument
Remuneration
the Company
fund and
ten thousands
parties of
the Company
ten thousands
Yes
Since 16 August 2019
July 1971
Male
Non-executive Director
Wang Junhui
Yes
55.22
13.45
41.77
since 16 August 2019,
President since November 2023
President
July 1969
Male
Li Mingguang
Executive Director
Appointed as an Executive Director
Since 31 May 2022 .. Ye
Executive Director
March 1963
Male
Bai Tao
Chairman of the Board
ten thousands
(before tax)
in RMB
received
Zhuo Meijuan
Salary/
provident
Total
housing
emoluments
Whether
provident
received from
Salary/
received
from connected
Period in RMB
fund paid by
Other benefits,
social insurance,
the Reporting
enterprise
annuity
paid in RMB
ten thousands
Date of birth Term
Gender
Position
Name
emolument
Remuneration
the Company
fund and
Female
during
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Current Directors, Supervisors and Senior Management
DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
No
Whether
emoluments
housing
Total
social insurance,
Other benefits,
59
Annual Report 2023 | Corporate Governance
Chief Network Security Officer since
March 2024
2022,
Chief Network Security
Officer
No
165.97
40.67
125.30
Male
Chief Risk Officer since December
April 2018,
Ruan Qi
Chief Risk Officer
Vice President
Appointed as a Vice President since
December 2023
Chief Investment Officer since
Chief Investment Officer
received from
Non-executive Director
July 1966
July 1964
153.12
38.26
114.86
Appointed as a Vice President since
August 2023,
November 1967
Male
Zhao Guodong
52.21
July 2023,
Female February 1970
Liu Hui
No
Vice President
No
62.18
15.67
46.51
Since 21 June 2023
October 1974
Female
Employee Representative
Supervisor
Ye Yinglan
No
136.54
Appointed as a Vice President since
Board Secretary
Board Secretary since February 2023
Bai Kai
No
Female
Hou Jin
9.83
3.58
6.25
Since November 2023
July 1971
Person in Charge of Audit Female
Hu Zhijun
No
126.94
30.93
96.01
Since July 2018
October 1969
Male
Xu Chongmiao Compliance Officer
No
153.58
38.72
Since August 2023
June 1974
Male
Vice President
34.35
102.19
114.86
May 1964
Since 13 July 2022
March 1964
Male
Independent Director
Huang Yiping
Yes
42.00
42.00
Since 14 October 2021
January 1969
Male
Independent Director
Zhai Haitao
NNO
42.00
0
42.00
Since 29 June 2021
April 1953
Male
Independent Director
Lam Chi Kuen
Since 14 October 2021
Yes
Since 21 June 2023
42.00
42.00
No
Chen Jie
Employee Representative
Supervisor
Lai Jun
Representative Supervisor
Male
No
Yes
September 1974 Since 14 October 2021
Male
Niu Kailong
No
164.50
37.71
126.79
Non-employee
Male
September 1965 Since 4 November 2022
April 1970
Female
42.00
42.00
0
Cao Weiqing
Chairman of the Board of
Supervisors
Independent Director
No
Since 13 July 2022
The Company has set up a corporate governance structure
with well-defined duties and responsibilities strictly in
accordance with relevant laws, regulations and regulatory
requirements, including the Company Law and the Securities
Law. The corporate governance structure of the Company
generally meets the regulatory requirements of its listed
jurisdictions and the relevant provisions. The Company has
carried out its corporate governance procedures strictly in
accordance with relevant laws, regulations and regulatory
requirements, including the Company Law and the Securities
Law, as well as the requirements of its Articles of Association
and procedural rules. Shareholders' general meeting, Board
of Directors and Board of Supervisors of the Company have
been functioning independently and coordinately.
In accordance with the regulatory requirements of its listed
jurisdictions and the relevant provisions of its Articles of
Association, the Company has continuously improved the
decision-making mechanism of the Board. The Board is
accountable to shareholders of the Company with respect to
the assets and resources entrusted to it by the shareholders,
and performs its duties on corporate governance. All members
of the Board have taken initiatives to look into the Company's
affairs and have had a comprehensive understanding of the
Company's businesses. They have devoted sufficient time
in performing their duties as Directors with due care and in
a diligent and efficient manner. By setting up mechanisms
including regular reporting of business development
strategies and marketing tactics, the management of the
Company can periodically report the business operations,
development strategies and marketing tactics to the Board,
which provides a basis for the Board's decision-making.
With the establishment of a corporate governance system
with reasonably designed structure, well-developed
mechanism, strict rules and regulations, as well as high
efficiency in operation as its core objectives, the Company
constantly promotes the development of its corporate
governance, strictly performs its obligation of information
disclosure, enhances its transparency and actively serves
the interest of public investors so as to enhance its image
and position in the capital market.
Annual Report 2023 | Corporate Governance
73
The Board of Supervisors of the Company has carried out
its work and performed its duties in accordance with the
Articles of Association and the "Procedural Rules for the
Board of Supervisors Meetings". Members of the Board of
Supervisors attended the shareholders' general meetings
and the Board of Supervisors meetings, participated in
the Board meetings and the meetings of the specialised
Board committees based on their work allocation, and
conducted investigations on local branches to have an in-
depth understanding of the implementation of the decisions
made by the Board, so as to diligently perform their role of
supervision.
The Company has made information disclosure in a timely,
open and transparent manner pursuant to the requirements
of the listing rules of its listed jurisdictions. The Company
has continuously improved its management of investor
relations and enriched its communication with investors in
both form and substance, thus ensuring that all shareholders
enjoy equal rights and have access to information about the
Company in an open, fair, true and accurate manner.
The Company has intensified its management of subsidiaries
on an ongoing basis to optimise the management
mechanism. In 2023, the Company revised the "Measures
for the Administration of Non-wholly Owned Subsidiaries
and Major Associates" to strengthen its management of
performance of duties by the Directors, Supervisors and
senior management designated to non-wholly owned
subsidiaries and major associates, as well as its support to
their duty performance, thereby increasing the Company's
management and control of non-wholly owned subsidiaries
in corporate governance.
The Company has applied the principles of the Corporate
Governance Code (the "CG Code") as set out in Appendix
C1 to the Listing Rules of the HKSE. Save for code provision
F.2.2 of Part 2 of the CG Code, the Company has complied
with all code provisions of the CG Code during the Reporting
Period. Mr. Bai Tao, the Chairman of the Board of Directors
of the Company, was unable to attend the 2022 Annual
General Meeting of the Company as required by code
provision F.2.2 due to other business arrangements. Mr.
Zhao Peng, the then Executive Director of the Company,
was elected by the Board to preside over the meeting, and
communicated with shareholders in an effective manner.
