China Securities Regulatory Commission
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Contents
Annual Report 2014
39
102
104
105
Insurance Law
Company Law
SSE
HKSE
CSRC
CIRC
CLP&C
Pension Company
AMC
CLIC
The Company'
report, unless the context otherwise requires, the following expressions have the following meanings:
In this annual
Definitions and Material Risk Alert
China Life Insurance Company Limited Annual Report 2014
217
107
China Life Insurance Company Limited
China Life Insurance Company Limited and its subsidiaries
1
Notes to the Consolidated Financial Statements
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.
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.
成人达己
成己为人
點諧中國
Annual Report 2014
Stock Code: 2628
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 2014, the Company had approximately 197 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
China Life Insurance Company Limited
60 Wall Street, New York, NY 10005
Domestic Legal Adviser:
King & Wood Mallesons
International Legal Advisers:
Latham & Watkins
Debevoise & Plimpton LLP
Date of First Registration of the Company:
30 June 2003
中国人寿保险股份有限公司
services.
Definitions and Material Risk Alert
Company Profile
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Consolidated Statement of Comprehensive Income
Statement of Financial Position
Consolidated Statement of Financial Position
Independent Auditors' Report
Honors and Awards
Internal Control
Corporate Governance
Directors, Supervisors, Senior Management and Employees
Changes in Share Capital and Shareholders Information
Significant Events
Report of the Supervisory Committee
Report of the Board of Directors
Management Discussion and Analysis
Chairman's Statement
Financial Summary
Embedded Value
Initial Registered Address of the Company:
China Life Insurance (Group) Company, the controlling shareholder of
the Company
China Life Pension Company Limited, a subsidiary of the Company
The Company's H Share Disclosure Websites:
HKExnews website at www.hkexnews.hk
www.sse.com.cn
CSRC's Designated Website for the Company's Annual Report Disclosure:
Company Profile
China Life Insurance Company Limited Annual Report 2014
3
Securities Times
The Company's website at www.e-chinalife.com
Shanghai Securities News
Newspapers for the Company's A Share Disclosure:
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
China Securities Journal
The Company's Annual Reports may be Obtained at:
12/F, China Life Plaza, 16 Financial Street, Xicheng District, Beijing, P.R. China
Stock Information:
Stock Type
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
Stock Code
Stock Short Name
Stocks are Listed
Shanghai Stock Exchange
ADR
H Share
A Share
Exchanges on which the
Telephone: 86-10-63633333
China Life Asset Management Company Limited, a subsidiary of the
Company
16 Financial Street, Xicheng District, Beijing, P.R. China 100033
16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Material Risk Alert:
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
RMB
China or PRC
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".
Articles of Association
Insurance Law of the People's Republic of China
Company Law of the People's Republic of China
Shanghai Stock Exchange
The Stock Exchange of Hong Kong Limited
8
China Insurance Regulatory Commission
China Life Property and Casualty Insurance Company Limited, a
subsidiary of CLIC
Securities Law
Except for “the Company” referred to in the Consolidated Financial Statements.
2
China Life Insurance Company Limited Annual Report 2014
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
Fax: 86-10-66575112
Telephone: 86-10-63631068
Office Address: 16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Securities Representative: Lan Yuxi
Email: ir@e-chinalife.com
Fax: 86-10-66575112
Office Address: 16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Telephone: 86-10-63631244
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
Current Office Address:
16 Chaowai Avenue, Chaoyang District, Beijing, P.R. China 100020
Date of the Latest Change of Registration of the Company:
19 June 2014
Latest Change of the Registered Address of the Company:
29.0%
7.82
6.78
7.38
Net cash inflow from operating activities per share
2.77
2.42
7.80
14.6%
4.74
6.32
Major financial ratio
Weighted average ROE (%)
12.83
11.22
increase of 1.61
4.68
10.05
Equity holders' equity per share
1.19
2,246,567
1,972,941
13.9%
2,100,870
1,959,236
1,848,681
1,750,356
284,121
220,331
1,898,916 1,583,907 1,410,579
13.6% 1,790,838 1,494,969 1,336,245
11.9% 1,675,815 1,390,519 1,200,104
29.0% 221,085
191,530 208,710
Per share (RMB)
Earnings per share (basic and diluted)
1.14
0.88
30.1%
0.39
0.65
5.38
Total equity holders' equity
9.16
percentage points
Gross investment yield = (Investment income + Net realised gains/(losses) and impairment 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)
China Life Insurance Company Limited Annual Report 2014
Chairman's Statement
Yang Mingsheng, Chairman
greater
In 2014, the world economic recovery was difficult and the downward pressure on China's economy increased
continuously. There was an array of interrelated problems and challenges. Amidst such a complicated business situation
accompanied by more fierce competitions in financial and insurance markets, the Company, with scientific planning
and reasonable deployment, closely adhered to the business strategy of “prioritizing value, stabilizing volume, optimizing
structure and expanding sources of profit", solidly promoted the “innovation-driven development strategy", actively
implemented the development tactics of "Five Focuses", which is the focuses on creating more business value,
sales force, regular premiums, individual life insurance and market in urban areas, persistently overcame difficulties,
and achieved a series of encouraging results. Under a great deal of pressures resulting from the intensive termination
of renewal premiums, the Company's business volume developed with ensuring stability. Meanwhile, the Company
achieved obvious results in structural adjustments by putting more efforts on the development of insurance businesses
with mid- and long-term regular premiums, realized a noticeable increase in its new business value by effectively tackling
the challenges of market-oriented reform of premium rates, and strongly enhanced the sales force and its productivity
by adhering to the strategy of “effective expansion”. At the critical point of surmounting difficulties on reform, the
Company made a breakthrough of the innovation-driven development, realized solid prevention and control of its
operation risks and achieved a sound and steady business development in the meanwhile. Suffice it to say that the
Company has confidently taken a new step forward on its road of transformation and upgrading.
7
4.
China Life Insurance Company Limited Annual Report 2014
During the Reporting Period, the Company's total revenue was RMB440,766 million, a 5.5% increase year-on-year;
net profit attributable to equity holders of the Company was RMB32,211 million, a 30.1% increase year-on-year;
earnings per share (basic and diluted) were RMB1.14, a 30.1% increase year-on-year. One-year new business value was
RMB23,253 million, a 9.2% increase year-on-year. The Company's market share² in 2014 was approximately 26.1%,
maintaining a leading position in the life insurance market. As at the end of the Reporting Period, the Company's total
assets reached RMB2,246,567 million, an increase of 13.9% from the end of 2013; embedded value was RMB454,906
million, an increase of 32.9% from 2013. As at 31 December 2014, the Company's solvency ratio was 294.48%.
The Board of Directors of the Company proposes the payment of a final dividend of RMB0.40 per share (inclusive of
tax), subject to the shareholders' approval at the 2014 Annual General Meeting to be held on Thursday, 28 May 2015.
The Company continued to actively undertake its corporate social responsibility. 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, as well as Rural Micro-insurance business. In addition, the Company
provided insurance coverage for astronauts, aerospace scientists, and over 160,000 college-graduate village officials.
The Company actively participated in public welfare and charitable undertakings. During the Reporting Period, the
Company continually donated RMB30 million to the China Life Foundation. It also donated over RMB36 million
through the China Life Foundation to relevant organizations to provide support for Wenchuan earthquake orphans,
Yushu earthquake orphans and Zhouqu mudslide orphans; to provide funding for the poverty alleviation projects in
Yunxi County in Hubei Province, and Tiandeng County and Longzhou County in Guangxi Zhuang Autonomous
Region; to provide subsidies for families bereft of their only child; to provide funding for the construction of kidney
dialysis clinics in grass-root hospitals in some rural areas in Liaoning Province; to provide funding for equipping rural
hospitals in southern Ningxia mountainous area with ambulances and color type-B ultrasonic medical devices; and to
offer the "screening of two types of cancers" and the protection of serious diseases for women in poverty-stricken areas.
The year 2015 marks the in-depth and thorough implementation of “Opinions on Promoting the Development of the
Modern Insurance Service Industry" (hereinafter referred to as the "New Ten Rules"), and the final phase of China's
12th Five-Year Plan. Under the “new normal” state of China's economic growth, the insurance industry will enter into
a new period characterized by “leaping development, big challenges, major adjustments and great differentiations". The
industry's social status is expected to be further elevated, the market further expanded, the pace of innovation further
accelerated, and the development environment further optimized. The Company will seek to speed up its business
development, make breakthroughs in the “Five Focuses" and overcome bottleneck problems by adhering to the working
guidelines of "capturing opportunities, acting proactively, advancing prudently and developing innovatively" and firmly
implementing the operation ideas of “emphasizing value, strengthening sales force, optimizing structure and achieving
stable growth", to strive to strengthen the Company's sustainable development capacity and core competitiveness, and to
embark on a new march of transformation and upgrading.
The Company will aim to maintain its leading position in the market by striving for a stable growth, and to increase
the new business value by deeply advancing the structural adjustment. With the exclusive individual agents as the main
channel, the Company will further accelerate the development of insurance businesses with mid- and long-term regular
premiums, improve the group insurance channel business and its benefit contribution, accelerate the development of
bancassurance businesses with regular premiums and push forward transformation of the bancassurance channel, actively
enhance the construction and development of new sales channels such as tele-sales, online sales and direct sales over the
2
Calculated according to the premium data of life insurance companies in 2014 released by the CIRC.
Chairman's Statement
Ratio of assets and liabilities = Total liabilities/Total assets
3.
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 +
Investment properties
Ratio of assets and liabilities (%)
87.21
88.72
Gross investment yield (%)
5.36
4.86
decrease of 1.51
percentage points
increase of 0.50
percentage points
88.25
87.79
85.08
2.79
3.51
5.11
Notes:
1.
2.
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.
16.02
Total liabilities
Investment assets²
Total assets
Financial Summary
Major Financial Data¹
2014
2013
Under International Financial
Reporting Standards (IFRS)
Change
RMB million
China Life Insurance Company Limited Annual Report 2014
2012
2010
For the year ended
Total revenues
Net premiums earned
440,766
417,883
5.5%
2011
5
Changes of the Controlling Shareholder of the Company since the Company's Initial Public Offering:
None
None
16 Financial Street, Xicheng District, Beijing, P.R. China 100033
4
Corporate Business Licence Serial Number:
100000000037965
Tax Registration Certificate Number:
11010271092841X
Organization Code:
71092841-X
China Life Insurance Company Limited Annual Report 2014
Company Profile
Auditors of the Company:
Domestic Auditor: Ernst & Young Hua Ming LLP
Address: Level 16, Ernst & Young Tower, Oriental Plaza, No.1 East Changan Avenue,
Dongcheng District, Beijing, P.R. China
Name of the Signing Auditors: Zhang Xiaodong, Huang Yuedong
International Auditor: Ernst & Young
Address: 22/F, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong
Changes in the Main Business of the Company since the Company's Initial Public Offering:
371,485
370,899
385,838
330,105
20,513
41,008
Net profit attributable to equity holders of
the Company
32,211
24,765
30.1%
11,061
18,331
33,626
Net cash inflow from operating activities
78,247
68,292
14.6%
132,182 133,953
178,600
As at 31 December
10,968
Depositary of ADR:
37.2%
40,402
324,813
1.6%
322,126
318,276 318,088
Benefits, claims and expenses
404,275
391,557
3.2%
363,554
352,599 346,601
Insurance benefits and claims expenses
315,294
312,288
1.0%
300,562
290,717 279,632
Profit before income tax
29,451
Deutsche Bank
In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Company and
of the Group as at 31 December 2014, and of the Group's profit and cash flows for the year then ended in accordance
with International Financial Reporting Standards and have been properly prepared in accordance with the disclosure
requirements of the Hong Kong Companies Ordinance.
The notes on pages 107 to 216 form an integral part of these consolidated financial statements.
"Forbes"
Honors and Awards
China Life Insurance Company Limited Annual Report 2014
95
of
The Company formulated the “Provisional Measures on Accountability System for Major Errors in Periodic
Report Disclosures of China Life Insurance Company Limited", which were adopted throughout the Company
after being examined and approved by the Board in March 2011, and organized the related internal departments
and personnel to study and implement it. In 2014, there were no incidents of major error in the annual report
the Company.
III. ACCOUNTABILITY SYSTEM FOR MAJOR ERRORS IN ANNUAL REPORTS AND ITS
IMPLEMENTATION
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.
In 2014, the Company continued to implement the “Guidelines for the Implementation of Comprehensive Risk
Management of Personal Insurance Companies" issued by the CIRC so as to further promote the establishment
of a comprehensive risk management system for the Company, and strengthen the downward transmission
mechanism for the system of risk preference in order to change its risk supervision and control from ex post
reporting to concurrent monitoring. The Company developed and improved the framework for comprehensive risk
management, and formulated a plan to establish a risk database with the aim to conducting quantitative assessment
of risk losses and risk indicators. The Company also continued to strengthen its efforts in risk early-warning and
risk classification management, and intensify its control over key risk fields, thus forming a standardized and
systematic early-warning system.
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.
II. RISK MANAGEMENT
China Life Insurance Company Limited Annual Report 2014
Internal Control
94
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, enhance legal compliance and pursue 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 short-term health insurance, policy-based medical and social security supplemental medical insurance,
costs in relation to business promotion and education and training, information system security, connected
transactions, rectification of internal control deficiencies and subsequent audit. 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 proper responsibility. In September 2014, the Company dismissed the Sales Supervision
Department, the management functions and responsibilities of which were given to other relevant departments
of the Company, including the management functions and responsibilities with respect to any cases involving
insurance agents (which specifically refer to judicial cases) being assigned to the Supervision Department. The
Supervision Department reports and manages the responsibility attribution of the cases involving insurance agents
in accordance with regulations such as the “Notice on the Establishment of a Reporting System of Judicial Cases
involving Insurance Industry" and internal policies such as the "Implementing Rules for Responsibility Attribution
of Cases", and will constantly optimize the relevant internal policies pursuant to the standards for administration
of cases of insurance institutions to be 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.
Internal Control
China Life Insurance Company Limited Annual Report 2014
"FORTUNE China"
"2014 Forbes Global 2000", ranking No. 66
"2014 Top 500 Chinese Enterprises", ranking
No. 11
EY安永
Independent Auditors' Report
China Life Insurance Company Limited Annual Report 2014
96
"2014 Best Insurance Company of the Year"
"2014 Golden Tripod Award - the Insurance
Company with the Strongest Comprehensive
Strength of the Year"
Eastmoney.com – “2014 Eastmoney
Award"
"National Business Daily” – Assessment
and Selection of the "Golden Tripod
Award" (the 5th Session)
93
"2014 Golden-shell Award - Best Insurance
Company for Comprehensive Services"
"2014 Golden Dragon Award – Best Listed
Insurance Company of the Year"
"2014 BrandZ Top 100 Global Most Valuable
Brands", ranking No. 81
"Golden Bauhinia Award - 2014 Best Listed
Company for Investor Relations Management"
"Financial Times” – “2014 Gold Medal
List of Chinese Financial Institutions"
Millward Brown
Hong Kong "Takungpao”
"2014 Most Reliable Life Insurance Company"
Hexun.com and China Securities Market
Research and Design Center - the "12th
China's Financial Annual Champion
Awards of 2014"
"21st Century Business Herald" -
Assessment and Selection of the 21st
Century Asset Management "Golden-
shell Award" (the 7th Session)
93
The Company established transparent and standardized investment decision-making procedures and procedural
rules to ensure the safe use of insurance funds. The Company has set up an Investment Decisions Committee with
its own procedural rules. Any investment plans of the Company could only be implemented after obtaining the
approval from the Investment Decisions Committee, which ensures that all investment decisions are in compliance
with the requirements of PRC laws, regulations and administrative rules, and are proper taking into account the
balance between assets and liabilities of the Company.
The Company has formulated the “Provisional Measures on Accountability System for Major Errors in Periodic
Report Disclosures of China Life Insurance Company Limited", which was reviewed and approved at the twelfth
ad-hoc meeting of the third session of the Board held on 15 March 2011. These Provisional Measures 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 2014, there has been no major error in periodic
report disclosures of the Company.
90
96
In 2014, the Company continued to promote the innovation of its periodic reports. The Company fully considered the
needs of its shareholders and investors on information, actively studied and improved the method of disclosure of key
information, and extended the scope and depth of information disclosure so as to enable the shareholders and 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 the shareholders and investors to obtain
timely and accurate information. The Company regularly organized training courses relating to information disclosure,
carried out timely study and promotion of new regulatory rules of its listed jurisdictions, explained the key points
and difficulties of information disclosure, strengthened its internal information exchange, continuously improved
its workflow for information disclosure and improved the quality of its information disclosure. Such substantial and
effective information disclosure measures has laid down a sound foundation for the continuous improvement of
information disclosure of the Company.
In 2014, 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 accordance with the regulatory
requirements of the CSRC and the Beijing Securities Regulatory Bureau with respect to the system of registration
and administration of persons of the Company who have knowledge of inside information, the Company strictly and
consistently implemented the "Measures for the Administration of Persons Who Have Knowledge of Inside Information"
to ensure the standardization of its workflow for the management of inside information. The Company strictly
implemented the registration and filing procedures of persons who have knowledge of inside information and conducted
a self-examination over the implementation of the "Measures for the Administration of Persons Who Have Knowledge of
Inside Information” in 2014, thereby further improving its information disclosure system.
The Company has established a well-developed and practical information disclosure system in strict compliance with
the laws and regulatory rules 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.
INFORMATION DISCLOSURE AND INVESTOR RELATIONS
Shareholders may put forward enquiries to the Board through the Company Secretary or the Board 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.
China Life Insurance Company Limited
Corporate Governance
89
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.
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 comprises basic salary, performance compensation, 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, 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.
PERFORMANCE APPRAISAL AND INCENTIVES FOR SENIOR MANAGEMENT
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.
China Life Insurance Company Limited Annual Report 2014
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
Annual Report 2014
In 2014, the Company continuously improved and strengthened investor relations, 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, organizing global open days of the
Company, updating information on its investor relations website in a timely manner, delivering investor newsletters,
establishing an investor relations hotline and an exclusive electronic mailbox to ensure timely replies to any enquiries
made by investors and investment analysts.
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” in accordance with the relevant laws
and regulations, such as the “Accounting Law of the People's Republic of China” and the “Enterprise Accounting
Standards". 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.
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 of products such as individual insurance, group
insurance, bancassurance, health insurance, rural 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 the
safe custody of documents. 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 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, complied with relevant PRC laws and regulations and the internal rules and regulations of the Company,
and improved the quality of accounting data.
China Life Insurance Company Limited Annual Report 2014
Internal Control
92
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 regulations and Section 404 of the U.S. Sarbanes-Oxley Act, and reports to the Board,
the Audit Committee and the management. In 2014, the Company further improved its internal control self-
assessment systems, with its functional departments conducting the internal control self-assessment by way of
walk-through test and strengthened its risk-oriented assessment strategy through target-specific assessments and
substantive tests. The Company also further enhanced its independence of internal control assessment through
cross-examination among its local branches.
Pursuant to the requirements of the “Notice on the Proper Preparation for Disclosure of 2014 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 2014 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 2014 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 2014, 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 2014. 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.
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 (2014 Edition)” to strengthen the implementation of internal control standards
and internal control assessments, and actively promote the culture and philosophy of internal control, thereby
continuously enhancing the internal control of the Company.
Corporate Governance
ESTABLISHMENT OF AN INTERNAL CONTROL SYSTEM
Internal Control
China Life Insurance Company Limited Annual Report 2014
91
With the approval at the 2013 Annual General Meeting held on 29 May 2014, the Company increased the number of
the Board members as stipulated in the Articles of Association from 11 to 12. The amendment has been approved by the
CIRC on 1 July 2014. For details of such amendment, please refer to the Supplemental Notice of 2013 Annual General
Meeting of the Company dated 13 May 2014 and relevant meeting documents.
CHANGES OF THE ARTICLES OF ASSOCIATION
In 2014, the Company was awarded the “Most Popular Website of Listed Companies Among Investors” and the “Best
Website of Listed Companies for Information Disclosure", and Mr. Zheng Yong, the Board Secretary, was awarded the
"Board Secretary of the Best Website for Investor Relations Management” in the “Sixth Session of the Election of the
Outstanding Website of Listed Companies in China" held by the Securities Times. In the “China Listed Companies
Oversea Summit Forum in 2014 – China Securities Golden Bauhinia Award Festival" held by Hong Kong “Takungpao”,
the Company was awarded the “2014 Best Listed Company for Investor Relations Management”. In the “12th China's
Financial Annual Champion Awards of 2014” jointly organized by Hexun.com and China Securities Market Research
and Design Center, the Company was awarded the “2014 Most Reliable Life Insurance Company of the Year", and Mr.
Lin Dairen, President of the Company, was awarded the “Annual Influential Person in the Insurance Industry". In the
assessment and selection of the “Gold Bull Award for Listed Companies in 2013 ” held by China Securities in 2014, the
Company was awarded the title of the “Most Profitable Company”. Mr. Zheng Yong, the Board Secretary, was awarded
the title of the “Best Board Secretary for Information Disclosure” in the “Golden Board Secretary of Listed Companies
of 2014” held by Shanghai Securities News.
groups, and
In 2014, the Company communicated with more than 3,000 investors and analysts through different channels,
including the reception at the Company of 117 groups of investors and analysts consisting of over 500 individuals in
total, communicating with more than 1,000 investors by participating in 17 investors' meetings held locally or overseas,
and meeting and visiting more than 230 investors in roadshows. In addition, the Company kept in close contact with
investors' groups by phone and email, communicated through more than 1,500 emails with investors'
answered and replied more than 1,000 calls and emails.
I.
98
We have audited the consolidated financial statements of China Life Insurance Company Limited (the “Company”)
and its subsidiaries (together, the “Group”) set out on pages 98 to 216, which comprise the consolidated and company
statements of financial position as at 31 December 2014, 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.
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 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.
Accrued investment income
8,295
11,925
9.7
Securities purchased under agreements to resell
34,172
53,052
9.6
Securities at fair value through profit or loss
491,527
607,531
9.5
Available-for-sale securities
6,153
6,153
9.4
Statutory deposits - restricted
9.8
44,350
34,717
Premiums receivable
1,972,941
2,246,567
Total assets
21,330
47,034
20,430
19,411
13
664,174
1,069
23
12
Cash and cash equivalents
Other assets
Reinsurance assets
9,876
11,166
11
1,032
690,156
9.3
Term deposits
Notes
2013
2014
As at 31
December
As at 31
December
ASSETS
As at 31 December 2014
Consolidated Statement of Financial Position
RMB million
China Life Insurance Company Limited Annual Report 2014
24 March 2015
Hong Kong
Certified Public Accountants
Ernst & Young
OPINION
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
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.
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.
97
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
RMB million
6
118,626
166,453
9.2
Loans
503,075
517,283
9.1
Held-to-maturity securities
Property, plant and equipment
34,775
8
Investments in associates and joint ventures
1,329
1,283
7
Investment properties
23,393
25,348
44,390
Corporate Governance
China Life Insurance Company Limited Annual Report 2014
Reserves
2,254
222,585
32,211
303
32,514
39,232
52
39,284
95,037
Total comprehensive income
32,211
355
71,798
Transactions with owners
Capital paid in
826
692
1,518
39,232
Appropriation to reserves (Note 35)
97,029
Other comprehensive income
(3,957)
(3,957)
Dividends to non-controlling interests
(80)
(80)
Total transactions with owners
6,082
(10,039)
28,265
8
As at 31 December 2013
28,265
97,029
earnings
2,254
222,585
As at 1 January 2014
Net profit
(3,949)
Dividends paid
8,832
Dividends paid (Note 32)
For the year ended 31 December 2014
2014
2013
RMB million
RMB million
40,402
29,451
Adjustments for:
Profit before income tax
Investment income
(82,816)
Net realised and unrealised gains and impairment on financial assets
(12,928)
(5,930)
Amount of investment cost below the fair value for identifiable
net assets of an associate
(683)
Insurance contracts
(93,548)
(8,832)
CASH FLOWS FROM OPERATING ACTIVITIES
China Life Insurance Company Limited Annual Report 2014
(8,479)
(8,479)
Dividends to non-controlling interests
(91)
(91)
Total transactions with owners
9,658
(17,311)
Consolidated Statement of Cash Flows
601
As at 31 December 2014
28,265
145,919
109,937
3,210
287,331
The notes on pages 107 to 216 form an integral part of these consolidated financial statements.
104
(7,052)
(6,082)
6,082
Appropriation to reserves (Note 35)
Annuity and other insurance balances payable
20,426
46,089
18
Securities sold under agreements to repurchase
10,890
Financial liabilities at fair value through profit or loss
67,985
25,617
67,989
2,623
16
675
Bonds payable
Interest-bearing loans and borrowings
49,536
74,745
Policyholder dividends payable
17
65,087
23,179
Other liabilities
Total liabilities
184
223
20
20
5
52
4,919
Premiums received in advance
19,375
18,233
20,062
19
6,305
15,850
Statutory insurance fund
Current income tax liabilities
Deferred tax liabilities
28
72,275
15
Investment contracts
80,311
2,016
223,101
24,765
243
25,008
(21,562)
(13)
112,509
(21,575)
24,765
230
3,433
Total comprehensive income
Transactions with owners
Capital paid in
888
88
(21,562)
28,265
(Note 35)
(Note 34)
1,494,497
1,603,446
14
Insurance contracts
Liabilities
LIABILITIES AND EQUITY
RMB million
RMB million
Notes
2013
2014
As at 31
December
As at 31
December
As at 31 December 2014
Consolidated Statement of Financial Position
China Life Insurance Company Limited Annual Report 2014
RMB million
RMB million
RMB million
Depreciation and amortisation
Foreign exchange losses/(gains)
Share of profit of associates and joint ventures
Changes in operating assets and liabilities:
Cash and cash equivalents
Beginning of the year
21,330
69,452
End of the year
47,034
21,330
Analysis of balances of cash and cash equivalents
(48,122)
Cash at banks and in hand
20,036
Short-term bank deposits
1,595
1,294
The notes on pages 107 to 216 form an integral part of these consolidated financial statements.
106
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
45,439
For the year ended 31 December 2014
25,704
(76)
Interest paid
(10)
(4,618)
(4,083)
Dividends paid to equity holders of the Company
(8,479)
(3,957)
Dividends paid to non-controlling interests
Net increase/decrease) in cash and cash equivalents
(91)
Capital injected into a subsidiary by non-controlling interests
1,358
88
Net cash inflow/(outflow) from financing activities
16,704
(56,105)
Foreign exchange gains/(losses) on cash and cash equivalents
10
(80)
1
2
ORGANIZATION AND PRINCIPAL ACTIVITIES
(i)
Financial Instruments: Presentation - Offsetting Financial Assets and
Financial Liabilities
Recoverable Amount Disclosures for Non-Financial Assets
Novation of Derivatives and Continuing of Hedge Accounting
Investment Entities
Definition of Vesting Condition
Accounting for Contingent Consideration in a Business Combination
Short-term Receivables and Payables
Meaning of Effective IFRSS
IFRS 1 Amendment (iii)
These three amendments are included in Annual Improvements 2010-2012 Cycle.
(iii) The amendment is included in Annual Improvements 2011-2013 Cycle.
IAS 32 Amendment - Financial Instruments: Presentation - Offsetting Financial Assets and Financial
Liabilities
The amendment to IAS 32 clarifies the meaning of “currently has a legally enforceable right to set-off” and
the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting. The
amendment has no impact on the Group's consolidated financial statements.
IAS 36 Amendment – Recoverable Amount Disclosures for Non-Financial Assets
The amendment to IAS 36 removes the unintended consequences of IFRS 13 Fair Value Measurement on
the disclosures required under IAS 36 Impairment of Assets. In addition, the amendment requires disclosure
of the recoverable amounts for the assets or each cash-generating unit for which impairment loss has been
recognised or reversed during the period, and expands the disclosure requirements regarding the fair value
measurement for these assets or units if their recoverable amounts are based on fair value less costs of
disposal. The Group will provide the required disclosures once an impairment loss for non-financial assets
exists.
108
(ii) These two amendments have been effective from 1 July 2014.
IFRS 10, IFRS 12 and IAS 27
(Revised) Amendments
IFRS 2 Amendment (i)(ii)
IFRS 3 Amendment (i)(ii)
IFRS 13 Amendment (i)
IAS 39 Amendment
IAS 36 Amendment
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.
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 24
March 2015.
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 relating to the preparation of consolidated financial statements, which for this
financial year and the comparative period continue to be those of the predecessor Companies Ordinance
(Cap. 32), in accordance with transitional and saving arrangements for Part 9 of the Hong Kong Companies
Ordinance (Cap. 622), “Accounts and Audit”, which are set out in sections 76 to 87 of Schedule 11 to
that 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.
107
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
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 1 January 2014
Standards/Amendments
Content
IAS 32 Amendment
Cash repaid to lenders
Equity
2,881
25,663
Dividends received – securities at fair value through profit or loss
106
579
Net cash inflow from operating activities
78,247
68,292
CASH FLOWS FROM INVESTING ACTIVITIES
Disposals and maturities:
1,002
Disposals of debt securities
Disposals of equity securities
Property, plant and equipment
Purchases:
Debt securities
21,242
20,623
22,407
15,244
Maturities of debt securities
285,647
1,902
(5,343)
Securities at fair value through profit or loss
108,955
109,843
2,124
2,026
(268)
437
(3,911)
Interest received securities at fair value through profit or loss
(3,125)
(449)
Financial liabilities at fair value through profit or loss
9,704
Receivables and payables
41,330
23,300
Income tax paid
(1,923)
(13,698)
231,864
437
159
Increase in policy loans, net
(13,478)
(20,283)
Net cash outflow from investing activities
(69,257)
(60,233)
The notes on pages 107 to 216 form an integral part of these consolidated financial statements.
105
2,861
China Life Insurance Company Limited Annual Report 2014
Consolidated Statement of Cash Flows
CASH FLOWS FROM FINANCING ACTIVITIES
Increase/(decrease) in securities sold under agreements to
2014
2013
RMB million
RMB million
repurchase, net
Cash received from borrowings
For the year ended 31 December 2014
4,258
Dividends received
72,667
(115,808)
(122,952)
Equity securities
(312,544)
(223,449)
Property, plant and equipment
(5,048)
(3,724)
Additional capital contribution to associates and joint ventures
(5,671)
(2,386)
Increase in term deposits, net
(25,972)
(23,456)
Increase in securities purchased under agreements to resell, net
(3,630)
(7,401)
Interest received
78,903
(48,073)
Share capital
95,037
Retained earnings
(1,818)
(1,958)
25
(107,354)
(105,883)
24
(11,263)
(16,752)
Policyholder dividends resulting from participation in profits
24
(192,659)
24
2222
Investment contract benefits
Increase in insurance contract liabilities
Accident and health claims and claim adjustment expenses
Life insurance death and other benefits
417,883
(193,671)
440,766
(24,866)
Underwriting and policy acquisition costs
(404,275)
Total benefits, claims and expenses
(637)
(701)
20
Statutory insurance fund contribution
(3,864)
(4,151)
(18,423)
Other expenses
(25,432)
Administrative expenses
(4,032)
(4,726)
26
Finance costs
(25,690)
(27,147)
(24,805)
expenses
Insurance benefits and claims
BENEFITS, CLAIMS AND EXPENSES
331,010
(515)
RMB million
RMB million
Notes
2013
2014
Net premiums earned
Net change in unearned premium reserves
326,290
Net written premiums
Gross written premiums
REVENUES
For the year ended 31 December 2014
Consolidated Statement of Comprehensive Income
China Life Insurance Company Limited Annual Report 2014
101
The notes on pages 107 to 216 form an integral part of these consolidated financial statements.
1,958,937
Less: premiums ceded to reinsurers
(556)
330,495
325,734
Total revenues
4,324
4,185
137
5,808
23
Net fair value gains/(losses) through profit or loss
Other income
5,793
7,120
22
Net realised gains and impairment on financial assets
82,816
93,548
21
Investment income
324,813
330,105
(921)
(390)
(391,557)
2,211,673
Share of profit of associates and joint ventures
3,911
71,798
Total comprehensive income for the year, net of tax
(21,575)
39,284
Other comprehensive income for the year, net of tax
Other comprehensive income that will not be reclassified to
profit or loss in subsequent periods
(21,575)
39,284
3,433
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods
(13,023)
28
Income tax relating to components of other comprehensive income
(332)
120
Share of other comprehensive income of associates and joint ventures
under the equity method
2,635
(11,035)
7,050
(5,793)
Attributable to:
- Non-controlling interests
capital
RMB million
Retained
Total
Non-controlling
interests
Share
Attributable to equity holders
of the Company
Other comprehensive income
Net profit
- Equity holders of the Company
As at 1 January 2013
Consolidated Statement of Changes in Equity
China Life Insurance Company Limited Annual Report 2014
103
The notes on pages 107 to 216 form an integral part of these consolidated financial statements.
230
355
3,203
71,443
For the year ended 31 December 2014
(7,120)
(25,135)
70,342
24,765
32,211
303
Basic and diluted earnings per share
Reserves
- Equity holders of the Company
Attributable to:
Net profit
25,008
243
32,514
(7,888)
28
Income tax
29,451
40,402
27
Profit before income tax
3,125
(4,443)
30
RMB1.14
The notes on pages 107 to 216 form an integral part of these consolidated financial statements.
attributable to participating policyholders
Amount transferred to net profit from other comprehensive income
Portion of fair value changes on available-for-sale securities
Fair value gains/(losses) on available-for-sale securities
profit or loss in subsequent periods:
Other comprehensive income that may be reclassified to
Other comprehensive income
RMB million
RMB million
Note
2013
2014
ended 31 December 2014
year
For the
Consolidated Statement of Comprehensive Income
Annual Report 2014
China Life Insurance Company Limited
RMB0.88
102
8
209,733
- Non-controlling interests
Director
118,286
165,913
9.2
Loans
502,517
516,710
9.1
Held-to-maturity securities
Term deposits
23,976
8
Investments in associates and joint ventures
4,165
11,705
38
Investments in subsidiaries
1,394
1,345
27,044
22,818
9.3
662,402
9.8
Accrued investment income
8,266
11,841
9.7
Securities purchased under agreements to resell
34,005
38,822
685,471
9.6
489,642
605,245
9.5
Available-for-sale securities
5,653
5,653
9.4
Statutory deposits – restricted
Securities at fair value through profit or loss
24,792
67
Investment properties
Lin Dairen
Yang Mingsheng
Director
Approved and authorized for issue by the Board of Directors on 24 March 2015.
95,037
109,937
97,029
145,919
35
Director
28,265
34
1,750,356
1,959,236
Total liabilities and equity
Total equity
Non-controlling interests
Attributable to equity holders of the Company
268,536
28,265
284,121
220,331
3,210
Property, plant and equipment
ASSETS
RMB million
2013
RMB million
Notes
2014
As at 31
December
As at 31
December
As at 31 December 2014
Statement of Financial Position
China Life Insurance Company Limited Annual Report 2014
99
The notes on pages 107 to 216 form an integral part of these consolidated financial statements.
1,972,941
2,246,567
222,585
287,331
2,254
43,981
34,624
19,431
11
Statutory insurance fund
4,683
19,023
28
Deferred tax liabilities
17,690
RMB million
19
20
Other liabilities
15,850
Premiums received in advance
23,179
25,617
Annuity and other insurance balances payable
20,058
44,538
18
6,305
223
184
Total liabilities
Premiums receivable
Lin Dairen
Yang Mingsheng
Director
Approved and authorized for issue by the Board of Directors on 24 March 2015.
84,263
95,265
97,205
145,006
35
28,265
28,265
34
1,749,204
1,943,137
Total liabilities and equity
Total equity
Retained earnings
Reserves
Share capital
Securities sold under agreements to repurchase
67,985
Equity
17
100
The notes on pages 107 to 216 form an integral part of these consolidated financial statements.
1,958,937
2,211,673
Total assets
20,395
42,984
17,969
China Life Insurance Company Limited Annual Report 2014
13
1,032
12
Cash and cash equivalents
Other assets
Reinsurance assets
67,989
11,166
9,876
1,069
Statement of Financial Position
19,849
As at 31
December
49,536
74,745
Bonds payable
As at 31 December 2014
Policyholder dividends payable
65,087
72,275
1,494,497
1,603,446
14
15
2013
Insurance contracts
LIABILITIES AND EQUITY
Liabilities
RMB million
RMB million
Notes
Investment contracts
2014
As at 31
December
2.5 Foreign currency translation
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.
China Life Insurance Company Limited Annual Report 2014
The Group's operating segments are presented in a manner consistent with the internal management
reporting provided to the president office for deciding how to allocate resources and for assessing
performance.
Notes to the Consolidated Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2014
Except for China Life Franklin Asset Management Company Limited (“AMC HK") (Note 38), 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.
2.4 Segment reporting
2.6 Property, plant and equipment
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (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.
115
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
2
2.6 Property, plant and equipment (continued)
Depreciation
2
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:
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.
114
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 dividend received and receivable.
The Group determines at each reporting date whether there is any objective evidence that the investment
in the associates and joint ventures is 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 to dispose of and value in use. The impairment of
investment in the associates and joint ventures is reviewed for possible reversal at each reporting date.
Buildings
For the year ended 31 December 2014
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 period.
Gains and losses on the disposal of an entity take into consideration the carrying amount of goodwill
relating to the entity sold.
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.
113
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
2
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 right 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 and losses on the disposal of an entity take into consideration the carrying amount of goodwill
relating to the entity sold.
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.
Office equipment, furniture and fixtures
2.8.a Classification (continued)
Leasehold improvements
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:
(i)
Securities at fair value through profit or loss
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 certain criteria 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.
117
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.8 Financial assets (continued)
Notes to the Consolidated Financial Statements
(iii) 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.
(iv) 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.
2.8.b Recognition and measurement
Purchase and sale of investments are recognised on 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 or losses and impairment on financial assets.
Term deposits primarily represent traditional bank deposits which have fixed maturity dates and are stated at
amortised cost.
Loans are carried at amortised cost, net of allowance for impairment.
2.8.a Classification
Motor vehicles
2.8 Financial assets
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.
Estimated useful lives
15 to 35 years
5 to 11 years
4 to 8 years
Over the shorter of the remaining term of
the lease and the useful lives
The 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 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 a 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.
116
2
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 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.
China Life Insurance Company Limited Annual Report 2014
IFRS 15 - Revenue from Contracts with Customers
112
Standards/Amendments
Content
beginning on or after
Equity Method in Separate Financial Statements
an Investor and its Associate or Joint Venture
IAS 27 Amendment
IFRS 10 and IAS 28
Amendments
IFRS 11 Amendment
IFRS 15
IFRS 9
Sale or Contribution of Assets between
Effective for annual period
Accounting for Acquisitions of Interests in
Revenue from Contracts with Customers
Financial Instruments
1 January 2016
1 January 2016
1 January 2016
1 January 2017
1 January 2018
-
IAS 27 Amendment – Equity Method in Separate Financial Statements
The amendment 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 amendment is effective
for annual periods beginning on or after 1 January 2016, with early adoption permitted. The amendment is
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.
IFRS 10 and IAS 28 Amendments
Joint Venture
_
Joint Operations
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 1 January 2014
2.1 Basis of preparation (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
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 1 January 2014 (continued)
IAS 39 Amendment - Novation of Derivatives and Continuing of Hedge Accounting
The amendment to IAS 39 provides relief from discontinuing hedge accounting when novation of a
derivative designated as a hedging instrument meets certain criteria. The amendment is not relevant to the
Group, since the Group has not applied hedge accounting during the current period.
IFRS 10, IFRS 12 and IAS 27 (Revised) Amendments – Investment Entities
These amendments provide an exception to the consolidation requirement for entities that meet the
definition of an investment entity under IFRS 10 Consolidated Financial Statements. The exception to
consolidation requires investment entities to account for subsidiaries at fair value through profit or loss.
These amendments are not relevant to the Group, since the Group does not qualify to be an investment
entity under IFRS 10.
IFRS 2 Amendment - Definition of Vesting Condition
The amendment to IFRS 2 clarifies various issues relating to the definitions of performance condition
and service condition which are vesting conditions, including (i) a performance condition must contain a
service condition; (ii) a performance target must be met while the counterparty is rendering service; (iii)
a performance target may relate to the operations or activities of an entity, or to those of another entity
in the same group; (iv) a performance condition may be a market or non-market condition; and (v) if
the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service
condition is not satisfied. The amendment has no impact on the Group.
IFRS 3 Amendment - Accounting for Contingent Consideration in a Business Combination
The amendment to IFRS 3 clarifies that contingent consideration arrangements arising from a business
combination that are not classified as equity should be subsequently measured at fair value through profit or
loss whether or not they fall within the scope of IFRS 9 or IAS 39. The amendment has no impact on the
Group.
IFRS 13 Amendment - Short-term Receivables and Payables
The amendment to IFRS 13 clarifies that short-term receivables and payables with no stated interest rates
can be measured at invoice amounts when the effect of discounting is immaterial. The amendment has no
impact on the Group.
IFRS 1 Amendment - Meaning of Effective IFRSS
109
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
2
Sale or Contribution of Assets between an Investor and its Associate or
2
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 material impact on the Group's consolidated financial statements.
The amendment to IFRS 11 requires 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 amendment also clarifies 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 amendment is effective for annual periods beginning on
or after 1 January 2016, with early adoption permitted. It is not expected that the amendment would be
relevant to the Group, since the Group has no joint operation as at 31 December 2014.
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.
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:
•
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers
Derecognises the assets (including goodwill) and liabilities of the subsidiary;
•
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.
Derecognises the carrying amount of any non-controlling interests;
the ability to use its power over the investee to affect its returns.
•
exposure, or rights, to variable returns from its involvement with the investee; and
110
2
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
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 1 January 2014 (continued)
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 to measuring and recognising revenue. IFRS 15 is effective for annual
periods beginning on or after 1 January 2017, with early adoption permitted. IFRS 15 is not applied to the
insurance contracts and financial instruments, which are the main source of the Group's revenue. The Group
is currently assessing the impact on the Group's consolidated financial statements.
IFRS 9 - Financial Instruments
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.
Except for those described in Note 2.1.1, Annual Improvements 2010-2012 Cycle and Annual Improvements
2011-2013 Cycle issued in December 2013, and Annual Improvements 2012-2014 Cycle issued in September
2014 set 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.
In addition, the new Hong Kong Companies Ordinance (Cap. 622) will affect the presentation and
disclosure of certain information in the consolidated financial statements for the year ending 31 December
2015. The Group is in the process of making an assessment of the impact of these changes.
111
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.2 Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries
for the year ended 31 December 2014. 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);
IFRS 11 Amendment - Accounting for Acquisitions of Interests in Joint Operations
The amendment clarifies that an entity may choose to apply either a current standard or a new standard
that is not yet mandatory, but permits early application, provided either standard is applied consistently
throughout the periods presented in the entity's first IFRSs financial statements. The amendment has no
impact on the Group, since the Group is an existing IFRSS preparer.
118
Long-term insurance contracts (continued)
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 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
121
(ii)
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:
(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 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.
The unearned premium reserve represents the portion of the premiums written net of certain
acquisition costs relating to the unexpired terms of coverage.
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.
Short-term insurance contracts
(i)
2.11.2.a Recognition and measurement
2.11.2 Insurance contracts
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.
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.
2.11.1 Classification
(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:
•
contracts.
(c) The Group has considered the impact of time value on the reserve calculation for insurance
Long-term insurance contracts (continued)
(ii)
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)
For the year ended 31 December 2014
•
Notes to the Consolidated Financial Statements
2
122
Margin comprises of 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.
additional non-guaranteed benefits, such as policyholder dividends;
guaranteed benefits based on contractual terms, including payments for deaths,
disabilities, diseases, survivals, maturities and surrenders;
•
China Life Insurance Company Limited Annual Report 2014
(iii) Universal life contracts and unit-linked contracts
2.11 Insurance contracts and investment contracts
For the year ended 31 December 2014
•
The market price of the equity securities was more than 50% below their cost at the reporting date;
•
•
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
•
•
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 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:
2.8 Financial assets (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
2
•
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
119
Notes to the Consolidated Financial Statements
2
120
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.
2.10 Cash and cash equivalents
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.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements
are categorized within the fair value hierarchy, described in Notes 4.3, 7 and 10, based on the lowest level
input that is significant to the fair value measurement as a whole.
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.
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.
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 and impairment 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 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 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)
2
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
in the absence of a principal market, in the most advantageous market for the asset or liability.
Universal life contracts and unit-linked contracts are unbundled into the following components:
China Life Insurance Company Limited Annual Report 2014
Insurance components
2.20 Current and deferred income taxation
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
2
126
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.
2.19 Finance costs
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.
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.
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 are 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.
Policy fee income
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 from long-term insurance contracts are recognised as revenue when due from the policyholders.
Premiums
Turnover of the Group represents the total revenues which include the following:
2.18 Revenue recognition
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
Investment income
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
•
128
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.
2.23 Dividend distribution
A contingent liability is not recognised in the consolidated statement of financial position but is disclosed
in the notes to the 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.
2.22 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.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and
associates except where the timing of the reversal of the temporary difference can be controlled and it is
probable that the temporary difference will not reverse in the foreseeable future.
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.
2.21 Operating leases
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
127
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.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realized 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.
Leases where substantially all the risks and rewards of ownership of assets remain with the lessor company
are accounted for as operating leases.
2
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.
Notes to the Consolidated Financial Statements
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 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
Except for unit-linked contracts, of which the liabilities are carried at fair value, the liabilities of investment
contracts are carried at amortised cost.
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 certain acquisition cost is deferred as unearned revenue and amortised over the expected life of
the contracts.
2.11.3 Investment contracts
2.11 Insurance contracts and investment contracts (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
123
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.
For the year ended 31 December 2014
Non-insurance components
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.
2.13 Securities sold under agreements to repurchase
2
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.
China Life Insurance Company Limited Annual Report 2014
125
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
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).
Housing benefits
2.15 Derivative instruments
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
2
124
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.
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
11,743
7,889
7,916
11,331
16,379
8,161
8,879
8,035
8,741
1 year later
Current year
The following table indicates the claim development for short-term insurance contracts taking account of
reinsurance impacts:
2014
2013
2012
2011
2010
Estimated claims expenses
Short-term insurance contracts (accident year)
7,316
6,863
2 years later
Total
8,557
(11,292)
7,997
(45,376)
453
(9,553)
(7,997)
(7,977)
(8,557)
expenses paid
claims
Accumulated
52,653
16,379
11,743
7,997
7,977
8,557
expenses
claims
Estimated accumulated
8,557
4 years later
7,977
8,557
3 years later
7,977
Unpaid claims expenses
For the year ended 31 December 2014
(9,636)
1 year later
16,499
11,476
8,056
8,002
8,826
Current year
Total
2014
2013
2012
2011
2010
Estimated claims expenses
Short-term insurance contracts (accident year)
The following table indicates the claim development for short-term insurance contracts without taking
account of reinsurance impacts:
Sensitivity analysis of short-term insurance contracts (continued)
4.1.3 Sensitivity analysis (continued)
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
Insurance risk (continued)
4.1
Unpaid claims expenses
8,967
(45,908)
8,279
11,872
(11,419)
(8,123)
(8,090)
(8,640)
claims expenses paid
Accumulated
53,224
16,499
11,872
8,123
8,090
8,640
claims expenses
Estimated accumulated
8,640
4 years later
8,090
8,640
3 years later
8,123
8,090
8,640
2 years later
8,164
451
266
7,277
2,623
2,623
2,623
2,623
21,175
54
8,371
12,750
Total
Interest-bearing loans and borrowings
Financial liabilities
Total
3,784
54
68
3,662
Cash and cash equivalents
8,774
8,774
Term deposits
260
260
- Available-for-sale securities
As at 31 December 2013
54
US dollar
GB pound
3,207
12,528
Total
2,045
222
1,823
Cash and cash equivalents
10,400
10,400
Term deposits
4 RISK MANAGEMENT (continued)
266
- Available-for-sale securities
39
39
- Held-to-maturity securities
Debt securities
2,985
2,985
- Available-for-sale securities
Equity securities
Financial assets
Total
HK dollar
6,826
54
Debt securities
4.2 Financial risk (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
RISK MANAGEMENT (continued)
4
136
As at 31 December 2014, 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 RMB883 million (as at
31 December 2013: RMB934 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 RMB6,675
million (as at 31 December 2013: RMB10,720 million) lower or higher respectively, as a result of a
decrease or increase in the fair value of available-for-sale securities.
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.
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.
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.
(i) Interest rate risk
4.2.1 Market 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.
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 to the consolidated
financial statements.
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'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.
4.2 Financial risk
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
135
4.2.1 Market risk (continued)
- Held-to-maturity securities
(ii) Price risk
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.
8,303
Total
GB pound
8,303
HK dollar
US dollar
- Available-for-sale securities
Equity securities
Financial assets
As at 31 December 2014
The following table summarizes financial assets and financial liabilities denominated in currencies
other than RMB as at 31 December 2014 and 2013, expressed in RMB equivalent:
(iii) Currency risk (continued)
4.2.1 Market risk (continued)
4.2 Financial risk (continued)
RISK MANAGEMENT (continued)
4
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
137
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 operates principally in the PRC except for
limited exposure to foreign exchange rate risk arising primarily with respect to financial assets and
financial liabilities denominated in US dollar or HK dollar or GB pound.
(iii) Currency risk
As at 31 December 2014, 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 RMB1,054
million (as at 31 December 2013: RMB164 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 RMB12,881 million (as at 31 December 2013:
RMB15,154 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.
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.
134
0.34%
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.
8.08%
24,623
Kang Ning Whole Life (b)
0.03%
92
20.56%
62,635
New Xin Feng Endowment (Type A) (a)
Premiums of long-term insurance contracts
%
RMB million
%
RMB million
2013
2014
Product name
The table below presents the Group's major products of long-term insurance contracts:
4.1.2 Concentration of insurance risks (continued)
Insurance risk (continued)
4.1
RISK MANAGEMENT (continued)
4
For the year ended 31 December 2014
25,672
Notes to the Consolidated Financial Statements
8.40%
16,293
100.00%
305,720
100.00%
304,677
Total
75.62%
231,209
61.90%
188,610
Others (f)
0.21%
631
0.05%
149
Hong Fu Participating Endowment (e)
6.18%
18,881
4.06%
12,367
Mei Man Yi Sheng Participating Annuity (d)
9.56%
29,235
5.35%
Hong Ying Participating Endowment (c)
Insurance benefits of long-term
China Life Insurance Company Limited Annual Report 2014
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.
3.2 Investments (continued)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
129
The Group considers a wide range of factors in the impairment assessment as described in Note 2.8.c.
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.
3.2 Investments
The impact of the various assumptions and their changes are described in Note 14.
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 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 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.
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
3
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
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 considerations. The methods and assumptions used by the Group in measuring the fair value of
financial instruments are as follows:
131
•
•
4.1.2 Concentration of insurance risks
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 reinsurances 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 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 strategy, 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
Insurance risk
4.1
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 is carried out by the Group's Risk Management Committee under policies approved by the
Group's Board of Directors.
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
RISK MANAGEMENT
4
130
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
2014, the Group has consolidated five fund products issued and managed by the Company's subsidiary,
China Life AMP Asset Management Company ("CL AMP"), in the consolidated financial statements. Please
refer to Note 38 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.
3.4 Determination of control over investee
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.
3.3 Income tax
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 statement of consolidated
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.
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 RMB258 million lower or higher, respectively (as at 31
December 2013: RMB193 million).
insurance contracts
56
4.1 Insurance risk (continued)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
132
100.00%
1,482,946
100.00%
1,588,900
Total
61.33%
909,534
58.44%
928,694
Others (f)
7.25%
107,477
92,985
Hong Fu Participating Endowment (e)
7.72%
114,531
7.83%
4.1.2 Concentration of insurance risks (continued)
124,381
(a)
(b) Kang Ning is a whole life insurance contract with the options for single premium or regular premium
of 10 years or 20 years. 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.
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 RMB41,300 million or RMB46,868
million (as at 31 December 2013: RMB39,833 million or RMB45,292 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 RMB5,191 million or RMB5,478 million (as at 31
December 2013: RMB5,460 million or RMB5,765 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 RMB12,971 million
or RMB13,554 million (as at 31 December 2013: RMB12,120 million or RMB12,660 million) lower or
higher, respectively.
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.
Sensitivity analysis of long-term insurance contracts
4.1.3 Sensitivity analysis
(f) Others consist of various long-term insurance contracts with no significant concentration.
4.1.2 Concentration of insurance risks (continued)
Insurance risk (continued)
4.1
RISK MANAGEMENT (continued)
4
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
133
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.
Mei Man Yi Sheng is a participating endowment insurance contract with the options for regular
premium of 3 years, 5 years, 8 years or 12 years, applicable to healthy policyholders between 30-day-
old and 60-year-old. The insured period is till when the insured is 75 years old. Annuity is paid at
1% of the basic sum insured multiplied by the number of years of premium payments during the
insured period. Maturity benefit is paid at the basic sum insured multiplied by the number of years
of premium payments. Disease death benefit incurred within the first two policy years is paid at the
premium received (without interest). Accident or disease death benefit after the first two policy years is
paid at 110% of the basic sum insured multiplied by the number of years of premium payments.
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. For accident death incurred on a train, a ship or a
flight, 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. For accident death incurred not on a train, a ship nor a flight, accident 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.
(e)
(d)
(c)
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.
New Xin Feng Endowment (Type A) (a)
Mei Man Yi Sheng Participating Annuity (d)
179,258
78,170
Others (f)
0.23%
300
10.77%
10,255
Hong Fu Participating Endowment (e)
2.11%
2,719
2.79%
2,659
Mei Man Yi Sheng Participating Annuity (d)
15,735
432
0.51%
482
Hong Ying Participating Endowment (c)
2.59%
3,339
3.74%
3,556
Kang Ning Whole Life (b)
0.06%
82.13%
12.09%
122,102
Total
11.79%
187,274
Hong Ying Participating Endowment (c)
11.60%
172,055
12.08%
191,865
Kang Ning Whole Life (b)
0.01%
91
4.01%
63,701
New Xin Feng Endowment (Type A) (a)
Liabilities of long-term insurance contracts
%
RMB million
%
As at 31 December 2013
As at 31 December 2014
RMB million
100.00%
128,892
100.00%
95,178
94.73%
138
5.85%
As at 31 December 2013
but not later
2,126
amount
maturity
than 1
year
than 3 years
than 5 years
Later than
5 years
Financial assets
Contractual cash inflows
Equity securities
154,957
154,957
Debt securities
873,817
67,013
142,017
201,242
994,360
Loans
118,626
63,142
16,740
26,382
29,326
Term deposits
664,174
87,700
but not later
355,944
Not later
Carrying
(213)
(2,783)
Bonds payable
67,989
(3,424)
(73,198)
Subtotal
1,828,929
(10,890)
(150,835)
(207,037)
(35,244)
(2,547,580)
Net cash inflows/(outflows)
326,174
225,140
321,642
385,423
359,064
(1,502,613)
141
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
4 RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.3 Liquidity risk (continued)
Contractual and expected cash flows (undiscounted)
Later than 1 year Later than 3 years
Without
(106)
295,967
Statutory deposits-restricted
Investment contracts
65,087
(14,692)
(11,642)
(8,564)
(2,237,733)
(77,315)
Contractual cash outflows
Securities sold under
agreements to repurchase
20,426
(20,426)
Annuity and other insurance
balances payable
23,179
(23,179)
Bonds payable
67,985
(3,424)
(36,848)
(39,774)
Subtotal
1,671,174
(92,442)
(168,760)
(157,899)
(2,315,048)
Net cash inflows/(outflows)
220,771
154,957
(109,561)
10,050
(120,270)
1,494,497
6,153
378
891
6,253
Securities purchased under
agreements to resell
8,295
8,295
Accrued investment income
34,717
28,358
32
6,327
Premiums receivable
9,876
9,876
Cash and cash equivalents
21,330
21,330
Subtotal
1,891,945
154,957
286,092
515,624
536,171
1,033,736
Financial and insurance liabilities
Expected cash outflows
Insurance contracts
(30,721)
193,650
2,623
Interest-bearing loans and
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
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
Carrying
As at 31 December 2014
amount
Without
maturity
Not later
than 1 year
but not later
than 3 years
years
but not later
than 5 years
Later than
5 years
Financial assets
Contractual cash inflows
Equity securities
236,030
236,030
Debt securities
941,836
72,234
186,342
186,285
982,202
4
Loans
140
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 Financial risk (continued)
4.2.1 Market risk (continued)
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
(iii) Currency risk (continued)
As at 31 December 2014, if RMB had strengthened or weakened by 10% against US dollar, HK
dollar and GB pound, with all other variables held constant, pre-tax profit for the year would have
been RMB1,025 million (as at 31 December 2013: RMB1,275 million) lower or higher, respectively,
mainly as a result of foreign exchange losses or gains on translation of US dollar, HK dollar and GB
pound 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
RMB830 million (as at 31 December 2013: RMB299 million) lower or higher, respectively, as a result
of foreign exchange losses or gains on translation of the available-for-sale equity securities. The actual
exchange gain in 2014 was RMB268 million (2013: exchange loss of RMB437 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 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.
Credit risk exposure
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 2014 and 2013.
Collateral and other credit enhancements
Securities purchased under agreements to resell are pledged by counterpart's debt securities or term deposits
of which the Group could take the ownership if the owner of the collateral default. Policy loans and
premium receivables are collateralized by their policies' cash value according to the terms and conditions of
policy loan contracts and policy contracts, respectively.
139
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
4
RISK MANAGEMENT (continued)
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 2014,
99.1% (as at 31 December 2013: 99.1%) of the corporate bonds held by the Group had credit rating of
AA/A-2 or above. As at 31 December 2014, 99.6% (as at 31 December 2013: 99.7%) of the subordinated
bonds or debts held by the Group either have credit rating of AA/A-2 or above, or were issued by national
commercial banks. The bonds or debts' credit rating is 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 2014, 99.7% (as at 31 December 2013: 99.6%) 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 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
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 2014 and 2013.
The credit risk associated with securities purchased under agreements to resell, policy loans and 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 2014 and
2013.
4.2.3 Liquidity risk
In the normal course of business, the Group attempts to match the maturity of financial assets to the
maturity of insurance and financial liabilities.
borrowings
166,453
27,423
394,308
1,044,967
Financial and insurance liabilities
Expected cash outflows
Insurance contracts
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
Securities sold under
agreements to repurchase
46,089
(46,089)
Financial liabilities at fair value
through profit or loss
10,890
(10,890)
Annuity and other insurance
balances payable
25,617
(25,617)
592,460
85,652
472,477
2,155,103
44,344
36,144
Term deposits
690,156
212,356
367,662
155,236
26,621
Statutory deposits-restricted
6,153
182
2,620
4,434
Securities purchased under
agreements to resell
11,925
11,925
Accrued investment income
44,350
31,928
8,413
4,009
Premiums receivable
11,166
11,166
Cash and cash equivalents
47,034
47,034
Subtotal
236,030
346,864
378,272
(1,281,312)
13,588
301
577
577
(144)
(144)
(290)
(85)
(205)
362
362
9,349
9,349
4,035
85
3,649
301
RMB million
RMB million
Equity securities
Equity securities
RMB million
RMB million
Debt securities
Total
Available-for-sale securities
(25)
(25)
Closing balance
other comprehensive income
13,889
Total gains/(losses) recorded in
147
Notes to the Consolidated Financial Statements
363
473
836
(377)
(377)
69
69
148
Accident insurance business relates primarily to the sale of accident insurance policies.
(iii) Accident insurance business (Accident)
Health insurance business relates primarily to the sale of health insurance policies, including those
health insurance policies without significant insurance risk transferred.
(ii) Health insurance business (Health)
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:
5.1 Operating segments
SEGMENT INFORMATION
As at 31 December 2014 and 2013, unobservable inputs such as weighted average cost of capital and
liquidity discount were used in the valuation of assets classified as Level 3 of fair value. The fair value was
not significantly sensitive to reasonable changes in these unobservable inputs.
For the years ended 31 December 2014 and 2013, 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 2014, RMB22,436
million (2013: RMB10,194 million) debt securities were transferred from Level 1 to Level 2 within the fair
value hierarchy, whereas RMB10,344 million (2013: RMB13,368 million) debt securities were transferred
from Level 2 to Level 1. No material equity securities were transferred between Level 1 and Level 2.
5
material impact
any
The assets whose fair value measurements are classified under Level 3 above do not have
on the profit or loss of the Group.
4.3 Fair value hierarchy (continued)
RISK MANAGEMENT (continued)
4
For the year ended 31 December 2014
China Life Insurance Company Limited Annual Report 2014
13,889
6,135
or loss
Transferred out of Level 3
- Equity securities
Available-for-sale securities
Assets measured at fair value
RMB million
RMB million
Total
inputs
Level 3
Significant
unobservable
RMB million
RMB million
Level 2
Level 1
market
inputs
in active
Quoted prices
Fair value measurement using
Significant
observable
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 2013:
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
4.3 Fair value hierarchy (continued)
RISK MANAGEMENT (continued)
4
146
22,678
542
21,635
501
134,085
Total gains/(losses) recorded in
profit
- Debt securities
3,868
305,665
Transferred into Level 3
Purchases
Opening balance
value through
profit or loss
Securities at fair
The following table presents the changes in Level 3 assets for the year ended 31 December 2013:
(25)
Total
(25)
through profit or loss
Investment contracts at fair value
525,699
13,889
330,956
180,854
Liabilities measured at fair value
Total
30,756
3,416
21,423
9,333
- Debt securities
3,416
- Equity securities
profit or loss
Securities at fair value through
339,986
151,541
13,588
301
34,020
5,935
13,588
200
According to "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.
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 value 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.
Under certain conditions, the Group may not receive price 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.
144
4
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
RISK MANAGEMENT (continued)
4.3 Fair value hierarchy (continued)
As at 31 December 2014, assets classified as Level 1 accounted for approximately 33.91% 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 2014, assets classified as Level 2 accounted for approximately 62.58% 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, analyze 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 2014, assets classified as Level 3 accounted for approximately 3.51% 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.
145
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
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:
Fair value measurement using
Quoted prices
Significant
in active
observable
226%
Significant
unobservable
294%
80,193
142
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
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 RMB74,745
million as at 31 December 2014 (as at 31 December 2013: RMB49,536 million). At 31 December 2014,
declared dividends of RMB44,515 million (as at 31 December 2013: RMB33,671 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.
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 RMB47,589 million
and RMB24,064 million, respectively for the year ended 31 December 2014 (2013: RMB46,196 million
and RMB18,364 million, respectively), payable within one year.
4.2.4 Capital management
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 35 and Note 20, respectively.
The Group ensures its continuous and full compliance with the regulations mainly through monitoring its
quarterly and annual solvency ratio, as well as the solvency ratio based on dynamic solvency testing.
143
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
4 RISK MANAGEMENT (continued)
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:
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
Actual capital
Minimum capital
Solvency ratio
236,151
168,501
74,485
market
Level 1
RMB million
Financial liabilities at fair value
through profit or loss
Investment contracts at fair value
through profit or loss
(10,890)
(21)
Total
(10,911)
The following table presents the changes in Level 3 assets for the year ended 31 December 2014:
Securities at fair
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
Closing balance
(10,890)
(21)
(10,911)
value through
Available-for-sale securities
profit or loss
Total
Debt securities
RMB million
Equity securities
RMB million
Equity securities
RMB million
RMB million
301
645,324
22,678
403,871
218,775
inputs
Level 2
RMB million
RMB million
inputs
Level 3
Total
RMB million
Assets measured at fair value
Available-for-sale securities
- Equity securities
151,817
- Debt securities
25,437
23,479
369,403
RISK MANAGEMENT (continued)
21,635
196,931
395,341
Securities at fair value
through profit or loss
- Equity securities
22,716
582
542
23,840
- Debt securities
18,805
10,407
29,212
Total
Liabilities measured at fair value
501
4
2,126
(1,389)
2,244
13,496
255
(25)
As at 1 January 2013
Net book value
(25)
As at 31 December 2013
(25)¨¨¨¨(25)
(11,745)
(836)
Disposals
properties
Motor
Assets under
Leasehold
Buildings
fixtures
vehicles
construction improvements
Total
RMB million
As at 1 January 2013
19,247
6,282
589
5,126
330
21,785
Buildings
RMB million
As at 31 December 2014
As at 1 January 2014
Net book value
As at 31 December 2014
year
As at 1 January 2014
Charge for the
Accumulated depreciation
As at 31 December 2014
Additions
As at 1 January 2014
Cost
1,531
Group
7
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
157
22,818
306
6,125
559
2,331
13,497
As at 31 December 2013
INVESTMENT PROPERTIES
1,435
5,126
33,266
Accumulated depreciation
As at 1 January 2013
(5,265)
(3,973)
(932)
(736)
(10,906)
Charge for the year
(744)
(727)
(169)
(138)
(1,778)
Transfer to investment
properties
83
83
Disposals
16
351
218
16
601
As at 31 December 2013
(5,910)
35,418
1,166
6,125
1,448
Transfers
Additions
upon completion
1,263
18
(1,389)
108
127
822
155
3,373
4,477
Transfer to investment
1,080
properties
(811)
(1,435)
Disposals
(64)
(392)
(238)
(174)
(22)
(890)
As at 31 December 2013
19,949
6,730
(624)
1,435
(106)
(46)
(1,844)
Disposals
58
654
54
26
792
As at 31 December 2014
(6,640)
(4,473)
(996)
year
(943)
(13,052)
Impairment
As at 1 January 2014
(25)
Charge for the year
Disposals
As at 31 December 2014
(24)
(25)
(24)
Net book value
As at 1 January 2014
(111)
(167)
(778)
(788)
2
3,614
13
4,165
Disposals
(128)
(683)
(58)
(212)
(33)
(1,114)
As at 31 December 2014
14,014
22,777
1,392
6,333
1,246
38,424
Accumulated depreciation
As at 1 January 2014
(5,910)
(4,349)
(883)
(858)
(12,000)
Charge for the year
6,676
2,381
565
6,125
Transfer to investment
properties
96
96
Disposals
14
349
218
16
597
As at 31 December 2013
(5,764)
(1,724)
(4,275)
Impairment
As at 1 January 2013
Charge for the
158
2,080
2,045
As at 31 December 2014
As at 1 January 2014
Fair value
1,283
1,329
(152)
(870)
(4,349)
(126)
(713)
308
23,393
As at 31 December 2014
16,113
2,203
396
6,333
303
25,348
154
6
China Life Insurance Company Limited Annual Report 2014
(166)
Notes to the Consolidated Financial Statements
PROPERTY, PLANT AND EQUIPMENT (continued)
Group (continued)
Cost
Office
equipment
furniture and
(5,155)
(3,911)
(922)
(726)
(10,714)
Charge for the year
(719)
For the year ended 31 December 2014
(883)
Impairment
As at 1 January 2013
expenses
Benefits, claims and
440,766
(928)
4,736
12,268
35,255
389,435
Segment revenues
(928)
928
Including: inter-segment revenue
4,185
(928)
4,148
67
898
Other income
5,808
(547)
22
154
6,179
Net fair value gains/(losses) through profit or loss
7,120
Insurance benefits and claims expenses
Life insurance death and other benefits
(191,291)
(1,355)
(897)
(3,354)
(4,770)
(18,126)
Underwriting and policy acquisition costs
(24,866)
(124)
(24,742)
participation in profits
Policyholder dividends resulting from
(1,958)
(152)
(48)
(1,806)
(105,883)
(110)
(8,196)
(97,577)
Increase in insurance contract liabilities
(16,752)
(3,869)
(12,883)
adjustment expenses
Accident and health claims and claim
(192,659)
(13)
Investment contract benefits
24
174
6,970
Accident
Health
Life
For the year ended 31 December 2014
SEGMENT INFORMATION (continued)
5
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
149
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 contracts liabilities are presented under the
respective segments. The remaining assets and liabilities are not allocated.
5.3 Allocation basis of assets and liabilities
Others
Investment income, net realised gains and impairment 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.
5.2 Allocation basis of income and
The Group has restated prior year's comparative amounts based on the adjusted operating segments as
follows.
In order to better reflect the changes in the Group's external environment and business structure, and
the objectives of future development, as well as providing users of financial statements with more useful
information, the Group has adjusted its internal reporting method of segments in 2014, and realigned the
composition of its reporting segments by changing the previously reported individual life insurance, group
life insurance, short-term insurance, supplementary major medical insurance and other segments into four
newly identified segments, namely life insurance, health insurance, accident insurance and others. The
Group's management has conducted analysis and evaluation on the operating results based on the new
reporting segments.
Other businesses relate primarily to income and allocated cost of insurance agency
business in respect
of services to CLIC as described in Note 33, share of results of associates and joint ventures, income
and expenses of subsidiaries, and unallocated income and expenditure of the Group.
Other businesses (Others)
(iv)
5.1 Operating segments (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
SEGMENT INFORMATION (continued)
5
expenses
(27,147)
RMB million
Total
Net realised gains and impairment on financial assets
93,548
1,183
315
2,236
89,814
Investment income
330,105
11,907
32,624
285,574
Net premiums earned
Elimination
35,319
- Annuity
- Endowment
29,767
- Whole life
2,871
- Term life
331,010
12,199
33,192
285,619
Gross written premiums
Revenues
217,662
361
Finance costs
(111)
6 PROPERTY, PLANT AND EQUIPMENT (continued)
Company
Office
equipment
furniture and
Buildings
fixtures
Motor
vehicles
Assets under
construction improvements
Leasehold
Total
RMB million
Cost
As at 1 January 2014
19,286
6,606
1,429
6,125
1,142
34,588
Transfers
Additions
upon completion
2,781
268
(3,194)
100
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
155
Charge for the
year
Transfer to investment
properties
Disposals
(858)
(12,000)
(25)¨¨¨¨(25)
As at 31 December 2013
(25)
(25)
Net book value
(45)
As at 1 January 2013
2,309
599
5,126
344
22,335
As at 31 December 2013
14,014
2,381
565
6,125
308
23,393
13,957
175
336
2
Disposals
57
654
54
25
790
As at 31 December 2014
(6,469)
(4,382)
(982)
(919)
(12,752)
(1,797)
Impairment
(25)
Charge for the year
Disposals
As at 31 December 2014
(24)
----(
(25)
(24)
Net book value
As at 1 January 2014
(148)
(16)
As at 1 January 2014
(4,451)
(108)
(761)
3,613
12
4,138
Disposals
(128)
(683)
(58)
(212)
(32)
(1,113)
As at 31 December 2014
22,114
(166)
6,527
6,332
1,222
37,568
Accumulated depreciation
As at 1 January 2014
(5,764)
(4,275)
(870)
(836)
(11,745)
Charge for the year
(762)
1,373
175
(45)
100
Depreciation and amortisation
(21,562)
(372)
(66)
(428)
(20,696)
equity holders of the Company
Other comprehensive income attributable to
243
24,765
- Non-controlling interests
- Equity holders of the Company
Attributable to
25,008
Net profit
(4,443)
Income tax
29,451
4,066
608
2,739
22,038
Segment results
3,125
3,125
1,392
271
221
142
34,863
303
2,609
7,991
Others
6,279
5,578
38,363
1,831,849
cash equivalents)
Financial assets (including cash and
Assets
Share of profit of associates and joint ventures
Total
Others
Accident
RMB million
Health
Life
As at 31 December 2013 (restated)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
SEGMENT INFORMATION (continued)
5
152
2,026
Elimination
(391,557)
878
(3,547)
(81)
(3,931)
Finance costs
(25,690)
(741)
(3,012)
(4,408)
(17,529)
Underwriting and policy acquisition costs
(18,423)
(54)
(18,369)
(12)
participation in profits
(1,818)
(11,263)
(107,354)
| | |
(69)
(1,749)
Investment contract benefits
(62)
(5,981)
(101,311)
Increase in insurance contract liabilities
(3,236)
As at 1 January 2013
Policyholder dividends resulting from
1,882,069
45,766
(8)
Administrative expenses
(9,558)
(23,292)
(356,038)
Segment benefits, claims and expenses
(637)
(75)
(92)
(470)
Statutory insurance fund contribution
878
(3)
(18)
(4,032)
(857)
(3,864)
878
(926)
(577)
(149)
(3,090)
Other expenses
(24,805)
(1,872)
(2,581)
(3,384)
(16,968)
Including: inter-segment expenses
(8,027)
Segment assets
40,972
6,332
391
2,145
15,621
As at 31 December 2014
22,818
306
6,125
559
2,331
13,497
113
810
155
3,373
4,451
Transfer to investment
properties
(702)
(811)
(1,513)
Disposals
(64)
(377)
(237)
303
24,792
156
China Life Insurance Company Limited Annual Report 2014
18
1,263
upon completion
Transfers
Additions
32,524
1,056
5,126
1,511
6,155
18,676
As at 1 January 2013
Cost
(174)
RMB million
construction improvements
vehicles
fixtures
Buildings
Leasehold
Assets under
Motor
Office
equipment
furniture and
Company (continued)
6 PROPERTY, PLANT AND EQUIPMENT (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
Total
(22)
(874)
As at 31 December 2013
20,426
368
62
404
19,592
Securities sold under agreements to repurchase
65,087
7,096
57,991
Investment contracts
1,494,497
5,147
Others
28,229
Insurance contracts
Liabilities
1,972,941
21,713
23,393
Total
Others
Property, plant and equipment
Unallocated
1,927,835
41,142
5,881
1,461,121
1,839,840
89,003
322
19,286
6,606
1,429
6,125
1,142
34,588
Accumulated depreciation
PROPERTY, PLANT AND EQUIPMENT
6
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
2,318
1,750,356
153
Total
Others
Unallocated
1,671,653
68
368
5,531
38,047
1,627,707
Segment liabilities
91,643
78,703
108
adjustment expenses
(193,671)
221
324
1,427
Depreciation and amortisation
39,232
(123)
134
951
38,270
equity holders of the Company
Other comprehensive income attributable to
303
32,211
- Non-controlling interests
- Equity holders of the Company
Attributable to
32,514
Net profit
(7,888)
Income tax
40,402
4,953
1,546
3,252
30,651
152
2,124
150
5
2,067,522
Segment assets
2,144,036
56,568
44,390
312
3,985
7,881
Others
27,421
6,961
50,013
2,059,641
Segment results
cash equivalents)
Assets
Total
Elimination
Others
Accident
RMB million
Health
Life
As at 31 December 2014
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
SEGMENT INFORMATION (continued)
Financial assets (including cash and
3,911
3,911
Share of profit of associates and joint ventures
(4,726)
Group
Cost
Office
equipment
furniture and
Motor
Assets under
Buildings
fixtures
vehicles
construction improvements
Leasehold
Administrative expenses
Total
As at 1 January 2014
19,949
6,730
1,448
6,125
1,166
35,418
Transfers
Additions
upon completion
2,781
268
(3,194)
RMB million
53,998
(16,677)
(2,576)
(404,275)
928
(3,694)
(10,722)
(32,003)
(358,784)
Segment benefits, claims and expenses
(701)
(79)
(116)
(506)
Statutory insurance fund contribution
(4,092)
928
(22)
(903)
Including: inter-segment expenses
(4,151)
928
(562)
(705)
(204)
(3,608)
Other expenses
(25,432)
(2,087)
(3)
Accident and health claims and claim
7,273
2,200,604
18
117
5,679
Net realised gains and impairment on financial assets
82,816
258
253
1,665
80,640
Investment income
324,813
9,895
24,180
290,738
Net premiums earned
326,290
| | | |
| | | |
49,635
209,034
- Annuity
- Endowment
29,782
- Whole life
2,327
(21)
5,793
Net fair value gains/(losses) through profit or loss
149
(3)
(1,047)
(192,621)
Life insurance death and other benefits
Insurance benefits and claims expenses
expenses
Benefits, claims and
417,883
(878)
4,488
10,166
26,031
- Term life
378,076
(878)
878
Including: inter-segment revenue
4,324
(878)
4,266
66
870
Other income
137
(15)
3
Segment revenues
10,799
24,713
290,778
2,732
90,703
Others
46,089
1,551
152
1,076
43,310
Securities sold under agreements to repurchase
72,275
8,565
63,710
372
Investment contracts
5,860
38,872
1,558,714
Insurance contracts
Liabilities
2,246,567
20,615
25,348
Total
Others
Property, plant and equipment
Unallocated
1,603,446
71,811
13,513
Segment liabilities
Gross written premiums
Revenues
Total
Elimination
RMB million
Others
Accident
Health
For the year ended 31 December 2013 (restated)
Life
SEGMENT INFORMATION (continued)
5
107,320
For the year ended 31 December 2014
China Life Insurance Company Limited Annual Report 2014
1,959,236
130,106
151
Total
Others
Unallocated
1,829,130
15,064
6,384
51,245
1,756,437
Notes to the Consolidated Financial Statements
Transfer to investment
As at 31 December 2013
2,447
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Total
Debt securities
Listed in mainland, PRC
Unlisted
Total
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
88,843
97,702
Debt securities
126,140
Company
503,075
146,595
131,022
155,705
160,733
517,283
503,075
68,199
49,159
37
21
23
23
449,024
453,872
517,283
The estimated fair value of all held-to-maturity securities was RMB526,526 million as at 31 December 2014
(as at 31 December 2013: RMB464,996 million).
113,618
113,618
130,469
9.1 Held-to-maturity securities (continued)
Group debt securities
– Contractual maturity schedule
Maturing:
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
Within one year
11,823
12,905
After one year but within five
70,592
64,878
years
FINANCIAL ASSETS (continued)
146,027
9
Notes to the Consolidated Financial Statements
155,700
160,728
516,710
502,517
68,199
49,159
448,511
453,358
516,710
502,517
The estimated fair value of all held-to-maturity securities was RMB525,949 million as at 31 December 2014
(as at 31 December 2013: RMB464,477 million).
Unlisted debt securities include those traded on the Chinese interbank market.
165
China Life Insurance Company Limited Annual Report 2014
Accumulated depreciation
For the year ended 31 December 2014
After five years but within ten years
126,140
88,843
35.00%
Carrying amount of the investments
17,704
3,267
12,403
1,401
Total revenues
Net profit
Other comprehensive income
34,477
28,054
32,386
1,483
11,583
535
29.02%
4,661
40.00%
Proportion of the Group's ownership
43,445
Total equity attributable to equity holders
of the associates
73,292
8,167
37,525
2,445
Total adjustments (i)
1,877
Total equity attributable to equity holders
of the associates after adjustments
73,292
8,167
39,402
2,445
20.00%
97,702
169
253
Subordinated bonds/debts
Total
Debt securities
Listed in mainland, PRC
Listed in Hong Kong, PRC
Listed in Singapore
Unlisted
Total
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
Corporate bonds
(1,820)
bonds
Government bonds
46
9
Total comprehensive income
9,763
788
4,707
178
The Group had no contingent liabilities or capital commitments with the associates as at 31 December 2013.
(i) Including adjustments for the difference of accounting policies, fair value and others.
164
9
FINANCIAL ASSETS
9.1 Held-to-maturity securities
Group
Debt securities
Government agency
149,986
109,334
After ten years
60,315
53,665
26,002
32,111
31,969
165,913
118,286
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
9
FINANCIAL ASSETS (continued)
9.2 Loans (continued)
(i)
Other loans mainly consisted of different types of asset management products. As at 31 December 2014,
RMB84,300 million (as at 31 December 2013: RMB62,200 million) of asset management products had been
managed by China Life Asset Management Company Limited ("AMC”), a subsidiary of the Company, of which
RMB39,571 million (as at 31 December 2013: RMB34,920 million) was owned by the Group. Meanwhile, the
Group also owned RMB50,034 million (as at 31 December 2013: RMB22,836 million) of asset management
products managed by other financial institutions. All 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.
80,137
During the year ended 31 December 2014, the Group's investment income from the above asset management
products was RMB4,137 million (2013: RMB2,894 million), the related asset management fee received by AMC
was RMB171 million (2013: RMB106 million).
RMB million
December 2013
32,345
32,119
166,453
118,626
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
73,654
92,259
60,176
58,110
165,913
118,286
As at 31
December 2014
As at 31
RMB million
26,192
9.3 Term deposits
Maturing:
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
Within one year
After one year but within five
years
After five years but within ten years
195,529
463,442
74,460
577,942
26,500
10,000
Total
685,471
662,402
168
Maturing:
Group
Company
690,156
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
Within one year
After one year but within five
years
After five years but within ten years
200,214
74,932
463,442
579,242
26,500
10,000
Total
664,174
53,894
60,315
80,214
64,872
After five years but within ten years
149,837
109,085
284,580
315,655
After ten years
Total
166
516,710
502,517
9
FINANCIAL ASSETS (continued)
9.2 Loans
Group
70,477
Policy loans
After one year but within five years
12,905
284,882
315,958
Total
517,283
503,075
Company debt securities
As at 31
As at 31
Contractual maturity schedule
December 2014
December 2013
RMB million
RMB million
Maturing:
11,816
Within one year
Other loans (i)
Total
Maturing:
As at 31
December 2013
RMB million
RMB million
73,654
60,176
92,799
58,450
166,453
118,626
As at 31
As at 31
December 2014
December 2013
RMB million
RMB million
December 2014
As at 31
167
For the year ended 31 December 2014
Within one year
After one year but within five years
After five but within ten years
years
Total
Company
Policy loans
Other loans (i)
8,167
Total
Within one year
After one year but within five
years
After five years but within ten years
Total
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
Maturing:
Total equity
73,292
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
7
8
INVESTMENT PROPERTIES (continued)
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.
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
Group
2014
RMB million
2013
RMB million
As at 1 January
34,775
161
Investments in associates and joint ventures (i)
The fair values of investment properties of the Group and the Company as at 31 December 2014 amounted
to RMB2,080 million and RMB2,231 million (as at 31 December 2013: RMB2,045 million and RMB2, 195
million), respectively, which were 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.
The Group has no restrictions on the reliability of its investment properties and no contractual obligations to each
investment property purchased, constructed or developed or for repairs, maintenance and enhancements.
Fair value
As at 1 January 2013
As at 31 December 2013
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
Buildings
RMB Million
1,513
1,513
(23)
(96)
(119)
1,394
2,195
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.
There were no investment properties without title certificates as at 31 December 2014.
As at 31 December 2013
5,671
Amount of additional investment cost below the fair value for identifiable net assets
Scrip dividend (ii)
As at 31 December
162
2014
RMB million
2013
RMB million
23,976
21,389
2,800
268
2,506
81
27,044
23,976
8
China Life Insurance Company Limited Annual Report 2014
Investments in associates and joint ventures (i)
28,991
2,506
As at 1 January
34,775
683
Scrip dividend (ii)
268
81
Share of profit
3,911
3,125
Other equity movements
280
(332)
Dividend received (ii)
(515)
(279)
As at 31 December
44,390
Company
6,039
As at 1 January 2013
As at 31 December 2013
Charge for the year
(119)
1,513
1,513
Buildings
RMB million
As at 1 January 2014
Accumulated depreciation
As at 31 December 2014
Transfer from property, plant and equipment
Additions
As at 1 January 2014
Cost
Company
INVESTMENT PROPERTIES (continued)
7
(49)
For the year ended 31 December 2014
Transfer from property, plant and equipment
(168)
Cost
Company (continued)
INVESTMENT PROPERTIES (continued)
7
2,231
2,195
1,345
1,394
160
As at 31 December 2014
As at 1 January 2014
Fair value
As at 31 December 2014
As at 1 January 2014
Net book value
As at 31 December 2014
Net book value
Notes to the Consolidated Financial Statements
159
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
As at 1 January 2013
Accumulated depreciation
As at 31 December 2013
Transfer from property, plant and equipment
Additions
As at 1 January 2013
Cost
Group (continued)
INVESTMENT PROPERTIES (continued)
7
As at 1 January 2013
Charge for the year
Transfer from property, plant and equipment
For the year ended 31 December 2014
China Life Insurance Company Limited Annual Report 2014
Buildings
RMB Million
1,435
2,045
As at 31 December 2013
As at 1 January 2013
Fair value
1,329
As at 31 December 2013
As at 1 January 2013
Net book value
(106)
As at 31 December 2013
(83)
(23)
33
Transfer from property, plant and equipment
Charge for the year
1,435
As at 1 January 2013
For the year ended 31 December 2014
(i)
20.00%
40.00%
29.46%
35.00%
70.00%
Carrying amount of the investments
Total revenues
Net profit
Other comprehensive income
20,535
6,757
13,186
1,434
2,478
44,644
Proportion of the Group's ownership
36,522
3,540
41,475
Total equity attributable to equity holders
of the associates and joint ventures
87,449
16,893
40,491
2,539
3,749
Total adjustments (i)
984
(209)
Total equity attributable to equity holders
of the associates and joint ventures
after adjustments
87,449
16,893
2,539
3,749
40,411
241
CGB
RMB million
CLP&C
RMB million
Sino-Ocean
RMB million
COFCO Futures
RMB million
Total assets
1,469,850
37,359
137,869
8,486
Total liabilities
1,396,558
Transfer from property, plant and equipment
29,192
94,424
The following table illustrates the summarised financial information of the Group's associates as at 31 December
2013 and for the year ended 31 December 2013:
3,306
December 2014.
(157)
12,037
1,407
4,606
84
142
2,120
318
(19)
8
(299)
Total comprehensive income
14,157
1,725
4,587
92
The Group had no contingent liabilities or capital commitments with the associates and joint venture as at 31
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
2,539
16,893
10 Upper Bank Street SLP
Jersey Island
As at 31 December 2013, the Group owned the following associates:
Name
CGB
CLP&C
Sino-Ocean
COFCO Futures
Percentage of equity interest held
20.00%
40.00%
29.46%
PRC
35.00%
70.00%
Joint venture
Country of incorporation
("COFCO Futures")
Hong Kong, PRC
(ii)
On 9 June 2014, the Company, CLIC and China Life Property and Casualty Insurance Company Limited
("CLP&C") signed a contract, pursuant to which the Company and CLIC agreed to contribute capital of
RMB2,800 million and RMB4,200 million in cash respectively to CLP&C. After the capital injection, the
Company's percentage of holding in CLP&C remained unchanged and its accumulated investment cost
increased to RMB6,000 million.
On 20 June 2014, King Phoenix Tree Limited, a subsidiary of the Company, invested GBP275 million to
establish 10 Upper Bank Street Separate Limited Partnership (“10 Upper Bank Street SLP”), holding 70%
of the total partnership interest. According to the partnership agreement, King Phoenix Tree Limited, as a
limited partner, cannot control 10 Upper Bank Street SLP on its own, but has joint control with the general
partner. Therefore, 10 Upper Bank Street SLP was accounted for as a joint venture of the Group.
2013 final dividend of HKD0.16 per ordinary share was approved and declared in the annual general
meeting of Sino-Ocean Land Holdings Limited (“Sino-Ocean”) on 9 May 2014, and each shareholder could
elect to receive the 2013 final dividend in cash or in scrip shares. The Company elected the scrip shares
option and received scrip shares amounting to RMB268 million.
2014 interim dividend of HKD0.075 per ordinary share was approved and declared in the board meeting of
Sino-Ocean on 19 September 2014, and each shareholder could elect to receive the 2014 interim dividend
in cash or in scrip shares. The Company elected the cash option and received cash dividend amounting to
RMB131 million.
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 2014, the stock price of Sino-Ocean was HKD4.41 per
As at 31 December 2014, the Group owned the following associates and joint venture:
share.
Name
Associates
Country of incorporation
China Guangfa Bank Co. Ltd (“CGB")
CLP&C
PRC
PRC
Sino-Ocean
COFCO Futures Company Limited
44,383
Percentage of equity interest held
20.00%
Street SLP
RMB million
Total assets
1,648,056
52,769
132,212
9,784
8,199
Total liabilities
1,560,607
35,876
87,829
7,245
4,450
Total equity
87,449
RMB million
PRC
Sino-Ocean
RMB million
PRC
40.00%
Hong Kong, PRC
29.02%
PRC
35.00%
163
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
8
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
The following table illustrates the summarised financial information of the Group's associates and joint venture as
at 31 December 2014 and for the year ended 31 December 2014:
COFCO 10 Upper Bank
Futures
RMB million
CGB
CLP&C
RMB million
Additions
Group
Contractual maturity schedule
Statutory deposits - restricted
352
FINANCIAL ASSETS (continued)
9
Within one year
9.4
After one year but within five
years
Total
11,925
8,295
11,925
Securities purchased under agreements to resell
34,172
53,052
34,172
53,052
Securities at fair value through profit or loss
491,527
592,272
491,527
592,272
6,153
6,153
8,295
6,153
Cash and cash equivalents
21,330
(20,426)
(46,089)
(20,426)
(46,089)
Securities sold under agreements to repurchase
(10,890)
(10,890)
Financial liabilities at fair value through profit or loss
(63,772)
(70,694)
(65,087)
(72,275)
Investment contracts (iii)
21,330
47,034
47,034
6,153
664,174
690,156
investment contracts:
The table below presents the carrying value and estimated fair value of major financial assets and liabilities, and
For the year ended 31 December 2014
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
10
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
34,624
43,981
176
Total
6,337
12,377
Non-current
28,287
Carrying value
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
Estimated fair value (i)
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
664,174
690,156
118,626
166,453
118,626
166,453
464,996
Bonds payable (iii)
526,526
517,283
Available-for-sale securities, at fair value
Term deposits
Loans
Held-to-maturity securities (ii)
-
Statutory deposits – restricted
503,075
31,604
(67,989)
(68,370)
6,137
Land use rights
RMB million
As at 31
December 2013
As at 31
December 2014
RMB million
1,069
1,032
846
908
223
124
Group
OTHER ASSETS
13
Total
6,183
Non-current
Due from related parties
656
Total
Non-current
Current
Total
3,360
3,756
Others
4,104
Fund subscription and redemption fees receivable
8,175
2,449
Tax refundable
2,056
2,281
Automated policy loans
684
Current
1,069
1,032
12
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
177
As at 31 December 2014, the carrying value of premiums receivable within one year was RMB11,143 million (as
at 31 December 2013: RMB9,871 million).
PREMIUMS RECEIVABLE
The fair value of investment contracts at amortised cost and bonds payable were determined by 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 value of investment contracts at amortised
cost and bonds payable were classified as Level 3.
Investment contracts at fair value through profit or loss have quoted prices in active markets, so its fair value
was classified as Level 1.
(iii)
(ii) The fair value of held-to-maturity securities are 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 RMB69,506 million and under Level 2 was RMB457,020 million as at 31 December 2014 (as at 31
December 2013: Level 1 RMB54,643 million and Level 2 RMB410,353 million).
The estimates and judgements to determine the fair value of financial assets are described in Note 3.2.
11
(i)
(65,486)
REINSURANCE ASSETS
Group and Company
As at 31
December 2014
Total
60
39
121
65
42
20
(67,985)
846
Claims recoverable from reinsurers (Note 14)
Ceded unearned premiums (Note 14)
Due from reinsurance companies
Long-term insurance contracts ceded (Note 14)
RMB million
RMB million
As at 31
December 2013
908
Current
34,624
43,981
16,764
Subtotal
25,312
11,666
Unlisted
5,277
5,098
Listed in mainland, PRC
Debt securities
34,005
38,822
3,416
22,058
Total
Subtotal
30,589
2,477
Equity securities
Unlisted
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
9
174
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.
34,005
38,822
3,416
22,058
932
352
2,484
21,706
Total
Subtotal
Listed in mainland, PRC
21,559
Common stocks
939
Company
9.6 Securities at fair value through profit or loss (continued)
FINANCIAL ASSETS (continued)
9
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
34,172
53,052
3,416
23,840
173
Total
Subtotal
932
Debt securities
Government bonds
Government agency bonds
Corporate bonds
499
Funds
Equity securities
30,589
16,764
24,441
14,782
FINANCIAL ASSETS (continued)
4,659
1,489
254
RMB million
December 2014
RMB million
As at 31
December 2013
As at 31
Subtotal
1,728
9.7 Securities purchased under agreements to resell
Group
Maturing:
12,422
Non-current
28,358
31,928
Current
34,717
44,350
1,105
1,599
13,402
15,667
20,210
27,084
RMB million
As at 31
December 2013
6,359
Total
Company
Bank deposits
1,104
1,596
13,379
15,450
20,141
26,935
RMB million
December 2014
RMB million
As at 31
December 2013
December 2014
As at 31
34,717
44,350
Total
Others
Debt securities
RMB million
178
As at 31
Others
8,295
11,925
As at 31
December 2013
RMB million
December 2014
RMB million
As at 31
For the year ended 31 December 2014
175
Total
After 30 days but within 90 days
Within 30 days
Maturing:
Company
Total
After 30 days but within 90 days
Within 30 days
11,925
8,295
As at 31
As at 31
Debt securities
Bank deposits
Group
9.8 Accrued investment income
FINANCIAL ASSETS (continued)
9
For the year ended 31 December 2014
Total
Notes to the Consolidated Financial Statements
8,266
11,841
8,266
11,841
RMB million
December 2013
December 2014
RMB million
China Life Insurance Company Limited Annual Report 2014
Unlisted
19,411
12,956
Unlisted
Subtotal
Total
170
71,553
80,638
8,303
2,985
132,334
67,918
212,190
151,541
607,531
491,527
9
Listed in Hong Kong, PRC
FINANCIAL ASSETS (continued)
Listed in mainland, PRC
Subtotal
Equity securities
Others (i)
15,259
Total
607,531
491,527
Debt securities
Listed in mainland, PRC
46,137
Listed in Singapore
260
Unlisted
348,944
37,652
266
302,068
395,341
339,986
Equity securities
9.5 Available-for-sale securities (continued)
Company
Available-for-sale securities, at fair value
For the year ended 31 December 2014
As at 31
As at 31
December 2014
December 2013
RMB million
RMB million
25,913
31,088
138,487
119,739
205,620
164,364
22,798
23,579
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
Others (i)
(i)
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Others (i)
Subtotal
Available-for-sale securities, at cost
Equity securities
Common stocks
Preferred stocks
Others (i)
Subtotal
Available-for-sale securities, at cost
Equity securities
Total
Funds
1,217
151,541
16,239
December 2014
December 2013
RMB million
RMB million
5,653
5,653
5,653
5,653
Insurance companies in China are required to deposit an amount equal 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.
169
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
9
FINANCIAL ASSETS (continued)
As at 31
9.5 Available-for-sale securities
As at 31
6,153
Company
Contractual maturity schedule
Within one year
After one year but within five years
Total
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
As at 31
As at 31
December 2014
RMB million
December 2013
RMB million
6,153
6,153
6,153
Group
Available-for-sale securities, at fair value
Debt securities
119,739
206,511
165,001
22,798
23,579
1,217
232
395,341
339,986
83,121
58,052
71,592
77,250
3,000
39,218
138,487
31,435
26,328
RMB million
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Others (i)
Subtotal
Equity securities
196,931
Funds
Preferred stocks
Others (i)
Subtotal
As at 31
December 2014
RMB million
As at 31
December 2013
Common stocks
20,430
232
339,002
Notes to the Consolidated Financial Statements
FINANCIAL ASSETS (continued)
9.6 Securities at fair value through profit or loss
Group
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Subtotal
For the year ended 31 December 2014
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
254
China Life Insurance Company Limited Annual Report 2014
1,489
9
394,035
RMB million
Maturing:
Within one year
After one year but within five years
After five years but within ten years
After ten years
Total
172
13,939
7,964
139,624
115,468
119,987
117,203
120,485
98,367
339,002
4,085
4,659
24,873
Unlisted
23,292
25,381
Subtotal
29,212
30,756
Equity securities
Listed in mainland, PRC
23,488
2,484
20,430
19,411
6,338
6,455
14,092
5,375
5,920
Listed in mainland, PRC
Debt securities
24,608
29,212
30,756
Equity securities
Funds
499
939
December 2013
Common stocks
2,477
Subtotal
Total
23,840
3,416
53,052
34,172
23,341
394,035
As at 31
December 2014
Company (continued)
Debt securities
Listed in mainland, PRC
Listed in Singapore
Unlisted
Equity securities
Listed in mainland, PRC
Listed in Hong Kong, PRC
Unlisted
Subtotal
Total
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
9.5 Available-for-sale securities (continued)
FINANCIAL ASSETS (continued)
9
For the year ended 31 December 2014
82,714
57,704
71,592
77,235
3,000
38,645
15,701
45,707
260
348,068
195,951
15,259
605,245
489,642
Other available-for-sale securities mainly include bank wealth management products, private equity funds, other
unlisted equity investments, 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 maximum
risk exposure.
171
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
150,640
RMB million
37,208
266
394,035
Company debt securities
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
13,939
7,964
139,737
115,636
120,284
117,242
121,381
99,144
395,341
339,986
As at 31
Contractual maturity schedule
Total
301,528
After ten years
After one year but within five years
339,002
71,548
80,365
8,303
2,985
131,359
67,290
After five years but within ten years
211,210
605,245
489,642
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.
Group debt securities
- Contractual maturity schedule
Maturing:
Within one year
150,640
Subtotal
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 2014, the carrying value of securities deposited in the collateral pool was RMB49,308 million (as
at 31 December 2013: RMB35,331 million). The collateral is restricted from trading during the period of the
repurchase transaction.
188
Increase
2014
Other movements
- Change in other assumptions (ii)
Change in discount rates
Change in assumptions
Accretion of interest
Release of liabilities (i)
Premiums
As at 1 January
Group and Company
The table below presents movements in the liabilities of long-term insurance contracts:
(d) Movements in liabilities of long-term insurance contracts
INSURANCE CONTRACTS (continued)
14
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
(6,896)
121
(6,775)
(5,955)
101
(5,854)
RMB million
As at 31 December
(65)
7,165
6,896
(121)
6,775
183
7,230
Release
2013
RMB million
1,375,504
Deposits received
As at 1 January
The table below presents movements of investment contracts with DPF:
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
Total
- At fair value through profit or loss
- At amortised cost
Investment contracts without DPF
Investment contracts with DPF at amortised cost
Group and Company
15 INVESTMENT CONTRACTS
184
For the
year ended 31 December 2013, change in other assumptions was mainly caused by change in
lapse rate assumptions of certain products, which increased insurance contract liabilities by RMB337
million. This change reflected the Group's most recent experience and future expectations about
lapse rate as at the reporting date. Changes in assumptions other than lapse rates decreased insurance
contract liabilities by RMB66 million.
For the year ended 31 December 2014, change in other assumptions was mainly caused by 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 the morbidity rates as at the reporting date. Changes in assumptions other than morbidity rates
decreased insurance contract liabilities by RMB21 million.
(ii)
305,720
(264,175)
69,214
64,478
(4,599)
420
1,482,946
304,677
(265,137)
1,222
271
(74)
As at 31 December
1,588,900
1,482,946
(i)
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.
1,379
6,775
(121)
6,896
- Claims arising in prior years
11,476
16,499
- Claims arising in current year
Claims incurred
(2,712)
(4,557)
- Cash paid for prior year claims
(7,106)
(9,636)
Cash paid for current year claims
Cash paid for claims settled
3,078
4,655
Total as at 1 January – Gross
2,876
202
For the year ended 31 December 2014
INSURANCE CONTRACTS (continued)
14
(c)
Movements in liabilities of short-term insurance contracts
The table below presents movements in claims and claim adjustment expense reserve:
355
Group and Company
Incurred but not reported
2014
RMB million
2013
RMB million
835
3,820
Notified claims
(81)
Total as at 31 December - Gross
Notified claims
Net
Gross
Ceded
Net
As at 1 January
6,896
Ceded
(121)
5,955
(101)
5,854
7,230
(65)
7,165
6,775
Deposits withdrawn, payments on death and other benefits
Gross
RMB million
Incurred but not reported
Total as at 31 December - Gross
The table below presents movements in unearned premium reserves:
Group and Company
7,316
4,655
RMB million
2,135
5,181
3,820
7,316
4,655
2014
2013
835
Policy fees deducted from account balances
Interest credited
As at 31 December
46,089
3,000
3,000
118
17,426
42,971
20,426
46,089
6,564
4,612
13,862
41,477
RMB million
As at 31
December 2013
December 2014
RMB million
As at 31
For the year ended 31 December 2014
186
18
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Group
20,426
Interbank market
Total
Maturing:
Within 30 days
After 30 but within 90 days
After 90 days
Total
Stock exchange market
As at 31 December 2014, bonds with a carrying value of RMB42,177 million (as at 31 December 2013:
RMB14,338 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
2014, the carrying value of securities deposited in the collateral pool was RMB49,963 million (as at 31 December
2013: RMB35,677 million). The collateral is restricted from trading during the period of the repurchase
transaction.
RMB million
RMB million
40,499
13,494
4,039
6,564
As at 31
December 2013
44,538
41,538
17,058
3,000
3,000
20,058
As at 31 December 2014, bonds with a carrying value of RMB42,131 million (as at 31 December 2013:
RMB13,962 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.
20,058
Subordinated bonds are measured at amortised cost as described in Note 2.14.
December 2014
Total
187
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
18
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (continued)
As at 31
Company
Stock exchange market
Total
Maturing:
Within 30 days
After 30 but within 90 days
After 90 days
Interbank market
Notes to the Consolidated Financial Statements
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
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
46,555
47,962
1,284
1,288
(13)
(33)
(5,315)
(3,334)
2,622
3,486
47,977
46,555
RMB million
RMB million
2013
185
As at 31
December 2014
As at 31
December 2013
RMB million
RMB million
For the year ended 31 December 2014
47,962
24,292
21
18,507
25
72,275
65,087
2014
46,555
16 INTEREST-BEARING LOANS AND BORROWINGS
Maturity date
Guaranteed loans
26 October 2021
5.50%
30,000
30,000
29 June 2022
4.70%
26 October 2011
29 June 2012
28,000
5 November 2012
5 November 2022
4.58%
10,000
10,000
Total
28,000
68,000
Par Value
Maturity date
17 June 2019
Interest rate
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
3.54%
Interest rate p.a.
2,623
BONDS PAYABLE
As at 31 December 2014, all bonds payable were subordinated bonds with a total carrying value of RMB67,989
million (as at 31 December 2013: RMB67,985 million) and the par value of RMB68,000 million (as at 31
December 2013: RMB68,000 million).
Group and Company
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
Issue date
17
China Life Insurance Company Limited Annual Report 2014
44,538
1,493,470
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
4.80%-5.00%
4.80%-5.00%
Discount rate assumptions
179
As at 31 December 2013
As at 31 December 2014
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:
reserves.
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
(i)
(a) Process used to decide on assumptions
INSURANCE CONTRACTS
19,849
For the year ended 31 December 2014
17,969
14
(a) Process used to decide on assumptions (continued)
14
180
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. 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.
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 by 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.
3.52%-5.96%
3.47%-5.74%
As at 31 December 2013
As at 31 December 2014
(ii)
Discount rate assumptions
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:
(continued)
(i)
INSURANCE CONTRACTS (continued)
6,309
6,063
13,540
5,943
Land use rights
RMB million
December 2013
December 2014
RMB million
As at 31
As at 31
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
Company
14
OTHER ASSETS (continued)
13
182
6,183
Due from related parties
625
655
11,906
17,969
Total
Current
Non-current
Total
2,780
3,240
China Life Insurance Company Limited Annual Report 2014
Others
Fund subscription and redemption fees receivable
8,175
2,449
Tax refundable
2,056
2,281
Automated policy loans
3,431
Notes to the Consolidated Financial Statements
19,849
INSURANCE CONTRACTS (continued)
(60)
(39)
- Claims and claim adjustment expenses (Note 12)
Short-term insurance contracts
(846)
(908)
Long-term insurance contracts (Note 12)
Recoverable from reinsurers
1,494,497
1,603,446
6,896
7,230
4,655
7,316
1,482,946
(65)
1,588,900
(121)
(1,012)
1,602,434
For the year ended 31 December 2014
Total, net
6,775
7,165
- Unearned premiums
4,595
7,277
- Claims and claim adjustment expenses
Short-term insurance contracts
1,482,100
1,587,992
Long-term insurance contracts
Net
(1,027)
Total, ceded
As at 31
December 2013
RMB million
- Unearned premiums (Note 12)
As at 31
(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 brings 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%
14.00
14.00
0.85%-0.90%
0.85%-0.90%
As at 31 December 2014
As at 31 December 2013
(A)
RMB Per Policy
RMB Per Policy
% of Premium
Group Life
Individual Life
December 2014
RMB million
(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 cost per policy and percentage of premium as follows:
(a) Process used to decide on assumptions (continued)
% of Premium
The Group applied 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.
37.00-45.00
37.00-45.00
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.
gross
- Unearned premiums
- Claims and claim adjustment expenses
Short-term insurance contracts
Long-term insurance contracts
Gross
Group and Company
Total,
INSURANCE CONTRACTS (continued)
14
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
(b) Net liabilities of insurance contracts
181
Insurance benefits and claims expenses
2013
2014
RMB million
For the year ended 31 December
(2) Benefits, Claims and Expenses
During the Reporting Period, other income decreased by 3.2% from 2013, remaining stable.
Other Income
Net Realised Gains and Impairment on Financial Assets
Net Fair Value Gains/(Losses) through Profit or Loss
During the Reporting Period, net realised gains and impairment on financial assets increased by 22.9% from
2013. This was primarily due to a decrease in impairment losses of available-for-sale stocks and an increase
in spread income from trading funds.
During the Reporting Period, investment income from bank deposits increased by 6.9% from 2013.
This was primarily due to a slight increase in the allocation volume of ordinary term deposits.
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2014
Investment Income from Loans
16
During the Reporting Period, investment income from loans increased by 41.0% from 2013. This was
primarily due to an increase in the volume of policy loans and the Company's increased allocation in
diversified investments such as the debt investment plans and trust schemes.
During the Reporting Period, net fair value gains/(losses) through profit or loss increased by 4,139.4% from
2013. This was primarily due to a significant increase in the allocation of securities at fair value through
profit or loss and an increase in the market value of these securities.
Life insurance business
18,423
315,294
27,147
Investment Income from Bank Deposits
25,690
Underwriting and policy acquisition costs
24,866
Policyholder dividends resulting from participation in profits
1,818
1,958
Investment contract benefits
3,301
3,992
Accident insurance business
15,055
22,434
293,932
288,868
312,288
Health insurance business
During the Reporting Period, investment income from held-to-maturity securities increased by 12.3%
from 2013. This was primarily due to an increase in interest income resulting from the Company's
increased allocation in high-grade credit bonds and financial bonds in light of market conditions.
Management Discussion and Analysis
During the Reporting Period, investment income from available-for-sale securities increased by 17.5%
from 2013. This was primarily due to an increase in dividend income from available-for-sale funds and
interest income from available-for-sale debt securities.
Investment income from held-to-maturity securities
19,596
23,029
Investment income from available-for-sale securities
1,542
1,677
Investment income from securities at fair value through profit or loss
2013
25,357
2014
For the year ended 31 December
Investment Income
China Life Insurance Company Limited Annual Report 2014
15
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.
Other channels mainly include supplementary major medical insurance business, telephone sales, etc.
Finance costs
326,290
RMB million
Investment Income from Held-to-Maturity Securities
22,588
Investment income from loans
Investment Income from Available-for-Sale Securities
5
4
3
2
During the Reporting Period, investment income from securities at fair value through profit or loss
increased by 8.8% from 2013. This was primarily due to an increase in interest income from debt
securities at fair value through profit or loss.
Investment Income from Securities at Fair Value through Profit or Loss
1
Investment income from bank deposits
82,816
Total
650
413
5,773
8,138
32,667
34,934
Other investment income
93,548
4,726
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)
Administrative expenses
5
6
7
8
Including debt investment plans, trust schemes, project asset-backed plans, asset-backed securities and specialized asset
management plans.
Net investment yield = (Investment income + Net 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 including share of profit of associates and joint ventures = (Investment income + Net realised gains/
(losses) and impairment on financial assets + Net fair value gains/(losses) through profit or loss + Total income from investment
properties Business tax and extra charges for investment + 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
-
=
(Investment income + Net realised gains/(losses) and impairment 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)
12
II
China Life Insurance Company Limited Annual Report 2014
Management Discussion and Analysis
accelerating the mechanism innovation in investment management, the Company made breakthroughs in market-
oriented entrusted investment management for Chinese domestic and overseas market. 15 domestic and 8 overseas
professional investment management institutions, which were selected in the first round by the Company to
manage different types of investment portfolios, generated periodical results.
In 2014, the Company thoroughly implemented the “innovation-driven development strategy”. The Company
stepped up the efforts in developing innovative products, and launched 41 new products, including a cancer
insurance product. The Company received industrial awards for 6 of these 41 new products. The Company
innovated the sales modes with the strategy of innovating product portfolios and effectively promoted the sales of
its major products. The Company achieved quick development and value enhancement of regular premiums of
long-term insurance business by innovating sales methods and reinforcing customer relation management through
various customer value-added activities. The Company made great efforts in channel innovation and carried out
pilot program of direct sales over the counter, which generated over RMB3 billion of premiums from the sale of
new policies over the counters in all branches of the Company. With the smooth implementation of innovation in
services and technology, the internet technology has been increasingly applied in the Company's businesses. For
example, the E-customer Service with on-line services and the mobile phone app services as its core was launched,
and the electronic policies for the short-term insurance business were adopted; the number of E-China Life users
reached 710,000 and the number of registered users of Cloud Assistant reached 470,000. With the launch of a
smart claim settlement platform, the average claim settlement efficiency was increased by 8.9%. The Company
further improved its service by pushing forward the pilot program of “95519” call center consolidation and
optimized its operation management model by carrying out the centralized pilot programs in “two-core” regions,
improved customer experience by organizing service experience activities and optimizing 58 service processes. By
diversification of investment styles and strategies; in terms of investment territories, the Company explored various
ways of overseas investment, prudently pushed forward overseas commercial real estate project investment, and
the pilot program of open market strategies. As at the end of the Reporting Period, the Company's investment
assets reached RMB2,100,870 million, an increase of 13.6% from the end of 2013. Among the major types of
investments, the percentage of bonds decreased to 44.77% from 47.25% as at the end of 2013, the percentage
of term deposits decreased to 32.85% from 35.93% as at the end of 2013, the percentage of equity investment
allocation increased to 11.23% from 8.39% as at the end of 2013, and the financial assets allocation such as
the debt investment plans and trust schemes increased to 4.32% from 3.14% as at the end of 2013. During the
Reporting Period, interest income increased steadily, and net investment yield was 4.71%. Spread income and fair
value gains and losses increased significantly and the impairment losses of assets decreased noticeably, as a result
of which the gross investment yield was 5.36% and gross investment yield including share of profit of associates
and joint ventures' was 5.45%. The comprehensive investment yield taking into account the current net fair value
changes of available-for-sale financial assets recognized in other comprehensive income³ was 8.56%.
China Life Insurance Company Limited Annual Report 2014
Management Discussion and Analysis
11
By Order of the Board
Yang Mingsheng
Chairman
Beijing, China
24 March 2015
China Life Insurance Company Limited Annual Report 2014
Management Discussion and Analysis
From left to right:
Ms. Huang Xiumei, Mr. Li Mingguang, Mr. Xu Hengping, Mr. Miao Ping, Mr. Lin Dairen, Mr. Su Hengxuan,
Mr. Liu Anlin, Mr. Xu Haifeng, Mr. Yang Zheng
I
3
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 and the “Basic Standards
of Internal Control for Insurance Companies” issued by the CIRC. In addition, the Company benchmarked its
internal control system to the “Internal Control-Integrated Framework (2013)" issued by the U.S. Committee of
Sponsoring Organizations (COSO) in order to adapt to new framework requirements. The Company continuously
complied with the “Guidelines for the Implementation of Comprehensive Risk Management of Personal Insurance
Companies" issued by the CIRC, improved the comprehensive risk management framework, reinforced the
mechanism of "top-down” transmission for its risk preference system, implemented the work in relation to risk
monitoring and risk early-warning classification management, conducted quantitative analysis of operating risk
management, and improved its precaution capability in key risk areas.
OVERVIEW OF OPERATIONS IN 2014
331,010
10
China Life Insurance Company Limited Annual Report 2014
Management Discussion and Analysis
With respect to the exclusive individual agent channel, its business scale increased steadily and the business
structure was optimized evidently. During the Reporting Period, gross written premiums from the exclusive
individual agent channel increased by 3.9% year-on-year; first-year premiums for policies with insurance duration
of more than one year increased by 8.3% year-on-year; first-year regular premiums increased by 8.7% year-on-
year; first-year regular premiums with 10 years or longer payment duration increased by 17.0% 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 96.03% and 68.36%
respectively, increased by 10.23 and 4.89 percentage points year-on-year; and renewal premiums increased by
3.0% year-on-year. The Company achieved fruitful results 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 743,000
exclusive individual agents which increased by 13.8% from 2013. The Company continued to promote the
professional development for the exclusive individual agent channel, and achieved great results in both product
strategy and sales planning.
With respect to the group insurance channel, businesses with higher profit margin maintained a relatively fast
growth, and the overall premiums volume remained stable. During the Reporting Period, gross written premiums
of the group insurance channel remained stable; short-term insurance premiums increased by 12.7% year-on-
year and short-term accident insurance premiums increased by 14.5% year-on-year. The group insurance channel
actively provided services for economic and social development, participated in the building of the social security
system, broadened the service areas by actively developing the medical insurance business in the high-end market,
and effectively improved the development of insurance for college-graduate village officials, planned birth
insurance and accident insurance for senior citizens. The Company also actively 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 19,000 group insurance sales representatives in
the
group insurance channel.
With respect to the bancassurance channel, the Company actively responded to new changes in regulatory policies
and new challenges from market competition by strengthening product innovation, deepening channel cooperation
and enhancing the construction of sales team. While maintaining the business to a certain scale, the Company
actively adjusted its business structure, made great efforts in developing businesses with regular premiums and
achieved preliminary results in its transformation. During the Reporting Period, gross written premiums from the
bancassurance channel decreased by 7.3% year-on-year, first-year premiums of policies with insurance duration
of more than one year decreased by 0.4% year-on-year, first-year regular premiums increased by 41.0% year-on-
year, and first-year regular premiums with 5 years or longer payment duration increased by 98.5% year-on-year. As
at the end of the Reporting Period, the number of intermediary bancassurance outlets was 61,000, with a total of
71,000 sales representatives.
In 2014, China's equity market and bond market were both bullish with yields of bonds continued their downside
trend, and valuations of blue chip shares increased significantly. The Company actively responded to the capital
market by continuously diversifying investment products and channels and optimizing asset allocation structure.
In terms of investment portfolios, the Company increased its allocation in equity, other financial products and
high-grade credit bonds; in terms of investment management, the Company substantially pushed forward the
market-oriented entrusted investment management for both domestic and international market, and promoted
In 2014, the Company achieved a steady growth of its business and maintained its leading position in the market,
with its business structure significantly optimized and the operating results noticeably improved. During the
Reporting Period, net profit attributable to equity holders of the Company was RMB32,211 million, an increase
of 30.1% from 2013; and one-year new business value was RMB23,253 million, an increase of 9.2% from 2013.
As at the end of the Reporting Period, the Company's embedded value was RMB454,906 million, an increase of
32.9% from 2013. During the Reporting Period, the Company's net premiums earned was RMB330,105 million,
an increase of 1.6% from 2013 with RMB285,574 million from life insurance business, decreased by 1.8% from
2013, RMB32,624 million from health insurance business, increased by 34.9% from 2013, RMB11,907 million
from accident insurance business, increased by 20.3% from 2013; first-year premiums for policies with insurance
duration of more than one year increased by 1.4% from 2013, first-year regular premiums increased by 15.5%
from 2013, and the percentage of first-year regular premiums in first-year premiums for policies with insurance
duration of more than one year increased to 39.94% in 2014 from 35.05% in 2013; first-year regular premiums
with 10 years or longer payment duration increased by 22.0% from 2013, and the percentage of first-year regular
premiums with 10 years or longer payment duration in first-year regular premiums increased to 55.33% in 2014
from 52.40% in 2013; renewal premiums decreased by 1.4% from 2013, and the percentage of renewal premiums
in gross written premiums decreased to 56.82% in 2014 from 58.45% in 2013. As at 31 December 2014, the
number of in-force policies increased by 11.3% from the end of 2013; the Policy Persistency Rate (14 months and
26 months)³ reached 89.00% and 86.00%, respectively; and the Surrender Rate* was 5.46%, a 1.60 percentage
point increase from 2013.
ANALYSIS OF MAJOR ITEMS OF CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
(1) Total Revenues
For the year ended 31 December
3
2
Life Insurance Business
1
Insurance Benefits and Claims Expenses
China Life Insurance Company Limited Annual Report 2014
Management Discussion and Analysis
391,557
404,275
During the Reporting Period, insurance benefits and claims expenses attributable to life insurance
business decreased by 1.7% from 2013. This was primarily due to a decrease in maturities payable of
life insurance business.
17
637
701
Statutory insurance fund contribution
3,864
4,151
Other expenses
24,805
25,432
Total
4,032
Health Insurance Business
Accident Insurance Business
2014
RMB million
2013
Net premiums earned
18
investment.
During the Reporting Period, other expenses increased by 7.4% from 2013. This was primarily due to
an increase in business taxes and surcharges expenses resulting from an increase in taxable income from
Other Expenses
During the Reporting Period, administrative expenses increased by 2.5% from 2013. This was primarily due
to an effective curb on administrative expenses growth resulting from the Company's enhanced efforts in
cost control.
During the Reporting Period, insurance benefits and claims expenses attributable to health insurance
business increased by 49.0% from 2013. This was primarily due to an increase in the volume of health
insurance business.
Administrative Expenses
Finance Costs
During the Reporting Period, underwriting and policy acquisition costs increased by 5.7% from 2013. This
was primarily due to an increase in underwriting costs for first-year regular premium business resulting from
an improvement in the Company's business structure.
Underwriting and Policy Acquisition Costs
During the Reporting Period, policyholder dividends resulting from participation in profits increased by
35.0% from 2013. This was primarily due to an increase in investment yields for the participating products.
Policyholder Dividends Resulting from Participation in Profits
During the Reporting Period, investment contract benefits increased by 7.7% from 2013. This was primarily
due to an increase in the volume of certain investment contracts.
Investment Contract Benefits
During the Reporting Period, insurance benefits and claims expenses attributable to accident
insurance business increased by 20.9% from 2013. This was primarily due to an increase in the
volume of accident insurance business.
During the Reporting Period, finance costs increased by 17.2% from 2013. This was primarily due to an
increase in interest payments for securities sold under agreements to repurchase.
2.
Exclusive Individual Agent Channel
Notes:
First-year business
24,713
33,192
Health Insurance Business
179,832
174,273
Renewal business
36,317
41,340
First-year regular
74,629
70,006
110,946
111,346
290,778
285,619
Single
19,525
13,829
Single
14,459
161
First-year regular
10,633
11,888
Single
10,788
12,049
First-year business
First-year business
10,799
Accident Insurance Business
10,884
13,667
Renewal business
3,834
5,066
First-year regular
9,995
12,199
Life Insurance Business
2013
2014
137
5,808
Net fair value gains/(losses) through profit or loss
5,793
7,120
Net realised gains and impairment on financial assets
82,816
93,548
Other income
Investment income
11,907
Accident insurance business
24,180
32,624
Health insurance business
290,738
285,574
324,813
9,895
155
4,185
Total
RMB million
year ended 31 December
For the
Gross written premiums categorized by business:
During the Reporting Period, net premiums earned from accident insurance business increased by
20.3% from 2013. This was primarily due to the Company's enhanced efforts in adjusting business
structure, implementing active financial policies, strengthening team building and motivating local
branches' initiatives in business expansion.
3. Accident Insurance Business
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2014
4,324
13
Health Insurance Business
2.
During the Reporting Period, net premiums earned from life insurance business decreased by 1.8%
from 2013. This was primarily due to the Company's proactive control on the single premiums
volume and a decrease in the renewal premiums earned.
Life Insurance Business
1.
Net Premiums Earned
417,883
440,766
During the Reporting Period, net premiums earned from health insurance business increased by
34.9% from 2013. This was primarily due to the Company's enhanced efforts in developing health
insurance business.
Renewal business
150
11
29,387
21,815
Renewal business
8,483
11,963
First-year regular
69,695
65,918
Short-term insurance business
Single
77,881
First-year business of long-term insurance
107,658
99,825
Bancassurance Channel
12,375
13,945
Short-term insurance business
78,178
563
129
Other Channels¹
Total
2,521
6,428
Short-term insurance business
475
638
Renewal business
262
93
373
18
889
Single
280
1,262
First-year business of long-term insurance
3,276
8,328
First-year regular
1.
506
159
Single
31,815
34,455
First-year business of long-term insurance
197,698
205,417
9
2013
335
2014
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2014
For the year ended 31 December
Gross written premiums categorized by channel:
326,290
331,010
14
Total
RMB million
Renewal business
413
34,120
111
First-year regular
4,561
2,878
Single
4,720
2,989
First-year business of long-term insurance
First-year regular
17,658
Group Insurance Channel
5,581
5,831
Short-term insurance business
160,302
165,131
Renewal business
31,402
17,440
In such a new situation with new opportunities and new challenges, all of us in China Life will strengthen our
confidence, ride on the momentum, seize every opportunity to boost development, work together to make
breakthroughs, continuously push forward corporate transformation and upgrading and improve the Company's capacity
for sustainable development and core competences. By consistently following the corporate culture of "Success for you,
by you", the Company will aim to provide all customers with higher qualified services and create greater value for all the
shareholders, and relentlessly strive to achieve a new success for China Life.
Life insurance business
counter. Meanwhile, the Company will continue to make strategic investment in the construction of the sales teams,
promote the transformation and upgrading of the traditional sales teams, and build up, from a high starting point, a
new type of "comprehensive individual agent team” which includes among others, new types of Service & Up-selling
teams and new types of insurance planners. While reinforcing and improving its competitive advantages in county-level
markets, the Company will take more proactive and effective measures to further accelerate its business development
in some key cities. Integration and interaction in resources and channels will be realized for the Company to reduce
the barrier among insurance businesses with different promotion channels. The Company will further implement the
“innovation-driven development strategy" in putting more efforts in product innovation and establishing an efficient
research and development mechanism to satisfy customers' diversified demands for insurance. To realize a higher level
of operation management and a better customer experience, the Company will establish the “Rui Operation” mode
with multiple service contacts at the front end, combined with shared operations at the provincial level and intelligent
operations in the headquarter and construct a comprehensive business processing system. Finally, the Company will
operate strictly in compliance with applicable laws and regulations and take strict precautions against key risks to realize
a sound and sustainable development.
330,105
The "New Ten Rules” brings another new era for the development of the insurance industry, according to which, the
development of the insurance industry has been promoted from the industry's will to the state's will, and the Company
will take full advantages of such policy-oriented opportunities and proactively gain the initiatives in the industry's
new round of development. The Company will continue to strengthen its cooperation with the government, accelerate
the development of policy-oriented businesses including Supplementary Major Medical Insurance for Urban and
Township Residents and New Village Cooperative Medical Insurance, and reinforce its leading position in the industry.
Furthermore, the Company will actively follow up with the implementation process of individual income tax deferred
commercial pension policy and design insurance products accordingly, to seize market opportunities. Meanwhile, the
Company will further expand the pension and health insurance product lines, accelerate the development of commercial
pension and health business and promote professional management of health insurance, as well as actively explore the
interaction between commercial businesses and policy-oriented businesses.
China Life Insurance Company Limited Annual Report 2014
Chairman's Statement
COFCO Futures
10 Upper Bank Street SLP
China Life Real Estate Co., Limited ("CLRE")
China Life Insurance (Overseas) Company Limited
("CL Overseas")
China Life Investment Holding Company Limited (“CLI”)
China Life Ecommerce Company Limited
("CL Ecommerce")
China Life Enterprise Annuity Fund (“EAP”)
CL AMP Exchange Traded Realtime Fund (ii)
CLP&C
For the year ended 31 December 2014
CL AMP Zunxiang Bond Fund (ii)
CL AMP Money Market Xinjinbao Fund (ii)
An associate of the Company
An associate of the Company
An associate 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 pension fund jointly set up by the Company
and others
CL AMP CSI 300 Index Fund (ii)
CL AMP Money Market Fund (ii)
CGB
An indirect subsidiary of the Company
An indirect subsidiary of the Company
An indirect subsidiary of the Company
An indirect subsidiary of the Company
CLIC
AMC
China Life Pension Company Limited
("Pension Company”)
China Life (Suzhou) Pension and Retirement Investment
Company Limited (“Suzhou Pension Company”)
Golden Phoenix Tree Limited (i)
AMC HK
CL AMP
King Phoenix Tree Limited (i)
China Life Wealth Management Co., Limited
("CL Wealth") (i)
Sino-Ocean
Relationship with the Company
Immediate and ultimate holding company
A subsidiary of the Company
A subsidiary of the Company
A subsidiary of the Company
A subsidiary of the Company
An associate of the Company
A consolidated structured entity of the Company
A consolidated structured entity of the Company
A consolidated structured entity of the Company
A consolidated structured entity of the Company
An indirect consolidated structured entity of
the Company
Golden Phoenix Tree Limited, King Phoenix Tree Limited and CL Wealth were incorporated in 2014.
552
(Charged)/credited to net profit
(4,683)
992
5,952
(11,627)
As at 1 January 2014
(4,683)
992
5,952
(11,627)
As at 31 December 2013
(120)
(660)
(120)
(660)
Others
(1,827)
(62)
(1,337)
(Charged)/credited to other
(i)
(ii)
China Life Insurance Company Limited Annual Report 2014
195
(19,023)
930
(11,637)
(8,316)
Significant related parties
2,759
(15,762)
(15,762)
As at 31 December 2014
attributable to participating
policyholders
available-for-sale securities
- Portion of fair value changes on
- Available-for-sale securities
comprehensive income
2,759
Notes to the Consolidated Financial Statements
The table set forth below summarises the names of significant related parties and nature of relationship with
the Company as at 31 December 2014:
7,722
(273)
Subtotal
(25,621)
(13,830)
Net deferred tax liabilities
(19,375)
(4,919)
Company
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 2014
RMB million
As at 31
December 2013
RMB million
4,205
7,085
(1,491)
- deferred tax liabilities to be settled within 12 months
(13,557)
(24,130)
28 TAXATION (continued)
(d) The analysis of deferred tax assets and deferred tax liabilities is as follows:
Group
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:
1,929
As at 31
December 2014
RMB million
RMB million
4,219
7,084
2,027
1,827
6,246
8,911
- deferred tax liabilities to be settled after 12 months
As at 31
December 2013
Related parties
1,727
8,812
EARNINGS PER SHARE
There is no difference between basic and diluted earnings per share. The basic and diluted earnings per share for
the year ended 31 December 2014 are based on the net profit for the year attributable to equity holders of the
Company and the weighted average number of 28,264,705,000 ordinary shares (2013: 28,264,705,000 ordinary
shares).
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.
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 2014. As at 31 December 2014,
there were 55.01 million units outstanding and exercisable (as at 31 December 2013: 55.01 million). As at 31
December 2014, the amount of intrinsic value for the vested stock appreciation rights was RMB1,012 million (as
at 31 December 2013: RMB757 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 0.1% to 0.2%.
The Company recognised a loss of RMB255 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 2014
(2013: fair value gain of RMB71 million). RMB1,012 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 2014 (as at 31 December 2013: RMB757 million and RMB13 million), respectively. There was no
unrecognised compensation cost for the stock appreciation rights as at 31 December 2014 (as at 31 December
2013: Nil).
197
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
32
DIVIDENDS
Pursuant to the shareholders' approval at the Annual General Meeting on 29 May 2014, a final dividend of
RMB0.30 per ordinary share totalling RMB8,479 million in respect of the year ended 31 December 2013 was
declared and paid in 2014. The dividend has been recorded in the consolidated financial statements for the year
ended 31 December 2014.
Pursuant to a resolution passed at the meeting of the Board of Directors on 24 March 2015, a final dividend of
RMB0.40 per ordinary share totalling approximately RMB11,306 million for the year ended 31 December 2014
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 2014.
33 SIGNIFICANT RELATED PARTY TRANSACTIONS
Net profit attributable to equity holders of the Company is recognised in the financial statements of the Company
to the extent of RMB28,271 million (2013: RMB21,484 million).
31
30
NET PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Deferred tax liabilities:
- deferred tax liabilities to be settled after 12 months
(23,709)
(13,223)
- deferred tax liabilities to be settled within 12 months
(1,448)
(272)
Subtotal
6,134
(25,157)
Net deferred tax liabilities
(19,023)
(4,683)
196
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
29
(13,495)
(a)
7,722
179
(c)
28
TAXATION (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
193
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.
4,443
7,888
1
12
51
19
200
1,190
(3,172)
As at 31 December 2014 and 2013, 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)
Group
As at 1 January 2013
(iii)
(ii)
(i)
RMB million
RMB million
RMB million
RMB million
Total
(3,434)
Others
Insurance
attributable to participating
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
Investments
(11,787)
7,363
29,451
For the year ended 31 December
Taxation charges
Deferred taxation
Current taxation - Enterprise income tax
(a) The amount of taxation charged to net profit represents:
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 fiscal authority.
TAXATION
28
52
55
437
(268)
2,026
2,124
1,932
1,553
These five funds were issued and managed by CL AMP in 2014.
2014
2013
RMB million
RMB million
40,402
2013
RMB million
2014
RMB million
For the year ended 31 December
(i)
Income tax at the effective tax rate
Others
Expenses not deductible for tax purposes (i)
Unused tax losses
10,101
Non-taxable income (i)
Profit before income tax
(b) The reconciliation between the Group's effective tax rate and the statutory tax rate of 25% in the PRC
(2013: 25%) is as follows:
4,443
7,888
4,015
1,433
428
6,455
Tax computed at the statutory tax rate
3,061
892
(7,834)
Deferred tax assets/(liabilities) (continued)
(c) The movements in deferred tax assets and liabilities during the year are as follows (continued):
TAXATION (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
28
194
The deferred tax arising from the other categories is mainly related to the temporary differences of employee
salaries and welfare cost payables.
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 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 dividend payables.
(iii)
(ii)
(i)
(19,375)
23
2,759
Group (continued)
Unrecognised deductible tax losses of the Group amounted to RMB879 million as at 31 December 2014
(as at 31 December 2013: RMB863 million). Unrecognised deductible temporary differences of the Group
amounted to RMB166 million as at 31 December 2014 (as at 31 December 2013: RMB124 million).
Company
As at 1 January 2013
(4,702)
820
(7,922)
813
3,052
(11,787)
Total
RMB million
RMB million
(15,805)
Others
Insurance
RMB million
attributable to participating
policyholders
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
Investments
RMB million
1,036
(12,095)
(8,316)
1,081
5,627
(11,627)
As at 31 December 2013
(120)
(120)
(21)
(21)
(4,919)
Others
(660)
(660)
7,731
7,731
(4,015)
189
(5,024)
820
- Others
(3,703)
As at 1 January 2014
5,627
23
2,759
(15,805)
As at 31 December 2014
- Others
attributable to participating
policyholders
available-for-sale securities
- Portion of fair value changes on
(11,627)
- Available-for-sale securities
(Charged)/credited to other
(1,433)
(45)
(1,940)
552
(Charged)/credited to net profit
(4,919)
1,081
comprehensive income
policyholders
198
For the
NET FAIR VALUE GAINS/(LOSSES) THROUGH PROFIT OR LOSS
23
During the year ended 31 December 2014, the Group recognised impairment charge of RMB146 million (2013:
RMB142 million) of available-for-sale funds, RMB1,003 million (2013: RMB3,517 million) of available-for-
sale common stocks, and no impairment charge (2013: RMB144 million) of other available-for-sale securities, for
which the Group determined that objective evidence of impairment existed.
Net realised gains and impairment on financial assets are from available-for-sale securities.
5,793
7,120
year ended 31 December
2014
2013
RMB million
RMB million
5,408
(3,803)
(1,149)
9,211
8,127
385
142
6,978
385
Debt securities
2,272
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
137
5,808
191
Total
Equity securities
(1,186)
71
(255)
Stock appreciation rights
305
4,977
(239)
Financial liabilities at fair value through profit or loss
142
Total
Subtotal
94
114
556
299
5,773
8,138
93,548
32,667
579
106
3,408
4,458
963
1,571
34,934
82,816
For the year ended 31 December 2014, included in investment income was interest income of RMB88,984 million
(2013: RMB78,829 million). All interest income was accrued using the effective interest method.
The investment income from listed debt and equity securities for the year ended 31 December 2014 was
RMB6,449 million (2013: RMB6,395 million). The investment income from unlisted debt and equity securities
for the year ended 31 December 2014 was RMB43,614 million (2013: RMB37,331 million).
Net realised gains
Impairment
Equity securities
Subtotal
Reversal of impairment
Net realised gains
Debt securities
2013
RMB million
year ended 31 December
2014
RMB million
For the
NET REALISED GAINS AND IMPAIRMENT ON FINANCIAL ASSETS
22
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
190
For the year ended 31 December 2014
16,188
24 INSURANCE BENEFITS AND CLAIMS EXPENSES
RMB million
3,433
RMB million
RMB million
ended 31 December
2013
year
2014
For the
3,423
192
Interest expenses for securities sold under agreements to repurchase
Interest expenses for interest-bearing loans and borrowings
Interest expenses for bonds payable
FINANCE COSTS
26
Benefits of investment contracts are mainly the interest credited to investment contracts.
INVESTMENT CONTRACT BENEFITS
Total
312,288
1,234
59
For the
Auditors' remuneration
Exchange loss/(gain)
Depreciation and amortisation
Contribution to the defined contribution pension plan
Housing benefits
609
Employee salaries and welfare cost
27 PROFIT BEFORE INCOME TAX
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
4,032
4,726
Profit before income tax is stated after charging the following:
(301)
312,589
Total
105,945
Increase in insurance contract liabilities
16,752
(102)
16,854
Accident and health claims and claim adjustment expenses
(62)
192,659
192,863
Life insurance death and other benefits
For the year ended 31 December 2014
RMB million
Net
Ceded
RMB million
(204)
105,883
Total
315,662
107,354
(88)
107,442
Increase in insurance contract liabilities
11,263
(129)
11,392
Accident and health claims and claim adjustment expenses
193,671
(84)
193,755
Life insurance death and other benefits
For the year ended 31 December 2013
315,294
(368)
25
18,571
Gross
25,357
717
682
ended 31 December
2013
RMB million
RMB million
377
11,564
740
761
1,708
783
770
1,025
787
1,039
4,216
20,062
4,014
5,008
4,341
4,006
RMB million
RMB million
3,221
December 2013
As at 31
December 2014
18,233
20,062
18,233
20,062
18,233
As at 31
1,044
1,630
1,919
Salary and welfare payable
Interest payable to policyholders
Commission and brokerage payable
Interest payable of subordinated debts
Stock appreciation rights (Note 31)
Payable to constructors
Company
Total
Non-current
Current
Total
Agent deposits
Others
Agent deposits
Interest payable to policyholders
Commission and brokerage payable
Interest payable of subordinated debts
Stock appreciation rights (Note 31)
Payable to constructors
Salary and welfare payable
Group
19 OTHER LIABILITIES
22,588
Tax payable
Tax payable
Others
Total
4,014
5,008
4,792
4,589
RMB million
RMB million
As at 31
December 2013
As at 31
December 2014
189
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
Total
Non-current
Current
1,919
1,630
10,789
1,039
STATUTORY INSURANCE FUND
As required by the CIRC Order [2008] No. 2, “Measures for Administration of Statutory Insurance Funď”, 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.
21
INVESTMENT INCOME
Debt securities
-held-to-maturity securities
year
2014
- available-for-sale securities
20
- at fair value through profit or loss
- available-for-sale securities
– at fair value through profit or loss
Bank deposits
Loans
Securities purchased under agreements to resell
Others
Total
For the year ended 31 December
2014
2013
RMB million
RMB million
1,044
For the year ended 31 December 2014
Equity securities
Notes to the Consolidated Financial Statements
778
770
1,025
682
693
361
4,197
3,148
19,431
761
17,690
19,431
17,690
19,431
17,690
China Life Insurance Company Limited Annual Report 2014
1,705
directly
100.00%
I
200
indirectly
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
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:
Transactions with CLIC and its subsidiaries
Notes
For the year : ended 31 December
2014
2013
RMB million
RMB million
King Phoenix Tree Limited
Golden Phoenix Tree Limited
RMB200
indirectly
HKD30
50.00%
HKD30
50.00%
indirectly
indirectly
Suzhou Pension Company
RMB300
100.00%
RMB300
100.00%
100.00%
directly
CL AMP
RMB500
85.03%
RMB500
85.03%
indirectly
indirectly
CL Wealth
RMB200
Policy management fee received from CLIC
100.00%
directly
(i)(vii)
Payment of dividends from the Company to CLIC
1,022
18
53
50
10
11
(ii.c)
2,800
(viii)
Claim and other payments received from CLP&C
Payment of insurance premium to CLP&C
fee received from CLP&C
Capital contribution to CLP&C
Asset management
28
30
(ii.b)
Asset management fee received from CL Overseas
80
AMC HK
24
987
Agency fee received from CLP&C
1,013
Asset management fee received from CLIC
(ii.a)
128
133
Investment in the Group's consolidated fund products from CLIC
718
91
Distribution of profits from AMC to CLIC
5,797
2,705
Payment of rental, project fee and others expenses to CLRE
28
41
Rental and a service fee received from CLP&C
16
4
(iii)
Payment of an agency fee to CLP&C
852
(iii)(vii)
and indirectly
CL AMP
directly
As at 31
December 2013
RMB million
Increase
RMB million
Decrease
RMB million
As at 31
December 2014
RMB million
CLIC
4,600
AMC
3,000
2,500
35
Suzhou Pension Company
300
588
CL Wealth
200
4,600
4,000
2,500
300
Name of related party
588
year
Refer to Note 38 for the basic and related information of subsidiaries.
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(b) 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
Legal
representative
Immediate and
ultimate holding
State-owned
Yang
Mingsheng
company
(c) Registered capital of related parties with control relationship and changes during the
and indirectly
200
On 31 December 2014, the CIRC approved Pension Company's application to change its registered capital. After
the capital contribution by the Company and other shareholder, Pension Company's paid-in capital increased from
RMB2,500 million to RMB3,400 million. As at 31 December 2014, since the business registration modification
procedure for Pension Company was still in progress, the registered capital remained RMB2,500 million. The
Company contributed capital of RMB441 million for the capital injection. The capital injection led to a decrease
in the total percentage of the Group's holding in Pension Company from 92.20% to 74.27%, an increase of non-
controlling interests of RMB692 million, and other reserves of RMB666 million in the Group's consolidated
financial statements.
As at 31 December 2013
Percentage
of holding
Increase
million
Decrease
million
Amount
million
As at 31 December 2014
Percentage
of holding
AMC
RMB1,680
60.00%
RMB1,680
60.00%
directly
directly
Pension Company
RMB2,305
92.20%
RMB441
RMB2,746
74.27%
directly
Amount
million
(i)
Subsidiaries
RMB19,324
199
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
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 2013
Percentage
of holding
Increase
million
Decrease
million
Amount
million
As at 31 December 2014
Percentage
of holding
CLIC
RMB19,324
68.37%
68.37%
27
Notes to the Consolidated Financial Statements
81
Including: Domestic listed
Owned by other equity holders
Owned by CLIC (i)
As at 31 December 2014, the Company's share capital was as follows:
34 SHARE CAPITAL (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
207
28,265
28,264,705,000
28,265
28,264,705,000
RMB Million
As at 31 December 2013
No. of shares
RMB million
As at 31 December 2014
No. of shares
Overseas listed (ii)
Registered, authorised, issued and fully paid
Ordinary shares of RMB1 each
Total
All shares owned by CLIC are domestic listed shares.
Group
35 RESERVES
Overseas listed shares are traded on the Stock Exchange of Hong Kong 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
RMB million
No. of shares
As at 31 December 2014
(ii)
(i)
34 SHARE CAPITAL
As at and during the year ended 31 December 2014, most of 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 2014, 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.
(1)
$ེ॰༤ | ཝཱསྐྱེཊྛཙྪཱ 'པྤཱ ཝཙིའབ
(3)
(73)
(3)
(5)
(225)
46
48
266
260
(1)
284
296
15,051
16,287
2
(49)
16
76
14
(32)
(h) Transactions with state-owned enterprises
The total compensation package for the Company's key management for the year ended 31 December
2014 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 2013
has been approved by the relevant authorities. The total compensation of 2013 was RMB26 million,
including a deferred payment I about RMB5 million.
26
13
RMB million
RMB million
2013
ended 31 December
Share of other
Unrealised comprehensive
year
2014
Salaries and other benefits
Key management compensation
(g)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
1
For the
gains/
(losses) from
income
of investees
Other comprehensive income for the year
97,029
(3)
18,545
19,157
21,641
(327)
(15,835)
(9)
53,860
As at 1 January 2014
97,029
(3)
18,545
19,157
(327) 21,641
(15,835)
39,089
143
39,232
Appropriation to reserves
བ།
145,919
(3)
208
21,747
21,627
(184) 24,801
23,254
(9)
817
As at 31 December 2014
826
826
Capital paid in
8,832
3,202
2,470
3,160
53,860
12
53,860
6,082
operations
reserve
foreign
General
reserve
fund
fund
reserve
the equity
method
for-sale
securities
reserves
Other
Share
premium
translating
Statutory Discretionary
under
available-
Exchange
differences on
Total
RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
(a)
(b)
2,505
1,107
2,470
Appropriation to reserves
(21,562)
(353)
(21,209)
Other comprehensive income for the year
As at 31 December 2013
(3) 112,509
18,050
19,171
26
5,374
(9)
53,860
As at 1 January 2013
(c)
16,040
(6)
114
15
year
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
Contribution to EAP
Transactions between EAP and the Group
(e)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Transactions with significant related parties (continued)
For the year ended 31 December 2014
1,000
China Life Insurance Company Limited Annual Report 2014
201
30
34
25
ended 31 December
Notes
2014
2013
sales of annuity funds
Agency fee received from Pension Company for entrusted
17
17
23
22
441
Rental received from Pension Company
25
Capital contribution to Pension Company
137
846
886
(ii.e)(vii)
262
286
RMB million
RMB million
121
(vi)
Interest payment of subordinated debts received from Sino-Ocean
Project management fee paid to Sino-Ocean
131
Investment in Group's consolidated fund products from CL Ecommerce
Property leasing income received from CLI
8
89
(ii.d)
Payment of an asset management fee to CLI
78
79
(viii)
Payment to CLI for purchase of fixed assets
6
14
Asset management fee received from CLI
87
86
(iv)
Property leasing expenses charged by CLI
Transactions between CGB and the Group
29
24
478
Cash dividend from Sino-Ocean (Note 8)
81
268
Scrip dividend from Sino-Ocean (Note 8)
2,387
2
9
6
198
86
683
838
Capital contribution to Sino-Ocean
Transactions between Sino-Ocean and the Group
Claim payment to CGB
Premiums received from CGB
Commission expenses charged by CGB
Interest on deposits received from CGB
(v)
Investment in the Group's consolidated fund products from CLRE
12
Marketing fee income for promotion of annuity business
from Pension Company
Amount due from CLIC
The resulting balance due from and to significant related parties of the Group
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 issued by Sino-Ocean.
(f)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Amounts due from/to significant related parties
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
205
(viii) 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.
(vii) 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.
On 27 November 2014, the Company and Pension Company renewed the agency agreement for the distribution
and customer service of enterprise annuity funds, pension management business and occupation annuity. The
agreement was effective for one year starting from 28 November 2014, and was subject to an automatic one-year
renewal if no objections were raised by both parties upon expiry. In the renewed agreement, the charge clause for
the entrusting service of enterprise annuity fund management, which is the core business of Pension Company,
was consistent with that in the prior year. The calculation base, method and charge rate for the agency fee of
occupation annuity refer to 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 daily management fee of personal pension plan annually.
(vi) In December 2011, the Company and Pension Company signed an agency agreement for the distribution and
customer service of enterprise annuity funds and pension management business, effective till 28 December
2012. The agreement was subject to an automatic one-year renewal if no objections were raised by either party
upon expiry. In accordance with the agreement, Pension Company entrusted the Company to act as an agent to
distribute enterprise annuity fund and pension management business, and to provide related customer services.
The commissions for the entrusting service of enterprise annuity fund management, which is the core business of
Pension Company, are calculated at 30% to 50% 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 charge 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 agreement was automatically renewed for another year from 29 December 2012. On 20
November 2013, the Company and Pension Company renewed the agreement, effective for a year starting from 28
November 2013.
Notes (continued):
Transactions with significant related parties (continued)
(e)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Amount due to CLIC
Amount due from CL Overseas
Amount due from CLP&C
Amount due to CLP&C
(1)
549
541
As at 31
December 2013
RMB million
As at 31
December 2014
RMB million
206
Amount due to AMC HK
Amount due to AMC
For the year ended 31 December 2014
Amount due to Pension Company
The resulting balance due from and to subsidiaries of the Company
Subordinated debts of Sino-Ocean
Amount due to CGB
Amount due from CGB
Amount deposited with CGB
Amount due from CLRE
Amount due to CLI
Amount due from CLI
Amount due from Pension Company
11
Notes to the Consolidated Financial Statements
204
(e) Transactions with significant related parties (continued)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
202
(ii.a) On 29 December 2011, CLIC signed a renewable asset management agreement with AMC, entrusting AMC
to manage and make investments of its insurance funds. The agreement is effective from 1 January 2012 to 31
December 2014, whereby 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 net
asset value of the assets under management (after deducting the funds obtained and interests accrued for from
repurchase transactions) 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.
On 15 December 2011, the Company and CLIC signed a confirmation letter to renew a renewable insurance
agency agreement for three years, effective from 1 January 2012 to 31 December 2014, whereby the Company
was engaged to provide various policy administration services to CLIC in relation to the non-transferred policies.
The Company, as a service provider, does not acquire any rights or assume any obligations as an insurer of
the non-transferrable policies. In consideration of the services provided under the agreement, CLIC paid the
Company a policy management fee based on the estimated cost of providing the services, plus a margin. The policy
management fee was payable semi-annually, and is equal to the sum of (1) the number of non-transferred 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 collected 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)
Notes:
8
11
(ii.f)
Payment of an investment management fee to AMC HK
Transactions between AMC HK and the Company
23
19
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. According to 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 is accrued for 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 2012, 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 till 31 December 2013 and
subject to an automatic one-year renewal if no objections were raised by both parties upon expiry. The agreement
was automatically renewed for another year, effective from 1 January 2014 to 31 December 2014. According to 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 asset 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.
(ii.d) On 22 March 2013, the Company and CLI signed a management agreement of alternative investment of insurance
funds, which was effective till 31 December 2013 and subject to an automatic one-year renewal if no objections
were raised by both parties upon expiry. The agreement was automatically renewed for another year, effective
from 1 January 2014 to 31 December 2014. According to the agreement, the Company entrusted CLI to engage
in specialized investment, operation and management of real estates, equities and related financial products under
the instructions of the annual guidelines. The Company paid CLI a basic asset management fee and a performance
related bonus or charged a performance related deduction. The basic asset management fee was calculated by
multiplying the total investment with a management fee rate of 0.6%, and paid on a quarterly basis; and the
performance related bonus or deduction was calculated based on the comprehensive investment yield. On 15 April
2014, the Company and CLI signed a supplementary agreement to the management agreement of alternative
investment of insurance funds, effective from the date on which the investment instruction of 2014 was issued
to 31 December 2014. During the effective period of the supplementary agreement, the performance assessment
and evaluation method in the investment instruction of 2014 replaced the relevant parts in the abovementioned
management agreement of alternative investment of insurance funds. In accordance with the investment instruction
of 2014, the performance related bonus or deduction was linked to the realised investment yield and the
comprehensive investment yield.
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 31 December 2012, the Company signed a property leasing agreement with CLI, effective till 31 December
2014, pursuant to which CLI leased to the Company certain owned and leased 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.
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. The agreement
was automatically renewed for another year from 8 April 2014.
The Company and CLP&C renewed a 2-year framework insurance agency agreement on 8 March 2012, 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. The agreement
was automatically renewed for another year from 8 March 2014.
(v)
(iv)
(iii)
(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. According to the agreement, the
Company entrusted AMC HK to manage and make investment of its insurance funds and paid AMC HK 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. 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.
China Life Insurance Company Limited Annual Report 2014
Notes (continued):
(e)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
203
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. According to 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 asset value of the assets under management and 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.e) On 27 December 2012, the Company and AMC entered into a renewable agreement for the
Transactions with significant related parties (continued)
Pension Company (i)
21,593
218
361
later than five years
Later than one year but not
149
222
144
247
207
RMB million
As at 31
December 2013
As at 31
December 2014
RMB million
RMB million
As at 31
December 2013
December 2014
RMB million
Not later than one year
As at 31
389
Later than five years
INVESTMENTS IN SUBSIDIARIES
38
For the year ended 31 December 2014
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
211
454
248
628
585
Total
57
17
57
17
448
Group
Company
The future minimum rentals receivable under non-cancellable operating leases are as follows:
Later than one year but not
458
494
480
549
Not later than one year
later than five years
As at 31
December 2013
RMB million
As at 31
December 2013
RMB million
RMB million
As at 31
December 2014
Company
Group
The future minimum lease payments under non-cancellable operating leases are as follows:
As at 31
December 2014
RMB million
753
472
690
as lessor
-
(c) Operating lease commitments
The operating lease payments charged to profit before income tax for the year ended 31 December 2014
were RMB774 million (2013: RMB736 million).
940
1,194
970
1,312
Total
18
10
18
10
Later than five years
464
Company
For the year ended 31 December 2014
Unlisted investments at cost
(b)
Investment
Not Applicable
100% indirectly
Jersey Island
King Phoenix Tree Limited
Investment
Non-controlling interests in subsidiaries are not significant to the Company.
Not Applicable
Golden Phoenix Tree Limited Hong Kong, PRC
Financial service
RMB200 million
100% indirectly
PRC
CL Wealth
100% directly
Fund management
The table below presents the basic information of the Company's consolidated structured entities as at 31
December 2014:
CL AMP Exchange Traded Realtime Fund
Investment management
Investment management
Investment management
Investment management
Investment management
RMB2,020 million
RMB13,900 million
RMB1,237 million
RMB648 million
RMB246 million
38.84% directly and indirectly
52.10% directly
45.00% directly and indirectly
65.26% directly and indirectly
Name
50.00% directly
Funds received
Percentage of shares held
CL AMP Money Market Xinjinbao Fund
CL AMP Zunxiang Bond Fund
CL AMP CSI 300 Index Fund
CL AMP Money Market Fund
Principal activities
RMB588 million
85.03% indirectly
PRC
PRC
AMC
Principal
activities
Registered capital
Percentage
of equity
interest held
Place of
incorporation
and operation
60% directly
Name
4,165
11,705
RMB million
RMB million
2013
As at 31 December
2014
The table below presents the basic information of the Company's subsidiaries as at 31 December 2014:
RMB4,000 million
Asset management
Pension Company
CL AMP
Investment in retirement
properties
RMB300 million
100% directly
PRC
Suzhou Pension Company
Asset management
Not applicable
50% indirectly
Hong Kong, PRC
AMC HK
Pension and annuity
RMB2,500 million
74.27% directly
and indirectly
PRC
(a)
212
(b) Operating lease commitments - as lessee
37
Other comprehensive
97,205
18,429
19,157
21,593
(15,834)
income for the year
Appropriation to reserves
53,860
97,205
18,429
35 RESERVES (continued)
Company
Unrealised
gains/(losses)
China Life Insurance Company Limited Annual Report 2014
As at 1 January 2014
Notes to the Consolidated Financial Statements
39,011
3,160
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 RMB3,160 million for the year ended 31 December 2014 (2013:
RMB2,470 million).
(c)
(b)
(a)
145,006
21,589
39,011
21,627
23,177
53,860
As at 31 December 2014
8,790
3,160
2,470
24,753
For the year ended 31 December 2014
from
available-for-sale
19,123
18,050
15,959
112,348
Other comprehensive
income for the year
Appropriation to reserve
(21,190)
5,356
(21,190)
1,107
2,470
6,047
As at 31 December 2013
53,860
(15,834)
2,470
53,860
As at 1 January 2013
(c)
Share premium
securities
Statutory
reserve fund
Discretionary
reserve fund
General
reserve
Total
RMB million RMB million
RMB million
RMB million
RMB million
RMB million
(a)
(b)
Approved by the Annual General Meeting in May 2014, the Company appropriated RMB2,470 million to the
discretionary reserve fund for the year ended 31 December 2014 based on net profit under CAS (2013: RMB1,107
million).
COMMITMENTS (continued)
-
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.
33,903
15,585
33,903
65
87
65
15,578
87
9,887
7,690
23,929
7,690
7,830
9,887
23,929
7,823
As at 31
December 2013
Authorized, but not contracted for
5,834
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
210
5,921
65
5,921
Investments
65
87
65
87
65
Property, plant and equipment
5,834
Total
As at 31
December 2014
RMB million
As at 31
December 2013
RMB million
As at 31
December 2014
RMB million
December 2014
As at 31
Company
As at 31
December 2013
RMB million
As at 31
December 2014
RMB million
Group
RMB million
Pending lawsuits
The following is a summary of the significant contingent liabilities:
36 PROVISIONS AND CONTINGENCIES
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
209
37
389
215
389
Company
Group
Total
Others
Property, plant and equipment
Investments
Contracted, but not provided for
The Group and the Company had the following capital commitments relating to property development
projects and investments:
(a) Capital commitments
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 analyzed 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
2014 and 2013, the Group had other contingent liabilities but disclosure of such was not practical because the
amounts of liabilities could not be reliably estimated.
215
RMB million
December 2013
As at 31
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 2014, the Company appropriated 10% of net profit under
CAS which amounted to RMB3,160 million to the general reserve for future uncertain catastrophes, which cannot be used
for dividend distribution or conversion to share capital increment (2013: RMB2,470 million). In addition, pursuant to the
CAS, the Group appropriated RMB42 million to the general reserve of its subsidiaries attributable to the Company in the
consolidated financial statements (2013: RMB35 million).
China Life Insurance Company Limited Annual Report 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
bonuses
included
included
Benefits
in salary
of salary
income
Actual paid
included
Subtotal
Performance
related
Basic
salaries
Name
Deferred
payment
payment
income
Total
615.5
Shi Xiangming
1,176.2
433.4
1,609.6
349.4
in kind
433.4
866.8
393.4
Xia Zhihua
RMB Thousand
in total
in total
1,260.2
Deferred
The
aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December
2013 are as follows:
(ii) Xiong Junhong was appointed as supervisor on 20 October 2014.
Total
Benefits in kind
RMB Thousand
Remuneration paid
Luo Zhongmin (i)
Shi Xiangming
Xia Zhihua
Yang Cuilian
Name
(b) Supervisors' emoluments
39 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
214
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December
2014 are as follows:
Li Xuejun
Xiong Junhong (ii)
(i)
963.8
374.0
589.8
996.9
381.4
615.5
62.5
62.5
994.4
378.9
615.5
768.0
371.5
396.5
Luo Zhongmin resigned as external supervisor on 29 May 2014.
482.1
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.
1,097.6
1,430.3
China Life Insurance Company Limited Annual Report 2014
216
year ended 31 December 2014, no emoluments have been paid by the Company to the directors
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 2013: Nil).
For the
RMB4,000,001 - RMB4,500,000
4
Embedded Value
2013
RMB3,000,001 - RMB4,000,000
RMB2,000,001 - RMB3,000,000
RMB1,000,001 - RMB2,000,000
RMB0 RMB 1,000,000
The emoluments fell within the following bands:
1,610
Number of individuals
2014
3,816
BACKGROUND
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.
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 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.
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.
Net assets, defined as assets less PRC solvency policy reserves and other liabilities; and
"Adjusted net worth" is equal to the sum of:
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.
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.
Embedded Value
China Life Insurance Company Limited Annual Report 2014
217
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.
DEFINITIONS OF EMBEDDED VALUE AND VALUE OF ONE YEAR'S SALES
Basic salaries, housing allowances, other allowances and benefits in kind
RMB
Thousand
Thousand
1,427.7
1,427.7
338.0
1,089.7
499.9
589.8
Li Xuejun
Yang Cuilian
150.0
150.0
30.0
120.0
Luo Zhongmin
1,430.3
150.0
589.8
462.0
1,051.8
RMB
2013
2014
Details of remuneration of the remaining four (2013: one) highest paid individuals are as follows:
The five individuals whose emoluments were the highest in the Company include one director (2013: four
directors) whose emoluments are reflected in the analysis presented above.
(c) Five highest paid individuals
39 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
For the year ended 31 December 2014
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
215
The compensation amounts for these supervisors for the year ended 31 December 2013 were restated based
on the finalised amounts determined during 2014.
1,380.8
1,380.8
329.0
332.7
The compensation amounts for these directors for the year ended 31 December 2013 were restated based on
the finalised amounts determined during 2014.
Tang Jianbang
300.0
(iii)
Lin Dairen was appointed as Chief Executive Officer on 29 April 2014.
(ii)
Wan Feng was appointed as non-executive director and Vice President on 25 March 2014 and resigned as non-
executive director and Vice President on 5 August 2014.
80.0
80.0
Liu Yingqi resigned as executive director on 25 March 2014.
80.0
382.6
184.3
198.3
382.7
184.4
198.3
80.0
300.0
(iv)
Su Hengxuan and Miao Ping were appointed as executive directors on 1 July 2014.
payment
Deferred
year
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the
ended 31 December 2013 are as follows:
Directors' and chief executive's emoluments (continued)
(a)
Sun Changji and Tang Jianbang resigned as independent directors on 29 May 2014. The resignation would not be
effective until the appointment of new independent director was approved by the CIRC. In accordance with the
regulations of the relevant PRC authorities, the Company did not pay any emoluments to Sun Changji and Tang
Jianbang within the reporting period.
39 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2014
213
Chang Tso Tung Stephen and Huang Yiping were appointed as independent directors on 20 October 2014.
(vi)
(v)
For the year ended 31 December 2014
320.0
300.0
320.0
Miao Ping (v)
Su Hengxuan (v)
Tang Jianbang (iv)
Bruce Douglas Moore
Anthony Francis Neoh
Sun Changji (iv)
Wang Sidong
Chang Tso Tung Stephen (vi)
Liu Yingqi (iii)
Miao Jianmin
Zhang Xiangxian
Yang Mingsheng
Wan Feng (i)
Name
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the year
ended 31 December 2014 are as follows:
(a) Directors' and chief executive's emoluments
The total compensation package for these directors, supervisors, chief executive and senior management for the
year ended 31 December 2014 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 2014 consolidated financial statements. The final compensation will be disclosed in a separate
announcement when determined.
39 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION
Lin Dairen (ii)
Huang Yiping (vi)
Note:
(i)
192.2
93.1
99.1
770.8
370.9
399.9
194.0
93.7
100.3
848.4
402.9
445.5
Total
Benefits in kind
RMB Thousand
Remuneration paid
Deferred
Performance
Subtotal
included
433.4
1,260.2
866.8
393.4
Liu Yingqi
1,176.2
349.4
433.4
349.4
433.4
1,260.2
866.8
393.4
Lin Dairen
1,609.6
1,609.6
433.4
1,176.2
300.0
320.0
320.0
300.0
50.0
250.0
Anthony Francis Neoh
320.0
70.0
250.0
Bruce Douglas Moore
Sun Changji
Wang Sidong
Zhang Xiangxian
Miao Jianmin
1,189.0
19,157
438.3
353.0
income
income
bonuses
salaries
Name
included
in kind
included
in salary
of salary
related
Basic
Actual paid
payment
Benefits
Total
in total
in total
438.3
1,274.3
876.5
397.8
Wan Feng
1,312.1
487.0
1,799.1
383.2
487.0
1,415.9
973.9
442.0
Yang Mingsheng
RMB Thousand
1,627.3
RMB million
B
Notes:
1) Numbers may not be additive due to rounding.
342,224
37,516
23,253
563
39,338
(3,209)
24,458
26
(8,479)
(783)
454,906
2) Items B through J are explained below:
B
Reflects expected impact of covered business, and the expected return on investments supporting the 2014 opening
net worth.
C
Value of new business sales in 2014.
Embedded Value as at 31 December 2014 (sum A through J)
K
Other
J
value" section.
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. 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
PREPARATION AND REVIEW
China Life Insurance Company Limited Annual Report 2014
Embedded Value
C
Value of New Business in the Period
D
Operating Experience Variance
D
E
F
Methodology, Model and Assumption Changes
G
Market Value and Other Adjustments
H
Exchange Gains or Losses
I
Shareholder Dividend Distribution
Investment Experience Variance
Reflects the difference between actual operating experience in 2014 (including mortality, morbidity, lapse, and
expenses etc.) and the assumptions.
E
Compares actual with expected investment returns during 2014.
Base case scenario
260,670
23,253
1.
Risk discount rate of 11.5%
248,363
21,962
2.
VALUE OF ONE YEAR'S
SALES AFTER COST OF
SOLVENCY MARGIN
Risk discount rate of 10.5%
24,640
10% increase in investment return
301,993
26,555
4.
10% decrease in investment return
219,647
19,971
273,875
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 2014 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".
RMB million
VALUE OF IN-FORCE
BUSINESS AFTER COST OF
F
Reflects the effect of projection method, model enhancements and assumption changes.
G
Change in the market value adjustment from the beginning of year 2014 to 31 December 2014 and other related
adjustments.
H
Reflects the gains or losses due to changes in exchange rate.
I
Reflects dividends distributed to shareholders during 2014.
SOLVENCY MARGIN
J
221
China Life Insurance Company Limited Annual Report 2014
Embedded Value
SENSITIVITY RESULTS
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:
Table 4
Sensitivity Results
Other miscellaneous items.
5.
ASSUMPTIONS
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 17% 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%.
260,670
234,702
E
Embedded Value (A + D)
454,906
342,224
F
Value of One Year's Sales before Cost of Solvency Margin
26,633
24,421
G
Cost of Solvency Margin
(3,380)
(3,120)
H
Value of One Year's Sales after Cost of Solvency Margin (F + G)
23,253
Value of In-Force Business after Cost of Solvency Margin (B + + C)
D
(37,135)
(40,042)
C
271,837
300,712
Value of In-Force Business before Cost of Solvency Margin
B
107,522
194,236
Adjusted Net Worth
21,300
A
2014
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 2014 and the value of one year's sales for the 12 months to 31 December 2014,
and their corresponding results as at 31 December 2013 are shown below:
Cost of Solvency Margin
31 December
2013
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
1,048
1,129
23,253
21,300
China Life Insurance Company Limited
Annual Report 2014
Embedded Value
MOVEMENT ANALYSIS
The following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period.
532
Table 3
RMB million
ITEM
A Embedded Value at Start of Year
SUMMARY OF RESULTS
Embedded Value
China Life Insurance Company Limited Annual Report 2014
219
Other operating assumptions such as mortality, morbidity, lapses and expenses are based on the Company's recent
operating experience and expected future outlook.
Analysis of Embedded Value Movement in 2014
Economic assumptions:
464
21,740
reserves.
VALUE OF ONE YEAR'S SALES BY CHANNEL
The value of one year's sales by channel is shown below:
Table 2
Value of One Year's Sales by Channel
Channel
Exclusive Individual Agent Channel
Group Insurance Channel
19,639
Bancassurance Channel
Notes:
1) Numbers may not be additive due to rounding.
2) Taxable income is based on earnings calculated using solvency reserves.
220
RMB million
31 December
31 December
2014
2013
Total
10% increase in expenses
3.
21,435
a review of the methodology used to develop the embedded value and value of one year's sales as at 31 December
2014, 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;
Our scope of work covered:
•
Scope of work
China Life has engaged Towers Watson Management Consulting (Shenzhen) Co. Ltd. Beijing Branch ("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 for the financial year ended
31 December 2014 (“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
TOWERS WATSON'S REVIEW OPINION REPORT ON EMBEDDED VALUE
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 2014;
Annual Report 2014
Embedded Value
222
Note: Taxable income is based on earnings calculated using solvency reserves for Scenarios 1 to 16.
22,894
262,577
possible scenario
Treatment Related to Insurance Contracts under one
in accordance to the Provisions on the Accounting
Taxable income based on the accounting profit
China Life Insurance Company Limited
17.
a review of the results of China Life's calculation of the EV Results.
223
257,909
Expected Return on Embedded Value
The cover photo of the printed version of this report was photographed by
Mr. Lan Yuxi of the Company.
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.
224
Wesley Cui
24th March 2015
Michael Freeman
In carrying out our review, we have relied on the accuracy of audited and unaudited data and information provided by
For and on behalf of Towers Watson
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. 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;
Based on the scope of work above, we have concluded that:
Opinion
Embedded Value
China Life Insurance Company Limited Annual Report 2014
the EV Results have been prepared, in all material respects, in accordance with the methodology and assumptions
set out in the Embedded Value section.
23,274
China Life.
Using 2013 EV assumptions
22,863
259,675
10% increase in lapse rates
9.
23,378
262,860
and 10% increase in mortality rate for annuity products
10% decrease in mortality rate for non-annuity products
10.
23,128
and 10% decrease in mortality rate for annuity products
10% increase in mortality rate for non-annuity products
7.
25,070
263,431
10% decrease in expenses
263,638
6.
258,517
10% decrease in lapse rates
8.
23,585
21,519
261,613
241,056
24,460
261,024
10% decrease in claim ratio of short term business
15. Solvency margin at 150% of
statutory minimum
14.
16.
260,316
13. 10% increase in claim ratio of short term business
22,045
23,388
263,013
10% decrease in morbidity rates
12.
23,118
258,351
10% increase in morbidity rates
11.
RMB million
As at 31 December 2014
Amount
Percentage
As at 31 December 2013
Amount
Percentage
1,804,598
Fixed-maturity investments
89.94%
1,662,770
85.90%
Term deposits
As at the end of the Reporting Period, our investment assets are categorized as below in terms of asset
classes:
Securities at Fair Value through Profit or Loss
Investment Properties
As at the end of the Reporting Period, loans increased by 40.3% from the end of 2013. This was primarily
due to an increase in policy loans volume and the increased allocation in diversified investments such as debt
investment plans and trust schemes.
Loans
As at the end of the Reporting Period, cash and cash equivalents increased by 120.5% from the end of 2013.
This was primarily due to the needs for liquidity management.
Cash and Cash Equivalents
As at the end of the Reporting Period, securities at fair value through profit or loss increased by 55.2% from
the end of 2013. This was primarily due to the increased allocation in common stocks at fair value through
profit or loss.
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2014
690,156
20
20
As at the end of the Reporting Period, investment properties decreased by 3.5% from the end of 2013. This
was primarily due to a depreciation of the investment properties.
32.85%
During the Reporting Period, profit before income tax in life insurance business increased by 39.1%
from 2013. This was primarily due to an increase in investment yield.
35.93%
29,451
As at the end of the Reporting Period, available-for-sale securities increased by 23.6% from the end of 2013.
This was primarily due to the increased allocation in high-grade credit bonds and funds in light of market
conditions.
40,402
2
3
4
Health Insurance Business
During the Reporting Period, profit before income tax in health insurance business increased by
18.7% from 2013. This was primarily due to an increase in business volume and investment yield.
Accident Insurance Business
During the Reporting Period, profit before income tax in accident insurance business increased by
154.3% from 2013. This was primarily due to an increase in business volume and an improvement in
business quality.
Other Business
During the Reporting Period, profit before income tax in other business increased by 21.8% from
2013. This was primarily due to an increase in investment yield of subsidiaries and net profits of
associates.
(4) Income Tax
During the Reporting Period, income tax of the Company was RMB7,888 million, a 77.5% increase from
2013. This was primarily due to the combined effect of taxable income and deferred tax.
9
In response to favorable market opportunities for health insurance and accident insurance businesses in recent years, the
Company has increased its efforts in developing health insurance and accident insurance businesses. In particular, the health
insurance business has been growing rapidly and the income generated from health insurance business has increased gradually as
a percentage of the Company's gross written premiums. Meanwhile, the income derived from the previously reported group life
insurance, short-term insurance and supplementary major medical insurance segments represented an insignificant percentage
of the Company's gross written premiums. In order to better reflect the changes in the Company's external environment,
its business structure and the objectives of its future development, as well as providing the report readers with more useful
information, the Company has realigned the composition of its reporting segments by changing the previously reported
individual life insurance, group life insurance, short-term insurance, supplementary major medical insurance and other segments
into four newly identified segments, namely life insurance, health insurance, accident insurance and other. The Company's
management has conducted analysis and evaluation on the operating results based on the new reporting segments in 2014. For a
detailed discussion, please refer to our financial statements.
Insurance asset management products
47.25%
873,585
44.77%
940,619
Bonds
664,174
Available-for-Sale Securities
As at 31
Held-to-Maturity Securities
607,531
Available-for-sale securities
503,075
517,283
664,174
690,156
1,848,681
In 2015, the Company intends to 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:
Held-to-maturity securities
Term deposits
Investment assets
RMB million
As at 31
December 2013
December 2014
Major Assets
(1)
ANALYSIS OF MAJOR ITEMS OF CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
During the Reporting Period, net profit attributable to equity holders of the Company was RMB32,211
million, a 30.1% increase from 2013. This was primarily due to the increase in investment yield and the
change of discount rate assumption of reserves of traditional insurance contracts.
(5) Net Profit
III
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2014
19
4,066
491,527
As at the end of the Reporting Period, held-to-maturity securities increased by 2.8% from the end of 2013.
This was primarily due to the increased allocation in high-grade credit bonds and financial bonds in light of
market conditions.
Securities at fair value through profit or loss
34,172
As at the end of the Reporting Period, term deposits increased by 3.9% from the end of 2013. This was
primarily due to the increased allocation volume of ordinary term deposits.
1,972,941
2,246,567
Term Deposits
Total
124,260
145,697
Other assets
1,329
1,283
Investment properties
6,153
6,153
Statutory deposits - restricted
118,626
166,453
Loans
21,330
47,034
Cash and cash equivalents
8,295
11,925
Securities purchased under agreements to resell
53,052
4,953
2,100,870
1,546
4,000
Profit
Assets
Assets
Shareholding
Net
Net
Total
Registered
Capital
RMB million
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 CIRC
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; other business
permitted by CIRC
Management and utilization of proprietary funds;
acting as agent or trustee for asset management
business; consulting business relevant to the above
businesses; other assets management business
permitted by applicable PRC laws and regulations
China Life Property
and Casualty Insurance
Company Limited
China Life Pension
Company Limited
China Life Asset
Management Company
Limited
Business Scope
Company Name
VII BUSINESS OPERATIONS OF OUR MAIN SUBSIDIARIES AND AFFILIATES
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2014
25
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.
60%
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 2014, the investment assets reached RMB2,100,870 million, an increase of
13.6% from the end of 2013.
6,819
779
FUTURE PROSPECT AND RISK ANALYSIS
IX
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2014
26
26
During the Reporting Period, the Company had neither raised capital nor used capital raised in the previous
periods. The Company had not invested in any major projects with non-raised capital, the total investments of
which were over 10% of the audited equity holder's equity as at the end of the previous year.
VIII USE OF RAISED AND NON-RAISED CAPITAL
Note: On 31 December 2014, the CIRC approved an application made by Pension Company in relation to the change of its
registered capital, as a result of which the paid-in capital of Pension Company was changed from RMB2,500 million to
RMB3,400 million. As at 31 December 2014, Pension Company did not complete all formalities relation to the change of
registration with the department in charge of industrial and commercial administration and its registered capital remained
at RMB2,500 million. The Company made a capital injection in Pension Company in the amount of RMB441 million.
Upon completion of the capital increase, the shareholding percentage of the Company in Pension Company was changed
from 87.4% to 70.74%, whereas the shareholding percentage of AMC in Pension Company was changed from 4.8% to
3.53%. Pension Company has completed its formalities in relation to the change of registration with the department in
charge of industrial and commercial administration on 15 January 2015.
1,407
16,893
52,769
40%
15,000
held by AMC
and 3.53% is
by the Company,
(161)
2,811
3,208
70.74% is held
Note
2,500
5,898
The Company possesses great financial strength. As at 31 December 2014, the registered capital of the Company
was RMB28,265 million. The total assets of the Company reached RMB2,246,567 million, which ranked No.1
in China's life insurance industry. As at the end of 2014, the total market capitalization of the Company was
US$143,865 million, which ranked No.2 among all listed insurance companies in the world.
The Company has the most extensive customer base. As at 31 December 2014, the Company had approximately
197 million long-term individual and group life insurance policies, annuity contracts and long-term health
insurance policies in force.
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 743,000 exclusive individual agents, 19,000 direct sales
representatives, 61,000 intermediary bancassurance outlets and 71,000 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.
27
China Life Insurance Company Limited Annual Report 2014
Management Discussion and Analysis
In 2015, the Company intends to constantly implement the “innovation-driven development strategy” in
great depth, reinforces the business philosophy of “focusing on value, enhancing personnel, optimizing
structure, and maintaining growth” and implements the operational strategies of “strengthening benchmarks
and focusing on breakthroughs” to improve the Company's sustainable development capability and core
competence by strengthening confidence, capturing opportunities, making pioneering efforts and acting
proactively. Given the above mentioned risk factors, the Company intends to 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 intends to 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
2015. At the same time, the Company will make corresponding arrangements in accordance with the capital
market conditions to further implement its future business development strategies if there is any further
capital requirement.
28
62,348
(3) Profit before Income Tax
For the year ended 31 December
Life insurance business
Health insurance business
Accident insurance business
Other business
Total
1
Life Insurance Business
China Life Insurance Company Limited Annual Report 2014
Management Discussion and Analysis
RMB million
2014
2013
30,651
22,038
3,252
2,739
27
In light of the complexity of the domestic and international economies, the uncertain financial markets
may adversely affect the Company's investment income and the book value of its assets. In addition,
with the gradual expansion of the investment scope for insurance funds, the Company may invest some
of its insurance funds through new investment channels, utilize new investment vehicles or appoint new
investment management entity, which may have an impact on its investment income and the book value of
its assets. Moreover, some of the Company's assets are held in foreign currencies, which may be adversely
affected by exchange rate movements if the exchange rate of Renminbi continues to appreciate.
Risks relating to investments
3.
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 2014, the brand of China Life has been ranked
as one of the "World's 500 Most Influential Brands” published by World Brand Lab for eight consecutive years.
The brand was also ranked as No. 5 on the "China's 500 Most Valuable Brands” list, with brand value estimated at
RMB174,536 million, continuously ranking No.1 among the insurance industry.
ANALYSIS OF CORE COMPETITIVENESS
VI
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2014
24
24
The Company's solvency ratio increased due to a significant increase in the comprehensive income during the
Reporting Period.
226.22%
294.48%
74,485
608
168,501
RMB million
As at 31
December 2013
As at 31
December 2014
Solvency ratio
Actual capital
Minimum capital
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 rules) by the minimum capital it is required to meet. The following table shows our solvency ratio as at
the end of the Reporting Period:
SOLVENCY RATIO
We have established a cash flow testing system, and 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, net cash inflow from operating activities increased by
14.6% from 2013. This was primarily due to an increase in cash flows from policyholders' investment. Net
cash outflow from investing activities increased by 15.0% from 2013. This 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.
2.
In 2015, the world economy will remain in the period of in-depth adjustments with insufficient momentum
for recovery. As the impact of non-economical factors, such as geopolitics, intensifies, greater fluctuation
will be seen in the international financial market, which will cause increased uncertainties. China's economic
development is at the stage of “superimposition of three periods”, enters the “new normal” state, and is
evolving into a stage with more advanced patterns, more sophisticated division of work and more reasonable
structures. 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, and increase the
difficulties and pressures for the insurance industry to adapt to and lead the “new normal” state.
Risks relating to our business
China's insurance industry remains at a significant stage with significant strategic opportunities. At this
stage, the form of development of the insurance industry is in urgent need of change as financial reform
enters into a new stage, market-oriented interest rate reform accelerates, market-oriented premium rate
reform moves forward steadily, trend of mixed financial operations becomes increasingly apparent and
technologies such as Internet and big data penetrate deeply. The industry shall actively take part in trans-
boundary competitions and achieve transformation and upgrade while reinforcing the traditional insurance
advantages. 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, it may be more difficult for the Company to improve its operational results, which may in turn
cause more irregular policy surrenders. Meanwhile, factors such as relatively slow growth of the sales force
and its high turnover rate may also adversely affect the business development of the Company.
236,151
80,193
2.97%
1. Risks relating to macro trends
2.98%
Annuity and Other Insurance Balances Payable
As at the end of the Reporting Period, annuity and other insurance balances payable increased by 10.5%
from the end of 2013. This was primarily due to an increase in maturities payable.
Interest-bearing Loans and Borrowings
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 RMB2,623 million.
22
22
As at the end of the Reporting Period, policyholder dividends payable increased by 50.9% from the end of
2013. This was primarily due to an increase in investment yields for participating products.
IV
Management Discussion and Analysis
Bonds Payable
As at the end of the Reporting Period, bonds payable remained stable from the end of 2013. This was
primarily due to the fact that no subordinated debts were issued by the Company in 2014.
Deferred Tax Liabilities
As at the end of the Reporting Period, deferred tax liabilities increased by 293.9% from the end of 2013.
This was primarily due to an increase in the fair value of the available-for-sale financial assets.
(3)
China Life Insurance Company Limited Annual Report 2014
Policyholder Dividends Payable
As at the end of the Reporting Period, securities sold under agreements to repurchase increased by 125.6%
from the end of 2013. This was primarily due to the needs for liquidity management.
Securities Sold under Agreements to Repurchase
67,989
67,985
Deferred tax liabilities
19,375
4,919
Other liabilities
47,077
24,727
Total
Insurance Contracts
1,959,236
1,750,356
As at the end of the Reporting Period, insurance contracts liabilities increased by 7.3% from the end of
2013. 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, account balance of investment contracts increased by 11.0% from the
end of 2013. This was primarily due to an increase in the volume of certain investment contracts.
Equity Holders' Equity
Bonds payable
As at the end of the Reporting Period, equity holders' equity was RMB284,121 million, a 29.0% increase
from the end of 2013. This was primarily due to the combined effect of an increase in the fair value of
available-for-sale financial assets and the profit gains during the Reporting Period.
(1)
2014
RMB million
2013
78,247
68,292
(69,257)
Net increase/(decrease) in cash and cash equivalents
(60,233)
(56,105)
10
25,704
(48,122)
V
55,107
16,704
Foreign currency gains/(losses) on cash and cash equivalents
Net cash inflow/(outflow) from financing activities
Net cash outflow from investing activities
Liquidity Sources
Our principal cash inflows come from insurance premiums, deposits from investment contracts, proceeds
from sales and maturity of financial 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
these risks.
manage
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 RMB47,034 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 RMB690,156
million.
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 limit our ability to sell these investments or sell
them at a fair price.
(2)
Liquidity Uses
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.
We believe that our sources of liquidity are sufficient to meet our current cash requirements.