The shareholders' general meeting, as an organ of the
highest authority of the Company, exercises its duties and
functions in accordance with relevant laws. Its duties and
powers include the election, appointment and removal of
Directors and Non-employee Representative Supervisors,
review and approval of the reports of the Board of Directors
and the Board of Supervisors, review and approval of the
annual budget and final accounts of the Company, and
any other matters required by the Articles of Association
to be approved by way of resolution of the shareholders'
general meeting. The Company ensures that all shareholders
are equally treated so as to ensure that the rights of all
shareholders are protected, including the right of access to
information in relation to, and the right to vote in respect of,
major matters of the Company. The Company has the ability
to operate and manage its business autonomously, and is
separate and independent from its controlling shareholder
in its business operations, personnel, assets and financial
matters.
(Corporate Governance Structure Chart)
SHAREHOLDERS' GENERAL MEETING
During the Reporting Period, the Company was awarded
the "Best Practice Case of the Board of Directors' Office
of Listed Companies for the Year 2023" by the China
Association for Public Companies. It was also awarded,
among others, Grade A in the assessment by the SSE of
information disclosure of listed companies for the year 2022-
2023, as well as the "Top 50 in the Market Capitalisation
List (Full List) of Chinese Listed Companies" and the "Top
5 of the Insurance Industry" by Wind.
The Company has actively promoted the development of
corporate governance, continuously improved its corporate
governance structure and enhanced its scientific decision-
making ability. In order to improve the decision-making
efficiency of the specialised Board committees, the Board
has established five specialised Board committees, i.e.
the Audit Committee, the Nomination and Remuneration
Committee, the Risk Management and Consumer Rights
Protection Committee, the Strategy and Assets and Liabilities
Management Committee, and the Connected Transactions
Control Committee. These specialised Board committees
conduct studies on specific matters, hold meetings both
on a regular and an ad-hoc basis, communicate with the
management, provide advice and recommendations for the
Board's consideration, and deal with matters entrusted or
authorised by the Board, for the purposes of improving the
Board's efficiency and intensifying the Board's functions.
Department
Audit
Committee
Connected
Transactions
Control
Committee
As at 31 December 2023, the Company had approximately
18,300 branches (including branches at the provincial or
prefecture level, sub-branches, sales offices and sales &
services offices).
Branches
74 Annual Report 2023 | Corporate Governance
72
Annual Report 2023 | Corporate Governance
REPORT OF CORPORATE GOVERNANCE
OVERVIEW OF CORPORATE GOVERNANCE
Board Secretary
Company Secretary
Board of Directors' Office/
Investor Relations
The Company implements good corporate governance policies and strongly believes that through fostering sound corporate
governance, further enhancing its transparency and establishing an effective system of accountability, the Company can
operate in a more systematic manner, make decisions in a more scientific way, and boost the confidence of investors.
Shareholders'
General Meeting
Board of
Directors
Risk Management
and
Consumer Rights
Protection
Committee
Board of
Supervisors
Strategy and
Assets and
Liabilities
Management
Committee
Nomination
and
Remuneration
Committee
Shareholders' general meetings convened during the Reporting Period are as follows:
person
Date of the meeting
Name of Director Type of Director
meetings
attended in
required to
attend for
the year
Executive Director
2
1
Executive Director
2
1
Non-executive Director
2
In 2023, the Company effectively proceeded with the "Party
Building Foundation Program" and the "Talent Development
Program". Under the classification system and plan for talent
training, the Company regularly launched training courses for
leading cadres at the headquarters, provincial, municipal and
county levels before and during their employment, continued
to offer enhanced training programs to young cadres and
new employees, and further nourished professional talents
from various business lines and sectors. The Company
also consistently solidified the foundation for training
development, made tremendous efforts to develop a team of
full-time and part-time lecturers and a training management
team, optimised training methods and approaches through
innovation, and strived to enhance training efficiency, which
ensured the continuous supply of talents for the high-quality
development of the Company.
2
general
Session of the meeting
Number of
meetings
2022 Annual General Meeting
28 June 2023
First Extraordinary General
Meeting 2023
15 December 2023
Index for websites on which
resolutions were published
www.sse.com.cn
www.hkexnews.hk
www.e-chinalife.com
www.sse.com.cn
www.hkexnews.hk
www.e-chinalife.com
Date of publication of
resolutions
28 June 2023
15 December 2023
Eight proposals, including the "Proposal in relation to the
Report of the Board of Directors of the Company for the
Year 2022", the "Proposal in relation to the Report of the
Board of Supervisors of the Company for the Year 2022"
and the "Proposal in relation to the Financial Report of the
Company for the Year 2022", were considered and approved
by a combination of on-site and online voting, and the "Duty
Report of the Independent Directors of the Company for
the Year 2022" and the "Report on the Overall Status of
Connected Transactions of the Company for the Year 2022"
were debriefed and reviewed at the 2022 Annual General
Meeting held in Beijing on 28 June 2023.
Five proposals, including the "Proposal in relation to the
Election of Ms. Liu Hui as an Executive Director of the
Seventh Session of the Board of Directors of the Company",
the "Proposal in relation to Project Huizhi" and the "Proposal
in relation to the Issue of Capital Supplementary Bonds by the
Company", were considered and approved by a combination
of on-site and online voting at the First Extraordinary General
Meeting 2023 held in Beijing on 15 December 2023.
Attendance records of the current Directors at the
shareholders' general meetings convened during the
Reporting Period are as follows:
Number of
shareholders'
Training Plans
70 Annual Report 2023 | Corporate Governance
Remuneration Policy for Employees
Niu Kailong
China Life Insurance (Group) Company
Position
Chairman
Vice President
Chief Investment Officer
Senior Director of the Strategic
Planning Department (General
Office for Deepening Reforms)/
Office of the Board of Directors/
China Life Institute of Finance
General Manager and President of
the Strategic Planning Department
(General Office for Deepening
Reforms)/Office of the Board of
Directors/China Life Institute of
Finance
Term
Since March 2022
Since November 2023
Since August 2016
Since September 2023
Since December 2022
Remuneration of Directors, Supervisors and Senior
Management
Decision-making procedures for the remuneration of Directors,
Supervisors and senior management: The remuneration of
Directors and Supervisors are approved by shareholders
at general meetings, whereas the remuneration of senior
management is approved by the Board of Directors.
Abstention from voting by Directors during the discussion
of their remuneration at Board meetings: The "Proposal in
relation to the Remuneration of Directors and Supervisors
of the Company for the Year 2022" was considered and
approved at the thirty-third meeting of the seventh session
of the Board of Directors of the Company. The Board of
Directors agreed to submit the proposal to the general
meeting for approval, and all Directors abstained from voting
during the discussion of their remuneration.
Specific recommendations given by the Nomination and
Remuneration Committee with respect to the remuneration
of Directors, Supervisors and senior management: The
"Proposal in relation to the Remuneration of Directors and
Supervisors of the Company" and the "Proposal in relation to
the Remuneration of Senior Management of the Company"
were considered and approved at the ninth meeting of the
Nomination and Remuneration Committee of the seventh
session of the Board of Directors of the Company. Having
been fully reviewed by the Directors present at the meeting,
the Nomination and Remuneration Committee unanimously
approved the proposals and agreed to submit the same to
the Board of Directors for review.