23
China Life Insurance Company Limited Annual Report 2014
Management Discussion and Analysis
(3) Consolidated Cash Flows
For the year ended 31 December
Net cash inflow from operating activities
ANALYSIS OF CASH FLOWS
2,623
(76)
23,179
3.19%
Other equity investments³
57,477
2.73%
16,239
0.89%
58,991
Investment properties
0.06%
1,329
0.07%
Cash, cash equivalents and others*
58,959
2.81%
1,283
3.98%
83,620
Funds
Interest-bearing loans and borrowings
Other fixed-maturity investments²
111,475
69,904
3.78%
Equity investments
236,030
11.23%
154,957
8.39%
Common stocks
94,933
4.52%
79,727
4.31%
29,625
1.60%
5.31%
2,100,870
As at 31
December 2013
Insurance contracts
1,603,446
1,494,497
Investment contracts
72,275
RMB million
65,087
46,089
20,426
Policyholder dividends payable
74,745
Total
Annuity and other insurance balances payable
Securities sold under agreements to repurchase
December 2014
49,536
(2) Major Liabilities
100%
1,848,681
As at 31
100%
Notes:
1.
Insurance asset management products under fixed-maturity investments include infrastructure and real estate debt
investment plans and project asset-backed plans.
25,617
Other fixed-maturity investments include policy loans, trust schemes, statutory deposits – restricted, etc.
3.
4.
2.
Other equity investments include private equity funds, unlisted equities, equity investment plans, etc.
Cash, cash equivalents and others include cash and cash equivalents and securities purchased under agreements to
resell.
21
China Life Insurance Company Limited Annual Report 2014
Management Discussion and Analysis
PRINCIPAL BUSINESS
Mr. Huang Yiping, Mr. Anthony Francis Neoh, Mr. Miao Ping, Mr. Su Hengxuan, Mr. Lin Dairen,
Mr. Yang Mingsheng, Mr. Miao Jianmin, Mr. Zhang Xiangxian, Mr. Wang Sidong, Mr. Bruce Douglas Moore,
Mr. Chang Tso Tung Stephen
From left to right:
3.
2.
Report of the Board of Directors
Annual Report 2014
China Life Insurance Company Limited
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.
1.
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.
FORMULATION AND IMPLEMENTATION OF PROFIT DISTRIBUTION POLICY
For an analysis of the Company's operating and financial results during the Reporting Period, please refer to the
section headed "Management Discussion and Analysis” in this annual report.
1.
In accordance with Article 212 of the Articles of Association, the Company's profit distribution policy is as
follows:
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.
(II)
Report of the Board of Directors
China Life Insurance Company Limited Annual Report 2014
MANAGEMENT DISCUSSION AND ANALYSIS
29
The Company shall give priority to cash dividends as its profit distribution manner.
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 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;
1.
(I) In accordance with Article 211 of the Articles of Association, the basic principles of the Company's profit
distribution are as follows:
The "distributable profits” means the Company's after-tax profits less the provisions for losses and the
allocations to statutory funds that the Company is required to make.
2.
At no time during the Reporting Period had the Company authorized its Directors, Supervisors or their respective
spouses or children under the age of 18 to benefit by means of the acquisition of shares or debentures of the
Company or any of its associated corporations, and no such rights for the acquisition of shares or debentures were
exercised by them.
10. PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S SECURITIES
the Company has expressly provided in its Articles of Association the level of authority required for
approving external guarantees and the approval procedures.
2.
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)
(1) during the Reporting Period, the Company did not provide any external guarantee;
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 2014
33
33
No management or administration contracts for the whole or substantial part of any business of the Company
were entered into during the Reporting Period.
18. MANAGEMENT CONTRACTS
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 ON 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 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 2014.
During the Reporting Period, the Company and its subsidiaries did not purchase, sell or redeem any of the
Company's listed securities.
11. H SHARE STOCK APPRECIATION RIGHTS
No H Share Stock Appreciation Rights of the Company were granted or exercised in 2014. The Company will
deal with such rights and related matters in accordance with PRC governmental policy.
32
China Life Insurance Company Limited Annual Report 2014
Report of the Board of Directors
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 18 June 2014 for the
information on income tax in respect of the dividend distributed to A Share shareholders during the Reporting
Period, and the announcements published by the Company on the HKExnews website of the Hong Kong
Exchanges and Clearing Limited on 29 May 2014 for the information on income tax in respect of the dividend
distributed to H Share shareholders during the Reporting Period.
12. DAY-TO-DAY OPERATIONS OF THE BOARD
13. DIRECTORS' AND SUPERVISORS' SERVICE CONTRACTS
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).
14. DIRECTORS' AND SUPERVISORS' INTERESTS IN MATERIAL CONTRACTS
None of the Directors or Supervisors is or was materially interested, directly or indirectly, in any contracts of
significance entered into by the Company or its controlling shareholders or any of their respective subsidiaries at
any time during the Reporting Period.
15. DIRECTORS' AND SUPERVISORS' RIGHTS TO ACQUIRE SHARES
16. DISCLOSURE OF INTERESTS OF DIRECTORS, SUPERVISORS AND THE CHIEF
EXECUTIVE IN THE SHARES OF THE COMPANY
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.
3.
1.4
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: (i) the distributable profit as ascertained under the
Accounting Standards for Business Enterprises; (ii) the residual overall income ascertained pursuant to
the preparation rules of the Company's solvency report.
Percentage of
amount of cash
dividends
in net profit
attributable to
equity holders
of the Company
dividends were in the consolidated
Amount of
cash dividends
(including tax)
distributed
statements
11,306
32,211
35%
8,479
24,765
34%
3,957
11,061
20. RESPONSIBILITY STATEMENT OF DIRECTORS ON FINANCIAL REPORTS
The total amount of charitable donations made by the Company during the Reporting Period was approximately
RMB97 million.
CHARITABLE DONATIONS
Details of the reserves of the Company are set out in Note 35 in the Notes to the Consolidated Financial
Statements in this annual report.
RESERVES
The changes in accounting estimates and assumptions 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.
Unit: RMB million
CHANGES IN ACCOUNTING ESTIMATES AND ASSUMPTIONS
5.
4.
Report of the Board of Directors
China Life Insurance Company Limited Annual Report 2014
31
36%
6.
equity holders of
the Company in
the consolidated
statements for
the year in which
Net profit
attributable to
3.0
In accordance with the profit distribution plan for the year 2014 approved by the Board on 24 March
2015, with the appropriation to its discretionary surplus reserve fund of RMB3,160 million (10%
of the net profit for 2014), 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 2014 Annual General Meeting to be held on 28 May 2015 (Thursday). 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 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.
of 2014
year
2.
Profit distribution plan or public reserves capitalization plan for the
1.
No public reserve capitalization is provided for in the profit distribution plan for the current financial
Report of the Board of Directors
(IV) Profit distribution plan and public reserves capitalization plan
30
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
the Company's Independent Directors give their independent opinions and a specific resolution regarding
this proposal is reached, 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
China Life Insurance Company Limited Annual Report 2014
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 the Company fails to distribute the
dividends to the shareholders on the day when dividends were due to have been distributed.
year.
The dividend distribution of the Company for the recent 3 years is as follows:
4.0
ten shares (RMB)
Amount of
dividends per
Number of
bonus stocks
per
ten shares (shares)
ten shares (shares)
capital per
The profit distribution policy of the year 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.
into share
(including tax)
2012
2013
2014
dividends were
distributed
Year in which
Transfer of
public reserve
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.
PROPERTY, PLANT AND EQUIPMENT
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 2014.
INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON CERTAIN
MATTERS
2.
Report of the Supervisory Committee
China Life Insurance Company Limited Annual Report 2014
37
Strengthening training and enhancing duty performance of the Supervisors. The Supervisors actively
participated in the training courses on the latest regulatory regime and industrial development organized
by the Company and presented by lawyers and experts, and also attended the training courses organized
by the regulatory authorities. The Company organized the training courses on the latest regulatory regime
and industrial development presented by lawyers, auditors and external experts for all Supervisors of the
Supervisory Committee. Pursuant to the regulatory requirements, the Company also organized training
courses on anti-money laundering for all Supervisors of the Supervisory Committee with the aim of enabling
Supervisors to understand the latest laws and regulations governing anti-money laundering. Certain
Supervisors attended the “Advanced Study Course on the Regulation of Overseas-Listed Chinese Companies
and Enterprises" organized by the Hong Kong Institute of Chartered Secretaries in Hong Kong. Through
participating these internal and external training activities organized by the Company, the Supervisors
further solidified the foundation of corporate governance theory and professional experience.
1.
Conducting on-site visits and research activities to further broaden the basis for discharge of duties by
the Supervisory Committee. In accordance with the 2014 investigation and research work plan of the
Supervisory Committee, all members of the Supervisory Committee carried out investigation and research
on Guizhou Branch of the Company with the aim of supervising and deeply understanding the business
development and operation of the branch and its implementation of the budget and indicators formulated
by the headquarter, the branch's role and competitiveness in the local insurance market, internal control
and compliance, internal supervision and risk control, sales channels and team building. Ms. Xia Zhihua,
the Chairperson of the Supervisory Committee, and certain other Supervisors of the Supervisory Committee
conducted investigation and research on the supervisory committee of China Minsheng Bank to fully
understand the issues such as the responsibilities of the supervisory committee of a bank, establishment
of the rules and policies of the supervisory committee, and evaluation on the supervisory committee's
discharge of its duties and responsibilities, and to explore the theories and practices of the performance
of the supervisory committee. All Supervisors of the Supervisory Committee also went to Hubei,
Chongqing, Gansu and Qingdao, etc. to conduct on-site visits and research on the issues including business
development, internal control and compliance, risk management, market competition and team building of
local branches, which has further enriched the experience of the Supervisory Committee in discharging its
duties and responsibilities and enabled the Supervisory Committee to better exercise its role of supervision.
4.
Report of the Supervisory Committee
China Life Insurance Company Limited Annual Report 2014
36
Attending and participating in corporate governance meetings and actively exercising their supervisory role.
In 2014, the Supervisory Committee attended the 2013 Annual General Meeting, the First Extraordinary
General Meeting 2014 and the Second Extraordinary General Meeting 2014 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.
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, 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 2014, the fourth session 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.
5.
Currently, the fourth session of the Supervisory Committee comprises Ms. Xia Zhihua, Mr. Shi Xiangming,
Ms. Yang Cuilian, Mr. Li Xuejun and Ms. Xiong Junhong, with Ms. Xia Zhihua acting as the Chairperson
of the Supervisory Committee. Of the members of the Supervisory Committee, Ms. Xia Zhihua, Mr. Shi
Xiangming and Ms. Xiong Junhong are Non Employee Representative Supervisors, and Ms. Yang Cuilian
and Mr. Li Xuejun are Employee Representative Supervisors.
2.
4.
7.
21. BOARD'S STATEMENT ON INTERNAL CONTROL
24 March 2015
Beijing, China
Chairperson of the Supervisory Committee
Xia Zhihua
3.
By Order of the Supervisory Committee
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.
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.
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.
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
2014 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.
5.
38
3.
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.
ACTIVITIES OF THE SUPERVISORY COMMITTEE
PricewaterhouseCoopers Zhong Tian Certified Public Accountants Limited Company and PricewaterhouseCoopers,
the PRC auditor and the international auditor of the Company for the year 2012, retired as the auditors of the
Company upon expiration of their term of office at the close of the 2012 Annual General Meeting. Resolutions
were passed at the 2013 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 2014, respectively. Ernst & Young Hua Ming
LLP and Ernst & Young have been serving as the Company's auditors for two consecutive years.
25. AUDITORS
Report of the Board of Directors
China Life Insurance Company Limited Annual Report 2014
34
Period.
Remuneration paid by the Company to the auditors is subject to approval by 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.
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
Based on the information publicly available to the Company and within the knowledge of the Directors as at the
Latest Practicable Date (24 March 2015), 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.
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.
2.
23
22. MAJOR CUSTOMERS
24. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
Remuneration paid by China Life Insurance Company Limited to the auditors in 2014 was as follows:
34
Fees (RMB million)
Ms. Xiong Junhong, Ms. Yang Cuilian,
Ms. Xia Zhihua, Mr. Shi Xiangming,
Mr. Li Xuejun
From left to right:
Service/Nature
1.
Report of the Supervisory Committee
China Life Insurance Company Limited Annual Report 2014
Beijing, China
24 March 2015
By Order of the Board
Yang Mingsheng
Chairman
1.
A resolution for the re-appointment of Ernst & Young Hua Ming LLP and Ernst & Young as the PRC and
international auditors of the Company for the year 2015 will be proposed by the Board of Directors at the
forthcoming 2014 Annual General Meeting to be held on 28 May 2015.
10.70
42.80
Internal control audit fee
Financial report audit fee
35
ASSET TRANSACTIONS, MERGERS AND ACQUISITIONS DURING THE REPORTING
PERIOD
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 transactions in relation to the acquisition of properties from CLI,
the capital injection to CLP&C and the investment in the trust scheme by each of the Company, CLIC
and CLP&C were subject to reporting and announcement requirements but were exempt from independent
shareholders' approval requirements pursuant to Rule 14A.76(2) of the Listing Rules. The transaction of the
capital injection to CLP&C was submitted to the 2013 Annual General Meeting for shareholders' approval
pursuant to the aggregation principles of the SSE Listing Rules. The Company has complied with the
disclosure requirements under Chapter 14A of the Listing Rules in respect of such connected transactions.
As approved at the seventeenth meeting of the fourth session of the Board, the Company, CLIC
and CLP&C (each as the principal and beneficiary) agreed to subscribe for, through AMC (as the
authorized agent), the trust units under the trust scheme established by Shanghai International
Trust Co., Ltd. (“Shanghai Trust”, as the trustee), and the Company, CLIC and CLP&C entered
into subscription risk statements with Shanghai Trust, respectively. In September 2014, CLIC and
CLP&C subscribed for 3 billion and 1 billion trust units of RMB1 each issued by Shanghai Trust
under Phase I of the trust scheme at RMB3 billion and RMB1 billion, respectively. On 5 December
2014, the Company fulfilled its subscription obligation by subscribing for 5.96 billion trust units of
RMB1 each issued by Shanghai Trust under Phase II of the trust scheme at RMB5.96 billion. The
trust funds under the trust scheme is RMB10 billion in total, which shall be used for the provision of
loans to China Huarong Asset Management Co., Ltd. (“Huarong Asset”), and such loans shall only be
applied to Huarong Asset's non-performing assets business that is operated within the business scope
of Huarong Asset and in compliance with applicable laws and regulations. Idle funds (including gains
derived from the trust) shall only be deposited into banks. The trust scheme is expected to have a term
of not more than 72 months. Shanghai Trust shall distribute trust benefits to the beneficiaries out of
the trust assets after deduction of trust costs and other liabilities. The trust benefits to be distributed
by Shanghai Trust to the beneficiaries are mainly derived from the principal of the loan and any
interests accrued thereon to be repaid by Huarong Asset.
Investment in Trust Scheme
4.
China Life Insurance Company Limited Annual Report 2014
Significant Events
46
As approved at the eleventh meeting of the fourth session of the Board and the 2013 Annual General
Meeting, the Company entered into the "Capital Injection Contract of China Life Property and
Casualty Insurance Company Limited" with CLIC and CLP&C on 9 June 2014, whereby the
Company and CLIC agreed to inject further capital into CLP&C by subscription of 2.8 billion shares
and 4.2 billion shares at RMB1.00 per share, respectively. The amounts of the capital injection by the
Company and CLIC were RMB2.8 billion and RMB4.2 billion, respectively, representing 40% and
60% of the increased registered capital of CLP&C, respectively. On 7 July 2014, the CIRC approved
CLP&C's application for the change of its registered capital. Upon completion of the capital injection,
the aggregate investment of the Company in CLP&C amounts to RMB6 billion, and CLP&C
continues to be held as to 60% and 40% by CLIC and the Company, respectively.
Entrustment of Enterprise Annuity Funds and Account Management Agreement
On 27 July 2009, the Company, CLIC and AMC entered into the “Entrustment of Enterprise
Annuity Funds and Account Management Agreement of China Life Insurance (Group) Company"
with Pension Company. The agreement was valid for three years from the date on which the
entrusted funds were transferred into a special entrustment account. As the trustee and account
manager, Pension Company provided trusteeship and account management services for the enterprise
annuity funds of the Company, CLIC and AMC, and charged trustee management fees and account
management fees in accordance with the agreement. The agreement expired on 1 December 2012.
As approved at the fourth meeting of the fourth session of the Board, the Company, CLIC, AMC
and Pension Company renewed the agreement in the form of memorandum for one year up to 1
December 2013. 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 Provisions in relation to Account Management and Investment
Management)" on 22 March 2014 with a term from 2 December 2013 to 31 December 2016. At
present, the Pension Company is registering the contract in accordance with the regulations of the
Ministry of Human Resources and Social Security of the PRC.
Capital Injection to CLP&C
During the Reporting Period, the Company did not undertake any material asset transaction, merger and
acquisition.
3.
47
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.
Significant Events
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 RMB1.7 billion. 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.
48
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.
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 such formalities could not be completed within such period, CLIC would bear any potential losses to the
Company in relation thereto.
UNDERTAKINGS OF THE COMPANY OR SHAREHOLDERS HOLDING MORE THAN
5% OF THE SHARE CAPITAL OF THE COMPANY WHICH ARE EITHER GIVEN OR
EFFECTIVE DURING THE REPORTING PERIOD
China Life Insurance Company Limited Annual Report 2014
Except otherwise disclosed in this annual report, the Company had no other material contracts during the
Reporting Period.
3.
2.
MATERIAL CONTRACTS AND THE PERFORMANCE OF MATERIAL CONTRACTS
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.
1.
5.
4.
The Company neither gave external guarantees nor provided guarantees to its subsidiaries during the
Reporting Period.
Acquisition of Properties from CLI
Significant Events
2.
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 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 2014, the subscription price for the fund products was
RMB720.00 million, the redemption price for the fund products was RMB726.45 million,
the subscription fee for the fund products was RMB0 million, the redemption fee for the fund
products was RMB0 million, the sales commission fee and client maintenance fee paid by AMP
was RMB0 million, and the fees for other daily transactions was RMB0.02 million.
Significant Events
China Life Insurance Company Limited Annual Report 2014
44
(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;
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 2014, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB4,380.23 million, and the redemption price
and corresponding redemption fee for the redemption of fund products was RMB3,927.47
million.
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.
(3) Framework Agreement between CLIC and AMP
For the year ended 31 December 2014, 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 was RMB0 million, and the fees for
other daily transactions was RMB0 million.
China Life Insurance Company Limited Annual Report 2014
43
(4) Framework Agreement between CLP&C and AMP
(2)
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;
(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
1.
(II) Other Major Connected Transactions
Significant Events
China Life Insurance Company Limited Annual Report 2014
45
the amounts of the above transactions have not exceeded the relevant annual caps.
(4)
the transactions were entered into in accordance with the agreements governing those continuing
connected transactions; and
(3)
(2) the transactions were conducted either on normal commercial terms or on terms that are fair and
reasonable so far as the Company's independent shareholders are concerned;
(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 reporting, announcement and/or independent shareholders' approval requirements, and
confirmed that:
Confirmation by Independent Directors
announcements.
(4) nothing has come to the auditors' attention that causes them to believe that the disclosed continuing
connected transactions have exceeded the maximum aggregate annual value disclosed in the previous
3.
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.
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 interests, real
properties, 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. For the year
ending 31 December 2015, the investment management service fee and the performance
incentive fee payable by the Company to CLI will not exceed RMB500 million. The contractual
amount of the assets entrusted by the Company to CLI for investment and management will
not exceed RMB150 billion 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 entrusted by the
Company in its co-investment with CLIC and CLP&C, which shall not exceed RMB40 billion
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.
(2) Framework Agreement between Pension Company and AMP
(1) Asset Management Agreement between the Company and AMC
Asset Management Agreements
For the year ended 31 December 2014, the service fee paid by CLIC to the Company amounted to
RMB987 million.
The Company and CLIC have from time to time entered into policy management agreements since 30
September 2003. The Company and CLIC entered into the 2011 confirmation letter on 15 December
2011, pursuant to which both parties confirmed the renewal of the policy management agreement
for three years from 1 January 2012 to 31 December 2014. Pursuant to the 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 ended 31 December
2014 is RMB1,188 million. 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 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 2017 is RMB1,037 million.
2.
Policy Management Agreement
1.
Significant Events
China Life Insurance Company Limited Annual Report 2014
39
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
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 ending 31
December 2015 is RMB1,200 million.
The Company has complied with the disclosure requirements under Chapter 14A of the Listing Rules in
respect of the above continuing connected transactions (except those fully exempted continuing connected
transactions as mentioned above). 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.
During the Reporting Period, the Company also entered into certain continuing connected transactions,
including the asset management agreement between CLIC and AMC and the 2013 asset management
agreement for alternative investments between the Company and China Life Investment Holding Company
Limited ("CLI"), which were exempt from reporting, announcement, annual review and independent
shareholders' approval requirements under Chapter 14A of the Listing Rules. CLI is a wholly-owned
subsidiary of CLIC and is therefore a connected person of the Company.
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
China Life AMP Asset Management Co., Ltd. (“AMP") with the Company, Pension Company, CLIC and
CLP&C, respectively. These continuing connected transactions were subject to reporting, announcement,
annual review and independent shareholders' approval requirements under the Listing Rules. AMP is a non-
wholly owned subsidiary of AMC and is therefore a connected person of the Company.
(I) Continuing Connected Transactions
II. MAJOR CONNECTED TRANSACTIONS
During the Reporting Period, the Company was not involved in any material litigation, arbitration or matter
generally enquired by media.
MATERIAL LITIGATIONS, ARBITRATIONS AND MATTERS GENERALLY ENQUIRED
BY MEDIA
I.
Significant Events
China Life Insurance Company Limited Annual Report 2014
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
In addition, the Company and CLI have entered into the 2015 asset management agreement for alternative
investments, which was subject to reporting, announcement and annual review requirements but was exempt
from independent shareholders' approval requirements under the Listing Rules. However, such agreement
was subject to approval by the shareholders' general meeting of the Company under the SSE Listing Rules.
For the year ended 31 December 2014, the Company paid AMC an asset management fee of
RMB886 million.
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, and
the insurance sales framework agreement between the Company and CLP&C. These continuing connected
transactions were subject to reporting, announcement and annual review requirements but were exempt from
independent shareholders' approval requirements under the Listing Rules. CLIC, the controlling shareholder
of the Company, holds 40% of the equity interest of AMC and 60% of the equity interest of CLP&C.
Therefore, each of CLIC, AMC and CLP&C constitutes a connected person of the Company.
China Life Insurance Company Limited Annual Report 2014
For the year ended 31 December 2014, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB11,460.00 million, the redemption price and
corresponding redemption fee for the redemption of fund products was RMB4,414.71 million,
the sales commission fee and client maintenance fee paid by AMP was RMB0 million, the
management fee paid by the Company for the asset management for specific clients was RMBO
million, and the fees for other daily transactions was RMB0.47 million.
40
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
Framework Agreements with AMP
China Life Insurance Company Limited Annual Report 2014
4.
42
For the year ended 31 December 2014, CLP&C paid the Company an agency service fee of
RMB1,013 million.
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. 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 annual caps
for the three years ended 31 December 2014 are RMB660 million, RMB1,250 million and RMB1,950
million, respectively. 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 2015 insurance sales
framework agreement, CLP&C continues 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 2017 are RMB1,386 million, RMB1,738 million and RMB2,222 million, respectively.
Insurance Sales Framework Agreement
Significant Events
3.
For the year ended 31 December 2014, the Company paid CLI an asset management fee of
RMB89 million.
Significant Events
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 2011. CLIC and AMC entered into the 2011 asset management agreement on
29 December 2011, which was for a term from 1 January 2012 to 31 December 2014. Pursuant
to the 2011 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 caps for the three years ended
31 December 2014 are RMB300 million, RMB310 million and RMB320 million, respectively.
On 31 December 2014, CLIC and AMC entered into the 2015 asset management agreement.
The entrustment term is from 1 January 2015 to 31 December 2015. Pursuant to the 2015
asset management agreement, AMC will continue to invest and manage assets entrusted to it by
CLIC. The annual cap for the year ending 31 December 2015 is RMB320 million.
(2) Asset Management Agreement between CLIC and AMC
(3) Asset Management Agreement for Alternative Investments between the Company and CLI
On 22 March 2013, the Company and CLI entered into the 2013 asset management agreement
for alternative investments. The term of the agreement has been extended to 31 December 2014
pursuant to the automatic renewal clause. Pursuant to the 2013 asset management agreement
for alternative investments, CLI 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 and the investment guidelines given
by the Company. The assets under management include equity interests, real properties
and related financial products. In consideration of CLI'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 CLI 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 caps for the two years ended 31 December 2014 are RMB150 million and RMB250
million, respectively.
For the year ended 31 December 2014, CLIC paid AMC an asset management fee of RMB128
million.
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
41
China Life Insurance Company Limited Annual Report 2014
Significant Events
Company Period in RMB
shares held at shares held at
during the
Reporting
paid/fee in
paid by the
annuity fund
Number of Number of
during the shareholders
the Company_received from
and enterprise
Reporting
provident fund received from emolument
Remuneration
the beginning the end of the
Wan Feng
RMB ten
Total
10.03
0
0
10 July 2012-
Executive Director Male 56
(before tax) ten thousands Reason for changes
thousands
thousands
changes
year
of the year
Previous Position Gender Age Term
Name
in RMB ten ten thousands Period in RMB
Reason for
emolument
33.51
Total
26.15
0 Retired due to the attainment of statutory
retirement age
90.34
9.37
Note: According to the relevant rules and regulations of China, Mr. Sun Changji and Mr. Tang Jianbang, Independent Directors, did
not receive any emoluments from the Company during the Reporting Period.
57
52
China Life Insurance Company Limited Annual Report 2014
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 for 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 since October 2008, and was appointed
as the President of the Company by the Board in March 2014. He served concurrently as a
Non-executive Director of China Life Property and Casualty Insurance Company Limited
and China Life Pension 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, was awarded special allowance by the State Council. He worked in the life
insurance industry for over 33 years and has accumulated extensive experience in operation and
management. He is currently the Chairman of the China Life Foundation, Vice Chairman of the
Insurance Institute of China and the Insurance Association of China, and the Director of the Life
Insurance Committee of the Insurance Association of China.
58
12.93
housing
Notes:
2.
insurance,
Other
benefits, social
RESIGNATION AND RETIREMENT OF DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2014
4.
56
With the approval given at the sixteenth meeting of the fourth session of the Board, Ms. Huang Xiumei was
appointed as the Financial Controller of the Company with effect from 19 December 2014.
With the approval given at the sixteenth meeting of the fourth session of the Board and the approval from CIRC,
Mr. Xu Hengping, Mr. Xu Haifeng, Mr. Li Mingguang and Mr. Yang Zheng were appointed as the Vice President
of the Company with effect from 5 November 2014.
With the approval given at the twelfth meeting of the fourth session of the Board and the approval from CIRC,
Mr. Lin Dairen was appointed as the President of the Company with effect from 29 April 2014.
According to the relevant rules and regulations of China, the final amount of emoluments of the Senior
Management is currently subject to review and approval. The result of the review will be revealed 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.
5.
4.
3.
1.
19.40
0
President
0
0
Male 52 August 2003-25
Vice President
Liu Jiade
29 May 2014
9.91
6.25
6.25
0
0
64 24 July 2012-
Male
Supervisor
0
9.41
19.32
0 Resigned pursuant to the relevant state policy
13.22
arrangements
0
0
Total
April 2014
0
Male 61 August 2008-3
Vice President
Zhou Ying
March 2014
0 Resigned due to adjustment of work
0 Resigned pursuant to the relevant state policy
of China
0 Resigned pursuant to the relevant state policy
of China
of China
Luo Zhongmin
20 October 2014
Director
0
Vice President
arrangements
25 March 2014
0 Resigned due to adjustment of work
19.22
9.31
9.91
10 July 2012-
Executive Director Female 56
Liu Yingqi
25 March 2014-
5 August 2014
Vice Chairman,
Non-executive
Director
33.51 Due to adjustment of work arrangements,
Mr. Wan Feng tendered his resignation as
the President and was re-designated as Non-
executive Director. Due to his personal career
arrangement, Mr. Wan Feng tendered his
resignation as the Vice Chairman and Non-
executive Director
25 March 2014
September 2007-
January 2006-
25 March 2014
25 March 2014
Independent
Director
0
0
0
0
24 July 2012-
68
Male
Independent
Tang Jianbang
20 October 2014
0
0
0
10 July 2012-
Male 72
Sun Changji
58,984,669
Li Mingguang
Significant Events
Su Hengxuan
0
77.08
37.09
39.99
0
Executive Director
0
56
Male
Executive Director
Lin Dairen
Executive Director
0
Since 10 July 2012
84.84
Male
Since 1 July 2014
38.26
18.43
19.83
0
Since 1 July 2014
56
52
Male
Miao Ping
0
38.27
18.44
19.83
0
Executive Director
0
40.29
0
Company Period in RMB
paid/fee in
held at the shares held
during the
Reporting
paid by the
Reporting
Remuneration
shareholders
during the
annuity fund
Number
received from
the Company
of shares Number of
44.55
beginning of at the end of Reason for
in RMB ten
0
Male 59 Since 10 July 2012
Chairman
Yang Mingsheng
(before tax) ten thousands
thousands
RMB ten
thousands
the year
the year
Gender Age Term
Position
Name
ten thousands Period in RMB
changes
Miao Jianmin
Non-executive Director Male
50
0
8.00
0
8.00
Since 20 October 2014
66
Huang Yiping
Male
Chang Tso Tung Stephen
0
30.00
0
30.00
Since 10 July 2012
Independent Director
68
Independent Director
51 Since 20 October 2014
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.
1.
Notes:
233.88
316.45
0
Male
0
0
8.00
0
8.00
0
0
Total
Male
Independent Director
Anthony Francis Neoh
0
0
0
Since 24 July 2012
59
Male
China Life Insurance Company Limited Annual Report 2014
Non-executive Director
80.08
0
0
0
0
Since 10 July 2012
Zhang Xiangxian
Wang Sidong
Non-executive Director
Male
0
32.00
0
32.00
0
0
Since 10 July 2012
65
Male
Independent Director
Bruce Douglas Moore
76.90
0
Since 24 July 2012
53
and enterprise
emolument
received from
provident fund
2.
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.
3.
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.
Details of shareholders
2.
Information relating to the Controlling Shareholder and Effective Controller
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.
Changes in Share Capital and Shareholders Information
China Life Insurance Company Limited Annual Report 2014
or frozen
shares pledged
Number of
Unit: Shares
1.
50
The controlling shareholder of the Company is CLIC, and its relevant information is set out below:
Legal representative
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.
4.6 billion
10002372-8
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
Name of company
in China or abroad during the
Reporting Period
Shareholdings in other
Future development strategy
Main businesses
Registered capital
Organization code
Date of incorporation
subsidiaries and affiliates listed
10,984,726
0.04%
Overseas legal person
18,452,300
0.07%
State-owned legal person
China International Television Corporation
20,000,000
0.07%
CSOP Asset Management Limited - CSOP
State-owned legal person
+14,967,002
31,546,972
0.11%
State-owned legal person
China Securities Finance Corporation Limited
+58,984,669
China National Nuclear Corporation
Other
0.05%
14,369.446
Platinum Investment Management
Company Limited
Great Wall Domestic Demand Increase II
Stocks Securities Investment Fund
+11,112,836
11,112,836
0.04%
Other
a - Jingshun
Agricultural Bank of China -]
+13,108,818
13,108,818
0.05%
Other
National Social Security Fund - Portfolio 116
FTSE China A50 ETF
+195,759
The strategy is designed to devote much efforts in consolidating the competitive
advantages in its existing principal business including life insurance, asset management,
property and casualty insurance, and enterprise annuity by focusing on the core aspects
of "development under a group and professional operation” and implementing the
strategic measures such as “driven by innovation, principal business upgrade, integrated
operation, resources integration, overseas expansion, talent prioritization, technological
guidance and cultural navigation”, which enables the Group to grow bigger and
stronger. The strategy aims to actively develop new business areas such as non-insurance
financial business and internet financial business, which makes such business areas a
new growth point for the development of the Group. The strategy intends to develop
China Life into a world-class modern financial insurance group by taking further steps
to push forward the integrated operation, market-oriented mechanism, management
modernization, and business internationalization.
2.
As at 31 December 2014, CLIC held 231,141,935 A shares of CITIC Securities
Co., Ltd., representing 2.1% of its total shares, and 227,226,064 A shares of China
Minsheng Banking Corp., Ltd., representing 0.67% of its total shares.
China Life Insurance Company Limited Annual Report 2014
(Note 2): JPMorgan Chase & Co. was interested in a total of 448,698,262 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, JF Asset Management
Limited, J.P. Morgan Investment Management Inc., J.P. Morgan Trust Company of Delaware, J.P. Morgan
Whitefriars Inc., J.P. Morgan Securities plc, JPMorgan Chase Bank, N.A. and JPMorgan Asset Management (UK)
Limited were interested in 3,630 H shares, 2,353,139 H shares, 6,916,000 H shares, 401,000 H shares, 1,860 H
shares, 90,678,761 H shares, 22,279,366 H shares, 325,788,506 H shares and 276,000 H shares respectively. All of
these entities are either controlled or indirectly controlled subsidiaries of JPMorgan Chase & Co.
(Note 1): BlackRock, Inc. was interested in a total of 532,568,789 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, N.A., 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) Ltd, BlackRock Asset Management Deutschland AG, BlackRock Fund Managers
Ltd and BlackRock Life Limited were interested in 3,897,305 H shares, 2,181,000 H shares, 110,954,051 H shares,
174,758,000 H shares, 2,062,000 H shares, 7,120,352 H shares, 2,207,480 H shares, 3,217,000 H shares, 54,535,895
H shares, 3,140,000 H shares, 69,371,822 H shares, 4,446,700 H shares, 54,443,186 H shares, 22,665,000 H shares,
12,389,998 H shares, 704,000 H shares, 4,357,000 H shares and 118,000 H shares respectively. All of these entities
are either controlled or indirectly controlled subsidiaries of BlackRock, Inc.
Changes in Share Capital and Shareholders Information
China Life Insurance Company Limited Annual Report 2014
52
52
Included in the 448,698,262 H shares are 325,782,986 H shares (4.37%), 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.
The letter "L" denotes a long position. The letter “S” denotes a short position. The letter “P” denotes interest in a lending pool.
1.15%
4.37%
325,782,986 (P)
corporation/approved lending
0.13%
0.49%
agent
36,726,613 (S)
JPMorgan Chase & Co. held by way of attribution a short position as defined under Part XV of the SFO in
36,726,613 H shares (0.49%).
the SFO.
Total
emolument
housing
Total
social insurance,
Other benefits,
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 2014, 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
CURRENT DIRECTORS
I
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2014
53
53
1.
1.59%
6.02%
448,698,262 (L)
China Life Insurance (Group)
Company
Name of substantial shareholder
and HKSE:
So far as is known to the Directors, Supervisors and the chief executive of the Company, as at 31 December 2014,
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
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.
Capacity
Beneficial owner
China Life Insurance Company Limited
68.37%
China Life Insurance (Group) Company
100%
Ministry of Finance
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:
Changes in Share Capital and Shareholders Information
4.
Type of shares
Number of
shares held
Percentage of
the respective
type of shares
H Shares
1.88%
7.16%
532,568,789 (L)
H Shares
Interest in controlled corporation
Beneficial owner, investment
manager, trustee and custodian
(Note 2)
JPMorgan Chase & Co.
BlackRock, Inc.
(Note 1)
68.37%
92.80%
A Shares 19,323,530,000 (L)
of shares in issue
Percentage of
the total number
51
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.
76.90
4.
37.07
39.65
0
0
76.80
37.15
39.65
0
0
77.08
37.09
51 Since March 2013
Since December 2009
56
Male
Male
Vice President
76.72
Vice President
0
39.65
Vice President
0
12.79
6.18
6.61
0
0
Male 55 Since November 2014
Vice President
0
73.29
35.42
37.87
Vice President
0
80.71
41.06
0
0
0.21%
Xu Hengping
housing
social insurance,
Other benefits,
39.99
changes ten thousands
paid in RMB
Remuneration
0
beginning of at the end of Reason for
the year
the year
at the shares held
held
of shares Number of
Number
52 Since August 2008
56 Since April 2014
Male
Male
provident fund
Xu Haifeng
Total
received from
Liu Anlin
Miao Ping
F]atal
(before tax) ten thousands
ten thousands Period in RMB
Reporting
3.
shareholders
thousands
in RMB ten
paid by the
Company Period in RMB
Reporting
during the
annuity fund
and enterprise the Company received from
emolument
Total
emolument
0
37.87
33.81
Total number of shareholders
as at the end of the fifth
trading day before the
disclosure of the annual report
No. of A Share holders:
222,011
No. of H Share holders:
33,095
Particulars of top ten shareholders of the Company
Total number of
shares held as at
Name of shareholder
Nature of shareholder
China Life Insurance (Group)
Company
State-owned legal person
Percentage of
the end of the
shareholding Reporting Period
68.37%
Increase/decrease
during the
Reporting Period
Number of
shares subject to
selling restrictions
19,323,530,000
HKSCC Nominees Limited
Overseas legal person
No. of H Share holders:
33,551
25.81%
No. of A Share holders:
167,266
Total number of
shareholders as
at the end of the
6.
MISCELLANEOUS
As approved at the sixteenth meeting of the fourth session of the Board, the Company entered into a capital
increase agreement with Sinopec Marketing Company Ltd. ("Sinopec Marketing") and other investors on 12
September 2014. Pursuant to the agreement, the Company agreed to contribute RMB10 billion for subscription of
the increased capital in Sinopec Marketing. Upon completion of the transaction, the Company holds 2.8% of the
enlarged registered capital of Sinopec Marketing. For details, please refer to the announcements of the Company
posted on the website of the SSE and the HKExnews website of the Hong Kong Exchanges and Clearing Limited
on 15 September 2014.
On 13 February 2015, the Company made the payment of RMB10 billion in full to an account designated by
Sinopec Marketing in accordance with the capital injection agreement. As of now, due to fund raising issues, one
of the investors has not made its capital contribution in full to Sinopec Marketing. Sinopec Marketing intends
to carry out the subsequent arrangement in accordance with the capital injection agreement, including but not
limited to modifications to the capital injection agreement and fulfilling the corresponding change of business
registration procedures, etc.
49
China Life Insurance Company Limited Annual Report 2014
Changes in Share Capital and Shareholders Information
1.
2.
3.
CHANGES IN SHARE CAPITAL
During the Reporting Period, there was no change in the total number of shares and the share capital of the
Company.
ISSUE AND LISTING OF SECURITIES
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.
INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER
1.
Number of shareholders and their shareholdings
Reporting Period
7,294,438,508
+8,149,255
Hong Kong Securities Clearing Company Limited
33.31
37.87
0
0
Male 44 Since November 2014
Vice President
Yang Zheng
Zheng Yong
Huang Xiumei
387
2012
appointed as Chief
Actuary since March
November 2014;
President since
Male 45 Appointed as Vice
Male 56 Since November 2014
Chief Actuary
0
71.68
71.18
0
Board Secretary
Financial Controller Female 47
Male
Overseas legal person
0
632.19
0
0
| |
Total
0
Gender Age Term
5.82
3.08
0
0
Since December 2014
86.12
34.48
51.64
52 Since June 2013
2.74
Vice President
during the
Position
Shi Xiangming
Supervisory Committee
0
76.80
37.15
39.65
0
Supervisor
0
Female 60
Chairperson of the
Xia Zhihua
(before tax) ten thousands
thousands
thousands
changes
President
Male
55
Since 24 July 2012
Employee Representative Male 44 Since 24 July 2012
Li Xuejun
0
99.69
38.14
61.55
0
0
Since 24 July 2012
Employee Representative Female 50
Supervisor
Yang Cuilian
0
99.44
37.89
61.55
0
0
the year the year
Gender Age Term
Position
Name
received from
provident fund
Total
emolument
housing
Total
social insurance,
Other benefits,
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2014
CURRENT SUPERVISORS
2.
54
According to the relevant rules and regulations of China, 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 revealed when the
final amount is confirmed.
With the approval given at the First Extraordinary General Meeting 2014 of the Company and the approval from
CIRC, Mr. Chang Tso Tung Stephen and Mr. Huang Yiping were appointed as the Independent Directors with
effect from 20 October 2014.
With the approval given at the 2013 Annual General Meeting of the Company and the approval from CIRC, Mr.
Su Hengxuan and Mr. Miao Ping were appointed as the Executive Directors with effect from 1 July 2014.
5.
emolument
0
and enterprise
received from
in RMB ten ten thousands Period in RMB
RMB ten
Reason for
beginning of at the end of
Reporting
Company Period in RMB
paid/fee in
held at the shares held
during the
Reporting
paid by the
Remuneration
of shares Number of
shareholders
during the
annuity fund
Number
the Company
0
Since 10 July 2012
With the approval given at the First Extraordinary General Meeting 2014 of the Company and the approval from
CIRC, Ms. Xiong Junhong was appointed as a Supervisor with effect from 20 October 2014.
18.65
372.31
0
0
Total
18.65
0
0
0
0
0
Since 20 October 2014
Female 46
Supervisor
Xiong Junhong
Supervisor
0
96.38
37.40
Notes:
1.
2.
3.
Su Hengxuan
Lin Dairen
Name
58.98
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2014
55
3. CURRENT SENIOR MANAGEMENT
According to the relevant rules and regulations of China, the final amount of emoluments of the Chairperson of
the Supervisory Committee is currently subject to review and approval. The result of the review will be revealed
when the final amount is confirmed.
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.
55
(1)
As at the end of the Reporting Period, the composition of the Company's employees is as follows:
Structure of Expertise
Class of Expertise
Management and administration
Sales and sales management
Finance and auditing
Insurance verification, claim processing and customer services
Other expertise and technicians
for which extra costs have to be incurred
Employees in total
Name of shareholders
Name
allowance from
shareholders
remuneration and
Whether receiving
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 2014
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
the HKSE.
Mr. Heng Victor Ja Wei, born in 1977, British
COMPANY SECRETARY
Ms. Huang Xiumei became the Financial Controller of the Company in December 2014. She
has been the General Manager of the Company's Fujian Branch since October 2011. From 2005
to 2011, she held various positions at the Company's Fujian Branch, including Assistant to the
General Manager, Deputy General Manager and Deputy General Manager (responsible for daily
operations). From 1999 to 2005, she held various positions at the Company's Fujian Branch,
including the Deputy Director and Manager of the Financial and Accounting Department and
Manager of the Financial Department. Ms. Huang was also the Deputy General Manager of
the Company's Fuzhou Branch from 2004 to 2005. Ms. Huang graduated from Fujian Banking
School in 1985, majoring in Insurance, and graduated from Fuzhou University in 2005, majoring
in Accounting. Ms. Huang is a senior certified public accountant.
Ms. Huang Xiumei, born in 1967, Chinese
Mr. Zheng became the Board Secretary of the Company in June 2013. He previously held
positions as department head at the Ministry of Justice of the PRC, a practicing lawyer at Beijing
Longan Law Firm, China Legal Service Ltd. (Hong Kong), and Beijing DeHeng Law Offices,
Deputy General Manager of the Department of Legal Affairs, Company Secretary, and General
Manager of the Legal and Compliance Department of the Company, and an Executive Director
and Deputy 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 currently serves as an arbitrator of the China International Economic and Trade
Arbitration Commission, and is a Senior Economist.
Mr. Zheng Yong, born in 1962, Chinese
9
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2014
65
Yang Mingsheng
China Life Insurance (Group) Company
Position
Chairman
Term
Number of employees of the Company's major subsidiaries
Number of employees of the Company
Employees
1.
IV
EMPLOYEES
The Company's 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, qualified underwriting
personnel, actuaries and experienced investment managers. During the Reporting Period, there was no movement
of these personnel which may have material impacts on the Company.
CORE TECHNICAL TEAM OR KEY PERSONNEL
III
Resigned and retired employees of the Company and its major subsidiaries
Yes
Yes
Since August 2008
Yes
Since October 2013
Vice Chairman, President
Vice President
Vice President
China Life Insurance (Group) Company
China Life Insurance (Group) Company
China Life Insurance (Group) Company
Miao Jianmin
Zhang Xiangxian
Wang Sidong
No
Since March 2012
Since June 2004
Others
4,620
67
38%
-34%
3%
6% -
3%
22%
31,291
4%
Chart of the Education Level
6%
4%
30%
Chart of the Structure of Expertise
Total
Others
Secondary School
College Diploma
Bachelor
Master or above
Education Level
Education Level
(2)
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2014
3,838
50%
88
68
Number of Employees
101,972
1,151
103,123
1
Number of Employees
22,304
34,783
6,287
103,123
Mr. Yang became the Vice President of the Company in November 2014. He became the Chief
Financial Officer of the Company in April 2013. He served as the Qualified Accountant of
the Company since 2006, and as Assistant to the General Manager, Deputy General Manager
and 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 China Insurance Solvency Regulatory Standard
Committee and the China Accounting Standards Committee of the Ministry of Finance of the
PRC, respectively.
103,123
Others
Secondary School
Total
College Diploma
Master or above
Others
Other expertise and technicians
Insurance verification, claim processing and customer services
Finance and auditing
Sales and sales management
Management and administration
5,626
3,347
39,110
51,874
3,166
Bachelor
Mr. Yang Zheng, born in 1970, Chinese
66
Mr. Li Mingguang, born in 1969, Chinese
SUPERVISORS
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2014
61
Mr. Huang became an Independent Director of the Company in October 2014. Mr. Huang is
currently a professor of economics and the Deputy Dean of the National School of Development
at Peking University. From August 2011 to June 2013, Mr. Huang was the Managing Director
and Chief Economist of Emerging Asian Market of Barclays Capital. From May 2000 to February
2009, he held various positions at Citigroup including the Vice President of the Asia Pacific
Region and Economist of the Greater China Region, as well as the Managing Director and Chief
Economist of the Asia Pacific Region. From August 1993 to April 2000, he held various positions
including researcher and senior lecturer of the Asia-Pacific Economics and Management College
and Director of the China Economy Program at the Australian National University. Mr. Huang
received his Master of Economics from Renmin University of China and PhD in Economics from
the Australian National University.
Mr. Huang Yiping, born in 1964, 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 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.
Mr. Chang Tso Tung Stephen, born in 1948, 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 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 degree of Doctor of 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 an Independent Non-executive Director of the Link Management Limited,
Manager of the Link Real Estate Investment Trust, 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.
Mr. Anthony Francis Neoh, born in 1946, Chinese
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2014
60
Mr. Moore became an Independent Director of the Company in May 2009. From 2002 to 2007,
Mr. Moore worked in Beijing as the Partner-in-charge of Asian actuarial services for Ernst &
Young. He had served in actuarial leadership roles with Ernst & Young in New York and Tokyo.
From 1995 to 2000, he was the head of international actuarial services in New York with Ernst &
Young. In 2000, Mr. Moore worked at Ernst & Young's Beijing Office where he was in charge of
the business in Asian markets (including Japan). In 2001, he worked at Ernst & Young's Tokyo
Office responsible for the actuarial services in Japan. Since 2002, Mr. Moore worked at Ernst &
Young's Beijing Office overseeing the actuarial services in Asian markets (excluding Japan). From
1982 to 1995, Mr. Moore worked in various senior financial management positions at Prudential
Life Insurance (U.S.). Mr. Moore graduated from Brown University in 1971, majoring in Applied
Mathematics. Mr. Moore has obtained FSA, FCAS, MAAA and CFA qualifications. Mr. Moore
has over 36 years of experience serving the insurance industry as an executive and a consultant.
Mr. Bruce Douglas Moore, born in 1949, American
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 Deputy Director of the General Office of China Life Insurance Company, Deputy
General Manager of its Zhejiang Branch and 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 graduated from Shandong University with a Bachelor's
degree in Arts, majoring in Chinese Language and Literature.
Mr. Wang Sidong, born in 1961, Chinese
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 General Manager of the Product Development
Department, Responsible Actuary of the Company and General Manager of the Actuarial
Department. He graduated from Shanghai Jiao Tong University majoring in Computer Science
with a Bachelor's degree in 1991, Central University of Finance and Economics majoring in
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.
China Life Insurance Company Limited Annual Report 2014
Directors, Supervisors, Senior Management and Employees
୭
Mr. Su Hengxuan, born in 1963, Chinese
Mr. Su became an Executive Director of the Company in July 2014. He has been the Vice
President of the Company since August 2008. Mr. Su served as the Assistant to the President
of the Company from January 2006 to July 2008. He has also been a Director of China Life
Property and Casualty Insurance Company Limited since November 2006, Director of Insurance
Professional College since December 2006, and Director of China Life Asset Management
Company Limited since May 2014. He was the General Manager of the Company's Individual
Life Insurance Business Department from 2003 to 2006. Mr. Su graduated from the Banking
School of Henan Province in 1983, the Department of Finance and Insurance of the School of
Economics of Wuhan University in 1998 with a Bachelor's degree in Economics, majoring in
Insurance, and the School of Management of the University of Science and Technology of China
in July 2011 with a PhD in Management, majoring in Management Science and Engineering. Mr.
Su, a Senior Economist, has over 30 years of experience in the Chinese life insurance industry and
insurance management. He is currently the Chairman of the Insurance Marketing Committee,
the Vice Chairman of the Education and Training Committee, and an executive member of
the Human Resources Development Committee of the Insurance Association of China, and a
member of China Advisory Panel of the Financial Planning Standards Board.
Ms. Xia Zhihua, born in 1955, Chinese
Mr. Miao Ping, born in 1958, Chinese
Mr. Miao Jianmin, born in 1965, Chinese
59
China Life Insurance Company Limited Annual Report 2014
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 operations) 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. Miao became an Executive Director of the Company in July 2014. He has been 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 31 years of
experience in the operation of life insurance business and the management of insurance business.
Ms. Xia became the Chairperson of the Supervisory Committee of the Company in March
2006. Ms. Xia acted as the Deputy Director of National Debt Bureau of the Ministry of Finance
from July 1997 to June 1998 and the Deputy Director of National Debt and Finance Bureau
of the Ministry of Finance from July 1998 to June 2000. Ms. Xia served as the State Council's
representative in Supervisory Committee of state-owned important financial institutions,
Designated Supervisor of assistant bureau-level official from July 2000 to October 2001, and
the State Council's representative in Supervisory Committee of state-owned important financial
institutions, Designated Supervisor of bureau-level official from November 2001 to December
2005. Ms. Xia graduated from Xiamen University, majoring in Political Economics at the
Department of Economics, and majoring in World Economics at the College of Economics from
February 1978 to November 1984, and received a BA degree and a MA degree in Economics
respectively. Currently, Ms. Xia is an Executive Director of both the China Institution of
Internal Audit and the Insurance Institute of China, and the Vice Chairman of Supervisory
Board Committee of China Association for Public Companies. Ms. Xia, a Senior Economist, has
obtained the qualification of Certified Internal Auditor (CIA) and was awarded special allowance
by the State Council.
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, the Chairman of China Insurance
Plaza 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 Doctor's degree 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.
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's degree in Science.
Mr. Shi Xiangming, born in 1959, Chinese
Mr. Xu became the Vice President of the Company in November 2014. He became the Business
Controller of the Company in February 2014, and served concurrently 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 MA 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
operation of the life insurance business and insurance management.
Mr. Xu Haifeng, born in 1959, Chinese
e
2
Directors, Supervisors, Senior Management and Employees
64
Mr. Xu became the Vice President of the Company in November 2014. He became the Chief
Operating Officer of the Company in August 2010. Mr. Xu had been the General Manager of
the Company's Fujian Branch since April 2007, Deputy General Manager of the Company's
Fujian Branch since December 2002, Assistant to the General Manager of the Company's Fujian
Branch since September 1998, and Director of Personal Insurance Division of the Company's
Fujian Branch since July 1996. Mr. Xu once served as 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 34
years of experience in operation of the life insurance business and insurance management.
Mr. Xu Hengping, born in 1958, Chinese
Mr. Liu became the Vice President of the Company in March 2013. He serves as a member
of the Party Committee of the Company since February 2013. He served concurrently as the
Party Secretary and General Manager of Beijing Branch of the Company from February 2013
to November 2014. From December 2012 to February 2013, Mr. Liu was the Person-in-Charge
(with equivalent level as Assistant to the President of the Company) of Beijing Branch of the
Company. From 2009 to 2012, Mr. Liu was the Party Secretary and General Manager (with
equivalent level as Assistant to the President of the Company) of Jiangsu Branch of the Company.
From 2006 to 2009, Mr. Liu served as the Chief Information Technology Officer (with
equivalent level as Assistant to the President of the Company) of the Company, and concurrently
as the Party Secretary and General Manager of Beijing R&D Center in 2008. From 2003 to 2006,
Mr. Liu was the General Manager of the Information Technology Department of the Company.
Prior to that, Mr. Liu successively served as Person-in-Charge of the Information Technology
Department of the Company, Deputy General Manager of the Human Resource Department
of the Company, Assistant to the General Manager of Gansu Branch of the Company, and
Deputy Head of the Computer Department (responsible for daily operations) of Gansu Branch
of the Company. Mr. Liu graduated from the Mathematics and Mechanics Department of
Lanzhou University (majoring in computer mathematics), and obtained a Bachelor's degree in
Science in 1985. He also obtained a Master's degree in Business Administration from Tsinghua
University in 2006. Mr. Liu has over 25 years of experience in operation of the life insurance
business and insurance management, during which he gained extensive experience in operation
and management. Mr. Liu was awarded special allowance by the State Council and is a Senior
Engineer.
Mr. Liu Anlin, born in 1963, Chinese
Mr. Miao Ping, please see the section “Directors” for his profile.
Mr. Su Hengxuan, please see the section “Directors” for his profile.
Mr. Lin Dairen, please see the section “Directors” for his profile.
SENIOR MANAGEMENT
China Life Insurance Company Limited Annual Report 2014
8
Ms. Yang Cuilian, born in 1965, Chinese
S.
Ms. Yang became a Supervisor of the Company in July 2012, and has been the General Manager
of the Brand Promotion Department of the Company since October 2014. She served as the
General Manager of the Group Business Department of the Company from January 2011 to
September 2014. Ms. Yang joined the Company in July 1984. She successively served as the
Deputy General Manager of Jiangxi Branch, General Manager of Pingxiang Branch, Manager
of the Group Sales Department of Jiangxi Branch, and Manager of the Business Management
Department of Jiangxi Branch. Ms. Yang, a Senior Economist, graduated from Party School of
the Central Committee of C.P.C with a Bachelor's degree majoring in Economic Management.
62
62
Directors, Supervisors, Senior Management and Employees
Mr. Li Xuejun, born in 1970, Chinese
China Life Insurance Company Limited Annual Report 2014
Ms. Xiong Junhong, born in 1968, Chinese
Directors, Supervisors, Senior Management and Employees
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 at the Assets Management Department of China Life Insurance
Company. Ms. Xiong has been serving as 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, the Assistant to the General Manager of the Strategic Planning Department of China
Life Insurance (Group) Company since September 2008, the 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
study, and has extensive experience in assets preservation, risk management, management of
retained assets, investment research and strategic planning.
63
China Life Insurance Company Limited Annual Report 2014
Mr. Li became a Supervisor of the Company in July 2012, and has been the General Manager
of the Strategy and Marketing Department of the Company since July 2014. Mr. Li served as
the General Manager of the Education and Training Department of the Company from January
2011 to June 2014. Mr. Li joined the Company in November 1997. He successively served
as the Deputy General Manager of the Education and Training Department of the Company
(responsible for daily operations), Assistant General Manager of Shanghai Branch, General
Manager of Shanghai Songjiang Sub-branch, and General Manager of the Human Resource
Department of Shanghai Branch. Mr. Li worked for Shanghai Finance College (now known as
Shanghai Finance University) from July 1994 to October 1997. Mr. Li, a Senior Economist,
graduated from the Department of Insurance at Central Finance College (now known as Central
University of Finance and Economics) in 1994, majoring in International Insurance with a
Bachelor's degree in Economics.
Zhang Xiangxian
Non-executive Director
7
0
1
No
Note 2
86%
0
6
Yes
Non-executive Director
0
0
3
7
Miao Jianmin
Note 1
No
Note 3
100%
0
43%
Wang Sidong
100%
7
0
0
1
6
7
Note 5
Independent Director
Anthony Francis Neoh
No
0
Non-executive Director
0
7
Independent Director
Bruce Douglas Moore
Note 4
No
86%
0
1
0
6
6
0
absent
3
Executive Director
Yang Mingsheng
in person
rate
0
by proxies
telephony
attended
the year
Type of Director
7
Name of Director
Attendance
meetings
attended
attended by
physically
attend during
Number of
meetings
meetings
meetings
consecutive
meetings
7
0
0
Executive Director
Miao Ping
No
100%
0
0
0
3
3
Executive Director
Su Hengxuan
No
100%
0
0
0
7
7
Executive Director
Lin Dairen
No
100%
0
3
100%
Annual Report 2014
Independent Director
0
0
1
Executive Director
Lin Dairen
No
100%
0
0
0
0
1
Yang Mingsheng
in person
rate
absent
by proxies
telephony
attended
the year
Type of Director
Name of Director
Executive Director
100%
No
Su Hengxuan
No
0
0
1
0
1
Non-executive Director
Miao Jianmin
Note
No
100%
0
0
0
1
Executive Director
Miao Ping
No
100%
0
0
0
Executive Director
consecutive
meetings
Chang Tso Tung Stephen
Attendance
attended
3.
2.
1.
Notes:
No
농농농
No
No
100%
0
4.
0
2
2
Independent Director
Huang Yiping
100%
0
0
0
2
2
0
5.
At the twelfth meeting of the fourth session of the Board held on 25 March 2014, Mr. Miao Jianmin gave written
authorization for Mr. Zhang Xiangxian to act as his proxy to attend and vote at the meeting; at the fourteenth meeting
of the fourth session of the Board held on 29 May 2014, Mr. Miao Jianmin gave written authorization for Mr. Zhang
Xiangxian to act as his proxy to attend and vote at the meeting; at the sixteenth meeting of the fourth session of the Board
held on 27 August 2014, Mr. Miao Jianmin gave written authorization for Mr. Lin Dairen to act as his proxy to attend
and vote at the meeting; at the seventeenth meeting of the fourth session of the Board held on 28 October 2014, Mr.
Miao Jianmin gave written authorization for Mr. Zhang Xiangxian to act as his proxy to attend and vote at the meeting;
At the sixteenth meeting of the fourth session of the Board held on 27 August 2014, Mr. Zhang Xiangxian gave written
authorization for Mr. Wang Sidong to act as his proxy to attend and vote at the meeting;
Number of
meetings
meetings
attended by
physically
attend during
meetings
required to
to attend two
Number of
Number of
Number of
Whether the
Director failed
Number of
meetings the
Director was
the Board. The attendance records of individual Directors are as follows:
year 2014 up to the Latest Practicable Date (i.e. 24 March 2015), 1 Board meeting was held by
From the end of
Corporate Governance
required to
China Life Insurance Company Limited
76
At the fifteenth meeting of the fourth session of the Board held on 30 June 2014, Mr. Anthony Francis Neoh attended the
meeting by way of telephony.
At the fifteenth meeting of the fourth session of the Board held on 30 June 2014, Mr. Bruce Douglas Moore attended the
meeting by way of telephony;
At the thirteenth meeting of the fourth session of the Board held on 25 April 2014, Mr. Wang Sidong gave written
authorization for Mr. Miao Jianmin to act as his proxy to attend and vote at the meeting;
meetings
Whether the
Director failed
to attend two
1.
Number of
Type of Director
Name of Director
Number of
Attendance records of Directors at the shareholders' general meetings convened during the Reporting Period:
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” was
considered and approved by a combination of on-site and online ballots at the Second Extraordinary General
Meeting 2014 held in Beijing on 29 December 2014.
Four proposals were considered and approved by a combination of on-site and online ballots at the First
Extraordinary General Meeting 2014 held in Beijing on 18 August 2014, including: the “Proposal in relation
to the Election of Mr. Chang Tso Tung Stephen as an Independent Director of the Fourth Session of the Board
of Directors of the Company”, the “Proposal in relation to the Election of Ms. Xiong Junhong as a Shareholder
Representative Supervisor of the Fourth Session of the Supervisory Committee of the Company”, the “Proposal in
relation to the Amendments to the ‘Precedural Rules for the Supervisory Committee Meeting””, and the “Proposal
in relation to the Election of Mr. Huang Yiping as an Independent Director of the Fourth Session of the Board of
Directors of the Company".
Corporate Governance
Annual Report 2014
China Life Insurance Company Limited
2.
shareholders'
general meetings
the Director was
required to attend
during the year
72
30 December 2014
19 August 2014
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
http://www.sse.com.cn
http://www.hkexnews.hk
http://www.e-chinalife.com
29 December 2014
Second Extraordinary General
Meeting 2014
18 August 2014
First Extraordinary General
Meeting 2014
30 May 2014
29 May 2014
2013 Annual General Meeting
15 proposals including: the “Proposal in relation to the Report of the Board of Directors of the Company for
the Year 2013", the "Proposal in relation to the Report of the Supervisory Committee of the Company for the
Year 2013", the “Proposal in relation to the Financial Report of the Company for the Year 2013", the "Proposal
in relation to the Profit Distribution Plan of the Company for the Year 2013”, the “Proposal in relation to the
Remuneration of Directors and Supervisors of the Company", and the “Proposal in relation to the Remuneration
of Auditors of the Company for the Year 2014", etc. were considered and approved by a combination of on-site
and online ballots, and the “Duty Report of the Independent Directors of the Fourth Session of the Board of
Directors of the Company for the Year 2013" and the "Report on the Status of Connected Transactions and the
Execution of Connected Transactions Management System of the Company for the Year 2013” were received and
reviewed at the 2013 Annual General Meeting held in Beijing on 29 May 2014.
Number of Number of Number of
meetings meetings
physically attended by
meetings
Note 1
Zhang Xiangxian
Miao Jianmin
Note 2
Miao Ping
Su Hengxuan
3
67%
1
0
0
2
3
Executive Director
Executive Director
Lin Dairen
Yang Mingsheng
rate
meetings Attendance
absent
by proxies
telephony
attended
attended
Number of
of resolutions
Executive Director
Date of publication
Date of the meeting
(Corporate Governance Structure Chart)
Board Secretariat/Company Secretary
Board Secretary
Strategy and
Investment Decision
Committee
Risk
Management
Committee
Nomination and
Remuneration
Committee
Audit Committee
Supervisory
Committee
Board
Shareholders'
General Meeting
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.
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.
Corporate Governance
China Life Insurance Company Limited Annual Report 2014
69
Adhering to the talent philosophy of "people-oriented and both capability and integrity being equally
important", the Company has been striving hard to achieve the mutual development of its own and its
employees. In 2014, the Company organized employees' trainings with the view to implementing the
"strategy of innovation-driven growth" in great depth. While further solidifying the achievements of its
education and training system and continuously optimizing the framework of its training system, the
Company has also organized diversified training courses based on a multi-layer, multi-class and multi-
category structure, with a particular focus on the core areas of business management of the Company and
the development needs of the employees. The annual training plan places an emphasis on improving the
skills required for employees' discharge of their various duties and responsibilities, strengthening the training
and intellectual support for key personnel of the Company, including senior and mid-level management
teams, sales management team, operation management team and skilled personnel, and highlighting the
practical and targeted features of various training programs, thus enabling the Company's education and
training programs to continuously provide intellectual support and bring synergistic effect to the Company's
management value chain. Through the implementation of a series of targeted training programs with
prominent themes and clear directions, the Company's education and training departments at all levels
effectively promoted relevant work of the Company in business development, team building, cultural
cultivation, service improvement, efficiency optimization and risk prevention in 2014.
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
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2014
OVERVIEW OF CORPORATE GOVERNANCE
1.
2.
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. 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.
Session of the meeting
1. Shareholders' general meetings convened during the Reporting Period are as follows:
The shareholders' general meeting, as an organ of 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
8. Directors and Supervisors of the Company actively attended various training courses. All Directors and Supervisors
attended the annual special training courses taught by external lawyers, auditors and experts that covered
the regulatory rules governing the listed companies in Hong Kong, development trend of international risk
management, and director liability risks and protection, etc. They also attended training courses relating to anti-
money laundering pursuant to regulatory requirements. Directors and Supervisors have referred to the relevant
materials prepared by the Company on a regular basis and listened to the reports on special topics. Some of the
Supervisors attended the "Advanced Study Course on the Regulation of Listed Companies and Enterprises Outside
China" organized by the Hong Kong Institute of Chartered Secretaries in Hong Kong.
Corporate Governance
China Life Insurance Company Limited Annual Report 2014
71
The Board and Supervisory Committee of the Company conducted extensive investigation and research activities.
Members of the Board carried out investigation and research on Beijing Audit Center and local branches of the
Company in Hubei Province, conducted inspection of the operation and development of local branches, their
mid- or long-term work plans and internal audits. Members of the Supervisory Committee subsequently carried
out investigation and research on local branches of the Company in Guizhou Province, Hubei Province and Gansu
Province, as well as the supervisory committee of China Minsheng Bank, and listened to the report on the special
topic of risk control and the presentation sharing the experience of the establishment of supervisory committee.
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 carried out the procedures relating to the resignation and appointment of Directors and
Supervisors in compliance with applicable laws and regulations. Pursuant to the relevant requirements of national
policies, Mr. Sun Changji and Mr. Tang Jianbang, both of whom were Independent Directors, and Mr. Luo
Zhongmin, an External Supervisor, resigned from their respective positions in the Board and the Supervisory
Committee. Mr. Wan Feng and Ms. Liu Yingqi, both of whom were Directors, resigned from their respective
positions in the Board due to adjustment of work arrangements. Mr. Su Hengxuan, Mr. Miao Ping, Mr. Chang
Tso Tung Stephen, and Mr. Huang Yiping were elected as new Directors, while Ms. Xiong Junhong was elected
as a new Supervisor, both at shareholders' general meetings of the Company. The Company has complied with the
governance-related rules and regulations and strictly carried out all of the above governance procedures.
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 supervisory role.
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 capabilities.
7.
6.
5.
4.
3.
Corporate Governance
Annual Report 2014
China Life Insurance Company Limited
70
In accordance with the requirements of its listed jurisdictions and 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 the initiative 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 decision-making of the Board.
Index for websites on which
resolutions were published
Number of
2
0
3.
Mr. Miao Ping has been an Executive Director of the Company and a member of the Risk Management Committee since
1 July 2014;
Mr. Su Hengxuan has been an Executive Director of the Company and a member of the Strategy and Investment Decision
Committee since 1 July 2014;
2.
Zhang Xiangxian
Notes:
0
1
0
0
Mr. Chang Tso Tung Stephen has been an Independent Director of the Company and a member of the Audit Committee
and the Chairman of the Nomination and Remuneration Committee since 20 October 2014;
0
Independent Director
Note 4
Note 3
Stephen'
Huang Yiping
0
1
0
0
0
1
1
4.
Mr. Huang Yiping has been an Independent Director of the Company and a member of the Audit Committee and the
Chairman of the Strategic and Investment Decision Committee since 20 October 2014.
73
Number of
Number of
meetings the
Director was
In 2014, 7 Board meetings were held by the fourth session of the Board, of which 6 were physical meetings and 1
was combined physical and telephony meeting. The attendance records of individual Directors are as follows:
Meetings and attendance
1.
Corporate Governance
China Life Insurance Company Limited Annual Report 2014
75
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 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 rights 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 and 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 2 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.
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 and 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 2014, 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 was found
which would have material adverse impacts on the Company's ongoing operation.
In 2014, all Independent Directors of the Company possessed extensive experience in various fields, such as economics,
insurance, management, finance and accounting. 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.
Corporate Governance
Annual Report 2014
China Life Insurance Company Limited
74
In 2014, all Directors attended the annual special training courses taught by external lawyers, auditors and experts that
covered the regulatory rules governing the listed companies in Hong Kong, development trend of international risk
management, and director liability risks and protection, etc. They also attended training courses relating to anti-money
laundering pursuant to regulatory requirements. All directors of the Company have referred to the relevant materials
prepared by the Company on a regular basis and listened to the reports on special topics. Under the arrangement of
regulatory authorities, the Board Secretary attended training courses organized by the Beijing Securities Regulatory
Bureau and the Hong Kong Institute of Chartered Secretaries in Hong Kong.
Currently, the Board comprised 11 members, including 4 Executive Directors, 3 Non-executive Directors and
4 Independent Directors. The number of Independent Directors complies with the minimum requirement of 3
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 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 (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 the following: 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,
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 2014
Independent Director
30
Chang Tso Tung
1
Non-executive Director
67%
1
0
0
2
3
Non-executive Director
100%
0
3
0
2
2
Executive Director
0
2
0
0
100%
0
0
0
2
0
0
0
0
2
3
Anthony Francis Neoh
33%
2
0
0
1
3
Independent Director
Bruce Douglas Moore
67%
1
0
0
2
3
Non-executive Director
Wang Sidong
67%
1
67%
Non-executive Director
Independent Director
0
1/2
0/2
ཏྲཱི॰
Note 4
Tang Jianbang
Liu Yingqi
Sun Changji Note 3
Note 2
Note 1
Wan Feng
2/3
2/4
0/1
Meeting
Meeting
Meeting
Committee
Committee
Committee
Decision
Investment
Risk
Management
'འང
3/5
2/3
4/4
2.
0
78
All Independent Directors diligently fulfilled their responsibilities and faithfully performed their duties by
attending meetings of the Board and the specialized Board committees in 2014, 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 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 an 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
In 2014, all Independent Directors of the Company possessed extensive experience in various fields, such as
insurance, management, finance and accounting, and law. 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
Mr. Tang Jianbang ceased to be an Independent Director of the Company, a member of the Audit Committee and the
Chairman of the Strategy and Investment Decision Committee on 20 October 2014.
Mr. Sun Changji ceased to be an Independent Director of the Company, a member of the Audit Committee and the
Chairman of the Nomination and Remuneration Committee on 20 October 2014. At the fifteenth meeting of the fourth
session of the Board held on 30 June 2014, Mr. Sun Changji gave written authorization for Mr. Tang Jianbang to act as
his proxy to attend and vote at the meeting; at the sixteenth meeting of the fourth session of the Board held on 27 August
2014, Mr. Sun Changji gave written authorization for Mr. Tang Jianbang to act as his proxy to attend and vote at the
meeting; at the eleventh meeting of the Audit Committee of the fourth session of the Board held on 27 August 2014,
Mr. Sun Changji gave written authorization for Mr. Bruce Douglas Moore to act as his proxy to attend and vote at the
meeting; at the seventh meeting of the Nomination and Remuneration Committee of the fourth session of the Board held
on 27 August 2014, Mr. Sun Changji attended the meeting by way of telephony;
Ms. Liu Yingqi ceased to be an Executive Director of the Company and a member of the Risk Management Committee
on 25 March 2014, and therefore did not attend any meetings of the Board and the Risk Management Committee of the
Company in 2014;
Mr. Wan Feng was re-designated from an Executive Director of the Company to a Non-executive Director on 25 March
2014, and ceased to be a Non-executive Director of the Company and a member of the Strategy and Investment Decision
Committee on 5 August 2014. At the fourteenth meeting of the fourth session of the Board held on 29 May 2014, Mr.
Wan Feng gave written authorization for Mr. Wang Sidong to act as his proxy to attend and vote at the meeting; at the
fifteenth meeting of the fourth session of the Board held on 30 June 2014, Mr. Wan Feng gave written authorization
for Mr. Miao Jianmin to act as his proxy to attend and vote at the meeting; at the eleventh meeting of the Strategy and
Investment Decision Committee of the fourth session of the Board held on 29 May 2014, Mr. Wan Feng gave written
authorization for Mr. Wang Sidong to act as his proxy to attend and vote at the meeting;
Remuneration
4.
1.
2.
Notes:
Corporate Governance
China Life Insurance Company Limited Annual Report 2014
77
4/4
3/3
5/5
|
2.
Audit
Committee
Meeting
3.
General Meeting
1
Independent Director
Anthony Francis Neoh
No
100%
0
0
0
1
Independent Director
0
Bruce Douglas Moore
100%
0
0
1
Non-executive Director
Wang Sidong
No
100%
0
Board
Meeting
No
0
0
100%
Name of Director
0
Nomination and
Strategy and
In 2014, the attendance records of the resigned Directors are as follows:
No
100%
0
0
0
1
Note: At the nineteenth meeting of the fourth session of the Board held on 24 March 2015, Mr. Miao Jianmin gave written
authorization for Mr. Zhang Xiangxian to act as his proxy to attend and vote at the meeting.
Independent Director
No
Independent Director
1
0
0
100%
No
Huang Yiping
0
Chang Tso Tung Stephen
Bruce Douglas Moore
Independent Director, Chairman of the Audit
Committee of the fourth session of the Board
Performance of duties by the Audit Committee
1/1
100%
Chang Tso Tung Stephen Independent Director, member of the Audit
Committee of the fourth session of the Board
Independent Director, member of the Audit
Committee of the fourth session of the Board
Huang Yiping
(1) Reviewing and approving the “Proposal on the 2013 Financial Report of the Company", the "Proposal on
the Financial Report of the Company for the First Quarter of 2014”, the “Proposal on the 2014 Interim
Report of the Company” and the “Proposal on the Financial Report of the Company for the Third Quarter
of 2014". 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.
100%
1/1
(5)
(3)
Reviewing and approving the “Proposal in relation to the Appointment of Auditors of the Company for the
Year 2014”; listening to the “Report on the Audit Plan of 2013”, the “Report on the Results of Agreed-upon
Procedures Performed in relation to the First Quarter of 2014", the "Report on the 2014 Interim Review”
and the “Report on the Results of Agreed-upon Procedures Performed in relation to the Third Quarter of
2014" from the external auditors.
Examining the internal audit functions of the Company; reviewing and approving proposals including the
"Proposal on the 2013 Internal Audit Summary and the 2014 Internal Audit Work Plan and Budget of
Costs of the Company”, the “Proposal on the Audit on the Senior Management of the Company" and the
"Proposal on the Internal Audit Summary for the First Half of 2014 and the Internal Audit Work Plan for
the Second Half of 2014", in order to facilitate the communication between the Company's internal audit
department and the independent auditors.
Attendance rate
(4) Monitoring the Company's internal control function; reviewing and approving the “Proposal concerning
the 2013 Internal Control Assessments of the Company” and the “Proposal concerning the 2014 Work Plan
of Internal Control Assessment of the Company" pursuant to Section 404 of the U.S. Sarbanes-Oxley Act;
listening to the “Report on the Improvement of the Issues Identified by Ernst & Young in the First Round
of Internal Control Audit in 2014".
1/1
Number of meetings attended
Huang Yiping
Name of member
Bruce Douglas Moore
Reviewing and approving the "Proposal concerning the Compliance Report of the Company for 2013",
the "Proposal concerning the 2013 Audit Report of Connected Transactions of the Company” and the
"Proposal concerning the Compliance Report of the Company for the First Half of 2014"
pursuant to
the relevant requirements of the CIRC and the SSE; reviewing the proposals on connected transactions,
including the “Proposal concerning the Amendment to the Framework Agreement of Daily Connected
Transactions between the Company and China Guangfa Bank Co., Ltd.”, the “Proposal on Requesting the
Shareholders' General Meeting to Review the Capital Injection by the Company to China Life Property
& Casualty Insurance Company Limited”, the “Proposal concerning the Execution of the Framework
Chang Tso Tung Stephen Independent Director, member of the Audit
Independent Director, Chairman of the Audit
Committee of the fourth session of the Board
4/4
100%
1/1
Position
100%
1/1
100%
81
China Life Insurance Company Limited Annual Report 2014
Corporate Governance
2.
From the end of the year 2014 up to the Latest Practicable Date, the Audit Committee of the fourth session of the
Board convened 1 meeting. Attendance records of individual members are as follows:
Committee of the fourth session of the Board
Independent Director, member of the Audit
Committee of the fourth session of the Board
82
1/1
Annual Report 2014
Number of meetings attended
Attendance rate
100%
Nomination and Remuneration Committee of
the fourth session of the Board
Bruce Douglas Moore
Independent Director, member of the
Chang Tso Tung Stephen Independent Director, Chairman of the
5/5 Note
Nomination and Remuneration Committee of
the fourth session of the Board
Miao Jianmin
Non-executive Director, member of the
Nomination and Remuneration Committee of
the fourth session of the Board
Attendance rate
100%
China Life Insurance Company Limited
Position
2.
Corporate Governance
(6)
Agreement of Daily Connected Transactions between the Company and its non-wholly owned subsidiary
China Life Pension Company Limited and China Life AMP Asset Management Co., Ltd.", the "Proposal
concerning the Execution of the Framework Agreement of Daily Connected Transactions between China
Life Insurance (Group) Company and its non-wholly owned subsidiary China Life Property & Casualty
Insurance Company Limited and China Life AMP Asset Management Co., Ltd.” and the “Proposal
concerning the Execution of the Entrusted Investment and Management Agreement for Alternative
Investments with Insurance Funds between the Company and China Life Investment Holding Company
Limited"; reviewing the report on the list of connected parties of the Company and submitting a report
relating thereto to the Board and the Supervisory Committee.
Conducting investigation and research on Beijing Audit Center in May 2014 to have an in-depth
understanding of the situation of such audit center since its inception in 2013, such as its work, long-
term work planning, and the 2014 work plan and off-site audit. Through the investigation and research, all
members of the Audit Committee highly appraised the work conducted by Beijing Audit Center, and offered
supports for the better performance of duties of the Audit Committee.
NOMINATION AND REMUNERATION COMMITTEE
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.
At present, the Nomination and Remuneration Committee of the fourth session of the Board comprises Mr. Chang Tso
Tung Stephen and Mr. Bruce Douglas Moore, both of whom are Independent Directors, and Mr. Miao Jianmin, a Non-
executive Director, with Mr. Chang Tso Tung Stephen acting as the Chairman.
Name of member
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.
883
83
China Life Insurance Company Limited Annual Report 2014
Corporate Governance
1.
Meetings and attendance
In 2014, 5 meetings were held by the Nomination and Remuneration Committee of the fourth session of the
Board. Attendance records of individual members are as follows:
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.
Number of meetings attended
100%
Name of member
Name of Supervisor
Xia Zhihua
Shi Xiangming
Yang Cuilian
Li Xuejun
Xiong Junhong
Number of meetings attended
Attendance rate
In 2014, 6 meetings were held by the fourth session of the Supervisory Committee. Attendance records of
individual Supervisors are as follows:
6/6
6/6
100%
6/6
100%
Note 1
5/6
83%
515
2/2
Meetings and attendance
At present, the fourth session of the Supervisory Committee of the Company comprises Ms. Xia Zhihua, Mr. Shi
Xiangming, Ms. Yang Cuilian, Mr. Li Xuejun and Ms. Xiong Junhong, with Ms. Xia Zhihua acting as the Chairperson
of the Supervisory Committee. Of the members of the Supervisory Committee, Ms. Xia Zhihua, Mr. Shi Xiangming
and Ms. Xiong Junhong are Non Employee Representative Supervisors, and Ms. Yang Cuilian and Mr. Li Xuejun are
Employee Representative Supervisors.
China Life Insurance Company Limited Annual Report 2014
Corporate Governance
advice after careful deliberation and discussion. In 2014, the Company provided various materials to Independent
Directors, which enabled 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 2014, the Independent Directors of the Company and the representatives from the external auditors (Ernst
& Young Hua Ming LLP and Ernst & Young) convened two special meetings to separately discuss on matters
including the audit for the year 2013 and the annual financial reports, and listened to the “2014 Annual Audit
Plan", and communicate in respect of the audit work of the Company.
In 2014, the Independent Directors of the Company conducted investigation and research on Beijing Audit
Center and the local branches of the Company in Hubei Province and carried out on-site inspections of the
business development and management of the above branches.
During the Reporting Period, Mr. Bruce Douglas Moore, an Independent Director, abstained from voting on
the "Proposal in relation to the Proposed Participation in the Capital Increase of Sinopec Marketing Company
Ltd." due to the facts that the investment project was complicated and he was not familiar with the sale market
of refined oil in China. No Independent Director has raised any objection against other proposals and matters
considered by the Board of the Company.
CHAIRMAN AND PRESIDENT
1.
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 is 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.
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 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 supervisory rules of the Company's listed jurisdictions.
79
China Life Insurance Company Limited Annual Report 2014
Corporate Governance
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.
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.
Meetings of the Supervisory Committee are convened by the Chairperson 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.
SUPERVISORY COMMITTEE
100%
Notes:
1.
100%
1/1
100%
1/1
100%
2.
3.
1/1
The Supervisory Committee had no objection in respect of any matters under its supervision
during the Reporting Period.
For the work done by the Supervisory Committee during the Reporting Period, please refer to the “Report of the
Supervisory Committee” in this annual report.
AUDIT COMMITTEE
The Company established its Audit Committee on 30 June 2003. In 2014, the Audit Committee comprised only
Independent Directors of the Company. At present, the Audit Committee of the fourth session of the Board comprises
Mr. Bruce Douglas Moore, Mr. Chang Tso Tung Stephen, and Mr. Huang Yiping, with Mr. Bruce Douglas Moore
acting as the Chairman.
All members of the Audit Committee have extensive experience in financial matters. Mr. Bruce Douglas Moore is the
financial expert of the Audit Committee. 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.
1.
Meetings and attendance
In 2014, 4 meetings were held by the Audit Committee of the fourth session of the Board. Attendance records of
individual members are as follows:
Activities of the Supervisory Committee during the Reporting Period
100%
1/1
100%
2.
At the fourteenth meeting of the fourth session of the Supervisory Committee held on 28 October 2014, Mr. Li Xuejun
gave written authorization for Mr. Shi Xiangming to act as his proxy to attend and vote at the meeting;
Mr. Luo Zhongmin ceased to be a Supervisor of the Company on 29 May 2014. In 2014, Mr. Luo Zhongmin attended
the tenth and eleventh meetings of the fourth session of the Supervisory Committee of the Company with an attendance
rate of 100%.
88
80
China Life Insurance Company Limited Annual Report 2014
Corporate Governance
From the end of the year 2014 up to the Latest Practicable Date, the Supervisory Committee convened 1 meeting.
Attendance records of individual Supervisors are as follows:
Name of Supervisor
Xia Zhihua
Shi Xiangming
Yang Cuilian
Li Xuejun
Xiong Junhong
Number of meetings attended
Attendance rate
1/1
Position
100%
100%
From the end of the year 2014 up to the Latest Practicable Date, the Nomination and Remuneration Committee
of the fourth session of the Board convened 1 meeting. Attendance records of individual members are as follows:
6/6
100%
99
6/6
3/3
33
100%
99
100%
From the end of the year 2014 up to the Latest Practicable Date, the Strategy and Investment Decision Committee
of the fourth session of the Board convened 1 meeting. Attendance records of individual members are as follows:
Name of member
Huang Yiping
Wang Sidong
Lin Dairen
Position
Independent Director, Chairman of
the Strategy and Investment Decision
Committee of the fourth session of the Board
Non-executive Director, member of the
Strategy and Investment Decision Committee
of the fourth session of the Board
Note: At the tenth meeting of the Strategy and Investment Decision Committee of the fourth session of the Board held on 25
April 2014, Mr. Wang Sidong gave written authorization for Mr. Wan Feng to act as his proxy to attend and vote at the
meeting.
83%
5/6 Note
100%
In 2014, 6 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
Position
Huang Yiping
Wang Sidong
Lin Dairen
Anthony Francis Neoh
Su Hengxuan
Independent Director, Chairman of
the Strategy and Investment Decision
Committee of the fourth session of the Board
Non-executive Director, member of
the Strategy and Investment Decision
Committee of the fourth session of the Board
Executive Director, member of the Strategy
and Investment Decision Committee of
the fourth session of the Board
Independent Director, member of the Strategy
and Investment Decision Committee of
the fourth session of the Board
Executive Director, member of the Strategy
and Investment Decision Committee of
the fourth session of the Board
Number of meetings attended
Attendance rate
2/2
Number of meetings attended
Meetings and attendance
Attendance rate
100%
Notes:
2.
1.
2.
At the fifteenth meeting of the Strategy and Investment Decision Committee of the fourth session of the Board held on
24 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 fifteenth meeting of the Strategy and Investment Decision Committee of the fourth session of the Board held on
24 March 2015, Mr. Lin Dairen gave written authorization for Mr. Su Hengxuan to act as his proxy to attend and vote at
the meeting.
Performance of duties by the Strategy and Investment Decision Committee
Corporate Governance
In 2014, the Strategy and Investment Decision Committee performed its duties and functions in strict compliance
with the "Procedural Rules for Strategy and Investment Decision Committee Meetings". In 2014, the Strategy
and Investment Decision Committee held six meetings reviewed and approved the proposals in relation to annual
investment plans, authorization of investments, new investment businesses, agreements and guidances for domestic
and international entrusted investment management and major investment projects, and listened to reports,
such as the report on the solvency and capital planning of the Company for the next five years and the annual
assessment report for the "Twelfth Five-year Plan".
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.
Note: At the sixth meeting of the Nomination and Remuneration Committee of the fourth session of the Board held on 30 June
2014, Mr. Bruce Douglas Moore attended the meeting by way of telephony.
88
Based on its work needs, the Strategy and Investment Decision Committee conducted investigation and research
in Hubei Province in April 2014, discussed with the management of the Company's branches at provincial, city
and county levels, listened to the reports from branch offices with respect to the basic situations including their
business development, risk prevention and payments on maturities, and conducted on-site inspection of “95519"
call center and the service counters of local companies in counties. Through the investigation and research, all
Directors had an in-depth understanding of the implementation by local companies of strategic decisions of the
Board and gave their guiding opinions in respect thereof.
China Life Insurance Company Limited Annual Report 2014
87
the fourth session of the Board
Note 1
0/1
0
Executive Director, member of the Strategy
0/1
0
Anthony Francis Neoh
and Investment Decision Committee of
the fourth session of the Board
Independent Director, member of the Strategy
and Investment Decision Committee of
ང
1/1
100%
the fourth session of the Board
Su Hengxuan
Executive Director, member of the Strategy
and Investment Decision Committee of
1/1
100%
1/1
1.
Note 2
Annual Report 2014
84
China Life Insurance Company Limited
Annual Report 2014
Corporate Governance
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, 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 while taking into consideration of various factors such as business
development management, strategic investment decisions, and corporate governance management and control,
carefully examined and determined the 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 appraised the
performance of Directors in the discharge of their duties.
RISK MANAGEMENT COMMITTEE
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.
In 2014, the Nomination and Remuneration Committee performed its relevant duties and functions strictly
in accordance with the “Procedural Rules for Nomination and Remuneration Committee Meetings". In 2014,
the Nomination and Remuneration Committee convened five meetings, reviewed and approved the "Proposal
concerning the 2013 Remuneration Management Report of the Company", and the “Proposal in relation
to the 2013 Performance Appraisal Result and the Contract of 2014 Performance of the Company's Senior
Management”, the “Proposal concerning the Remuneration of Directors and Supervisors of the Company” and
the "Proposal concerning the Remuneration of Senior Management of the Company"; reviewed and approved the
proposals in relation to the nomination of candidates of Executive Directors and Independent Directors, and the
appointment of the President, Vice Presidents and Chief Financial Officer.
At
the Risk Management Committee of the fourth session of the Board comprises Mr. Anthony Francis Neoh,
an Independent Director, Mr. Zhang Xiangxian, a Non-executive Director, and Mr. Miao Ping, an Executive Director,
with Mr. Anthony Francis Neoh acting as the Chairman of the committee.
1.
Meetings and attendance
In 2014, 3 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
Position
Anthony Francis Neoh
present,
Performance of duties by the Nomination and Remuneration Committee
Nomination and Remuneration Committee of
the fourth session of the Board
1/1
Position
Corporate Governance
Chang Tso Tung Stephen Independent Director, Chairman of the
Number of meetings attended
1/1
Attendance rate
100%
Nomination and Remuneration Committee of
the fourth session of the Board
Name of member
Bruce Douglas Moore
Independent Director, member of the
1/1
100%
Nomination and Remuneration Committee of
the fourth session of the Board
Miao Jianmin
Non-executive Director, member of the
Zhang Xiangxian
Miao Ping
100%
85
Number of meetings attended
Attendance rate
1/1
100%
100%
1/1
100%
2.
Performance of duties by the Risk Management Committee
In 2014, the Risk Management Committee performed its duties and functions in strict compliance with the
"Procedural Rules for Risk Management Committee Meetings". In 2014, the Risk Management Committee
convened three meetings, reviewed and approved the "Proposal concerning the 2013 Work Summary of
Anti-money Laundering and the 2014 Work Plan Report of the Company”, the “Proposal concerning the
2013 Comprehensive Risk Management Report of the Company”, the “Proposal concerning the 2014 Risk
Preference Statement of the Company" and the "Proposal concerning the Amendments to the Comprehensive
Risk Management Provisions of the Company"; listened to the "Report on the Work of Risk Preference and
the Thoughts of 2015 Comprehensive Risk Management Work of the Company”; participated in the Audit
Committee meetings to listen to the “Proposal concerning the 2013 Compliance Report of the Company" and the
"Proposal concerning the 2013 Internal Control Assessment of the Company".
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.
At present, the Strategy and Investment Decision Committee of the fourth session of the Board comprises Mr. Huang
Yiping, an Independent Director, Mr. Wang Sidong, a Non-executive Director, Mr. Lin Dairen, an Executive Director,
Mr. Anthony Francis Neoh, an Independent Director and Mr. Su Hengxuan, an Executive Director, with Mr. Huang
Yiping acting as the Chairman.