Basis for determination of the remuneration of Directors,
Supervisors and senior management: The remuneration
of Directors, Supervisors and senior management are
determined based on the operating results of the Company
and the performance appraisal conducted by the Board of
Directors, and in accordance with the measures for the
administration of remunerations of the Company.
China Life Insurance (Group) Company
Actual payment of remuneration to Directors, Supervisors
and senior management: During the Reporting Period, the
remuneration actually received by all Directors, Supervisors
and senior management (including the resigned and retired
Directors, Supervisors and senior management) from the
Company totalled RMB17.9166 million. In accordance
with the relevant requirements of the measures for the
administration of remunerations of the Company, the
standard for performance-based bonus (as part of the
remuneration) payable to Directors, Supervisors and senior
management of the Company in 2023 has not yet been
determined.
Zhuo Meijuan
Li Mingguang
Wang Junhui
Non-executive Director
Ms. Hu Zhijun, born in 1971, Chinese
Ms. Hu became the Person in Charge of Audit of the Company in November 2023. She
has been the General Manager of the Audit Department of the Company since October
2022. She was a Supervisor of the Company from July 2022 to June 2023. Ms. Hu
joined the Company in 2006 and successively served as an Assistant to the General
Manager and the Deputy General Manager of Tianjin Branch, the Deputy General Manager
and the Secretary of the Discipline Inspection Committee of Beijing Branch, and the
General Manager of the Asset Management Department of the Company from 2009
to October 2022. Prior to joining the Company, she worked at China Packing Import &
Export Tianjin Company and other companies. Ms. Hu graduated from Tianjin Institute
of Finance and Economics in 1993, majoring in accounting with a bachelor's degree in
economics, and from Nankai University in 2006, majoring in corporate management with
a master's degree in management. Ms. Hu is admitted as a certified public accountant in
the PRC. She is a principal senior accountant and the national leading accounting talent
recognised by the Ministry of Finance of the PRC in the first session of its assessment
and selection, and was listed in the "Financial Talent Pool" of the Ministry of Finance
of the PRC.
Ms. Hou Jin, born in 1980, Chinese
Ms. Hou became the Chief Actuary of the Company in November 2023. She has been
the General Manager of the Actuarial Department of the Company since September
2023 and concurrently served as the General Manager of the Product Department of
the Company since November 2023. Ms. Hou successively served as a senior actuary
(Grade III), an Assistant to the General Manager and the Deputy General Manager of
the Actuarial Department and the temporary Chief Actuary of the Company from 2017
to 2023. Ms. Hou successively graduated from Southwestern University of Finance and
Economics and Nankai University, with a bachelor's degree and a master's degree in
economics, and is a full member of the China Association of Actuaries and a member
of the Society of Actuaries.
Ms. Yuan Ying, born in 1978, Chinese
Ms. Yuan became the temporary Person in Charge of Finance of the Company in March
2024. She has been the Deputy General Manager (responsible for daily operations) of the
Finance Department of the Company since December 2023. She successively served as
an Assistant to the General Manager of the Accounting Department, and an Assistant
to the General Manager and the Deputy General Manager of the Finance Department
of the Company from 2018 to 2023. Ms. Yuan graduated from Peking University with
a master's degree in management.
Annual Report 2023 | Corporate Governance 69
COMPANY SECRETARY
Mr. Heng Victor Ja Wei, born in 1977, British
Mr. Heng is the managing partner of Morison Heng. He holds a Master of Science
degree of the Imperial College of Science, Technology and Medicine, the University of
London, and is a member of The Hong Kong Institute of Certified Public Accountants
and a fellow of The Association of Chartered Certified Accountants. Mr. Heng has over
20 years of experience in accounting and auditing for private and public companies and
financial consultancy. He serves as an Independent Non-executive Director of each of
Lee & Man Chemical Company Limited, Matrix Holdings Limited, Best Food Holding
Company Limited, Trade Go Fintech Limited and Veson Holdings Limited, all of which are
listed on the main board of the HKSE, as well as an Independent Non-executive Director
of Bacui Technologies International Ltd., which is listed on the Singapore Exchange.
Positions Held by Current Directors, Supervisors and Senior Management in Shareholders of the
Company
Name
Name of shareholders
Bai Tao
China Life Insurance (Group) Company
China Life Insurance (Group) Company
China Life Insurance (Group) Company
Annual Report 2023 | Corporate Governance
71
EMPLOYEES AND BRANCHES
Employees
Class of education level
Master and above
Bachelor
College diploma
Secondary school
Others
Total
5,783
3,585
100,000
Number of
employees
6,758
69,799
20,582
953
1,908
100,000
Employee Diversity
The Company attached great importance to the enhancement
of its development and competitiveness arising from the
diversity of its employees. As at 31 December 2023, there
were five female members in the senior management of the
Company, accounting for 50% of the senior management;
the percentage of female employees of the Company and
its major subsidiaries was 57%.
Total
Others
Other expertise and technicians
and customer services
Number of employees of the Company
Number of employees of the Company's
major subsidiaries
Employees in total
Retired employees of the Company and
its major subsidiaries for which extra
Icosts have to be incurred
98,065
1,935
100,000
The Company has established a remuneration and incentive
system with reference to employee's positions, the
Company's performance and market conditions.
60
Class of professional composition
Number of
employees
Management and administration
Sales and sales management
Finance and auditing
Insurance verification, claim processing
19,341
44,187
4,545
22,559
As at the end of the Reporting Period, the composition of
the employees of the Company and its major subsidiaries
is as follows:
2
Chen Jie
Independent Director
Twenty-fourth meeting of
the seventh session of the Board
27 April 2023
Twenty-third meeting of
the seventh session of the Board
29 March 2023
Twenty-second meeting of
the seventh session of the Board
27 February 2023
Twenty-first meeting of
25 May 2023
the seventh session of the Board
Twentieth meeting of
Date of the meeting
Session of the meeting
Board meetings convened during the Reporting Period are as follows:
77
Annual Report 2023 | Corporate Governance
The practice of obtaining Board consent through the
circulation of written resolutions does not constitute a
regular Board meeting. An ad-hoc Board meeting may be
convened in urgent situations if requisitioned by any of
the following: shareholders representing over one-tenth of
voting shares, Directors constituting more than one-third
of the total number of Directors, the Board of Supervisors,
more than two Independent Directors, the Chairman of the
Board or the President of the Company. If the resolution
to be considered at such ad-hoc Board meetings has been
circulated to all the Directors and more than half of the
Directors having voting rights approve such resolution by
signing the resolution in writing, the ad-hoc Board meeting
need not be physically convened and such resolution in
writing shall become an effective resolution.
the above requirements. By fully reviewing all the relevant
proposals, the Board has confirmed that the information
contained in its periodic reports and financial reports is true,
accurate and complete and contains no false representations,
misleading statements or material omissions, and no event
or situation which would have material adverse impacts on
the Company's ongoing operation has been found.
Meetings of the Board are held both on a regular and an ad-
hoc basis. Regular meetings are convened at least four times
a year for the examination and approval of proposals, such
as annual report, interim report, quarterly reports, related
financial reports, and major business operations of the year.