98
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 the
fourth session of the Board
86
China Life Insurance Company Limited
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
the fourth session of the Board
Miao Ping
1/1
Number of meetings attended
3/3
Zhang Xiangxian
33
100%
3/3
100%
n
1/1
Attendance rate
100%
China Life Insurance Company Limited Annual Report 2014
Corporate Governance
From the end of the year 2014 up to the Latest Practicable Date, the Risk Management Committee of the fourth
session of the Board convened 1 meeting. Attendance records of individual members are as follows:
Name of member
Anthony Francis Neoh
Position
The Company's website at www.e-chinalife.com
The Company's H Share Disclosure Websites:
HKExnews website at www.hkexnews.hk
Company Profile
3
Securities Times
www.sse.com.cn
CSRC's Designated Website for the Company's Annual Report Disclosure:
The Company's Annual Reports may be obtained at:
China Life Insurance Company Limited Annual Report 2015
H Share
Stock Short Name
Stock Information:
Stock Type
Exchanges on which the
Stocks are Listed
Stock Code
A Share
Shanghai Stock Exchange
ADR
Shanghai Securities News
12/F, China Life Plaza, 16 Financial Street, Xicheng District, Beijing, P.R. China
China Securities Journal
Office Address: 16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Fax: 852-29192638
Board Secretary: Zheng Yong
Legal Representative: Yang Mingsheng
China Life
601628
Office Address: 16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Telephone: 86-10-63631191
Fax: 86-10-66575112
Email: ir@e-chinalife.com
Securities Representative: Lan Yuxi
Telephone: 86-10-63631068
Fax: 86-10-66575112
Email: lanyuxi@e-chinalife.com
* Mr. Lan Yuxi, Securities Representative of the Company, is also the main contact person of the external Company
Secretary engaged by the Company
Registered Office Address:
16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Current Office Address:
16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Telephone: 86-10-63633333
Fax: 86-10-66575722
Website: www.e-chinalife.com
Email: ir@e-chinalife.com
Hong Kong Office:
Office Address: 1403, 14/F., C.L.I. Building, 313 Hennessy Road, Wanchai, Hong Kong
Telephone: 852-29192628
Media for the Company's A Share Disclosure:
The Stock Exchange of
Hong Kong Limited
China Life
Net premiums earned
Exchange
Major Financial Data¹
2015
2014
Change
2013
2012
2011
For the year ended
Total revenues
507,449
440,766
15.1%
417,883
371,485
370,899
362,301
330,105
9.8%
322,126
China Life Insurance Company Limited (“China Life")
324,813
Reporting Standards (IFRS)
Under International Financial
RMB million
Financial Summary
2628
LFC
H Share Registrar and Transfer Office:
Computershare Hong Kong Investor Services Limited
Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong
Depositary of ADR:
Deutsche Bank
60 Wall Street, New York, NY 10005
Domestic Legal Adviser:
King & Wood Mallesons
New York Stock
International Legal Advisers:
Debevoise & Plimpton LLP
Auditors of the Company:
Domestic Auditor: Ernst & Young Hua Ming LLP
Address: Level 16, Ernst & Young Tower, Oriental Plaza, No.1 East Changan Avenue,
Dongcheng District, Beijing, P.R. China
Name of the Signing Auditors: Zhang Xiaodong, Huang Yuedong
International Auditor: Ernst & Young
Address: 22/F, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong
4
China Life Insurance Company Limited Annual Report 2015
Latham & Watkins
Registered Name in English:
Directors, Supervisors, Senior Management and Employees
Registered Name in Chinese:
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
5
6
9
28
38
41
54
58
73
97
101
Consolidated Statement of Financial Position
102
Independent Auditors' Report
Internal Control
中国人寿保险股份有限公司
China Life Insurance Company Limited
318,276
Stock Code: 2628
小諧中國
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
Report of the Supervisory Committee
Significant Events
Changes in Ordinary Shares and Shareholders Information
Corporate Governance
Honors and Awards
中國人壽保險股份有限公司(簡稱「中國人壽」)
103
107
CSRC
HKSE
SSE
Company Law
Insurance Law
Securities Law
Articles of Association
China or PRC
RMB
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
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
Material Risk Alert:
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”.
Except for "the Company" referred to in the Consolidated Financial Statements.
2
China Life Insurance Company Limited Annual Report 2015
Company Profile
China Insurance Regulatory Commission
105
CIRC
China Life AMP Asset Management Co., Ltd., an indirect non-wholly
owned subsidiary of the Company
108
110
228
China Life Insurance Company Limited Annual Report 2015
Definitions and Material Risk Alert
In this annual
report, unless the context otherwise requires, the following expressions have the following meanings:
The Company'
CLIC
AMC
Pension Company
CLP&C
CLI
AMP
CLWM
China Life Insurance Company Limited and its subsidiaries
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
Benefits, claims and expenses
Chairman's Statement
404,275
2.79
4.86
increase of 0.88
percentage point
5.36
6.24
Gross investment yield (%)
percentage point
87.79
88.25
88.72
decrease of 0.53
87.21
86.68
Ratio of assets and liabilities³ (%)
percentage points
9.16
5.38
Net cash inflow/(outflow) from operating
activities per share
(0.67)
2.77
N/A
2.42
3.51
463,492
Major financial ratio
Weighted average ROE (%)
11.56
12.83
decrease of 1.27
11.22
4.74
Notes:
1.
2.
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.
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.
2
Calculated according to the premium data of life insurance companies in 2015 released by the CIRC.
7
China Life Insurance Company Limited Annual Report 2015
tenure.
Chairman's Statement
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.
8
By Order of the Board
Yang Mingsheng
Chairman
Beijing, China
23 March 2016
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.
6.78
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
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%.
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
Ratio of assets and liabilities = Total liabilities/Total assets
3.
4.
Gross investment yield
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.
=
5
China Life Insurance Company Limited Annual Report 2015
Yang Mingsheng, Chairman
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".
6
China Life Insurance Company Limited Annual Report 2015
Chairman's Statement
(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)
7.82
4.68
Net profit attributable to ordinary share holders
24,765
11,061
18,331
Net cash inflow/(outflow) from operating activities
(18,811)
78,247
N/A
68,292 132,182 133,953
As at 31 December
Total assets
2
Investment assets
Total liabilities
7.1%
Total equity holders' equity
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
Per share (RMB)
Earnings per share (basic and diluted)
1.22
1.14
7.1%
0.88
0.39
0.65
Equity holders' equity per
share
11.41
10.05
2,448,315 2,246,567
2,287,639 2,100,870
2,122,101 1,959,236
322,492 284,121
13.5%
32,211
of the Company
14.6%
391,557
363,554 352,599
Insurance benefits and claims expenses
352,219
315,294
11.7%
312,288
300,562
290,717
Profit before income tax
45,931
34,514
40,402
29,451
10,968
20,513
Net profit attributable to equity holders of
the Company
34,699
32,211
7.7%
24,765
11,061
18,331
13.7%
7.80
Independent Director, Chairman of the Strategy
and Investment Decision Committee of
the fourth session of the Board
Number of meetings attended
Position
Attendance rate
2/2
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
Number of meetings attended
Note
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.
2/3
67%
Lin Dairen
3/3
100%
and Investment Decision Committee of
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
Attendance rate
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 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;
3.
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
Note 2
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
50%
the fourth session of the Board
Anthony Francis Neoh
Independent Director, member of the Strategy
and Investment Decision Committee of
the fourth session of the Board
2/2
100%
Notes:
1.
2.
Huang Yiping
Name of member
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
Meetings and attendance
2/2
50%
Note 2
12
1/2
50%
Note 1
1/2
100%
2/2
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
Xu Hengping
Liu Jiade
Zhang Xiangxian
Anthony Francis Neoh
Attendance rate
Number of meetings attended
the fourth session of the Board
Number of meetings attended
Attendance rate
2/2
42
100%
100%
2/2
2/2
22
100%
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
Position
100%
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:
Notes:
2.
Corporate Governance
Executive Director, member of the Strategy
Miao Ping
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
Position
Anthony Francis Neoh
Zhang Xiangxian
China Life Insurance Company Limited Annual Report 2015
90
96
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.
STRATEGY AND INVESTMENT DECISION COMMITTEE
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
Corporate Governance
2.
1.
Performance of duties by the Risk Management Committee
(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.
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.
and Investment Decision Committee of
1.
Anthony Francis Neoh
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".
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
95
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.
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.
INFORMATION DISCLOSURE AND INVESTOR RELATIONS
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.
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
94
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.
CHANGES OF THE ARTICLES OF ASSOCIATION
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.
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.
China Life Insurance Company Limited Annual Report 2015
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.
98
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.
the fifth session of the Board
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 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.
Internal Control
China Life Insurance Company Limited Annual Report 2015
97
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.
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.
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.
ESTABLISHMENT OF AN INTERNAL CONTROL SYSTEM
I.
Internal Control
96
SHAREHOLDERS' INTERESTS
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 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.
China Life Insurance Company Limited Annual Report 2015
92
(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.
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.
Performance of duties by the Strategy and Investment Decision Committee
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.
2.
100%
3/3
100%
3/3
33
the fifth session of the Board
Independent Director, member of the Strategy
The remuneration for senior management comprises basic salary, performance compensation, welfare benefits and
medium and long term incentives.
Corporate Governance
(2)
and Investment Decision Committee of
(4)
(3)
China Life Insurance Company Limited Annual Report 2015
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
93
33
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 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.
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.
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.
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.
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.
PERFORMANCE APPRAISAL AND INCENTIVES FOR SENIOR MANAGEMENT
INDEPENDENCE OF THE COMPANY FROM ITS CONTROLLING SHAREHOLDER
Employees: The Company is independent in the aspects of employment, human resources and remuneration
management.
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.
"2015 BrandZ Top 100 Global Most Valuable Brands",
ranking No.62
Hexun.com and China Securities Market
Research and Design Center (SEEC) – the “13th
China's Financial Annual Champion Awards of
2015"
The Chamber of Hong Kong Listed Companies
and the Center for Corporate Governance and
Financial Policy, Hong Kong Baptist University
Millward Brown
-
"Financial Times" "2015 Gold Medal List of
Chinese Financial Institutions"
"Value Line" Magazine - the "2nd China Listed
Companies Value Ranking List of 2015"
of 2015"
"2015 Top 500 Chinese Enterprises", ranking No.13
"2015 Most Reliable Life Insurance Company"
"Hong Kong Corporate Governance Excellence Awards"
"FORTUNE China"
"National Business Daily" - Assessment and
Selection of the "Golden Tripod Award" (the 6th
Session)
"2015 Forbes Global 2000", ranking No.37
II. RISK MANAGEMENT
Honors and Awards
China Life Insurance Company Limited Annual Report 2015
100
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.
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.
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.
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
"2015 Golden Dragon Award - Best Listed Insurance
Company of the Year"
"Forbes"
"2015 Best Listed Company of China"
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
"2015 Best Life Insurance Company in Asia"
2014
2015
RMB million
Notes
As at 31
December
As at 31
December
As at 31 December 2015
Consolidated Statement of Financial Position
China Life Insurance Company Limited Annual Report 2015
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.
OPINION
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.
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"
International Customer Management Institute
(ICMI) Assessment and Selection of the "2015
Best Global
Call Center"
"2015 Top 100 China Listed Companies Most Respected by
Investors"
"2015 Best Global Call Center"
101
"2015 Golden Tripod Award - the Insurance Company
with the Best Comprehensive Strength of the Year"
China Life Insurance Company Limited Annual Report 2015
EY 安永
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
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.
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
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.
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.
Independent Auditors' Report
"21st Century Business Herald" - "Asian
Insurance Companies Competitiveness Ranking
10
Property, plant and equipment
Dividends paid (Note 32)
(8,832)
8,832
Appropriation to reserves (Note 36)
1,518
692
826
non-controlling interests
Capital paid in by
Transactions with owners
71,798
355
32,211
39,232
(8,479)
39,284
39,232
32,514
303
32,211
222,585
2,254
95,037
97,029
28,265
(Note 36)
(Note 35)
(Note 34)
RMB million
RMB million
52
earnings
RMB million
(8,479)
(91)
34,699
7,076
Total comprehensive income
7,137
61
7,076
35,187
488
34,699
287,331
3,210
109,937
RMB million
28,265
Dividends to non-controlling interests
Other comprehensive income
As at 1 January 2015
287,331
3,210
109,937
145,919
28,265
As at 31 December 2014
(7,052)
601
109
(17,311)
9,658
Total transactions with owners
(91)
Net profit
549
RMB million
RMB million
7,137
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods
(13,023)
(2,242)
28
Income tax relating to components of other comprehensive income
Exchange differences on translating foreign operations
120
353
Share of other comprehensive income of associates and joint ventures
under the equity method
(11,035)
(12,767)
attributable to participating policyholders
Portion of fair value changes on available-for-sale securities
39,284
(7,120)
Amount transferred to net profit from other comprehensive income
70,342
54,080
Fair value gains on available-for-sale securities
profit or loss in subsequent periods:
Other comprehensive income that may be reclassified to
RMB million
2014
RMB million
Note
2015
Other comprehensive income
For the year ended 31 December 2015
Consolidated Statement of Comprehensive Income
(32,297)
RMB million
Other comprehensive income that will not be reclassified to
profit or loss in subsequent periods
7,137
Reserves
instruments
capital
Retained
Other equity
Share
Total
Non-controlling
interests
of the Company
Attributable to equity holders
Total comprehensive income
Other comprehensive income
Net profit
As at 1 January 2014
Other comprehensive income for the year, net of tax
For the year ended 31 December 2015
China Life Insurance Company Limited Annual Report 2015
106
The notes on pages 110 to 227 form an integral part of these consolidated financial statements.
355
549
71,443
41,775
- Non-controlling interests
- Equity holders of the Company
Attributable to:
71,798
42,324
Total comprehensive income for the year, net of tax
39,284
Consolidated Statement of Changes in Equity
China Life Insurance Company Limited Annual Report 2015
49
Transactions with owners
400,451
22,407
41,806
21,242
11,546
Debt securities
Purchases:
Property, plant and equipment
Disposal of subsidiaries
Disposals of equity securities
Maturities of debt securities
Disposals of debt securities
Disposals and maturities:
CASH FLOWS FROM INVESTING ACTIVITIES
78,247
285,647
(18,811)
106
313
Dividends received - securities at fair value through profit or loss
1,902
1,225
Interest received – securities at fair value through profit or loss
(1,923)
(8,380)
Income tax paid
41,330
70,482
Receivables and payables
9,704
403
Net cash inflows/(outflows) from operating activities
Financial liabilities at fair value through profit or loss
199
3,875
(53,340)
108
The notes on pages 110 to 227 form an integral part of these consolidated financial statements.
(69,257)
67,047
Net cash inflows/(outflows) from investing activities
(13,478)
(11,305)
Decrease/(increase) in policy loans, net
4,258
8,828
Dividends received
78,903
81,688
Interest received
437
(3,630)
Decrease/(increase) in securities purchased under agreements to resell, net
(25,972)
124,838
Decrease/(increase) in term deposits, net
(5,671)
(766)
Additional capital contribution to associates and joint ventures
(5,048)
(8,384)
Property, plant and equipment
(312,544)
(522,787)
Equity securities
(115,808)
(9,602)
42,324
(13,698)
(3,911)
123,055
163,381
7,791
28,265
(3,441)
(37)
(21,581)
10,386
7,791
As at 31 December 2015
Total transactions with owners
296
296
Others
3,722
(117)
Dividends to non-controlling interests
(11,491)
(10,090)
(11,491)
Dividends paid (Note 32)
10,090
Appropriation to reserves (Note 36)
7,791
7,791
instruments holders
Capital paid in by other equity
80
80
non-controlling interests
Capital paid in by
(117)
(100,089)
326,214
107
(1,974)
(268)
(812)
2,124
2,036
108,955
112,142
(12,928)
(42,506)
(93,548)
(97,582)
40,402
45,931
Securities at fair value through profit or loss
The notes on pages 110 to 227 form an integral part of these consolidated financial statements.
Changes in operating assets and liabilities:
Foreign exchange gains
Depreciation and amortisation
Insurance contracts
Net realised and unrealised gains on financial assets
Investment income
Adjustments for:
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax
RMB million
2014
RMB million
2015
For the year ended 31 December 2015
Consolidated Statement of Cash Flows
China Life Insurance Company Limited Annual Report 2015
Share of profit of associates and joint ventures, net
RMB1.14
145,919
The notes on pages 110 to 227 form an integral part of these consolidated financial statements.
Financial liabilities at fair value through profit or loss
67,989
67,994
17
2,623
2,643
16
675
Bonds payable
Interest-bearing loans and borrowings
74,745
107,774
Policyholder dividends payable
72,275
856
84,106
Investment contracts
1,603,446
1,715,985
14
RMB million
RMB million
Notes
2014
2015
As at 31
December
December
As at 31
Insurance contracts
Liabilities
15
LIABILITIES AND EQUITY
10,890
18
28,265
34
1,959,236
2,122,101
Equity
Total liabilities
223
217
20
20
52
5,347
19,375
16,953
Securities sold under agreements to repurchase
28
26,514
19
15,850
32,266
Statutory insurance fund
Current income tax liabilities
Deferred tax liabilities
Other liabilities
Premiums received in advance
25,617
30,092
Annuity and other insurance balances payable
46,089
31,354
20,062
28,265
As at 31 December 2015
China Life Insurance Company Limited Annual Report 2015
770,516
9.5
Available-for-sale securities
6,153
6,333
9.4
Statutory deposits – restricted
690,156
562,622
9.3
Term deposits
166,453
207,267
9.2
607,531
Loans
504,075
9.1
Held-to-maturity securities
44,390
47,175
8
Investments in associates and joint ventures
1,283
1,237
25,348
26,974
69
7
Investment properties
517,283
Consolidated Statement of Financial Position
Securities at fair value through profit or loss
137,990
103
The notes on pages 110 to 227 form an integral part of these consolidated financial statements.
2,246,567
2,448,315
Total assets
47,034
76,096
19,411
23,642
13
1,032
1,420
12
233
9.6
Cash and cash equivalents
Reinsurance assets
11,166
11,913
11
105
44,350
49,552
9.8
Accrued investment income
11,925
21,503
9.7
Securities purchased under agreements to resell
53,052
Other assets
35
Premiums receivable
36
Investment contract benefits
25
(2,264)
(1,958)
Policyholder dividends resulting from participation in profits
(33,491)
(105,883)
(24,866)
(35,569)
(27,147)
Finance costs
26
(4,320)
(4,726)
Underwriting and policy acquisition costs
(27,458)
(109,509)
Increase in insurance contract liabilities
5,060
4,185
Total revenues
BENEFITS, CLAIMS AND EXPENSES
Insurance benefits and claims expenses
507,449
440,766
24
Life insurance death and other benefits
(221,701)
(192,659)
Accident and health claims and claim adjustment expenses
24
(21,009)
(16,752)
24
(25,432)
Other expenses
(7,428)
Income tax
Net profit
Attributable to:
- Equity holders of the Company
- Non-controlling interests
Basic and diluted earnings per share
(7,888)
35,187
34,699
488
32,211
303
7,791
RMB1.22
30
32,514
(10,744)
28
40,402
(4,151)
Statutory insurance fund contribution
20
(743)
(701)
Total benefits, claims and expenses
(463,492)
(404,275)
Share of profit of associates and joint ventures, net
8
1,974
3,911
Profit before income tax
27
45,931
Other income
5,808
Administrative expenses
Notes
ended 31 December 2015
2015
2014
Share capital
RMB million
RMB million
REVENUES
Gross written premiums
For the year
109,937
Net written premiums
Net change in unearned premium reserves
Net premiums earned
363,971
(978)
331,010
(515)
362,993
330,495
Less: premiums ceded to reinsurers
(692)
Consolidated Statement of Comprehensive Income
104
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
Director
China Life Insurance Company Limited Annual Report 2015
322,492
3,722
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.
Other equity instruments
284,121
Retained earnings
(390)
330,105
145,919
123,055
362,301
163,381
10,209
23
Net fair value gains through profit or loss
Reserves
32,297
22
Net realised gains on financial assets
Investment income
21
7,120
97,582
93,548
Standards/Amendments
Effective for annual period
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
1,358
Content
(19,415)
16,704
241
10
2,630
beginning on or after
IAS 28 Amendments
IFRS 10, IFRS 12 and
IAS 7 Amendments
IFRS 9
IFRS 15
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
1 January 2016
Investment Entities: Applying the Consolidation
Exception
IAS 27 Amendments
IFRS 10 and IAS 28
Amendments
IFRS 11 Amendments
IFRS 16
arrangement.
29,062
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
113
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.
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 11 Amendments – Accounting for Acquisitions of Interests in Joint Operations
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.
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
2.1 Basis of preparation (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
112
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.
-
1 January 2019
1 January 2018
Revenue from Contracts with Customers
Leases
1 January 2018
Financial Instruments
1 January 2017
Statement of Cash Flows
1 January 2016
25,704
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.
Beginning of the year
2.1 Basis of preparation (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
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)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for
the financial year beginning on 1 January 2015
Standards
Annual Improvements 2010-2012 Cycle
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.
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
entities.
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
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)
Cash and cash equivalents
IFRS 13 Amendments Fair Value Measurement
110
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
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 activity is the writing of life insurance business, providing life, annuity,
accident and health insurance products in China.
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.
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
111
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)
IAS 7 Amendments - Statement of Cash Flows
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
IFRS 9 - Financial Instruments
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.
118
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.
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.
2.6 Property, plant and equipment
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.
2.5 Foreign currency translation
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.
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.
2.4 Segment reporting
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
117
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.
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.
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.
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.
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.
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.
2.3 Associates and joint ventures
(91)
For the year ended 31 December 2015
(117)
(11,491)
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)
(4,471)
(4,618)
(8,479)
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.
Notes to the Consolidated Financial Statements
2
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.
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 Group's voting rights and potential voting rights.
•
rights arising from other contractual arrangements; and
•
the contractual arrangement with the other vote holders of the investee;
all relevant facts and circumstances in assessing whether it has power over an investee, including:
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers
the ability to use its power over the investee to affect its returns.
•
exposure, or rights, to variable returns from its involvement with the investee; and
power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee);
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:
2.2 Consolidation
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
114
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.
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.
IFRS 16 Leases
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 15 - Revenue from Contracts with Customers
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.
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:
China Life Insurance Company Limited Annual Report 2015
•
derecognises the carrying amount of any non-controlling interests;
116
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.
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.
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.
Transactions with non-controlling interests
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.
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 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.
2.2 Consolidation (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
115
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
•
recognises the fair value of any investment retained;
•
recognises the fair value of the consideration received;
•
derecognises the cumulative translation differences recorded in equity;
•
derecognises the assets (including goodwill) and liabilities of the subsidiary;
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.
•
China Life Insurance Company Limited Annual Report 2015
(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:
•
•
guaranteed benefits based on contractual terms, including payments for deaths,
disabilities, diseases, survivals, maturities and surrenders;
additional non-guaranteed benefits, such as policyholder dividends;
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.
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.
(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.
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.
125
(ii) Long-term insurance contracts (continued)
China Life Insurance Company Limited Annual Report 2015
For the
year
ended 31 December 2015
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)
(ii)
Long-term insurance contracts (continued)
Notes to the Consolidated Financial Statements
2.11.2.a Recognition and measurement (continued)
2.11.2 Insurance contracts (continued)
2.11 Insurance contracts and investment contracts (continued)
year
ended 31 December 2015
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.11 Insurance contracts and investment contracts
2.11.1 Classification
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 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.
(ii) Long-term insurance contracts
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.
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:
124
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)
(c) The Group has considered the impact of time value on the reserve calculation for insurance
contracts.
(iii) Universal life contracts and unit-linked contracts
Universal life contracts and unit-linked contracts are unbundled into the following components:
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.
2.14 Bonds payable
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.
127
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)
2.15 Derivative instruments
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).
2.16 Employee benefits
2
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
2.13 Securities sold under agreements to repurchase
For the
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.
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.
•
insurance components
•
non-insurance components
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.
2.11.2.b Liability adequacy test
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.
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.
126
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)
2.11 Insurance contracts and investment contracts (continued)
2.11.3 Investment 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
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.
2.11.4 DPF in long-term insurance contracts and investment contracts
2.12 Financial liabilities at fair value through profit or loss
Notes to the Consolidated Financial Statements
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.
123
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 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
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:
(i)
Securities at fair value through profit or loss
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
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)
ended 31 December 2015
2.8 Financial assets (continued)
year
Notes to the Consolidated Financial Statements
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)
2.6 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:
Office equipment, furniture and fixtures
Motor vehicles
Leasehold improvements
Estimated useful lives
15 to 35 years
5 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.
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.
119
China Life Insurance Company Limited Annual Report 2015
For the
2.8.a Classification (continued)
Buildings
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.
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
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.
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.
122
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)
2.9 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
•
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 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.
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.
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.
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.
2.10 Cash and cash equivalents
(iii) Loans and receivables
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.
•
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 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.
it becomes probable that the issuer or debtor will enter into bankruptcy or other financial
reorganisation; and
the disappearance of an active market for that financial asset because of financial difficulties.
2.8.b 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.
Term deposits primarily represent traditional bank deposits which have fixed maturity dates and are stated at
amortised cost.
Loans are carried at amortised cost, net of allowance for impairment.
(iv) Available-for-sale securities
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.
121
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
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.
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.
year
•
•
•
significant financial difficulty of the issuer or debtor;
a breach of contract, such as a default or delinquency in payments;
2.8 Financial assets (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
ended 31 December 2015
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:
2015
2014
RMB million
%
RMB million
%
Premiums of long-term insurance contracts
New Xin Feng Endowment (Type A) (a)
38,314
7.09%
62,635
20.56%
Xin Annuity (b)
10.74%
2,171
0.71%
Kang Ning Whole Life (c)
Product name
23,508
11.55%
35,606
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.
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
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
24,623
3.5 Determination of control over investee
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.
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.
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.
4.1 Insurance risk
4.1.1 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 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.
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.
134
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
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks
The table below presents the Group's major products of long-term insurance contracts:
8.08%
0.07%
22,265
Xin Annuity (b)
13
0.01%
Kang Ning Whole Life (c)
3,692
3.20%
3.74%
Fu Lu Shuang Xi Participating Endowment (d)
3,136
0.06%
2.72%
2.49%
Hong Fu Participating Endowment (e)
54,374
47.17%
10,255
10.77%
Others (f)
3
53,982
2,367
Fu Lu Shuang Xi Participating Endowment (d)
56
New Xin Feng Endowment (Type A) (a)
6.71%
29,749
9.76%
Hong Fu Participating Endowment (e)
63
0.02%
149
0.05%
Others (f)
80
211,826
185,350
60.84%
Total
331,582
100.00%
304,677
100.00%
Insurance benefits of long-term
insurance contracts
63.89%
ended 31 December 2015
2.22 Operating leases
For the
For the
year
ended 31 December 2015
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Notes to the Consolidated Financial Statements
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 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)
Leases where substantially all the risks and rewards of ownership of assets remain with the lessor company
are accounted for as operating leases.
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.
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.
China Life Insurance Company Limited Annual Report 2015
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.
46.83%
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)
2.17 Share capital
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.
2.18 Other equity instruments
129
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.
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
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
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
2.19 Revenue recognition
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.
2.23 Provisions and contingencies
past
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)
•
The Group considers a wide range of factors in the impairment assessment as described in Note 2.8.c.
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.
term deposits and loans: the carrying amounts of these assets in the consolidated statement of financial
position approximate fair value.
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.
3.3 Impairment of investments in associates and joint ventures
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.
3.4 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.
133
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
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 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.
3.2 Investments
The impact of the various assumptions and their changes are described in Note 14.
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.
131
China Life Insurance Company Limited Annual Report 2015
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.
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.
3.1 Estimate of future benefit payments and premiums arising from long-term insurance
contracts
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.
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.
year
78,944
3,556
Total
Estimated accumulated
claims expenses
8,090
8,123
11,775
17,265
20,497
65,750
Accumulated claims
expenses paid
(8,090)
(8,123)
(11,775)
(16,145)
(12,349)
(56,482)
Unpaid claims
expenses
1,120
8,148
9,268
8,090
The following table indicates the claim development for short-term insurance contracts taking account of
reinsurance impacts:
4 years later
8,090
2012
2013
2014
2015
Total
Current year
8,002
8,056
11,476
16,499
20,497
1 year later
8,279
8,164
11,872
17,265
2 years later
8,090
8,123
11,775
3 years later
8,123
Short-term insurance contracts (accident year)
Estimated claims expenses
2011
expenses
7,977
7,997
11,645
17,127
20,359
65,105
Accumulated claims
expenses paid
(7,977)
(7,997)
(11,645)
(16,013)
(12,255)
(55,887)
Unpaid claims expenses
1,114
8,104
9,218
82.94%
138
claims
Estimated accumulated
7,977
4 years later
2012
2013
2014
2015
Current year
7,889
7,916
11,331
16,379
20,359
2011
1 year later
8,035
11,743
17,127
2 years later
7,977
7,997
11,645
3 years later
7,977
7,997
8,161
Estimated claims expenses
Total
The following table indicates the claim development for short-term insurance contracts without taking
account of reinsurance impacts:
Fu Lu Shuang Xi Participating Endowment (d)
93,267
5.49%
75,857
4.77%
Hong Fu Participating Endowment (e)
37,810
2.23%
92,985
5.85%
Others (f)
1,270,871
74.81%
1,162,308
73.15%
Total
1,698,773
100.00%
1,588,900
100.00%
135
12.08%
China Life Insurance Company Limited Annual Report 2015
191,865
Kang Ning Whole Life (c)
115,277
100.00%
Short-term insurance contracts (accident year)
95,178
100.00%
As at 31 December 2015
RMB million
As at 31 December 2014
%
RMB million
%
Liabilities of long-term insurance contracts
New Xin Feng Endowment (Type A) (a)
43,788
2.58%
63,701
4.01%
Xin Annuity (b)
38,917
2.29%
2,184
0.14%
12.60%
Notes to the Consolidated Financial Statements
214,120
year
4.1 Insurance risk (continued)
4.1.3 Sensitivity analysis
Sensitivity analysis of long-term insurance contracts
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.
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.
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 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.
Sensitivity analysis of short-term insurance contracts
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).
137
For the year ended 31 December 2015
China Life Insurance Company Limited Annual Report 2015
For the
year
ended 31 December 2015
4
RISK MANAGEMENT (continued)
4.1
For the
Sensitivity analysis of short-term insurance contracts (continued)
Insurance risk (continued)
4.1.3 Sensitivity analysis (continued)
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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.
RISK MANAGEMENT (continued)
4
RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
ended 31 December 2015
China Life Insurance Company Limited Annual Report 2015
4.1.2 Concentration of insurance risks (continued)
(a)
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.
(b)
(d)
(e)
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.
(c)
Fu Lu Shuang Xi is an endowment insurance contract with the options for regular premium of 3 years,
5
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.
4
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.
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.
(f)
Others consist of various long-term insurance contracts with no significant concentration.
136
Contractual cash inflows
236,030
than 1
year
than 5 years
5 years
Financial assets
maturity
Equity securities
than 3 years
value
Later than 1 year Later than 3 years
Later than
but not later
but not later
Not later
Without
Carrying
Contractual and expected cash flows (undiscounted)
For the year ended 31 December 2015
4.2.3 Liquidity risk (continued)
236,030
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
As at 31 December 2014
Debt securities
4,434
72,234
44,350
4.2 Financial risk (continued)
Accrued investment income
11,925
11,925
agreements to resell
Securities purchased under
2,620
182
6,153
Statutory deposits-restricted
26,621
941,836
155,236
212,356
690,156
Term deposits
36,144
44,344
27,423
85,652
166,453
Loans
982,202
186,285
186,342
367,662
RISK MANAGEMENT (continued)
1,715,985
144
(31,354)
31,354
agreements to repurchase
Securities sold under
Contractual cash outflows
(108,091)
(11,334)
(16,207)
(16,199)
84,106
Investment contracts
(2,789,186)
Financial liabilities at fair
26,347
(81,630)
Insurance contracts
Expected cash outflows
Financial and insurance liabilities
951,830
355,222
583,934
559,113
411,623
2,347,867
Subtotal
31,928
(44,697)
4
value through profit or loss
(856)
(1,945,447)
367,542
483,042
366,307
410,767
414,837
Net cash inflows/(outflows)
12,320 (2,897,277)
(100,892)
(192,806)
(856)
1,933,030
856
Subtotal
(214)
(39,774)
(33,424)
67,994
Bonds payable
(107)
2,643
borrowings
Interest-bearing loans and
(30,092)
30,092
balances payable
Annuity and other insurance
(2,693)
8,413
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.
Premiums receivable
The table below summarises the solvency ratio of the Company, the actual capital held against the minimum
required capital:
4.2.4 Capital management (continued)
4.2 Financial risk (continued)
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
146
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.
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'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.
4.2.4 Capital management
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 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.
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.
4.2.3 Liquidity risk (continued)
4.2 Financial risk (continued)
4 RISK MANAGEMENT (continued)
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
145
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
Actual capital
Minimum capital
Solvency ratio
76,096
148
For the accounting policies regarding the determination of fair values of financial assets and liabilities, see
Note 3.2.
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.
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.
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.
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.
4.3
RISK MANAGEMENT (continued)
4
ended 31 December 2015
year
(1,502,613)
For the
China Life Insurance Company Limited Annual Report 2015
147
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.
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.
4.3 Fair value hierarchy
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.
330%
294%
80,193
85,676
236,151
282,820
Notes to the Consolidated Financial Statements
359,064
385,423
321,642
(84,013)
(9,827)
(15,192)
(14,703)
72,275
Investment contracts
(2,463,567)
(22,634)
(118,434)
(60,896)
1,603,446
Insurance contracts
Contractual cash outflows
Expected cash outflows
1,044,967
394,308
592,460
472,477
236,030
2,155,103
Subtotal
47,034
47,034
Cash and cash equivalents
11,166
11,166
Financial and insurance liabilities
4,009
Securities sold under
46,089
225,140
326,174
Net cash inflows/(outflows)
(35,244) (2,547,580)
(207,037)
(150,835)
(10,890)
1,828,929
Subtotal
(2,783)
(3,424)
67,989
agreements to repurchase
Bonds payable
2,623
borrowings
Interest-bearing loans and
(25,617)
25,617
balances payable
Annuity and other insurance
(10,890)
10,890
value through profit or loss
Financial liabilities at fair
(46,089)
(106)
76,096
(213)
(73,198)
11,913
636
3,743
Cash and cash equivalents
5,431
5,431
Term deposits
402
8
8
15
371
profit or loss
- Securities at fair value through
266
68
266
- Available-for-sale securities
68
- Held-to-maturity securities
Debt securities
7,868
1,056
2,190
1,139
70
132
14
6
4,531
- Held-to-maturity securities
Debt securities
8,303
8,303
- Available-for-sale securities
Equity securities
Financial assets
Total
GB pound
HK dollar
US dollar
As at 31 December 2014
3,413
2,643
2,643
2,643
Total
Interest-bearing loans and borrowings
Financial liabilities
31,895
1,242
2,212
1,286
9,148
18,007
Total
2,643
through profit or loss
- Securities at fair value
13,329
4.2 Financial risk (continued)
4 RISK MANAGEMENT (continued)
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
139
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.
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.
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.
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.
4.2.1 Market risk (continued)
Interest rate risk
4.2.1 Market 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.
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 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'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.
Financial risk
4.2
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
4
Cash and cash equivalents
(i)
54
(ii)
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.
172
8,442
4,715
- Available-for-sale securities
Equity securities
Financial assets
Total
Others
EUR
GB pound
US dollar HK dollar
As at 31 December 2015
Price risk
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:
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
4.2.1 Market risk (continued)
4.2 Financial risk (continued)
RISK MANAGEMENT (continued)
4
140
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.
(iii) Currency risk
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.
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.
(iii) Currency risk (continued)
54
RISK MANAGEMENT (continued)
- Available-for-sale securities
1,000,958
Debt securities
411,623
411,623
Equity securities
Contractual cash inflows
Financial assets
Later than
5 years
years
but not later
than 5 years
than 3 years
but not later
Not later
than 1 year
maturity
Without
Carrying
value
As at 31 December 2015
Later than 1 year Later than 3
Contractual and expected cash flows (undiscounted)
The following tables set forth the contractual and expected undiscounted cash flows for financial assets and
liabilities and insurance liabilities:
4.2.3 Liquidity risk (continued)
4.2 Financial risk (continued)
4 RISK MANAGEMENT (continued)
ended 31 December 2015
year
For the
130,340
214,106
170,658
910,196
-
7
18,327
31,218
49,552
Accrued investment income
21,503
21,503
agreements to resell
Securities purchased under
232
6,404
Notes to the Consolidated Financial Statements
484
Statutory deposits-restricted
128,322
296,268
190,658
562,622
Term deposits
41,634
56,003
48,829
96,901
207,267
Loans
6,333
China Life Insurance Company Limited Annual Report 2015
Premiums receivable
In the normal course of business, the Group attempts to match the maturity of financial assets to the
maturity of insurance and financial liabilities.
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
2,623
2,623
2,623
2,623
141
Total
Interest-bearing loans and borrowings
Financial liabilities
21,175
54
For the
8,371
Total
3,784
54
68
3,662
Cash and cash equivalents
8,774
8,774
Term deposits
260
143
260
12,750
year
11,913
4 RISK MANAGEMENT (continued)
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.
ended 31 December 2015
4.2.3 Liquidity risk
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.
source of
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.
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.
Credit quality
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
4.2 Financial risk (continued)
RISK MANAGEMENT (continued)
4.2.2 Credit risk (continued)
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 Financial risk (continued)
Credit risk exposure
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.
4.2.2 Credit risk
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).
(iii) Currency risk (continued)
4
4.2.1 Market risk (continued)
Life insurance death and other benefits
(219,944)
(1,737)
(4,151)
(221,701)
Accident and health claims and claim
adjustment expenses
(16,858)
Insurance benefits and claims expenses
(20)
expenses
5,060
507,449
(1,081)
5,370
13,860
45,204
444,096
Segment revenues
(1,081)
1,081
Including: inter-segment revenue
(21,009)
(1,081)
Benefits, claims and
Increase in insurance contract liabilities
(33,491)
(15,803)
(3,136)
(3,811)
(18,293)
Administrative expenses
(4,320)
(122)
(15)
(129)
(4,054)
Finance costs
(35,569)
(1,307)
(93,668)
(3,813)
(24,921)
Underwriting and policy acquisition costs
(163)
(33,328)
participation in profits
Policyholder dividends resulting from
(2,264)
(188)
(2,076)
Investment contract benefits
(109,509)
(38)
(5,528)
5,006
992
1,074
363,971
13,761
42,041
308,169
Gross written premiums
Revenues
Total
Elimination
Others
Accident
RMB million
Health
Life
For the year ended 31 December 2015
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
SEGMENT INFORMATION (continued)
5
152
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.
5.3 Allocation basis of assets and liabilities
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.
5.2 Allocation basis of income and expenses
(2,218)
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.
- Term life
3,476
- Whole life
28,119
Other income
10,209
(3)
36
313
9,863
Net fair value gains/(losses) through profit or loss
32,297
(69)
115
31,259
Net realised gains/(losses) on financial assets
61
97,582
344
2,983
93,819
Investment income
362,301
13,365
40,855
308,081
Net premiums earned
98,703
- Annuity
- Endowment
436
177,871
145
Other expenses
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
Others
Accident
As at 31 December 2015
Health
Life
SEGMENT INFORMATION (continued)
5
ended 31 December 2015
year
Segment assets
For the
2,251,307
8,443
(iv) Other businesses (Others)
986
108
931
29,329
Securities sold under agreements to repurchase
84,106
10,060
74,046
Investment contracts
1,715,985
6,492
57,024
1,652,469
Insurance contracts
Liabilities
2,448,315
25,034
26,974
Total
Others
Property, plant and equipment
Unallocated
2,396,307
62,075
74,482
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
153
Share of profit of associates and joint ventures, net
(463,492)
1,081
(4,644)
(12,107)
(44,647)
(403,175)
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)
1,081
(997)
(840)
(327)
(6,345)
1,974
1,974
Segment results
40,921
2,036
40
240
263
1,388
Depreciation and amortisation
7,076
492
23
202
6,359
equity holders of the Company
(27,458)
Other comprehensive income attributable to
34,699
- Non-controlling interests
- Equity holders of the Company
Attributable to
35,187
Net profit
(10,744)
Income tax
45,931
2,700
1,753
557
488
Operating segments (continued)
market
SEGMENT INFORMATION (continued)
39,449
39,449
22,678
542
21,635
501
RMB million
RMB million
Equity securities
Equity securities
RMB million
RMB million
Debt securities
Total
profit or loss
Available-for-sale securities
(870)
(14)
(856)
4
RISK MANAGEMENT (continued)
4.3
Fair value hierarchy (continued)
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
2,785
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:
1,319
(390)
Fair value measurement using
Assets measured at fair value
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:
Fair value hierarchy (continued)
4.3
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
149
64,728
1,884
62,343
501
(4,800)
(4,800)
3,664
3,664
352
352
(719)
(329)
4,104
Assets measured at fair value
Available-for-sale securities
- Equity securities
Fair value measurement using
18,304
76,680
94,984
Total
312,817
510,154
64,728
887,699
Liabilities measured at fair value
Financial liabilities at fair value
through profit or loss
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
other comprehensive income
Sales
- Debt securities
43,006
1,884
711
Quoted prices
Significant
in active
market
observable
inputs
Level 1
Level 2
Significant
unobservable
inputs
Level 3
RMB million
RMB million
RMB million
Quoted prices
Total
RMB million
51,940
62,343
347,810
- Debt securities
20,575
380,823
501
401,899
Securities at fair value
through profit or loss
- Equity securities
40,411
233,527
in active
Significant
observable
31,354
150
22,678
542
21,635
501
2,126
2,126
69
69
(377)
(377)
836
473
363
13,889
6,135
5,935
200
13,588
301
RMB million
RMB million
Equity securities
Equity securities
RMB million
Debt securities
RMB million
Total
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
4
5
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
151
Accident insurance business relates primarily to the sale of accident insurance policies.
(iii) Accident insurance business (Accident)
Health insurance business relates primarily to the sale of health insurance policies, including those
health insurance policies without significant insurance risk transferred.
(ii) Health insurance business (Health)
Life insurance business relates primarily to the sale of life insurance policies, including those life
insurance policies without significant insurance risk transferred.
profit or loss
Life insurance business (Life)
The Group operates in four operating segments:
5.1 Operating segments
SEGMENT INFORMATION
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.
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.
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.
5
material impact
any
The assets whose fair value measurements are classified under Level 3 above do not have
on the profit or loss of the Group.
4.3 Fair value hierarchy (continued)
RISK MANAGEMENT (continued)
(i)
5.1
Available-for-sale securities
Closing balance
542
582
22,716
- Equity securities
profit or loss
Securities at fair value through
196,931
395,341
501
369,403
25,437
- Debt securities
21,635
23,479
151,817
- Equity securities
Available-for-sale securities
RMB million
RMB million
RMB million
RMB million
Total
Significant
unobservable
inputs
Level 3
Level 2
Level 1
inputs
23,840
- Debt securities
18,805
10,407
other comprehensive income
Total gains recorded in
Total gains recorded in profit or loss
Transferred out of Level 3
Transferred into Level 3
Purchases
Opening balance
Securities at fair
The following table presents the changes in Level 3 assets for the year ended 31 December 2014:
(10,911)
(21)
(10,890)
value through
(10,911)
(21)
Investment contracts at fair value
through profit or loss
(10,890)
through profit or loss
Investment contracts at fair value
Liabilities measured at fair value
645,324
22,678
403,871
218,775
Total
29,212
Total
Others
(148)
3,278
(658)
(839)
Charge for the year
(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
3,528
(135)
13
(116)
Disposals
2,203
16,113
As at 1 January 2015
Net book value
(24)
(24)
(24)
As at 31 December 2015
Disposals
year
Charge for the
(24)
As at 1 January 2015
Impairment
(14,131)
(942)
(1,005)
(4,738)
(7,446)
As at 31 December 2015
669
117
126
393
33
(1,748)
2,981
128
352
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
13,513
372
2,732
90,703
Others
46,089
1,551
152
1,076
43,310
For the year ended 31 December 2015
6
PROPERTY, PLANT AND EQUIPMENT
Office
54
Additions
(22)
172
(1,686)
6
1,486
Transfers upon completion
38,424
1,246
6,333
1,392
396
6,676
As at 1 January 2015
Cost
RMB million
Total
construction improvements
vehicles
fixtures
Buildings
Leasehold
Assets under
Motor
equipment
furniture and
22,777
Securities sold under agreements to repurchase
6,333
25,348
(13,052)
(943)
(996)
(4,473)
(6,640)
As at 31 December 2014
792
26
54
654
58
Disposals
(1,844)
(111)
(167)
(778)
(788)
Charge for the year
(12,000)
(858)
(883)
(4,349)
(5,910)
As at 1 January 2014
Accumulated depreciation
Impairment
38,424
As at 1 January 2014
Charge for the
Closing balance
158
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)
(24)
As at 31 December 2014
1
Disposals
year
(25)
1,246
6,333
1,392
As at 1 January 2014
Cost
RMB million
Total
Leasehold
construction improvements
Assets under
Motor
vehicles
fixtures
Buildings
Office
equipment
furniture and
6 PROPERTY, PLANT AND EQUIPMENT (continued)
ended 31 December 2015
year
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
16,783
As at 31 December 2015
19,949
6,730
1,448
6,125
6,676
22,777
As at 31 December 2014
(1,114)
(33)
(212)
(58)
(683)
(128)
Disposals
4,165
13
303
3,614
361
175
Additions
(45)
100
(3,194)
-
268
2,781
Transfers upon completion
35,418
1,166
2
72,275
8,565
63,710
Life insurance death and other benefits
Insurance benefits and claims expenses
expenses
Benefits, claims and
440,766
(928)
4,736
12,268
35,255
389,435
Segment revenues
(928)
928
Including: inter-segment revenue
4,185
(928)
4,148
67
898
Other income
5,808
(547)
22
154
6,179
(191,291)
Net fair value gains/(losses) through profit or loss
(1,355)
Accident and health claims and claim
(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)
(16,752)
(192,659)
(152)
(1,806)
Investment contract benefits
(110)
(8,196)
(97,577)
Increase in insurance contract liabilities
(3,869)
(12,883)
adjustment expenses
(13)
7,120
(48)
24
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)
5
2,122,101
154
Total
188,889
Others
Unallocated
1,933,212
4,485
7,001
71,293
1,850,433
Segment liabilities
101,767
3,499
401
Elimination
Total
Revenues
Gross written premiums
174
6,970
Net realised gains/(losses) on financial assets
93,548
1,183
315
2,236
89,814
Investment income
330,105
11,907
32,624
(111)
285,574
35,319
217,662
- Annuity
- Endowment
29,767
- Whole life
2,871
- Term life
331,010
12,199
33,192
285,619
Net premiums earned
(16)
|||
(24,866)
2,059,641
cash and cash equivalents)
Financial assets (including
RMB million
Total
Elimination
Others
Accident
As at 31 December 2014
Health
Life
Assets
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
155
2,124
152
221
324
1,427
50,013
6,961
27,421
2,144,036
Investment contracts
1,603,446
5,860
38,872
1,558,714
Insurance contracts
Liabilities
2,246,567
20,615
25,348
Total
Others
Depreciation and amortisation
Property, plant and equipment
2,200,604
71,811
7,273
53,998
2,067,522
Segment assets
56,568
44,390
312
3,985
7,881
Others
Unallocated
94,589
39,232
134
(701)
(79)
(116)
(506)
Statutory insurance fund contribution
928
(3)
(22)
(903)
Including: inter-segment expenses
(4,151)
928
(562)
(705)
(204)
(3,608)
Other expenses
(25,432)
(2,087)
(2,576)
(4,092)
(16,677)
Administrative expenses
(4,726)
(27,147)
Segment benefits, claims and expenses
(358,784)
(32,003)
(10,722)
951
38,270
equity holders of the Company
Other comprehensive income attributable to
303
32,211
- Non-controlling interests
- Equity holders of the Company
Attributable to
32,514
Net profit
(7,888)
(123)
Income tax
4,953
1,546
3,252
30,651
Segment results
3,911
3,911
Share of profit of associates and joint ventures, net
(404,275)
28
928
(3,694)
40,402
value through
Total comprehensive income
8
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
As at 31
December 2015
As at 31
December 2014
RMB million
China Life Insurance Company Limited Annual Report 2015
RMB million
88,843
126,097
126,140
146,405
146,595
152,135
79,438
155,705
Total
Listed in Singapore
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
167
FINANCIAL ASSETS
9.1 Held-to-maturity securities
Debt securities
Unlisted
Government bonds
Corporate bonds
Subordinated bonds/debts
Total
Debt securities
Listed in mainland, PRC
Listed in Hong Kong, PRC
Government agency bonds
504,075
517,283
61,916
years
86,198
70,592
After five years but within ten years
167,450
149,986
After one year but within five
After ten years
284,882
Total
504,075
517,283
165
China Life Insurance Company Limited Annual Report 2015
248,427
11,823
2,000
Within one year
68,199
50
37
24
23
442,085
449,024
504,075
517,283
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).
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
For the
year
ended 31 December 2015
9
20,807
196,931
347,810
Others (i)
Total
Equity securities
15,259
Available-for-sale securities, at cost
18,180
41,050
Others (i)
21,038
50,053
Wealth management products
Subtotal
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
(19)
8
(299)
14,157
1,725
4,587
92
(157)
The Group had no contingent liabilities or capital commitments with the associates and joint ventures as at 31
December 2015 and 31 December 2014.
(i) Including adjustments for the difference of accounting policies, fair value and others.
164
9
168
exposure.
maximum risk
3,000
Notes to the Consolidated Financial Statements
18,712
71,592
As at 31
December 2014
As at 31
December 2015
Subtotal
Others (i)
Subordinated bonds/debts
RMB million
Corporate bonds
Government agency
Government bonds
Debt securities
Available-for-sale securities, at fair value
9.5 Available-for-sale securities
FINANCIAL ASSETS (continued)
bonds
RMB million
25,713
26,328
74,629
Common stocks
83,121
163,366
Funds
Equity securities
395,341
401,899
1,217
4,722
19,298
206,511
206,767
138,487
145,399
Preferred stocks
318
For the
ended 31 December 2015
1,435
1,435
Buildings
RMB million
As at 31 December 2014
As at 1 January 2014
Fair value
(106)
As at 31 December 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 1 January 2014
Additions
(46)
1,329
As at 31
December 2014
RMB million
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.
(152)
For the year ended 31 December 2015
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
1,283
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.
As at 1 January 2014
Cost
7 INVESTMENT PROPERTIES (continued)
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
Net book value
Notes to the Consolidated Financial Statements
As at 31 December 2015
Accumulated depreciation
As at 31 December 2015
Additions
As at 1 January 2015
Cost
7 INVESTMENT PROPERTIES
As at 1 January 2015
Charge for the year
For the year ended 31 December 2015
Buildings
RMB million
1,435
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)
1,435
RMB million
December 2015
As at 31
Total
84,959
73,654
122,308
92,799
207,267
166,453
RMB million
As at 31
December 2015
December 2014
RMB million
RMB million
90,250
80,214
As at 31
RMB million
As at 31
December 2014
December 2015
9
FINANCIAL ASSETS (continued)
9.2 Loans
Policy loans
Other loans (i)
Total
Maturing:
Within one year
After one year but within five
years
After five years but within ten years
After ten years
Total
(i)
As at 31
84,078
year
53,894
32,345
years
After five years but within ten years
181,780
200,214
380,842
463,442
After one year but within five
26,500
562,622
690,156
9.4 Statutory deposits – restricted
Contractual maturity schedule:
Within one year
After one year but within five years
Total
Within one year
As at 31
December 2014
RMB million
RMB million
8,700
207,267
166,453
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.
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).
166
9
FINANCIAL ASSETS (continued)
9.3 Term deposits
Maturing:
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
As at 31
December 2015
24,239
2,120
22,798
84
Bank
CLP&C Sino-Ocean Futures Technology
Street SLP
Sanya
Company
RMB million RMB million RMB million RMB million RMB million RMB million RMB million
Total assets
1,836,587
65,634 148,185
8,598
337
8,503
600
Total liabilities
1,739,047
46,103
99,995
6,146
COFCO Annoroad
7
10 Upper
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:
Dividend received (i)
Other equity movements
Share of profit
Scrip dividend
Investments in associates and joint ventures
As at 1 January
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
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.
INVESTMENT PROPERTIES (continued)
8
7
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
160
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
CGB
4,449
Total equity
97,540
13,186
6,757
20,535
Gross carrying value of the investments
70.00%
35.00%
29.46%
40.00%
20.00%
Proportion of the Group's ownership
3,540
2,539
41,475
16,893
87,449
adjustments
the associates and joint ventures after
1,434
2,478
Impairment
Net carrying value of the investments
19,531
48,190
2,452
330
4,054
600
Total equity attributable to equity holders
97,540
Impairment (ii)
19,531
2,452
330
4,054
600
1,434
13,186
6,757
20,535
41,231
Total equity attributable to equity holders of
As at 31 December
RMB million
PRC
Percentage of equity interest held
20.00%
PRC
40.00%
Hong Kong, PRC
29.998%
PRC
35.00%
PRC
16.67%
Jersey Island
PRC
70.00%
51.00%
(ii)
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.
Company Limited (“Sanya Company”)(ii)
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.
China Life (Sanya) Healthy Investment
Joint ventures
142
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.
161
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
8
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
As at 31 December 2015, the Group owned the following associates and joint ventures:
Name
Country of incorporation
Associates
China Guangfa Bank Co., Ltd (“CGB")
China Life Property & Casualty Insurance
Company Limited ("CLP&C")
Sino-Ocean
COFCO Futures Company Limited
("COFCO Futures")
Annoroad Gene Technology (Beijing)
Co., Ltd. ("Annoroad Technology")(i)
10 Upper Bank Street SLP
As at 31 December 2014, the Group owned the following associates and joint ventures:
Name
Associates
(ii)
(i)
44,390
47,175
(1,010)
(515)
(604)
280
649
3,911
2,984
268
5,671
766
34,775
44,390
2014
RMB million
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.
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
70.00%
CGB
CLP&C
Sino-Ocean
COFCO Futures
Joint venture
10 Upper Bank Street SLP
Country of incorporation
162
2015
Percentage of equity interest held
20.00%
PRC
40.00%
Hong Kong, PRC
29.46%
PRC
35.00%
Jersey Island
PRC
(209)
of the associates and joint ventures
Total adjustments (i)
496
(37)
15
2,258
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
7,812
22,553
Net carrying value of the investments
(1,010)
Impairment
306
2,464
246
Other comprehensive income
1,028
379
(80)
1,407
12,037
241
3,306
40,411
36,522
44,644
Total comprehensive income
Other comprehensive income
Net profit
Total revenues
2,478
4,606
1,397
984
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
163
541
(37)
2,171
2,637
10,092
45
(15)
8
13,407
2,251
22,553
RMB million
RMB million
Total assets
1,648,056
52,769
132,212
8,199
Total liabilities
3,749
2,539
40,491
1,560,607
35,876
RMB million
87,829
4,450
16,893
87,449
of the associates and joint ventures
Total equity
Total adjustments (i)
7,812
Total equity attributable to equity holders
3,749
2,539
44,383
16,893
87,449
7,245
10 Upper Bank
Street SLP
9,784
Sino-Ocean
Gross carrying value of the investments
51.00%
70.00%
16.67%
35.00%
29.998%
40.00%
20.00%
COFCO
Futures
600
3,520
330
2,452
41,470
19,531
Proportion of the Group's ownership
after adjustments
97,540
CLP&C
RMB million
RMB million
CGB
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 2014 and for the year ended 31 December 2014:
(534)
Total equity attributable to equity holders
of the associates and joint ventures
239
Unlisted
172
71,553
42,022
266
Listed in Singapore
8,303
8,391
Listed in Hong Kong, PRC
85,658
348,944
Equity securities
395,341
401,899
359,611
RMB million
274,396
46,137
260
Listed in mainland, PRC
132,334
121,016
Total
As at 31
December 2014
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
395,341
401,899
169
Total
121,381
After ten years
120,284
112,419
After five years but within ten years
139,737
135,866
368,617
212,190
770,516
607,531
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
Subtotal
Maturing:
As at 31
December 2014
RMB million
Within one year
32,598
13,939
After one year but within five years
As at 31
December 2015
RMB million
December 2015
RMB million
7,316
For the year ended 31 December 2015
Total, ceded
(65)
(87)
- Unearned premiums (Note 12)
(39)
(50)
- Claims and claim adjustment expenses (Note 12)
Short-term insurance contracts
(908)
(1,246)
Long-term insurance contracts (Note 12)
Recoverable from reinsurers
1,603,446
1,715,985
7,230
7,944
9,268
1,588,900
1,698,773
Listed in mainland, PRC
Debt securities
9.5 Available-for-sale securities (continued)
FINANCIAL ASSETS (continued)
9
9
(1,383)
(1,012)
Net
Long-term insurance contracts
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
Subtotal
Unlisted
Listed in Singapore
The table below presents movements in claims and claim adjustment expense reserve:
Movements in liabilities of short-term insurance contracts
(c)
INSURANCE CONTRACTS (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
As at 31
14
1,714,602
7,165
7,857
7,277
9,218
1,587,992
1,697,527
176
Total, net
- Unearned premiums
- Claims and claim adjustment expenses
Short-term insurance contracts
1,602,434
FINANCIAL ASSETS (continued)
5,920
Debt securities
39
1,420
1,032
174
124
1,246
908
50
1,420
As at 31
December 2015
As at 31
December 2014
RMB million
RMB million
Receivable from constructors
Land use rights
6,341
1,032
65
87
20
Ceded unearned premiums (Note 14)
Claims recoverable from reinsurers (Note 14)
Total
Current
Non-current
Total
OTHER ASSETS
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
As at 31
December 2015
As at 31
December 2014
RMB million
RMB million
1,246
908
37
1,656
5,998
6,137
Investments receivable
17,274
12,956
6,368
6,455
23,642
19,411
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
14
INSURANCE CONTRACTS
(a) Process used to decide on assumptions
(i)
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
reserves.
19,411
Due from reinsurance companies
23,642
Total
4,242
4,104
Automated policy loans
2,520
2,281
Tax refundable
936
2,449
Due from related parties
772
684
Others
2,833
2,100
Total
Current
Non-current
173
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:
Long-term insurance contracts ceded (Note 14)
REINSURANCE ASSETS
690,156
562,622
690,156
Statutory deposits – restricted
-
6,333
6,153
562,622
6,333
Available-for-sale securities, at fair value
749,709
592,272
749,709
592,272
Securities at fair value through profit or loss
137,990
6,153
166,453
207,267
166,453
The table below presents the carrying value and estimated fair value of major financial assets and liabilities, and
investment contracts:
11
Carrying value
As at 31
December 2015
RMB million
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
Held-to-maturity securities (ii)
Loans
Term deposits
504,075
517,283
550,844
526,526
207,267
53,052
137,990
53,052
Securities purchased under agreements to resell
(46,089)
(31,354)
(46,089)
Bonds payable (iii)
(67,994)
(67,989)
(69,580)
(68,370)
(i)
The estimates and judgements to determine the fair value of financial assets are described in Note 3.2.
(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).
(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.
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.
PREMIUMS RECEIVABLE
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).
172
12
(31,354)
13
Securities sold under agreements to repurchase
(856)
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)
(10,890)
Discount rate assumptions
As at 31 December 2015
As at 31 December 2014
43,006
Total
Subtotal
352
4,410
6,099
Unlisted
23,840
Listed overseas
Listed in Hong Kong
23,488
32,427
Listed in mainland, PRC
Equity securities
29,212
94,984
70
137,990
53,052
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.
As at 31
December 2014
RMB million
December 2015
RMB million
As at 31
For the year ended 31 December 2015
Total
Others
Bank deposits
Debt securities
9.8 Accrued investment income
Total
Within 30 days
Maturing:
9.7 Securities purchased under agreements to resell
FINANCIAL ASSETS (continued)
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
9
170
Subtotal
23,292
86,076
Unlisted
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
Others
Corporate bonds
bonds
Government agency
Government bonds
401
21,503
94,984
Equity securities
56
Listed overseas
8,852
Listed in mainland, PRC
Debt securities
53,052
137,990
23,840
43,006
Total
Subtotal
23,341
36,887
Common stocks
499
6,119
Funds
29,212
11,925
21,503
11,925
RMB Per Policy
As at 31 December 2015
As at 31 December 2014
37.00-45.00
37.00-45.00
Group Life
% of Premium
RMB Per Policy
% of Premium
0.85%-0.90%
0.85%-0.90%
15.00
14.00
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.
175
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
Individual Life
14
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:
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.
4.80%-5.00%
4.80%-5.00%
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:
Discount rate assumptions
As at 31 December 2015
As at 31 December 2014
3.42%-5.78%
3.52%-5.96%
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.
Risk margin is considered in the Group's mortality and morbidity assumptions.
9.6 Securities at fair value through profit or loss
INSURANCE CONTRACTS (continued)
(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.
Non-current
31,928
31,218
Current
44,350
49,552
1,599
2,144
15,667
15,703
27,084
31,705
RMB million
RMB million
As at 31
December 2014
December 2015
As at 31
18,334
(a) Process used to decide on assumptions (continued)
12,422
49,552
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.
(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 2015
RMB million
As at 31
December 2014
RMB million
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
171
44,350
Total
Notified claims
2015
2014
Accretion of interest
Release of liabilities (i)
Premiums
As at 1 January
The table below presents movements in the liabilities of long-term insurance contracts:
(d) Movements in liabilities of long-term insurance contracts
INSURANCE CONTRACTS (continued)
14
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
Change in assumptions
China Life Insurance Company Limited Annual Report 2015
7,165
(65)
7,230
7,857
(87)
7,944
As at 31 December
(6,775)
121
(6,896)
(7,165)
65
177
(7,230)
– Change in discount rates
Other movements
Incurred but not reported
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
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)
1,588,900
1,698,773
1,379
1,043
- Change in other assumptions (ii)
420
(4,599)
8,510
69,214
68,741
(265,137)
304,677
1,482,946
1,588,900
331,582
(300,990)
RMB million
2014
2015
RMB million
As at 31 December
987
Release
10
(65)
Incurred but not reported
Notified claims
Total as at 31 December - Gross
- Claims arising in prior years
355
669
16,499
20,497
- Claims arising in current year
Claims incurred
(4,557)
(6,865)
Total as at 31 December - Gross
- Cash paid for prior year claims
(12,349)
Cash paid for claims settled
4,655
7,316
Total as at 1 January – Gross
3,820
5,181
835
2,135
RMB million
RMB million
7,165
(9,636)
The table below presents movements in unearned premium reserves:
Cash paid for current year claims
7,316
7,230
9,268
(87)
7,944
Increase
6,775
6,896
7,165
(65)
7,230
As at 1 January
Net
Ceded
(121)
Net
1,748
2,135
Gross
7,520
5,181
9,268
7,316
7,857
2015
RMB million
2014
RMB million
Gross
Ceded
Housing benefits
Contribution to the defined contribution pension plan
Depreciation and amortisation
Foreign exchange gains
Auditors' remuneration
185
year
2015
Employee salaries and welfare costs
ended 31 December
784
2014
RMB million
3,430
3,433
For the
RMB million
For the year ended 31 December 2015
PROFIT BEFORE INCOME TAX
1,234
(368)
315,294
184
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
25 INVESTMENT CONTRACT BENEFITS
Profit before income tax is stated after charging/(crediting) the following:
Benefits of investment contracts are mainly the interest credited to investment contracts.
FINANCE COSTS
27
Interest expenses for bonds payable
Interest expenses for securities sold under agreements to repurchase
Interest expenses
for interest-bearing loans and borrowings
Total
26
106
(b)
4,320
ended 31 December 2015
28
TAXATION
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:
315,662
Current taxation - Enterprise income tax
Deferred taxation
Taxation charges
For the
year ended 31 December
2015
RMB million
2014
RMB million
15,408
6,455
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
4,726
For the year ended 31 December
2015
RMB million
2014
RMB million
13,045
11,564
824
59
787
1,553
2,036
2,124
(812)
(268)
60
55
1,678
Total
Life insurance death and other benefits
(62)
NET FAIR VALUE GAINS THROUGH PROFIT OR LOSS
Debt securities
Equity securities
Stock appreciation rights
Financial liabilities at fair value through profit or loss
Total
24
INSURANCE BENEFITS AND CLAIMS EXPENSES
For the
RMB million
year ended 31 December
2015
2014
RMB million
766
2,272
9,324
4,977
23
180
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.
ended 31 December 2015
142
(4)
142
32,622
8,127
(321)
(1,149)
32,301
6,978
32,297
7,120
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
22 NET REALISED GAINS ON FINANCIAL ASSETS (continued)
(255)
(61)
(1,186)
Total
352,962
(743)
352,219
For the year ended 31 December 2014
Life insurance death and other benefits
192,863
(204)
192,659
Accident and health claims and claim adjustment expenses
16,854
(102)
16,752
Increase in insurance contract liabilities
105,945
109,509
(338)
109,847
21,009
10,209
5,808
Gross
Ceded
Net
RMB million
RMB million
105,883
RMB million
(4,664)
221,949
(248)
221,701
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
21,166
(157)
For the year ended 31 December 2015
1,433
10,744
7,888
(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
Notes to the Consolidated Financial Statements
For the
(1,451)
11
3,192
(5,445)
(12,095)
1,036
(19,375)
(Charged)/credited to net profit
3,673
843
148
year
4,664
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
(Charged)/credited to other
(8,316)
ended 31 December 2015
29
(26,850)
(24,130)
- deferred tax liabilities to be settled within 12 months
(2,270)
(1,491)
Subtotal
(29,120)
(25,621)
Net deferred tax liabilities
(16,953)
(19,375)
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).
EARNINGS PER SHARE
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).
188
- deferred tax liabilities to be settled after 12 months
Deferred tax liabilities:
6,246
12,167
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:
28
- deferred tax assets to be recovered after 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
- deferred tax assets to be recovered within 12 months
10,744
As at 1 January 2015
1,036
1
19
(30)
12
Income tax at the effective tax rate
(4)
7,888
(i)
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.
186
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
TAXATION (continued)
28
(41)
1,190
2,655
(3,434)
The reconciliation between the Group's effective tax rate and the statutory tax rate of 25% in the PRC
(2014: 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)
Tax losses utilised from previous periods
Unused tax losses
Others
(c)
For the year ended 31 December
RMB million
2014
RMB million
45,931
40,402
11,483
10,101
(3,324)
2015
(19,375)
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:
As at 1 January 2014
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)
5,627
(11,627)
(iii)
(ii)
(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
Deferred tax assets/(liabilities)
- Others
Investments
Others
RMB million
RMB million
RMB million
Total
RMB million
(i)
Insurance
RMB million
32,285
2014
10,000
4.58%
5 November 2022
5 November 2012
RMB million
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
10,000
2,623
Total
68,000
31,354
46,089
31,354
4,612
3,432
41,477
27,922
As at 31
December 2014
RMB million
December 2015
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
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
180
Subordinated bonds are measured at amortised cost as described in Note 2.14.
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
2,643
3.54%
As at 31
December 2014
RMB million
14
24,292
33,797
47,962
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 without DPF
Investment contracts with DPF at amortised cost
15 INVESTMENT CONTRACTS
21
84,106
72,275
2015
As at 31
December 2015
RMB million
Interest rate
17 June 2019
Guaranteed loans
Maturity date
16 INTEREST-BEARING LOANS AND BORROWINGS
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
47,962
42,971
50,295
1,164
(33)
(34)
(3,334)
(2,543)
3,486
3,746
46,555
47,962
RMB million
RMB million
2014
1,288
118
21 INVESTMENT INCOME
31,354
Bank deposits
Loans
Securities purchased under agreements to resell
Others
Total
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
For the year ended 31 December
2015
2014
RMB million
RMB million
24,541
25,357
18,526
18,571
1,382
1,571
Stock appreciation rights (Note 31)
8,950
4,458
326
106
34,934
11,115
- at fair value through profit or loss
8,138
- available-for-sale securities
- at fair value through profit or loss
1,025
845
783
Tax payable
Others
511
717
5,584
4,216
Total
Current
Non-current
Total
STATUTORY INSURANCE FUND
26,514
20,062
26,514
20,062
26,514
3,000
20,062
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.
182
Debt securities
-held-to-maturity securities
- available-for-sale securities
Equity securities
368
299
89
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
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
181
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
2,598
1,919
Payable to third party holders of consolidated trust schemes
2,550
114
97,582
93,548
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.
22
NET REALISED GAINS ON FINANCIAL ASSETS
Debt securities
Realised gains
Reversal of impairment
Subtotal
Equity securities
Realised gains
Payable to constructors
Impairment
Total
Net realised gains on financial assets are from available-for-sale securities.
183
For the
1,044
year
2015
ended 31 December
1,045
Interest payable of subordinated debts
761
1,117
Agent deposits
Subtotal
634
4,953
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.
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, 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.
Finance Costs
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.
Administrative Expenses
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
Health Insurance Business
investments.
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.
2
25,432
Other expenses
7,428
4,151
743
701
Total
16
463,492
404,275
Insurance Benefits and Claims Expenses
1
Life Insurance Business
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
3
18
17
Management Discussion and Analysis
2,700
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
Accident Insurance Business
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
1,546
China Life Insurance Company Limited Annual Report 2015
1,753
557
(3) Profit before Income Tax
For the year ended 31 December
Life insurance business
Health insurance business
Accident insurance business
Other business
Total
1
Life Insurance Business
2
RMB million
2015
2014
40,921
30,651
3,252
Statutory insurance fund contribution
27,458
5,066
First-year regular
56,381
41,340
Renewal business
173,720
174,273
Health Insurance Business
42,041
33,192
First-year business
24,435
19,525
Single
18,993
14,459
70,006
First-year regular
78,068
111,346
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:
For the year ended 31 December
RMB million
2015
2014
Life Insurance Business
First-year business
308,169
285,619
134,449
Single
5,442
Renewal business
17,606
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
Gross written premiums categorized by channel:
For the year ended 31 December
2015
RMB million
2014
Exclusive Individual Agent Channel
225,957
205,417
First-year business of long-term insurance
47,974
34,455
Single
495
331,010
363,971
13
Total
13,667
Accident Insurance Business
13,761
12,199
First-year business
13,480
12,049
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
Single
11,888
First-year regular
77
161
Renewal business
281
150
13,403
335
Life Insurance Business
Net Premiums Earned
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.
5 Exclusive of currency fund.
6
Including debt investment plans, equity investment plans, trust schemes, project asset-backed plans, asset-backed securities and
specialized asset management plans, etc.
7 Net investment yield
=
8
9
(Investment income + Net 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 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
=
(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)
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%.
11
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
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
Administrative expenses
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)
9
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
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.
10
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
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.
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
507,449
440,766
2.
97,582
Investment income
11,907
13,365
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
1.
Life insurance business
362,301
330,105
308,081
285,574
40,855
32,624
Accident insurance business
Health insurance business
First-year regular
13
34,120
1
2
3
4
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.
Investment Income from Bank Deposits
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 Loans
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.
93,548
97,582
Total
47,479
1,708
1,677
Investment income from available-for-sale securities
27,476
23,029
Investment income from held-to-maturity securities
24,541
15
25,357
Investment income from loans
Other investment income
32,285
34,934
11,115
8,138
457
Investment income from bank deposits
Investment income from securities at fair value through profit or loss
China Life Insurance Company Limited Annual Report 2015
Net Realised Gains on Financial Assets
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
Underwriting and policy acquisition costs
35,569
27,147
Finance costs
4,320
4,726
22,434
34,398
288,868
313,612
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.
(2)
Benefits, Claims and Expenses
Management Discussion and Analysis
For the year ended 31 December
2015
2014
Insurance benefits and claims expenses
Life insurance business
Health insurance business
352,219
315,294
RMB million
2014
413
RMB million
553
506
Short-term insurance business
15,983
13,945
Bancassurance Channel
106,028
99,825
First-year business of long-term insurance
77,881
Single
73,508
65,918
First-year regular
13,714
Renewal business
2015
111
199
Renewal business
171,632
165,131
Short-term insurance business
6,351
5,831
Group Insurance Channel
11,963
20,107
First-year business of long-term insurance
3,571
2,989
Single
3,372
2,878
First-year regular
17,440
Renewal business
87,222
2.
9,806
6,428
Total
Notes:
1.
18,558
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
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
638
864
Short-term insurance business
373
21,815
Short-term insurance business
248
129
Other Channels¹
Renewal business
8,328
First-year business of long-term insurance
11,879
1,262
Single
701
889
First-year regular
508
1,209
China Life Enterprise Annuity Fund (“EAP”)
10 Upper Bank Street SLP
Ecommerce")
China Life Investment Holding Company Limited (“CLI”)
China Life Ecommerce Company Limited (“CL
China Life Insurance (Overseas) Company Limited ("CL
Overseas")
China Life Real Estate Co., Limited ("CLRE")
Sanya Company
Annoroad Technology
Sino-Ocean
CLP&C
CGB
An associate 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
A subsidiary of the Company
A subsidiary of the Company
A subsidiary of the Company
CL AMP Zunxiang Bond Securities Investment Fund
COFCO Futures
CL AMP Zengjinbao Money Market Fund
China Life Wealth Management Co., Limited ("CL
Wealth")
Jiao Yin Guo Xin - Wen Jian No. 798 Collective Fund
Trust Scheme (the second batch)
Rui Chong Company was incorporated in 2015.
(i)
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
A directly and indirectly held consolidated
structured entity of the Company
A directly and indirectly held consolidated
structured entity of the Company
A directly held consolidated structured entity of the
Company
A directly and indirectly held consolidated
structured entity of the Company
A pension fund jointly set up by the Company and
others
Under common control of CLIC
Under common control of CLIC
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
An associate of the Company
An associate of the Company
An associate of the Company
Shang Xin Jing Neng Jin Tai Indemnificatory Housing
Collective Fund Trust Scheme
Jiao Yin Guo Xin - Wen Jian No. 1119 Collective Fund
Trust Scheme
CL AMP Xinqianbao Money Market Fund
Shang Xin Lv Di Collective Fund Trust Scheme
King Phoenix Tree Limited
(7)
AMC HK
China Life Insurance Company Limited Annual Report 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
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.
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.
DIVIDENDS
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).
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%.
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).
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.
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
31
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
190
Notes to the Consolidated Financial Statements
CL AMP
For the
ended 31 December 2015
("Rui Chong Company”) (i)
Shanghai Rui Chong Investment Co., Limited
Golden Phoenix Tree Limited
Company Limited ("Suzhou Pension Company")
China Life (Suzhou) Pension and Retirement Investment
A subsidiary of the Company
A subsidiary of the Company
Immediate and ultimate holding company
Relationship with the Company
China Life Pension Company Limited ("Pension
Company")
AMC
CLIC
Significant related parties
The table below summarises the names of significant related parties and nature of relationship with the
Company as at 31 December 2015:
Related parties
(a)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS
year
(3)
China Life Insurance Company Limited Annual Report 2015
For the year ended 31 December 2015
Payment of an investment management fee to AMC HK
Transactions between AMC HK and the Company
19
14
Marketing fee income for promotion of annuity business
from Pension Company
12
20
(vii)
Agency fee received from Pension Company for entrusted
sales of annuity funds
(ii.f)
23
Transactions between Pension Company and the Company
Rental received from Pension Company
137
158
886
1,020
(ii.e)(viii)
Distribution of profits from AMC
Payment of an asset management fee to AMC
Transactions between AMC and the Company
24
2014
RMB million
14
Transactions between the Group's consolidated trust
195
(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.
(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.
(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.
(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.
Notes (continued):
(e) Transactions with significant related parties (continued)
SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2015
11
Notes to the Consolidated Financial Statements
33
194
(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.
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)
Notes:
187
Distribution from the Group's consolidated trust
schemes to the Company
schemes and the Company
China Life Insurance Company Limited Annual Report 2015
For the year ended 31 December
2015
RMB million
Notes
(e)
Commission expenses charged by CGB
838
524
Interest on deposits received from CGB
Transactions between CGB and the Group
29
89
79
2221
(v)
29
14
17
86
35
41
4
428222532
(vi)
Payment of a business management service fee to CL Ecommerce
97
15
8
Transactions between Sino-Ocean and the Group
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Transactions with significant related parties (continued)
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
286
303
34
59
25
34
559
131
422
268
193
corporate
Transactions between EAP and the Group
Contribution to EAP
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
Scrip dividend from Sino-Ocean
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
114
203
15
21
(1)
(1)
541
526
As at 31
December 2014
RMB million
(2)
As at 31
December 2015
RMB million
Amount due to AMC HK
Amount due to AMC
Amount due to Pension Company
Amount due from Pension Company
The resulting balance due from and to subsidiaries of the Company
Amount due to CL Ecommerce
Amount due from CL Ecommerce
Subordinated debts and corporate bonds of Sino-Ocean
Amount due to CGB
198
(6)
16
12
(225)
(325)
(5)
(6)
48
50
(40)
4
260
872
(1)
(13)
296
194
16,287
9,660
(1)
2
2
(49)
(71)
Amount due from CGB
Property leasing income received from CLI
Amount deposited with CGB
Amount due from CLRE
Transactions with significant related parties (continued)
Notes (continued):
(e)
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
196
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.
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.
(v)
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 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)
(iii)
(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.
Notes (continued):
Transactions with significant related parties (continued)
(e)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
ended 31 December 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.
(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.
Amount due to CLI
Amount due from CLI
Amount due to CLP&C
Amount due from CLP&C
Amount due from CL Overseas
Amount due to CLIC
Amount due from CLIC
The resulting balance due from and to significant related parties of the Group
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.
(f)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Amounts due from/to significant related parties
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
197
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.
(ix)
(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.
(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.
Amount due to CLRE
Notes to the Consolidated Financial Statements
167
Payment of an asset management fee to CLI
CLIC
68.37%
RMB19,324
68.37%
As at 31 December 2015
Amount Percentage
million
of holding
Decrease
million
Increase
million
As at 31 December 2014
Percentage
of holding
million
RMB19,324
Amount
year
(d) Percentages of holding of related parties with control relationship and changes during the
(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.
(c) Registered capital of related parties with control relationship and changes during the year
(continued)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
Shareholder
China Life Insurance Company Limited Annual Report 2015
Subsidiaries
Amount
million
and indirectly
directly
directly
74.27%
RMB2,746
74.27%
RMB2,746
Pension Company
directly
As at 31 December 2014
directly
RMB1,680
60.00%
RMB1,680
AMC
As at 31 December 2015
Percentage
of holding
Amount
million
Decrease
million
Increase
million
Percentage
of holding
60.00%
191
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.
(i)
As at 31
December 2014
RMB million
Name of related party
year
(c) Registered capital of related parties with control relationship and changes during the
Yang
Mingsheng
State-owned
Refer to Note 39(c) for the basic and related information of subsidiaries.
company
Immediate and
ultimate holding
Increase
RMB million
representative
Nature of
ownership
Relationship with
the company
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.
registration Principal business
Location of
CLIC
Name
(b) Related parties with control relationship
Information of the parent company is as follows:
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Legal
Decrease
RMB million
As at 31
December 2015
RMB million
CLIC
6,800
200
588
300
3,400
4,000
4,600
6,800
Rui Chong Company
200
CL Wealth
588
CL AMP
300
Suzhou Pension Company (i)
900
2,500
Pension Company
4,000
AMC
4,600
and indirectly
AMC HK
HKD30
50.00%
indirectly
(ii.b)
fee received from CL Overseas
Asset management
91
106
Distribution of profits from AMC to CLIC
5,797
7,729
Payment of dividends from the Company to CLIC
39
128
(ii.a)
Asset management fee received from CLIC
987
950
(i)(viii)
Policy management fee received from CLIC
Transactions with CLIC and its subsidiaries
RMB million
2014
133
30
Asset management fee received from CLP&C
(ii.c)
(ix)
Payment to CLI for purchase of fixed assets
Asset management fee received from CLI
(iv)
Property leasing expenses charged by CLI
Payment of rental, project fee and others expenses to CLRE
Rental and a service fee received from CLP&C
(iii)
Payment of an agency fee to CLP&C
1,013
1,464
(iii)(viii)
Agency fee received from CLP&C
18
17
Claim and other payments received from CLP&C
50
51
Payment of insurance premium to CLP&C
11
26
For the year ended 31 December
2015
RMB million
(ii.d)(viii)
Notes
Transactions with significant related parties
100.00%
RMB200
CL Wealth
indirectly
indirectly
RMB500
85.03%
RMB500
CL AMP
RMB200
directly
100.00%
RMB800
RMB500
100.00%
RMB300
Suzhou Pension Company
indirectly
50.00%
-- HKD30
directly
100.00%
indirectly
indirectly
(e)
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
192
directly
100.00%
RMB6,199
RMB6,199
Rui Chong Company
indirectly
indirectly
100.00%
100.00%
King Phoenix Tree Limited
directly
directly
100.00%
100.00%
Golden Phoenix Tree Limited
The following table summarises significant transactions carried out by the Group with its significant related
parties:
85.03%
2
Notes to the Consolidated Financial Statements
Leasehold
vehicles
construction improvements
Total
RMB million
As at 1 January 2015
22,114
6,527
1,373
6,332
1,222
37,568
Transfers upon completion
1,486
6
(1,680)
166
Motor Assets under
(22)
furniture
and fixtures
Office
equipment
Total equity
304,103
268,536
Total liabilities and equity
2,418,226
2,211,673
205
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)
(a)
Property, plant and equipment
Cost
Buildings
95,265
Additions
341
(4,382)
(982)
(919)
(12,752)
Charge for the year
(813)
(639)
(134)
(115)
(1,701)
Disposals
33
369
126
108
636
As at 31 December 2015
(6,469)
51
As at 1 January 2015
40,262
128
2,955
8
3,483
Disposals
(64)
(393)
(133)
(63)
(114)
(767)
As at 31 December 2015
23,587
6,481
1,368
7,544
1,282
Accumulated depreciation
106,375
Retained earnings
145,006
Statement of financial position (continued)
As at 31 December 2015
LIABILITIES AND EQUITY
Liabilities
Insurance contracts
As at 31
December 2015
Notes
RMB million
As at 31
December 2014
RMB million
14
1,715,985
1,603,446
Investment contracts
15
84,106
72,275
Policyholder dividends payable
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
107,774
For the year ended 31 December 2015
China Life Insurance Company Limited Annual Report 2015
11,913
11,166
Reinsurance assets
Other assets
Cash and cash equivalents
12
1,420
1,032
39(m)
16,294
17,969
74,750
42,984
Total assets
204
2,418,226
2,211,673
Notes to the Consolidated Financial Statements
74,745
Bonds payable
17
Statutory insurance fund
20
217
223
Total liabilities
Equity
2,114,123
1,943,137
Share capital
34
Other equity instruments
39(q)
28,265
7,791
28,265
Reserves
39(r)
161,672
5,256
Current income tax liabilities
19,023
16,883
67,994
67,989
Securities sold under agreements to repurchase
39(n)
30,368
44,538
Annuity and other insurance balances payable
30,092
(7,249)
25,617
32,266
15,850
Other liabilities
39(0)
23,182
19,431
Deferred tax liabilities
39(p)
Premiums received in advance
11
(4,652)
(926)
6,125
559
2,331
13,497
As at 1 January 2014
Net book value
(24)
----(25)
(24)
As at 31 December 2014
1
Disposals
year
Charge for the
(25)
As at 1 January 2014
Impairment
306
(12,752)
22,818
15,621
Additions
As at 1 January 2015
Cost
(b) Investment properties
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
39
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
207
24,792
303
6,332
391
2,145
As at 31 December 2014
Transfer from property, plant and equipment
(919)
(4,382)
37,568
1,222
6,332
1,373
6,527
22,114
As at 31 December 2014
(1,113)
(32)
(212)
(58)
(683)
(128)
Disposals
4,138
12
3,613
Accumulated depreciation
(982)
As at 1 January 2014
(4,275)
(6,469)
As at 31 December 2014
790
25
54
654
57
Disposals
(1,797)
(108)
(166)
(761)
(762)
Charge for the year
(11,745)
(836)
(870)
(5,764)
As at 31 December 2015
Buildings
RMB million
1,513
16,314
1,829
378
7,544
356
26,421
206
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)
(a)
Property, plant and equipment (continued)
Cost
Office
Buildings
equipment
furniture
and fixtures
As at 31 December 2015
Motor
24,792
6,332
(13,817)
Impairment
As at 1 January 2015
Charge for the
year
Disposals
(24)
49
As at 31 December 2015
(24)
Net book value
As at 1 January 2015
----(24)
(24)
15,621
2,145
391
303
vehicles
Assets under
construction improvements
Leasehold
1,296
1,345
As at 1 January 2015
Fair value
As at 31 December 2015
As at 1 January 2015
Net book value
(217)
As at 31 December 2015
Transfer from property, plant and equipment
(49)
year
Charge for the
(168)
As at 1 January 2015
Accumulated depreciation
1,513
2,231
As at 31 December 2015
2,415
208
Total
RMB million
As at 1 January 2014
19,286
6,606
1,429
6,125
1,142
(990)
34,588
2,781
268
(3,194)
100
(45)
Additions
175
China Life Insurance Company Limited Annual Report 2015
Transfers upon completion
Premiums receivable
For the year ended 31 December 2015
49,385
Statutory Discretionary
translating
Share
premium
Other
reserves
for-sale
securities
the equity
method
reserve
fund
reserve
General
foreign
fund
reserve operations
Total
RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
(a)
(b)
For the year ended 31 December 2015
(c)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Key management personnel compensation
28,264,705,000
RMB million
As at 31 December 2014
No. of shares
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.
25
14
RMB million
2014
For the year ended 31 December
2015
RMB million
Salaries and other benefits
(g)
28,265
As at 1 January 2014
(15,835)
(184)
24,801
21,627
21,747
(3)
145,919
As at 1 January 2015
53,860
416
817
23,254
(184)
24,801
21,627
21,747
145,919
Other comprehensive income for the year
23,254
53,860
817
As at 31 December 2014
(327)
21,641
19,157
18,545
97,029
Other comprehensive income for the year
39,089
143
39,232
Appropriation to reserves
3,160
2,470
3,202
8,832
Others
826
826
53,860
28,264,705,000
28,265
199
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.
7,791
1,280
7,791
1,280
Total
7,791
For the year ended 31 December 2015
1,280
As at 31
As at 31
December 2014
RMB million
under
43,981
available-
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
3,722
7,791
284,121
314,701
284,121
322,492
December 2015
RMB million
7,791
1,280
Core Tier 2 Capital Securities
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)
As at 31 December 2015, the Company's share capital was as follows:
34 SHARE CAPITAL (continued)
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
RMB million
19,323,530,000
19,324
8,941,175,000
RMB million
RMB million Quantity million
RMB million Quantity million
RMB million Quantity million
Quantity million
As at 31
December 2015
Decrease
Increase
6,709
As at 31
December 2014
Overseas listed shares are traded on the Stock Exchange of Hong Kong 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
(a) Basic information
364
35 OTHER EQUITY INSTRUMENTS
7,076
For the
year
ended 31 December 2015
39
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS
Statement of financial position
As at 31 December 2015
ASSETS
As at 31
December 2015
Notes
RMB million
As at 31
December 2014
RMB million
Property, plant and equipment
39(a)
26,421
24,792
Investment properties
Notes to the Consolidated Financial Statements
39(b)
China Life Insurance Company Limited Annual Report 2015
524
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
203
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
258
207
253
361
13
17
585
-
1,296
Investments in subsidiaries
5,653
5,653
Available-for-sale securities
39(i)
766,799
605,245
Securities at fair value through profit or loss
39(j)
135,733
38,822
Securities purchased under agreements to resell
39(k)
21,461
11,841
Accrued investment income
3
39(1)
39(h)
1,345
-
685,471
39(c)
11,843
11,705
Investments in associates and joint ventures
39(d)
27,810
27,044
Held-to-maturity securities
39(e)
503,489
516,710
39(f)
203,152
165,913
Term deposits
39(g)
560,807
Statutory deposits – restricted
(c) Operating lease commitments
Loans
1,312
ended 31 December 2015
36 RESERVES (continued)
(a)
(b)
(c)
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).
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 "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).
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.
37 PROVISIONS AND CONTINGENCIES
The following is a summary of the significant contingent liabilities:
Pending lawsuits
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
440
389
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
Appropriation to reserves
3,438
The operating lease payments charged to profit before income tax for the year ended 31 December 2015
were RMB857 million (2014: RMB774 million).
3,160
3,492
10,090
Others
296
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.
296
53,860
1,113
29,963
180
28,239
25,239
163,381
201
As at 31 December 2015
202
24,787
China Life Insurance Company Limited Annual Report 2015
The future minimum lease payments under non-cancellable operating leases are as follows:
As at 31
December 2015
As at 31
December 2014
Not later than one year
Later than one year but not later than five
years
Later than five years
Total
(b) Operating lease commitments - as lessee
RMB million
534
549
721
1,275
38
753
20
10
ཚཊྚ॰
33,903
RMB million
9,887
87
(a) Capital commitments
336
36,307
The Group had the following capital commitments relating to property development projects and
investments:
Investments
Property, plant and equipment
Others
Notes to the Consolidated Financial Statements
Contracted, but not provided for
COMMITMENTS
As at 31
December 2015
As at 31
December 2014
23,929
RMB million
30,453
5,820
34
Total
RMB million
China Life Insurance Company Limited Annual Report 2015
27,044
27,810
RMB million
2015
27,044
766
RMB million
Notes to the Consolidated Financial Statements
2014
268
23,976
2,800
Debt securities
year
ended 31 December 2015
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(e) Held-to-maturity securities
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Listed in mainland, PRC
Unlisted
211
Debt securities
Total
For the
As at 31 December
Investment management
Investments in associates and joint ventures
RMB262 million
Investment management
Total
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
RMB257 million
Investment management
49.00% directly and indirectly
RMB4,000 million
Investment management
100.00% directly
RMB2,000 million
Scrip dividend
No. 798 Collective Fund
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
Trust Scheme (the second batch)
As at 31
December 2015
503,489
As at 31
December 2014
RMB million
167,290
149,837
After ten years
248,127
284,580
Total
212
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
57.67% directly
92,259
After five years but within ten years
RMB million
70,477
years
79,438
88,843
126,097
126,140
145,824
152,130
155,700
503,489
516,710
61,916
68,199
441,573
448,511
503,489
516,710
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
86,072
CL AMP Zengjinbao Money
Market Fund
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.