Meetings are convened by the Chairman of the Board and a
notice is given to all Directors 14 days before such meetings.
Agendas and related documents are sent to the Directors
at least 3 days prior to such meetings. In 2023, all notices,
agendas and related documents in respect of such regular
Board meetings were sent to Directors in compliance with
Hong Kong, China
3 persons
Female
2 persons
18 January 2023
4 persons
the seventh session of the Board
28 June 2023
2
Annual Report 2023 | Corporate Governance
78
Eight proposals, including the "Proposal in relation to the
Financial Report of the Company for the First Half of 2023",
were considered and approved, and four reports, including
the "Report on the Company's Business Operations for the
First Half of 2023 and Work Arrangement for the Second
Half of 2023", were debriefed.
Eight proposals, including the "Proposal in relation to the
Nomination of Mr. Li Mingguang as the President of the
Company", were considered and approved.
One proposal, namely the "Proposal in relation to the
Solvency Report of the Company for the Second Quarter
of 2023", was considered and approved.
Five proposals, including the "Proposal in relation to the
'Capital Planning of the Company for the Years from 2023
to 2025", were considered and approved.
Two proposals, including the "Proposal in relation to the
'Stress Test Report on the Company's Solvency for the
Year 2022, were considered and approved.
Nine proposals, including the "Proposal in relation to the
First Quarter Report of the Company for 2023" and the
"Proposal in relation to the 'Report of Corporate Governance
of the Company for the Year 2022'", were considered and
approved, and four reports, including the "Report on the
Company's Business Operations for the First Quarter of
2023 and Work Arrangement for the Next Stage", were
debriefed.
33 proposals, including the "Proposal in relation to the
Financial Report of the Company for the Year 2022", were
considered and approved, and eight reports, including the
"Report on the Business Operations and Management of
the Company for 2022", were debriefed.
Twenty-fifth meeting of
One proposal, namely the "Proposal in relation to the
'Product Tracing Report of the Company for 2022"'", was
considered and approved.
Resolutions adopted at the meeting
the seventh session of the Board
23 August 2023
Twenty-eighth meeting of
the seventh session of the Board
4 August 2023
Twenty-seventh meeting of
the seventh session of the Board
25 July 2023
the seventh session of the Board
Two proposals, including the "Proposal in relation to the
Nomination of Ms. Liu Hui as a Vice President of the
Company", were considered and approved.
6 persons
Twenty-sixth meeting of
Directors by gender
Number of Directors
meetings
Name of Director Type of Director
meetings
general
Number of
Number of
shareholders'
Attendance record of the resigned Director at the
shareholders' general meetings convened during the
Reporting Period is as follows:
Zhai Haitao
Li Mingguang
Wang Junhui
Zhuo Meijuan
Lam Chi Kuen
Bai Tao
attended in
2
2
2
Independent Director
Huang Yiping
2
2
Independent Director
2
Male
2
Independent Director
required to
2
attend for
5 persons
Number of Directors
person
Mainland China
Directors by location
2 persons
2 persons
Number of Directors
Non-executive Independent
Director
Director
Directors by type
76 Annual Report 2023 | Corporate Governance
The Company has developed a well-established procedure
for nomination and election of Directors, under which the
Board shall, when nominating Directors, consider their
professional ability and conduct, and also take into account
the requirement for diversity of the Board members.
Complementarity among the Board members in aspects
including but not limited to gender, age, culture, educational
background, professional experience, skills and expertise will
be considered in the selection of candidates for Directors. The
Company will also take into account factors based on its own
business model and specific needs from time to time. The
ultimate decision will be based on merit and contribution that
the selected candidates will bring to the Board. The Board
and the Nomination and Remuneration Committee will from
time to time discuss the measurable objective for achieving
diversity of the Board. In relation to gender diversity, the
Company sets its phased objective for 2024 as having three
female Directors to serve on the Board. The above objective
of gender diversity is expected to be achieved in the near
future. The Company will also continue to take active actions
in identifying female Directors and management members.
The Company believes that the gender diversity in the Board
would bring more inspiration to the Board and enhance the
business development of the Company. Currently, the Board
of the Company comprises eight members with extensive
experience in various fields, such as financial management,
macro economy, financial accounting, law and management.
The diversified composition of the Board is as follows:
Executive
Director
In 2023, Independent Directors of the Board of the Company
possessed extensive experience in various fields, such as
macro economy, financial management, legal compliance,
accounting and auditing. The Company also complies with
the requirement of the Listing Rules of the HKSE that at least
one of its Independent Directors has appropriate professional
qualifications or accounting qualifications or related financial
management expertise. As required under the Listing Rules
of the SSE and the HKSE, the Company has obtained a
written confirmation from each of its Independent Directors in
respect of their independence. The Company is of the opinion
that all of the Independent Directors are independent of the
Company and strictly perform their duties as Independent
Directors. Pursuant to the Articles of Association, Directors
shall be elected at the shareholders' general meeting for a
term of three years and may be re-elected on expiry of the
three-year term. However, Independent Directors may not
serve for more than six years.
Currently, the Board of the Company comprises eight
members, including two Executive Directors, two Non-
executive Directors and four Independent Directors. The
number of Independent Directors complies with the
minimum requirement of three Independent Directors and
the requirement that at least one-third of the Board be
represented by Independent Directors under the regulatory
rules of the industry and its listed jurisdictions. All members
of the Board have devoted sufficient time in dealing with
the affairs of the Board and attended the relevant training
courses organised by external regulatory authorities and the
Company according to regulatory requirements. They have
referred to regulatory documents on a regular basis so as
to keep themselves informed of the regulatory development
in a timely manner. The Company has applied director's
liability insurances for its Directors, which provide protection
to Directors for liabilities that might arise in the course of
their performance of duties according to law and facilitate
Directors to fully perform their duties. So far as the Company
is aware, no financial, business, family or other material
relationship exists among members of the Board of Directors,
the Board of Supervisors or the senior management.
The Board is the standing decision-making body of the
Company and its main duties include: performing the
function of corporate governance of the Company, convening
shareholders' general meetings, implementing resolutions
passed at such meetings, improving the Company's corporate
governance policies, approving the Company's development
strategies and operation plans, formulating and supervising
the Company's financial policies, annual budgets and financial
reports, providing an objective evaluation on the Company's
operating results in its financial reports and other disclosure
documents, dealing with senior management personnel
matters, arranging for Directors and senior management
to attend various training courses, attaching importance to
the enhancement of their professional quality, reviewing
the compliance policies of the Company, assessing the
internal control systems of the Company and reviewing
the compliance by the Company with the CG Code. The
day-to-day management and operation of the Company
are delegated to the management. The responsibilities of
Non-executive Directors and Independent Directors include,
without limitation, regularly attending meetings of the Board
and the specialised Board committees of which they are
members, providing opinions at meetings of the Board and
the specialised Board committees, resolving any potential
conflict of interest, serving on the Audit Committee, the
Nomination and Remuneration Committee and other
specialised Board committees, and inspecting, supervising
and reporting on the performance of the Company. The
Board is accountable to the shareholders of the Company
and reports to them.