Investment management
1,394
1,345
2,195
2,231
209
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)
(c) Investments in subsidiaries
Unlisted investments at cost
As at
As at
31 December
2015
31 December
2014
RMB million
RMB million
11,843
11,705
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December
2015:
Place of
incorporation
As at 31 December 2014
Name
As at 1 January 2014
As at 31 December 2014
203,152
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 (continued)
Cost
As at 1 January 2014
Additions
Transfer from property, plant and equipment
As at 31 December 2014
Buildings
RMB million
1,513
Accumulated depreciation
As at 1 January 2014
(119)
Charge for the
year
(49)
Transfer from property, plant and equipment
As at 31 December 2014
(168)
Net book value
As at 1 January 2014
Fair value
and operation
Percentage of
equity interest held
Registered capital
Financial service
Investment
King Phoenix Tree Limited
Rui Chong Company
Jersey Island
PRC
100.00% indirectly
100.00% directly
Not Applicable
Investment
RMB6,800 million
Investment
Non-controlling interests in subsidiaries are not significant to the Company.
210
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)
(c)
Investments in subsidiaries (continued)
(ii) The table below presents the basic information of the Company's consolidated structured entities as at
31 December 2015:
Name
Percentage of shares held
Funds/trust received
Principal activities
CL AMP Zunxiang Bond Securities 30.68% directly and indirectly
RMB867 million
Asset management
Investment in
retirement properties
Fund management
Not Applicable
100.00% directly
Hong Kong, PRC
Principal activities
AMC
PRC
60.00% directly
Pension Company
PRC
74.27% directly
RMB4,000 million
RMB3,400 million
Asset management
Pension and annuity
and indirectly
AMC HK
Hong Kong, PRC
Investment Fund
50.00% indirectly
PRC
100.00% directly
Not applicable
RMB300 million
CL AMP
PRC
85.03% indirectly
RMB588 million
CL Wealth
PRC
100.00% indirectly
RMB200 million
Golden Phoenix Tree Limited
Suzhou Pension Company
165,913
1,513
December 2015
RMB million
22,058
42,745
Total
Subtotal
352
4,149
6,099
Unlisted
Listed overseas
70
Listed in Hong Kong
21,706
32,427
Listed in mainland, PRC
Equity securities
16,764
92,988
135,733
Subtotal
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.
11,841
21,461
As at 31
December 2014
RMB million
RMB million
As at 31
December 2015
Total
Others
Bank deposits
Debt securities
(1) Accrued investment income
Total
Within 30 days
Maturing:
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(k) Securities purchased under agreements to sell
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
216
38,822
11,666
84,738
Unlisted
14,782
86,816
254
1,728
5,218
553
RMB million
RMB million
As at 31
December 2014
As at 31
December 2015
Subtotal
Others
Corporate bonds
bonds
Government agency
Government bonds
Debt securities
Securities at fair value through profit or loss
401
92,988
16,764
Equity securities
56
Listed overseas
5,098
8,194
Listed in mainland, PRC
Debt securities
38,822
135,733
21,461
22,058
Total
Subtotal
21,559
36,887
Common stocks
499
5,858
Funds
42,745
11,841
As at 31
December 2015
RMB million
5,900
11,906
10,394
Total
Stock exchange market
Interbank market
(n) Securities sold under agreements to repurchase
Total
Current
Non-current
17,969
16,294
Total
3,240
2,147
Others
625
756
6,063
16,294
17,969
As at 31
December 2015
RMB million
44,538
30,368
218
Total
After 90 days
3,000
Within 30 days
41,538
Due from related parties
30,368
44,538
30,368
4,039
2,902
40,499
27,466
RMB million
As at 31
December 2014
Maturing:
(j)
2,449
Tax refundable
217
Total
12,377
18,256
Non-current
31,604
31,129
Current
43,981
49,385
1,596
2,131
15,450
15,642
26,935
31,612
As at 31
December 2014
RMB million
49,385
43,981
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
2,281
2,520
Automated policy loans
3,431
4,126
5,943
5,809
Investments receivable
936
Land use rights
RMB million
As at 31
December 2015
(m) Other assets
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
39
ended 31 December 2015
year
For the
As at 31
December 2014
RMB million
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
146,027
year
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 bonds
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Others (i)
As at 31
December 2015
RMB million
Total
Within one year
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
year
ended 31 December 2015
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(h) Statutory deposits – restricted
(i)
Contractual maturity schedule:
After one year but within five years
25,258
25,913
145,399
21,038
Others (i)
17,607
Subtotal
346,230
195,951
Available-for-sale securities, at cost
Equity securities
Others (i)
Total
214
20,759
15,259
766,799
605,245
China Life Insurance Company Limited Annual Report 2015
ended 31 December 2015
Notes to the Consolidated Financial Statements
50,053
Wealth management products
3,000
18,712
138,487
205,149
205,620
19,298
22,798
4,706
1,217
Subtotal
After five years but within ten years
399,810
Equity securities
Funds
162,563
82,714
Common stocks
74,592
71,592
Preferred stocks
394,035
years
40,310
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.
605,245
766,799
211,210
366,989
Total
Subtotal
131,359
273,023
Unlisted
172
Listed in Singapore
8,303
8,391
Listed in Hong Kong, PRC
As at 31
December 2015
RMB million
As at 31
December 2014
RMB million
Within one year
32,062
For the
After one year but within five
China Life Insurance Company Limited Annual Report 2015
394,035
399,810
215
Total
120,485
71,548
120,003
119,987
112,012
After five years but within ten years
139,624
135,733
years
After one year but within five
13,939
After ten years
85,403
Notes to the Consolidated Financial Statements
Equity securities
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
As at 31
December 2015
RMB million
Listed in mainland, PRC
Maturing:
As at 31
December 2014
RMB million
90,102
Within one year
203,152
As at 31
December 2014
RMB million
399,810
Maturing:
394,035
357,995
41,549
266
As at 31
December 2014
RMB million
RMB million
As at 31
December 2015
Subtotal
45,707
260
Listed in Singapore
For the year ended 31 December 2015
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
Available-for-sale securities (continued)
Unlisted
(i)
348,068
Debt securities
(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.
Listed in mainland, PRC
97,205
Appropriation to reserves
19,157
21,593
(15,834)
RMB million
53,860
As at 1 January 2014
Other comprehensive
income for the year
RMB million
RMB million
RMB million
RMB million
39,011
Total
RMB million
53,860
3,160
23,177
reserve
53,860
As at 1 January 2015
145,006
21,589
39,011
21,627
23,177
As at 31 December 2014
18,429
8,790
3,160
2,470
24,753
reserve fund
268,536
Discretionary
(25,157)
Net deferred tax liabilities
(16,883)
(19,023)
(q) Other equity instruments
As at 31
December 2015
As at 31
December 2014
RMB million
RMB million
Equity attributable to equity holders of the Company
Equity attributable to ordinary equity holders of the Company
Equity attributable to other equity instruments holders of the Company
304,103
296,312
7,791
24,753
268,536
Statutory
reserve fund
securities
Share premium
available-for-sale
Unrealised
gains/(losses)
from
(s)
General
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(r) Reserves
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.
ended 31 December 2015
21,627
Pending lawsuits
145,006
Others
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
9,887
87
36,199
33,903
The future minimum lease payments 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
As at 31
December 2015
(28,683)
The future minimum rentals receivable under non-cancellable operating leases are as follows:
(iii) Operating lease commitments - as lessor
1,194
1,159
10
Property, plant and equipment
20
644
494
495
RMB million
RMB million
As at 31
December 2014
690
Investments
Contracted, but not provided for
(ii)
25,027
24,787
28,191
29,807
53,860
As at 31 December 2015
161,672
10,036
3,160
3,438
6,630
6,630
income for the year
Appropriation to reserves
Other comprehensive
3,438
21,589
Provisions and contingencies
222
Capital commitments of the Company relating to property development projects and investments:
(i) Capital commitments
(t) Commitments
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
The following is a summary of the significant contingent liabilities:
China Life Insurance Company Limited Annual Report 2015
389
440
RMB million
As at 31
December 2014
December 2015
RMB million
As at 31
39
Subtotal
As at 1 January 2014
(2,183)
4,197
Total
Current
Non-current
Total
219
23,182
19,431
23,182
19,431
23,182
19,431
China Life Insurance Company Limited Annual Report 2015
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2015
RMB million
Investments
Insurance
RMB million
available-for-sale securities
- Portion of fair value changes on
- Available-for-sale securities
5,488
comprehensive income
(Charged)/credited to net profit
Not later than one year
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)
(Charged)/credited to other
Others
693
484
Salary and welfare payable
5,008
6,410
Interest payable to policyholders
RMB million
As at 31
December 2014
4,561
As at 31
December 2015
RMB million
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
(o) Other liabilities
Others
RMB million
4,006
2,598
Tax payable
778
634
Payable to constructors
1,025
845
Commission and brokerage payable
Stock appreciation rights (Note 31)
1,045
Interest payable of subordinated debts
761
1,117
Agent deposits
1,919
1,044
Total
RMB million
(11,627)
552
5,952
year
(ii) The analysis of deferred tax assets and deferred tax liabilities during the
Taxation (continued)
(p)
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2015
is as follows:
Notes to the Consolidated Financial Statements
220
(16,883)
1,072
(16,504)
(1,451)
As at 31 December 2015
China Life Insurance Company Limited Annual Report 2015
3,192
Deferred tax assets:
- deferred tax assets to be recovered within 12 months
- deferred tax liabilities to be settled within 12 months
(23,709)
(26,500)
- deferred tax liabilities to be settled after 12 months
Deferred tax liabilities:
6,134
- deferred tax assets to be recovered after 12 months
11,800
2,553
4,205
9,247
As at 31
December 2014
RMB million
As at 31
December 2015
RMB million
Subtotal
1,929
(1,448)
3,192
available-for-sale securities
(11,637)
(8,316)
As at 31 December 2014
2,759
2,759
policyholders
930
attributable to participating
(15,762)
(1,337)
(62)
(1,827)
(4,683)
992
(15,762)
attributable to participating
policyholders
(19,023)
(8,316)
- Portion of fair value changes on
(5,401)
(5,401)
- Available-for-sale securities
comprehensive income
(Charged)/credited to other
As at 1 January 2015
4,349
534
3,673
(Charged)/credited to net profit
(19,023)
930
(11,637)
142
Later than one year but not later than five
Later than five years
61.3
Total
559.1
Wang Cuifei (iii)
821.8
49.8
87.7
684.3
Zhan Zhong (iii)
316.7
51.6
88.7
68.4
Miao Ping (ii)
Xiong Junhong
947.6
53.8
161.0
732.8
Li Xuejun (i)
895.8
54.3
196.7
163.9
47.8
(i)
included
included
scheme
Benefits
Actual paid
payment
Pension
Deferred
Deferred
payment
of salary
included in
income salary income
695.6
bonuses
Name
Subtotal
Performance
related
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December
2014 are as follows:
Zhan Zhong and Wang Cuifei were appointed as supervisors on 11 July 2015.
(iii)
Miao Ping was appointed as supervisor on 11 July 2015, and was appointed as the chairman of board of supervisors
on 24 July 2015.
(ii)
Xia Zhihua, Yang Cuilian and Li Xuejun retired as supervisors on 11 July 2015.
Basic salaries
677.6
Yang Cuilian (i)
1,603.5
China Life Insurance Company Limited Annual Report 2015
225
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
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.
80.0
80.0
80.0
Notes to the Consolidated Financial Statements
17.5
Huang Yiping
80.0
80.0
80.0
17.5
62.5
Chang Tso Tung Stephen
639.5
238.6
62.5
For the
year
ended 31 December 2015
96.5
245.6
1,261.4
Shi Xiangming
443.0
57.6
155.9
229.5
Xia Zhihua (i)
RMB Thousand
Total
Pension scheme
contributions
Benefits in kind
paid
Remuneration
Name
ended 31 December
year
The aggregate amounts of emoluments paid to supervisors of the Company for the
2015 are as follows:
(b) Supervisors' emoluments
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
in kind contribution
878.1
Total
in total
The emoluments fell within the following bands:
9,046
7,823
Total
489
476
8,557
7,347
Basic salaries, housing allowances, other allowances and benefits in kind
Pension scheme contributions
Number of individuals
2015
Thousand
RMB
RMB
2014
2015
Details of remuneration of the five highest paid individuals are as follows:
41
The five individuals whose emoluments were the highest in the Company include five supervisors (2014:
three directors and one supervisor).
(c) Five highest paid individuals
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
Thousand
For the year ended 31 December 2015
2014
RMB1,000,001 - RMB2,000,000
228
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 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.
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.
BACKGROUND
Embedded Value
China Life Insurance Company Limited Annual Report 2015
RMB0- RMB1,000,000
227
EVENTS AFTER THE REPORTING PERIOD
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 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).
25
5
RMB4,000,001 - RMB4,500,000
RMB3,000,001 - RMB4,000,000
RMB2,000,001 - RMB3,000,000
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.
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
226
Luo Zhongmin
1,508.8
1,508.8
90.5
288.4
1,129.9
514.4
615.5
Shi Xiangming
50.0
1,281.8
1,759.0
95.9
275.6
477.2
1,387.5
954.4
433.1
Xia Zhihua
RMB Thousand
477.2
12.5
62.5
62.5
2014.
The supervisors received the compensation amounts disclosed above during their term of office in 2015 and
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.
Xiong Junhong
1,444.0
1,444.0
88.7
285.3
1,070.0
480.2
589.8
Li Xuejun
1,469.5
1,469.5
90.2
291.2
1,088.1
472.6
615.5
Yang Cuilian
62.5
in total
49.0
135.3
238.6
63.8
196.7
Xu Haifeng (v)
314.6
49.7
68.2
196.7
Xu Hengping (v)
320.0
51.9
320.0
320.0
320.0
Chang Tso Tung Stephen
391.2
49.2
145.3
196.7
Miao Ping (iii)
300.0
Huang Yiping (iv)
300.0
312.4
Robinson Drake Pike (vii)
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
For the year ended 31 December 2015
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
224
(vii) Robinson Drake Pike was appointed as independent director on 11 July 2015.
Liu Jiade was appointed as non-executive director on 11 July 2015.
(vi)
Xu Hengping and Xu Haifeng were appointed as executive directors on 11 July 2015.
Liu Jiade (vi)
(v)
(iv)
Miao Ping retired as executive director on 28 May 2015.
(iii)
Su Hengxuan resigned as executive director on 8 May 2015.
(ii)
Bruce Douglas Moore retired as independent director on 28 May 2015.
(i)
160.0
160.0
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.
Anthony Francis Neoh
262.8
32.7
(a) Directors' and chief executive's emoluments
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.
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION
ended 31 December 2015
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2015
628
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the year
ended 31 December 2015 are as follows:
546
13
389
261
222
272
RMB million
As at 31
December 2014
As at 31
December 2015
RMB million
223
17
Name
Remuneration
paid Benefits in kind
99.0
131.1
Su Hengxuan (ii)
133.3
133.3
Bruce Douglas Moore (i)
Wang Sidong
Zhang Xiangxian
Miao Jianmin
711.8
100.6
213.4
397.8
Lin Dairen
601.9
105.4
435.2
Yang Mingsheng
RMB Thousand
Total
Pension scheme
contributions
(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
250.0
Bruce Douglas Moore
Sun Changji
Wang Sidong
Zhang Xiangxian
Miao Jianmin
320.8
119.3
440.1
70.0
23.5
119.3
346.9
238.6
108.3
Liu Yingqi
1,288.9
481.2
1,770.1
95.9
69.7
320.0
Anthony Francis Neoh
250.0
693.8
477.2
216.6
Miao Ping
639.5
238.6
878.1
49.0
135.3
238.6
693.8
477.2
216.6
Su Hengxuan
Tang Jianbang
300.0
300.0
320.0
320.0
300.0
50.0
275.0
years
481.2
962.4
Total
contribution
in kind
bonuses
Basic salaries
Name
included
included
scheme
in total
Benefits
of salary
related
Actual paid
payment
Pension
payment
Subtotal
Performance
Deferred
included in
in total
RMB Thousand
Yang Mingsheng
436.8
Lin Dairen
323.9
120.6
444.5
23.6
70.1
120.6
350.8
241.3
109.5
Wan Feng
1,424.1
536.2
1,960.3
98.7
302.5
536.2
1,559.1
1,072.4
486.7
1,399.2
income salary income
SUMMARY OF RESULTS
Exclusive Individual Agent Channel
•
Our
scope 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
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;
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 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.
235
China Life Insurance Company Limited Annual Report 2015
Embedded Value
Opinion
Based on the scope of work above, we have concluded that:
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;
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;
Scope of work
the operating assumptions used by China Life have been set with appropriate regard to past, current and expected
future experience;
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 Towers Watson
Michael Freeman
23rd March 2016
Wesley Cui
236
◎ 国家
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.
The cover photo of the printed version of this report was photographed by
Mr. Wu Chang, a retired employee of CLIC.
Channel
Value of One Year's Sales by Channel
Table 2
The value of one year's sales by channel is shown below:
VALUE OF ONE YEAR'S SALES BY CHANNEL
no changes have been assumed to the treatment of tax, but some sensitivity results relating to tax have been shown
by China Life; and
Embedded Value
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
31,355
12.
10% decrease in morbidity rates
294,595
31,704
13. 10% increase in claim ratio of short term business
291,150
30,662
14.
10% decrease in claim ratio of short term business
291,947
32,395
15.
Solvency margin at 150% of statutory minimum
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.
269,973
Using 2014 EV assumptions
297,864
32,291
17.
Taxable income based on the accounting profit
in accordance to the "Provisions on the Accounting
Treatment Related to Insurance Contracts" under one
possible scenario
292,818
31,338
Note: Taxable income is based on earnings calculated using solvency reserves for Scenarios 1 to 16.
234
China Life Insurance Company Limited Annual Report 2015
Embedded Value
TOWERS WATSON'S REVIEW OPINION REPORT ON EMBEDDED VALUE
29,388
288,533
China Life Insurance Company Limited Annual Report 2015
2) Taxable incomes in embedded value and the value of one year's sales are based on earnings calculated using solvency reserves.
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:
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%.
Economic assumptions:
ASSUMPTIONS
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".
31 December
2014
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.
Embedded Value
China Life Insurance Company Limited Annual Report 2015
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 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.
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.
Net assets, defined as assets less PRC solvency policy reserves and other liabilities; and
"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 capital supporting a company's desired solvency margin.
DEFINITIONS OF EMBEDDED VALUE AND VALUE OF ONE YEAR'S SALES
Embedded Value
China Life Insurance Company Limited Annual Report 2015
Group Insurance Channel
PREPARATION AND REVIEW
231
A
268,729
Notes: 1) Numbers may not be additive due to rounding.
23,253
31,528
Value of One Year's Sales after Cost of Solvency Margin (F + G)
H
(3,380)
(4,155)
Cost of Solvency Margin
G
26,633
35,684
Value of One Year's Sales before Cost of Solvency Margin
F
454,906
Adjusted Net Worth
560,277
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
300,712
335,500
Value of In-Force Business before Cost of Solvency Margin
B
194,236
Embedded Value (A + D)
10% increase in morbidity rates
16.
32,029
Methodology, Model and Assumption Changes
G
Market Value and Other Adjustments
H
Exchange Gains or Losses
I
Shareholder Dividend Distribution and Capital Injection
J
Other
K
Embedded Value as at 31 December 2015 (sum A through J)
454,906
44,956
31,528
F
11.
(5,602)
14,199
745
(3,699)
(34)
560,277
2) Items B through J are explained below:
B
Notes: 1) Numbers may not be additive due to rounding.
Reflects expected impact of covered business, and the expected return on investments supporting the 2015 opening net
worth.
C
Value of new business sales in 2015.
D
20,591
Reflects the difference between actual operating experience in 2015 (including mortality, morbidity, lapse, and expenses
etc.) and the assumptions.
Investment Experience Variance
Operating Experience Variance
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
31 December
2015
31 December
2014
28,851
21,740
371
464
2,306
E
1,048
23,253
China Life Insurance Company Limited Annual Report 2015
Embedded Value
MOVEMENT ANALYSIS
The following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period.
Table 3
Analysis of Embedded Value Movement in 2015
RMB million
ITEM
AB
Embedded Value at Start of Year
В Expected Return on Embedded Value
Value of New Business in the Period
C
D
31,528
E
2,685
F
4.
10% decrease in investment return
245,077
25,789
5.
10% increase in
expenses
288,643
29,372
6.
10% decrease in expenses
294,454
33,685
7.
37,274
10% increase in mortality rate for non-annuity products
289,720
31,388
8.
10% decrease in mortality rate for non-annuity products
and 10% increase in mortality rate for annuity products
293,398
31,669
9.
10% increase in lapse rates
290,806
30,959
10.
10% decrease in lapse rates
292,199
Compares actual with expected investment returns during 2015.
338,279
and 10% decrease in mortality rate for annuity products
3.
10% increase in investment return
Reflects the effect of projection method, model enhancements and assumption changes.
G
Change in the market value adjustment from the beginning of year 2015 to 31 December 2015 and other related
adjustments.
H
Reflects the gains or losses due to changes in exchange rate.
I
J
233
China Life Insurance Company Limited Annual Report 2015
Embedded Value
SENSITIVITY RESULTS
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:
Table 4
Sensitivity Results
Reflects dividends distributed to shareholders and issuance of Core Tier 2 Capital Securities during 2015.
Other miscellaneous items.
29,953
306,029
Risk discount rate of 10.5%
2.
278,043
Risk discount rate of 11.5%
VALUE OF IN-FORCE
BUSINESS AFTER COST OF
1.
31,528
291,549
Base case scenario
VALUE OF ONE YEAR'S
SALES AFTER COST OF
SOLVENCY MARGIN
RMB million
SOLVENCY MARGIN
33,222
137,990
607,531
53,052
6,333
Securities purchased under agreements to resell
517,283
770,516
21,503
Investment properties
76,096
47,034
207,267
166,453
Statutory deposits - restricted
Other assets
504,075
11,925
690,156
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
2,100,870
6,153
(resigned with effect from 7 March 2016)
28
III ANALYSIS OF MAJOR ITEMS OF CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
(1) Major Assets
As at
RMB million
As at
562,622
31 December 2015 31 December 2014
Term deposits
Held-to-maturity securities
Available-for-sale securities
Securities at fair value through profit or loss
Cash and cash equivalents
Loans
2,287,639
Investment assets
1,237
(appointed as Director with effect from 11 July 2015)
(appointed as Director with effect from 7 March 2016)
160,676
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.
Investment Contracts
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.
1,959,236
2,122,101
47,077
65,200
19,375
16,953
67,989
67,994
2,623
2,643
25,617
30,092
74,745
107,774
46,089
31,354
72,275
84,106
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.
Interest-bearing Loans and Borrowings
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.
21
China Life Insurance Company Limited Annual Report 2015
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
ended 31 December
year
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
1,603,446
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 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
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.
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
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
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.
Management Discussion and Analysis
1,715,985
RMB million
As at
2.81%
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%
130,622
Other equity investments³
3.98%
83,620
7.41%
169,485
Funds
4.52%
94,933
4.87%
111,516
Common stocks
11.23%
236,030
Total
Notes:
1.
2,287,639
As at
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2015
Insurance Contracts
Total
Other liabilities
Deferred tax liabilities
Bonds payable
Interest-bearing loans and borrowings
Annuity and other insurance balances payable
Policyholder dividends payable
Securities sold under agreements to repurchase
Investment contracts
31 December 2015 31 December 2014
Insurance contracts
(2)
20
20
Cash, cash equivalents and others include cash and cash equivalents, and securities purchased under agreements to
resell.
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%
Major Liabilities
RMB million
2015
2014
Risks relating to our business
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.
Risks relating to macro trends
1.
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:
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
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
117
2,931
3,440
70.74% is held
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
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.
(retired upon expiry of the term with effect from 28 May 2015)
(appointed as Director with effect from 11 July 2015)
(appointed as Director with effect from 11 July 2015)
(retired upon expiry of the term with effect from 28 May 2015)
(appointed as Director with effect from 11 July 2015)
(resigned with effect from 8 May 2015)
Robinson Drake Pike
Tang Xin
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
3,400
Independent 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
Mr. Tang Xin, Mr. Chang Tso Tung Stephen, Mr. Xu Haifeng, Mr. Xu Hengping, Mr. Lin Dairen,
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
Non-executive Directors
1,096
6,940
Net Profit
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2015
23
23
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.
294.48%
236,151
80,193
282,820
85,676
330.10%
31 December 2015 31 December 2014
As at
As at
RMB million
Solvency ratio
VI
Actual capital
Minimum capital
SOLVENCY RATIO
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.
25,704
29,062
Net increase in cash and cash equivalents
V
16,704
10
241
(19,415)
(69,257)
67,047
78,247
(18,811)
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:
17.99%
ANALYSIS OF CORE COMPETITIVENESS
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.
Net Assets
Shareholding
Percentage Total Assets
60% 7,608
4,000
Registered
Capital
RMB million
25
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
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
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
China Life Property
and Casualty Insurance
Company Limited
China Life Pension
Company Limited
China Life Asset
Management Company
Limited
Major Business Scope
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.
Company Name
During the Reporting Period, there was no sale of material assets and equity of the Company.
IX
VIII SALES OF MATERIAL ASSETS AND EQUITY
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.
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.
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.
VII MAJOR INVESTMENTS
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
24
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.
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 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 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.
BUSINESS OPERATIONS OF OUR MAIN SUBSIDIARIES AND AFFILIATES
411,623
Equity investments
5.31%
19
China Life Insurance Company Limited Annual Report 2015
Management Discussion and Analysis
Cash and Cash Equivalents
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.
Loans
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.
Investment Properties
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.
As at the end of the Reporting Period, our investment assets are categorized as below in terms of asset
classes:
loss.
RMB million
As at 31 December 2014
Amount
Percentage
Fixed-maturity investments
77.69%
1,804,598
85.90%
Term deposits
562,622
24.59%
1,283
690,156
As at 31 December 2015
Amount
Percentage
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
1,777,180
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
6.60%
150,753
Other fixed-maturity investments²
62,348
2.95%
67,569
Insurance asset management products
44.77%
940,619
43.55%
2.97%
Bonds
Available-for-Sale Securities
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.
996,236
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
111,475
32.85%
Term Deposits
Total
145,697
2,448,315
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
No management or administration contracts for the whole or substantial part of any business of the Company
were entered into during the Reporting Period.
35
China Life Insurance Company Limited Annual Report 2015
Report of the Board of Directors
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.
Independent Directors of the Company have rendered their independent opinions on the Company's external
guarantees, and are of the view that:
(1) during the Reporting Period, the Company did not provide any external
(2)
guarantee;
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
the Company has expressly provided in its Articles of Association the level of authority required for
approving external guarantees and the approval procedures.
20. RESPONSIBILITY STATEMENT OF DIRECTORS ON FINANCIAL REPORTS
19. MATERIAL GUARANTEES
(3)
11. H SHARE STOCK APPRECIATION RIGHTS
15. DIRECTORS' AND SUPERVISORS' RIGHTS TO ACQUIRE SHARES
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.
SHARE CAPITAL
9.
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.
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.
10. PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S SECURITIES
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.
16. DISCLOSURE OF INTERESTS OF DIRECTORS, SUPERVISORS AND THE CHIEF
EXECUTIVE IN THE SHARES OF THE COMPANY
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.
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.
34
China Life Insurance Company Limited Annual Report 2015
Report of the Board of Directors
13. DIRECTORS' AND SUPERVISORS' SERVICE CONTRACTS
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).
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.
12. DAY-TO-DAY OPERATIONS OF THE BOARD
21. BOARD'S STATEMENT ON INTERNAL CONTROL
37
22. MAJOR CUSTOMERS
Beijing, China
23 March 2016
8.
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
ACTIVITIES OF THE SUPERVISORY COMMITTEE
1.
1.
2.
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
By Order of the Board
Yang Mingsheng
Chairman
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.
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.
46.00
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.
23. SUFFICIENCY OF PUBLIC FLOAT
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.
24. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
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.
36
China Life Insurance Company Limited Annual Report 2015
Report of the Board of Directors
25. 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.
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.
Remuneration paid by China Life Insurance Company Limited to the auditors in 2015 was as follows:
Service/Nature
Fees (RMB million)
Financial report audit fee
Internal control audit fee
11.50
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.
7.
The total amount of charitable donations made by the Company during the Reporting Period was approximately
RMB99 million.
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.
31
China Life Insurance Company Limited Annual Report 2015
Report of the Board of Directors
(II)
In accordance with Article 212 of the Articles of Association, the Company's profit distribution policy is as
follows:
1.
2.
3.
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.
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.
(III) In accordance with Article 213 of the Articles of Association, the procedures of reviewing the Company's
profit distribution proposal is as follows:
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.
32
2.
(IV) Profit distribution plan and public reserves capitalization plan
China Life Insurance Company Limited Annual Report 2015
Report of the Board of Directors
(I)
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:
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.
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.
China Life Insurance Company Limited Annual Report 2015
Report of the Board of Directors
1.
2.
PRINCIPAL BUSINESS
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.
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 of “Management Discussion and
Analysis" in this annual
report.
(II) Environmental policies and performance 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.
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.
1.
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.
China Life Insurance Company Limited Annual Report 2015
Report of the Board of Directors
(III) Compliance by the Company with the relevant laws and regulations that have a significant impact
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.
(IV) Relationship between the Company and its customers
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.
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.
30
China Life Insurance Company Limited Annual Report 2015
Report of the Board of Directors
3.
(V) Relationship between the Company and its employees
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.
29
PROPERTY, PLANT AND EQUIPMENT
Profit distribution plan or public reserves capitalization plan for the
of 2015
2013
4.2
4.0
3.0
33
33
distributed
11,871
34,699
34%
11,306
32,211
2014
35%
24,765
34%
China Life Insurance Company Limited Annual Report 2015
Report of the Board of Directors
4.
5.
6.
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
8,479
2015
statements
financial
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.
No public reserve capitalization is provided for in the profit distribution plan for the current financial
year.
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.
The dividend distribution of the Company for the recent 3 years is as follows:
Year in which
dividends were
distributed
Amount of
Transfer of
public reserve
Number of
dividends per
bonus stocks
per
ten shares (shares)
ten shares (RMB)
into share
capital per
Amount of
cash dividends
(inclusive of tax)
(inclusive of tax) ten shares (shares)
Net profit
attributable to
equity holders of
the Company in
the consolidated
financial
statements for
Unit: RMB million
Percentage of
amount of cash
dividends
in net profit
attributable to
equity holders
of the Company
the year in which in the consolidated
dividends were
year
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.
48
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.
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.
Significant Events
II.
MATERIAL LITIGATIONS OR ARBITRATIONS
During the Reporting Period, the Company was not involved in any material litigation or arbitration.
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 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.
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 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.
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.
China Life Insurance Company Limited Annual Report 2015
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.
China Life Insurance Company Limited Annual Report 2015
Significant Events
1.
Policy Management Agreement
2.
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.
41
23 March 2016
Beijing, China
Chairman of the Supervisory Committee
China Life Insurance Company Limited Annual Report 2015
Report of the Supervisory Committee
2.
4.
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.
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.
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
Miao Ping
For the year ended 31 December 2015, the Company paid AMC an asset management fee of
RMB1,020 million.
42
I.
(2) Asset Management Agreement between CLIC and AMC
For the
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
(1) Framework Agreement between the Company and CLWM
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.
47
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
China Life Insurance Company Limited Annual Report 2015
Significant Events
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
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.
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.
(2) Framework Agreement between Pension Company and AMP
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.
Significant Events
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.
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.
For the year ended 31 December 2015, CLIC paid AMC an asset management fee of RMB133
million.
43
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.
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
(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
4.
3.
China Life Insurance Company Limited Annual Report 2015
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,
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.
45
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
(1) Framework Agreement between the Company and AMP
thousands
changes
the year
the year
Gender Age Term
Position
Name
connected
ten thousands
in RMB ten
paid/fee in
beginning of at the end of Reason for
from the
Company Period in RMB
held at the shares held
emolument
Reporting
paid by the
of shares Number of
thousands
Remuneration
RMB ten
(before tax)
Lin Dairen
Yang Mingsheng
received
Male
Executive Director
Xu Hengping
No
71.18
31.40
39.78
0
0
Male 57 Since 27 October 2008
Executive Director
No
60.19
16.67
43.52
0
0
Since 22 May 2012
Male 60
Chairman,
Executive Director
parties
during the
0
Number
The letter "L" denotes a long position. The letter “S” denotes a short position. The letter “P” denotes interest in a lending pool.
1.62%
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)
57
56
China Life Insurance Company Limited Annual Report 2015
Changes in Ordinary Shares and Shareholders Information
(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.
Whether
the Company
and enterprise
received from
provident fund
emoluments
housing
Total
social insurance,
Other benefits,
annuity fund
1.
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.
I
Since 11 July 2015
Chang Tso Tung Stephen
19.67
0
44 Since 7 March 2016
Male
Independent Director
Tang Xin
16.00
0
16.00
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
68.37%
0
30.00
0
2 3 3 3 3 3 2 3
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.
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.
2.
1.
Notes:
272.07
0
0
Total
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
No
0
0
0
0
Zhang Xiangxian
0
0
0
0
0
Since 27 October 2008
51
Non-executive Director Male
Miao Jianmin
31.24
11.57
19.67
Since 11 July 2015
56
Male
Executive Director
Xu Haifeng
No
31.46
11.79
Non-executive Director Male
30.00
60
0
Since 21 June 2010
69
Male
Independent Director
Anthony Francis Neoh
0
0
0
0
Since 11 July 2015
53
Male
Non-executive Director
0
Since 24 July 2012
54
Male
Non-executive Director
Wang Sidong
Liu Jiade
0
0
Since 24 July 2012
92.80%
Other
Beneficial owner
CHANGES IN SHARE CAPITAL
2.
1.
Changes in Ordinary Shares and Shareholders Information
China Life Insurance Company Limited Annual Report 2015
53
53
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.
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.
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.
During the Reporting Period, there was no change in the total number of shares and the share capital of the
Company.
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.
ISSUE AND LISTING OF SECURITIES
INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER
Number of shares
subject to selling
during the
Reporting Period
Number of shares
Increase/decrease
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.
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.
restrictions
The Company neither gave external guarantees nor provided guarantees to its subsidiaries during the
Reporting Period.
4.
(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
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:
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) the transactions were conducted on normal commercial terms;
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.
(3)
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
3.
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
2.
1.
(II) Other Major Connected Transactions
China Life Insurance Company Limited Annual Report 2015
Significant Events
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.
(4)
A Shares 19,323,530,000 (L)
pledged or frozen
State-owned legal person
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.
2.
Details of shareholders
2.
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.
Changes in Ordinary Shares and Shareholders Information
China Life Insurance Company Limited Annual Report 2015
1.
54
Securities Investment Fund²
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.)
Limited-SSE 50 Exchange Traded Index
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.
55
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
Class of shares
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:
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
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.
China Life Insurance (Group) Company
+1,675,837
0.04%
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
+19,573,721
520,692,410 +489,145,438
1.84%
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%
China National Nuclear Corporation³
11,996,529
China International Television Corporation
0.07%
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.
Industrial and Commercial Bank of China
Equity Securities Investment Fund
Credit Suisse Internet Plus Stock
+12,903,409
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%
State-owned legal person
20,000,000
State-owned legal person
58
0
0
Male
Independent
Director
Huang Yiping
28 May 2015
13.33
0
333
13.33
0
4 June 2009-
66
Male
Independent
Director
Bruce Douglas
Moore
May 2015
December 2009-
Vice President
28 May 2015
39.12
19.45
19.67
0
0
52
20 October 2014 -
0
0
Female 51 24 July 2012-
11 July 2015
Representative
Supervisor
Employee
Yang Cuilian
430
44.30
21.35
22.95
25
001
16 March 2006 -
11 July 2015
57 1 July 2014-
the Supervisory
Committee
Chairperson of
Xia Zhihua
7 March 2016
No Resigned according to relevant policies
Board
No Retired due to the expiration of session of the
Retired due to adjustment of work
arrangements
No Retired due to the expiration of session of the
Board
32.00
0
32.00
Female 61
Executive Director Male
Miao Ping
8 May 2015
the beginning the end of the
from the
Company Period in RMB
paid/fee in
share held at share held at
emolument
Reporting
paid by the
Remuneration
Number of Number of
received
Reason for
during the
Whether
and enterprise the Company
provident fund received from
housing emoluments
Total
insurance,
Other
benefits, social
RESIGNATION AND RETIREMENT OF DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
4.
annuity fund
0
RMB ten
connected
August 2008-
Vice President
arrangements
8 May 2015
Yes Resigned due to adjustment of work
26.28
13.17
13.11
0
0
1 July 2014-
in RMB ten ten thousands
53
Su Hengxuan
Reason for changes
parties
(before tax)
thousands
thousands
changes
year
of the year
Previous Position Gender Age Term
Name
Executive Director Male
0
67.76
21.82
Mr. Robinson Drake Pike, born in 1951, American
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
65
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.
Mr. Chang Tso Tung Stephen, born in 1948, 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. Anthony Francis Neoh, born in 1946, Chinese
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
64
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.
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.
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.
Mr. Wang Sidong, born in 1961, 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. Zhang Xiangxian, born in 1955, Chinese
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
69
63
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.
Mr. Miao Jianmin, born in 1965, 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. Liu Jiade, born in 1963, Chinese
Mr. Xu Haifeng, born in 1959, Chinese
Mr. Tang Xin, born in 1971, Chinese
66
68
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.
Mr. Li Mingguang, born in 1969, Chinese
Mr. Xu Haifeng, please see the section “Directors” for his profile.
Mr. Xu Hengping, please see the section “Directors” for his profile.
Mr. Lin Dairen, please see the section "Directors" for his profile.
SENIOR MANAGEMENT
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.
Ms. Wang Cuifei, born in 1964, 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.
Mr. Zhan Zhong, born in 1968, 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.
e
China Life Insurance Company Limited Annual Report 2015
67
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.
Ms. Xiong Junhong, born in 1968, 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.
Mr. Shi Xiangming, born in 1959, 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. Miao Ping, born in 1958, Chinese
SUPERVISORS
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
Directors, Supervisors, Senior Management and Employees
60
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.
2
0
9.84
0
0
March 2013-
March 2015
52
Male
Vice President
Liu Anlin
market
45
18.07
94.76
39
73.28
2,000 Bought from
the secondary
0
Male 45 24 July 2012 -
11 July 2015
Representative
Supervisor
Employee
Li Xuejun
No Retired due to the expiration of session of the
Supervisory Committee
No Retired due to the expiration of session of the
Supervisory Committee
89.58
21.48
Mr. Xu Hengping, born in 1958, Chinese
Huang Xiumei
Female 48
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
662
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.
Mr. Lin Dairen, born in 1958, 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. Yang Mingsheng, born in 1955, Chinese
DIRECTORS
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
61
Financial
Controller
429.98
0
Total
arrangements
No Retired due to adjustment of work
Yes Resigned due to adjustment of work
arrangements
No Retired due to the expiration of session of the
Supervisory Committee
72.54
35.85
36.69
0
December 2014 -
February 2016
2,000
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.
8.23
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.
No
82.18
13.75
68.43
0
Since 11 July 2015
Male 47
Employee Representative
Zhan Zhong
Yes
0
0
0
0
0
Since 20 October 2014
Female 47
Supervisor
Xiong Junhong
No
160.35
34.21
126.14
Supervisor
Wang Cuifei
Employee Representative Female 52 Since 11 July 2015
0
3. CURRENT SENIOR MANAGEMENT
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2015
59
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.
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.
0
2.
343.76
0
0
Notes:
Total
Supervisor
No
69.56
13.65
55.91
0
1.
0
Since 25 May 2009
56
Reporting
emolument
held at the shares held
paid/fee in
Company Period in RMB
from the
beginning of at the end of
Reason for
RMB ten
in RMB ten ten thousands
connected
paid by the
Name
Gender Age Term
the year the year
changes
thousands
thousands
(before tax)
parties
Miao Ping
Chairman of the
Male 57 Since 11 July 2015
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.
Position
Other benefits,
social insurance,
Remuneration
received
Male
Supervisor
Shi Xiangming
Supervisory Committee
No
31.67
12.00
19.67
2.
China Life Insurance Company Limited Annual Report 2015
Directors, Supervisors, Senior Management and Employees
of shares Number of
Other benefits,
Total
housing
emoluments
provident fund
received from
and enterprise
the Company
Whether
Number
annuity fund
during the
social insurance,
Total
CURRENT SUPERVISORS
emoluments
No
70.60
31.26
39.34
0
0
Male 45 Since November 2014
Vice President
Yang Zheng
March 2012
Chief Actuary since
Xiao Jianyou
Zheng Yong
Total
November 2014 and
No
70.03
30.69
39.34
0
0
Male 46 As Vice President since
Vice President,
Li Mingguang
No
70.20
Chief Actuary
30.86
Assistant President
47
3.
housing
2.
1.
Notes:
456.20
0
0
No
71.35
34.66
Male
36.69
0
Since June 2013
53
Male
Board Secretary
No
33.06
14.71
18.35
0
Since July 2015
0
39.34
0
0
Position
Name
connected
ten thousands
in RMB ten
Reason for paid in RMB
the end of
beginning of
from the
Company Period in RMB
Remuneration
Gender Age Term
emolument
paid by the
of share Number of
received
during the
annuity fund
Number
Whether
the Company
0
and enterprise
provident fund received from
Reporting
the year
held at the share held at
changes ten thousands
Xu Haifeng
the year
No
Male 56 Since November 2014
69.78
30.44
39.34
0
Vice President
Since November 2014
Male 57
Vice President
0
President
(before tax)
Xu Hengping
parties
Lin Dairen
Male 57
thousands
39.78
31.40
71.18
No
Since April 2014
Shareholders'
General Meeting
Corporate Governance
China Life Insurance Company Limited Annual Report 2015
OVERVIEW OF CORPORATE GOVERNANCE
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.
Decision Committee
Risk
Management
Committee
Supervisory
Committee
Audit Committee
Nomination and
Remuneration
Committee
Board Secretary
Board Secretariat/Company Secretary
Strategy and
Investment
Board of Directors
72
52,264
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.
Others
(Corporate Governance Structure Chart)
Secondary School
Total
Number of Employees
3,480
72
34,918
5,240
98,823
Remuneration Policy
The Company has established a remuneration and incentive system with reference to employee's positions,
the Company's performance and market conditions.
3.
Training Plans
2,921
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.
SHAREHOLDERS' GENERAL MEETING
2.
28 May 2015
College Diploma
Date of publication
of resolutions
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.
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.
1.
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.
Bachelor
the HKSE.
Education Level
Since June 2004
Since August 2014
Since June 2013
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
III
770
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 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.
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.
First Extraordinary General
Meeting 2015
Mr. Yang Zheng, born in 1970, Chinese
70
EMPLOYEES
1.
Employees
(2) Education Level
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
Number of employees of the Company
97,607
Number of employees of the Company's major subsidiaries
1,216
Employees in total
98,823
Master or above
Retired employees of the Company and its major subsidiaries for which extra costs have to be incurred
(1)
Structure of Expertise
Class of Expertise
Management and administration
Sales and sales management
Finance and auditing
As at the end of the Reporting Period, the composition of the employees of the Company and its major
subsidiaries is as follows:
29 December 2015
Robinson Drake Pike
29 May 2015
50%
1
0
0
1
2
Independent Director
Chang Tso Tung
100%
0
0
0
2
2
Huang Yiping
Independent Director
100%
0
0
0
1
1
Non-executive Director
Liu Jiade
50%
1
0
0
1
2
Anthony Francis Neoh
Independent Director
2
0
Directors, Supervisors, Senior Management and Employees
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.
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.
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
0
0
2
0
Independent Director
1
Non-executive Director
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
76
0
Wang Sidong
0
2
100%
0
0
0
2
2
Executive Director
Executive Director
Yang Mingsheng
Lin Dairen
rate
absent
by proxies
telephony
attended
meetings Attendance
attended
Number of
meetings
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
China Life Insurance Company Limited Annual Report 2015
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.
2
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
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1
0
0
0
0
2
Non-executive Director
Zhang Xiangxian
50%
1
0
0
1
2
Non-executive Director
Miao Jianmin
100%
0
0
1
50%
Xu Hengping
Executive Director
1
1
0
0
0
100%
Xu Haifeng
Executive Director
1
0
0
China Life Insurance Company Limited Annual Report 2015
Stephen
Corporate Governance
Note 4
Wang Sidong
Yes
50%
0
2
0
2
4
Non-executive Director
Zhang Xiangxian
Note 3
Yes
Non-executive Director
50%
2
0
2
4
Non-executive Director
Note 2
Miao Jianmin
No
100%
0
0
0
3
0
3
4
0
0
0
0
4
Independent Director
Chang Tso Tung Stephen
No
100%
0
0
0
4
4
3
Independent Director
No
67%
0
0
2
Note 5
3
Non-executive Director
Liu Jiade
No
75%
0
1
Anthony Francis Neoh
100%
Executive Director
No
telephony
attended
the year
Type of Director
Name of Director
meetings
meetings Attendance
consecutive
Number of
meetings
attended by
attended by
physically
attend during
proxies
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;
meetings
Xu Haifeng
absent
in
100%
0
0
0
3
3
Executive Director
Xu Hengping
No
100%
0
0
0
rate
4
Executive Director
Lin Dairen
No
75%
0
1
0
3
4
Executive Director
Yang Mingsheng
Note 1
person
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;
No
Independent Director
During the Reporting Period, no Independent Director has raised any objection against the proposals and matters
considered by the Board of the Company.
81
China Life Insurance Company Limited Annual Report 2015
Corporate Governance
CHAIRMAN AND PRESIDENT
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.
SUPERVISORY COMMITTEE
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.
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.
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.
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.
82
China Life Insurance Company Limited Annual Report 2015
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.
Corporate Governance
1.
Meetings and attendance
In 2015, 2 meetings were held by the fourth session of the Supervisory Committee. Attendance records of
individual Supervisors are as follows:
Name of Supervisor
Xia Zhihua
Shi Xiangming
Yang Cuilian
Li Xuejun
Xiong Junhong
Number of meetings attended
Attendance rate
2/2
100%
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.
2/2
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.
3
3
0
0
0
100%
No
Notes:
1.
2.
3.
4.
5.
Independent Director
6.
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;
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;
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;
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;
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 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. Huang Yiping gave written
authorization for Mr. Anthony Francis Neoh to act as his proxy to attend and vote at the meeting.
80
China Life Insurance Company Limited Annual Report 2015
Corporate Governance
2.
Performance of duties by Independent Directors
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.
7.
Huang Yiping
100%
1/2
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.
The Supervisory Committee had no objection in respect of any matters under its supervision
during the Reporting Period.
Activities of the Supervisory Committee during the Reporting Period
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.
83
China Life Insurance Company Limited Annual Report 2015
Corporate Governance
AUDIT COMMITTEE
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.
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.
1.
Meetings and attendance
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:
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;
Name of member
Number of meetings attended
Attendance rate
Bruce Douglas Moore
Independent Director, Chairman of the Audit
Committee of the fourth session of the Board
2/2
Robinson Drake Pike
No
75%
0
2
4
Note 7
Note 6
Position
Note
2.
3.
50%
2/2
100%
2/2
100%
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.
In 2015, 4 meetings were held by the fifth session of the Supervisory Committee. Attendance records of individual
Supervisors are as follows:
Name of Supervisor
Miao Ping
Shi Xiangming
Xiong Junhong
Zhan Zhong
Wang Cuifei
Number of meetings attended
1.
Attendance rate
100%
3/4
Note 1
75%
4/4
100%
4/4
100%
Note 2
3/4
75%
Notes:
2.
4/4
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;
China Life Insurance Company Limited Annual Report 2015
3.
1/2
Note
50%
Nomination and Remuneration Committee
of the fifth session of the Board
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
and vote at the meeting.
87
China Life Insurance Company Limited Annual Report 2015
Corporate Governance
2.
Performance of duties by the Nomination and Remuneration Committee
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.
Non-executive Director, member of the
(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.
(3)
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.
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.
RISK MANAGEMENT COMMITTEE
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.
88
0
1
2
Note 3
Non-executive Director
Wang Sidong
Miao Jianmin
Zhang Xiangxian
(2)
No
Miao Jianmin
Nomination and Remuneration Committee
Nomination and Remuneration Committee
of the fourth session of the Board
Bruce Douglas Moore
Independent Director, member of the
2/2
100%
Nomination and Remuneration Committee
of the fourth session of the Board
Miao Jianmin
Non-executive Director, member of the
2/2
100%
Nomination and Remuneration Committee
of the fifth session of the Board
of the fourth session of the Board
Name of member
Position
Chang Tso Tung Stephen Independent Director, Chairman of the
Number of meetings attended
Attendance rate
2/2
100%
Nomination and Remuneration Committee
of the fifth session of the Board
Robinson Drake Pike
Independent Director, member of the
1/1
100%
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:
100%
100%
0
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:
Number of
meetings the
Director was
required to
attend during
Whether the
Director failed
Number of
Number of
Number of
to attend two
meetings
meetings
physically
attended by
meetings
attended by
Meetings and attendance
Number of
Attendance
consecutive
meetings
Name of Director
Type of Director
the year
attended
telephony
proxies
absent
rate
in person
Note 1
4.
meetings
0
1.
Yang Mingsheng
Lin Dairen
0
2
No
50%
0
1
0
1
Note 2
No
100%
0
0
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.
0
No
50%
0
1
0
1
2222
Executive Director
Miao Ping
Executive Director
Su Hengxuan
Executive Director
Executive Director
2
2/2
88
Number of meetings attended
0
2
2
Independent Director
Bruce Douglas Moore
No
50%
0
1
0
1
Note 4
No
0
100%
0
0
2
22
Non-executive Director
Non-executive Director
No
50%
0
1
100%
Chang Tso Tung Stephen Independent Director, member of the Audit
22
0
0
100%
No
2.
1.
Notes:
No
100%
0
0
0
2
2
Independent Director
No
100%
0
0
0
2
2
Independent Director
Chang Tso Tung Stephen
Huang Yiping
Attendance rate
100%
0
0
0
2
2
Independent Director
Anthony Francis Neoh
2/2
100%
No
Huang Yiping
(2)
(3)
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.
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.
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.
85
85
China Life Insurance Company Limited Annual Report 2015
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 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.
(5)
(6)
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.
(1)
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.
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.
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.
86
China Life Insurance Company Limited Annual Report 2015
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.
1.
Meetings and attendance
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:
Name of member
Committee of the fourth session of the Board
Chang Tso Tung Stephen Independent Director, Chairman of the
Position
NOMINATION AND REMUNERATION COMMITTEE
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.
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.
2.
42
2/2
Performance of duties by the Audit Committee
Independent Director, member of the Audit
100%
Committee of the fourth session of the Board
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:
Name of member
Number of meetings attended
Attendance rate
Robinson Drake Pike
Independent Director, Chairman of the Audit
Committee of the fifth session of the Board
3/3
100%
Position
3/3
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.
Chang Tso Tung Stephen Independent Director, member of the Audit
China Life Insurance Company Limited Annual Report 2015
Committee of the fifth session of the Board
84
2/3
Note
67%
Independent Director, member of the Audit
Huang Yiping
Corporate Governance
Committee of the fifth session of the Board
100%
601628
China Life
2628
LFC
V. OTHER RELEVANT INFORMATION
The Stock Exchange of
Hong Kong Limited
New York Stock
Exchange
H Share Registrar and
International Legal Advisers
Depositary of ADR
Domestic Legal Adviser
Auditors of the Company
Computershare Hong Kong
Investor Services Limited
Address: Shops 1712-1716, 17th Floor, Hopewell
Centre, 183 Queen's Road East, Wanchai, Hong
Kong
Shanghai Stock Exchange
King & Wood Mallesons
Deutsche Bank
Transfer Office
Stocks are Listed
The Company's Annual
Reports may be obtained at
Stock Short Name
5
Latham & Watkins
Domestic Auditor
Prelude
III. INFORMATION DISCLOSURE AND PLACE FOR OBTAINING THE REPORT
Media for the Company's
A Share Disclosure
CSRC's Designated
Website for the Company's
Annual Report Disclosure
The Company's H Share
Disclosure Websites
China Securities Journal, Shanghai Securities News, Securities Times
www.sse.com.cn
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
A Share
H Share
ADR
Exchanges on which the
Stock Code
Ernst & Young Hua Ming LLP
Address: Level 16, Ernst
& Young Tower, Oriental
Plaza, No.1 East Changan
Avenue, Dongcheng
District, Beijing, P.R.
China
S
Auditors: Zhang Xiaodong,
Wu Jun
Annual Report 2017
7
Prelude
Business Highlights
Gross written premiums
RMB511,966 million
a year-on-year increase of 18.9%
$
First-year regular premiums
RMB113,121 million
a year-on-year increase of 20.4%
First-year regular premiums with ten
years or longer payment duration
RMB66,003 million
a year-on-year increase of 28.5%-
Renewal premiums
RMB288,106 million
a year-on-year increase of 28.9%
8 China Life Insurance Company Limited Annual Report 2017
China Life Insurance Company Limited Annual Report 2017
China Life Insurance Company Limited
Name of the Signing
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.
and stable
Address: 60 Wall Street, New York, NY 10005
Debevoise & Plimpton LLP
International Auditor
Ernst & Young
Address: 22/F, CITIC Tower, 1 Tim Mei
Avenue, Central, Hong Kong
6
China Life Insurance Company Limited Annual Report 2017
Core Competitiveness
Prelude
Long
history
and
excellent
brand
Prominent
principal
business
and solid
financial
strength
Well-
established
network
and leading
technologies
Profound
and extensive
customer base
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.
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.
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.
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.
Professional
core team
*Ms. Li Yinghui, Securities Representative
of the Company, is also the main contact
person of the external Company Secretary
engaged by the Company
China Life
86-10-66575112
8
10
Prelude
Definitions and Material Risk Alert
In this annual report, unless the context otherwise requires, the following expressions have the following meanings:
The Company'
CLIC
AMC
Pension Company
AMP
CLWM
CLP&C
7
CLI
CSRC
HKSE
SSE
Company Law
Insurance Law
Securities Law
Articles of Association
China or PRC
RMB
China Life Insurance Company Limited and its subsidiaries
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
CIRC
China Life Pension Company Limited, a non-wholly owned subsidiary of
the Company
Financial Summary
Core Competitiveness
liyh@e-chinalife.com
中国人寿保险股份有限公司
China Life Insurance Company Limited
Stock Code: 2628
Annual Report 2017
Contents
Prelude
3
Chairman's Statement
11
Management Discussion and Analysis
19
Business Highlights
Embedded Value
Significant Events
52
Corporate Governance
Other Information
135
Financial Report
142
Prelude
Definitions and Material Risk Alert
4
5
Company Profile
44
China Life AMP Asset Management Company Limited, an indirect non-
wholly owned subsidiary of the Company
70
China Life Property and Casualty Insurance Company Limited, a non-
wholly owned subsidiary of CLIC
Fax
Email
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
16 Financial Street, Xicheng District, Beijing, P.R. China
100033
16 Financial Street, Xicheng District, Beijing, P.R. China
100033
86-10-63633333
86-10-66575722
www.e-chinalife.com
16/F, Tower A, China Life Centre, One Harbour Gate, 18 Hung Luen Road,
Hung Hom, Kowloon, Hong Kong
Telephone
852-29192628
II. CONTACT INFORMATION
Board Secretary
Li Mingguang
16 Financial Street, Xicheng District,
Beijing, P.R. China
86-10-63631241
86-10-66575112
ir@e-chinalife.com
Securities Representative
Li Yinghui
16 Financial Street, Xicheng District,
Beijing, P.R. China
86-10-63631191
China Life Wealth Management Company Limited, an indirect non-wholly
owned subsidiary of the Company
852-29192638
Office Address
ir@e-chinalife.com
Fax
China Insurance Regulatory Commission
China Life Investment Holding Company Limited, a wholly-owned
subsidiary of CLIC
Name
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
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
Material Risk Alert:
Except for "the Company" referred to in the Consolidated Financial Statements.
4
China Life Insurance Company Limited Annual Report 2017
Company Profile
Prelude
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".
Email
Hong Kong Office Address
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.
Website
Fax
Telephone
Telephone
Postal Code
Registered Name in English
Legal Representative
Registered Office Address
Postal Code
Registered Name in Chinese
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.
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.
Current Office Address
parties
for
RMB ten
Company
paid/fee
Number of Number of
shares held at shares held
the beginning at the end
of the year of the year changes
connected
Period in
by the
Remuneration
in RMB ten in RMB ten
Term
Reason
thousands
136.46
thousands thousands (before tax)
Company
Miao Ping
Chairman of the
Male
April 1958
Since 11 July 2015
0
0
114.80
21.66
No
Gender Date of Birth
Supervisory Committee
of the
Position
1.
from
Total
0
0
558.00
Notes:
Shi Xiangming
2.
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.
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.
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.
4.
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.
Reporting
fund paid
annuity during the emolument
enterprise Company received
the Whether
from
Name
fund and
housing received
insurance, emoluments
social Total
benefits,
Other
(II) Current Supervisors
provident
Supervisor
Since 15 March 2018
November 1959 Since 25 May 2009
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.
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.
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.
(III) Current Senior Management
Corporate Governance
Other
benefits,
social
insurance,
Total
Term
Gender Date of Birth
Position
Name
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
Remuneration
459.65
for
share held Reason
the beginning
Number of Number of
share held at
mally
fund from the
and Company Whether
housing emoluments
provident received
at the end
0
0
Total
0
0
0
0
Since 11 February 2018
March 1974
0
Male
Luo Zhaohui
Wang Cuifei
No
157.61
32.24
125.37
0
Supervisor
Male
Yes
Employee Representative Female January 1964
Supervisor
Employee Representative Male
Supervisor
90
90
No
0
0
Yes
Song Ping
June 1964
165.58
31.41
134.17
0
0
Since 11 July 2015
No
30.00
0
30.00
in RMB ten in RMB ten
thousands
of the
Name
Position
Gender Date of Birth
Term
of the year of the year changes
thousands
thousands
(before tax)
Company
Yang Mingsheng
Chairman of the Board, Male
for
August 1955
0
0
0
0
Yes
Executive Director
Lin Dairen
Executive Director
Male
Xu Hengping
Xu Haifeng
Yuan Changqing
Executive Director
Male
June 1958
November 1958
Since 27 October 2008
Since 22 May 2012
parties
RMB ten
Company
of the year
of work
Directors, Supervisors, Senior Management and Employees
I. DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
(I) Current Directors
Other
benefits,
social Total
Corporate Governance
insurance, emoluments
housing
received
provident
from
fund and
the
Whether
paid/fee
Reason
held at the shares held
beginning at the end
connected
Period in
by the
0
Remuneration
Reporting from
fund paid
Number
annuity during the emolument
received
enterprise Company
of shares Number of
0
140.00
21.88 161.88
Chang Tso Tung Stephen Independent Director
Male
November 1948
Since 20 October 2014
32.00
32.00
Yes
Robinson Drake Pike
Independent Director
Male
October 1951
Since 11 July 2015
32.00
0
32.00
No
Tang Xin
0
Since 20 July 2016
April 1939
Female
Independent Director
Leung Oi-Sie Elsie
Yes
Yes
0
32.00
Since 7 March 2016
September 1971
Male
Independent Director
32.00
0
0
0
No
Since 11 July 2015
0
113.40
21.66 135.06
No
Executive Director
Non-executive Director Male
Male
May 1959
Since 11 July 2015
0
21.66 135.06
No
September 1961
Since 11 February 2018
0
0
0
Since 31 July 2017
July 1965
Non-executive Director Male
Yin Zhaojun
Yes
0
0
Since 31 July 2017
June 1965
Non-executive Director Male
Liu Huimin
Yes
0
0
113.40
to adjustment
Corporate Governance
0
0
0
0
December 1961 24 July 2012
Non-executive Male
Director
Wang Sidong
Yes Resigned due
to adjustment
00/000 Ye
-7 April 2017
Director
27 October 2008
Non-executive Male January 1965
Miao Jianmin
Company changes
thousands thousands (before tax)
of the year changes
RMB ten
parties
Name
Previous
Position
the beginning
at the end
-12 January 2018
for
Since March 2018
thousands
of the Reason for
Gender Date of Birth
Term
of the year
in RMB ten in RMB ten
Company
of work
Yes Resigned due
21.71
135.11
No
Since October 2016
0
112.00
21.71
133.71
No
Yes Resigned due
arrangements
of work
adjustment
0
0
0
-23 February 2018
to adjustment
of work
arrangements
Liu Jiade
Non-executive Male Feburary 1963 11 July 2015
0
arrangements
0
0
0
Yes Resigned
Director
-8 August 2017
Xiong Junhong Supervisor Female December 1968 20 October 2014
0
paid
Reason
share held
Total
0
0
10.33
43.00
No
No
1,038.79
annuity
received
enterprise Company
Whether
from the
fund and
provident received
housing emolument
Total
91
Corporate Governance
Notes:
1.
2.
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.
0
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.
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.
92
China Life Insurance Company Limited Annual Report 2017
(IV) Resignation and Retirement of Directors, Supervisors and Senior Management
Other
benefits, social
insurance,
3.
0
Since March 2018
27
5.54
26.25
0
0
during the emolument
Salary/
31.79
fund
Number of
Number of
Remuneration paid by the
Period in
from
connected
share held at
Reporting
113.40
No
0
32.67
0
0
Since August 2017
Male
April 1968
Female February 1967
Operation Director
Refer to the Notes
Yang Hong
Zhan Zhong
approval of CIRC)
subject to the
(his qualification is
No
98.00 29.94 127.94
Marketing Director
Since July 2016
July 1963
Male September 1968
April 1972
July 1966
Male
Mr. Lin Dairen, born in 1958, Chinese
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.
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
49.39
Representative
Director
-2 January 2018
Zheng Yong Board Secretary Male
November 1962 5 June 2013
00/35.00
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.
10.39
-27 April 2017
Total
0
to adjustment
of work
arrangements
No Resigned due
45.39
11.47
94
China Life Insurance Company Limited Annual Report 2017
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
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.
Mr. Robinson Drake Pike, born in 1951, American
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.
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
Mr. Xu Hengping, born in 1958, 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, 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.
Corporate Governance
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 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.
China Life Insurance Company Limited
94
Annual Report 2017
Corporate Governance
Mr. Yuan Changqing, born in 1961, 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. Liu Huimin, born in 1965, Chinese
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.
96
95
Annual Report 2017
37.92
0
May 1959
Since November 2014
0
0
113.40
21.66
135.06
No
Li Mingguang
Vice President,
Male
July 1969
Appointed as Vice
113.40
21.84 135.24
No
Chief Actuary,
Vice President
Ruan Qi
Male
Vice President
Vice President
Zhao Peng
Xiao Jianyou
Male
Male
Zhao Lijun
Secretary since June 2017
since March 2012, Board
2014, Chief Actuary
Board Secretary
President since November
Vice President
0
Vice President
No
Zhan Zhong Employee Male April 1968
11 July 2015
0
79.67
20.82
100.49
arrangements
No Resigned due
-21 August 2017
Director
Li Guodong
Employee
Male April 1965
31 August 2017
Representative
Xu Haifeng
of the year changes
President
21.66 135.06
113.40
0
0
November 1958 Since November 2014
Male
Lin Dairen
Vice President
No
21.88 161.88
140.00
Since April 2014
June 1958
Male
Xu Hengping
China Life Insurance Company Limited
IV. EMPLOYEES
(I) Employees
Corporate Governance
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
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
The Company has established a remuneration and incentive system with reference to employee's positions,
the Company's performance and market conditions.
(Corporate Governance Structure Chart)
Corporate Governance
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.
2.
Yin Zhaojun
Luo Zhaohui
China Life Insurance (Group) Company
China Life Insurance (Group) Company
Vice Chairman, President
Vice President
Vice President
Deputy General Manager of
Strategic Planning Department
Since March 2012
Since May 2017
Since September 2013
Since October 2016
Since July 2016
Corporate Governance
1.
2.
3.
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.
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.
China Life Insurance Company Limited
Annual Report 2017
105
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.
1.
Term
(II) Remuneration Policy for Employees
4,060
Total
Others
Other expertise and technicians
Insurance verification, claim processing and customer services
Finance and auditing
Sales and sales management
Management and administration
Class of Expertise
Structure of Expertise
1.
As at the end of the Reporting Period, the composition of the employees of the Company and its major
subsidiaries is as follows:
14
Retired employees of the Company and its major subsidiaries for which extra costs have to be incurred
102,297
Employees in total
1,377
Number of employees of the Company's major subsidiaries
100,920
Number of employees of the Company
China Life Insurance Company Limited Annual Report 2017
102,297
Number of Employees
38,859
2,347
31,861
59,810
4,219
Total
Others
Secondary School
College Diploma
Bachelor
Master or above
Number of Employees
Education Level
Education Level
2.
102,297
3,943
4,106
27,960
5,122
22,307
Position
Chairman
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.
Liu Huimin
Mr. Zhao Lijun, born in 1963, 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. Li Mingguang, born in 1969, Chinese
Mr. Xu Haifeng, please see the section “Directors” for his profile.
Mr. Xu Hengping, please see the section “Directors” for his profile.
Mr. Lin Dairen, please see the section “Directors” for his profile.
SENIOR MANAGEMENT
Corporate Governance
China Life Insurance Company Limited Annual Report 2017
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. Song Ping, born in 1964, Chinese
100
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.
Ms. Wang Cuifei, born in 1964, Chinese
Corporate Governance
96
99
China Life Insurance Company Limited Annual Report 2017
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.
Mr. Luo Zhaohui, born in 1974, 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 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. Shi Xiangming, born in 1959, Chinese
Corporate Governance
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.
China Life Insurance (Group) Company
China Life Insurance (Group) Company
China Life Insurance (Group) Company
SUPERVISORS
106
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
Mr. Miao Ping, born in 1958, Chinese
Corporate Governance
Yuan Changqing
101
Name
Yang Mingsheng
POSITIONS HELD BY CURRENT DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
IN SHAREHOLDERS OF THE COMPANY
II.
China Life Insurance Company Limited Annual Report 2017
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.
Mr. Heng Victor Ja Wei, born in 1977, British
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
Name of shareholder
China Life Insurance Company Limited Annual Report 2017
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.
103
Mr. Xiao Jianyou, born in 1968, Chinese
Mr. Zhao Peng, born in 1972, Chinese
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.
China Life Insurance Company Limited Annual Report 2017
102
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.
Corporate Governance
Mr. Zhan Zhong, born in 1968, Chinese
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.
Mr. Ruan Qi, born in 1966, Chinese
the year
1
2
meetings
Number of
attended
0
Name of Director
0
Type of Director
attended
Non-executive Director
Non-executive Director
by proxies
meetings Attendance
absent
rate
Miao Jianmin
Liu Jiade
0
0
0
0
0
0
1
1
0
telephony
50%
0
Independent Director
meetings
physically attended by
0
required to
attend during
Number of
Number of Number of
Director was
meetings the
general
Number of
shareholders'
Attendance records of the resigned Directors at the shareholders' general meetings convened during the
Reporting Period:
Corporate Governance
111
Tang Xin
Annual Report 2017
50%
0
2
Independent Director
Leung Oi-Sie Elsie
100%
0
meetings
0
0
2
2
China Life Insurance Company Limited
0
Number of meetings attended
0
attend two
Number of
consecutive
meetings
Attendance
meetings
Name of Director
Type of Director
the year
attended
telephony
proxies
Number of
meetings
attended by
absent
in
person
Yang Mingsheng
Executive Director
6
Note 1
3
0
3
0
50%
No
rate
meetings
attended by
physically
attend during
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.
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
Corporate Governance
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.
Meetings and attendance
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:
Whether the
Number of
meetings the
Director was
required to
Directors
failed to
Independent Director
Number of
Number of
meetings
1
Robinson Drake Pike
Type of Director
0
China Life Insurance Company Limited Annual Report 2017
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20 December 2017
2.
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
110
Name of Director
the year
meetings
physically
attended
Number of
meetings
attended by
Number of
meetings
Number of
attended
meetings
Attendance
telephony
by proxies
absent
Lin Dairen
rate
General Meeting 2017
First Extraordinary
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
20 December 2017
II.
9.
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.
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.
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
Date of publication
of resolutions
2016 Annual General Meeting 31 May 2017
31 May 2017
8.
100%
Yang Mingsheng
Lin Dairen
2
2
0
0
0
2
0
Liu Huimin
Non-executive Director
1
0
0
1
Non-executive Director
0
Non-executive Director
1
1
0
0
0
100%
Chang Tso Tung Stephen Independent Director
2
2
0
0
Yin Zhaojun
Executive Director
Wang Sidong
1
0
0
0
2
0
Executive Director
2
2
0
0
0
100%
50%
Xu Hengping
2
1
0
0
1
50%
Xu Haifeng
Executive Director
2
1
0
0
Executive Director
Executive Director
0
6
No
Note 1
Note 2
Non-executive Director
3
0
1
2
0
33%
Yes
Notes:
100%
1.
Corporate Governance
At the eleventh meeting of the fifth session of the Board held on 23 March 2017, Mr. Liu Jiade attended the
meeting by telephony.
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.
China Life Insurance Company Limited
Annual Report 2017
115
Corporate Governance
2.
Performance of duties by Independent Directors
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.
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.
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.
2.
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.
0
0
Number of
Number of
attend two
during
Name of Director
Type of Director
the year
meetings
physically
attended
meetings
attended by
meetings
Number of
consecutive
0
attended
Attendance
meetings
telephony
by proxies
absent
rate
in
person
Miao Jianmin
Liu Jiade
Non-executive Director
1
1
meetings
Number of
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.
116
100%
2/2
Zhan Zhong
Attendance rate
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.
3.
2.
2.
1.
100%
2/2
60%
3/5 Note 3
80%
4/5 Note 2
80%
Note 1
4/5M
100%
5/5
Attendance rate
Notes:
During the Reporting Period, no Independent Director has raised any objection against the proposals and
matters considered by the Board of the Company.
The Supervisory Committee had no objection in respect of any matters under its
supervision during the Reporting Period.
Activities of the Supervisory Committee during the Reporting Period
China Life Insurance Company Limited Annual Report 2017
Corporate Governance
IV. CHAIRMAN AND PRESIDENT
V.
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.
SUPERVISORY COMMITTEE
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.
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.
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.
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
necessary.
China Life Insurance Company Limited Annual Report 2017
3.
117
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.
1.
Meetings and attendance
In 2017, five meetings were held by the fifth session of the Supervisory Committee. Attendance records of
individual Supervisors are as follows:
Name of Supervisor
Miao Ping
Shi Xiangming
Xiong Junhong
Wang Cuifei
3.
China Life Insurance Company Limited Annual Report 2017
118
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.
Corporate Governance
6
failed to
Whether
3
1
2
0
67%
Yes
Liu Huimin
Non-executive Director
3
3
0
0
Note 5
0
No
Yin Zhaojun
Non-executive Director
3
Note 6
2
0
1
0
67%
No
Chang Tso Tung Stephen
100%
Independent Director
6
Non-executive Director
0
0
0
100%
No
Xu Hengping
Executive Director
6
4
Note 2
0
2
Note 4
0
No
Xu Haifeng
Executive Director
Note 3
6
5
0
1
0
83%
No
Wang Sidong
67%
the Director
6
4
0
100%
No
Notes:
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.
114
China Life Insurance Company Limited Annual Report 2017
3.
4.
0
5.
7.
8.
9.
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.
At the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Mr. Wang Sidong attended the
meeting by telephony.
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.
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
6.
Note 7
1 Note 9
6
2
0
0
100%
No
Robinson Drake Pike
Independent Director
6
Note 8
5
0
1
5
Li Guodong
No
Tang Xin
Independent Director
6
6
0
0
0
100%
No
Leung Oi-Sie Elsie
Independent Director
83%
Corporate Governance
0
Wang Sidong
Non-executive Director, member of the Nomination
and Remuneration Committee of the fifth session
of the Board
1/1
100%
2.
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.
China Life Insurance Company Limited Annual Report 2017
Corporate Governance
(1) Proposed appointment of Directors and senior management officers of the Company. In accordance
(2)
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.
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.
Miao Jianmin
(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.
Corporate Governance
China Life Insurance Company Limited Annual Report 2017
123
Corporate Governance
VIII. RISK MANAGEMENT COMMITTEE
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.
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.
1.
Meetings and attendance
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
(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.
Attendance rate
meetings attended
Position
Meetings and attendance
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:
Name of member
Position
Chang Tso Tung Stephen Independent Director, Chairman of the
Number of
meetings attended
Attendance rate
4/4 Note
100%
Nomination and Remuneration Committee
of the fifth session of the Board
Robinson Drake Pike
Independent Director, member of the
4/4
100%
Nomination and Remuneration Committee
of the fifth session of the Board
Non-executive Director, member of the
3/3
100%
Nomination and Remuneration Committee
of the fifth session of the Board
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.
In 2017, the attendance records of the resigned Director at the Nomination and Remuneration Committee
Meetings are as follows:
Number of
Name of member
Position
122
Leung Oi-Sie Elsie
Number of
Non-executive Director, member of the
Risk Management Committee of the fifth
session of the Board
Number of
meetings attended
1.
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.
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.
IX. STRATEGY AND INVESTMENT DECISION COMMITTEE
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.
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.
(4)
(3)
Liu Jiade
Corporate Governance
China Life Insurance Company Limited Annual Report 2017
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.
2018
year
(2)
(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.
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.
Performance of duties by the Risk Management Committee
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.
2.
Corporate Governance
50%
125
Position
Name of member
In 2017, attendance records of the resigned Director at the Risk Management Committee meetings are as
follows:
meetings attended
Attendance rate
515
100%
Xu Hengping
Executive Director, member of the Risk
3/5 Note
1
60%
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:
1.
2.
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;
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.
China Life Insurance Company Limited Annual Report 2017
Independent Director, Chairperson of the
Risk Management Committee of the fifth
session of the Board
1.
Corporate Governance
121
Position
Name of member
Number of
In 2017, attendance records of the resigned Director at the Strategy and Investment Decision Committee
meetings are as follows:
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.
100%
5/5
80%
4/5 Note
100%
5/5
100%
meetings attended
5/5
Number of
meetings attended
China Life Insurance Company Limited Annual Report 2017
126
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
Leung Oi-Sie Elsie
Xu Haifeng
Lin Dairen
Tang Xin
Position
Name of member
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:
Meetings and attendance
Attendance rate
Attendance rate
Wang Sidong
Non-executive Director, member of the Strategy
China Life Insurance Company Limited Annual Report 2017
128
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 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.
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.
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.
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.
management.
INDEPENDENCE OF THE COMPANY FROM ITS CONTROLLING SHAREHOLDER
Employees: The Company is independent in the aspects of employment, human resources and remuneration
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.
(4)
(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.
X.
127
Annual Report 2017
China Life Insurance Company Limited
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.
ล
(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.
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.
Performance of duties by the Strategy and Investment Decision Committee
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.
2.
Corporate Governance
and Investment Decision Committee of the
fifth session of the Board
0
0/1 Note
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.
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.
1/2 Note
China Life Insurance Company Limited Annual Report 2017
119
(1) Reviewing and approving financial reports. The Audit Committee, according to its duties, reviewed
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.
(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.
(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.
(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.
China Life Insurance Company Limited Annual Report 2017
Corporate Governance
120
Corporate Governance
(5) Examining the internal audit functions of the Company. The Audit Committee reviewed proposals
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.
(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.
VII. NOMINATION AND REMUNERATION COMMITTEE
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.
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.
China Life Insurance Company Limited Annual Report 2017
VI. AUDIT COMMITTEE
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.
Attendance rate
1.
Position
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.
Attendance rate
4/4
100%
Robinson Drake Pike
Name of member
Independent Director, Chairman of the
Audit Committee of the fifth session of the Board
Chang Tso Tung Stephen Independent Director, member of the
Tang Xin
Audit Committee of the fifth session of the Board
Independent Director, member of the Audit
Committee of the fifth session of the Board
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:
Note
4/4
100%
4/4
100%
Meetings and attendance
Number of
meetings attended
Announcement of Premium Income
2017/4/27
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
31
2017/4/27
-
Overseas Regulatory Announcement – 2017 First Quarter Report
30
Notice of Board Meeting
29
2017/4/13
List of Directors and Their Role and Function
28
33
2017/4/13
63
138
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
47
Representative Supervisor
2017/8/24
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
Announcement of Unaudited Interim Results for the six months ended 30 June 2017
43
2017/8/22
Announcement - Resignation of Supervisor
42
2017/8/14
Notice of Board Meeting
41
2017/8/14
Other Information
Serial
Items
Date of disclosure
Announcement Renewal of Continuing Connected Transactions under the Policy
Management Agreement
58
2017/10/26
Summary of Solvency Quarterly Report of Insurance Company (Third Quarter of
2017)
57
2017/10/26
Overseas Regulatory Announcement – 2017 Third Quarter Report
56
2017/10/20
Announcement on Estimated Profit Increase for the First Three Quarters of 2017
55
2017/10/16
Notice of Board Meeting
54
Announcement of Premium Income
2017/10/16
53
2017/9/14
Announcement of Premium Income
52
2017/9/8
Notification Letter and Request Form to Non-Registered Shareholders
51
2017/9/8
Notification Letter and Change Request Form to Registered Shareholders
50
2017/9/8
2017 Interim Report
49
No.
Announcement of Premium Income
40
2017/8/10
List of Directors and Their Role and Function
2017/10/26
2017/4/13
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
Overseas Regulatory Announcement China Life Insurance Company Limited -
Announcement on Changes in Accounting Estimates
Notification Letter and Change Request Form to Registered Shareholders
68
Notification Letter and Request Form to Non-Registered Shareholders
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
2017/11/2
China Life Insurance Company Limited Annual Report 2017
62
Announcement - Proposed Acquisition of Properties jointly with CLP&C
39
of Director
2017/8/10
38
Announcement - Approval of Qualification as Directors by the CIRC and Resignation
2017/7/20
Announcement - Election of Employee Representative Supervisor
37
2017/7/14
Announcement of Premium Income
36
2017/6/14
Announcement of Premium Income
35
2017/10/26
of Final Dividend
34
Resolutions Passed at the Annual General Meeting and Distribution
-
Announcement
2017/5/15
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
61
2017/5/31
2017/4/13
32
2017/4/11
131
Corporate Governance
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.
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.
China Life Insurance Company Limited Annual Report 2017
133
Corporate Governance
2.
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.
Risk Management
SEC.
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.
129
Corporate Governance
XIII. 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, 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.
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.
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 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)".
XIV. CHANGES OF THE ARTICLES OF ASSOCIATION
During the Reporting Period, no amendment was made to the Articles of Association by the Company.
China Life Insurance Company Limited Annual Report 2017
130
XV. INTERNAL CONTROL AND RISK MANAGEMENT
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
1.
Internal Control
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
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.
2017/1/20
3
Reply Form
2017/1/20
4
Announcement on Estimated Profit Decrease for the year 2016
2017/1/25
5
Announcement - Forfeiture of Unclaimed Dividends
2017/2/8
6
Change of Principal Place of Business in Hong Kong
2017/2/15
7
2017/4/11
Election of Language and Means of Receipt of Corporate Communication
2
2017/1/17
Announcement of Premium Income
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
Other Information
Announcement Index
Honors and Awards
Annual Report 2017
136
Information Disclosure Index
Other Information
Serial
Items
Date of disclosure
No.
1
140
China Life Insurance Company Limited
China Life Insurance Company Limited Annual Report 2017
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.
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
22
2017/4/11
2017/4/11
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
21
20
2017/4/11
Annual Report 2016
19
2017/4/7
List of Directors and Their Role and Function
18
2017/4/7
Announcement - Resignation of Non-Executive Director
2017/4/11
136
China Life Insurance Company Limited 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.
2017/4/11
Announcement - Change of Composition of Board Committees
27
Announcement of Premium Income
26
Notification Letter and Request Form to Non-Registered Shareholders
25
17
Notification Letter and Change Request Form to Registered Shareholders
24
23
No.
Date of disclosure
Corporate Governance
Items
Serial
Reply Slip of H Share Shareholders
2017/3/23
Other Information
16
XI. PERFORMANCE APPRAISAL AND INCENTIVES FOR SENIOR MANAGEMENT
10 Announcement of Results for the year ended 31 December 2016
2017/3/14
2017/3/10
2017/2/15
Announcement of Premium Income
Announcement of Premium Income
9
8
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.
The remuneration for senior management mainly comprises position compensation, performance rewards, welfare
benefits and medium and long term incentives.
XII. SHAREHOLDERS' INTERESTS
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.
China Life Insurance Company Limited
Announcement on Changes in Accounting Estimates
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.
2017/3/23
11
Notice of Board Meeting
2017/3/23
-
Overseas Regulatory Announcement
Announcement on Supplementary Information regarding the Compensation of
Directors, Supervisors and Senior Management Members in 2015
2017/3/23
China Life Insurance Company Limited 2016 Corporate Social Responsibility Report
15
Summary of Solvency Quarterly Report of Insurance Company (Fourth Quarter of
2016)
14
2017/3/23
Announcement - Continuing Connected Transactions with Chongqing Trust
13
2017/3/23
Renewal of Continuing Connected Transactions in relation to the
Entrusted Investment and Management Agreement for Alternative Investments with
Insurance Funds
12
Announcement
2017/3/23
As
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.
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.
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.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS
The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the
Group's financial reporting process.
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.
part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL
STATEMENTS
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.
To the shareholders of China Life Insurance Company Limited
Independent Auditor's Report (continued)
China Life Insurance Company Limited Annual Report 2017
146
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
Financial Report
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.
thereon.
(Incorporated in the People's Republic of China with limited liability)
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.
Certified Public Accountants
147
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
China Life Insurance Company Limited Annual Report 2017
148
22 March 2018
Hong Kong
Ernst & Young
The engagement partner on the audit resulting in this independent auditor's report is Ng Chi Keung.
Financial Report
communication.
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
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.
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.
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.
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 appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS (continued)
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
Independent Auditor's Report (continued)
China Life Insurance Company Limited Annual Report 2017
OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT
Financial Report
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.
"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)"
140
China Life Insurance Company Limited Annual Report 2017
Stone Business Review - "Global Top 100 Companies by Market Capitalization (Year-end edition)"
“2017 Global Top 100 Companies by Market Capitalization”, ranking No. 84
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)"
Other Information
China Life Insurance Company Limited Annual Report 2017
141
Financial Report
Independent Auditor's Report
143
Consolidated Statement of
Financial Position
149
Consolidated Statement of
Comprehensive Income
151
Consolidated Statement of
the Insurance Company with the Most Social Responsibility of 2017”
Changes in Equity
Financial Times - "Gold Medal List of Chinese Financial Institutions"
21st Century Business Herald - "Assessment and Selection of the Competitiveness of
Asian Financial Enterprises in the 21st Century"
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
Continuing Connected Transactions between CLWM and
75
"2017 Best Life Insurance Company in Asia"
2017/12/19
76
Announcement – Resolutions Passed at the First Extraordinary General Meeting 2017
2017/12/20
We tested the valuation, verification and model approval
processes, and evaluated the design and operating
effectiveness of the internal controls over those processes.
China Life Insurance Company Limited
Annual Report 2017
139
Other Information
Honors and Awards
Forbes
"2017 Forbes Global 2000", ranking No. 52
"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 China Securities Golden Bauhinia Award -
Best Investment Value Award for Listed Companies"
Chongqing Trust
153
Other Information
Cash Flows
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
144
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)
KEY AUDIT MATTERS (continued)
Key audit matter
The impairment test for investment in an associate
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.
Disclosure of the impairment of this investment is
disclosed in Note 8.
Establishing models independently to test the
valuation of liabilities for selected insurance
products; and
How our audit addressed the key audit matter
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
Calculating the Weighted Average Cost of Capital
using the Capital Asset Pricing Model.
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.
China Life Insurance Company Limited Annual Report 2017
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
Fair value of financial assets
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.
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.
How our audit addressed the key audit matter
Consolidated Statement of
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:
Assessing the assumptions by reference to the
industry data, and considering both historical
experience and business expectation of the Group;
145
•
154
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;
Notes to the Consolidated
Financial Statements
156
Independent Auditor's 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.
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.
BASIS FOR OPINION
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.
KEY AUDIT MATTERS
Financial Report
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.
•
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.
How our audit addressed the key audit matter
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.
In our audit, we involved our internal actuarial specialists
to perform the following audit procedures in this area,
which included among others:
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.
KEY AUDIT MATTERS (continued)
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
Independent Auditor's Report (continued)
143
China Life Insurance Company Limited Annual Report 2017
Key audit matter
87,309
18
81,088
Annuity and other insurance balances payable
44,820
39,038
Premiums received in advance
Other liabilities
28
Current income tax liabilities
Statutory insurance fund
18,505
35,252
229
19
47,430
Securities sold under agreements to repurchase
36,836
Deferred tax liabilities
2,031
195,706
Financial liabilities at fair value through profit or loss
4,871
Insurance contracts
14
2,025,133
1,847,986
Investment contracts
15
232,500
Policyholder dividends payable
83,910
87,725
Interest-bearing loans and borrowings
Bonds payable
675
16
18,794
16,170
17
37,998
2,529
7,768
Approved and authorised for issue by the Board of Directors on 22 March 2018.
1,214
36
145,675
145,007
139,202
122,558
Yang Mingsheng
Director
Lin Dairen
Director
7,791
320,933
4,377
4,027
325,310
307,648
2,897,591
2,696,951
Liabilities
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
303,621
7,791
35
28,265
20
20
282
491
150
Total liabilities
Equity
Share capital
Other equity instruments
Reserves
Retained earnings
Attributable to equity holders of the Company
Non-controlling interests
Total equity
Total liabilities and equity
2,572,281
2,389,303
34
28,265
6,198
LIABILITIES AND EQUITY
47,444
RMB million
Held-to-maturity securities
9.1
717,037
594,730
Loans
Term deposits
9.2
383,504
119,766
226,573
449,400
538,325
Statutory deposits - restricted
9.4
6,333
6,333
Available-for-sale securities
9.5
9.3
161,472
8
Investments in associates and joint ventures
China Life Insurance Company Limited Annual Report 2017
Consolidated Statement of Financial Position
As at 31 December 2017
ASSETS
As at
As at
31 December
2017
31 December
2016
Notes
RMB million
RMB million
Property, plant and equipment
Investment properties
69
42,707
30,389
3,064
1,191
810,734
2016
RMB million
766,423
9.6
22,013
48,586
67,046
2,897,591
2,696,951
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
Financial Report
China Life Insurance Company Limited
33,952
Annual Report 2017
Financial Report
Consolidated Statement of Financial Position (continued)
As at 31 December 2017
As at
As at
31 December
2017
31 December
Notes
149
13
2,134
3,046
136,809
209,124
Securities purchased under agreements to resell
9.7
36,185
43,538
Accrued investment income
9.8
50,641
55,945
Premiums receivable
11
14,121
13,421
Reinsurance assets
Other assets
Cash and cash equivalents
Total assets
12
Securities at fair value through profit or loss
Consolidated Statement of Comprehensive Income
Reserves
year
IFRS 12 Amendments
included in Annual
Improvements to IFRSS
2014-2016 Cycle
Content
Disclosure Initiative
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)
For the year ended 31 December 2017
Financial Report
IAS 7 Amendments
IAS 12 Amendments
2
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
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.
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
Standards/Amendments
IFRS 2 Amendments
IFRS 9
IFRS 4 Amendments
IFRS 15
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Standards/Amendments
1 January 2017
Effective for annual periods
beginning on or after
2,240
Depreciation and amortisation
131,354
176,148
Insurance contracts
1,056
(6,225)
Net realised and unrealised (gains)/losses on financial assets
(109,147)
(122,727)
1,142
64,364
2,682
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
Financial Report
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.
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 and authorised for issue by the Board of
Directors on 22 March 2018.
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
IFRS 15 Amendments
2,083
IAS 40 Amendments
IFRS 16
IFRS 10 and IAS 28
Amendments
Adjustments for:
23,842
41,671
RMB million
2016
2017
Profit before income tax
CASH FLOWS FROM OPERATING ACTIVITIES
ended 31 December 2017
year
For the
Consolidated Statement of Cash Flows
Financial Report
Investment income
153
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
China Life Insurance Company Limited Annual Report 2017
China Life Insurance Company Limited Annual Report 2017
158
Financial Report
Content
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
1 January 2018
1 January 2018
1 January 2019
1 January 2021
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
157
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
2
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 2 Amendments
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.
IFRS 9 Financial Instruments
Classification and measurement
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
investment cost.
IFRS 17
Foreign exchange (gains)/losses
(52)
(582)
Dividends paid to non-controlling interests
(12,257)
(7,164)
(4,891)
(5,671)
49,999
6,228
Dividends paid to equity holders of the Company
Interest paid
Increase/(decrease) in securities sold under agreements to repurchase, net
CASH FLOWS FROM FINANCING ACTIVITIES
RMB million
RMB million
(135)
2016
ended 31 December 2017
year
For the
Consolidated Statement of Cash Flows (continued)
China Life Insurance Company Limited Annual Report 2017
154
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
(104,703)
(173,676)
Net cash inflows/(outflows) from investing activities
(11)
(399)
Cash paid related to other investing activities
2017
(151)
Cash received from borrowings
Capital injected into subsidiaries by non-controlling interests
Cash at banks and in hand
Analysis of balances of cash and cash equivalents
67,046
48,586
year
End of the
76,096
67,046
Beginning of the year
Cash and cash equivalents
(9,050)
(18,460)
Net decrease in cash and cash equivalents
285
(179)
Foreign exchange gains/(losses) on cash and cash equivalents
6,270
(45,595)
Net cash inflows/(outflows) from financing activities
(13,200)
(8,008)
Cash paid related to other financing activities
(30,000)
(38,000)
2,939
4,034
13,831
3,121
Cash repaid to lenders
(7,483)
(15,515)
Decrease/(increase) in policy loans, net
20,390
Disposals of equity investments
Maturities of debt investments
89,098
200,990
Disposals of debt investments
Disposals and maturities:
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash inflows/(outflows) from operating activities
526
778
5,465
4,497
(9,331)
(4,473)
124,466
38,967
1,539
931
(76,318)
76,378
Interest received – securities at fair value through profit or loss
Dividends received - securities at fair value through profit or loss
Income tax paid
Receivables and payables
Financial liabilities at fair value through profit or loss
Securities at fair value through profit or loss
Changes in operating assets and liabilities:
(5,855)
(7,143)
Share of profit of associates and joint ventures, net
Property, plant and equipment
135
Purchases:
Equity investments
29,014
Dividends received
78,891
98,012
Interest received
(22,035)
6,981
Decrease/(increase) in securities purchased under agreements to resell, net
37,515
92,148
Decrease/(increase) in term deposits, net
(65,158)
(37,304)
Capital contribution to associates and joint ventures
(5,310)
(9,619)
Property, plant and equipment
(537,012)
(500,737)
(173,628)
(516,051)
114
103
508,476
506,306
50,101
142,845
10,447
30,540
Debt investments
(135)
(135)
(7,164)
Net profit
(4,257)
(8,919)
28
Income tax
23,842
41,671
27
Profit before income tax
5,855
7,143
8
(522,794)
Attributable to:
(608,827)
(1,068)
20
20
(4,859)
(6,426)
Share of profit of associates and joint ventures, net
Total benefits, claims and expenses
Statutory insurance fund contribution
Other expenses
(31,854)
(35,953)
Administrative expenses
(4,767)
(1,048)
- Equity holders of the Company
- Non-controlling interests
Basic and diluted earnings per
RMB million
Note
2016
2017
attributable to participating policyholders
Amount transferred to net profit from other comprehensive income
Portion of fair value changes on available-for-sale securities
Fair value gains/(losses) on available-for-sale securities
profit or loss in subsequent periods:
Other comprehensive income that may be reclassified to
Other comprehensive income
ended 31 December 2017
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
30
458
19,127
32,253
499
19,585
32,752
share
(4,601)
26
Finance costs
(52,022)
109,147
122,727
21
222
Net fair value gains through profit or loss
Other income
Net realised gains on financial assets
Investment income
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
2016
2017
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
22
RMB million
42
23
(64,789)
Underwriting and policy acquisition costs
(15,883)
(21,871)
Policyholder dividends resulting from participation in profits
(5,316)
(8,076)
25
(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
BENEFITS, CLAIMS AND EXPENSES
Insurance benefits and claims expenses
Total revenues
540,781
643,355
6,460
7,493
(7,094)
6,183
6,038
For the
(15,003)
(42)
(6,038)
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
4,027
(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
Total comprehensive income
(6,191)
456
19,127
(151)
307,648
As at 1 January 2017
28,265
(7,164)
(8,445)
8,445
As at 31 December 2017
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)
Total comprehensive income
(7,926)
(14)
(7,912)
Other comprehensive income
32,752
499
32,253
Net profit
307,648
4,027
122,558
145,007
7,791
(25,774)
(25,776)
(2)
(25,774)
456
485
(6,647)
24,341
- Non-controlling interests
- Equity holders of the Company
Attributable to:
(6,191)
24,826
Total comprehensive income for the year, net of tax
(25,776)
(7,926)
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)
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods
8,242
2,359
28
Income tax relating to components of other comprehensive income
21
(865)
Exchange differences on translating foreign operations
(864)
20
Share of other comprehensive income of associates and joint
ventures under the equity method
17,372
5,605
152
(44,509)
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Equity
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
Short-term bank deposits
Retained
Total
Non-controlling
interests
RMB million
instruments
Other equity
Attributable to equity holders
of the Company
Share capital
RMB million
Other comprehensive income
Net profit
As at 1 January 2016
For the year ended 31 December 2017
China Life Insurance Company Limited Annual Report 2017
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.
RMB million
The Group is currently assessing the impact of the standard upon adoption.
the contractual arrangement with the other vote holders of the investee;
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 ability to use its power over the investee to affect its returns.
•
exposure, or rights, to variable returns from its involvement with the investee; and
power over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee);
•
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:
2.2 Consolidation
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.
now.
rights arising from other contractual arrangements; and
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
IFRS 10 and IAS 28 Amendments
Joint Venture
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)
Financial Report
2
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
161
China Life Insurance Company Limited Annual Report 2017
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.
Sale or Contribution of Assets between an Investor and its Associate or
Extensive disclosures to provide information on the recognised amounts from insurance contracts and
the nature and extent of risks arising from these contracts.
the Group's voting rights and potential voting rights.
162
China Life Insurance Company Limited Annual Report 2017
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.
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 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;
•
recognises the fair value of the consideration received;
•
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.
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.
2.2 Consolidation (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
•
163
Insurance services results are presented separately from the insurance finance income or expense;
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;
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.
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)
2.1 Basis of preparation (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
159
China Life Insurance Company Limited Annual Report 2017
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.
IFRS 15 - Revenue from Contracts with Customers and IFRS 15 Amendments
IAS 40 Amendments - Transfers of Investment Property
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.
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.
Hedge accounting
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.
Impairment
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
Financial Report
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
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.
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;
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 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.
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 expected present value of future cash flows are adjusted against the CSM and
thereby recognised in profit or loss over the remaining coverage 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;
The fulfilment cash flows including the expected present value of future cash flows and explicit risk
adjustment, remeasured every reporting period;
•
•
•
•
•
•
The main features of the new accounting model for insurance contracts are, as follows:
IFRS 16 Leases
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.
IFRS 17 Insurance Contracts
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
Financial Report
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
160
Financial Report
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.
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
2
For the year ended 31 December 2017
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.
Held-to-maturity securities
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.
(ii)
(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
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
for
2.8.a Classification
2.8 Financial assets
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.
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.
2.7 Investment properties (continued)
2
Financial Report
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
166
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.
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.
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.
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.
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.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(iv) 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.
2.8.b Recognition and measurement
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:
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.
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.
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
Annual Report 2017
China Life Insurance Company Limited
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.
2.7 Investment properties
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.
(iii) Loans and receivables
Impairment and gains or losses on disposals
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.
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.
2.3 Associates and joint ventures (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
Financial Report
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
164
Financial Report
2.4 Segment reporting
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'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.
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.
2.3 Associates and joint ventures
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.
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.
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.
Transactions with non-controlling interests
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.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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'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.
2.2 Consolidation (continued)
2.5 Foreign currency translation
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.
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.
Over the shorter of the remaining term of
the lease and the useful lives
4 to 8 years
3 to 11 years
15 to 35 years
Estimated useful lives
Leasehold improvements
Office equipment, furniture and fixtures
Motor vehicles
Buildings
Financial Report
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:
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.
2.6 Property, plant and equipment (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
165
China Life Insurance Company Limited Annual Report 2017
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.
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.
2.6 Property, plant and equipment
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.
Depreciation
2.11.2.a Recognition and measurement (continued)
(iii) Universal life contracts and unit-linked contracts
•
Universal life contracts and unit-linked contracts are unbundled into the following components:
2.11.2.c Reinsurance contracts held
non-insurance components
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.
2.11.2.b Liability adequacy test
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.
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.
insurance components
2.11.2 Insurance contracts (continued)
China Life Insurance Company Limited Annual Report 2017 171
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
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.
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.
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 Insurance contracts and investment contracts (continued)
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.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.11.3 Investment contracts
additional non-guaranteed benefits, such as policyholder dividends; and
China Life Insurance Company Limited Annual Report 2017
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
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
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.
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 Insurance contracts and investment contracts (continued)
2
Financial Report
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
2.11.4 DPF in long-term insurance contracts and investment contracts
guaranteed benefits based on contractual terms, including payments for deaths,
disabilities, diseases, survivals, maturities and surrenders;
3
(a)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
169
China Life Insurance Company Limited Annual Report 2017
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.
2.10 Cash and cash equivalents
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.
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.
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.
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.
Financial Report
in the absence of a principal market, in the most advantageous market for the asset or liability.
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
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.
2.8.c Impairment of financial assets other than securities at fair value through profit or loss
(continued)
2.8 Financial assets (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
Financial Report
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
173
in the principal market for the asset or liability, or
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
2.11 Insurance contracts and investment contracts
Long-term insurance contracts (continued)
(ii)
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
Financial Report
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
170
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.
(ii) Long-term insurance contracts
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.
The unearned premium reserve represents the portion of the premiums written net of certain
acquisition costs relating to the unexpired terms of
coverage.
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.
Short-term insurance contracts
(i)
2.11.2.a Recognition and measurement
2.11.2 Insurance contracts
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.
2.11.1 Classification
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:
Notes to the Consolidated Financial Statements (continued)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
2
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:
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.
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 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.
For the year ended 31 December 2017
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Financial Report
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
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.
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.
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.
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.
fair value of other loans are obtained from valuation techniques.
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
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 is carried out by the Company's Risk Management Committee under policies approved by the
Company's Board of Directors.
RISK MANAGEMENT
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.
3.5 Determination of control over investee
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.
3.3 Impairment of investments in associates and joint ventures
4
3
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
177
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.
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.
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.
3.1 Estimate of future benefit payments and premiums arising from long-term insurance
contracts (continued)
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.
Financial Report
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
174
Financial Report
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.
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
2.19 Revenue recognition
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.
2.23 Provisions and contingencies
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)
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.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.17 Share capital
Investment income
2.19 Revenue recognition (continued)
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
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
Financial Report
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
175
Annual Report 2017
China Life Insurance Company Limited
3
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 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.
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.
2.21 Current and deferred income taxation
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.
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 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.
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.
390,438
100.00%
323,162
100.00%
Insurance benefits of long-term
464,898
Total
82.77%
203
340,054
Others (f)
0.05%
0.04%
166
insurance contracts
1.27%
Hong Tai Endowment (e)
73.14%
New Xin Feng Endowment (Type A) (a)
Net cash inflows/(outflows)
0.05%
Subtotal
4,968
2,411,085
(2,529)
(132,358)
173,367
20,217
(4,195,862)
242,265
406,999
389,892
777,919
491,510
(2,823,821)
188
China Life Insurance Company Limited Annual Report 2017
67
78
0.65%
Xin Fu Ying Jia Annuity (b)
Hong Ying Participating Endowment (d)
2016
2017
For the year ended 31 December
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
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.
4.1.1 Types of insurance risks (continued)
4.1 Insurance risk (continued)
RISK MANAGEMENT (continued)
4
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
0.04%
(18,557)
RMB million
3,019
%
%
5.74%
22,420
4.61%
21,435
Kang Ning Whole Life (c)
0.42%
1,626
8.73%
40,588
Xin Fu Ying Jia Annuity (b)
9.75%
38,059
12.83%
59,636
New Xin Feng Endowment (Type A) (a)
contracts
Premiums of long-term insurance
RMB million
18,794
(1,240)
4.2.1 Market risk (continued)
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
Total
Unpaid claims
Year end
16,379
20,359
26,897
33,700
1 year later
11,743
17,127
21,262
27,107
2 years later
11,645
16,589
21,259
11,331
(97,374)
(21,404)
(26,047)
27,120
33,926
1 year later
11,872
17,265
21,427
27,303
2 years later
11,775
16,726
21,422
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
(11,775)
(16,726)
(21,422)
11,645
20,497
16,589
3 years later
(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.
China Life Insurance Company Limited Annual Report 2017
183
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
4.2.1 Market risk (continued)
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)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
(ii)
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.
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 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.
4 years later
Estimated accumulated
claims expenses
11,645
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
12,427
13,674
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
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.
11,645
16,499
11,476
Year end
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
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
%
Liabilities of long-term insurance contracts
New Xin Feng Endowment (Type A) (a)
69,280
3.47%
Notes to the Consolidated Financial Statements (continued)
43,794
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%
2.40%
Financial Report
179
Annual Report 2017
277
0.15%
Kang Ning Whole Life (c)
4,197
2.52%
3,949
2.20%
Hong Ying Participating Endowment (d)
49,796
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
100.00%
179,902
100.00%
Financial Report
China Life Insurance Company Limited
117,946
6.46%
Hong Tai Endowment (e)
16,730
Others consist of various long-term insurance contracts with no significant concentration.
4.1.3 Sensitivity analysis
Sensitivity analysis of long-term insurance contracts
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.
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.
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.
The following table indicates the claim development for short-term insurance contracts without taking into
account the impacts of ceded business:
182
Estimated claims expenses
2013
2015
Short-term insurance contracts (accident year)
2014
2016
2017
Total
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.
other borrowings
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.
(e)
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)
(c)
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.
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)
(f)
(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
Financial Report
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:
Contractual and expected cash flows (undiscounted)
As at 31 December 2017
Carrying
value
Without
maturity
Not later
187
Later
than 1 year
but not later
than 1 year
than 3 years
than 3 years
but not later
than 5 years
Later than
5 years
Financial assets
Contractual cash inflows
Equity securities
409,528
409,528
Debt securities
1,255,052
127,830
240,582
Later
China Life Insurance Company Limited Annual Report 2017
In the normal course of business, the Group attempts to match the maturity of financial assets to the
maturity of insurance and financial liabilities.
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.
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.
Credit risk exposure
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.
Collateral and other credit enhancements
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.
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
271,538
Loans
383,504
141,679
471,293
1,372,041
Financial and insurance liabilities
Expected cash outflows
Insurance contracts
Investment contracts
2,025,133
16,319
221,905
47,109
232,500
(15,308)
(29,981)
(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)
Interest-bearing loans and
604,552
Notes to the Consolidated Financial Statements (continued)
522,250
2,653,350
105,063
64,386
Term deposits
449,400
104,976
252,571
133,013
1,240,465
128,753
2,823
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
14,121
Cash and cash equivalents
48,586
48,586
Subtotal
409,528
4.79%
185
16,170
5
5
463
Term deposits
7,744
7,744
Cash and cash equivalents
1,246
185
282
128
3
1,844
18
Total
29,190
1,388
2,823
1,206
59,772
Financial liabilities
Interest-bearing loans and
other borrowings
12,480
Total
12,480
2,413
3,901
25,165
435
profit or loss
- Securities at fair value through
US dollar HK dollar
GB pound
EUR
Others
Total
Financial assets
Equity securities
- Available-for-sale securities
8,697
28,859
37,556
- Securities at fair value
through profit or loss
4,707
146
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
2,413
3,901
18,794
18,794
378
Term deposits
6,106
6,106
Cash and cash equivalents
2,685
2,083
145
39
9
4,961
Total
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
731
16,170
2,339
731
13
China Life Insurance Company Limited Annual Report 2017
3
348
Financial Report
As at 31 December 2016
US dollar
HK dollar
GB pound
EUR
Others
Total
Financial assets
Equity securities
- Available-for-sale securities
6,968
12,791
148
19,907
- Securities at fair value
through profit or loss
3,906
128
1,115
2,475
1,135
8,759
Debt securities
- Held-to-maturity securities
164
164
- Securities at fair value
through profit or loss
14
7,956
Annual Report 2017
17
China Life Insurance Company Limited
0.55
Beijing, China
0.66
70.1%
1.22
1.14
0.88
Equity holders' equity per share
11.35
10.74
5.7%
11.41
10.05
7.80
Net cash inflows/(outflows) from operating activities
per
share
7.11
3.15
1.13
125.6%
Earnings per share (basic and diluted)³
5.7%
200,990
89,098
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%
2,448,315 2,246,567 1,972,941
7.7%
303,621
2,287,639 2,100,870 1,848,681
2,122,101 1,959,236 1,750,356
322,492 284,121 220,331
Net cash inflows/(outflows) from operating activities
(0.67)
2.42
Gross investment yield (%)
5.16
4.61
increase of
6.47
5.42
4.97
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.
point
2.77
percentage
88.72
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
86.68
87.21
0.18
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
24,765
34,514
Prelude
Financial Summary
RMB million
Under International Financial Reporting Standards (IFRS)
Major Financial Data¹
For the year
ended
Total revenues
Net premiums earned
2017
20166
Change
2015
2014
2013
643,355
540,781
9
19.0%
China Life Insurance Company Limited Annual Report 2017
million
22 March 2018
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
a year-on-year increase of 68.6%
32,211
507,449
417,883
41,671
23,842
74.8%
45,931
40,402
29,451
Net profit attributable to equity holders of the Company
32,253
19,127
68.6%
34,699
32,211
24,765
Net profit attributable to ordinary share holders of the Company
31,873
18,741
70.1%
Profit before income tax
440,766
312,288
352,219
506,910
426,230
18.9%
362,301
330,105
324,813
Benefits, claims and
expenses
608,827
522,794
16.5%
404,275
391,557
Insurance benefits and claims expenses
466,043
407,045
14.5%
315,294
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
463,492
10
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.
14
China Life Insurance Company Limited Annual Report 2017
Chairman's Statement
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.
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
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.
Chairman's Statement
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.
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
Yang Mingsheng
Chairman
£12 £
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.
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.
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.
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.
year-on-year.
Chairman's Statement
Chairman's Statement
China Life Insurance Company Limited Annual Report 2017
GRASPING THE “CHANGE" AND
"UNCHANGE” IN LIFE INSURANCE
OPERATION BY PROACTIVE THINKING AND
DILIGENT PRACTICING
12
Chairman's Statement
將藥局將藏傳 藏傳 藏傳
有世書世世書世書世書世
e
6444
China Life Insurance Company Limited Annual Report 2017
Yang Mingsheng, Chairman
PHOTO ALBUM
Chairman's Statement
1000
OUTSTANDING RESULTS ACHIEVED IN 2017
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.
China Life Insurance Company Limited Annual Report 2017 13
2
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.
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%
year-on-year.
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.
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.
WITH CONSISTENT EFFORTS
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%
Chairman's Statement
Administrative expense ratio = Administrative expenses/Total revenues
26,032
2,454
1,128
(2,054)
1,326
62,343
64,728
1,884
501
13,533
RMB million
RMB million
(1,884)
Equity securities
Equity securities
RMB million
12,499
(3,938)
Notes to the Consolidated Financial Statements (continued)
(67)
Financial Report
Debt securities
RMB million
5
Fair value hierarchy (continued)
4.3
RISK MANAGEMENT (continued)
4
For the year ended 31 December 2017
(67)
China Life Insurance Company Limited Annual Report 2017
91,239
1,061
76,445
13,733
(301)
(301)
2,331
2,331
194
Total
301,746
Available-for-sale securities
91,239
561,725
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.
Total
154,406
117,234
37,172
- Debt securities
54,718
1,061
867
52,790
- Equity securities
profit or loss
Securities at fair value through
399,758
345,828
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
(2,043)
(12)
(2,031)
Closing balance
Maturity
other comprehensive income
Total gains/(losses) recorded in
in profit or loss
value through
profit or loss
Total gains/(losses) recorded
Transferred into Level 3
Opening balance
Purchases
Securities at fair
The following table presents the changes in Level 3 assets for the year ended 31 December 2016:
(2,043)
Total
(12)
(2,031)
Transferred out of Level 3
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.
SEGMENT INFORMATION (continued)
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.
(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
198,418
Net premiums earned
42
Net fair value gains through profit or loss
5,690
269
(1,126)
8,969
14,799
69,123
551,590
Segment revenues
(1,126)
1,126
- Annuity
Including: inter-segment revenue
(1,126)
7,268
75
1,276
Other income
6,183
201
23
7,493
- Endowment
36,496
- Whole life
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)
Accident insurance business relates primarily to the sale of accident insurance policies.
(iii) Accident insurance business (Accident)
Health insurance business relates primarily to the sale of health insurance policies, including those
health insurance policies without significant insurance risk transferred.
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.
(ii) Health insurance business (Health)
Life insurance business (Life)
(i)
The Group operates in four operating segments:
Operating segments
5.3
5.2
5.1
SEGMENT INFORMATION
Life insurance business relates primarily to the sale of life insurance policies, including those life
insurance policies without significant insurance risk transferred.
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.
China Life Insurance Company Limited Annual Report 2017
Financial Report
4,110
- Term life
511,966
14,436
67,708
429,822
Gross written premiums
Revenues
195
Total
Others
For the year ended 31 December 2017
Accident
RMB million
Health
Life
76,445
13,733
5
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Elimination
357,463
Notes to the Consolidated Financial Statements (continued)
- Debt securities
643,355
Level 2
Level 3
RMB million
RMB million
RMB million
RMB million
Available-for-sale securities
- Equity securities
196,673
48,989
- Debt securities
46,898
350,893
89,111
57,333
334,773
455,124
Securities at fair value through
Level 1
profit or loss
inputs
markets
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
inputs
- Equity securities
52,300
- Debt securities
value through
profit or loss
Total
Debt securities
RMB million
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
Available-for-sale securities
(2,541)
(12)
(2,529)
9,301
963
73,590
655
53,918
82,891
Total
305,172
474,435
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.
147,099
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
926,706
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.
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.
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.
RISK MANAGEMENT (continued)
4
For the year ended 31 December 2017
Financial Report
193
Annual Report 2017
China Life Insurance Company Limited
Financial Report
147,099
655
89,111
57,333
Closing balance
(3,790)
(3,790)
Maturity
(90)
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 2016:
Assets measured at fair value
Fair value measurement using
86,161
183,222
- Equity securities
Available-for-sale securities
RMB million
RMB million
RMB million
RMB million
(90)
Level 3
Level 1
Significant
unobservable
inputs
inputs
markets
observable
Significant
Quoted prices
in active
Total
Level 2
28,562
Disposals
315
(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
RISK MANAGEMENT (continued)
4.3 Fair value hierarchy (continued)
Category A: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational
risk and liquidity risk are very low;
(i)
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:
297%
(519)
other comprehensive income
Total gains/(losses) recorded in
(42)
(42)
in profit or loss
Total gains/(losses) recorded
(6,657)
(204)
(1,059)
Transferred out of Level 3
3,537
695
254,503
228,080
278%
280%
278%
(5,598)
Benefits, claims and
Financial assets (including cash
Insurance benefits and claims expenses
54,774
466,104
Segment revenues
677,768
(890)
890
Including: inter-segment revenue
6,460
(890)
5,919
86
1,345
Other income
(7,094)
(378)
(25)
(255)
14,392
(6,436)
6,401
540,781
(274)
(16,578)
(109,767)
Increase in insurance contract liabilities
(27,269)
(5,311)
(21,958)
adjustment expenses
Accident and health claims and claim
(253,157)
(25)
(1,977)
(251,155)
Life insurance death and other benefits
Insurance benefits and claims expenses
expenses
Benefits, claims and
(890)
Net fair value gains through profit or loss
6,038
(39)
- Term life
430,498
14,583
54,010
361,905
Gross written premiums
Revenues
Total
Elimination
Others
For the year ended 31 December 2016
Accident
RMB million
Health
Life
SEGMENT INFORMATION (continued)
5
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
3,871
- Whole life
29,524
- Endowment
23
231
5,823
Net realised gains on financial assets
109,147
899
403
4,122
(126,619)
103,723
426,230
13,991
50,590
361,649
Net premiums earned
140,095
188,415
- Annuity
Investment income
Financial Report
Investment contract benefits
(225)
Net profit
(4,257)
Income tax
23,842
6,165
852
2,093
14,732
Segment results
5,855
5,855
Share of profit of associates and joint ventures, net
(522,794)
890
(6,091)
(13,540)
(52,681)
19,585
(451,372)
Attributable to
- Non-controlling interests
China Life Insurance Company Limited Annual Report 2017
198
2,083
140
196
257
1,490
Depreciation and amortisation
(25,774)
(1,320)
(91)
(930)
(23,433)
to equity holders of the Company
Other comprehensive income attributable
458
19,127
- Equity holders of the Company
Segment benefits, claims and expenses
(1,048)
(106)
(181)
(17)
(174)
(4,395)
Finance costs
(52,022)
(2,216)
(4,441)
(6,906)
(38,459)
Underwriting and policy acquisition costs
(15,883)
(96)
(15,787)
participation in profits
Policyholder dividends resulting from
(5,316)
(4,767)
Administrative expenses
(22,248)
(4,373)
(138)
(804)
Statutory insurance fund contribution
890
(3)
(34)
(853)
Including: inter-segment expenses
(5,091)
(4,859)
(1,360)
(467)
(256)
(3,666)
Other expenses
(31,854)
(2,334)
(2,899)
890
197
Financial Report
China Life Insurance Company Limited Annual Report 2017
Segment benefits, claims and expenses
(1,068)
(111)
(180)
(777)
Statutory insurance fund contribution
1,126
(4)
(51)
(1,071)
Including: inter-segment expenses
(6,426)
1,126
(1,521)
(147)
(376)
(5,508)
(522,275)
Other expenses
(65,877)
(7,530)
- Equity holders of the Company
Attributable to
32,752
Net profit
(8,919)
Income tax
41,671
8,582
528
3,246
29,315
Segment results
7,143
7,143
Share of profit of associates and joint ventures, net
(608,827)
1,126
(14,271)
(35,953)
(2,629)
(3,423)
(7,798)
Investment contract benefits
(172,517)
(158)
(20,249)
(152,110)
Increase in insurance contract liabilities
(33,818)
(5,826)
(27,992)
adjustment expenses
Accident and health claims and claim
(259,708)
(25)
(2,383)
(257,300)
Life insurance death and other benefits
(278)
(8,076)
Policyholder dividends resulting from
participation in profits
(5,615)
(24,286)
Administrative expenses
(4,601)
(431)
(16)
(187)
(3,967)
- Non-controlling interests
Finance costs
(2,949)
(4,565)
(8,494)
(48,781)
Underwriting and policy acquisition costs
(21,871)
(123)
(21,748)
(64,789)
32,253
499
Other comprehensive income attributable
Securities sold under agreements to repurchase
232,500
14,064
218,436
Investment contracts
2,025,133
8,346
102,190
1,914,597
Insurance contracts
Liabilities
2,897,591
35,713
42,707
Total
Others
Property, plant and equipment
81,163
3,832
321
1,993
2,572,281
160,781
Total
Others
Unallocated
2,411,500
23,316
8,891
2,819,171
123,209
Segment liabilities
66,558
21,323
224
3,123
41,888
Others
87,309
2,256,084
expenses
199,894
122,194
5
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
196
2,240
160
216
351
1,513
Depreciation and amortisation
(7,912)
327
(31)
(370)
(7,838)
to equity holders of the Company
SEGMENT INFORMATION (continued)
Life
Health
As at 31 December 2017
Accident
RMB million
2,487,141
Unallocated
Segment assets
2,640,596
178,575
161,472
552
8,149
8,402
9,942
Others
9,390
114,045
2,478,739
and cash equivalents)
Assets
Total
Elimination
Others
38,422
706,623
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.
706,516
Accrued investment income
43,538
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
55,945
44,722
11,100
123
Insurance contracts
Expected cash outflows
Financial and insurance liabilities
1,078,038
347,781
537,596
700,129
Term deposits
421,383
Subtotal
67,046
67,046
Cash and cash equivalents
13,421
13,421
Premiums receivable
2,521,458
Investment contracts
55,106
119,247
Not later
Without
Carrying
value
As at 31 December 2016
than 1 year
Later
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)
639,396
but not later
than 3 years
but not later
maturity
than 1 year
226,573
Loans
1,014,074
188,740
214,105
210,589
1,148,894
41,697
Debt securities
421,383
Equity securities
Contractual cash inflows
Financial assets
Later than
5 years
than 5 years
than 3 years
421,383
1,847,986
47,606
97,236
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.
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.
4.2.3 Liquidity risk (continued)
4.2 Financial risk (continued)
Financial Report
RISK MANAGEMENT (continued)
4
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
189
Annual Report 2017
China Life Insurance Company Limited
Financial Report
(2,411,261)
349,741
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.
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.
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.
190
As at 31
December 2016
RMB million
(43,322)
As at 31
December 2017
RMB million
Comprehensive solvency ratio
Core solvency ratio
Minimum capital
Actual capital
584,526
Core capital
4.2.4 Capital management (continued)
4.2 Financial risk (continued)
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
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):
480,631
4.2.4 Capital management
301,441
balances payable
Annuity and other insurance
(2,031)
2,031
through profit or loss
(81,088)
81,088
39,038
to repurchase
Contractual cash outflows
(3,229,394)
(259,905)
(33,128)
(34,147)
(15,880)
419,352
195,706
Securities sold under agreements
(39,038)
Financial liabilities at fair value
35,088
Net cash inflows/(outflows)
(3,489,299)
1,960
46,930
(219,498)
2,220,017
Subtotal
(39,032)
(2,031)
Bonds payable
(16,159)
(1,138)
16,170
other borrowings
Interest-bearing loans and
37,998
Total
8,906
Assets
Financial assets (including cash
and cash equivalents)
2,379,782
92,220
27,392
2,387,947
8,165
6,776
491
9,397
119,766
98,996
Elimination
Others
2,508,300
135,198
Equity Method
As at 31 December 2016
Accident
RMB million
328
147,158
7,929
6,000
China Life Property &
Limited ("Sino-Ocean") (ii)
(1,010)
29.79%
Others
13,626
(553)
1,201
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
5
SEGMENT INFORMATION (continued)
Life
Health
298
2,643,498
169,151
Unallocated
73,277
3,563
338
18,194
95,372
Segment liabilities
2,097,062
96,414
Others
8,426
2,220,152
Unallocated
Others
Total
China Life Insurance Company Limited
2,389,303
Financial Report
28
18,250
Segment assets
81,088
302
Property, plant and equipment
Others
Total
30,389
23,064
2,696,951
Liabilities
Insurance contracts
56
1,762,363
7,786
Investment contracts
183,773
11,933
1,847,986
195,706
Securities sold under agreements to repurchase
77,649
3,081
77,837
(69)
(1,862)
8,185 40.00%
(509)
16,801 15,281
33,349
Equity Method
Others (iv)
("Sanya Company")
Investments Co., Ltd
51.00%
(444)
291
306
Equity Method
China Life (Sanya) Health
Joint ventures
(1,010)
129,598
(1,418) (1,139)
21,829 7,662
301
102,523 102,664
454
Subtotal
Financial Report
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
204
Note: Including the amount originally held by the Company.
(1,010)
161,472
31,583
(685)
7,143
136,178 119,766 37,110
Total
31,874
454
(444)
(519)
33,655 17,102 15,281
Annual Report 2017
(3)
Subtotal
567 (776) (466)
(20)
1,351
20,000
20,000
Equity Method
Sinopec Sichuan to East
Futures")
Limited ("COFCO
20
35.00%
47
1,419
1,339
Equity Method
COFCO Futures Company
("CLP&C")
Company Limited
Casualty Insurance
1,466
9,732
16
43.86%
9,948 10,407
Equity Method
Others (iv)
("China Unicom") (iii)
Communications Limited
10.56%
21,783
(28)
21,347
1
21,829
21,829
Note
Equity Method
China United Network
Company")
Co., Ltd. ("Pipeline
China Gas Pipeline
(18)
199
As at 1 January 2017
Notes to the Consolidated Financial Statements (continued)
Leasehold
construction improvements
Total
RMB million
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
Assets under
Motor
vehicles
Office
equipment,
furniture and
fixtures
Buildings
17,027
1,903
426
10,548
485
30,389
As at 31 December 2017
23,185
37
1,751
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
448
653
177
4,896
(901)
(622)
(130)
Disposals
36
426
137
(942)
Charge for the year
(14,131)
(1,801)
22
621
As at 31 December 2016
(8,311)
(4,934)
(998)
(1,068)
(148)
As at 1 January 2017
(1,005)
(7,446)
16
5,779
Disposals
(104)
(432)
(140)
(475)
(27)
(4,738)
(1,178)
25,362
6,837
1,424
10,548
1,553
45,724
Accumulated depreciation
As at 1 January 2016
As at 31 December 2016
Financial Report
Net book value
(24)
312
(86)
Additions
70
450
174
15,747
13
16,454
Transfers into investment
properties
(1,931)
(1,931)
Disposals
(48)
(463)
(195)
(7,520)
49
7,073
Transfers upon completion
For the year ended 31 December 2017
6 PROPERTY, PLANT AND EQUIPMENT
Cost
Buildings
Office
equipment,
furniture
and fixtures
Motor
vehicles
Assets under
Leasehold
(148)
construction improvements
RMB million
As at 1 January 2017
25,362
6,837
1,424
10,548
1,553
45,724
Total
(48)
(902)
As at 31 December 2017
(1,068)
(181)
46
(15,311)
(1,910)
693
(1,203)
(16,528)
200
Impairment
(955)
8
Charge for the
year
| |
(24)
Transfers into investment
properties
Disposals
As at 31 December 2017
(24)
(24)
(5,122)
187
32,457
6,873
1,403
16,696
1,830
59,259
Accumulated depreciation
As at 1 January 2017
(9,248)
(8,311)
(998)
Charge for the year
(953)
(632)
(144)
Disposals
16
444
(4,934)
INVESTMENT IN ASSOCIATES AND JOINT VENTURES (continued)
COFCO Pipeline
Futures Company
RMB
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.
50,229
Gross carrying value of the investments
40.00%
29.991%
43.686%
Proportion of the Group's ownership
19,823
42,423
109,137
adjustments
of the associates and joint ventures after
Total equity attributable to equity holders
(1,576)
3,163
Total adjustments (i)
591
32,217
13,690
7,929
2,496 32,217
35.00% 43.86%
1,419 20,000
591
1
2,339
375
55,728
37,748
55,276
Total revenues
301
2,496
20,000
7,929
12,680
50,229
Net carrying value of the investments
(1,010)
Impairment
301
51.00%
1,419
19,823
43,999
105,974
Total assets
million
million
million
million
million
million
Sanya
Company
RMB
2,047,592
Company
RMB
RMB
RMB
RMB
Futures
CLP&C
CGB Sino-Ocean
Pipeline
COFCO
RMB
Net profit/(loss)
151,265
11,287
of the associates and joint ventures
Total equity attributable to equity holders
591
32,217
2,577
19,823
49,330
105,974
72,773
Total equity
5,014
8,710
52,950
101,935
1,941,618
Total liabilities
799
37,231
208
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:
9,504
1,157
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
530,374
625,251
20
19
144
136
64,192
91,631
594,730
717,037
150,089
148,494
178,444
Debt securities - Contractual maturity schedule
Maturing:
As at 31
December 2017
RMB million
As at 31
December 2016
China Life Insurance Company Limited Annual Report 2017
594,730
717,037
Total
260,846
293,113
After ten years
231,608
200,869
288,496
71,661
112,932
years
After one year but within five
30,615
22,496
Within one year
RMB million
After five years but within ten years
169,001
241,808
97,196
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.
631
66
Financial Report
631
8,434
(526)
(164)
(1,070)
Total comprehensive income
Other comprehensive income
631
66
4,282
4,446
Notes to the Consolidated Financial Statements (continued)
9
125,866
RMB million
December 2016
As at 31
As at 31
December 2017
RMB million
Total
Unlisted
Listed in Singapore
For the year ended 31 December 2017
Listed in Hong Kong, PRC
Debt securities
Total
Subordinated bonds/debts
Government bonds
Government agency bonds
Corporate bonds
Debt securities
208
9.1 Held-to-maturity securities
FINANCIAL ASSETS
Listed in Mainland, PRC
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
8
For the year ended 31 December 2017
29.991%
43.686%
Percentage of equity interest held
51.00%
10.56%
43.86%
35.00%
40.00%
29.79%
43.686%
PRC
PRC
PRC
PRC
Hong Kong, PRC
PRC
Country of incorporation
40.00%
35.00%
43.86%
51.00%
79,601
191,894
2,072,915
Total assets
RMB
million
Sanya
Company
China
Unicom
RMB
million
million
Sanya Company
million
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:
(15,311)
Joint venture
Pipeline Company
COFCO Futures
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
Sino-Ocean
205
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.
Annual Report 2017
10,651
CLP&C
Pipeline Company
CLP&C
Sino-Ocean
CGB
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
COFCO Futures
PRC
PRC
PRC
Hong Kong, PRC
PRC
Country of incorporation
Sanya Company
Joint venture
China Unicom
PRC
36,243
573,617
888
10,204
Net profit/(loss)
5,644 274,829
399
61,142
49,236
50,531
Total revenues
6,259
291
21,347
1,466
8,185
13,626
53,459
Net carrying value of the investments
(1,010)
Impairment
21,783
291
820
3,055
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
206
(20)
1,454
3,055
135
785
135
7,171
Total comprehensive income
(230)
(35)
912
(2,332)
Other comprehensive income
(20)
1,684
7,872
(i)
51.00%
135,393
10.56%
21,783
holders of the associates and
Total equity attributable to equity
571
307,018
35,309
2,631
20,463
58,728
joint ventures
113,846
317
266,599
934
8,020
59,138
133,166
1,959,069
Total liabilities
Total equity
571
113,846
2,631
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
48,502 20,463
ventures after adjustments
Total equity attributable to equity
676
(2,617)
2,267
Total adjustments (i)
571
135,393
35,309
holders of the associates and joint
Impairment
As at 31 December 2017
(24)
2,238
2,201
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.
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.
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 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.
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.
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.
China Life Insurance Company Limited Annual Report 2017
1,191
Financial Report
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
8 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
As at 1 January
Change of the cost
Share of profit or loss
Declared dividends
12,680
11,245
203
Equity Method
1,237
(46)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
7 INVESTMENT PROPERTIES (continued)
Cost
As at 1 January 2016
Additions
As at 31 December 2016
Accumulated depreciation
As at 1 January 2016
Charge for the year
(244)
As at 31 December 2016
As at 31 December
As at 31 December 2016
Fair value
As at 1 January 2016
As at 31 December 2016
Buildings
RMB million
1,435
1,435
(198)
Net book value
China Life Insurance Company Limited Annual Report 2017
Sino-Ocean Group Holding
53,459
31 December
Accounting
As at
Movement
119,766
161,472
(831)
(685)
(820)
Change
of the
(1,862)
7,143
68,387
37,110
47,175
119,766
RMB million
2016
RMB million
2017
5,855
43.686%
Share of
profit
(956)
4,186
50,229
32,162
Equity Method
China Guangfa Bank
Co., Ltd. ("CGB") (i)
Associates
interest impairment
of equity amount of
Other
Percentage Accumulated
dividends movements impairment
or loss
cost
2016
Cost
method
Provision
of
equity
Declared
As at 31
December
2017
4,629
As at 1 January 2016
3,064
China Life Insurance Company Limited Annual Report 2017
Financial Report
201
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
7 INVESTMENT PROPERTIES
Cost
As at 1 January 2017
Additions
As at 31 December 2017
Accumulated depreciation
As at 1 January 2017
Charge for the year
As at 31 December 2017
202
Buildings
RMB million
1,435
1,931
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).
30,389
485
10,548
(24)
Charge for the year
Disposals
As at 31 December 2016
(24)
(24)
Net book value
As at 1 January 2016
As at 1 January 2016
16,783
382
7,565
366
26,974
As at 31 December 2016
17,027
1,903
426
1,878
2,201
Other equity movements
(302)
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
(58)
(244)
3,366
48,586
Cash and cash equivalents
Securities sold under agreements to repurchase
67,046
43,538
48,586
(192,373)
Investment contracts (iii)
(232,500)
(195,706)
(229,222)
36,185
67,046
43,538
136,809
Securities purchased under agreements to resell
209,124
136,809
209,124
Financial liabilities at fair value through profit or loss
Securities at fair value through profit or loss
6,333
6,333
789,897
745,586
789,897
745,586
36,185
(2,031)
(2,529)
11,223
717,037
594,730
692,984
619,152
383,504
226,573
375,899
Available-for-sale securities, at fair value
231,005
538,325
449,400
538,325
6,333
6,333
(81,088)
(87,309)
449,400
(2,529)
Term deposits
Loans (iii)
Total
50,641
55,945
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
10 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The table below presents the carrying value and estimated fair value of major financial assets and liabilities, and
investment contracts:
(2,031)
Carrying value
As at 31
December 2017
RMB million
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
Held-to-maturity securities (ii)
5,852
Statutory deposits-restricted
(16,170)
(81,088)
December 2017
RMB million
As at 31
As at 31
2,134
3,046
1,783
2,351
351
695
December 2016
2,134
China Life Insurance Company Limited Annual Report 2017
Total
Current
Non-current
Total
Others
Prepaid to constructors
Due from related parties
Disbursements
Automated policy loans
3,046
RMB million
15,466
911
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
22,013
33,952
6,348
8,019
15,665
25,933
22,013
33,952
3,217
6,571
403
927
987
1,718
2,705
2,814
3,050
5,855
6,201
Investments receivable
Land use rights
(87,309)
216
Total
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).
Notes to the Consolidated Financial Statements (continued)
The estimates and judgements to determine the fair value of financial assets are described in Note 3.2.
(i)
Non-current
(18,794)
(16,170)
(18,794)
Interest-bearing loans and borrowings
(38,204)
(37,998)
Bonds payable (iii)
(ii)
For the year ended 31 December 2017
11
12
Non-current
Current
103
104
125
527
123
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
13 OTHER ASSETS
44,722
Equity securities
Current
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
455,124
362,595
410,195
37,163
44,929
As at 31
December 2016
RMB million
Maturing:
December 2017
RMB million
Within one year
After five years but within ten years
Debt securities
9.6 Securities at fair value through profit or loss
FINANCIAL ASSETS (continued)
9
For the year ended 31 December 2017
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
Total
After ten years
After one year but within five years
As at 31
Total
Subtotal
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
27,880
31,651
Preferred stocks
100,131
129,424
Common stocks
105,290
91,344
Funds
Total
20,837
20,837
810,734
Unlisted
Listed overseas
Listed in Hong Kong, PRC
Listed in Mainland, PRC
Equity securities
Subtotal
Unlisted
Listed in Mainland, PRC
Debt securities
9.5 Available-for-sale securities (continued)
Government bonds
FINANCIAL ASSETS (continued)
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
212
44,789
Government agency bonds
Others
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
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.
209,124
136,809
Total
54,718
53,918
Subtotal
10,746
7,210
Total
Unlisted
9.8 Accrued investment income
December 2017
RMB million
55,945
50,641
Total
2,540
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
43,518
20
36,055
130
As at 31
December 2016
RMB million
As at 31
6,284
7,187
74
9,892
154,406
82,891
3,133
4,811
144,131
66,915
6,762
9,084
380
2,081
RMB million
December 2016
December 2017
RMB million
As at 31
As at 31
Subtotal
Common stocks
Funds
Equity securities
Subtotal
14,683
44,026
40,035
53,918
79
Listed overseas
Listed in Hong Kong, PRC
37,614
39,442
Listed in Mainland, PRC
14 INSURANCE CONTRACTS
Subtotal
154,406
82,891
Corporate bonds
19,512
89
134,805
Unlisted
292
Listed overseas
26,776
Listed in Mainland, PRC
Debt securities
Total
209,124
136,809
54,718
55,823
(a) Process used to decide on assumptions
5,140
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
After one year but within five
years
After five years but within ten years
Total
As at 31
December 2017
As at 31
December 2016
RMB million
RMB million
Within one year
97,076
349,524
2,800
344,790
7,700
449,400
538,325
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.
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.
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.
9.4 Statutory deposits - restricted
Contractual maturity schedule:
185,835
Maturing:
9.3 Term deposits
FINANCIAL ASSETS (continued)
RMB million
RMB million
128,856
112,592
132,575
70,978
90,556
25,503
31,517
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
Financial Report
209
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
9
As at 31
December 2017
RMB million
As at 31
December 2016
Within one year
After one year but within five
21,653
Government agency bonds
157,765
146,310
Corporate bonds
197,133
188,337
Subordinated bonds/debts
13,495
16,708
Wealth management products
430
11,321
Others (i)
61,669
15,429
Subtotal
455,124
399,758
Equity securities
(i)
24,632
December 2016
RMB million
As at 31
years
Total
3,933
1,720
2,400
4,613
6,333
6,333
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.
210
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
9
FINANCIAL ASSETS (continued)
9.5 Available-for-sale securities
Available-for-sale securities, at fair value
Debt securities
Government bonds
As at 31
December 2017
RMB million
December 2016
December 2017
RMB million
As at 31
14 INSURANCE CONTRACTS (continued)
(a)
Process used to decide on assumptions (continued)
(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:
Individual Life
Group Life
RMB Per Policy
RMB Per Policy
% of Premium
As at 31 December 2017
As at 31 December 2016
45.00
37.00-45.00
0.85%-0.90%
0.85% 0.90%
25.00
15.00
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.
(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.
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.
218
Financial Report
China Life Insurance Company Limited Annual Report 2017
For the year ended 31 December 2017
217
As at 31
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:
Discount rate assumptions
4.85%
Financial Report
(ii)
As at 31 December 2017
As at 31 December 2016
4.45%-4.85%
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:
As at 31 December 2017
As at 31 December 2016
Discount rate assumptions
3.31%-4.86%
3.23%-4.68%
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.
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.
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 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.
Risk margin is considered in the Group's mortality and morbidity assumptions.
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
reserves.
% of Premium
RMB million
Policy loans
Total
Maturing:
Within one year
After one year but within five
years
years
After five but within ten years
After ten years
Total
9.2 Loans
(i)
As at 31
December 2017
December 2016
RMB million
107,957
92,442
275,547
134,131
383,504
226,573
As at 31
FINANCIAL ASSETS (continued)
Other loans (i)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
9
2,085
RMB million
- Claims and claim adjustment expenses
RMB million
2016
13,674
11,435
- Unearned premiums
11,762
10,367
Total, net
2017
2,022,151
1,845,975
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)
(c) Movements in liabilities of short-term insurance contracts
The table below presents movements in claims and claim adjustment expense reserve:
220
Notified claims
Incurred but not reported
1,748
China Life Insurance Company Limited
9,453
- Claims arising in current year
11,538
Claims incurred
(8,877)
(10,460)
27,120
-Cash paid for prior year claims
(16,364)
178
391
- Claims arising in prior years
Total as at 31 December - Gross
Notified claims
Incurred but not reported
Total
224
20
36,836
47,430
36,836
47,430
Short-term insurance contracts
Current
Non-current
33,926
(21,404)
Cash paid for current year claims
Cash paid for claims settled
Total as at 1 January - Gross
9,268
7,520
1,824,173
14 INSURANCE CONTRACTS (continued)
Long-term insurance contracts
Gross
(b) Net liabilities of insurance contracts
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
RMB million
For the year ended 31 December
2017
2016
Total
Securities purchased under agreements to resell
Total
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
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
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.
36,836
47,430
STATUTORY INSURANCE FUND
RMB million
Long-term insurance contracts
Short-term insurance contracts
- Claims and claim adjustment expenses
- Unearned premiums
Net
(2,011)
(2,982)
Total, ceded
(125)
(527)
- Unearned premiums (Note 12)
(103)
(104)
- Claims and claim adjustment expenses (Note 12)
Short-term insurance contracts
(1,783)
(2,351)
1,996,715
Long-term insurance contracts (Note 12)
1,847,986
2,025,133
10,492
12,289
11,538
13,778
1,825,956
1,999,066
As at 31
December 2016
RMB million
RMB million
December 2017
As at 31
Total, gross
Recoverable from reinsurers
7,628
8,006
813
Net
As at 1 January
10,492
(125)
10,367
7,944
(87)
7,857
Increase
12,289
(527)
11,762
10,492
(125)
10,367
Release
(10,492)
125
(10,367)
(7,944)
87
(7,857)
As at 31 December
12,289
(527)
11,762
10,492
Ceded
Gross
Net
Ceded
RMB million
RMB million
2016
2017
Total
Guaranteed loans
Guaranteed loans
Guaranteed loans
Guaranteed loans
Guaranteed loans
Credit loans
INTEREST-BEARING LOANS AND BORROWINGS
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
(125)
222
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
2017
RMB million
2016
RMB million
Gross
Total as at 31 December - Gross
53,688
10,367
Notes to the Consolidated Financial Statements (continued)
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
Investment contracts without DPF
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
175,335
12
142,006
12
232,500
195,706
Financial Report
China Life Insurance Company Limited
Annual Report 2017
221
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
15 INVESTMENT CONTRACTS (continued)
The table below presents movements of investment contracts with DPF:
16
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.
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.
1,825,956
1,999,066
For the year ended 31 December 2017
14 INSURANCE CONTRACTS (continued)
(d) Movements in liabilities of long-term insurance contracts
The table below presents movements in the liabilities of long-term insurance contracts:
As at 1 January
Premiums
Release of liabilities (i)
Accretion of interest
Change in assumptions
- Change in discount rates
- Change in other assumptions (ii)
2017
RMB million
1,825,956
464,898
2016
China Life Insurance Company Limited Annual Report 2017
RMB million
1,698,773
390,438
(353,048)
78,232
73,644
6,599
14,262
2,424
474
219
1,413
Other movements
As at 31 December
(i)
(ii)
(379,262)
9,553
50,295
4,680
Financial Report
223
Annual Report 2017
China Life Insurance Company Limited
Financial Report
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
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
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.
81,088
87,309
81,088
87,309
81,088
87,309
15,609
12,307
65,479
75,002
As at 31
December 2016
RMB million
As at 31
December 2017
RMB million
Total
Within 30 days
Maturing:
Total
Stock exchange market
Interbank market
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
19
OTHER LIABILITIES
127
Interest payable of debt instruments
Others
657
689
Tax payable
654
833
Stock appreciation rights (Note 31)
1,611
1,906
Agent deposits
1,032
2,668
Subordinated bonds are measured at amortised cost as described in Note 2.14.
Payable to constructors
5,659
Brokerage and commission payable
5,488
6,252
Payable to third party holders of consolidated trust schemes and debt investment schemes
9,614
Interest payable to policyholders
7,234
10,129
Salary and welfare payable
RMB million
As at 31
December 2016
As at 31
December 2017
RMB million
3,713
4,829
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.
18
1.50%
9 June 2017
6,521
6,142
2.40%
30 September 2019
6,579
6,338
2.30%
27 September 2019
2,339
2,413
3.54%
17 June 2019
RMB million
As at 31
December 2016
As at 31
December 2017
RMB million
Interest rate
Maturity date
53,688
57,153
1,106
1,183
(36)
(37)
(2,357)
(2,510)
731
11 January 2018
1.495%
780
17
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
38,000
China Life Insurance Company Limited Annual Report 2017
Total
5 November 2022
5 November 2012
29 June 2022
29 June 2012
28,000
10,000
4.70%
4.58%
As at 31
December 2016
RMB million
BONDS PAYABLE (continued)
As at 31
December 2017
RMB million
Maturity date
Par value
Issue date
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).
BONDS PAYABLE
17
3.8% when EURIBOR is negative.
(i)
16,170
18,794
3,121
EURIBOR + 3.8% (i)
6 December 2020
Interest rate p.a.
30,669
(7,847)
19,608
(283)
34,101
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
259,708
(1,145)
260,853
Life insurance death and other benefits
For the year ended 31 December 2017
33,818
RMB million
RMB million
Net
Ceded
Gross
(7,094)
6,183
(48)
(275)
RMB million
173,085
(568)
172,517
408,499
Total
126,619
(537)
127,156
Increase in insurance contract liabilities
27,269
(250)
27,519
Accident and health claims and claim adjustment expenses
253,157
(667)
253,824
Life insurance death and other benefits
For the year ended 31 December 2016
466,043
(1,996)
468,039
Total
191
(179)
(6,319)
8,179
6,038
42
5,992
165
(2,513)
(2,643)
8,505
2,808
46
(123)
189
(143)
(9)
(114)
RMB million
2016
2017
RMB million
For the year ended 31 December
Subtotal
Impairment
Realised gains
Total
(1,454)
Net realised gains on financial assets are from available-for-sale securities.
Financial Report
(918)
(1,542)
INSURANCE BENEFITS AND CLAIMS EXPENSES
Total
Financial liabilities at fair value through profit or loss
Stock appreciation rights
Equity securities
Debt securities
24
RMB million
2016
For the year ended 31 December
2017
RMB million
NET FAIR VALUE GAINS THROUGH PROFIT OR LOSS
23
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
225
China Life Insurance Company Limited Annual Report 2017
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.
Equity securities
407,045
INVESTMENT CONTRACT BENEFITS
Expenses not deductible for tax purposes (i)
Unused tax losses
Tax computed at the statutory tax rate
Non-taxable income (i)
Profit before income tax
(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:
4,257
8,919
(943)
(538)
Tax losses utilised from previous periods
5,200
RMB million
2016
2017
RMB million
For the year ended 31 December
Total tax charges
Deferred taxation
Current taxation - Enterprise income tax
The amount of taxation charged to net profit represents:
9,457
Others
Income tax at the effective tax rate
(i)
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
108
252
(49)
(15)
58
6
4,259
6,105
(6,080)
5,961
10,418
23,842
41,671
2016
RMB million
RMB million
For the year ended 31 December
2017
(a)
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.
58
59
27 PROFIT BEFORE INCOME TAX
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
4,601
181
424
3,126
1,460
3,144
1,033
2016
RMB million
For the year ended 31 December
2017
RMB million
China Life Insurance Company Limited Annual Report 2017
226
Total
Interest expenses for securities sold under agreements to repurchase
Interest expenses for interest-bearing loans and borrowings
Interest expenses for bonds payable
FINANCE COSTS
26
Benefits of investment contracts are mainly the interest credited to investment contracts.
Profit before income tax is stated after charging/(crediting) the following:
25
28
Housing benefits
(582)
(52)
2,083
2,240
1,798
2,357
838
933
15,955
18,741
RMB million
RMB million
2016
For the year ended 31 December
2017
ΤΑΧΑΤΙΟΝ
Remuneration in respect of audit services provided by auditors
Foreign exchange (gains)/losses
Depreciation and amortisation
Contribution to the defined contribution pension plan
Employee salaries and welfare costs
Subtotal
4,767
Debt securities
527
920
19,744
27,019
5,683
3,618
17,499
(1,401)
1
- Others
(1,401)
23,827
attributable to participating
policyholders
- Portion of fair value changes on
3,759
3,759
- Available-for-sale securities
comprehensive income
(Charged)/credited to other
538
745
(1,279)
1,072
available-for-sale securities
(Charged)/credited to net profit
27,851
12,018
(494)
2,360
(4,871)
(ii)
(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
16,320
China Life Insurance Company Limited Annual Report 2017
Impairment
Realised gains
As at 31 December 2017
NET REALISED GAINS ON FINANCIAL ASSETS
22
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.
109,147
122,727
971
746
24,854
(7,768)
1,615
(2,975)
Others
RMB million
Investments
RMB million
RMB million
Insurance
attributable to participating
policyholders
available-for-sale securities
- Portion of fair value changes on
- Available-for-sale securities
comprehensive income
As at 1 January 2016
(Charged)/credited to net profit
(Charged)/credited to other
Deferred tax assets/(liabilities)
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:
(c)
28 TAXATION (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
227
Annual Report 2017
China Life Insurance Company Limited
Financial Report
Total
RMB million
(6,737)
(i)
(iii)
(6,408)
As at 1 January 2017
(7,768)
1,615
(2,975)
(6,408)
As at 31 December 2016
(54)
(54)
(ii)
(4,343)
- Others
12,639
12,639
(16,953)
943
431
1,126
(614)
1,184
(16,686)
(1,451)
(4,343)
(i)
million
As at 31 December 2017
Amount Percentage
of holding
Guo Yang Guo Sheng (i)
Relationship with the Company
Decrease
million
100.00%
RMB2,176
Fortune Bamboo Limited
directly
directly
100.00%
RMB1,632
100.00%
RMB1,632
Sunny Bamboo Limited
directly
directly
100.00%
RMB1,734
100.00%
RMB1,734
Golden Bamboo Limited
100.00%
directly
directly
Glorious Fortune
100.00%
100.00%
RMB2,176
Forever Limited
directly
CL Hotel Investor, L.P.
100.00%
100.00%
directly
directly
directly
100.00%
directly
directly
USD0.6
100.00%
indirectly
China Life Insurance Company Limited Annual Report 2017
233
Financial Report
directly
Notes to the Consolidated Financial Statements (continued)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(f) Percentages of holding of related parties with control relationship and changes during the
year (continued)
Subsidiaries (continued)
As at 31 December 2016
Amount
million
Percentage
of holding
Increase
million
For the year ended 31 December 2017
RMB3,250
directly
100.00%
indirectly
Franklin Shenzhen Company
China Century Core
USD894
Fund Limited
100.00%
indirectly
USD2
USD896
USD0.6
100.00%
("Century Core Fund")
CL Health
RMB1,730
100.00%
RMB1,730
100.00%
indirectly
RMB3,250
New Capital Wisdom Limited (i)
99.997%
directly
100.00%
indirectly
(ii.d) (viii)
396
298
Property leasing income received from CLI
Payment of a business management service fee to
CL Ecommerce
37
38
(vi)
64
Payment of an asset management fee to CLI
56
Interest on deposits received from CGB
Commission expenses charged by CGB
1,382
(v)
92
ཚུག
685
42
Transactions between CGB and the Group
Transactions between Sino-Ocean and the Group
Cash dividend from Sino-Ocean (Note 8)
Interest payment of corporate bonds received
from Sino-Ocean
141
13
Payment of an agency fee to CLP&C
(iii)
1
2
Rental and a service fee received from CLP&C
59
43
Cash dividend from CLP&C (Note 8)
Payment to CLI for purchase of fixed assets
69
Payment of rental, project fee and other expenses to CLRE
Property leasing expenses charged by CLI
50
44
(iv)
78
81
Asset management fee received from CLI
9
135
2,337
Project management fee paid to Sino-Ocean
553
joint ventures to the Group
Transactions between AMC and the Company
Payment of an asset management fee to AMC
Distribution of profits from AMC
Transactions between Pension Company and the Company
For the
year
2017
ended 31 December
Distribution of profits from other associates and
Notes
2016
RMB million
1,240
437
(ii.e) (viii)
1,154
1,081
187
215
RMB million
Transactions between EAP and the Group
Contribution to EAP
ventures and the Group
236
248
252
27
38
55
60
368
700
Transaction between other associates and joint
337
China Life Insurance Company Limited
Annual Report 2017
235
Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Transactions with significant related parties (continued)
Financial Report
3,030
(iii) (viii)
Agency fee received from CLP&C
99.98%
directly
Partnership
(Limited Partnership)
(“Yuan Shu Yuan Pin”) (i)
Shanghai Wansheng Industry
RMB3,900
RMB3,900
99.998%
Investment Management
Partnership
(Limited Partnership)
234
("Wan Sheng") (i)
Ningbo Meishan Bonded
(i)
Port Area Bai Ning
Investment Partnership
("Bai Ning") (i)
directly
RMB1,680
RMB606
Shanghai Yuan Shu Yuan Pin
New Fortune Wisdom Limited (i)
100.00%
indirectly
Wisdom Forever Limited
USD447
USD447
100.00%
Partnership (i)
RMB606
indirectly
RMB606
RMB606
99.98%
Investment Management
directly
Partnership
(Limited Partnership)
("Yuan Shu Yuan Jiu”) (i)
Shanghai Yuan Shu Yuan Jiu
RMB1,680
99.98%
directly
4,638
8,116
125
143
(ii.b)
119
74
Asset management
Payment of dividends from the Company to CLIC
Distribution of profits from AMC to CLIC
Asset management fee received from CL Overseas
Payment of insurance premium to CLP&C
(ii.c)
14
36
44
49
Claim and other payments received from CLP&C
16
18
fee received from CLP&C
124
107
(ii.a)
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
RMB million
Transactions with CLIC and its subsidiaries
Policy management fee received from CLIC
(i) (viii)
740
869
Asset management
fee received from CLIC
RMB1,167
100.00%
and indirectly
New Aldgate Limited
RMB19,324
CLIC
Percentage
of holding
As at 31 December 2017
Amount
million
Decrease
million
Increase
million
Percentage
of holding
million
Amount
As at 31 December 2016
Shareholder
year
(f) Percentages of holding of related parties with control relationship and changes during the
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
232
(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.
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.
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.
USD2
USD2
(ii)
(i)
("Franklin Shenzhen Company")
RMB1,730
68.37%
RMB19,324
68.37%
Financial Report
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
Legal
representative
RMB1,730
Immediate and
ultimate holding
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
of holding
million
Percentage
Amount
As at 31 December 2016
Subsidiaries
company
Notes to the Consolidated Financial Statements (continued)
Management Co., Limited
China Life Franklin (Shenzhen)
As at 31
December 2017
Decrease
million
million
million
Increase
As at 31
December 2016
Name of related party
(e) Registered capital of related parties with control relationship and changes during the year
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
China Life Insurance Company Limited Annual Report 2017 231
Financial Report
Under common control of CLIC
A pension fund jointly set up by the Company and others
China Life Enterprise Annuity Fund (“EAP”)
("CL Ecommerce")
China Life Ecommerce Company Limited
Limited ("CLI")
Under common control of CLIC
China Life Investment Holding Company
Under common control of CLIC
("CL Overseas")
China Life Insurance (Overseas) Company Limited
Under common control of CLIC
China Life Real Estate Co., Limited ("CLRE")
million
CLIC
AMC
China Life Pension Company
("CL Health")
Management Co., Limited
China Life (Beijing) Health
RMB6,800
RMB6,800
("Rui Chong Company") (ii)
Investment Co., Limited
Shanghai Rui Chong
RMB200
RMB200
CL Wealth
RMB588
RMB588
Equity Investment Fund
CL AMP
RMB931
RMB1,060
("Suzhou Pension Company”) (i)
Company Limited
and Retirement Investment
China Life (Suzhou) Pension
RMB3,400
RMB3,400
Limited ("Pension Company")
RMB4,000
RMB4,000
RMB4,600
RMB4,600
RMB1,991
RMB1,167
China Life Insurance Company Limited Annual Report 2017
Financial Report
directly
100.00%
RMB1,586
RMB260
100.00%
RMB1,326
Suzhou Pension Company
Limited ("AMC HK")
indirectly
indirectly
Management Company
50.00%
HKD130
50.00%
HKD130
China Life Franklin Asset
Significant related parties
and indirectly
74.27%
directly
directly
RMB2,746
74.27%
RMB2,746
Pension Company
directly
60.00%
RMB1,680
directly
CL AMP
RMB500
85.03%
directly
directly
100.00%
RMB6,800
RMB601
100.00%
RMB6,199
Rui Chong Company
indirectly
indirectly
100.00%
100.00%
King Phoenix Tree Limited
million
directly
100.00%
100.00%
Golden Phoenix Tree Limited
indirectly
indirectly
100.00%
RMB200
100.00%
RMB200
CL Wealth
indirectly
85.03%
RMB500
directly
230
As at 31 December 2017
Percentage
of holding
60.00%
(2,213)
(1,381)
Subtotal
(11,344)
(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.
- deferred tax liabilities to be settled within 12 months
(13,037)
(9,131)
- deferred tax liabilities to be settled after 12 months
RMB1,680
AMC
Amount
Decrease
million
Increase
million
Rental received from Pension Company
Notes to the Consolidated Financial Statements (continued)
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
directly
Deferred tax assets:
- deferred tax assets to be recovered within 12 months
Subtotal
Deferred tax liabilities:
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
1,980
3,024
4,493
3,626
6,473
6,650
- deferred tax assets to be recovered after 12 months
Agency fee received from Pension Company for
indirectly
Marketing fee income for promotion of annuity
to the Company
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.
China Life Insurance Company Limited Annual Report 2017
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
(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.
(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)
entrusted sales of annuity funds
China Life Insurance Company Limited Annual Report 2017
238
Financial Report
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 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.
(i)
(iv)
(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.
(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.
Notes (continued):
Transactions with significant related parties (continued)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2017
(iii)
Notes:
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.
443
70
business from Pension Company
43
(vii)
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
34
526
Distribution of profits from the Group's other subsidiaries
260
entities/other subsidiaries and the Company
Transactions between the consolidated structured
134
203
Distribution of profits from the consolidated structured
entities to the Company
Distribution of profits from other associates and joint
Transactions between Rui Chong Company and the Company
Capital contribution to Rui Chong Company
ventures to the Company
3,944
Transaction between other associates and joint ventures
and the Company
601
4,985
(5,671)
18,794
At 31 December 2017
2
4,987
of consolidated structured entities
Changes arising from losing control
(497)
(497)
Foreign exchange movement
(33,558)
Interest expense
141,557
6,228
(38,000)
3,121
Changes from financing cash flows
813
5,488
81,088
37,998
16,170
At 1 January 2017
87,309
RMB million
764
6,252
For the year ended 31 December 2017
112,482
RMB million
As at 31
December
As at 31
December
(b) Operating lease commitments - - as lessee
Total
Property, plant and equipment
Others
Investments
Contracted, but not provided for
investments:
246
The Group had the following capital commitments relating to property development projects and
(a) Capital commitments
39 COMMITMENTS
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.
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
127
RMB million
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).
activities
2017
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).
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
135
Others
8,445
3,300
1,927
3,218
Appropriation to reserves
(7,912)
(847)
21
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.
Total
244
Notes to the Consolidated Financial Statements (continued)
schemes
repurchase
RMB million
RMB million
RMB million
payable
borrowings
financing
investment
agreements to
Bonds
loans and
sold under
bearing
interest payable
related to
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
China Life Insurance Company Limited Annual Report 2017
2016
Later than one year but not later than five years
RMB million
5,653
40(h)
Statutory deposits-restricted
535,361
444,279
40(g)
Term deposits
221,535
381,253
40(f)
Loans
594,054
716,346
40(e)
Held-to-maturity securities
76,427
104,039
40(d)
Investments in associates and joint ventures
27,353
39,662
40(c)
Investments in subsidiaries
1,247
1,401
40(b)
Investment properties
5,653
29,722
Available-for-sale securities
797,108
14,252
30,480
40(m)
2,134
3,046
12
Total assets
Cash and cash equivalents
Other assets
Reinsurance assets
13,421
14,121
11
Premiums receivable
55,774
50,183
40(1)
Accrued investment income
43,100
35,761
40(k)
Securities purchased under agreements to resell
204,046
127,544
40(j)
Securities at fair value through profit or loss
758,802
40(i)
RMB million
36,313
Property, plant and equipment
The operating lease payments charged to profit before income tax for the year ended 31 December 2017
were RMB1,204 million (2016: RMB994 million).
1,423
1,929
27
44
764
1,101
632
784
RMB million
RMB million
2016
2017
As at 31
December
Total
Later than five years
Later than one year but not later than five years
Not later than one year
As at 31
December
The future minimum lease payments under non-cancellable operating leases are as follows:
45,079
91,784
1
5,462
5,202
39,616
86,582
(c) Operating lease commitments - as lessor
40(a)
The future minimum rentals receivable under non-cancellable operating leases are as follows:
Not later than one year
As at 31
December 2016
RMB million
RMB million
Notes
As at 31
December 2017
ASSETS
As at 31 December 2017
Statement of financial position
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
463
741
10
76
267
411
186
254
RMB million
RMB million
2016
2017
As at 31
December
China Life Insurance Company Limited Annual Report 2017
Total
Later than five years
(7,086)
As at 31
December
Other comprehensive income for the year
24,787
7
year
2017
For the
(i) Key management personnel compensation
(4)
(604)
(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
592
(31)
365
1,041
330
199
26,342
ended 31 December
33,385
2016
RMB million
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.
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.
Transactions with state-owned enterprises
(j)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
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
Owned by CLIC (i)
2
(206)
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-
(h) Amounts due from/to significant related parties
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
240
Financial Report
(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.
(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.
Notes (continued):
Transactions with significant related parties (continued)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
239
Annual Report 2017
China Life Insurance Company Limited
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.
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 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.
(vi)
(v)
Notes (continued):
Transactions with significant related parties (continued)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Financial Report
Ocean.
2
The resulting balances due from and to significant related parties of the Group
Amount due from CLIC
Amount due from CLP&C
(265)
12
9
(6)
332
428
47
122
529
420
As at 31
December 2016
RMB million
December 2017
RMB million
As at 31
The resulting balances due from and to subsidiaries of the Company
Amount due from Pension Company
Amount due to CL Ecommerce
Amount due from CL Ecommerce
Amount due from Sino-Ocean
Corporate bonds of Sino-Ocean
Amount due to CGB
Amount due from CGB
Wealth management products of CGB
Interbank certificates of deposits of CGB
Amount deposited with CGB
Amount due from CLRE
Amount due to CLI
Amount due from CLI
Amount due to CLP&C
Amount due from CL Overseas
Owned by other equity holders
Including: Domestic listed
Overseas listed (ii)
44,186
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
operations
reserve
fund
fund
foreign
General
reserve
reserve
the equity
method
for-sale
securities
reserves
Other
Share
premium
translating
Statutory Discretionary
25,239
under
163,381
(24,863)
27,241
28,225
30,166
(738)
5,100
1,146
53,860
As at 1 January 2017
145,007
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
Appropriation to reserves
(25,774)
(918)
Other comprehensive income for the year
available-
Exchange
differences on
Unrealised comprehensive
gains/
income
of investees
As at 31
December 2017
RMB million
Decrease
RMB million
Increase
RMB million
December 2016
RMB million
As at 31
(a) Basic information
35 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
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.
(i)
Total
Core Tier 2 Capital Securities
7,791
Total
7,791
Share of other
(losses) from
36 RESERVES
For the year ended 31 December 2017
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
145,007
7,791
295,830
313,142
303,621
320,933
As at 31
December 2016
RMB million
As at 31
December 2017
RMB million
Equity attributable to ordinary equity holders of 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 non-controlling interests
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
62,606
Notes to the Consolidated Financial Statements (continued)
2,645,487
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
Other equity instruments
40(q)
28,265
7,791
28,265
2,645,487
2,831,375
Total liabilities and equity
281,012
291,159
Total equity
7,543
100,840
Retained earnings
144,116
144,240
40(r)
Reserves
7,791
110,863
3,991
40(p)
Deferred tax liabilities
83,910
Policyholder dividends payable
195,706
232,500
15
Investment contracts
87,725
1,847,986
14
Insurance contracts
Liabilities
LIABILITIES AND EQUITY
As at 31
December 2016
RMB million
For the year ended 31 December 2017
2,025,133
248
Bonds payable
37,998
30,556
39,678
40(0)
Other liabilities
35,252
18,505
17
Premiums received in advance
44,820
Annuity and other insurance balances payable
81,039
85,316
40(n)
Securities sold under agreements to repurchase
39,038
China Life Insurance Company Limited Annual Report 2017
RMB million
Notes to the Consolidated Financial Statements (continued)
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2017
As at 31
December 2017
Financial Report
247
Annual Report 2017
Statement of financial position (continued)
China Life Insurance Company Limited
Financial Report
2,831,375
Notes
As at 31 December 2017
(926)
(990)
(4,652)
(7,249)
40,262
(13,817)
Charge for the
year
(875)
(596)
(129)
As at 1 January 2016
Accumulated depreciation
24,688
1,525
10,387
1,405
6,682
(144)
As at 31 December 2016
(1,173)
(26)
(473)
(140)
(430)
(104)
44,687
(1,744)
Disposals
36
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
253
China Life Insurance Company Limited Annual Report 2017
Financial Report
Non-controlling interests in subsidiaries are not significant to the Company.
(24)
Investment
99.98% directly
PRC
Bai Ning
Investment
Not applicable
99.998% directly
PRC
Not applicable
Disposals
(24)
Disposals
426
136
22
620
As at 31 December 2016
(8,088)
(4,822)
As at 31 December 2016
(983)
(14,941)
Impairment
As at 1 January 2016
(24)
(24)
Charge for the
year
(1,048)
5,606
Additions
4,754
22,606
1,694
443
10,951
619
36,313
Financial Report
China Life Insurance Company Limited Annual Report 2017
249
Financial Report
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)
(a) Property, plant and equipment (continued)
Cost
Office
equipment
furniture and
Buildings
fixtures
Transfers upon completion
1,174
(1,438)
7,544
1,368
6,481
As at 31 December 2017
23,587
RMB million
Total
construction improvements
Leasehold
Assets
under
Motor
vehicles
As at 1 January 2016
13
29,722
10,387
177
631
31
1,282
(8)
256
(14,941)
(1,857)
46
691
As at 31 December 2017
(8,998)
(4,990)
(940)
(1,179)
(16,107)
Impairment
As at 1 January 2017
422
1,860
Wan Sheng
16,576
As at 1 January 2017
Net book value
477
(24)
As at 31 December 2017
Disposals
year
Charge for the
(24)
(24)
(24)
Investment
99.98% directly
99.98% directly
(266)
(49)
(217)
1,513
1,513
Buildings
RMB million
As at 31 December 2016
As at 1 January 2016
Fair value
As at 31 December 2016
1,296
As at 1 January 2016
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
Net book value
(b) Investment properties (continued)
1,247
2,377
Principal activities
Registered capital
Percentage of
equity interest held
and operation
Name
Place of incorporation
2017:
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December
27,353
39,662
2,415
RMB million
As at
31 December
2016
2017
31 December
As at
Unlisted investments at cost
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(c) Investments in subsidiaries
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited Annual Report 2017
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.
RMB million
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)
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
10,387
As at 1 January 2017
422
16,576
As at 31 December 2016
26,421
356
7,544
378
1,829
16,314
As at 1 January 2016
Net book value
1,860
Additions
As at 31 December 2017
Accumulated depreciation
Financial Report
251
China Life Insurance Company Limited Annual Report 2017
Financial Report
2,688
2,377
1,401
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
AMC
PRC
60.00% directly
RMB4,000 million
Health management
RMB1,730 million
100.00% directly
PRC
Franklin Shenzhen Company
Guo Yang Guo Sheng
CL Health
Investment
Not applicable
100.00% indirectly
The British
Cayman Islands
PRC
Century Core Fund
Not applicable
100.00% directly
The British Virgin Islands
Investment
Not applicable
100.00% directly
The British Virgin Islands
Investment
Not applicable
100.00% directly
Investment
100.00% indirectly
USD2 million
Investment
PRC
Yuan Shu Yuan Pin
Investment
Not applicable
(1,048)
(177)
PRC
Yuan Shu Yuan Jiu
Investment
Not applicable
100.00% indirectly
The British
Cayman Islands
Investment
Not applicable
100.00% indirectly
Investment
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
The British Virgin Islands
Not applicable
Investment
100.00% directly
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
Investment in
retirement properties
Fund management
Financial service
CL AMP
PRC
Suzhou Pension Company
50.00% indirectly
Hong Kong, PRC
AMC HK
and indirectly
RMB3,400 million
74.27% directly
PRC
Pension Company
100.00% directly
Golden Phoenix Tree Limited
Hong Kong, PRC
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
The British Jersey Island
King Phoenix Tree Limited
Investment
Not applicable
Not applicable
186
312
15
64,192
624,715
529,862
716,346
594,054
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).
Unlisted debt securities include those traded on the Chinese interbank market.
Debt securities-Contractual maturity schedule
91,631
Maturing:
After one year but within five
years
After five years but within ten years
After ten years
Total
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
Within one year
22,385
594,054
150,089
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Total
Debt securities
Listed in Mainland, PRC
Unlisted
Total
716,346
As at 31
December 2017
RMB million
125,866
97,196
241,808
169,001
200,178
177,768
148,494
RMB million
Debt securities
30,614
71,502
After one year but within five
years
After five but within ten years
years
After ten years
Total
Term deposits
Maturing:
Within one year
Within one year
years
After five years but within ten years
Total
As at 31
December 2017
As at 31
December 2016
RMB million
RMB million
107,957
After one year but within five
112,788
Maturing:
Other loans
288,260
231,391
292,913
260,547
716,346
594,054
Financial Report
China Life Insurance Company Limited
Total
Annual Report 2017
Financial Report
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)
(f) Loans
256
(g)
Policy loans
255
92,442
(e) Held-to-maturity securities
For the year ended 31 December 2017
Investment management
Debt-to-Equity Swap Investment
Scheme
Jiao Yin Guo Xin China Aluminium
99.99% directly
RMB10,000 million
Investment management
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
75.00% directly
RMB10,000 million
RMB10,000 million
and indirectly
Fund Trust Scheme
Chongqing Trust Fund⚫ China Life
100.00% directly
RMB8,000 million
Investment management
Qing Hai Yellow River
Debt-to-Equity Swap Collective
Investment management
Fund Trust Scheme
100.00% directly
RMB10,000 million
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(c) Investments in subsidiaries (continued)
(ii) The table below presents the basic information of the Company's major consolidated structured
entities as at 31 December 2017:
Principal activities
Name
Percentage of shares held
Trust/investments received
Shang Xin-Ningbo Wu Lu Si Qiao
PPP Collective Fund Trust Scheme
Kun Lun Trust Tianjin Urban
Investment management
88.02% directly
Investment management
99.99% directly
RMB10,001 million
Investment management
Communications Construction
No. 1 Collective Fund Trust Scheme
Shan Guo Tou Jing Tou Corporate
Trust Loan Collective Funds
Trust Scheme
China Life-China Hua Neng
100.00% directly
RMB11,099 million
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
Zhong Xin Jing Cheng Tianjin Port
RMB6,000 million
Investment management
(d) Investments in associates and joint ventures
As at 1 January
Investments in associates and joint ventures
As at 31 December
254
China Life Insurance Company Limited Annual Report 2017
2017
RMB5,000 million
2016
RMB million
76,427
27,810
27,612
48,617
104,039
76,427
Notes to the Consolidated Financial Statements (continued)
RMB million
100.00% directly
99.98% directly
Group Loan Collective Fund
Trust Scheme
Investment management
Group Loans Collective Fund
Trust Scheme
China Life - Yanzhou Coal Mining
100.00% directly
RMB6,000 million
Investment management
Debt Investment Scheme
Jiao Yin Guo Xin CLI – China
Nonferrous Metal Collective
Fund Trust Scheme
CITIC Trust CGB Trust Beneficial
RMB5,400 million
Investment management
Rights Investment Collective Fund
Trust Scheme
Kun Lun Trust • Jizhong Energy
99.98% directly
RMB5,000 million
Investment management
99.98% directly
444
273,296
381,253
Debt securities
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)
(a) Property, plant and equipment
Cost
Buildings
Office
equipment
furniture and
fixtures
Motor
vehicles
258
Assets
under
construction improvements
Total
RMB million
As at 1 January 2017
24,688
6,682
1,405
10,387
Leasehold
1,525
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) Available-for-sale securities (continued)
Subtotal
333,146
343,857
Available-for-sale securities, at cost
Equity securities
Others (i)
20,759
20,759
(i)
Total
758,802
Financial Report
China Life Insurance Company Limited
Annual Report 2017 257
Financial Report
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)
797,108
29,885
44,687
6,918
As at 31 December 2017
31,628
6,684
1,383
10,951
1,798
52,444
Accumulated depreciation
(897)
As at 1 January 2017
(4,822)
(983)
Charge for the
year
(925)
(612)
(143)
Disposals
(8,088)
Transfers upon completion
(48)
(192)
49
(7,365)
(86)
Additions
Listed in Mainland, PRC
70
416
170
(146)
8,280
8,945
Transfers into investment
properties
(205)
(205)
Disposals
(48)
(463)
9
129,093
41,123
81,544
7,700
444,279
535,361
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.
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)
344,790
(h) Statutory deposits - restricted
Within one year
After one year but within five years
Total
As at 31
December 2017
As at 31
December 2016
RMB million
RMB million
3,553
Contractual maturity schedule:
1,600
182,871
RMB million
As at 31
December 2017
221,535
As at 31
December 2016
RMB million
RMB million
128,473
109,979
95,155
346,324
2,800
130,913
90,350
24,303
31,517
17,500
381,253
221,535
As at 31
December 2017
RMB million
As at 31
December 2016
69,753
Others (i)
2,100
5,653
Others (i)
52,545
11,683
Subtotal
443,203
394,186
Equity securities
Funds
11,000
90,865
Common stocks
129,388
100,116
Preferred stocks
31,651
27,880
Wealth management products
40,119
104,432
4,053
Wealth management products
13,495
5,653
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.
(i) Available-for-sale securities
Available-for-sale securities, at fair value
Debt securities
Government bonds
As at 31
December 2017
RMB million
16,708
As at 31
December 2016
RMB million
21,198
Government agency bonds
157,689
146,310
Corporate bonds
195,244
187,287
Subordinated bonds/debts
24,230
As at 31
December 2016
Subtotal
394,186
232
132
25,034
41,507
90,756
93,349
394,186
443,203
357,495
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
Unlisted
218,917
248,594
443,203
364,616
353,905
104,244
88,224
113,161
163,319
143,840
149,895
41,765
RMB million
As at 31
December 2016
As at 31
December 2017
RMB million
32,941
Total
After ten years
After five years but within ten years
years
797,108
After one year but within five
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.
China Life Insurance Company Limited Annual Report 2017
758,802
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Financial Report
Benefits in kind
Name
Remuneration
paid
41 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
year
(c) Five highest paid individuals
2017
Details of the remuneration of the five highest paid individuals are as follows:
268
Basic salaries, housing allowances, other allowances and benefits in kind
Pension scheme contributions
Total
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
Pension scheme
contributions
RMB thousand
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).
Total
Wang Sidong
Yang Mingsheng
320.0
Robinson Drake Pike
2016
RMB thousand
87.6
129.0
1,134.0
Xu Haifeng
1,350.6
87.6
129.0
1,134.0
RMB thousand
Xu Hengping
320.0
Chang Tso Tung Stephen
Yin Zhaojun (iv)
Liu Huimin (iii)
Liu Jiade (ii)
Miao Jianmin (i)
1,618.8
87.6
131.2
1,400.0
Lin Dairen
320.0
1,350.6
7,060
6,861
565
Financial Report
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)
(t) Commitments
264
(i) Capital commitments
(ii)
Capital commitments of the Company relating to property development projects and investments:
Contracted, but not provided for
263
Investments
Others
Total
Operating lease commitments - as lessee
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
86,926
40,804
4,588
4,248
1
Property, plant and equipment
Annual Report 2017
China Life Insurance Company Limited
Financial Report
(8,239)
(8,239)
Appropriation to reserves
3,218
1,927
3,218
8,363
As at 31 December 2017
53,860
(3,280)
33,336
30,152
30,172
144,240
(s)
Provisions and contingencies
The following is a summary of the significant contingent liabilities:
Pending lawsuits
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
493
588
91,514
508
45,053
Not later than one year
324
9
10
344
542
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
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.
(a) Directors' and chief executive's emoluments
177
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the
ended 31 December 2017 are as follows:
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 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).
5
5
2016
For the year ended 31 December
2017
Number of individuals
7,426
7,568
China Life Insurance Company Limited Annual Report 2017
208
158
RMB million
Later than one year but not later than five
Later than five years
years
Total
(iii) Operating lease commitments - as lessor
As at 31
December 2017
As at 31
December 2016
RMB million
RMB million
749
591
1,080
761
44
27
1,873
1,379
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
China Life Insurance Company Limited Annual Report 2017
As at 31
December 2017
RMB million
As at 31
December 2016
The future minimum lease payments under non-cancellable operating leases are as follows:
income for the year
1,134.0
Tang Xin
87.6
1,364.6
1,253.7
195.2
127.2
1,576.1
796.7
129.0
79.2
1,004.9
129.0
1,341.7
379.2
117.7
1,655.8
67.9
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
196.4
1,148.0
RMB thousand
Total
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
Name
266.7
salaries
Subtotal of
salary
income salary income
110.1
1,658.4
1,658.4
Xiong Junhong
Zhan Zhong
593.6
1,007.0 1,600.6
189.8
114.7
1,905.1
190.2
1,905.1
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
Wang Cuifei
1,358.1
786.5
571.6
payment
included in
Benefits
Pension
scheme
payment
included
Actual paid
included
in kind contributions
Total
in total
in total
RMB thousand
Miao Ping
1,148.0
1,148.0
2,296.0
688.8
125.6
119.2
2,540.8
688.8
1,852.0
Shi Xiangming
bonuses
320.0
266.7
58.4
Actual paid
Benefits
scheme
included
included
Name
salaries
bonuses
income salary income
in kind contributions
Deferred
payment
Total
in total
RMB thousand
Yang Mingsheng
Lin Dairen
1,400.0
1,400.0
2,800
840.0
125.7
119.9
in total
Pension
Deferred
payment
included in
Subtotal of
salary
320.0
320.0
Leung Oi-Sie Elsie
300.0
300.0
(i) Miao Jianmin resigned as non-executive director on 7 April 2017.
(ii)
Liu Jiade resigned as non-executive director on 8 August 2017.
(iii) Liu Huimin was appointed as non-executive director on 31 July 2017.
(iv) Yin Zhaojun was appointed as non-executive director on 31 July 2017.
Financial Report
China Life Insurance Company Limited
Annual Report 2017
265
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)
(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
3,045.6
266.7
840.0
Miao Jianmin
2,512.8
680.4
1,832.4
Xu Haifeng
267
1,134.0
2,268.0
680.4
125.3
116.5
119.2
2,509.8
1,829.4
Liu Jiade
Robinson Drake Pike
250.0
70.0
320.0
320.0
320.0
Tang Xin
208.3
680.4
125.6
680.4
2,268.0
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
320.0
Huang Yiping
41.7
11.6
53.3
53.3
53.3
Xu Hengping
1,134.0
1,134.0
2,205.6
Other comprehensive
25,027
26,954
(m) Other assets
Total
Current
Non-current
Total
Others
Debt securities
Bank deposits
Accrued investment income
Total
After 90 days
Within 30 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
Investments receivable
Land use rights
Automated policy loans
Disbursements
RMB million
RMB million
As at 31
December 2016
December 2017
As at 31
43,100
35,761
43,100
35,631
130
China Life Insurance Company Limited Annual Report 2017
RMB million
As at 31
December 2016
As at 31
December 2017
China Life Insurance Company Limited Annual Report 2017
260
Total
Current
Non-current
Total
Others
Due from related parties
RMB million
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
292
Listed overseas
19,486
24,974
Listed in Mainland, PRC
Debt securities
Total
204,046
127,544
Unlisted
50,092
35,999
42,017
14,093
8,682
153,954
76,845
3,133
4,323
143,871
50,699
24,779
51,579
76,845
127,544
50,092
50,699
10,395
6,587
6,284
7,187
74
79
89
134,379
33,339
Total
Subtotal
Unlisted
Listed overseas
Listed in Hong Kong, PRC
Listed in Mainland, PRC
Equity securities
Subtotal
153,954
36,846
61,516
35,633
17,613
8,006
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.
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.
81,039
85,316
81,039
85,316
81,039
85,316
15,609
11,633
65,430
73,683
9,270
6,466
Brokerage and commission payable
5,659
Total
7,652
9,046
Others
810
78
Interest payable of debt instruments
620
639
RMB million
Tax payable
833
Stock appreciation rights (Note 31)
1,611
1,906
Agent deposits
1,024
2,633
Payable to constructors
3,713
654
RMB million
As at 31
December 2016
As at 31
December 2017
3,050
5,671
5,605
883
15,466
RMB million
December 2016
As at 31
RMB million
2,814
As at 31
December 2017
50,183
11,142
5,822
44,632
44,361
55,774
50,183
2,528
4,116
55,774
21,288
2,704
876
Total
Within 30 days
Maturing:
Total
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)
1,718
14,252
5,768
5,694
8,484
24,786
14,252
30,480
2,320
2,779
846
30,480
144,116
6,578
372
(2,133)
(1,310)
Subtotal
(10,116)
(13,862)
Net deferred tax liabilities
(3,991)
(7,543)
262
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)
(q) Other equity instruments
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
291,159
281,012
Equity attributable to equity holders of the Company
(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:
4,148
480
4,148
(1,401)
2,266
(3,991)
The analysis of deferred tax assets and deferred tax liabilities during the year is as follows:
Deferred tax assets:
- deferred tax assets to be recovered after 12 months
Equity attributable to ordinary equity holders of the Company
- deferred tax assets to be recovered within 12 months
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
1,715
2,758
4,410
3,561
6,125
6,319
Subtotal
Equity attributable to other equity instruments holders of the Company
283,368
7,791
161,672
(24,848)
(24,848)
Appropriation to reserves
1,927
3,438
1,927
7,292
As at 31 December 2016
China Life Insurance Company Limited
53,860
30,118
28,225
26,954
144,116
As at 1 January 2017
53,860
4,959
30,118
28,225
4,959
(6,737)
24,787
29,807
273,221
7,791
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.