BOARD
75
Annual Report 2023 | Corporate Governance
1
1
Executive Director
the year
Zhao Peng
Annual Report 2023 | Corporate Governance 79
Pursuant to the "Measures for the Evaluation of the
Performance of Duties by Directors and Supervisors" of
the Company and other requirements, and after taking into
account the actual situation of its corporate governance,
the Company conducted an evaluation of the performance
of duties by Directors. Based on the self-assessment of
Directors and the evaluation of the Board of Supervisors, all
members of the Board of the Company were evaluated as
competent in their performance of duties in 2023.
trends, macro economy and the development trend of the
insurance industry by attending special training courses on
certain topics as organised by the securities exchanges
of the Company's listed jurisdictions, listed companies
associations and the Company itself. All members of the
Board of the Company attended the training programs on
anti-money laundering. Ms. Zhuo Meijuan, a Non-executive
Director, attended a training course of the SSE for the first-
time directors, supervisors and senior management of listed
companies in 2023 (Session II). Mr. Wang Junhui and Ms.
Zhuo Meijuan, both being Non-executive Directors, attended
a special training course on the rules of independent directors
of listed companies as organised by the Listed Companies
Association of Beijing for listed companies within Beijing.
Mr. Lam Chi Kuen, Mr. Zhai Haitao and Ms. Chen Jie, all
being Independent Directors, attended a follow-up training
course for independent directors of listed companies in 2023
(Session VI) as organised by the SSE.
16 proposals, including the "Proposal in relation to the
Nomination of Ms. Liu Hui as the Chief Investment Officer
of the Company", were considered and approved, and one
report, namely the "Audit Report on the Solvency Risk
Management System of the Company for the Year 2023",
was debriefed.
Two proposals, including the "Proposal in relation to Project
Huizhi", were considered and approved.
One proposal, namely the "Proposal in relation to the
Adjustment to the Composition of Specialised Committees
of the Seventh Session of the Board of Directors of the
Company", was considered and approved.
One proposal, namely the "Proposal in relation to Matters
on the Post-investment of Project Zhongcheng", was
considered and approved.
Currently, the seventh session of the Board of the Company
comprises the following members: Mr. Bai Tao, the
Chairman and an Executive Director, Mr. Li Mingguang,
an Executive Director, Mr. Wang Junhui and Ms. Zhuo
Meijuan, both being Non-executive Directors, and Mr. Lam
Chi Kuen, Mr. Zhai Haitao, Mr. Huang Yiping and Ms. Chen
Jie, all being Independent Directors. Due to the adjustment
of work arrangements, Mr. Zhao Peng resigned from his
position of Executive Director and the relevant positions
in the specialised Board committees of the Company in
August 2023.
In 2023, all members of the Board further developed and
refreshed their information and knowledge in aspects such
as laws and regulations of securities markets, regulatory
Resolutions adopted at the meeting
Meetings and Attendance
Six proposals, including the "Proposal in relation to the
Third Quarter Report of the Company for 2023", were
considered and approved, and two reports, including the
"Report on the Company's Business Operations for the
First Three Quarters of 2023 and Work Arrangement for
the Fourth Quarter of 2023", were debriefed.
During the Reporting Period, a total of 14 meetings (including five regular Board meetings and nine ad-hoc Board meetings)
were held by the Board of the Company, of which ten meetings were convened by way of on-site meeting, four meetings
by way of participation through communication tools. Attendance records of the current individual Directors are as follows:
tools
Name of Director
Type of Director
Number of
meetings
required to
attend
Number of
meetings
attended in
person
meetings
participated
through
communication
Number of
meetings
attended by
proxies
Bai Tao
Li Mingguang
Wang Junhui
If a Director is materially interested in a matter to be
considered by the Board, the Director having such conflict
of interest shall have no voting right on the matter to be
considered and shall not be counted in the quorum for
the Board meeting. All Directors shall have access to the
advice and services of the Board Secretary and the Company
Secretary. Detailed minutes of Board meetings regarding
matters considered by the Board and decisions reached,
including any concerns raised by Directors or dissenting
views expressed, are kept by the Board Secretary. Minutes
of Board meetings are available upon reasonable notice for
inspection and comment upon by Directors.
Zhuo Meijuan
Lam Chi Kuen
Number of
15 December 2023
Attendance of Meetings by Independent Directors
Thirty-third meeting of
Executive Director
In 2023, the Independent Directors of the Company took
part in two investigation and research activities in relation
to China Life Science Park and the customer experience
center of Beijing Branch in Zhichun Road, respectively, and
conducted physical inspection, investigation and research
on the two segments of technology and operations of
the Company, for the purpose of further understanding
of the "Technology-driven China Life" and the business
operations and management of the Company. In addition, the
Independent Directors listened to two special reports on the
"development trends of the life insurance industry and the
strategy of the Company" and the "investment management
of the Company", enhancing their understanding of insurance
business and the development trends of the industry.
Investigation and Research by Independent Directors and
the Trainings for Them
In 2023, Independent Directors of the Company held a
separate special meeting with the Chairman of the Board,
during which the Independent Directors put forward their own
views and opinions on various aspects such as the macro-
environment, business development, and risk management,
etc., and gave advice and recommendations on matters
including the high-quality development, innovation in business
model, and investment management of the Company. The
Company attached great importance to opinions and advice
from Independent Directors, timely submitted the concerns,
opinions and advice of the Independent Directors to the
management of the Company and its relevant functional
departments, adopted their opinions and advice after careful
deliberation and discussion by various departments, and
promptly gave feedbacks to Independent Directors in relation
to the adoption and implementation thereof.
Communications between Independent Directors and All
Parties of the Company
All Independent Directors diligently fulfilled their
responsibilities by attending meetings of the Board and the
specialised Board committees convened in 2023, actively
participating in discussions and providing guiding opinions
on the proposals considered and discussed at the meetings,
and seriously examining and approving such matters as
connected transactions, nomination of Directors and
senior management and their remunerations, annual profit
distribution plan, internal control assessment, changes in
accounting estimates and appointment of external auditors,
thus expressing their independent opinions in an objective
and fair manner. The Independent Directors were engaged
in the work of specialised Board committees, providing
professional advice in respect of major decisions of the
Company. They listened to the reports from relevant
personnel, kept abreast of the daily operations and any
possible operational risks of the Company in a timely
manner, and expressed their opinions and exercised their
functions and powers at Board meetings, thus playing a
vital role in the decision-making of the Board. In 2023, the
Independent Directors of the Company gave their consent
to the matters resolved by the Board and the specialised
Board committees of the Company.
Performance of Duties by Independent Directors
Currently, a total of four Independent Directors serve on
the Board of the Company, accounting for over one-third
of the total number of members of the Board and being
in line with the the requirements of relevant laws and
regulations, as well as the Articles of Association. These
four Independent Directors possess extensive experience
in various fields, such as macro economy, financial
management, legal compliance, accounting and auditing,
and serve as the Chairmen/Chairpersons of the specialised
Board committees. Other than receiving their remuneration
as Independent Directors of the Company, they do not
I have any business or financial interest in the Company and
its subsidiaries, nor hold any management positions in the
Company. The Company has received annual confirmation
letters for self-inspection from each of the Independent
Directors to confirm their independence and, after the
assessment of the Board, considered them to satisfy the
criteria for independent directors and the requirements of
independence under the regulatory rules of the Company's
listed jurisdictions.
80 Annual Report 2023 | Corporate Governance
Note: Directors who were unable to attend any meeting of the Board authorised other Directors to attend and vote at the meeting on their behalf.
0
1
3
3
the seventh session of the Board
7
Date of the meeting
Twenty-ninth meeting of
21 September 2023
the seventh session of the Board
Thirtieth meeting of
17 October 2023
the seventh session of the Board
Thirty-first meeting of
the seventh session of the Board
26 October 2023
Thirty-second meeting of
22 November 2023
the seventh session of the Board
Session of the meeting
14
Name of Director
4
14
10
4
0
Number of
meetings
absent
0
0
0
0
oooo O o O 0
0
0
0
Independent Director
313 o o o
Number of
The Risk Management and Consumer Rights Protection
Committee is mainly responsible for formulating the
Company's system of risk control benchmarks, establishing
well-developed risk management and internal control
systems and the system for the management of consumer
rights protection, examining and reviewing the Company's
risk preference, risk tolerance and the work reports from
the senior management and the consumer rights protection
department, formulating the Company's risk management
policy and major policy on consumer rights protection,
reviewing the assessment reports in relation to the
Company's risk management and internal control, studying
major investigation findings on risk management and internal
control matters and the management's response to these
findings as delegated by the Board or on its own initiative,
dealing with major disagreement, major risk emergency
events or crisis events in risk management, and supervising
and directing the senior management and the relevant
departments to resolve any issues identified during the
rectification process in a timely manner.
Type of Director
Number of
meetings
required to
attend
Number of
meetings
attended in
person
meetings
participated
through
communication
Number of
meetings
attended by
Number of
meetings
absent
proxies
tools
Zhao Peng
Executive Director
Attendance record of the resigned Director of the Company at the Board meetings convened during the Reporting Period
is as follows:
7
Chen Jie
4
Executive Director
14
Non-executive Director
14
16
9
4
7
4
Non-executive Director
9
7
2
1
Independent Director
10
4
Zhai Haitao
Independent Director
14
10
4
0
0
Huang Yiping
Independent Director
14
9
14
The Company established its Risk Management Committee
on 30 June 2003. In December 2019, the Board resolved
to rename the Risk Management Committee as the Risk
Management and Consumer Rights Protection Committee,
the additional function of management of consumer rights
protection was included in the functions of the original Risk
Management Committee, and corresponding changes and
amendments were made in such areas as the functions
and responsibilities of the committee and the procedural
rules of the committee meetings. Currently, the Risk
Management and Consumer Rights Protection Committee
of the seventh session of the Board comprises Mr. Huang
Yiping, an Independent Director, Mr. Wang Junhui and Ms.
Zhuo Meijuan, both being Non-executive Directors, and Ms.
Chen Jie, an Independent Director, with Mr. Huang Yiping.
acting as the Chairman.
required to
attend
Carrying out the evaluation of the performance of duties
by Directors, Supervisors and senior management of the
Company and their performance appraisal. The Nomination and
Remuneration Committee of the Board reviewed proposals
on the results of evaluating the performance of duties by
Directors for the year 2022, the results of performance
appraisal of senior management for the year 2022 and the
performance target contract of senior management for the
year 2023, the remunerations of Directors, Supervisors and
senior management of the Company for the year 2022,
and made recommendations to the Board in respect of
matters such as the determination of performance target,
performance appraisal procedures and results.
Meetings and Attendance
All members of the Audit Committee have extensive
experience in financial matters. The principal duties of the
Audit Committee are to review and supervise the preparation
of the Company's financial reports, assess the effectiveness
of the Company's internal control system, supervise the
Company's internal audit system and its implementation,
and recommend the engagement or replacement of
external auditors and other tasks in relation to internal and
external audits. The Audit Committee is also responsible
for communications between the internal and external
auditors and the establishment of the internal whistleblowing
mechanism of the Company.
The Company established its Audit Committee on 30
June 2003. In 2023, the Audit Committee comprised only
Independent Directors. Currently, the Audit Committee of
the seventh session of the Board of the Company comprises
Mr. Lam Chi Kuen, Mr. Zhai Haitao and Ms. Chen Jie, all
being Independent Directors, with Mr. Lam Chi Kuen acting
as the Chairman.
AUDIT COMMITTEE
82 Annual Report 2023 | Corporate Governance
The composition of the Board of Supervisors and the
profile of each Supervisor are set forth in the section
headed "Directors, Supervisors, Senior Management and
Employees" of this report, and the details of the duty
performance of the Board of Supervisors are set forth in
the section headed "Report of the Board of Supervisors".
BOARD OF SUPERVISORS
As at the date of this report, Mr. Bai Tao is the Chairman of
the Board of the Company. The Chairman of the Board is the
legal representative of the Company, primarily responsible
for convening and presiding over Board meetings, ensuring
the implementation of Board resolutions, attending annual
general meetings and arranging attendance by Chairmen/
Chairpersons of Board committees to answer questions
raised by shareholders, signing securities issued by the
Company and other important documents, providing
leadership for the Board to ensure that the Board works
effectively and performs its responsibilities, encouraging
all Directors to make a full and active contribution to the
Board's affairs, and promoting a culture of openness and
debate. The Chairman of the Board is accountable to and
reports to the Board. As at the date of this report, Mr. Li
Mingguang is the President of the Company. The President
is responsible for the day-to-day operations of the Company,
mainly including implementing strategies, policies, operation
plans and investment schemes approved by the Board,
formulating the Company's internal management structure
and fundamental management systems, drawing up basic
rules and regulations of the Company, submitting to the
Board any requests for appointment or removal of senior
management and exercising other rights granted to him
under the Articles of Association and by the Board. The
President is fully accountable to the Board for the operations
of the Company.
CHAIRMAN AND PRESIDENT
The Company believes that the composition of the Board
of Directors of the Company (including the number and
proportion of Independent Directors) and the above
mechanism for the performance of duties by Independent
Directors can ensure that independent views and input are
available to the Board of Directors.
In 2023, the Company provided various materials
to Independent Directors, which facilitated them to
comprehend information associated with the insurance
industry. Independent Directors have access to adequate
resources and may obtain external professional advice to
ensure the performance of their duties. All Independent
Directors obtained information relating to the operation and
management of the Company through various channels,
which therefore formed the basis of their scientific and
prudent decisions.