(r) Reserves
Unrealised
gains/(losses)
from
Share available-for-sale
premium
RMB million
securities
RMB million
Statutory
reserve fund
RMB million
28,191
Discretionary
reserve fund
RMB million
reserve
Total
RMB million
RMB million
As at 1 January 2016
Other comprehensive
income for the year
53,860
General
8,985
(1,401)
As at 31 December 2017
39,678
30,556
Total
39,678
30,556
Financial Report
China Life Insurance Company Limited
Annual Report 2017
261
Financial Report
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)
(p) Deferred tax liabilities
(i)
The movements in deferred tax assets and liabilities during the year are as follows:
Deferred tax assets/(liabilities)
As at 1 January 2016
(Charged)/credited to net profit
Non-current
Current
30,556
39,678
2,021
RMB million
RMB million
As at 31
December 2016
As at 31
December 2017
Subtotal
Common stocks
Funds
Equity securities
(Charged)/credited to other
Subtotal
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)
For the year ended 31 December 2017
Notes to the Consolidated Financial Statements (continued)
Others
Insurance
RMB million
Investments
RMB million
Others
RMB million
(6,408)
(2,670)
1,535
(7,543)
As at 1 January 2017
(6,408)
(2,670)
1,535
(7,543)
As at 31 December 2016
(Charged)/credited to net profit
(998)
731
805
(Charged)/credited to other
comprehensive income
- Available-for-sale securities
- Portion of fair value changes on
available-for-sale securities
attributable to participating
policyholders
1,072
(ii)
(4,343)
policyholders
Total
RMB million
(1,451)
(614)
(16,504)
1,072
1,208
463
(16,883)
1,057
comprehensive income
(4,343)
Annual Report 2017
- Available-for-sale securities
12,626
12,626
- Portion of fair value changes on
available-for-sale securities
attributable to participating
the printed version and the website version of this report, the website version shall
prevail.
成己为人
The cover photo of the printed version of this report was photographed by
Mr. Cui Yu.
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
21.94%
Management
Discussion and Analysis
the number of exclusive
individual agents
21.1%
1.578 million in total
Company was
agents of the
exclusive individual
the number of
2017
exclusive individual agents
Size expansion and quality improvement of the
duration from 5 to 9 years
■First-year regular premiums with payment
duration less than 5 years
■First-year regular premiums with payment
increased by 5.6%
■First-year regular premiums with 10 years or longer payment
duration
62.17%
24.03%
2016
13.80%
21.34% 2017
13.50%
agent
premiums from the exclusive individual
channel
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
65.16%
the average productive agents on a
quarterly basis in the exclusive
individual agent channel increased
by 29.8% year-on-year
China Life Insurance Company Limited Annual Report 2017
(RMB million)
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
100,000
80,000
17,835 21,813
46.2%
17.5%
60,000
40,000
20,000
0
68,047
and Analysis
Management Discussion
25
and Analysis
Management Discussion
2017
60.000 70,000
2016
bancassurance channel
(RMB million)
59,777
20,954
31,880
12.2%
Long-term premiums from the
20,840
50.000
30,000
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
999
Renewal business
859
80
943
4,571
3,425
Single
5,430
4,368
First-year business of long-term insurance
24,915
26,207
Group Insurance Channel
561
894
Short-term insurance business
21,813
31,880
First-year regular
90
First-year regular
984
46,337
26.9%
58,796
20,000
10,000
0
28,193
2016
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
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
Renewal business
1,641
1,160
Short-term insurance business
15,881
40,000
13,220
Notes:
1.
2.
511,966
430,498
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.
Total
Renewal business
5,367
12.5%
81,854
3.34%
Other equity investments
94,515
3.64%
79,390
3.23%
Investment properties
3,064
0.12%
1,191
0.05%
Cash and others
84,771
1.56%
3.27%
4.51%
Total
2,591,652
100.00%
2,453,283
100.00%
Notes:
1.
2.
3.
4.
5.
6.
The figures as at the end of last year were adjusted on the same basis.
110,584
40,327
products
Bank wealth management
Bonds
1,188,606
45.86%
1,119,388
45.63%
Debt-type financial products²
301,761
11.65%
131,880
5.38%
Other fixed-maturity
investments³
154,522
5.96%
130,532
5.32%
Equity investments
4.89%
119,973
3.91%
101,236
Funds⭑
5.71%
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.
140,166
173,450
Common stocks
17.17%
421,383
15.80%
409,528
6.69%
11.0%
Other fixed-maturity investments include policy loans, statutory deposits-restricted, bank wealth
management products, and interbank certificates of deposits, etc.
million, respectively.
1.00%
2.00%
3.00%
4.00%
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
2.43%
China Life Insurance Company Limited Annual Report 2017
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.
■Long-term insurance premiums
Short-term insurance premiums
30.000
25,000
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
26
0.00%
Gross
investment yield
Net
investment yield
Other equity investments include private equity funds, unlisted equities, preference shares, equity
investment plans, and specialized asset management plans, etc.
Cash and others include cash, cash at banks, short-term bank deposits and securities purchased under
agreements to resell.
China Life Insurance Company Limited Annual Report 2017
17.34%
449,400
Term deposits
78.27%
1,920,125
80.81%
2,094,289
Fixed-maturity investments
Percentage
Amount
Percentage
Amount
As at 31 December 2016¹
As at 31 December 2017
Comprehensive
investment yield
■2016 ■2017
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)
China Life Insurance Company Limited Annual Report 2017
27
22
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
and Analysis
28
1.
Investment Portfolios
As at the end of the Reporting Period, our investment assets categorized by investment object are set
out as below:
Investment category
RMB million
Management Discussion
538,325
17,835
First-year regular
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.
652,057
2.46
734,172
2.68
31 December 2017 31 December 2016
As at
As at
2.
Numbers may not be additive due to rounding.
1.
Number of in-force policies (hundred million)
Embedded value
Annual Report 2017
85.90
90.20
90.90
Note 2
Note 2
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
85.70
21
and Analysis
Management Discussion
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
2017
Value of one year's sales
(RMB million)
60,117
21.9%
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.
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
agent
2016
0
10,000 20,000 30,000 40,000 50,000 60,000 70,000
Gross written premiums structure
(RMB million)
2017
63,671 47,068 47,118 66,003
2016
49,311
Short-term premiums
Renewal premiums
Including: Exclusive individual
60,117
200.000
100,000
0
430,498
511,966
Gross written premiums
(RMB million)
2016
2017
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
300.000
42
42
Social Responsibility
Performance of the Corporate
40
40
31
20
20
Other Analysis
Statements
Consolidated Financial
Analysis of Major Items of the
Operations in 2017
Review of Business
Future Prospect and Risk Analysis
400,000
500,000
600,000
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
First-year regular premiums with ten
93,945
113,121
Including: First-year regular premiums
206,996
223,860
Premiums from new policies
18.9%
Calculated according to the premium data of life insurance companies in 2017 released by the CIRC.
20
20
China Life Insurance Company Limited Annual Report 2017
I.
49,311
REVIEW OF BUSINESS OPERATIONS IN 2017
RMB million
2017
2016
Gross written premiums
511,966
430,498
(I) Key Performance Indicators
20,954
Single premiums
■First-year regular premiums with 10 years or longer payment
duration
2017
and Analysis
23
Annual Report 2017
Management Discussion
and Analysis
China Life Insurance Company Limited
80,000
70,000
60,000
50,000
40.000
30,000
20.000
10,000
Management Discussion
0
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
25.4%
24
2.
Gross written premiums categorized by channel
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
90,240
For the year ended 31 December
RMB million
2017
2016
Exclusive Individual Agent Channel
353,668
Renewal business
282,136
90,629
74,813
Single
389
283
First-year regular
First-year business of long-term insurance
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.
39
First-year regular
429,822
Single
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
361,905
22
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.
19.3%
129,021
Gross investment income
(RMB million)
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)
168,909
160,590
63,653
14,226
13,962
Single
14,265
14,106
First-year business
14,583
14,436
Accident Insurance Business
21,869
26,863
Renewal business
6,289
7,721
First-year regular
25,852
33,124
72,973
First-year regular
105,256
87,617
Renewal business
260,913
144
201,315
67,708
54,010
First-year business
40,845
32,141
Single
Health Insurance Business
Notes:
4.55%
48,586
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'
4.91%
4.66%
Gross investment yield
129,021
5.16%
Gross investment yield including net share
of profit of associates and joint ventures
5.16%
4.69%
and Analysis
Management Discussion
Notes:
1.
2.
3.
4.
5.
6.
4.61%
7.
Gross investment income³
6,183
6,333
Statutory deposits -
trust schemes in loans
An increase in the allocation of
69.3%
226,573
383,504
Loans
management
equivalents
The needs for liquidity
-27.5%
(7,094)
67,046
2.
Investment Income
For the year ended 31 December
2017
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
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.
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
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
25.2%
Rapid development in protection-
oriented businesses
426,230
Accident insurance
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
Net fair value gains through
14,320
506,910
Net premiums earned
Main Reasons for Change
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)
China Life Insurance Company Limited Annual Report 2017
29
and Analysis
Management Discussion
3.
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
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.
Major Investments
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
6,333
0
restricted
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
6,183
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
Dividends paid to policyholders
-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
(7,094)
N/A
profit or loss
2017
2016
Change
Profit before income tax
41,671
23,842
74.8%
Life insurance
29,315
14,732
99.0%
business
For the year ended 31 December
RMB million
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
Main Reasons for Change
Profit before Income Tax
3.
34
4,767
-3.5%
Administrative expenses
35,953
31,854
12.9%
Other expenses
6,426
4,859
32.2%
Statutory 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
Other businesses
4,601
8,582
39.2%
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
136,809
209,124
-34.6%
Available-for-sale
value through
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
profit or loss
An increase in the allocation of
financial bonds
securities
20.6%
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
(II) Analysis of Major Items of the Consolidated Statement of Financial Position
1.
Major Assets
RMB million
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
717,037
594,730
6,165
Cash and cash
Finance costs
24.5%
An increase in interest income
resulting from the growth of
allocation in financial bonds
A decrease in interest income
resulting from the reducing
scale of deposits
An increase in interest income
from the increasing scale of
trust schemes
A decrease in the scale of
securities purchased under
agreements to resell
Investment income from
46,627
37,243
25.2%
income from available-for-sale
equity investment
available-for-sale
Investment income from
30,669
24,854
23.4%
held-to-maturity
securities
Investment income
23,827
27,851
-14.4%
from bank deposits
Investment income
securities
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
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
31
and Analysis
Management Discussion
32
*
Investment Income
For the year ended 31 December
2017
2016
Change
Investment income from
4,538
6,210
-26.9%
securities at fair value
through profit or loss
RMB million
Main Reasons for Change
16,320
policy acquisition costs
12,018
from loans
50,624
40,513
25.0%
An increase in the scale of health
insurance business
Accident insurance
6,009
5,610
7.1%
business
Investment contract benefits
8,076
5,316
Health insurance business
51.9%
certain businesses
An increase in the scale of
investment contracts
Policyholder dividends
21,871
15,883
37.7%
resulting from
participation in profits
Underwriting and
64,789
52,022
Fluctuation in claims expenses of
insurance business
An increase in the scale of life
13.4%
Other investment income
746
971
-23.2%
Total
122,727
109,147
12.4%
China Life Insurance Company Limited Annual Report 2017
and Analysis
Management Discussion
2.
Benefits, Claims and Expenses
For the year ended 31 December
RMB million
2017
2016
Change
Main Reasons for Change
Insurance benefits and
466,043
407,045
14.5%
claims expenses
Life insurance business
409,410
360,922
35.8%
China Life Insurance Company Limited Annual Report 2017
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.
As at 31 December As at 31 December
15,000
3.53% is held
by AMC
held by the
Company, and
14
3,922
70.74% is
3,400
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
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
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
China Life Property
and Casualty
Insurance Company
Limited
China Life Pension
Company Limited
China Life Asset
Management
Company Limited
40%
1,126
9,237
60%
4,000
Assets Net Assets Net Profit
Total
Shareholding
Registered
Capital
RMB million
Major Business Scope
Company Name
(III) Business Operations of Our Main Subsidiaries and Affiliates
China Life Insurance Company Limited Annual Report 2017
40
8,339
79,601 20,463
820
20
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:
(III) Major potential risks and measures in relation thereto
and Analysis
Management Discussion
42
China Life Insurance Company Limited Annual Report 2017
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.
(II) Development strategies and business plans
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.
The
(I) Market environment
FUTURE PROSPECT AND RISK ANALYSIS
(http://www.hkexnews.hk).
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
V.
IV. PERFORMANCE OF THE CORPORATE SOCIAL RESPONSIBILITY
Management Discussion
and Analysis
41
China Life Insurance Company Limited Annual Report 2017
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.
(IV) Structured Entities Controlled by the Company
Note: For details, please refer to Note 8 and Note 33(e) in the Notes to the Consolidated Financial Statements in this
annual report.
10,204
43.686% 2,072,915 113,846
15,402
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
China Guangfa Bank
Co., Ltd.
Management Discussion
and Analysis
During the Reporting Period, there was no sale of material assets and equity of the Company.
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.
(II) Sale of Material Assets and Equity
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.
Change in account balance of
securities sold under agreements
The adjustment of investment
asset structure and an increase in
the allocation of bonds with long
duration and debt-type financial
products
securities at fair value through
profit or loss
from financing activities
N/A
6,270
(45,595)
Net cash inflows/(outflows)
from investing activities
65.9%
(104,703)
(173,676)
Net cash inflows/(outflows)
to repurchase from time to
time as a result of liquidity
The change in the scale of
89,098
200,990
Net cash inflows/(outflows)
from operating activities
Main Reasons for Change
Change
2016
2017
RMB million
For the year ended 31 December
Management Discussion
and Analysis
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.
3. Consolidated Cash Flows
125.6%
management activities
Foreign exchange gains/
(losses) on cash and
cash equivalents
Net decrease in cash
and cash equivalents
(179)
Comprehensive solvency ratio
297.16%
277.65%
280.34%
277.61%
228,080
254,503
677,768
706,623
639,396
706,516
2016
2017
RMB million
Core solvency ratio
Minimum capital
Core capital
Actual capital
(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:
III. OTHER ANALYSIS
Management Discussion
and Analysis
39
Annual Report 2017
China Life Insurance Company Limited
104.0%
(9,050)
(18,460)
N/A
285
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.
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.
3,086
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.
2,610
6,536
46,326
53,170
Note: Numbers may not be additive due to rounding.
Total
Group Insurance Channel
Bancassurance Channel
Exclusive Individual Agent Channel
2016
31 December
31 December
2017
RMB million
Channel
Value of One Year's Sales by Channel
Table 2
The value of one year's sales for the 12 months ended 31 December 2017 by channel is shown below:
VALUE OF ONE YEAR'S SALES BY CHANNEL
Embedded Value
47
Annual Report 2017
China Life Insurance Company Limited
Embedded Value
Note: Numbers may not be additive due to rounding.
49,311
60,117
Value of One Year's Sales after Cost of Required Capital (F + G)
H
(4,641)
375
(4,510)
49,311
The new business margin of one year's sales for the 12 months ended 31 December 2017 by channel is shown below:
1.1%
1.1%
1.0%
1.1%
10.2%
23.2%
3.0%
8.0%
51.2%
47.3%
51.1%
47.2%
2016
2017
2016
2017
31 December
31 December
31 December
31 December
By APE
By FYP
Group Insurance Channel
Bancassurance Channel
Exclusive Individual Agent Channel
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.
48
New Business Margin of One Year's Sales by Channel
Table 3
410
60,117
Cost of Required Capital
Channel
53,952
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.
PREPARATION AND REVIEW
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 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 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.
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.
Net assets, defined as assets less corresponding policy liabilities and other liabilities valued; and
“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.
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.
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.
BACKGROUND
Embedded Value
Embedded Value
43
China Life Insurance Company Limited Annual Report 2017
G
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:
Table 1
DEFINITIONS OF EMBEDDED VALUE AND VALUE OF ONE YEAR'S SALES
RMB million
64,627
Components of Embedded Value and Value of One Year's Sales
Value of One Year's Sales before Cost of Required Capital
F
652,057
734,172
Embedded Value (A + D)
E
302,530
Value of In-Force Business after Cost of Required Capital (B+ C)
D
(29,787)
(35,050)
Cost of Required Capital
363,673
A
31 December
C
31 December
2017
2016
Adjusted Net Worth
370,500
ITEM
349,528
B
Value of In-Force Business before Cost of Required Capital
398,723
332,317
10% decrease in mortality rate for non-annuity products
and 10% decrease in mortality rate for annuity products
361,113
59,400
7.
8.
10% increase in mortality rate for non-annuity products
10.
363,021
366,227
60,835
9.
10% increase in lapse rates
10% decrease in lapse rates
63,356
59,149
and 10% increase in mortality rate for annuity products
368,460
Investment return +50bps
6.
Risk discount rate -50bps
2.
364,137
380,622
62,964
3.
425,453
68,690
4.
Investment return -50bps
302,186
53
51,558
5.
10% increase in expenses
358,884
56,878
10% decrease in expenses
61,030
the EV Results have been prepared, in all material respects, in accordance with the methodology and assumptions
set out in the Embedded Value section.
10% increase in morbidity rates
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:
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 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 operating assumptions used by China Life have been set with appropriate regard to past, current and expected
future experience; and
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
Material Litigations or Arbitrations
57,470
Major Connected Transactions
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;
11.
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;
scope
358,936
58,997
12.
10% decrease in morbidity rates
368,448
61,235
13.
Using 2016 EV appraisal assumptions
357,052
60,114
China Life Insurance Company Limited Annual Report 2017
WILLIS TOWERS WATSON'S REVIEW OPINION REPORT ON EMBEDDED VALUE
To The Directors of China Life Insurance Company Limited
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.
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.
Scope of work
Our
of work covered:
347,884
53
1.
J
Other
K
Shareholder Dividend Distribution and Capital Injection
Embedded Value as at 31 December 2017 (sum A through J)
Notes: 1)
Numbers may not be additive due to rounding.
I
2)
B
RMB million
652,057
52,472
60,117
529
(4,280)
Items B through J are explained below:
Exchange Gains or Losses
H
Market Value and Other Adjustments
Material Contracts and
Table 4
Analysis of Embedded Value Movement in 2017
ITEM
A
Embedded Value at the Start of Year
B
Expected Return on Embedded Value
C
Value of New Business in the Period
D
Operating Experience Variance
E
Investment Experience Variance
F
Methodology, Model and Assumption Changes
G
(5,926)
(11,549)
(459)
(7,164)
49
Embedded Value
50
50
SENSITIVITY RESULTS
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:
Table 5
Sensitivity Results
RMB million
Value of In-Force
Business after Cost of
Value of One Year's
Required Capital
Sales after Cost of
Required Capital
Base case scenario
363,673
60,117
Embedded Value
Risk discount rate +50bps
China Life Insurance Company Limited Annual Report 2017
J
(1,625)
734,172
Reflects expected impact of covered business, and the expected return on investments supporting the 2017 opening
net worth.
C
Value of one year's sales for the 12 months ended 31 December 2017.
D
Reflects the difference between actual operating experience in 2017 (including mortality, morbidity, lapse, and
expenses etc.) and the assumptions.
E
Compares actual with expected investment returns during 2017.
F
Reflects the effects of appraisal methodology and model enhancement, and assumption changes.
G
Change in the market value adjustment from the beginning of year 2017 to 31 December 2017 and other
adjustments.
H
Reflects the gains or losses due to changes in exchange rate.
I
Reflects dividends distributed to shareholders during 2017.
Other miscellaneous items.
Their Performance
56
MOVEMENT ANALYSIS
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.
For the
year ended 31 December 2017, CLIC paid AMC a service fee of RMB106.79 million.
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.
China Life Insurance Company Limited Annual Report 2017 55
Significant Events
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.
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 following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period:
Significant Events
3.
4.
Insurance Sales Framework Agreement
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.
(3)
For the year ended 31 December 2017, CLP&C paid the Company an agency service fee of
RMB3,030.41 million.
(1)
Framework Agreement between the Company and AMP
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.
China Life Insurance Company Limited Annual Report 2017
57
Significant Events
58
58
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.
(2)
Framework Agreement between Pension Company and AMP
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.
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
Framework Agreements with AMP
(2) Asset Management Agreement between CLIC and AMC
China Life Insurance Company Limited Annual Report 2017
China Life Insurance Company Limited Annual Report 2017
68
69
Restriction on Major Assets
69
Significant Events
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.
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.
Significant Events
Significant Events
China Life Insurance Company Limited Annual Report 2017 53
54
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
(1)
Asset Management Agreements
Undertakings
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
For the year ended 31 December 2017, the service fee paid by CLIC to the Company amounted to
RMB739.56 million.
2.
1.
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.
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
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.
For the
year
60
Framework Agreement between CLI and AMP
China Life Insurance Company Limited Annual Report 2017
5.
Significant Events
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.
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.
China Life Insurance Company Limited
59
Annual Report 2017
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.
Framework Agreement between CLIC and AMP
(4)
(3)
Significant Events
Framework Agreements with CLWM
Significant Events
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.
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.
management
(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
(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
(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:
Confirmation by auditor
Significant Events
65
China Life Insurance Company Limited Annual Report 2017
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
66
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.
China Life Insurance Company Limited Annual Report 2017
(II) Other Major Connected Transactions
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
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.
2.
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.
4.
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
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+.
2.
1. Formation of Partnership with Ningbo Meishan Bonded Port Area Baiyi Investment Management
Partnership (Limited Partnership) ("Fund GP")
Significant Events
Formation of Partnership with China Life Properties Investment Management Company Limited
("China Life Properties")
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.
(2)
Framework Agreement between CLO 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 RMB0.04
million.
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
(4)
Significant Events
China Life Insurance Company Limited Annual Report 2017
62
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.
Framework Agreement between CLP&C and CLWM
For the year ended 31 December 2017, the management fee paid by CLIC for the asset
management services was RMB0.73 million.
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.
Framework Agreement between CLIC and CLWM
(3)
(2)
Significant Events
61
China Life Insurance Company Limited Annual Report 2017
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.
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.
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.
Framework Agreement between the Company and Chongqing Trust
For the year ended 31 December 2017, there was no relevant transaction between CLO and
CLWM.
Annual Report 2017
(1)
Framework Agreements with Chongqing Trust
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.
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
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.
Framework Agreement between CLI and CLWM
(6)
(5)
Significant Events
63
China Life Insurance Company Limited
Framework Agreement between the Company and CLWM
(1)
Year in which
dividends
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.
Corporate Governance
China Life Insurance Company Limited Annual Report 2017
72
Corporate Governance
year.
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
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 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.
(III) Compliance by the Company with the relevant laws and regulations that have a significant impact
(II) Environmental policies and performance of the Company
(I) Overall operation of the Company during the Reporting Period
BUSINESS REVIEW
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.
PRINCIPAL BUSINESS
2.
1.
China Life Insurance Company Limited Annual Report 2017 71
(appointed as Director with effect from 31 July 2017)
(appointed as Director with effect from 31 July 2017)
(resigned with effect from 8 August 2017 due to adjustment
of working arrangements)
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".
(resigned with effect from 12 January 2018 due to adjustment
of working arrangements)
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.
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.
2.
1.
(II)
(I)
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:
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.
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.
3.
Corporate Governance
(IV) Relationship between the Company and its customers
China Life Insurance Company Limited Annual Report 2017
Corporate Governance
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.
(V) Relationship between the Company and its employees
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.
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.
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
74
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;
(appointed as Director with effect from 11 February 2018)
(resigned with effect from 7 April 2017 due to adjustment
of working arrangements)
Chang Tso Tung Stephen
Robinson Drake Pike
Tang Xin
and Shareholders Information
Changes in Ordinary Shares
Committee
Report of the Supervisory
Report of the Board of Directors
Corporate
Governance
69
Annual Report 2017
China Life Insurance Company Limited
Directors, Supervisors, Senior
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.
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.
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.
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.
ACQUIRERS, DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT OR OTHER
RELATED PARTIES WHICH ARE EITHER GIVEN OR EFFECTIVE DURING THE
REPORTING PERIOD
V.
IV. UNDERTAKINGS OF THE COMPANY, SHAREHOLDERS, EFFECTIVE CONTROLLERS,
Significant Events
Unit: RMB million
RESTRICTION ON MAJOR ASSETS
Leung Oi-Sie Elsie
Management and Employees
89
Liu Huimin
Yin Zhaojun
Liu Jiade
Wang Sidong
Yuan Changqing
Miao Jianmin
Xu Haifeng
Independent Directors
Non-executive Directors
Corporate Governance
Xu Hengping
Corporate Governance
Lin Dairen
Executive Directors
Directors of the Company during the Reporting Period and up to the date of this report were as follows:
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
85
82
108
Yang Mingsheng (Chairman)
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;
55
In accordance with Article 212 of the Articles of Association, the Company's profit distribution policy is as
follows:
(shares)
cash dividends
(including tax)
which dividends
were distributed
statements
11,306
32,253
35%
6,784
19,127
Amount of
35%
34,699
34%
CHANGES IN ACCOUNTING ESTIMATES
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.
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.
CHARITABLE DONATIONS
11,871
The total amount of charitable donations made by the Company during the Reporting Period was approximately
RMB171 million.
consolidated
Percentage of
amount of
cash dividends
in net profit
attributable
3. The Company shall give priority to cash dividends as its profit distribution manner.
were
Number of
bonus stocks
per ten shares
distributed
(shares)
(RMB)
(including tax)
Amount of Transfer of public
dividends
per ten shares
reserve into
share capital
per ten shares
to equity
holders of the
Company in the
2017
2015
4.0
2.4
4.2
Net profit
attributable
to equity
holders of the
Company in the
consolidated
statements
2016
PROPERTY, PLANT AND EQUIPMENT
for the year in
Corporate Governance
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.
of 2017
year
1. Profit distribution plan or public reserves capitalization plan for the
(IV) Profit distribution plan and public reserves capitalization plan
China Life Insurance Company Limited Annual Report 2017
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.
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.
3.
75
China Life Insurance Company Limited Annual Report 2017
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;
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.
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.
(III) In accordance with Article 213 of the Articles of Association, the procedures of reviewing the Company's
profit distribution proposal is as follows:
4.
Corporate Governance
2.
77
China Life Insurance Company Limited Annual Report 2017
8. SHARE CAPITAL
5.
9.
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.
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.
During the Reporting Period, the Company and its subsidiaries did not purchase, sell or redeem any of the
Company's listed securities.
11. H SHARE STOCK APPRECIATION RIGHTS
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.
12. DAY-TO-DAY OPERATIONS OF THE BOARD
10. PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S SECURITIES
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.
13. DIRECTORS' AND SUPERVISORS' SERVICE CONTRACTS
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).
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.
Corporate Governance
78
China Life Insurance Company Limited Annual Report 2017
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.
The dividend distribution of the Company for the recent 3 years is as follows:
55
China Life Insurance Company Limited
China National Nuclear
Corporate Governance
12,400,000
Corporation
0.04%
State-owned legal
person
85
Annual Report 2017
0
Corporate Governance
(II) Information relating to the Controlling Shareholder and Effective Controller
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.
2.
Details of shareholders
3.
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.
The controlling shareholder of the Company is CLIC, and its relevant information is set out below:
Name of
company
Securities Investment Fund
Legal representative
1.
Limited SSE 50 Exchange Traded Index
0.08%
12,788,337
Date of incorporation
54,985,761
-4,398,849
Industrial and Commercial Bank of
China Limited China Southern Flexible
Allocation of Consumption and Vitality
of Hybrid Securities Investment Fund
Hong Kong Securities Clearing
Company Limited
Overseas legal person
22,976,187
-4,314,048
China International Television Corporation
State-owned legal person
0.07%
18,452,300
0
China Universal Asset Management
Other
0.05%
15,015,845
0
Co., Ltd Industrial and Commercial
Bank of China Limited - China
Universal - Tianfu Bull
No. 53 Asset Management Plan
Industrial and Commercial Bank of China
Other
0.05%
+440,300
Major businesses
Annual Report 2017
subsidiaries and affiliates listed
in China or abroad during the
Reporting Period
68.37%
(Group) Company
BlackRock, Inc.
(Note 1)
Interest in controlled
corporation
H Shares
541,161,285 (L)
4,209,000 (S)
7.27%
1.91%
0.06%
0.01%
92.80%
The letter "L" denotes a long position. The letter “S” denotes a short position.
0.19%
87
888
Corporate Governance
Corporate Governance
(Note 1):
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.
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.
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.
88
China Life Insurance Company Limited Annual Report 2017
China Life Insurance Company Limited
19,323,530,000 (L)
A Shares
Beneficial owner
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).
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.
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.
86
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:
Ministry of Finance of the PRC
100%
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.
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
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:
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
shares in issue
China Life Insurance
Shareholdings in other
Other
ISSUE AND LISTING OF SECURITIES
119,719,900
I.
(I)
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.
as a
(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.
82
China Life Insurance Company Limited Annual Report 2017
Corporate Governance
(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.
(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.
(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.
ACTIVITIES OF THE SUPERVISORY COMMITTEE
(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.
83
333
II.
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”.
(I)
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.
(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.
(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.
(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.
(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.
China Life Insurance Company Limited Annual Report 2017
Corporate Governance
Mr. Song Ping, Mr. Luo Zhaohui,
Mr. Miao Ping, Mr. Shi Xiangming,
Ms. Wang Cuifei
Corporate Governance
80
China Life Insurance Company Limited Annual Report 2017
25. 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.
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.
Remuneration paid by the Company to the auditors in 2017 was as follows:
Corporate Governance
Service/Nature
Audit, review and agreed-up procedures fee
Including: Internal control audit fee
Non-audit services fee
From left to right:
Total
58.61
11.14
1.66
60.27
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.
Beijing, China
22 March 2018
China Life Insurance Company Limited
Annual Report 2017
81
Report of the Supervisory Committee
Fees (RMB million)
84
China Life Insurance Company Limited Annual Report 2017
By Order of the Supervisory Committee
shareholder
Percentage of
shareholding
the Reporting
Period
the Reporting
Period
to selling
restrictions
Number of
shares pledged
or frozen
China Life Insurance (Group) Company
State-owned legal person
68.37%
19,323,530,000
Name of shareholder
0
Overseas legal person
25.90%
7,319,236,460
+5,220,506
China Securities Finance Corporation Limited
Central Huijin Asset Management Limited
State-owned legal person
2.10%
594,502,502
+22,190,586
State-owned legal person
0.42%
HKSCC Nominees Limited
Nature of
shares subject
Number of
Miao Ping
Chairman of the Supervisory Committee
Beijing, China
22 March 2018
Changes in Ordinary Shares and Shareholders Information
I.
II.
CHANGES IN SHARE CAPITAL
During the Reporting Period, there was no change in the total number of shares and the share capital 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.
III. INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER
(I) Total number of shareholders and their shareholdings
Total number of
ordinary share
shareholders as at the
end of the Reporting
Period
No. of A Share
shareholders: 120,420
No. of H Share
shareholders: 28,825
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
this annual report
No. of A Share
shareholders: 138,231
No. of H Share
shareholders: 28,362
Unit: Shares
Number of
shares held
as at the end of
Increase/
decrease during
0
By Order of the Board
Yang Mingsheng
Chairman
24. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
15. DIRECTORS' AND SUPERVISORS' RIGHTS TO ACQUIRE SHARES
80
Corporate Governance
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.
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.
16. 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 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.
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
19. MATERIAL GUARANTEES
Independent Directors of the Company have rendered their independent opinions on the Company's external
guarantees, and are of the view that:
1.
during the Reporting Period, the Company did not provide any external guarantee;
No management or administration contracts for the whole or substantial part of any business of the Company
were entered into during the Reporting Period.
3.
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
2.
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
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.
20. RESPONSIBILITY STATEMENT OF DIRECTORS ON FINANCIAL REPORTS
79
China Life Insurance Company Limited Annual Report 2017
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
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.
Financial Statements
Consolidated Statement of
131
Changes in Equity
Consolidated Statement of
132
Cash Flows
Notes to the Consolidated
134
VALUE
CHINA LIFE
55
CORE COMPETITIVENESS
4
Long history
and excellent
brand
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, when the People's Republic of China was founded. After the restructuring
and reorganization, the Company was successively listed 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. 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 the end of 2019, the brand of China Life
has been selected as one of the "World's 500 Most Influential Brands" published by World
Brand Lab for thirteen consecutive years, ranking 132nd in 2019, and was again ranked 5th on
the 2019 (the 16th session) "China's 500 Most Valuable Brands" list published by World Brand
Lab.
Prominent
principal
business and
sound financial
strength
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, China Life has solid
financial strength comparable to world-class enterprises in the world. As at 31 December 2019,
the Company's total assets amounted to RMB3,726,734 million, leading 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 2019, the
total market capitalization of the Company was USD124,913 million.
Well-
established
network
and leading
technologies
Profound and
extensive
customer base
35
Risk Alert
Independent Auditor's Report 120
Definitions and Material
Future Prospect
34
04
Embedded Value
EMBEDDED
07
FINANCIAL
REPORT
08
OTHER
INFORMATION
264
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 number of sales force from all channels of the Company was 1.848 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 implemented the "Technology-driven China Life" development
strategy in great depth by adhering to the leading concept of technological innovation, 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 social features, and leverages technologies to provide convenient insurance services to
the public.
258
Consolidated Statement of
127
Financial Position
Index of Information
261
Disclosure Announcements
Consolidated Statement of
129
Comprehensive Income
Basic Information of the
Company
The Company has an extensive customer base. As at 31 December 2019, the Company
had approximately 303 million long-term individual and group life insurance policies, annuity
contracts and long-term health insurance policies in force, offering insurance services for more
than 500 million customers.
"2019 Assessment and
Selection of Golden Tripod
Award in China"
and stable
core team
of the Year"
China Life Insurance Company Limited 2019 Annual Report Prelude
LO
5
Shanghai Securities News
"Golden Wealth Management'
for the Year of 2019"
"Annual Insurance
Protection Brand Top Award
of Golden Wealth
Management in 2019"
Insurance Company
People's Daily Online
"2019 People's Craftsmanship
Service Award"
Jointly published by China.org.cn
and Insurance Today
"2019 Assessment and
Selection of 'China Tripod'
in the Insurance Industry"
"Annual Best Insurance Brand"
Hexun.com
The "17th Financial Annual
Champion Awards"
"Influential Insurance Company of the Year"
Data Center Dynamics
"Asia Pacific Award"
China Life Hybrid Cloud () being
awarded by Data Center Dynamics (DCD)
the "Annual Hybrid IT Project Award" for
the Asia Pacific Region in 2019
Association for Talent
Development (ATD)
"Excellence in Practice Award"
"2019 Assessment and
Selection of Craftsmanship
Award of the People's Choice"
Professional
"Best Brand Personal
Selection by Sina Gold Kirin of
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 movement of these personnel which
might have a material impact on the Company.
China Life Insurance Company Limited 2019 Annual Report Prelude
HONORS AND AWARDS
Forbes
"2019 Forbes Global 2000", ranking 105th
21st Century Business Herald
"Assessment and Selection of
the Competitiveness of Asian
Financial Enterprises in the
21st Century"
"2019 Best Life Insurance Company in Asia"
Financial Times
"Gold Medal List of Chinese
Financial Institution"
"Golden Dragon Award
the Insurance Industry"
– 2019 Best Listed Insurance Company"
34
"Golden Tripod Award in China
- 2019 Excellent Life Insurance Company"
Securities Times
"Ark Prize for Insurance Company with
High-quality Development in 2019"
"Ark Prize for Targeted
Poverty Alleviation of the PRC
Insurance Industry in 2019"
Sina Finance
"2019 Assessment and
National Business Daily
Performance of the Corporate
Social Responsibility
53
22
CHINA LIFE
中国人寿
中国人寿
CHINA LIFE
C
CHINA LIFE
中国人寿
9
7686667
9
② 中國人壽
計
词
國人壽保險股份
忠獎
The Company is a life insurance company 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
on the New York Stock Exchange, the Hong Kong Stock Exchange and the Shanghai Stock Exchange on 17 and
18 December 2003, and 9 January 2007, respectively. The Company's registered capital is RMB28,264,705,000.
The Company is a leading life insurance company in China and possesses an extensive distribution network
comprising exclusive agents, direct sales representatives, and dedicated and non-dedicated agencies. The
Company is one of the largest institutional investors in China, and becomes one of the largest insurance
asset management companies in China through its controlling shareholding in China Life Asset Management
Company Limited. The Company also has controlling shareholding in China Life Pension Company Limited.
Our products and services include individual life insurance, group life insurance, and accident and health
insurance. The Company is a leading provider of individual and group life insurance, annuity products and
accident and health insurance in China. As at 31 December 2019, the Company had approximately 303 million
long-term individual and group life insurance policies, annuity contracts, and long-term health insurance
policies in force. We also provide both individual and group accident and short-term health insurance policies
and services.
SE
ㄓ
錯中國
Stock Code: 2628
ANNUAL REPORT 2019
中国人寿保险股份有限公司
China Life Insurance Company Limited
harance Company
8
CHINA
SE
Honors and Awards
Core Competitiveness
01
CONTENTS
PRELUDE
Customer Se
Products
CHINA LIFE
中國人壽
CHINA LIFE
中国人寿
中国人寿
Exe
CHIN
中国
Home
C
China Life
180
108
160
140
O
32
7 00
12
Restriction on Major Assets
53
Directors, Supervisors, Senior
Management and Employees
71
Targeted Poverty Alleviation
53
Report of Corporate
86
Others
E-learning Center () being awarded
53
Governance
MANAGEMENT
DISCUSSION
AND ANALYSIS
Review of Business Operations 18
in 2019
Business Analysis
Analysis of Specific Items
Technological Empowerment
and Operations and Services
21
29
03
CHAIRMAN'S
STATEMENT
Undertakings
Changes in Ordinary Shares
and Shareholders Information
02
Chairman's Statement
05
SIGNIFICANT
EVENTS
06
CORPORATE
GOVERNANCE
Material Litigations or
41
67
Report of the Board of
Arbitrations
Directors
Major Connected Transactions
41
Report of the Board of
64
Supervisors
Material Contracts and Their
52
Performance
56
by the Association for Talent Development (ATD)
the "Excellence in Practice Award"
942,087mill
China Life Insurance Company Limited 2019 Annual Report Prelude
3,573,154 3,104,014
14.5%
15.1%
3,317,392 2,931,113
13.2%
2,897,591 2,696,951
2,753,124 2,573,049
2,572,281 2,389,303
2,448,315
2,334,814
2,122,101
403,764
318,371
3,726,734 3,254,403
26.8%
303,621
322,492
Per share (RMB)
Earnings per share (basic and diluted)³
2.05
0.39
425.8%
1.13
0.66
1.22
320,933
Equity holders' equity per share³
Total equity holders' equity
Investment assets²
411.5%
32,253
19,127
34,699
Net profit attributable to ordinary
share holders of the Company
57,893
11,011
425.8%
31,873
Total liabilities
18,741
Net cash inflow/(outflow) from
operating activities
286,032
147,552
93.9%
200,990
89,098
(18,811)
As at 31 December
Total assets
34,514
11,395
14.28
26.8%
11.56
of 12.93
percentage
points
Ratio of assets and liabilities (%)
89.02
90.07
decrease
88.77
88.59
86.68
6.16
of 1.05
Gross investment yield 5 (%)
5.24
3.29
points
increase
5.16
4.69
6.42
of 1.95
percentage
points
8
China Life Insurance Company Limited 2019 Annual Report • Prelude
percentage
11.26
10.49
3.54
11.35
10.74
11.41
Ordinary share holders' equity per
share³
14.01
10.99
27.5%
11.08
10.47
increase
11.13
operating activities per share³
10.12
5.22
93.9%
7.11
3.15
(0.67)
Major financial ratios
Weighted average ROE (%)
16.47
Net cash inflow/(outflow) from
58,287
holders of the Company
Net profit attributable to equity
increase of 77.7%
וייון
Gross investment yield
5.24%
increase of 195BPS
a year-on-year
$
Comprehensive investment yield Comprehensive solvency ratio
7.28%
418BPS
a year-on-year
increase of
276.53%
million
an increase of
percentage
from the end of 2018
10
First-year regular premiums
with a payment duration of
ten years or longer
59,168m
a year-on-year
million
increase of 42.1%
Percentage of premiums
from designated protection-oriented
products in first-year regular
premiums
25.97 points
a year-on-year
increase of
a year-on-year
Gross investment income
BUSINESS HIGHLIGHTS
$
Gross written premiums
567,086
a year-on-year
million
increase of 5.8%
Net profit attributable to equity
holders of the Company
58,287million
a year-on-year
169,043m
increase of 411.5%
Business Highlights
Financial Summary
an increase of
million
18.5%
from the end of 2018
Value of one year's sales
58,698
a year-on-year
increase of
million
18.6%
Embedded value
percentage
8.6 points
China Life Insurance Company Limited 2019 Annual Report Prelude
Benefits, claims and expenses
677,690
621,243
9.1%
608,827
522,794
463,492
Insurance benefits and claims
expenses
509,467
362,301
479,219
466,043
407,045
352,219
Profit before income tax
59,795
13,921
329.5%
41,671
23,842
45,931
6.3%
426,230
506,910
5.3%
7
FINANCIAL SUMMARY
MAJOR FINANCIAL DATA AND INDICATORS FOR THE PAST FIVE YEARS
Major Financial Data¹
For the year ended
Total revenues
Net premiums earned
RMB million
Under International Financial Reporting Standards (IFRS)
2019
2018
Change
2017
2016
2015
729,474
627,419
16.3%
643,355
540,781
507,449
560,278
532,023
6
45
Shareholders' General Meeting
Reviewing connected transactions. In 2019, the Audit
Committee reviewed the proposal on the framework
agreement in relation to daily connected transactions of
AMP and the proposal on the renewal of the framework
agreement in relation to daily connected transactions
between the Company and Guangfa Bank, and submitted
it to the Board and shareholders' general meetings
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.
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 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.
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 sixth session of the Board comprises the
following members: Mr. Wang Bin, Mr. Su Hengxuan,
Mr. Li Mingguang and Mr. Zhao Peng, all being Executive
Directors, Mr. Yuan Changqing, Mr. Liu Huimin, Mr. Yin
Zhaojun and Mr. Wang Junhui, 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. Wang Bin as the
Chairman of the Board. In January 2019, Mr. Xu Hengping
resigned from his position as a Director due to the reason
of age. In June 2019, Mr. Xu Haifeng resigned from his
position as a Director due to the reason of age.
The Board of Directors of the Company has conducted in-
depth investigation and research activities. In May 2019,
the members of the Board carried out investigation and
research on AMC, received reports concerning its overall
situation, and discussed with the management of AMC
at seminars about its business operation, investment
strategy, allocation plan, investment return, and risk
control and prevention. Through the investigation and
research, the Board of Directors further understood the
development of the Company's investment business and
its entrusted investments in great depth and examined
the effectiveness of the implementation of decisions of
the Board, which thus enhanced the legal compliance and
risk prevention of the Company in a practical manner. In
2019, all members of the the Board of Directors attended
a training course on the topic of "Standards of New
Insurance Contracts and their Effects", with the external
auditors of the Company as the speaker, which gave
them the opportunity to familiarize with and understand
the impact of the standards of new insurance contracts
on the subsequent management of the Company. Mr. Liu
Huimin and Mr. Yin Zhaojun, the Non-executive Directors
of the Company, attended the 2nd and 4th special
training courses of 2019 for directors and supervisors
of listed companies within Beijing as organized by the
Listed Companies Association of Beijing, respectively.
Pursuant to the regulatory requirements, all members of
the the Board of Directors attended the training programs
on anti-money laundering. Pursuant to the regulatory
requirements of the industry, Mr. Li Mingguang and
Mr. Wang Junhui, the new Directors of the Company,
sat for the examinations of the CBIRC regarding the
approval of qualifications of new directors, supervisors
and senior management officers of insurance institutions
as organized by the CBIRC.
The Company has consistently improved its corporate
governance structure, regulated the acts of Directors in
performing their duties, and optimized the mechanism
for supervising and evaluating the performance of
duties by Directors. Pursuant to the "Measures for the
Administration of Independent Directors of Insurance
Institutions" published by the CBIRC, the "Operational
Guidance for Evaluating the Performance of Duties
by Directors of Insurance Companies" issued by the
Insurance Association of China, the "Provisional Measures
for Evaluating the Performance of Duties by Directors" 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 2019.
92 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
Meetings and attendance
In 2019, five regular Board meetings and seven ad-hoc Board meetings were held by the sixth session of the Board. The
attendance records of individual Directors are as follows:
China Life Insurance Company Limited 2019 Annual Report Corporate Governance 91
Name of Director
Number of
meetings
required
Number of
Number of
meetings
meetings
attended
attended
Number of
meetings
absent
to attend
Type of Director
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
2019, 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.
In 2019, 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.
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, including
between Mr. Wang Bin, the Chairman of the Board, and
Mr. Su Hengxuan, the President of the Company.
Name of Director
Type of Director
general meetings
required to attend
Number of
meetings
attended in
Number of
meetings
Attendance
rate
absent
person
Xu Hengping
Xu Haifeng
Executive Director
Executive Director
0
1
1
0
100%
90 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
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.
Currently, the Board comprises twelve 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 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 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
in person
Number of
shareholders'
by proxies
Whether
the Directors
failed to
attend two
No
Yuan Changqing
Non-executive Director
12
10
2 Note 3
0
83.3%
No
100%
Liu Huimin
12
9
3 Note 4
0
75%
Yes
Yin Zhaojun
Non-executive Director
12
Non-executive Director
0
0
3
consecutive
meetings
Wang Bin
Executive Director
12
9
3 Note 1
0
75%
No
Su Hengxuan
Executive Director
12
11
1 Note 2
0
91.7%
No
Li Mingguang
Executive Director
3
Rate of
attendance
in person
Attendance records of the resigned Directors at the shareholders' general meetings convened during the Reporting
Period:
50%
1
Number of
meetings
attended in
Number of
meetings
Attendance
rate
absent
person
Wang Bin
Executive Director
2
Number of
shareholders'
general meetings
required to attend
2
100%
Su Hengxuan
Executive Director
2
1
1
50%
Li Mingguang
Executive Director
0
Type of Director
Name of Director
Attendance records of Directors at the shareholders' general meetings convened during the Reporting Period:
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.
Shareholders' general meetings convened during the Reporting Period are as follows:
Session of the meeting
Date of the meeting
2018 Annual General Meeting
30 May 2019
First Extraordinary General Meeting 2019
19 December 2019
Index for websites on which
resolutions were published
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
Date of publication
of resolutions
30 May 2019
19 December 2019
Fifteen proposals including: the "Proposal in relation to
the Report of the Board of Directors of the Company for
the Year 2018", the "Proposal in relation to the Report.
of the Board of Supervisors of the Company for the Year
2018", the "Proposal in relation to the Financial Report
of the Company for the Year 2018", the "Proposal in
relation to the Profit Distribution Plan of the Company
for the Year 2018", 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 2018 and the
Appointment of Auditors of the Company for the Year
2019", the "Proposal in relation to the Amendments to
the 'Articles of Association'", the "Proposal in relation to
the General Mandate for the Issuance of H Shares by the
Company", the "Proposal in relation to the Authorization
associated with the Overseas Issue of Senior Bonds by
the Company", the "Proposal in relation to the Election
of Mr. Li Mingguang as an Executive Director of the Sixth
Session of the Board of Directors of the Company" and
the "Proposal in relation to the Election of Mr. Wang
Junhui as a Non-executive Director of the Sixth Session of
the Board of Directors of the Company", were considered
and approved by a combination of onsite and online voting,
and the "Duty Report of the Independent Directors of the
Board of Directors of the Company for the Year 2018" and
the "Report on the Status of Connected Transactions and
the Execution of Connected Transactions Management
System of the Company for the Year 2018" were received
and reviewed at the 2018 Annual General Meeting held in
Beijing on 30 May 2019.
Three proposals including: the "Proposal in relation to the
Election of Mr. Zhao Peng as an Executive Director of the
Sixth Session of the Board of Directors of the Company",
the "Proposal on the 'Framework Agreement in relation
to Daily Connected Transactions' of China Life AMP
Asset Management Co., Ltd." and the "Proposal on the
Renewal of the 'Framework Agreement in relation to Daily
Connected Transactions' between the Company and China
Guangfa Bank Co., Ltd." were considered and approved
by a combination of on-site and online voting at the First
Extraordinary General Meeting 2019 held in Beijing on
19 December 2019.
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
89
1
1
0
100%
Independent Director
2
2
0
100%
Robinson Drake Pike
Independent Director
2
2
0
100%
Tang Xin
Independent Director
2
2
0
100%
Leung Oi-Sie Elsie
Independent Director
2
1
Chang Tso Tung Stephen
10 Note 5
100%
1
Yuan Changqing
Non-executive Director
2
1
1
50%
Liu Huimin
Non-executive Director
2
0
2
0
Yin Zhaojun
Non-executive Director
2
0
2
0
Wang Junhui
Non-executive Director
1
0
Assessing the work of and strengthening communications
with external auditors. Besides regular meetings, the
Audit Committee convened communication meetings
in advance with 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 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.
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 Note 6
83.3%
Luo Zhaohui
Han Bing
Cao Qingyang
Song Ping
Number of
meetings
Attendance
rate
attended
5/5
Jia Yuzeng
100%
100%
3/3
100%
3/3
100%
2/5 Note 2
40%
Notes:
1.
5/5 Note 1
Name of Supervisor
In 2019, five meetings were held by the sixth session of the Board of Supervisors. Attendance records of individual
Supervisors are as follows:
Meetings and attendance
0
83.3%
No
Note: At the thirteenth meeting of the sixth session of the Board held on 25 April 2019, Mr. Xu Haifeng gave written authorization for Mr. Su Hengxuan to
act as his proxy to attend and vote at the meeting.
Performance of duties by Independent Directors
In 2019, 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.
All Independent Directors diligently fulfilled their
responsibilities and faithfully performed their duties by
attending meetings of the Board and the specialized
Board committees in 2019, examining and approving
the Company's business development, its 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 relevant personnel, understanding
the daily operations 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 between the Chairman and the
Independent Directors, all Independent Directors put
forward their own views and opinions on various aspects
such as the macro-environment, modern economy and
industry development, policies of the insurance industry,
and corporate governance, etc., and gave advices and
recommendations on matters including the development
strategy of the Company, development of investment
business, brand and image building, team building, and
coordinated development with the businesss of overseas
companies. 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 2019, 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.
94 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
In 2019, the Independent Directors of the Company
and the representatives from the external auditors
convened four special meetings to communicate and
discuss on matters including annual audit, new rules of
the HKSE on ESG Report, and contents and impacts of
IFRS17. The Independent Directors also met with the
person-in-charge of the relevant departments, such as
the Strategy and Planning Department, the Investment
Management Center, the Finance Department, the
Actuarial Department, the Audit Department, and the
Culture and Brand Department of the Company, to discuss
business development, financial budget, strategic and
asset allocation, and work relating to the audit of the
Company. In May 2019, Mr. Chang Tso Tung Stephen,
Mr. Robinson Drake Pike, Mr. Tang Xin and Ms. Leung
Oi-Sie Elsie, all being the Independent Directors of the
Company, carried out investigation and research on AMC,
received reports concerning its overall situation, and
discussed with the management of AMC at seminars
about its business operation, investment strategy,
allocation plan, investment return, and risk control and
prevention for the purpose of further understanding the
development of the Company's investment business and
its entrusted investments in great depth and examining
the effectiveness of the implementation of decisions of
the Board, which thus enhanced the legal compliance
and risk prevention of the Company in a practical
manner. According to the arrangement of the Board for
annual training courses, all Independent Directors of
the Company attended a training course on the topic
of "Standards of New Insurance Contracts and their
Effects", with the external auditors of the Company as the
speaker, which gave them the opportunity to familiarize
with and understand the impact of the standards of new
insurance contracts on the subsequent management of
the Company. All Independent Directors attended the
training programs on anti-money laundering for directors,
supervisors and senior management officers as organized
by the Company.
During the Reporting Period, no Independent Director has
raised any objection against the proposals and matters
considered by the Board of the Company.
CHAIRMAN AND PRESIDENT
During the Reporting Period, Mr. Wang Bin has 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/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. During the Reporting Period, Mr. Su Hengxuan has
served as 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 policies, drawing
up basic rules and regulations of the Company, submitting
to the Board any 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.
BOARD OF SUPERVISORS
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
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.
China Life Insurance Company Limited 2019 Annual Report Corporate Governance 95
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.
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 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 necessary.
The sixth session of the Board of Supervisors of the
Company comprises Mr. Jia Yuzeng, Mr. Luo Zhaohui,
Mr. Han Bing, Mr. Cao Qingyang and Ms. Wang Xiaoqing,
with Mr. Jia Yuzeng acting as the Chairman of the Board of
Supervisors. Mr. Jia Yuzeng, Mr. Luo Zhaohui and Mr. Han
Bing are Non-employee Representative Supervisors,
whereas Mr. Cao Qingyang and Ms. Wang Xiaoqing
are Employee Representative Supervisors. In February
2019, Mr. Shi Xiangming resigned from his position as
a Non-employee Representative Supervisor due to the
adjustment of work arrangements. In July 2019, Mr. Tang
Yong resigned from his position as a Non-employee
Representative Supervisor due to the adjustment of work
arrangements. In July 2019, Mr. Huang Xin resigned from
his position as an Employee Representative Supervisor
due to the adjustment of work arrangements. In January
2020, Mr. Song Ping resigned from his position as
an Employee Representative Supervisor due to the
adjustment of work arrangements.
2.
1 Note
At the sixth meeting of the sixth session of the Board of Supervisors held on 25 April 2019, Mr. Luo Zhaohui attended the meeting by telephony.
At the seventh meeting of the sixth session of the Board of Supervisors held on 22 August 2019, Mr. Song Ping gave written authorization for Mr. Cao
Qingyang to act as his proxy to attend and vote at the meeting; at the eighth meeting of the sixth session of the Board of Supervisors held on 29 October
2019, Mr. Song Ping gave written authorization for Mr. Cao Qingyang to act as his proxy to attend and vote at the meeting; at the ninth meeting of the
sixth session of the Board of Supervisors held on 19 December 2019, Mr. Song Ping gave written authorization for Mr. Cao Qingyang to act as his proxy
to attend and vote at the meeting.
In 2019, the attendance records of the resigned Supervisors of of the Company at the meetings of the Board of
Supervisors are as follows:
Position
meetings
attended
rate
Robinson Drake Pike
Independent Director, Chairman of the Audit Committee
of the sixth session of the Board
6/6
100%
Chang Tso Tung Stephen
Independent Director, member of the Audit Committee
of the sixth session of the Board
Name of member
6/6
Tang Xin
Independent Director, member of the Audit Committee
of the sixth session of the Board
4/6 Note
66.7%
Note: At the sixth meeting of the Audit Committee of the sixth session of the Board held on 26 March 2019, Mr. Tang Xin gave written authorization for
Mr. Robinson Drake Pike to act as his proxy to attend and vote at the meeting; at the seventh meeting of the Audit Committee of the sixth session
of the Board of Directors held on 24 April 2019, Mr. Tang Xin gave written authorization for Mr. Robinson Drake Pike to act as his proxy to attend and
vote at the meeting.
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
97
Performance of duties by the Audit Committee
In 2019, the Audit Committee performed its relevant
duties and functions in strict compliance with the
"Procedural Rules for the 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 any proposals
considered and discussed at the meetings.
Reviewing and approving financial reports. The Audit
Committee, according to its duties, reviewed and
approved annual, interim and quarterly financial reports 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
statements, 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 arisen
during the audit.
100%
Attendance
Number of
In 2019, six meetings were held by the Audit Committee of the sixth session of the Board. Attendance records of
individual members are as follows:
Name of Supervisor
Shi Xiangming
Tang Yong
Huang Xin
Number of
meetings
Attendance
rate
attended
0/0
2/2
0/2 Note
100%
0
Note: At the fifth meeting of the sixth session of the Board of Supervisors held on 27 March 2019, Mr. Huang Xin gave written authorization for Mr. Luo
Zhaohui to act as his proxy to attend and vote at the meeting; at the sixth meeting of the sixth session of the Board of Supervisors held on 25 April
2019, Mr. Huang Xin gave written authorization for Mr. Song Ping to act as his proxy to attend and vote at the meeting.
The Board of Supervisors had no objection in
respect of any matters under its supervision
during the Reporting Period.
Activities of the Board of Supervisors during the
Reporting Period
For the activities carried out by the Board of Supervisors
during the Reporting Period, please refer to the "Report of
the Board of Supervisors" in this annual report.
AUDIT COMMITTEE
The Company established its Audit Committee on 30
June 2003. In 2019, the Audit Committee comprised
only Independent Directors of the Company. Currently,
the Audit Committee of the sixth session of the Board
comprises the Independent Directors, Mr. Robinson Drake
Pike, Mr. Chang Tso Tung Stephen and Mr. Tang Xin, with
Mr. Robinson Drake Pike acting as the Chairman.
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.
Meetings and attendance
96 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
5
6
No
Tang Xin
Independent Director
12
12 Note 9
0
0
100%
No
Leung Oi-Sie Elsie
No
Independent Director
11 Note 10
1 Note 11
0
91.7%
No
Notes:
1.
2.
3.
12
100%
0
0
No
Wang Junhui
Non-executive Director
3
3
0
0
100%
No
Chang Tso Tung Stephen
Independent Director
12
12 Note 7
0
0
100%
No
Robinson Drake Pike
Independent Director
12
12 Note 8
4.
5.
6.
7.
Number of
meetings
absent
Rate of
attendance
Whether
the Directors
failed to
attend two
in
person
consecutive
to attend
in person
by proxies
meetings
in
person
Xu Hengping
Executive Director
Xu Haifeng
Executive Director
1
1
0
0
100%
attended
0
attended
meetings
8.
9.
10.
At the sixteenth meeting of the sixth session of the Board held on 23 July 2019, Mr. Wang Bin gave written authorization for Mr. Su Hengxuan to act as
his proxy to attend, vote at and chair the meeting; at the eighteenth meeting of the sixth session of the Board held on 22 August 2019, Mr. Wang Bin
gave written authorization for Mr. Su Hengxuan to act as his proxy to attend, vote at and chair the meeting; at the twentieth meeting of the sixth session
of the Board held on 29 October 2019, Mr. Wang Bin gave written authorization for Mr. Su Hengxuan to act as his proxy to attend, vote at and chair the
meeting.
At the fourteenth meeting of the sixth session of the Board held on 30 May 2019, Mr. Su Hengxuan gave written authorization for Mr. Xu Haifeng to act
as his proxy to attend and vote at the meeting.
At the twelfth meeting of the sixth session of the Board held on 27 March 2019, Mr. Yuan Changqing gave written authorization for Mr. Tang Xin to act as
his proxy to attend and vote at the meeting; at the twentieth meeting of the sixth session of the Board held on 29 October 2019, Mr. Yuan Changqing
gave written authorization for Mr. Wang Junhui to act as his proxy to attend and vote at the meeting.
At the twelfth meeting of the sixth session of the Board held on 27 March 2019, Mr. Liu Huimin gave written authorization for Mr. Yin Zhaojun to act as his
proxy to attend and vote at the meeting; at the thirteenth meeting of the sixth session of the Board held on 25 April 2019, Mr. Liu Huimin gave written
authorization for Mr. Yin Zhaojun to act as his proxy to attend and vote at the meeting; and at the twentieth meeting of the sixth session of the Board
held on 29 October 2019, Mr. Liu Huimin gave written authorization for Mr. Robinson Drake Pike to act as his proxy to attend and vote at the meeting.
At the twentieth meeting of the sixth session of the Board held on 29 October 2019, Mr. Yin Zhaojun attended the meeting by telephony.
At the eighteenth meeting of the sixth session of the Board held on 22 August 2019, Mr. Yin Zhaojun gave written authorization for Mr. Liu Huimin to act
as his proxy to attend and vote at the meeting; at the twenty-first meeting of the sixth session of the Board held on 19 December 2019, Mr. Yin Zhaojun
gave written authorization for Mr. Yuan Changqing to act as his proxy to attend and vote at the meeting.
At the sixteenth meeting of the sixth session of the Board held on 23 July 2019, Mr. Chang Tso Tung Stephen attended the meeting by telephony.
At the sixteenth meeting of the sixth session of the Board held on 23 July 2019, Mr. Robinson Drake Pike attended the meeting by telephony.
At the twentieth meeting of the sixth session of the Board held on 29 October 2019, Mr. Tang Xin attended the meeting by telephony.
At the twentieth meeting of the sixth session of the Board held on 29 October 2019, Ms. Leung Oi-Sie Elsie attended the meeting by telephony; at the
twenty-first meeting of the sixth session of the Board held on 19 December 2019, Ms. Leung Oi-Sie Elsie attended the meeting by telephony.
11. At the sixteenth meeting of the sixth session of the Board held on 23 July 2019, Ms. Leung Oi-Sie Elsie gave written authorization for Mr. Tang Xin to
act as her proxy to attend and vote at the meeting.
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
93
In 2019, the attendance records of the resigned Directors of of the Company at the Board meetings are as follows:
Number of
Number of
Number of
Name of Director
Type of Director
meetings
required
meetings
in person
98 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
The Nomination and Remuneration Committee
33.3%
1/3 Note 2
66.7%
2/3 Note 1
rate
Attendance
Number of
meetings
attended
Li Mingguang
Independent Director, Chairperson of the Risk
Management and Consumer Rights Protection
Committee of the sixth session of the Board
Non-executive Director, member of the Risk
Management and Consumer Rights Protection
Committee of the sixth session of the Board
Non-executive Director, member of the Risk
Management and Consumer Rights Protection
Committee of the sixth session of the Board
Yin Zhaojun
Liu Huimin
Leung Oi-Sie Elsie
Position
Name of member
In 2019, three meetings were held by the Risk Management and Consumer Rights Protection Committee of the sixth
session of the Board. Attendance records of individual members are as follows:
Meetings and attendance
102 China Life Insurance Company Limited 2019 Annual Report • Corporate Governance
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 as delegated by
the Board or on its own initiative and the management's
response to these findings, dealing with major risk
emergency events or crisis events or major disagreement
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.
and Consumer Rights Protection Committee of the sixth
session of the Board comprises Ms. Leung Oi-Sie Elsie, an
Independent Director, Mr. Liu Huimin and Mr. Yin Zhaojun,
the Non-executive Directors, and Mr. Li Mingguang, an
Executive Director, with Ms. Leung Oi-Sie Elsie acting
as the Chairperson. In January 2019, Mr. Xu Hengping
resigned from his position as a member of the Risk
Management Committee of the sixth session of the Board
due to the reason of age.
The Company established its Risk Management
Committee on 30 June 2003. In December 2019,
the "Proposal in relation to the Change to the Risk
Management and Consumer Rights Protection Committee
of the Board of Directors" was considered and approved
at the twenty-first meeting of the sixth session of
the Board, pursuant to which the Risk Management
Committee was renamed as the Risk Management and
Consumer Rights Protection Committee, the additional
function of management of consumers' 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. Currently, the Risk Management
RISK MANAGEMENT AND CONSUMER RIGHTS
PROTECTION COMMITTEE
2/3 Note 3
66.7%
Executive Director, member of the Risk Management
and Consumer Rights Protection Committee of the
sixth session of the Board
1/1
Reviewing the system of the Company in relation to
risk management. In 2019, the Risk Management and
Consumer Rights Protection Committee assisted the
Board in optimizing the system of the Company in relation
to internal control and risk management, considered and
approved the relevant rules and regulations such as the
amendments to the "Comprehensive Risk Management
Rules", as well as the proposals including the
amendments to the "Measures for the Administraion of
Anti-insurance Fraud of the Company" and the "Measures
for the Administration of Anti-money Laundering Work of
the Company", and submitted the review opinions to the
Board.
In 2019, the Risk Management and Consumer Rights
Protection Committee performed its duties and functions
in strict compliance with the "Procedural Rules for the
Risk Management and Consumer Rights Protection
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 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
China Life Insurance Company Limited ⚫ 2019 Annual Report Corporate Governance 103
0/0
Executive Director, member of the Risk Management
Committee of the sixth session of the Board
rate
meetings
attended
Position
Attendance
Conducting investigation and research activities. In
order to better understand the external investment of
the Company and the operation of AMC, Mr. Tang Xin,
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 AMC in May 2019, received
reports concerning its overall situation, and discussed with
the management of AMC at seminars about its business
operation, organizational structure, staff composition
and remuneration system for the purpose of further
understanding the remuneration standard and appraisal
incentive measures of AMC.
Number of
Name of member
In 2019, the attendance record of the resigned Director of the Company at the meetings of the Risk Management
Committee is as follows:
At the fourth meeting of the Risk Management Committee of the sixth session of the Board held on 18 December 2019, Mr. Yin Zhaojun gave written
authorization for Mr. Li Mingguang to act as his proxy to attend and vote at the meeting.
At the second meeting of the Risk Management Committee of the sixth session of the Board held on 26 March 2019, Mr. Liu Huimin gave written
authorization for Mr. Yin Zhaojun to act as his proxy to attend and vote at the meeting; at the third meeting of the Risk Management Committee of the
sixth session of the Board held on 24 April 2019, Mr. Liu Huimin gave written authorization for Mr. Yin Zhaojun to act as his proxy to attend and vote at
the meeting.
At the fourth meeting of the Risk Management Committee of the sixth session of the Board held on 18 December 2019, Ms. Leung Oi-Sie Elsie gave
written authorization for Mr. Liu Huimin to act as her proxy to attend and vote at the meeting.
3.
2.
1.
Notes:
100%
Xu Hengping
China Life Insurance Company Limited • 2019 Annual Report • Corporate Governance 101
Carrying out the performance appraisal of Directors,
Supervisors and senior management officers of the
Company. The Nomination and Remuneration Committee.
reviewed proposals such as the results of evaluating the
performance of duties by Directors for 2018, the results
of performance appraisal of senior management officers
for 2018 and the performance target contract of senior
management for 2019, the remuneration of Directors and
Supervisors of the Company, and the remuneration of
senior management officers of the Company, and made
recommendations to the Board in respect of matters such
as the determination of performance target, performance
appraisal procedures and results.
Proposing 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.
3.
2.
1. At the fifth meeting of the Nomination and Remuneration Committee of the sixth session of the Board held on 24 April 2019, Mr. Tang Xin gave written
authorization for Mr. Robinson Drake Pike to act as his proxy to attend and vote at the meeting.
Notes:
83.3%
5/6 Note 3
Non-executive Director, member of the Nomination
and Remuneration Committee of the sixth session
of the Board
Yuan Changqing
100%
6/6 Note 2
At the seventh meeting of the Nomination and Remuneration Committee of the sixth session of the Board held on 23 July 2019, Mr. Robinson Drake
Pike attended the meeting by telephony.
Independent Director, member of the Nomination
and Remuneration Committee of the sixth session
of the Board
83.3%
5/6 Note 1
rate
Attendance
Number of
meetings
attended
Independent Director, Chairman of the Nomination
and Remuneration Committee of the sixth session
of the Board
Position
Tang Xin
Name of member
In 2019, six meetings were held by the Nomination and Remuneration Committee of the sixth session of the Board.
Attendance records of individual members are as follows:
Robinson Drake Pike
Reviewing the risk analysis on major matters concerning
the business operation and management of the Company.
In 2019, the Risk Management and Consumer Rights
Protection Committee reviewed the risk analysis on
major matters concerning the business operation and
management of the Company, reviewed and approved
the proposals in relation to the risk compliance analysis
on the asset strategic allocation plan for the years from
2020 to 2022 and the risk compliance analysis on the
asset allocation plan for the year 2020, and gave guiding
opinions on risk control for major matters concerning the
business operation and management of the Company in
accordance with the regulatory requirements of the CBIRC
on the China Risk Oriented Solvency System (C-ROSS).
At the fourth meeting of the Nomination and Remuneration Committee of the sixth session of the Board held on 26 March 2019, Mr. Yuan Changqing
gave written authorization for Mr. Tang Xin to act as his proxy to attend and vote at the meeting.
In 2019, the Nomination and Remuneration Committee
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 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.
Over 70 years old
2 persons
60-69 years old
2 persons
50-59 years old
5 persons
40-49 years old
3 persons
1 person
Female
4 persons
Independent Director
11 persons
Male
Performance of duties by the Nomination and
Remuneration Committee
Directors by age:
4 persons
4 persons
Non-executive Director
Executive Director
Directors by type:
The members of the sixth session of the Board of the
Company possess extensive experience in various
fields, such as finance and insurance, macro-economics,
financial accounting, law and management. Currently, the
diversified composition of the sixth session of the Board is
as follows:
Committee reviewed the proposals in relation to the
nomination of Mr. Li Mingguang, Mr. Wang Junhui and
Mr. Zhao Peng as the candidates for Directors of the
sixth session of the Board, the members of the Risk
Management and Consumer Rights Protection Committee
of the sixth session of the Board and the members of
the Strategy and Assets and Liabilities Management
Committee of the sixth session of the Board, respectively.
The above nominations were considered and approved by
the Board.
Independent Directors, 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 met the requirements
set by the Company, and submitted a review opinion
to the Board. The Nomination and Remuneration
Committee agreed to submit such proposals to the Board
for consideration. In 2019, after fully considering the
educational background of Mr. Li Mingguang, Mr. Wang
Junhui and Mr. Zhao Peng and their experience in product
actuarial function, assets and liabilities management,
strategic investment and financial management and
taking into account the qualification requirements for
appointment as members of the specialized Board
committees, the Nomination and Remuneration
100 China Life Insurance Company Limited ⚫ 2019 Annual Report Corporate Governance
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 (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 and members
of the Board committees and the independence of
Directors by gender:
Providing its opinions for the review of the proposals
on risk management to the Board. In 2019, the Risk
Management and Consumer Rights Protection Committee
closely monitored and controlled and effectively prevented
internal and external risks of the Company, assisted the
Board in reviewing 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 and Consumer Rights Protection
Committee provided its opinions for the review of the
reports on risk management such as the work summary
on anti-money laundering for the year 2018 and the work
plan for the year 2019, the statement of the Company on
risk preference for the year 2019, the audit report on the
solvency risk management system of the Company for the
year 2019, the reputational risk management report and
the work report on fraudulent risk management, which
offered professional support to the Board's decision-
making in a scientific manner.
Conducting investigation and research activities. In
order to better understand the external investment of
the Company and the operation of AMC, Ms. Leung
Oi-Sie Elsie, the Chairperson of the Risk Management
Committee, carried out investigation and research on
AMC in May 2019, received reports concerning its overall
situation, and discussed with the management of AMC
at seminars about its business operation, compliance
construction, and risk control and prevention for the
purpose of further understanding the compliance
construction and risk control and prevention of the
Company's investment business.
Independent Director, member of the Connected
Transactions Control Committee of the sixth session
of the Board
Robinson Drake Pike
100%
1/1
Independent Director, member of the Connected
Transactions Control Committee of the sixth session
of the Board
Chang Tso Tung Stephen
100%
1/1
Independent Director, Chairman of the Connected
Transactions Control Committee of the sixth session
of the Board
Tang Xin
1/1
attended
meetings
Attendance
Number of
Position
Name of member
In 2019, one meeting was held by the Connected Transactions Control Committee of the sixth session of the Board.
Attendance records of individual members are as follows:
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 and necessity
of connected transactions and the fairness of their pricing,
which provide an important basis for the Board's decision-
making in connected transaction management.
Mr. Chang Tso Tung Stephen, Mr. Robinson Drake Pike
and Ms. Leung Oi-Sie Elsie, the Independent Directors,
with Mr. Tang Xin acting as the Chairman.
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 at the twentieth meeting
of the six 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
sixth session of the Board comprises Mr. Tang Xin,
CONNECTED TRANSACTIONS CONTROL
COMMITTEE
rate
106 China Life Insurance Company Limited 2019 Annual Report • Corporate Governance
100%
Independent Director, member of the Connected
Transactions Control Committee of the sixth session
of the Board
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.
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 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 sixth session of the Board comprises Mr. Tang Xin
and Mr. Robinson Drake Pike, the Independent Directors,
and Mr. Yuan Changqing, a Non-executive Director, with
Mr. Tang Xin acting as the Chairman.
NOMINATION AND REMUNERATION COMMITTEE
Conducting investigation and research activities. In
order to better understand the external investment of
the Company and the operation of AMC, Mr. Robinson
Drake Pike, the Chairman of the Audit Committee,
and Mr. Chang Tso Tung Stephen and Mr. Tang Xin,
the members of the Audit Committee, carried out
investigation and research on AMC in May 2019, received
reports concerning its overall situation, and discussed
with the management of AMC at seminars about its
business operation, internal control and internal audit
for the purpose of further understanding and examining
the effectiveness of internal control of the Company's
investment business.
Examining the internal audit functions of the Company. In
2019, the Audit Committee reviewed proposals including
the proposal on the 2018 internal audit work, and the
proposal on the internal audit work report for the first
half of 2019, and convened communication meetings
in advance with the Audit Department of the Company,
with a view to communicating any matters of concern in
an effective manner, further understanding the duties of
the Company's audit departments and supervising the
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.
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 CBIRC, 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.
108 China Life Insurance Company Limited 2019 Annual Report • 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 all
types of personal insurance services, consulting business
and agency business, sale of securities investment funds,
and other businesses permitted by the banking and
insurance administrative and regulatory authorities of the
PRC. The Company currently possesses the "Insurance
Company Legal Person Permit" (Number: 000005) issued
by the CBIRC. 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.
Organization: The Company has established a well-
developed organizational 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.
Leung Oi-Sie Elsie
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.
Employees: The Company is independent in the aspects
of employment, human resources and remuneration
management.
INDEPENDENCE OF THE COMPANY FROM ITS
CONTROLLING SHAREHOLDER
In 2019, the Connected Transactions Control Committee
focused on the compliance and necessity of connected
transactions and the fairness of their pricing when
reviewing the proposals in relation to the connected
transactions of the Company pursuant to the regulatory
requirements of the CBIRC with respect to connected
transactions. The Connected Transactions Control
Committee also submitted its review opinions in
connection with the proposals in relation to the connected
transactions such as the investment by the Company in
China Life Aged-care Industry Investment Fund and the
"Framework Agreement in relation to Daily Connected
Transaction" between the Company and Chongqing
Trust, which offered professional support to the Board's
decision-making in a scientific manner.
In 2019, 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
107
China Life Insurance Company Limited 2019 Annual Report • Corporate Governance
Note: At the first meeting of the Connected Transactions Control Committee of the sixth session of the Board held on 18 December 2019, Ms. Leung Oi-
Sie Elsie gave written authorization for Mr. Chang Tso Tung Stephen to act as her proxy to attend and vote at the meeting.
0
0/1 Note
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.
Meetings and attendance
Conducting investigation and research activities. In
order to better understand the external investment of
the Company and the operation of AMC, Mr. Chang,
Tso Tung Stephen, the Chairman of the Strategy and
Assets and Liabilities Management Committee, and
Ms. Leung Oi-Sie Elsie, a member of the Strategy and
Assets and Liabilities Management Committee, carried
out investigation and research on AMC in May 2019,
received reports concerning its overall situation, and
discussed with the management of AMC at seminars
about its business operation, investment strategy,
allocation plan, and investment return for the purpose
of further understanding the business development of
the Company's investment business and its entrusted
investments.
Discussing the Company's development plans and major
strategic projects. In 2019, the Strategy and Assets
and Liabilities Management Committee discussed and
reviewed the proposal on the 2018 assessment report
for the outline of the 13th five-year development plan,
and submitted its opinions to the Board. The Strategy and
Assets and Liabilities Management Committee reviewed
major strategic projects of the Company, such as the
strategic asset allocation plan of the Company for the
years from 2020 to 2022, and the investments by the
Company in the projects of Ruibo, Baiyangdian Ecological
and Environmental Protection Fund and China Life
(Jiangsu) Jiequan Health Industry Investment Fund, fully
discussed the necessity, feasibility and risks of the project
proposals and made recommendations to the Board.
2/2
Non-executive Director, member of the Strategy and
Assets and Liabilities Management Committee of the
sixth session of the Board
Wang Junhui
100%
6/6
Executive Director, member of the Strategy and
Assets and Liabilities Management Committee of the
sixth session of the Board
Su Hengxuan
100%
6/6 Note 1
rate
100%
Attendance
Independent Director, Chairman of the Strategy and
Assets and Liabilities Management Committee of the
sixth session of the Board
Position
Chang Tso Tung Stephen
Name of member
In 2019, six meetings were held by the Strategy and Assets and Liabilities Management Committee of the sixth session
of the Board. Attendance records of individual members are as follows:
Meetings and attendance
104 China Life Insurance Company Limited ⚫ 2019 Annual Report • Corporate Governance
The Strategy and Assets and Liabilities Management
Committee 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, and major strategic
investment decisions of the Company, and making
recommendations in respect thereof.
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 sixth session of the Board comprises Mr. Chang
Tso Tung Stephen and Ms. Leung Oi-Sie Elsie, the
Independent Directors, Mr. Su Hengxuan and Mr. Zhao
Peng, the Executive Directors, and Mr. Wang Junhui, a
Non-executive Director, with Mr. Chang Tso Tung Stephen
acting as the Chairman. In June 2019, Mr. Xu Haifeng
resigned from his position as a member of the Strategy
and Assets and Liabilities Management Committee of the
sixth session of the Board due to the reason of age.
STRATEGY AND ASSETS AND LIABILITIES
MANAGEMENT COMMITTEE
Number of
meetings
attended
Convening communication meetings of the Strategy and
Assets and Liabilities Management Committee in advance.
In 2019, Mr. Chang Tso Tung Stephen, the Chairman
of the Strategy and Assets and Liabilities Management
Committee, convened special meetings with the person-
in-charge of various departments such as the Corporate
Strategy and Planning Department, the Investment
Management Center, the Finance Department, the
Actuarial Department, and the Culture and Brand
Department for the purpose of understanding and
discussing the new business plan, financial budget, 2019
investments and the "Dingxin Project" of the Company
as well as the impact of the new ESG rules published
by the HKSE. The Strategy and Assets and Liabilities
Management Committee also communicated any matters
of concern in a timely and effective manner, kept itself
informed of the current development of the Company
from time to time, and made recommendations in respect
thereof.
Leung Oi-Sie Elsie
3/6 Note 2
Reviewing the systems of the Company concerning
assets and liabilities management. In 2019, the Strategy
and Assets and Liabilities Management Committee
reviewed and approved the proposal on the amendments
to the systems of the Company concerning assets
and liabilities management as well as asset allocation
pursuant to the requirements of the "Rules for the
Management and Supervision of Insurance Assets and
Liabilities" published by the CBIRC, studied on the
amendments to the "Comprehensive Risk Management
Rules", the "Measures for the Administration of Risk
Preference System", and the "Measures for the Assets
and Liabilities Management of the Company", and made
recommendations to the Board.
Reviewing annual asset allocation plan and entrusted
investments of the Company. In 2019, the Strategy and
Assets and Liabilities Management Committee carefully
reviewed the proposals on investment plans such as
the annual asset allocation plan of the Company and the
annual investment plan of the Company for self-use real
estate, the proposals on authorization of investments such
as the annual authorization by the Company of investment
in non self-use real estate, the annual authorization of
investment entrusted by the Company in connection with
Renminbi liberalization and the annual authorization 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 CLI
under the entrustment of the Company. The Strategy
and Assets and Liabilities Management Committee fully
reviewed the above proposals and submitted its opinions
to the Board in this regard.
In 2019, all members of the Strategy and Assets and
Liabilities Management Committee attended meetings in a
timely manner, reviewed the proposals on the application
of the Company's insurance funds, annual investments,
major strategic projects, assets and liabilities management
and annual related reports. 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 any proposals considered and
discussed at the meetings.
Performance of duties by the Strategy and Assets
and Liabilities Management Committee
China Life Insurance Company Limited 2019 Annual Report Corporate Governance 105
Note: At the sixth meeting of the Strategy and Assets and Liabilities Committee of the sixth session of the Board held on 24 April 2019, Mr. Xu Haifeng
gave written authorization for Mr. Su Hengxuan to act as his proxy to attend and vote at the meeting.
50%
1/2 Note
Executive Director, member of the Strategy and
Assets and Liabilities Management Committee of the
sixth session of the Board
rate
Independent Director, member of the Strategy and
Assets and Liabilities Management Committee of the
sixth session of the Board
Attendance
Xu Haifeng
Position
Name of member
In 2019, attendance record of the resigned Director of the Company at the meetings of the Strategy and Assets and
Liabilities Management Committee is as follows:
At the seventh meeting of the Strategy and Assets and Liabilities Management Committee of the sixth session of the Board held on 23 July 2019,
Ms. Leung Oi-Sie Elsie gave written authorization for Mr. Chang Tso Tung Stephen to act as her proxy to attend and vote at the meeting; at the ninth
meeting of the Strategy and Assets and Liabilities Management Committee of the sixth session of the Board held on 28 October 2019, Ms. Leung Oi-Sie
Elsie gave written authorization for Mr. Chang Tso Tung Stephen to act as her proxy to attend and vote at the meeting; at the tenth meeting of the
Strategy and Assets and Liabilities Management Committee of the sixth session of the Board held on 18 December 2019, Ms. Leung Oi-Sie Elsie gave
written authorization for Mr. Chang Tso Tung Stephen to act as her proxy to attend and vote at the meeting.
At the seventh meeting of the Strategy and Assets and Liabilities Management Committee of the sixth session of the Board held on 23 July 2019,
Mr. Chang Tso Tung Stephen attended the meeting by telephony.
2.
1.
Notes:
50%
Number of
meetings
attended
China Life Insurance Company Limited 2019 Annual Report Corporate Governance 99
Meetings and attendance
Operational risk refers to the risk of direct or indirect
losses arising from incomplete internal operational
processes, personnel, systems or external events.
internal audit and further strengthen the mechanism for
internal audit management, which effectively performed
the supervisory role of audit. The Company carried out
the economic responsibility audit on managers at all
levels, anti-money laundering audit, and a variety of
audits with a focus on connected transactions, assets
and liabilities management, solvency risk management
system, internal control over the application of insurance
funds, risk management of insurance frauds and certain
key issues that the management of the Company were
concerned about. Meanwhile, the Company has put more
efforts on the application of audit results, and played a
proactive role to supervise and direct the implementation
of rectification measures for any issues identified in audit,
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 Legal
and Compliance 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 Legal and Compliance 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 CBIRC and internal policies such
as the "Implementing Rules for Responsibility Attribution
of Cases". The Company has constantly optimized three
lines of defense for compliance management to establish
an efficient compliance management system, with a view
to identifying, guarding against and mitigating material
compliance risks. The Company has also fostered the
compliance concepts such as active compliance and value
of compliance, and promoted a good interaction between
the compliance management functional department of the
Company and external regulators, which enhanced the
overall compliance management standard of the Company
and pushed forward its transformation and restructuring.
China Life Insurance Company Limited ⚫ 2019 Annual Report Corporate Governance 113
Risk Management
Risk Management System
workflows.
Work in relation to Risk Management
Pursuant to the requirements of the CBIRC 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, reputation
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 actively implemented
key risk monitoring and risk pre-warning classification
management, and consistently reinforced the mechanism
for formation, transmission and application of the risk
preference system, which created a system for the daily
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 helped enhanced its risk management standard in
all aspects.
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 self-inspection and rectification in key risk areas,
which improved the Company's precaution capability in
key risk areas.
In 2019, the Company vigorously promoted the
informatization of risk management by actively applying
the latest advanced technologies such as big data
and artificial intelligence, thus making significant
breakthroughs in the intelligent application of anti-
money laundering, intelligent identification of illegal fund-
raising risks, monitoring of sale risk pre-warning, and risk
management data mart. The significant improvement of
informatization and intellectualization of risk management,
and the introduction of a new platform by the Company for
risk management provided a strong support to the high-
quality development of the Company.
Risk Identification and Control
The major risks of the Company in the course of operation
and management include insurance risk, market risk,
credit risk, operational risk, strategic risk, reputation risk,
liquidity risk and information safety risk.
114 China Life Insurance Company Limited ⚫ 2019 Annual Report • Corporate Governance
Insurance Risk
Insurance risk refers to the risk of losses arising from
the adverse deviation of the actual situation from the
projections of assumptions such as mortality, morbidity,
claim ratio, lapse rate and expenses.
The Company assessed and monitored insurance risks
through sensitivity analysis and other actuarial appraisal
methods, with a focus on the impact of loss ratio, expense
rate, lapse 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 organizational 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; and (5) transferring
and mitigating insurance risk through a scientific and
reasonable reinsurance arrangement. In 2019, 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 enhance its capability of managing
insurance risks on an ongoing basis.
Market Risk
The Company consistently implemented regulatory
requirements and its operational risk management
strategies, optimized the operational risk management
system, and regulated the operational risk management
processes, so as to enhance the effectiveness of
operational risk management policies, systems and
process management on an ongoing basis. The Company
established an operational risk management system
that combines three management tools, namely internal
control and operational risk assessment, loss data
collection and key risk indicators monitoring, and further
reinforced the operational risk management at all levels
of branches, so as to facilitate the vertical expansion of
operational risk management network. In the meanwhile,
the Company reported operational risk governance to the
management and the corporate governance level on a
regular basis. The risk control measures adopted by the
Company mainly included the following: (1) developing an
operational risk management process compatible with the
Operational 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
assessment on reinsurers through internal rating to select
reinsurers that have higher credit standing to mitigate
credit risks.
Reinsurance Risk
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) stepping up efforts on the research
and feasibility study of any industries and sectors for key
investment to enhance the capability of the Company in
risk management and control during and after investment.
China Life Insurance Company Limited ⚫ 2019 Annual Report Corporate Governance 115
The Risk Management Department, the Audit Department
and the Legal and Compliance Department of the Company
are responsible for the supervision and inspection of its
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 responsible persons. In 2019,
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 organizational structure of
To address the credit risks of investment business,
the Company developed and continuously improved
the organizational structure of credit risk management,
and constantly optimized 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 2019: (1) continuously
improving the theories and logics of credit rating and its
models to enhance the credit risk management standard;
(2) carrying out credit risk limit management in multiple
dimensions, in order to enhance the level of preventing
credit risks prior to investment; (3) strengthening the
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 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.
Credit Risk
asset is in line with the requirements of the CBIRC and
the internal management provisions of the Company.
According to the results of the risk indicator monitoring
and stress test, the market risk of the Company was
within a normal controllable range. The Company primarily
adopted the following risk control measures in 2019:
(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 and the
characteristics of their returns on a regular basis, so as
to constantly optimize the model of assets allocation;
(3) exercising an effective control over equity exposure
in public market to gradually reduce the proportion of
equity funds; (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; and (5) enhancing risk monitoring and
pre-warning to strengthen risk emergency management.
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
analysis and stress test to measure the risk losses to the
Company under stress scenarios and gave pre-warning of
market risks. Currently, the proportion of each investment
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.
Credit Risk of Investment Business
nature, scale and risk characteristics of the Company's
business, including the identification, assessment,
control, monitoring and reporting mechanisms; (2)
establishing a loss data room 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 organize regular monitoring
of any risks that may cause losses and to take relevant
control measures against them; (4) performing the
consolidation of internal control processes, implementing
internal control standards and conducting internal control
assessment on a regular basis, with a view to constantly
increasing the control over operational risks; and (5)
promoting a culture of operational risk management
by organizing and conducting training courses on
operational risk management. In 2019, the operational risk
management was satisfactory, the relevant operational
risk monitoring indicators were within a safe range, and
losses from operational risks were controllable. With the
continual improvement of the operational risk control
system, the management foundation of the Company was
strengthened consistently.
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
centralized 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 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 the systems of information safety and
information risk control, and formulated and implemented
a series of effective information safety control measures
at various stages of the system research and development
and its operation and maintenance, thereby strengthening
the Company's information safety protection capability. The
Company has explored the establishment of an efficient
information risk control system and strengthened its control
over information risks in advance, so as to effectively
ensure the successful commencement of various tasks. In
2019, the Company conducted several internal and external
risk assessments to consistently enhance its capability of
managing information safety risks.
112 China Life Insurance Company Limited 2019 Annual Report • Corporate Governance
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, 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.
The remuneration for senior management mainly
comprises position compensation, performance rewards,
welfare benefits and medium and long term incentives.
SHAREHOLDERS' INTERESTS
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.
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.
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.
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, 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.
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, optimized the
China Life Insurance Company Limited ⚫ 2019 Annual Report Corporate Governance 109
layout of periodic reports, increased the readability of
periodic reports by various means such as adding charts
and pictures; and inserted additional "business highlights"
and "index of information disclosure announcements" as
published during the Reporting Period to enable investors
to have a clearer understanding of the core business
operation of the Company. The Company extended the
scope and depth of information disclosure of periodic
and ad-hoc reports to ensure investors to obtain timely
and accurate information affecting their decisions. The
Company also strengthened the implementation of the
basic system of information disclosure, regularly organized
training courses relating to information disclosure and
compliance, carried out timely study and promotion of
regulatory rules of its listed jurisdictions in the PRC and
overseas, and explained the key tasks for information
disclosure and compliance and any difficulties therein.
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 laws, 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. The Company was awarded
Grade A in the assessment by the Shanghai Stock
Exchange on information disclosure for the year of 2018-
2019.
In 2019, the Company kept abreast with the development
pace of technology era in its investor relations, 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 work conducted by the Company
for investor relations mainly included holding general
meetings, organizing open days, 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 innovated a live streaming platform for
results announcements and broadcast live its results
presentation meetings simultaneously on the local and
international share trading platforms, such as Tencent
Portfolio, Sina Finance and Futu Securities, to enormously
increase its exposure, thereby facilitating investors
to comprehend the operating results of the Company
directly through internet and mobile phone. Looking back
to 2019, the Company communicated with more than
4,400 investors and analysts through different channels,
including communicating with more than 1,100 investors
who attended results briefings and open days physically
and by conference calls, holding over 200 meetings with
approximately 1,600 investors and analysts who visited
the Company for the year, communicating with more than
1,600 institutional investors by participating in a total of
55 investors' meetings held locally or internationally, and
meeting and visiting more than 130 investors in non-deal
roadshows for annual and interim results. In addition, the
Company kept in close contact with investors by various
means such as phone and internet, corresponded with
them through more than 1,700 emails, answered more
than 350 calls and emails, and recorded a click-through
rate of 40,000 viewers for the internet broadcast of results
briefings and open days.