In 2023, the Independent Directors of the Company seriously
listened to the issues that overseas and domestic investors
were concerned about from results briefings, ensuring the
communication and exchange of opinions with small- and
medium-sized shareholders. There were no obstacles
encountered by the four Independent Directors of the
Company during their performance of duties.
Performance of Other Duties
Annual Report 2023 | Corporate Governance 81
In the meanwhile, the Independent Directors further
developed and refreshed their professional knowledge by
actively attending special training courses on certain topics
as organised by the securities exchanges of the Company's
listed jurisdictions, listed companies associations and the
Company itself. In 2023, the four Independent Directors of
the Company attended the training programs of the Company
on anti-money laundering. Mr. Lam Chi Kuen, Mr. Zhai Haitao
and Ms. Chen Jie attended a follow-up training course for
independent directors of listed companies in 2023 (Session
VI) as organised by the SSE.
debriefed.
Five proposals, including the "Proposal in relation to the Financial
Report of the Company for the First Quarter of 2023" and the "Proposal
in relation to the Appointment of Auditors of the Company for the Year
2023", were considered and approved, and two reports, including the
"Report of PricewaterhouseCoopers on the Results of Agreed-upon
Procedures for the First Quarter of 2023 and the Interim Review Plan
for 2023", were debriefed.
Two proposals, including the "Proposal in relation to the Financial
Report of the Company for the First Half of 2023", were considered and
approved, and one report, namely the "Report of PricewaterhouseCoopers
on the Interim Review for 2023", was debriefed.
One proposal, namely the "Proposal in relation to the Financial
Report of the Company for the Third Quarter of 2023", was
considered and approved, and one report, namely the "Report of
PricewaterhouseCoopers on the Agreed-upon Procedures for the Third
Quarter of 2023 and the Annual Review Plan", was debriefed.
14 December 2023
Twelfth meeting of the Audit Committee
of the seventh session of the Board
One proposal, namely the "Pre-approval of the Scope of Additional
Services of PricewaterhouseCoopers", was considered and approved.
Performance of Duties by the Audit Committee
In 2023, the Audit Committee of the Board of the
Company performed its relevant duties and functions
in strict compliance with the "Procedural Rules for the
Audit Committee Meetings". During meetings of the Audit
Committee, all members reviewed the proposals in relation
to, among others, the audit of the Company, its financial
reports, appointment of external auditors, internal control
and compliance, and actively participated in discussions at
the meetings.
Reviewing and approving financial information of the
Company and the disclosure thereof. The Audit Committee
of the Board, according to its duties, reviewed and approved
the Company's financial reports for the year 2022, the first
quarter of 2023, the first half of 2023 and the third quarter
of 2023. The Audit Committee was of the view that the
financial reports of the Company reflected the overall
situation of the Company in a true, accurate and complete
manner. By reviewing and monitoring the completeness of
financial statements, annual report and accounts, interim
report and quarterly reports of the Company, examining
significant matters such as financial statements and reports,
and focusing on changes in accounting estimates, changes
in major accounting items and compliance with accounting
standards, the Audit Committee guaranteed the accuracy,
completeness and consistency of the financial information
publicly disclosed by the Company.
84
Annual Report 2023 | Corporate Governance
During the Reporting Period, five meetings were held by the Audit Committee of the Board of the Company. Attendance
records of individual members are as follows:
Name of member
Position
Lam Chi Kuen
Ten proposals, including the "Proposal in relation to the Financial
Report of the Company for the Year 2022", the "Proposal in relation
to the Relevant Arrangement for New Accounting Standards of
the Company" and the "Proposal in relation to the Appointment
of PricewaterhouseCoopers for the Implementation of the Agreed-
upon Procedures of the Company for the First Quarter of 2023",
were considered and approved, and one report, namely the “Report
of PricewaterhouseCoopers on the Audit for the Year 2022", was
Description
Eleventh meeting of the Audit Committee
of the seventh session of the Board
25 October 2023
Tenth meeting of the Audit Committee
of the seventh session of the Board
22 August 2023
Ninth meeting of the Audit Committee
of the seventh session of the Board
26 April 2023
Eighth meeting of the Audit Committee
of the seventh session of the Board
28 March 2023
Meetings convened
The meetings convened are as follows:
83
Supervising and assessing the internal and external audits
of the Company. In 2023, the Audit Committee of the Board
reviewed the proposals of the Company in relation to, among
others, the internal audit work for 2022 and the internal audit
work for the first half of 2023, communicated any matters of
concern in a timely and effective manner, further understood
the duties of the Company's audit departments, and
supervised the compliance and effectiveness of the internal
audit function. The Audit Committee was of the view that the
internal audit function of the Company was effective during
the Reporting Period. The Audit Committee strengthened
communications with external auditors and supervised the
performance of duties by the external auditors in a diligent
and responsible way. Besides regular meetings, the Audit
Committee convened communication meetings in advance
with external auditors so as to discuss the annual audit plan
of the Company, determine the service scope of the annual
audit, listen to the report given by the auditors with respect
to the results of the audit on and review of periodic financial
reports of the Company, and gave opinions and advice on the
agreed-upon procedures proposed annually and quarterly by
the external auditors of the Company and the pre-approval of
the scope of additional services. Prior to the audit conducted
by the external auditors and the review of the annual report,
the Audit Committee communicated the relevant situations
with the external auditors and listened to the report in
connection with the arrangement of the audit. Before an
audit opinion was issued by the external auditors, the Audit
Committee commenced in-depth communications with them
so as to understand whether there were any issues arisen
during the audit and follow up with the progress of the audit.
In the selection and appointment of external auditors, the
Audit Committee performed its duty of review in compliance
with laws.
Annual Report 2023 | Corporate Governance
96
0/5
5/5
Independent Director, member of the Audit
Committee of the seventh session of the Board
0/5
5/5
0/5
5/5
Number of
meetings
attended by
proxies/Number
of meetings
required to
attend
Number of
meetings
attended in
person/Number
of meetings
required to
attend
Independent Director, Chairman of the Audit
Committee of the seventh session of the Board
Chen Jie
Zhai Haitao
Note: The number of meetings attended in person includes meetings attended on-site and by way of telephone or video conference.
RISK MANAGEMENT AND CONSUMER RIGHTS
PROTECTION COMMITTEE
Supervising and assessing the effectiveness of internal
control of the Company. The Audit Committee of the Board
provided guidance to the Company on the management of
internal control, devised the working plan for internal control
assessment, reviewed the work report on assessment
of internal control, and inspected the rectification of
problems identified in the internal control pursuant to the
"Standard Regulations on Corporate Internal Control" and
other domestic and overseas regulatory requirements.
The Audit Committee earnestly performed its duties and
responsibilities and monitored the Company to carry out its
work in compliance with laws and regulations pursuant to
the relevant requirements of the NFRA and the securities
exchanges of the Company's listed jurisdictions. As required
by its duties and responsibilities, the Audit Committee
reviewed the annual work report on and working plan for
internal control assessment, and the annual compliance
report of the Company to ensure that its work was conducted
strictly according to the relevant regulatory requirements in
a reasonable and efficient manner.
The Company established the Management Training and
Remuneration Committee on 30 June 2003. On 16 March
2006, the Board resolved to change the name of the
Management Training and Remuneration Committee to the
Nomination and Remuneration Committee, with a majority
of Independent Directors on the committee. Currently, the
Nomination and Remuneration Committee of the seventh
session of the Board comprises Ms. Chen Jie, an Independent
Director, Mr. Wang Junhui, a Non-executive Director, and
Mr. Lam Chi Kuen, an Independent Director, with Ms. Chen
Jie acting as the Chairperson.
18 January 2023
Eighth meeting of the Nomination and
Remuneration Committee of the seventh
session of the Board
28 March 2023
Ninth meeting of the Nomination and
Remuneration Committee of the seventh
session of the Board
26 April 2023
Tenth meeting of the Nomination and
Remuneration Committee of the seventh
session of the Board
4 August 2023
Eleventh meeting of the Nomination and
Remuneration Committee of the seventh
session of the Board
25 October 2023
Twelfth meeting of the Nomination and
Remuneration Committee of the seventh
session of the Board
14 December 2023
Thirteenth meeting of the Nomination and
Remuneration Committee of the seventh
session of the Board
Description
One proposal, namely the "Proposal in relation to the Nomination of
Ms. Liu Hui as a Vice President of the Company", was considered
and approved.
Six proposals, including the "Proposal in relation to the Remuneration
of Directors and Supervisors of the Company" and the "Proposal in
relation to the Remuneration of Senior Management of the Company",
were considered and approved.
One proposal, namely the "Proposal in relation to the 'Corporate
Governance Report for the Year 2022' with respect to the 'Incentive
and Restraint Mechanism'", was considered and approved.
Eight proposals, including the "Proposal in relation to the Nomination of
Mr. Li Mingguang as the President of the Company", were considered
and approved.
One proposal, namely the "Proposal in relation to the Performance
Target Contracts of Senior Management of the Company for the Year
2023", was considered and approved.
Four proposals, including the "Proposal in relation to the Nomination
of Ms. Liu Hui as the Chief Investment Officer of the Company", were
considered and approved.
Annual Report 2023 | Corporate Governance
87
Performance of Duties by the Nomination and
Remuneration Committee
In 2023, the Nomination and Remuneration Committee of
the Board of the Company performed its relevant duties and
functions in strict compliance with the "Procedural Rules for
the Nomination and Remuneration Committee Meetings".
All members of the Nomination and Remuneration
Committee performed their obligations in a responsible
manner and reviewed the proposals on the nomination of
Directors of the seventh session of the Board and senior
management of the Company, their business objectives
and performance appraisal results, the remuneration of
Directors, Supervisors and senior management, and the
report on the duty performance of the Audit Committee
and the Nomination and Remuneration Committee. During
meetings of the Nomination and Remuneration Committee
of the Board, all members actively participated in discussions
and gave guiding opinions on the proposals considered and
discussed at the meetings.
Nomination and proposed appointment of Directors and
senior management officers of the Company and the Board
diversity policy. The Company firmly believes that the Board
diversity may enhance the decision-making capability of the
Board, and considers the Board diversity as a key factor for
maintaining a sound corporate governance standard and
achieving the sustainable development of the Company. In
accordance with the "Procedural Rules for the Nomination
and Remuneration Committee Meetings" and the Board
diversity policy, the Nomination and Remuneration Committee
seriously reviewed the structure of the Board, its number
of members and composition (including taking into account
diversity factors, such as gender, age, cultural and educational
background, skills, expertise and experience), fully reviewed
the professional qualifications and industrial background of
the candidates for Directors and members of the Board
committees. It also conducted a careful assessment on the
qualifications, skills, expertise and experience of candidates
for senior management to ensure that the candidates met
the requirements set by the Company, and submitted a
review opinion to the Board and agreed to submit such
proposals to the Board for consideration.
Proposing remuneration policy of Directors, Supervisors
and senior management of the Company. The Nomination
and Remuneration Committee of the Board took into
account various factors such as business development
management, strategic investment decisions, and corporate
governance management and control, carefully examined
and determined the specific remuneration packages of all
Executive Directors and senior management, approved the
terms of service contracts between the Company and each
of the Executive Directors, Non-executive Directors and
Independent Directors and pushed forward the signing of
service contracts between the Company and all Directors,
defined the rights, obligations and remunerations of Directors,
88 Annual Report 2023 | Corporate Governance
and seriously appraised the performance of Directors in the
discharge of their duties.
Meetings convened
The meetings convened are as follows:
Annual Report 2023 | Corporate Governance
86
The Nomination and Remuneration Committee is mainly
responsible for reviewing the structure of the Board, its
number of members and composition and drawing up plans
for the appointment, succession and appraisal criteria of
Directors and senior management. The committee is also
responsible for formulating training and remuneration policies
for the senior management of the Company. The Nomination
and Remuneration Committee, as an advisor to the Board
on the nomination of Directors, shall first discuss and agree
on the list of candidates to be nominated as new Directors,
following which such candidates are recommended to
the Board. The Board shall then determine whether such
candidates' appointments should be proposed for approval
at the shareholders' general meeting. The major criteria
considered by the Nomination and Remuneration Committee
and the Board are educational background, management
and research experience in the insurance industry, and
the candidates' commitment to the Company. As to the
nomination of Independent Directors, the Nomination and
Remuneration Committee will give special consideration to
the independence of the relevant candidates.
The Nomination and Remuneration Committee determines,
with delegated responsibility by the Board, the specific
remuneration packages of all Executive Directors and
senior management. The fixed salary of the Executive
Directors and other members of senior management are
determined in accordance with market levels and their
respective positions, and the amount of their performance-
related bonuses is determined according to the results of
performance appraisals. Directors' fees and the volume of
stock appreciation rights to be granted are determined with
reference to market levels and the actual circumstances of
the Company.
Annual Report 2023 | Corporate Governance 85
Meetings and Attendance
During the Reporting Period, six meetings were held by the Nomination and Remuneration Committee of the Board of the
Company. Attendance records of individual members are as follows:
Name of member
Position
Number of
meetings
attended in
person/Number
of meetings
required to
attend
Number of
meetings
attended by
proxies/Number
of meetings
Independent Director, Chairperson of the
Chen Jie
NOMINATION AND REMUNERATION COMMITTEE
Nomination and Remuneration Committee of the
seventh session of the Board
0/6
Wang Junhui
Non-executive Director, member of the Nomination
and Remuneration Committee of the seventh
session of the Board
2/6
4/6
Lam Chi Kuen
Independent Director, member of the Nomination
and Remuneration Committee of the seventh
session of the Board
6/6
90
0/6
Notes:
1. The number of meetings attended in person includes meetings attended on-site and by way of telephone or video conference.
Directors who were unable to attend any meeting of specialised Board committees authorised other Directors to attend and vote at the meeting on their
behalf.
2.
6/6
Independent Director, member of the Audit
Committee of the seventh session of the Board