In the assessment and selection of the "2019 Best
Corporate Management Team and Most Respected
Company in Asia" held by Institutional Investor, the
Company won the award of the "Most Respected
Company in Asia". In the assessment and selection of
the "5th Session of Investor Relations Awards" organized
by the Hong Kong Investor Relations Association, the
Company was awarded the "Excellent Award for Investor
Relations of Listed Companies". In the assessment and
selection of the "1st Session of Best Listed Companies
Awards" organized by New Fortune Magazine, the
Company was awarded the "Best Listed Company
Award". In the assessment and selection of the "3rd
Session of Excellent IR in China" jointly organized by
Shanghai Securities News and Roadshow China, the
Company was awarded the "Best Investor Relations
Frontier Award", the "Best Case Award" and the "Best
Leader Award", and was nominated by the Investor
Relation Magazine, a global authoritative magazine for
investor relations, for the 2019 Excellent Award for the
Greater China Region. In addition, Mr. Li Mingguang, the
Board Secretary of the Company, was awarded the 2019
"Golden Quality" - Outstanding Board Secretary Award by
Shanghai Securities News.
110 China Life Insurance Company Limited ⚫ 2019 Annual Report Corporate Governance
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
2019, there has been no major 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, after taking into account the regulatory
requirements, revised the "Rules for the Administration of
Information Disclosure of China Life Insurance Company
Limited" and the "System of Internal Reporting of
Material Information of China Life Insurance Company
Limited" in 2018. 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 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" 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.
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 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 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 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.
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 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. 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.
opinion on the effectiveness of its internal control in
relation to financial reporting as at 31 December 2019.
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.
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 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.
China Life Insurance Company Limited • 2019 Annual Report • Corporate Governance 111
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 CBIRC, 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 (2019 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
The Company has consistently complied with the regulatory
requirements of relevant regulatory authorities, such as
the SSE, the HKSE, the U.S. Securities and Exchange
Commission (the "SEC") and the New York Stock
Exchange, with respect to corporate internal control.
INTERNAL CONTROL AND RISK MANAGEMENT
The resolution on the amendments to the Articles of
Association of the Company was put to vote and adopted
at the 2018 Annual General Meeting held on 30 May 2019
and became effective after being approved by the CBIRC
(CBIRC's Reply [2019] No. 822) on 30 August 2019. The
amendments to the Articles of Association mainly include:
1. adding the information concering the establishment of
the Party Committee into the Articles of Association in
accordance with the requirements of the "Guidelines on
the Articles of Association of Insurance Companies" (Bao
Jian Fa [2017] No. 36) published by the CBIRC and the
"Governance Standards for Listed Companies" released
by the CSRC; 2. adding the obligation of shareholders
who hold more than 5% of shares of the Company to
inform the Company of significant mattes in accordance
with the Company Law, the "Guidelines on the Articles
of Association of Insurance Companies", the "Guidelines
on the Articles of Association of Listed Companies",
the "Governance Standards for Listed Companies" and
the actual situation of the operation and management of
the Company; 3. adding the chapter of "Special Matters
of Corporate Governance", which stipulates that the
Company shall adopt the internal corrective procedures
and apply to the CBIRC for guidance if it faces possible
failures in its corporate governance mechanim, and sets
out the obligations to be undertaken by the Company
and its shareholders, etc.; 4. further defining the specific
duties and powers of shareholders' general meetings and
the Board of Directors and setting out any share transfer
of the controlling shareholder and the circumstances
where no meeting of the Board of Directors shall be
convened by way of communication voting; 5. determining
the form of nomination of Independent Directors, their
duties and powers, and their right to report to the CBIRC,
adding the additional obligation of Independent Directors
to inform the Board of their inability to attend meetings,
the restrictive conditions for their re-appointment and
the procedures of removal of Independent Directors, and
removing the restrictions on the number of Independent
Directors nominated by shareholders, etc.; and 6. revising
and modifying the provisions with respect to the
repurchase of shares of the Company in accordance
with the Company Law. Please check the website of the
Company (http://www.e-chinalife.com) and the HKExnews
website of Hong Kong Exchanges and Clearing Limited
(http://www.hkexnews.hk) for the latest version of the
Articles of Association.
CHANGES OF THE ARTICLES OF ASSOCIATION
Pursuant to the requirements of the "Notice on the Proper
Preparation for Disclosure of 2019 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 2019 annual
report. Meanwhile, 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 2019 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
2019 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
Strategic Risk
The Company has established an organizational 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 organizational 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 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 organize and commence any work in relation to risk
management. 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
The Company set up a relatively well-developed system
for strategic risk management, and established an
organizational 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. By taking into full
account of various factors such as market conditions,
risk preference and capital position, the Company made
planning for its medium- and long-term development
and put the same into practice in annual business plans
and work plans, so as to strengthen the formulation,
approval, implementation and evaluation of whole
process management of strategic and development
planning. The Company also created an indicator system
for the daily monitoring of strategic risks to monitor and
analyze strategic risks on a regular basis, which ensured
an effective execution of the Company's strategic risk
management. In 2019, the soundness of the Company's
strategic risk management system and the effectiveness
of its implementation were maintained.
10.00 17.94
7.13
3867,300 29,580
7.433
5,239,900
11.7
1.65
10414.
2,322,248
29.0
0.43
16.27
2,389
3.300
2.02
0.53
17,288,600
32
0.09 13.04
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.
3,888,600
0.77 2.34
45.12
8.49
30 1.52
38,265,200 83 197
1.94
1,051
40,573
36.17
3,491
13,224
247,000
3.91 2.16
81,029 7,284 10.53
6,700
3,322,800 43,31
121967
116 China Life Insurance Company Limited ⚫ 2019 Annual Report Corporate Governance
Reputation Risk
The Company established a system for reputation risk
management to define the organizational structure and
responsibilities of reputation risk management in strict
compliance with the regulatory requirements. Further,
the Company developed a mechanism for the evaluation
and responsibility attribution of reputation risks, and
optimized the processes covering the identification
and ex-ante evaluation, monitoring, response and
disposal, reporting, and rectification of reputation risk.
By leveraging on technologies, the Company enhanced
the intellectualization of reputation risk management to
promptly identify reputation risk events and give pre-
warning in respect thereof. The Company also continued
to offer training courses and exercises on reputation risk
management to raise the risk awareness of all employees,
which helped enhance its risk response capability. In
2019, the Company constantly made improvements to
its system for reputation risk management, focused on
source management and organized training courses and
exercises. As a result, no major reputation risk events
have occurred for the year.
Liquidity 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.
The Company established a system for liquidity risk
management to define the organizational 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
organized 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 regulations to ensure the performance of its
obligation and give insurance benefits as scheduled.
Information safety risk
Information safety risk refers to the operational, legal
and reputation risks caused by natural factors, human
factors, technological loopholes or management defects
in the process of applying information technology in the
Company.
The Company attached great importance to information
safety risk management, and established the information
safety functional departments at the headquarters
and provincial levels for the strict implementation of
its system for information safety management, which
ensured that information safety risk was controllable. By
applying new cutting-edge technologies such as cloud
computing and big data in all aspects, the Company
built a security situational awareness platform for the
centralized analysis and coordinated disposal of various
safety risks. Through the introduction of systems for
adaptive security of host computers, deception defense
and attacks attribution, etc., the Company further
improved its defense-in-depth system, achieving the
transformation from passive defense to active security
and from assets-driven approach to data-driven approach.
With the research on the security governance system of
hybrid cloud, the Company effectively protected client
information and the safety of third parties connected
to the Company at different levels including physical
aspect, network, host computer and application. In
addition, the Company constantly stepped up efforts on
education for the safety awareness of employees to foster
a corporate culture of "everyone places emphasis on
safety", and conducted several assessments on internal
and external risks, which further enhanced the capability
of the Company in information safety risk management.
In 2019, the Company has not had any circumstances
where its operation was affected due to the breakdown of
computers or security breach.
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 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.
China Life Insurance Company Limited 2019 Annual Report Corporate Governance 117
Reputation risk refers to the risk of losses due to the
negative comments to the Company from the stakeholders
arising from the operation and management of the
Company or external events. Reputation risk may exist
in all aspects of operation and management, including
corporate governance, product design, sales and
promotion, claim services, application of capital, client
complaints, petition through letters and visits and stability
maintenance, information safety, remuneration plans,
personnel management and information disclosure.
04 14.32
96 10.09
10737,400
495,100
96 10.09
-3.27 3.83
1.74
133,200
-4.9
5.84
55.1
36 30 6
06
10,330
Deferred tax liabilities
Current income tax liabilities
Statutory insurance fund
Total liabilities
Equity
21
22 2
20
Other liabilities
81,114
58,426
29
223
46,650
Annuity and other insurance balances payable
Premiums received in advance
Financial liabilities at fair value through profit or loss
3,859
2,680
Derivative financial liabilities
10.7
602
60,898
1,877
Securities sold under agreements to repurchase
19
118,088
192,141
51,019
49,465
34,990
2,630
558
7,791
2,931,113
318,371
5,578
4,919
Total liabilities and equity
409,342
3,726,734
128 China Life Insurance Company Limited 2019 Annual Report • Financial Report
403,764
The notes on pages 134 to 257 form an integral part of these consolidated financial statements.
323,290
3,254,403
Approved and authorised for issue by the Board of Directors on 25 March 2020.
Wang Bin
Director
Su Hengxuan
Director
18
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS
3,317,392
133,022
149,293
Share capital
Other equity instruments
Reserves
Retained earnings
Attributable to equity holders of the Company
Non-controlling interests
170,487
Total equity
28,265
28,265
37
7,791
38
197,221
36
Bonds payable
The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the
Group's financial reporting process.
Lease liabilities
INDEPENDENT AUDITOR'S REPORT (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 125
• 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 judgement and maintain professional scepticism
throughout the audit. We also:
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.
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.
EXCELLENT
BUSINESS RESULTS
WITH SOLID
FINANCIAL PERFORMANCE
FINANCIAL REPORT
INDEPENDENT AUDITOR'S 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 127 to 257, which comprise the consolidated statement of financial position
as at 31 December 2019, 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.
120 China Life Insurance Company Limited 2019 Annual Report • Financial Report
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)
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)
• 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.
ASSETS
RMB million
RMB million
Notes
2018
2019
31 December
As at
As at
31 December
As at 31 December 2019
OPINION (continued)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
25 March 2020
Hong Kong
Certified Public Accountants
Ernst & Young
The engagement partner on the audit resulting in this independent auditor's report is Choi Kam Cheong, Geoffrey.
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
communication.
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.
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.
• 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.
126 China Life Insurance Company Limited 2019 Annual Report • Financial Report
Property, plant and equipment
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 2019, 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.
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.
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 123
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
Fair value of level III financial assets
At 31 December 2019, 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 or securities at fair value through profit or loss with a
combined carrying value of RMB234.99 billion. As disclosed
in Note 4.4 to the consolidated financial statements, these
investments are classified as level III in the fair value
hierarchy as their fair values are measured using valuation
methodologies with significant unobservable inputs.
Auditing the fair value measurement of the Group's level
III financial assets was complex due to the significant
estimates and judgements involved in the assessment
of valuation methodologies and significant unobservable
inputs, including discount rates for factors such as lack
of marketability and credit risk, among others. The use of
different valuation methodologies and changes in significant
unobservable inputs could result in significantly different fair
value estimates.
How our audit addressed the key audit matter
We obtained an understanding, evaluated the design and
tested the operating effectiveness of internal controls
over the Group's fair value measurement of level II|
financial assets. For example, we tested management's
review controls over the valuation methodologies and
the significant unobservable inputs used in the fair value
measurements.
To test the fair value measurement of level III financial
assets, our audit procedures included, among others,
evaluating the Group's valuation methodologies, testing
the significant unobservable inputs used by the Group in
determining the fair values, and testing the mathematical
accuracy of the Group's valuation calculations. We
involved our valuation specialists to assist us with
evaluating the Group's valuation methodologies
and assessing the reasonableness of the significant
unobservable inputs, including discount rates for factors
such as lack of marketability and credit risk, among
others used in the valuations by comparing them to
information available from third-party sources and market
data. For a sample of the Group's level III financial assets,
our valuation specialists also independently developed
fair value estimates and compared them to the Group's
valuation results.
3,091
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.
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.
124 China Life Insurance Company Limited 2019 Annual Report • Financial Report
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)
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.
To test the impairment test of Sino-Ocean, our audit
procedures included, among others, evaluating
the Group's valuation methodology and testing the
completeness and accuracy of the underlying data used
in the cash flows projection. We compared the selling
prices of development properties and rental prices of
investment properties used in the cash flow projection to
the historical business results of Sino-Ocean and industry
data. We also involved our internal valuation specialists
to assist us with assessing the reasonableness of
the Group's valuation methodology with reference to
valuation guidelines and industry practice. In addition, we
compared the discount rate used by the Group with the
discount rate developed by our valuation specialists using
information of comparable companies.
We obtained an understanding, evaluated the design
and tested the operating effectiveness of internal
controls over the Group's investment impairment
test of Sino-Ocean. For example, we tested controls
over management's review of the impairment test
methodology and the significant assumptions used in the
valuation.
How our audit addressed the key audit matter
Auditing management's impairment test of Sino-Ocean was
complex due to the significant estimates and judgements
involved in management's assessment of its value in use,
including the selling prices of development properties, rental
prices of investment properties included in the projection
of future cash flows and the discount rates used. These
estimates and judgements may be affected by unexpected
changes in the future market or economic conditions.
KEY AUDIT MATTERS
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 2019 Annual Report • Financial Report 121
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
At 31 December 2019, the Group had significant insurance
contract liabilities in the amount of RMB2,552.74 billion. As
disclosed in Notes 2.12 and 15 to the consolidated financial
statements, the Group's insurance contract liabilities
are primarily comprised of long-term insurance contract
liabilities. The Group uses the discounted cash flow method
to estimate the reserve of long-term insurance contracts.
BASIS FOR OPINION
Auditing the Group's long-term insurance contract
liabilities was complex and required the involvement of
specialists due to the complexity of the actuarial models
and highly judgemental nature of the actuarial assumptions
used by management to estimate the liabilities. The
actuarial assumptions include mortality, morbidity, lapse
rates, discount rates, and expenses. Changes in these
assumptions could have significant effects on the valuation
of the long-term insurance contract liabilities.
We obtained an understanding, evaluated the design
and tested the operating effectiveness of controls over
the Group's long-term insurance contract liabilities
valuation processes. For example, we tested controls
over management's review of the actuarial models, the
actuarial assumptions, and the data inputs used.
To test the valuation of long-term insurance contract
liabilities, our audit procedures included, among others,
comparing the methodology, actuarial models and
actuarial assumptions used by the Group to recognised
actuarial practices and testing the completeness and
accuracy of the underlying insurance policy data used
in the valuation. We involved our actuarial specialists
to assist us with assessing the reasonableness of
the assumptions by comparing them to industry data,
historical experiences and expectations of the Group. For
a sample of selected insurance products, our actuarial
specialists performed an independent recalculation of
the long-term insurance contract liabilities. In addition,
our actuarial specialists assessed the reasonableness of
the movement of long-term insurance contract liabilities
considering changes in the actuarial assumptions in the
reporting period.
122 China Life Insurance Company Limited⚫ 2019 Annual Report • Financial Report
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
The impairment test for investment in an associate
At 31 December 2019, the Group held a 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 RMB11.39 billion.
As disclosed in Note 9 to the consolidated financial
statements, as the quoted market price of this investment
has been continuously below its carrying value, the
Group performed an impairment test, and recognised an
impairment loss of RMB1.50 billion in 2019.
How our audit addressed the key audit matter
Right-of-use assets
OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT
Investments in associates and joint ventures
50,809
53,306
1,257
128
29
33,437
34,029
14
Total assets
Cash and cash equivalents
Deferred tax assets
Other assets
4,364
5,161
13
Reinsurance assets
15,648
17,281
12
Premiums receivable
48,402
41,703
10.9
Accrued investment income
9,905
4,467
10.8
3,726,734
Securities purchased under agreements to resell
3,254,403
China Life Insurance Company Limited 2019 Annual Report Financial Report 127
20,150
Investment properties
20,045
17
Interest-bearing loans and borrowings
85,071
112,593
Policyholder dividends payable
255,434
267,804
16
Investment contracts
2,216,031
2,552,736
15
RMB million
RMB million
Notes
2018
31 December
31 December
2019
As at
As at
Insurance contracts
LIABILITIES AND EQUITY
As at 31 December 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
The notes on pages 134 to 257 form an integral part of these consolidated financial statements.
428
Liabilities
6,333
12,141
9,747
9
222,983
201,661
10.1
10.7
Derivative financial assets
138,717
141,608
10.6
Securities at fair value through profit or loss
870,533
1,058,957
10.5
Available-for-sale securities
6,333
928,751
10.4
806,717
10.2
Statutory deposits - restricted
559,341
535,260
10.3
8
3,520
7
47,281
Term deposits
450,251
Loans
Held-to-maturity securities
608,920
51,758
6 ∞ O
equity
4,377
139,202
145,675
(Note 38)
7,791
(Note 37)
(Note 36)
28,265
Dividends paid (Note 33)
Appropriation to reserves (Note 38)
Capital paid in by non-controlling interests
Transactions with owners
Other comprehensive income
Net profit
Other
As at 1 January 2018
RMB million RMB million RMB million RMB million RMB million RMB million
Retained
earnings
Reserves
capital instruments
Total comprehensive income
4,919
controlling
interests
(76)
Other comprehensive income for the year, net of tax
joint ventures under the equity method
Share of other comprehensive income of associates and
Other comprehensive income that will not be reclassified to profit or
loss in subsequent periods:
(2,025)
34,988
34,912
Other comprehensive income that may be reclassified to profit or
loss in subsequent periods
(11,292)
29
Income tax relating to components of other comprehensive income
598
237
Exchange differences on translating foreign operations
735
1,716
Share
(2,025)
9,911
325,310
Total
Non-
of the Company
Attributable to equity holders
For the year ended 31 December 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
93,926
130 China Life Insurance Company Limited 2019 Annual Report • Financial Report
586
792
9,325
93,134
- Non-controlling interests
- Equity holders of the Company
Total comprehensive income for the year, net of tax
Attributable to:
The notes on pages 134 to 257 form an integral part of these consolidated financial statements.
11,395
(11,690)
11,936
Transactions with owners
93,926
792
58,287
34,847
Total comprehensive income
34,912
65
34,847
Other comprehensive income
59,014
7,791
149,293
133,022
4,919
323,290
Effect of associates' adoption of
new accounting standards (Note 9)
16
(2,905)
(2,889)
As at 1 January 2019
28,265
7,791
149,309
727
58,287
Net profit
320,401
Appropriation to reserves (Note 38)
Dividends paid (Note 33)
541
Dividends to non-controlling interests
Total transactions with owners
(2,070)
45
(2,025)
(2,070)
11,395
586
9,911
Dividends to non-controlling interests
Others
Total transactions with owners
As at 31 December 2018
105
105
5,885
(5,885)
(11,690)
130,117
(149)
(149)
(197)
(197)
5,688
(17,575)
(44)
(11,931)
28,265
599
(13,087)
13,087
As at 31 December 2019
Reserves to retained earnings (Note 38)
Others
(32)
Net gains on investments of associates and joint ventures
Including: share of profit of associates and joint ventures
19,549
24
19,251
(18,278)
8,195
8,098
(4,916)
729,474
627,419
BENEFITS, CLAIMS AND EXPENSES
Insurance benefits and claims expenses
Life insurance death and other benefits
25
(127,877)
(19,591)
(248,736)
25
(50,783)
(40,552)
25
(330,807)
(189,931)
Investment contract benefits
26
(9,157)
(9,332)
Policyholder dividends resulting from participation in profits
(22,375)
(19,646)
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
1,831
23
125,167
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
REVENUES
Gross written premiums
Less: premiums ceded to reinsurers
Net written premiums
Net change in unearned premium reserves
Net premiums earned
Investment income
Net realised gains on financial assets
Net fair value gains through profit or loss
Other income
Total revenues
2019
2018
Notes
RMB million
RMB million
567,086
(5,238)
535,826
(4,503)
561,848
531,323
(1,570)
700
560,278
532,023
22
139,919
Underwriting and policy acquisition costs
(81,396)
(62,705)
Finance costs
11,936
- Equity holders of the Company
- Non-controlling interests
58,287
727
11,395
541
Basic and diluted earnings per share
31
RMB2.05
RMB0.39
The notes on pages 134 to 257 form an integral part of these consolidated financial statements.
China Life Insurance Company Limited 2019 Annual Report Financial Report 129
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (continued)
For the year ended 31 December 2019
2019
2018
Notes
RMB million
RMB million
Other comprehensive income
Other comprehensive income that may be reclassified to profit or
loss in subsequent periods:
Fair value gains/(losses) on available-for-sale securities
Amount transferred to net profit from other comprehensive income
Portion of fair value changes on available-for-sale securities
attributable to participating policyholders
Share of other comprehensive income of associates and
joint ventures under the equity method
69,600
(24,591)
(4,635)
59,014
(19,521)
(1,985)
13,921
27
(4,255)
(4,116)
Administrative expenses
(40,275)
(37,486)
Statutory insurance fund contribution.
(9,602)
(7,642)
224
21
(1,163)
(1,097)
Total benefits, claims and expenses
(677,690)
(621,243)
9
8,011
7,745
9,159
7,745
Profit before income tax
28
Income tax
Net profit
Attributable to:
29
22
59,795
(781)
(4,916)
Other expenses
(133)
2015-2017 Cycle
Annual Improvements to IFRSS
IFRIC 23
IAS 19 Amendments
IAS 28 Amendments
IFRS 16
Content
Standards/Amendments
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 Basis of preparation
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 SUMMARY OF SIGNIFICANT 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 25
March 2020.
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.
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2019
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.
Leases
Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23
IFRS 16 supersedes IAS 17 Leases, and related interpretations from International Financial Reporting Interpretation
Committee and Standard Interpretation Committee. The standard 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. Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors continue to
classify leases as either operating or finance leases using similar principles as in IAS 17. Therefore, IFRS 16 did not have
any financial impact on leases where the Group is the lessor.
IFRS 16-Leases
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2019 (continued)
2.1 Basis of preparation (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2019
Long-term Interests in Associates and Joint Ventures
Plan Amendment, Curtailment or Settlement
Uncertainty over Income Tax Treatments
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2019
Effective for
annual periods
beginning on or after
134 China Life Insurance Company Limited ⚫ 2019 Annual Report⚫ Financial Report
The Group has adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application
of 1 January 2019. Under this method, the standard has been applied retrospectively with the cumulative effect of
initial adoption as an adjustment to the opening balance of retained earnings as at 1 January 2019, and the comparative
information for 2018 was not restated and continues to be reported under IAS 17.
1 ORGANISATION AND PRINCIPAL ACTIVITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Net increase/(decrease) in cash and cash equivalents
81
55
Foreign exchange gains/(losses) on cash and cash equivalents
92,963
(36,075)
2,497
Net cash inflow/(outflow) from financing activities
(761)
Cash paid related to other financing activities
3,560
12,961
Capital injected into subsidiaries by non-controlling interests
(1,348)
(327)
For the year ended 31 December 2019
2,223
Beginning of the year
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 133
The notes on pages 134 to 257 form an integral part of these consolidated financial statements.
17
506
50,792
52,800
Cash and cash equivalents
50,809
48,586
50,809
Short-term bank deposits
Cash at banks and in hand
Analysis of balances of cash and cash equivalents
End of the year
53,306
New definition of a lease
Under IFRS 16, at inception of a contract, an entity shall assess whether the contract is, or contains, a lease. A contract is,
or contains a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange
for consideration. Control is conveyed where the customer has both 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. The Group elected to use
the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as
leases applying IAS 17 and IFRIC 4 at the date of initial application. Contracts that were not identified as leases under IAS
17 and IFRIC 4 were not reassessed. Therefore, the definition of a lease under IFRS 16 has been applied only to contracts
entered or changed on or after 1 January 2019.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration
in the contract to each lease and non-lease component on the basis of their stand-alone prices. A practical expedient is
available to a lessee, which the Group has adopted, not to separate non-lease components and to account for the lease
and the associated non-lease components as a single lease component.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 137
In December 2017, the Annual Improvements 2015-2017 Cycle issued 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 has been no significant
impact on the Group's consolidated financial statements as a result of these amendments.
-
2.1 Basis of preparation (continued)
The Group's accounting treatment in the previous years is in line with the clarification of the interpretation. The
clarification has had no significant impact on the Group's consolidated financial statements.
IFRIC 23 - Uncertainty over Income Tax Treatments
The Group has no defined benefit plans. The amendments under IAS 19 have had no impact on the Group's consolidated
financial statements. The Group will adopt the amendments if such business occurs in the future.
In February 2018, the IASB issued the amendments to IAS 19 which addresses the accounting when a plan amendment,
curtailment or settlement occurs during a reporting period. The amendments are effective for annual periods beginning on
or after 1 January 2019 and apply retrospectively.
IAS 19 Amendments - Plan Amendment, Curtailment or Settlement
The Group's accounting treatment in the previous years is in line with the amendments, thus there has been no impact
on the Group's consolidated financial statements as a result of the amendments.
In October 2017, the IASB issued the amendments to IAS 28 which indicates that an entity applies IFRS 9 to long-term
interests in an associate or joint venture to which the equity method is not applied but that, in substance, form part of
the net investment in the associate or joint venture (long-term interests). The amendments also clarify that for the entity
that applies the temporary exemption from IFRS 9, IAS 39 applies to the long-term interests, and those entities are not
required to restate prior periods to reflect the application of amendments. The amendments are effective for annual
periods beginning on or after 1 January 2019.
In June 2017, the IASB issued IFRIC Interpretation 23 which clarifies application of the recognition and measurement
requirements in IAS 12 Income Taxes when there is uncertainty over income tax treatments. The interpretation mainly
addresses the following four areas: whether an entity separately considers the uncertainty of tax treatments; assumptions
adopted by an entity to address the examination of tax treatments by taxation authorities; how an entity determines
taxable profit/(tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and how an entity considers
changes in facts and circumstances. The interpretation is effective for annual reporting periods beginning on or after
1 January 2019.
IAS 28 Amendments - Long-term interests in associates and joint ventures
2.1.2 New accounting standards and amendments that are effective but temporary exemption is
applied by the Group for the financial year beginning on 1 January 2019
IFRS 9
138 China Life Insurance Company Limited 2019 Annual Report • Financial Report
The Group does not apply the 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.
Hedge accounting
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 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
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 elects 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 investment cost.
Standards/Amendments
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. The Group analysed the contractual cash flow
characteristics of financial assets as at 31 December 2019 and made relevant disclosures in Note 34.
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 that the adoption of IFRS 9 will
have a significant impact on the Group's consolidated financial statements. The Group adopts the temporary exemption
permitted in 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. Refer to Note 34 for more details.
IFRS 9 Financial Instruments
1 January 2018
Effective for
annual periods
beginning on or after
Financial Instruments
Content
Classification and measurement
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2019 (continued)
2.1 Basis of preparation (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Applied the recognition exemptions for leases of low value assets and leases with lease term that ends within 12
months from the date of initial application;
The Group has used the following elective practical expedients when applying IFRS 16 as at 1 January 2019:
As a lessee - Leases previously classified as operating leases (continued)
IFRS 16 Leases (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 2019 (continued)
2.1 Basis of preparation (continued)
Applied a single discount rate to a portfolio of leases with reasonably similar characteristics on the measurement of the
lease liability;
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 135
The right-of-use assets were measured at the amount of the lease liabilities, adjusted by the amount of any prepaid
or accrued lease payments relating to the leases recognised in the statement of financial position immediately before
1 January 2019. All these assets were assessed for any impairment based on IAS 36 - Impairment of Assets on that date.
Lease liabilities as at 1 January 2019 were recognised based on the present value of the remaining lease payments,
discounted using the incremental borrowing rate as at 1 January 2019.
As a lessee, the Group previously classified leases as either finance leases or operating leases based on the assessment
of whether the lease transferred substantially all the rewards and risks of ownership of assets to the Group. Under
IFRS 16, the Group applies a single approach to recognise and measure right-of-use assets and lease liabilities for all
leases, except for two elective exemptions for leases of low-value assets (elected on a lease by lease basis) and short-
term leases (elected by class of underlying asset). The Group has elected not to recognise right-of-use assets and
lease liabilities for (i) leases of low-value assets; and (ii) leases, that at the commencement date, have a lease term of
12 months or less. Instead, the Group recognises the lease payments associated with those leases as an expense on a
straight-line basis over the lease term.
As a lessee - Leases previously classified as operating leases
For the year ended 31 December 2019
• Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application;
• Used hindsight in determining the lease term where the contract contains options to extend or terminate the lease;
Relied on its assessment of whether leases are onerous immediately before the date of initial application. The Group
adjusted the right-of-use asset at the date of initial application by the amount of any provision for onerous leases
recognised in the statement of financial position immediately before the date of initial application.
In addition to land use rights, the Group recognised other right-of-use assets of RMB2,555 million and lease liabilities
of RMB2, 185 million at the date of initial application. Compared to the end of 2018, after the relative adjustments, total
assets and total liabilities at the group level as at 1 January 2019 both increased by RMB2, 194 million. The reconciliation
between the minimum unpaid lease payments of the operating leases disclosed in the Group's financial statements for
the year ended 31 December 2018, and the lease liabilities recognised in the consolidated statement of financial position
at the date of initial application are as follows:
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
136 China Life Insurance Company Limited 2019 Annual Report • Financial Report
Refer to Note 2.7 for relevant accounting policies.
The weighted average incremental borrowing rate the Group adopted as at 1 January 2019 in calculating the lease
liabilities in the consolidated statement of financial position was 3.76%.
2,185
(157)
(132)
2,474
RMB million
Lease liabilities as at 1 January 2019
impact of discounting at the incremental borrowing rate as at 1 January 2019
the date of initial application and leases of low-value assets
Less: short-term leases, those leases with a remaining lease term less than 12 months from
Operating lease commitments as at 31 December 2018
Payment of principal portion of lease liabilities
727
Annual Improvements to IFRSS 2015-2017 Cycle - Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23
34,988
(9,020)
6,858
Decrease/(increase) in securities at fair value through profit or loss, net
Changes in operating assets and liabilities:
(7,745)
(8,011)
Financial liabilities at fair value through profit or loss
Net gains on investments of associates and joint ventures
67
Foreign exchange losses/(gains)
2,638
4,379
Depreciation and amortisation
190,210
194
335,971
1,213
Receivables and payables
286,032
Net cash inflow/(outflow) from operating activities
1,164
964
Dividends received – securities at fair value through profit or loss
-
1,114
3,527
Interest received – securities at fair value through profit or loss
(9,991)
(8,636)
Income tax paid
48,838
50,622
3,811
Insurance contracts
37,869
(21,082)
170,487
197,221
7,791
28,265
(4,985)
(133)
5,578
(17,917)
64
64
86
(86)
(133)
123
13,065
409,342
The notes on pages 134 to 257 form an integral part of these consolidated financial statements.
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 131
Net realised and unrealised losses/(gains) on financial assets
(125,167)
(139,919)
Investment income
13,921
59,795
RMB million
RMB million
2018
2019
Adjustments for:
Profit before income tax
CASH FLOWS FROM OPERATING ACTIVITIES
For the year ended 31 December 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
147,552
CASH FLOWS FROM INVESTING ACTIVITIES
106,342
Disposals of debt investments
19,503
25,169
Dividends received
116,846
Interest received
26,258
5,468
Decrease in securities purchased under agreements to resell, net
(109,590)
24,102
(34,928)
(23,389)
Decrease/(increase) in term deposits, net
(19,546)
(11,415)
Property, plant and equipment
(335,301)
(545,657)
(294,238)
(504,292)
274
72
1,432
278,003
450,014
110,425
133,519
48,942
112,182
Equity investments
Increase in policy loans, net
(32,707)
(34,208)
Cash paid related to other investing activities
(149)
(133)
(11,690)
(4,916)
(365)
(3,990)
(3,072)
104,832
(73,552)
Cash received from borrowings
Proceeds from issue of bonds
Dividends paid to non-controlling interests
Dividends paid to equity holders of the Company
Repayment of borrowings
Debt investments
Interest paid
CASH FLOWS FROM FINANCING ACTIVITIES
RMB million
RMB million
2018
2019
For the year ended 31 December 2019
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
132 China Life Insurance Company Limited 2019 Annual Report • Financial Report
The notes on pages 134 to 257 form an integral part of these consolidated financial statements.
(238,373)
1,141
(247,515)
(309)
Net cash inflow/(outflow) from investing activities
Cash received related to other investing activities
Increase/(decrease) in securities sold under agreements to repurchase, net
Purchases:
Investments in associates and joint ventures
Disposals of property, plant and equipment
Disposals of equity investments
Disposals and maturities:
Maturities of debt investments
Disposals of subsidiaries
• the contractual arrangement with the other vote holders of the investee;
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:
2.2 Consolidation (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited • 2019 Annual Report Financial Report 141
the ability to use its power over the investee to affect its returns.
• exposure, or rights, to variable returns from its involvement with the investee; and
power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the
investee);
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.3 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 2019
Standards/Amendments
IFRS 3 Amendments
IAS 1 and IAS 8 Amendments
IFRS 9, IAS 39 and IFRS 7
Amendments
IFRS 17
•
rights arising from other contractual arrangements; and
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.
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)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 143
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.
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.
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.
Transactions with non-controlling interests
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 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.
2.2 Consolidation (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
142 China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report
⚫ 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
• recognises the fair value of any investment retained;
• recognises the fair value of the consideration received;
• 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:
⚫the Group's voting rights and potential voting rights.
Content
Definition of Material
Interest Rate Benchmark Reform
• 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 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 contractual service margin
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 OCI, determined by an accounting
policy choice;
• 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;
For the year ended 31 December 2019
• Amounts that the policyholder will always receive, regardless of whether an insured event happens (non-distinct
investment components), are not presented in the statement of comprehensive income, but are recognised directly in
the statement of financial position;
• 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.
140 China Life Insurance Company Limited ⚫ 2019 Annual Report⚫ Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.3 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 2019 (continued)
IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2021. 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, with comparative figures required. However, if full retrospective application for a group of insurance contracts
is impracticable, the entity is required to choose either the modified retrospective approach or the fair value approach.
In March 2020, the IASB decided to defer the effective date for IFRS 17 by two years to reporting periods beginning on or
after 1 January 2023. The IASB also decided to extend the exemption currently in place for qualifying insurers regarding
the application of IFRS 9, meaning that they could apply both standards for the first time to reporting periods beginning
on or after 1 January 2023. As at the approval date of the consolidated financial statements, the amendments to IFRS 17
have not yet been issued by the IASB.
The Group is currently assessing the impact of the standard upon adoption.
IFRS 10 and IAS 28 Amendments - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
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 IASB has deferred the effective date of these amendments indefinitely, but an entity
that early adopts the amendments must apply them prospectively. The Group will apply these amendments when they
become effective.
2.2 Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year
ended 31 December 2019. 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:
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.
IFRS 17 Insurance Contracts
Insurance Contracts
Effective for
annual periods
beginning on or after
1 January 2020
1 January 2020
1 January 2020
1 January 2021
IFRS 10 and IAS 28 Amendments
Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture
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.
Definition of a Business
IFRS 3 Amendments - Definition of a business
IAS 1 and IAS 8 Amendments - Definition of Material
In October 2018, the IASB issued amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors to provide a new definition of material. The new definition states
that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions
that the primary users of general purpose financial statements make on the basis of those financial statements. The
amendments clarify that materiality will depend on the nature or magnitude of information. A misstatement of information
is material if it could reasonably be expected to influence decisions made by the primary users. The amendments are
effective for annual reporting periods beginning on or after 1 January 2020 and apply prospectively. Earlier application is
permitted. The Group expects to adopt the amendments from 1 January 2020. The amendments are not expected to have
any significant impact on the Group's consolidated financial statements.
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 139
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.3 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 2019 (continued)
IFRS 9, IAS 39 and IFRS 7 Amendments - Interest Rate Benchmark Reform
In September 2019, the IASB issued the amendments to IFRS 9 Financial Instruments, IAS 39 Financial Instruments:
Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures to respond to the hedge accounting
induced in the Interbank Offered Rates (IBOR) reform. The amendments provide temporary reliefs which enable hedge
accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark.
The amendments are effective for annual reporting periods beginning on or after 1 January 2020 and apply retrospectively.
Earlier application is permitted. Because the Group has no interbank offered transactions and has no hedge accounting,
the amendments are not expected to have any significant impact on the Group's consolidated financial statements.
In October 2018, the IASB issued amendments to the definition of a business in IFRS 3 Business Combinations. The
amendments clarify and provide additional guidance on the definition of a business. The amendments clarify that for
an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a
substantive process that together significantly contribute to the ability to create outputs. A business can exist without
including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether
market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on
whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create
outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to
customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance
to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit
a simplified assessment of whether an acquired set of activities and assets is not a business. The amendments are
effective for annual reporting periods beginning on or after 1 January 2020 and apply prospectively. Earlier application is
permitted. The Group expects to adopt the amendments from 1 January 2020. The amendments are not expected to have
any significant impact on the Group's consolidated financial statements.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
IFRS 17 - Insurance Contracts (continued)
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.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.7 Leases (continued)
(i) Applicable from 1 January 2019 (continued)
As a lessee (continued)
Subsequent measurement
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.
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 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. 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.
The Group assesses whether there is any indication that a right-of-use asset may be impaired at the end of reporting
period. If any such indication exists, the Group performs the impairment test. An impairment loss is recognised in net
profit for the amount by which the carrying amount of the right-of-use asset exceeds its recoverable amount, which is the
higher of the right-of-use asset's net selling price and value in use.
For the year ended 31 December 2019
As a lessor
(ii) Applicable before 1 January 2019
As for leased assets, 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 expenses of operating leases are recognised in the cost
of assets or profit or loss on a straight-line basis. 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.
China Life Insurance Company Limited 2019 Annual Report Financial Report 147
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.8 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.
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.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
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.
2.3 Associates and joint ventures
Office equipment, furniture and fixtures
Motor vehicles
Leasehold improvements
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.
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 145
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
146 China Life Insurance Company Limited⚫ 2019 Annual Report • Financial Report
For the year ended 31 December 2019
2.6 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.
2.7 Leases
(i) Applicable from 1 January 2019
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 and land use rights, etc. 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. 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.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
2.9 Financial assets
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
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.
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.
2.6 Property, plant and equipment
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.
2.5 Foreign currency translation
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
144 China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report
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.
2.4 Segment reporting
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.
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.
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.
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'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.
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.
Buildings
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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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:
2.9.a Classification
(i) 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.
(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.
(iii) 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.
(iv) 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.
148 China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report
(ii) Long-term insurance contracts (continued)
2.12.2.a Recognition and measurement (continued)
2.12.2 Insurance contracts (continued)
2.12 Insurance contracts and investment contracts (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited 2019 Annual Report • Financial Report 151
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:
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.
(ii) Long-term insurance contracts
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.
The unearned premium reserve represents the portion of the premiums written net of certain acquisition costs relating to
the unexpired terms of coverage.
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.
(i) Short-term insurance contracts
2.12.2.a Recognition and measurement
2.12.2 Insurance contracts
(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:
guaranteed benefits based on contractual terms, including payments for deaths, disabilities, diseases, survivals,
maturities and surrenders;
• insurance components
• 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.
Universal life contracts and unit-linked contracts are unbundled into the following components:
The insurance components are accounted for as insurance contracts; and the non-insurance components are accounted
for as investment contracts (Note 2.12.3), which are stated in the investment contract liabilities.
(iii) Universal life contracts and unit-linked contracts
(c) The Group has considered the impact of time value on the reserve calculation for insurance contracts.
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 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.
152 China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
• additional non-guaranteed benefits, such as policyholder dividends; and
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.12.2 Insurance contracts (continued)
2.12.2.b Liability adequacy test
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.
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.
2.12.2.c Reinsurance contracts held
• non-insurance components
(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 amortisation of residual margin are
locked in at policy issuance and are not adjusted at each reporting date.
2.12 Insurance contracts and investment contracts (continued)
2.12.1 Classification
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:
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 (continued)
China Life Insurance Company Limited 2019 Annual Report Financial Report 149
• 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;
•
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:
2.9.c 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.
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.
2.9.b Recognition and measurement
2.9 Financial assets (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
2.12 Insurance contracts and investment contracts
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.9.c Impairment of financial assets other than securities at fair value through profit or loss (continued)
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:
2.11 Cash and cash equivalents
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
150 China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report
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.
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 4.4, 8, 11 and 42(c) based on the lowest level input that is
significant to the fair value measurement as a whole.
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.
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 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.
The principal or the most advantageous market must be accessible by the Group at the measurement date.
⚫ 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
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.
2.10 Fair value measurement
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.
⚫ 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
⚫ the market price of the equity securities was more than 50% below their cost at the reporting date;
2.9 Financial assets (continued)
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 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.
2.12.3 Investment contracts
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
156 China Life Insurance Company Limited 2019 Annual Report • Financial Report
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.
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.
2.23 Provisions and contingencies
For the year ended 31 December 2019
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.
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.
2.22 Current and deferred income taxation (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report 155
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.
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.
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
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.
3.1 Estimates of future benefit payments and premiums arising from long-term insurance contracts
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, expense assumptions and policy dividend 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.
158 China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report
For the description of valuation techniques, please refer to Note 4.4. Using different valuation techniques and parameter
assumptions may lead to some differences of fair value estimations.
• fair values 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.
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.
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:
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.
The Group considers a wide range of factors in the impairment assessment as described in Note 2.9.c.
3.2 Financial instruments
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited⚫ 2019 Annual Report Financial Report 157
The impact of the various assumptions and their changes are described in Note 15.
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 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, expenses assumption and policy
dividend assumptions) that are determined at inception of the contracts and remain unchanged for the duration of the
contracts.
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.
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.
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.
Interest expenses for bonds payable, securities sold under agreements to repurchase, interest-bearing loans, borrowings
and lease liabilities are recognised within finance costs in net profit using the effective interest rate method.
2.17 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 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. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.
2.16 Derivative instruments
2.15 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.
2.14 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.
Pension benefits
2.13 Financial liabilities at fair value through profit or loss
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report 153
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.
2.12.4 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.
revenue.
For investment contracts with or without DPF, the Company's policy fee income mainly consists of acquisition cost
and various fees (handling fees and management fees, etc.) over the period of which the service is provided. Policy fee
income net of certain acquisition cost is amortised over the expected life of the contracts by period and recognised in
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.22 Current and deferred income taxation
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.
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.
2.21 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.
The policy fee income for investment contracts mainly consists of acquisition costs and various 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 amortised over the expected life of the contracts and recognised as other income.
Policy fee income
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 from long-term insurance contracts are recognised as revenue when due from the policyholders.
Premiums
Turnover of the Group represents the total revenues which include the following:
Housing benefits
2.20 Revenue recognition
2.19 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.
2.18 Share capital
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
154 China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report
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
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 unfavourable 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.
Investment income
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Sensitivity analysis of long-term insurance contracts
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.
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 RMB28,045 million or RMB29,286 million (as at 31
December 2018: RMB23,322 million or RMB24,177 million) lower or higher, 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 RMB1,336 million or RMB1,253 million (as at 31 December 2018: RMB1,672
million or RMB1,535 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 RMB96,131 million or RMB108,946 million (as at 31 December 2018:
RMB83,634 million or RMB95,212 million) higher or lower, respectively.
China Life Insurance Company Limited⚫ 2019 Annual Report Financial Report 163
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
4 RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.3 Sensitivity analysis (continued)
4.1.3 Sensitivity analysis
Sensitivity analysis of short-term insurance contracts
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 RMB670 million (as at 31 December 2018: RMB551 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:
Estimated claims expenses
2015
2016
2017
2018
2019
Total
Year end
20,497
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.
27,120
(f) Others consist of various long-term insurance contracts with no significant concentration.
(d) 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. 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.
Others (f)
1,971,600
78.20%
Total
2,521,331
100.00%
1,733,391
2,189,794
79.16%
100.00%
China Life Insurance Company Limited 2019 Annual Report • Financial Report 161
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
(e) Hong Ying Participating Endowment 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
the basic sum multiplied by 3 insured for a single premium policy or the basic sum multiplied by 3 and times the number
of years of premium payments insured 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 the basic sum multiplied by 2 insured for a single premium policy or the
basic sum multiplied by 2 and times the number of years of premium payments insured for a regular premium policy.
For the year ended 31 December 2019
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks (continued)
(a) 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, and 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. Death
benefit and accidental death benefit are paid only once.
(b) Xin Xiang Jin Sheng Annuity (Type A) is an annuity insurance contract with the options for regular premium of 3 years
and 5 years paid annually or monthly. Its insured period is 15 years. This product is applicable to healthy policyholders
between 28-day-old and 65-year-old. To the first effective date after the fifth policy years and the first effective date after
the sixth policy years, if the policyholders live, the special survival payment shall be paid at 50% of the annual premium
according to the basic sum insured if the payment period is 3 years; and the survival payment shall be paid at 100% of
the annual premium according to the basic sum insured if the payment period is 5 years. From the first effective date
to the seventh policy years after the expiration date, if the policyholders live to the annual corresponding effective date,
the annuity payment shall be paid at 24% of annual premium according to the basic sum insured if the payment period
is 3 years; and the annuity payment shall be paid at 32% of annual premium according to the basic sum insured if the
payment period is 5 years. If the policyholders live to the annual corresponding effective date of the expiration period,
the contract terminates and maturity benefit is paid at the basic sum insured. If death incurred over insured period, the
contract terminates and death benefit is paid at the premium received (without interest).
(c) Xin Ru Yi 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 Ru Yi Annuity to the corresponding date when policyholders
reach the age of 80. 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 Ru Yi Annuity, the annuity payment of the first policy year
is paid at 10% of the first premium of the product, and the following annuity payments are paid at the basic sum insured
by Xin Ru Yi 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 80-year-old, the annuity payment of the first policy year is
paid at 110% of the basic sum insured during the insured period if policyholders live to the annual corresponding effective
date; the following annuity payments increase by 10% of the basic sum on the basis of the previous payment. The
maturity insurance premium is paid at the premium paid (without interest). The death benefit is paid at the larger value of
the insurance premium (without interest) and the cash value of the contract at the time of the death of the insured.
162 China Life Insurance Company Limited ⚫ 2019 Annual Report ⚫ Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
4 RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks (continued)
4 RISK MANAGEMENT (continued)
33,926
40,601
49,727
Short-term insurance contracts (accident year)
Estimated claims expenses
2015
2016
2017
2018
Year end
20,359
26,897
33,700
40,157
The following table indicates the claim development for short-term insurance contracts taking into account the impacts of
ceded business:
2019
49,175
1 year later
21,262
27,107
34,560
42,280
2 years later
21,259
26,655
34,045
3 years later
21,259
Total
18,404
16,483
49,727 175,113
(33,244) (156,709)
1 year later
21,427
27,303
34,845
42,785
2 years later
21,422
26,851
34,328
3 years later
21,422
26,851
4 years later
21,422
Estimated accumulated
claims expenses
21,422
26,851
34,328
Accumulated claims expenses paid
(21,422)
(26,851)
(34,328)
Unpaid claims expenses
42,785
(40,864)
1,921
1.96%
42,969
1.40%
35,403
Kang Ning Whole Life (d)
19,701
3.96%
20,667
4.30%
Hong Ying Participating Endowment (e)
558
0.11%
1,448
0.30%
Others (f)
4.57%
382,666
397,767
82.79%
Total
497,570
100.00%
480,496
100.00%
Insurance benefits of long-term
insurance contracts
Xin Fu Ying Jia Annuity (a)
1,799
76.91%
21,960
4.28%
21,276
4 RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
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:
For the year ended 31 December
2019
2018
Product name
RMB million
%
RMB million
%
Premiums of long-term insurance contracts
Xin Fu Ying Jia Annuity (a)
37,024
7.44%
38,397
7.99%
Xin Xiang Jin Sheng Annuity (Type A) (b)
36,345
7.30%
257
0.05%
Xin Ru Yi Annuity (c)
2.25%
26,655
1,847
Xin Xiang Jin Sheng Annuity (Type A) (b)
As at 31 December 2018
RMB million
%
Liabilities of long-term insurance contracts
Xin Fu Ying Jia Annuity (a)
86,876
3.45%
52,440
2.39%
Xin Xiang Jin Sheng Annuity (Type A) (b)
27,554
1.09%
%
193
Xin Ru Yi Annuity (c)
90,379
3.58%
71,571
3.27%
Kang Ning Whole Life (d)
309,519
12.28%
289,230
13.21%
Hong Ying Participating Endowment (e)
0.01%
As at 31 December 2019
RMB million
100.00%
134,398
12
0.01%
Xin Ru Yi Annuity (c)
3,512
4.38%
3,526
2.62%
Kang Ning Whole Life (d)
5,119
6.39%
4,663
3.47%
Hong Ying Participating Endowment (e)
7,906
9.87%
28,741
21.38%
Others (f)
61,776
77.10%
95,621
71.16%
Total
80,124
100.00%
1.37%
4 years later
Short-term insurance contracts (accident year)
Estimated accumulated claims
- Loans
1,766
1,766
- Available-for-sale securities
2,240
2,240
- Securities at fair value through
profit or loss
627
19
7
150
4
Term deposits
7,502
-
7,502
Cash and cash equivalents
1,768
261
287
42
2,358
Total
657
150
- Held-to-maturity securities.
Debt securities
4 RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.1 Market risk (continued)
(iii) Currency risk (continued)
For the year ended 31 December 2019
As at 31 December 2018
US dollar
HK dollar
GB pound
EUR
Others
Total
Financial assets
Equity securities
- Available-for-sale securities
9,994
41,379
- - - 51,373
- Securities at fair value through
profit or loss
4,511
163
951
2,315
1,076
9,016
28,558
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
41,803
2,364
As at 31 December 2019, 99.7% (as at 31 December 2018: 99.9%) 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 has not caused a material impact on the Group's consolidated
financial statements as at 31 December 2019 and 2018.
The credit risk associated with securities purchased under agreements to resell, policy loans and most of premium
receivables has not caused a material impact on the Group's consolidated financial statements taking into consideration
their sufficient collateral held and maturity terms of no more than one year as at 31 December 2019 and 2018.
168 China Life Insurance Company Limited 2019 Annual Report • Financial Report
160 China Life Insurance Company Limited 2019 Annual Report • Financial Report
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
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 is carried out by the Company's Risk Management Committee under policies approved by the
Company's Board of Directors.
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 2019, 99.8% (as at 31 December 2018: 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 2019, 100% (as at 31 December 2018: 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.
4 RISK MANAGEMENT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited⚫ 2019 Annual Report Financial Report 159
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 2019, 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 42(d) 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.
3.5 Determination of control over investee
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.
3.3 Impairment of investments in associates and joint ventures
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
For the year ended 31 December 2019
For the year ended 31 December 2019
Credit quality
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
1,080
75,062
Financial liabilities
Interest-bearing loans and
other borrowings
13,108
Total
13,108
21,259
4,657
2,385
4,657
20,150
20,150
As at 31 December 2019, 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 RMB1,013
million (as at 31 December 2018: RMB353 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 RMB10,423 million (as at 31 December 2018: RMB4,909 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 losses in 2019 were RMB67 million (2018: exchange losses of RMB194
million).
China Life Insurance Company Limited⚫ 2019 Annual Report Financial Report 167
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
4 RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
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 Banking and Insurance Regulatory Commission ("CBIRC") 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.
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.
Credit risk exposure
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
2019 and 2018.
1,257
166 China Life Insurance Company Limited ⚫ 2019 Annual Report ⚫ Financial Report
2,385
20,045
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 2019, 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 RMB528 million higher or lower (as at 31 December 2018: RMB145
million lower or higher), 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
RMB9,854 million lower or higher (as at 31 December 2018: RMB13,749 million lower or RMB10,045 million higher), as a
result of a decrease or increase in the fair value of available-for-sale securities.
China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report 165
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
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 mainly 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.
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.
As at 31 December 2019, 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 RMB5,641 million (as at 31 December 2018:
RMB5,073 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 RMB38,559
million (as at 31 December 2018: RMB24,898 million or RMB34,474 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.
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.
The following table summarises primary financial assets and financial liabilities denominated in currencies other than RMB
as at 31 December 2019 and 2018, expressed in RMB equivalent:
As at 31 December 2019
Financial assets
US dollar HK dollar
GB pound
EUR
Others
Total
Equity securities
- Available-for-sale securities
(iii) Currency 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.
(i) Interest rate risk
4.2.1 Market risk
20,045
expenses
21,259
26,655
34,045
Accumulated claims expenses paid
(21,259)
(26,655)
(34,045)
42,280
(40,374)
49,175
(32,822)
173,414
(155,155)
Unpaid claims expenses
1,906
16,353
18,259
164 China Life Insurance Company Limited 2019 Annual Report • Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
4 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
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 10.
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.
11,086
95,428
risk.
- Securities at fair value through
profit or loss
8,058
Cash and cash equivalents
1,842
444
406
20
3
2,715
Total
35,318
96,564
1,312
1,304
136,699
Financial liabilities
Interest-bearing loans and
other borrowings
12,892
Total
12,892
2,515
4,638
2,515
106,514
4,638
-
-
2,201
8,026
4,549
660
32
871
2,166
1,292
9,538
Debt securities
218
- Loans
1,592
218
- Held-to-maturity securities
448
1,592
9
15
35
profit or loss
507
· Securities at fair value through
7,557
Term deposits
7,557
- Available-for-sale securities
balances payable
3,859
(3,859)
Annuity and other insurance
through profit or loss
(1,572)
other borrowings
(51,019)
(16,111)
Interest-bearing loans and
20,045
Financial liabilities at fair value
(4,776)
51,019
(118,088)
Expected cash outflows
to repurchase
576,417
Bonds payable
605,996
681,499
667,309 1,901,263
Financial and insurance liabilities
118,088
Insurance contracts
2,552,736
267,804
179,925 209,603
(24,020) (29,900)
(35,264) (5,015,173)
23,462 (606,662)
Contractual cash outflows
Securities sold under agreements
Investment contracts
34,990
Not
3,091
value
3,397,014
As at 31 December 2018
than 3
not later
later
than 1
Without
Carrying
1 year but 3 years but
Later than
Later than
Contractual and expected cash flows
(undiscounted)
4.2.3 Liquidity risk (continued)
4.2 Financial risk (continued)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Subtotal
3,051,632
Net cash inflow/(outflow)
345,382
(3,859)
602,137
(332)
(1,331)
(19,641)
556,776
Lease liabilities
(2,996)
(1,491)
173,644
855,143
(440)
(74)
(66,349) (5,621,909)
600,960 (3,720,646)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 169
(37,996)
Subtotal
As at 31 December 2019
53,306
Debt securities
605,996
605,996
Equity securities
Contractual cash inflows
Financial assets
5 years
5 years
3 years
than
than
Later
not later
3 years but
1 year but
not later
than
Not later
than
1 year
Without
maturity
maturity
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
4 RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.3 Liquidity risk
1,523,748
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.
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
Later than
Carrying
value
In the normal course of business, the Group attempts to match the maturity of financial assets to the maturity of
insurance and financial liabilities.
53,306
107,632
250,805 1,701,886
Cash and cash equivalents
17,281
17,281
Premiums receivable
432
561
40,710
41,703
Accrued investment income
4,467
4,467
agreements to resell
Securities purchased under
4,594
2,315
479
6,333
Loans
608,920
232,715
174,260
117,001
191,290
319,656
Term deposits
119,827
184,707
294,477
8,087
Statutory deposits — restricted
-
535,260
year
Disposals
not later
Total gains/(losses) recorded
in other comprehensive income
221
3,205
3,426
Disposals
404
(200)
(4,200)
1,473
1,473
Maturity
(9,072)
(1,001)
(4,000)
(10,073)
404
428
Debt
securities
RMB million RMB million
RMB million RMB million
RMB million RMB million RMB million
79,248
35,453
100,000
428
46,561
(15,866)
179,248
82,014
16
(15,866)
(1,877)
(1,877)
Total gains/(losses) recorded
in profit or loss
16
Closing balance
105,650
128,899
RMB million
RMB million
RMB million
RMB million
Assets measured at fair value
Available-for-sale securities
Level 3
– Equity securities
92,260
44
92,304
Common stocks
113,750
15,871
Funds
inputs
Total
Significant
unobservable
16
428
234,993
176 China Life Insurance Company Limited⚫ 2019 Annual Report • Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
4 RISK MANAGEMENT (continued)
4.4 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 2018:
Fair value measurement using
Quoted prices
in active
markets
Level 1
Significant
observable
inputs
Level 2
Equity
securities
securities
Total
liabilities
Derivative
financial
liabilities
40,070
211
20
| | |
16,101
40,281
20
Debt securities
78
Government bonds
8
Government agency bonds
362
Corporate bonds
7,999
Others
33
16,023
Others
Common stocks
5,360
143,095
148,455
Subordinated bonds/debts
1,069
52,853
53,922
Others
6,817
105,650
112,467
Securities at fair value through
profit or loss
- Equity securities
Funds
6,497
69,200
1,091
13,848
41
6,859
77,215
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 175
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
4 RISK MANAGEMENT (continued)
4.4 Fair value hierarchy (continued)
The following table presents the changes in Level 3 assets and liabilities for the year ended 31 December 2019:
(10)
(3,869)
Opening balance
Purchases
Transferred out of Level 3
Available-for-sale securities
Debt
Securities
at fair value
through
profit or loss
Derivative
financial
assets
Total
assets
Transferred into Level 3
(3,859)
(3,869)
(10)
Derivative financial assets
428
1,091
428
Total
414,396
530,968
234,993
1,180,357
Liabilities measured at fair value
Financial liabilities at fair value through
profit or loss
Investment contracts at fair value through
profit or loss
Total
(3,859)
16
Corporate bonds
143,469
32,707
financial
liabilities
Total
liabilities
securities
Equity
securities
Equity
Total
assets
securities
RMB million
RMB million
RMB million
RMB million
RMB million
Opening balance
RMB million
Purchases
Derivative
Available-for-sale securities
Debt
(2,680)
Total
(2,689)
| || |
(1,877)
(1,877)
Securities
at fair value
through
profit or loss
(1,877)
China Life Insurance Company Limited 2019 Annual Report Financial Report 177
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
4 RISK MANAGEMENT (continued)
4.4 Fair value hierarchy (continued)
The following table presents the changes in Level 3 assets and liabilities for the year ended 31 December 2018:
(4,566)
Transferred into Level 3
Transferred out of Level 3
Total gains/(losses) recorded in profit or loss
(1,122)
(1,877)
(1,877)
6,470
(161)
(864)
(655)
179,248
(1,877)
The assets and liabilities whose fair value measurements are classified under Level 3 above do not have material impact
on the profit or loss of the Group.
For the assets and liabilities measured at fair value on a recurring basis, during the year ended 31 December 2019,
RMB13,307 million (2018: RMB11,215 million) debt securities were transferred from Level 1 to Level 2 within the fair
value hierarchy, whereas RMB9,716 million (2018: RMB16,119 million) debt securities were transferred from Level 2 to
Level 1. No material equity securities were transferred from Level 1 to Level 2 (2018: RMB3,491 million were transferred
from Level 1 to Level 2), whereas RMB853 million equity securities were transferred from Level 2 to Level 1 (2018: no
material transfer).
For the years ended 31 December 2019 and 2018, 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 2019 and 2018, significant unobservable inputs such as discount rate and discounts for lack of
marketability were used in the valuation of primarily assets and liabilities at fair value classified as Level 3. The fair value
was not significantly sensitive to reasonable changes in these significant unobservable inputs.
178 China Life Insurance Company Limited⚫ 2019 Annual Report • Financial Report
(1,877)
(467)
180
180
Total gains/(losses) recorded in other
comprehensive income
3,024
3,446
(161)
Maturity
Closing balance
(864)
79,248
100,000
57,333
89,111
655
19,755
7,891
147,099
27,646
- (2
Derivative financial liabilities
profit or loss
Investment contracts at fair value through
10,206
175,514
185,720
Subordinated bonds/debts
21,314
200
Corporate bonds
21,514
1,595
79,048
80,643
Securities at fair value through
profit or loss
- Equity securities
Others
180,273
126,840
53,433
32,707
Wealth management products
31,348
31,348
Others
34
53,445
53,479
-
Debt securities
Government bonds
2,587
25,853
28,440
Government agency bonds
Funds
Preferred stocks
13,891
13,967
72,722
79,774
Others
1,351
1,351
Total
7,052
329,243
179,248
988,614
Liabilities measured at fair value
Financial liabilities at fair value through
profit or loss
(2,680)
480,123
Corporate bonds
6,760
5,204
Common stocks
34,392
849
35,241
Wealth management products
1,506
1,506
-
Debt securities
Government bonds
82
years
118
Government agency bonds
1,556
76
171,189
36
24,305
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 2019 Annual Report • Financial Report 171
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
4 RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
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 10.4, Note 21 and Note 38, respectively.
4.2.4 Capital management (continued)
Core capital
Actual capital
Minimum capital
Core solvency ratio
Comprehensive solvency ratio
As at
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):
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 CBIRC, 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.
4.2.4 Capital management
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 be surrendered
immediately, it would cause a cash outflow of RMB61,178 million and RMB204,037 million, respectively for the year
ended 31 December 2019 (2018: RMB58,669 million and RMB194,290 million, respectively), payable within one year.
2,735,901
Net cash inflow/(outflow)
218,878
(2,680)
420,100
(16,977)
(74,392) 208,079
486,890 746,590
(3,798)
(24,911) (5,021,057)
605,992 (3,353,136)
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.
170 China Life Insurance Company Limited⚫ 2019 Annual Report • Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
4 RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.3 Liquidity risk (continued)
The liquidity analysis above does not include policyholder dividends payable of RMB112,593 million as at 31 December
2019 (as at 31 December 2018: RMB85,071 million). As at 31 December 2019, declared dividends of RMB77,512 million
(as at 31 December 2018: RMB74,932 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.
31 December
2019
RMB million
As at
31 December
2018
RMB million
The Group did not guarantee or provide any financing support for the structured entities that the Group had interest in or
sponsored.
172 China Life Insurance Company Limited⚫ 2019 Annual Report • Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
4 RISK MANAGEMENT (continued)
4.3 Disclosures about interest in unconsolidated structured entities (continued)
(i) The unconsolidated structured entities that the Group has interest in
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 financial statements relating to its interest in unconsolidated structured entities and the Group's
maximum exposure are shown below:
Unconsolidated structured entities
Carrying
amount
As at 31 December 2019
Size
of assets
RMB Million
Funds managed by affiliated entities
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.
Subtotal
The Group's interest in unconsolidated structured entities are recorded as securities at fair value through profit or
loss, available-for-sale securities and loans. 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 3.5 for the Group's consolidation
judgements related to 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.
952,030
761,353
987,067
761,367
356,953
303,872
267%
251%
277%
251%
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 CBIRC 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.
4.3 Disclosures about interest in unconsolidated structured entities
20,150
borrowings
Interest-bearing loans and other
559,341
172,525
145,634
88,718
237,508
172,050
77,961
Statutory deposits - restricted
6,333
782
739
6,005
Securities purchased under
agreements to resell
9,905
9,905
Accrued investment income
Term deposits
48,402
298,644 1,417,910
80,801
182,978
146,884
Later
than 5
than
years
5 years
Financial assets
Contractual cash inflows
Equity securities
422,780
422,780
Debt securities
1,391,310
Loans
450,251
290,449
101,149
185,158
47,834
28
(13,489) (4,391,739)
(11,422) (629,318)
Contractual cash outflows
Securities sold under agreements
to repurchase
192,141
(192,141)
Financial liabilities at fair value
through profit or loss
2,680
(2,680)
Annuity and other insurance
balances payable
49,465
(49,465)
222,170
(10,293)
540
197,289
(13,098)
2,216,031
Premiums receivable
15,648
15,648
Cash and cash equivalents
50,809
50,809
Subtotal
2,954,779
422,780
561,282
538,511
630,903 1,667,921
Financial and insurance liabilities
Expected cash outflows
Investment contracts
255,434
RMB Million
6,497
Insurance contracts
Interest held by
the Group
(ii) The unconsolidated structured entities that the Group has sponsored but does not have interest in
As at 31 December 2019, the size of the unconsolidated structured entities that the Group sponsored but had no
interest was RMB600,223 million (as at 31 December 2018: RMB400,419 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 2019, the management service fee from these structured entities was RMB1,749
million (2018: RMB1,338 million), which was recorded as other income. The Group did not transfer assets to these
structured entities.
4.4 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 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.
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 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 or liabilities valued by this method
are generally classified as Level 3.
As at 31 December 2019, assets classified as Level 1 accounted for approximately 35.11% 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.
As at 31 December 2019, assets classified as Level 2 accounted for approximately 44.98% 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.
174 China Life Insurance Company Limited⚫ 2019 Annual Report • Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
4 RISK MANAGEMENT (continued)
4.4 Fair value hierarchy (continued)
At 31 December 2019, assets classified as Level 3 accounted for approximately 19.91% 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 comparable companies approach,
etc. The determination of Level 3 is primarily based on the significance of certain unobservable inputs.
For the accounting policies regarding the determination of fair values of financial assets and liabilities, see Note 3.2.
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 2019:
4.3 Disclosures about interest in unconsolidated structured entities (continued)
Assets measured at fair value
4 RISK MANAGEMENT (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
33,330
and service fee
Investment income
third parties
Others managed by affiliated entities Note 2
422,006
9,502
9,502
Others managed by third parties Note 2
Note 1
110,035
110,035
Investment income
and service fee
Investment income
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, and asset-backed plans, etc.
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 173
For the year ended 31 December 2019
33,330
Available-for-sale securities
Funds
58,314
Wealth management products
32,640
32,640
Others
28,319
70,585
98,904
Debt securities
Government bonds
2,620
21,138
23,758
Maximum
exposure
RMB Million
6,497
Government agency bonds
58,314
- Equity securities
Preferred stocks
22,117
Fair value measurement using
Quoted prices
in active
markets
Significant
observable
inputs
Level 2
RMB million
RMB million
Significant
unobservable
Total
inputs
Level 3
RMB million
RMB million
102,349
102,349
Common stocks
214,206
236,323
Note 1
Level 1
managed by affiliated entities
Others managed by third parties
10,827
10,827
452,814
Others managed by affiliated entities Note 2
third parties
Investment income
Investment income
and service fee
37,112 Investment income
and service fee
and service fee
Investment income
Investment income
37,112
Debt investment schemes managed by
managed by affiliated entities
14,832
14,832
Note 2
34,025
71,707
71,707
Note 1
Trust schemes managed by third parties
3,588
3,588
6,400
106,205
106,205
Note 1
Debt investment schemes managed by
Trust schemes managed by affiliated entities
Funds managed by third parties
Investment income
Debt investment schemes
Note 1
Note 1
98,003
Interest held by
the Group
Funds managed by third parties
Trust schemes managed by affiliated entities
Note 1
3,800
104,678
2,680
104,678
2,680
and service fee
Investment income
Investment income
Trust schemes managed by third parties
Note 1
89,769
89,769
Debt investment schemes
98,003
32,029
32,029
59,456
Maximum
exposure
RMB Million
629
RMB Million
629
Investment income
amount
Funds managed by affiliated entities
of assets
Size
Investment income
and service fee
Investment income
RMB Million
120,797
Carrying
and service fee
Investment income
Investment income
As at 31 December 2018
Unconsolidated structured entities
(10,414)
As at 1 January 2019
(813)
71,500
14,378
1,364
8,368
Accumulated depreciation
2,619
579
48
Disposals
(48)
(190)
(620)
(1,397)
Other additions
Charge for the year
44,771
(5,443)
162
As at 31 December 2019
8,656
(107)
65,353
Transfers upon completion
7,171
288
(8,164)
532
(173)
Additions
415
1,026
195
2,191
As at 31 December 2019
3
10,295
Transfers into investment properties
(2,977)
(2,977)
Disposals
(77)
(604)
(171)
(39)
(998)
(11,811)
16,901
(841)
814
47,281
As at 31 December 2019
32,936
2,884
523
14,377
1,038
51,758
China Life Insurance Company Limited • 2019 Annual Report Financial Report 185
527
construction improvements
Assets under
Motor
vehicles
fixtures
16,902
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Buildings
Office
equipment,
furniture and
Cost
6 PROPERTY, PLANT AND EQUIPMENT (continued)
For the year ended 31 December 2019
Leasehold
2,215
26,824
As at 1 January 2019
Impairment
(24)
(1,377)
(18,047)
(283)
(2,490)
(48)
79
868
(1,581)
(19,717)
(1)
(25)
As at 1 January 2019
Charge for the year
Disposals
As at 31 December 2019
(24)
| | || |
EE
(1)
(25)
Net book value
(5,484)
1,340
2,743,378
9,696
37,262
Life
Health
As at 31 December 2018
Accident
Others
Elimination
Total
RMB million
145,889
8,975
9,835
Liabilities
43,383
610
201,661
2,753,074
154,864
10,445
245,044
220,942
3,163,427
47,281
43,695
3,254,403
2,942,485
Insurance contracts
Total
Property, plant and equipment
505
1,589
Depreciation and amortisation
- (2,070)
660
(10)
(141)
(2,579)
attributable to equity holders of
the Company
Total
Others
202
2,638
China Life Insurance Company Limited⚫ 2019 Annual Report Financial Report 183
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
5 SEGMENT INFORMATION (continued)
Assets
Financial assets
Others
Segment assets
Unallocated
342
7,658
2,081,822
8,466
9,358
26,039
2,738,459
Unallocated
Others
Total
192,654
2,931,113
184 China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
154,488
6 PROPERTY, PLANT AND EQUIPMENT
Office
equipment,
furniture and
Motor Assets under
Leasehold
Buildings
fixtures
vehicles
construction improvements
Total
RMB million
As at 1 January 2019
Cost
125,743
2,548,574
72,976
2,216,031
Investment contracts
240,152
15,282
255,434
Derivative financial liabilities
1,773
97
7
1,877
Segment liabilities
Securities sold under agreements to
178,499
9,759
674
3,209
192,141
Others
46,328
3,607
211
22,830
repurchase
RMB million
RMB million
32,457
(1,168)
2,554
3,519
1
2,555
1
3,520
The Group had no significant profit or loss from subleasing right-of-use assets or sale and leaseback transactions for the
year ended 31 December 2019.
The Group's right-of-use assets include the above assets and land use rights disclosed in Note 14.
(b) The amounts recognised in profit or loss in relation to leases are as follows:
Interest on lease liabilities
Depreciation charge of right-of-use assets
Expense relating to short-term leases
(1)
Expense relating to leases of low-value assets (except for short-term lease liabilities)
Total
2019
106
1,197
440
3
1,746
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 187
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
8 INVESTMENT PROPERTIES
Buildings
RMB million
31 December
Cost
29
│C ।」E
As at 31 December 2019
Net book value
As at 1 January 2019
As at 31 December 2019
Buildings
Others
Total
RMB million
2,554
1
(1,197)
2,555
1
2,263
(130)
(130)
4,686
2
4,688
(1,196)
29
(1,167)
2,262
Deductions
As at 1 January 2019
Deductions
Deductions
As at 31 December 2018
Net book value
As at 1 January 2018
As at 31 December 2018
Fair value
As at 1 January 2018
As at 31 December 2018
188 China Life Insurance Company Limited ⚫ 2019 Annual Report ⚫ Financial Report
Buildings
Accumulated depreciation
As at 1 January 2018
Additions
RMB million
Other comprehensive income
(14)
10,227
(302)
(186)
8
(480)
3,064
9,747
4,629
12,449
3,366
6,875
Additions
As at 31 December 2018
As at 1 January 2018
Additions
As at 31 December 2019
Accumulated depreciation
As at 1 January 2019
Additions
Deductions
As at 31 December 2019
Net book value
As at 1 January 2019
As at 31 December 2019
Fair value
As at 1 January 2019
As at 31 December 2019
Deductions
10,227
(351)
12,898
(480)
(325)
(757)
9,747
12,141
12,449
14,870
Cost
3,022
As at 1 January 2018
Charge for the year
Impairment
(86)
(946)
As at 31 December 2018
37,262
7,658
1,340
16,902
2,191
65,353
Accumulated depreciation
(76)
As at 1 January 2018
(5,122)
(955)
Charge for the year
(1,196)
(578)
(151)
Disposals
30
257
293
(9,248)
| | | |│|
(345)
(169)
6,873
1,403
16,696
1,830
59,259
Transfers upon completion
4,889
123
(5,500)
393
(270)
(95)
85
932
282
11,416
54
12,769
Transfers into investment properties
(5,634)
(5,634)
Disposals
Additions
As at 1 January 2019
(1,203)
(212)
627
42,707
26,824
2,215
527
16,901
814
47,281
As at 31 December 2019, the net book value of buildings above which were in process to obtain title certificates was
RMB8,852 million (as at 31 December 2018: RMB6,798 million).
186 China Life Insurance Company Limited 2019 Annual Report • Financial Report
16,696
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
7 LEASES
(a) Right-of-use assets
Cost
As at 1 January 2019
Additions
Deductions
As at 31 December 2019
Accumulated depreciation
As at 1 January 2019
Charge for the year
Deductions
As at 31 December 2019
For the year ended 31 December 2019
(16,528)
448
23,185
(2,137)
38
618
As at 31 December 2018
(10,414)
(5,443)
(813)
(1,377)
(18,047)
Impairment
1,751
As at 1 January 2018
(24)
Charge for the year
Disposals
As at 31 December 2018
Net book value
As at 1 January 2018
As at 31 December 2018
(24)
(1)
(25)
(24)
541
48
(5)
59,795
Income tax
Net profit
(781)
59,014
Attributable to
- Equity holders of the Company
- Non-controlling interests
11,013
Other comprehensive income
727
attributable to equity holders of
the Company
31,861
1,931
109
946
34,847
Depreciation and amortisation
58,287
489
5,875
42,418
(797)
(273)
(93)
(1,163)
Segment benefits, claims and expenses
(552,338)
(102,736)
(15,002)
(9,287)
1,673
(677,690)
Net gains on investments of associates
and joint ventures
8,011
8,011
Including: share of profit of associates
and joint ventures
Segment results
9,159
9,159
2,671
Statutory insurance fund contribution
917
479
572
222,983
244,617
3,120,093
195,251
10,652
299,890
3,625,886
3,381,269
Property, plant and equipment
Total
51,758
49,090
3,726,734
Liabilities
Insurance contracts
2,385,407
158,800
Others
76,907
10,080
183,142
12,109
4,379
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
5 SEGMENT INFORMATION (continued)
Assets
Financial assets
Others
Segment assets
Unallocated
Life
Health
As at 31 December 2019
Accident
Others Elimination
Total
RMB million
3,111,140
8,953
312
1,673
(5)
(95)
8,195
Including: inter-segment revenue
1,673
(1,673)
Segment revenues
594,756
108,611
15,491
(1,673)
12,289
729,474
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits
(124,194)
(3,649)
(34)
(127,877)
(1,673)
8,698
60
1,110
560,278
Investment income
129,334
7,849
443
2,293
139,919
Net realised gains on financial assets
1,646
100
6
79
1,831
16,947
1,027
58
1,219
19,251
Other income
Accident and health claims and
claim adjustment expenses
(44,613)
(6,170)
(200)
(12)
(755)
(4,255)
Administrative expenses
(25,328)
(9,075)
(2,962)
(2,910)
(40,275)
Other expenses
(7,120)
(692)
(169)
(3,294)
1,673
(9,602)
Including: inter-segment expenses
(1,573)
(3,288)
8,529
Finance costs
(2,328)
(50,783)
Increase in insurance contract liabilities
(303,479)
(27,209)
(119)
(330,807)
Investment contract benefits
(8,810)
(347)
(9,157)
Policyholder dividends resulting from
participation in profits
(22,251)
(124)
(22,375)
Underwriting and policy acquisition costs
(57,071)
(16,554)
(5,443)
(81,396)
14,984
2,552,736
252,362
(19,646)
Underwriting and policy acquisition costs
(43,108)
(11,806)
(4,808)
(2,983)
(62,705)
Finance costs
(123)
(3,304)
(12)
(619)
(4,116)
Administrative expenses
(23,728)
(7,881)
(2,982)
(2,895)
(181)
(19,523)
participation in profits
Policyholder dividends resulting from
Insurance benefits and claims expenses
Life insurance death and other benefits
Accident and health claims and claim
(245,786)
(2,922)
(28)
(248,736)
adjustment expenses
(33,801)
(6,751)
(40,552)
Increase in insurance contract liabilities
(167,090)
(22,966)
125
(189,931)
Investment contract benefits
(9,020)
(312)
(9,332)
(37,486)
Benefits, claims and expenses
Other expenses
(487)
Segment results
Income tax
Net profit
Attributable to
- Equity holders of the Company
- Non-controlling interests
7,745
7,745
Including: share of profit of associates
and joint ventures
7,745
1,630
4,100
495
7,696
13,921
(1,985)
11,936
11,395
7,745
and joint ventures
Net gains on investments of associates
(621,243)
(140)
(3,255)
1,579
(7,642)
Including: inter-segment expenses
(1,492)
(82)
1,579
Statutory insurance fund contribution
(759)
(242)
(96)
(1,097)
Segment benefits, claims and expenses
(517,657)
(80,721)
(14,692)
(9,752)
1,579
(5,339)
627,419
(1,579)
9,703
Total
268,007
3,317,392
182 China Life Insurance Company Limited ⚫ 2019 Annual Report ⚫ Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
5 SEGMENT INFORMATION (continued)
For the year ended 31 December 2018
Life
Others
Health
Others
Elimination
Total
RMB million
Revenues
Gross written premiums
437,540
83,614
Accident
Unallocated
3,049,385
28,803
15,442
267,804
Securities sold under agreements to
repurchase
106,377
6,447
365
4,899
118,088
Others
80,820
5,687
346
23,904
110,757
Segment liabilities
2,824,966
186,376
9,240
14,672
535,826
- Term life
3,145
Net fair value gains through profit or loss
(16,946)
(927)
(65)
(340)
(18,278)
Other income
1,088
84
8,505
(1,579)
8,098
Including: inter-segment revenue
1,579
(1,579)
Segment revenues
519,287
84,821
15,187
(19,591)
Investment contracts
(74)
(1,008)
- Whole life
46,375
- Endowment
126,318
- Annuity
261,702
Net premiums earned
436,863
80,279
14,881
532,023
Investment income
116,721
6,393
441
1,612
125,167
Net realised gains on financial assets
(18,439)
(70)
99,575
Net fair value gains through profit or loss
Net premiums earned
31 December 2019:
financial 31 December 2018: (1,877)
instruments
Derivative
Discount rate
Discounted cash
flow method
31 December 2019:105,666
31 December 2018: 79,248
securities
Debt
Discount rate
428
N/A
N/A
approach
Net asset value
method
Discounted cash
flow method
31 December 2019: 28,346
31 December 2018: 23,976
31 December 2019: 72,477
31 December 2018: 37,847
The fair value is inversely related to the
discounts for lack of marketability
between fair value and
unobservable inputs
Relationships
Discounts for lack 31 December 2019: 11%-35%
31 December 2018: 5%-25%
of marketability
N/A
companies
Comparable
companies
approach
31 December 2019: 3.02%-6.22%
31 December 2018: 4.00%-6.60%
Other businesses relate primarily to income and cost of the agency business in respect of transactions with CLIC, etc.,
as described in Note 35, 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)
Accident insurance business relates primarily to the sale of accident insurance policies.
(iii) Accident insurance business (Accident)
Health insurance business relates primarily to the sale of health insurance policies, including those health insurance
policies without significant insurance risk transferred.
(ii) Health insurance business (Health)
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)
31 December 2019: 3.80%-6.38%
31 December 2018: 3.80%-7.50%
The Group operates in four operating segments:
5 SEGMENT INFORMATION
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 179
The fair value is inversely related to the
discounts for lack of marketability
The fair value is inversely related to
discount rate
The fair value is inversely related to
discount rate
Discounts for lack 31 December 2019: 15%
of marketability 31 December 2018: 11%
5.1 Operating segments
Comparable
445,719
Equity
securities
Elimination
Total
RMB million
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Revenues
Gross written premiums
446,562
105,581
Others
14,943
2,584
- Whole life
61,612
- Endowment
113,950
- Annuity
268,416
31 December 2019: 26,265
31 December 2018: 34,388
567,086
Accident
- Term life
Life
Range
Health
inputs
Significant
unobservable
Valuation
techniques
The table below presents information about the significant unobservable inputs used for primary assets and liabilities at
fair value classified as Level 3 as at 31 December 2019 and 31 December 2018:
4.4 Fair value hierarchy (continued)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2019
Fair value
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.
5.3 Allocation basis of assets and liabilities
Financial assets, securities sold under agreements to repurchase and derivative financial liabilities 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.
180 China Life Insurance Company Limited 2019 Annual Report • Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
5.2 Allocation basis of income and expenses
5 SEGMENT INFORMATION (continued)
For the year ended 31 December 2019
An increase in investment yield from the
participating accounts
37,486
1,985
781
Income tax
40,275
An increase in interest paid for bonds
payables
The growth of business
An increase in commissions of regular
business due to the growth of the
Company's business and the optimization
of its business structure
7.4%
Administrative expenses
-60.7%
Company
acquisition costs
Net profit attributable to
58,287
11,395
411.5%
equity holders of the
Due to an increase in gross investment
income and the impact from the
new policy on pre-tax deduction of
underwriting and policy acquisition costs
China Life Insurance Company Limited 2019 Annual Report Prelude 11
CHAIRMAN'S STATEMENT
Due to a combined impact of the growth
of insurance business and a decrease
in maturities payments and surrender
payments
The impact from the new policy on pre-tax
deduction of underwriting and policy
An increase in profits of certain
associates
-1.9%
An increase in spread income of stocks
and funds in available-for-sale securities
479,219
6.3%
claims expenses
Investment contract benefits
9,157
9,332
The year of 2019 marked the 70th anniversary¹ of the founding of China Life, and also
the beginning of "China Life Revitalization”. In this inspiring springtime, I, on behalf
of the Company's board of directors (the "Board"), hereby report to shareholders and
the public on the Company's operating results for the year of 2019. 2019 was a truly
remarkable year for us, when the external environment was complicated and ever-
changing, and the insurance industry saw accelerated transformation. In the face of new
development and consumption trends, the Company has always kept pace with the
development of the times as well as demands from customers. With new development
philosophy guiding new practices, we have embarked on the journey of "China Life
Revitalization" and pursued high-quality development with concerted efforts.
Policyholder dividends
22,375
19,646
13.9%
resulting from participation
in profits
Underwriting and policy
81,396
62,705
29.8%
acquisition costs
Finance costs
4,255
4,116
3.4%
RMB million
Due to the steady growth of life insurance
business
The expansion of health insurance
business by the Company
An increase in interest income from fixed-
maturity investments and dividends from
stocks
An increase in spread income and fair
value of stocks in securities at fair value
through profit or loss
In the year of 2019, net profit attributable to equity
holders of the Company amounted to RMB58,287
million, an increase of 411.5% year on year. Value of
one year's sales of the Company reached RMB 58,698
million, an increase of 18.6% year on year,
significantly leading the market. The core solvency
ratio and comprehensive solvency ratio were
266.71% and 276.53%, respectively. The Company
has been listed on the "Forbes Global 2000" for
16 consecutive years, ranking 105th in 2019. Based
on the Company's sound operating performance,
the Board has proposed to distribute a final cash
dividend of RMB0.73 per share (inclusive of tax) and
such proposal will be submitted to the 2019 Annual
General Meeting for review and discussion.
Wang Bin
Chairman
1 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, when the People's Republic of China was founded.
In 1996, in compliance with the separate operation regulation,
Zhong Bao Life Insurance Company was established to focus
on life insurance business. In 1999, Zhong Bao Life Insurance
Company was renamed as China Life Insurance Company. In
2003, China Life Insurance Company accelerated its reform and
development and was restructured into China Life Insurance
(Group) Company, which founded the Company as a sole
promoter.
city branches and invigorated
field offices
One Goal
Build a vibrant organizational
structure to achieve the goal of
revitalizing China Life
Two Focuses
Create a strengthened individual
agent channel in coordination with
other channels (Yi Ti Duo Yuan)
and a market-oriented investment
management system
"Yi Ti" refers to the strengthened
individual agent channel by
upgrading the general team and
consolidating the upsales, insurance
planners and tele-sales teams for
enhanced value creation; "Duo
Yuan" refers to the operation of
business through bancassurance,
group and health insurance channels
so as to form effective synergy
with individual agent channel, and
consolidate market leading position.
Two Engines
Establish market-oriented
provincial branches, optimized
509,467
the models of technological
development
Two Supports
Integrated intelligent operational
system and precise financial
resource allocation system
MANAGEMENT DISCUSSION
AND ANALYSIS
REVIEW OF BUSINESS OPERATIONS
IN 2019
In 2019, despite the complicated situation of increased
risks and challenges at home and abroad, the Company
concentrated on the strategic goal of "China Life
Revitalization" with "Dual Centers and Dual Focuses" as
its strategic core, adhered to the overall keynote of making
steady progress, and upheld the operational guideline of
"prioritizing business value, strengthening sales force,
achieving stable growth, upgrading technology, optimizing
services, and guarding against risks". The Company
accelerated the establishment of a development system
of "Yi Ti Duo Yuan" with strengthened individual agent
channel in coordination with other channels as well as
a market-oriented investment management system,
strengthened technological empowerment, focused
on the transformation of sales and the development of
protection-oriented business, reformed its sales models,
investment and services systems, constantly improved
the efficiency of risk prevention and control, and achieved
the coordinated growth of business scale and value.
During the Reporting Period, the Company's gross written
premiums amounted to RMB567,086 million, an increase
of 5.8% year on year, maintaining its industry leadership
position. As at 31 December 2019, embedded value of
the Company reached RMB942,087 million, an increase
of 18.5% from the end of 2018. Value of one year's
sales was RMB58,698 million, an increase of 18.6%
year on year. During the Reporting Period, the Company
continued to enhance the asset-liability management,
and its gross investment income reached RMB169,043
million, a significant increase of 77.7% from 2018. Due to
an increase in gross investment income and the impact
from the new policy on pre-tax deduction of underwriting
and policy acquisition costs, net profit attributable to
equity holders of the Company was RMB58,287 million,
an increase of 411.5% year on year. As at the end
of the Reporting Period, the core solvency ratio and
the comprehensive solvency ratio were 266.71% and
276.53%, respectively.
18 China Life Insurance Company Limited ⚫ 2019 Annual Report Management Discussion and Analysis
mechanisms and optimize
All these achievements embodied devotion,
dedication and hard work of all the staff and sales
teams of the Company, and demonstrated the
precious splendor, spirit and strength of China
Life. Over the past year, we adhered to the
operational guideline of "prioritizing business value,
strengthening sales force, achieving stable growth,
upgrading technology, optimizing services and
guarding against risks" and took "Dual Centers and
Dual Focuses" as our strategic core, making new
strides in shouldering corporate social responsibility,
quality development, technology empowerment,
reform and transformation, and risk prevention and
control.
Strong headquarters, streamlined
DINGXIN PROJECT
12
China Life Insurance Company Limited 2019 Annual Report Chairman's Statement
We firmly committed to serving the society and
shouldering social responsibilities for the interest of
the public. The Company gave full play to the functions
of insurance as an economic "shock absorber" and social
"stabilizer", and underwrote an insured sum of RMB397
trillion for the public on a cumulative basis, with the
total claims payment of more than RMB120 billion. It
actively carried out policy-oriented businesses such as
supplementary major medical expenses insurance and
medical insurance administration projects, which helped
improve basic social medical insurance protection and
service level and significantly alleviated the illness-related
poverty. The Company targeted to the specific insurance
needs of poverty-stricken people, and made claims
payment of nearly RMB3 billion to poverty-stricken people
in relation to supplementary major medical expenses
insurance protection. In 2019, the Company gave support
to the targeted poverty alleviation work, helping nearly
87,000 poverty-stricken people be lifted from poverty. The
Company proactively aligned its needs for development
with national strategies. Leveraging on the leading role
and demonstration effect of insurance funds, it actively
participated in the country's major development strategies
including those for the coordinated development of the
Beijing-Tianjin-Hebei Region, the construction of the
Xiong'an New Area, the integrated development along the
Yangtze River Delta, and the building of the Guangdong-
Hong Kong-Macao Greater Bay Area, and took multiple
measures to promote the coordinated development
of regional economies. The Company also led the
investment in the hydropower development project in the
upper reaches of the Yellow River in Qinghai Province,
participated in the mixed ownership reform of state-
owned enterprises, and promoted the sustainable and
healthy development of green industries.
We adhered to the concept of value-oriented
development and realised consistent improvement
in our development quality. We strengthened the
asset-liability management and further promoted the
synergy between assets and liabilities. The Company
continuously consolidated the development foundation,
took active measures to increase the volume of value-
oriented business while enhancing the profitability of
scale business. The Company's gross written premiums
exceeded RMB560 billion, maintaining a leading position
in the market, and the growth of value of one year's
sales was substantially higher than that of its peers,
representing the coordinated growth of business value
and scale. By sticking to the protection role of insurance,
the Company further optimized its business structure,
with its long-term regular premiums growing over 40%
year on year, and the percentage of premiums from
designated protection-oriented products in the first-
year regular premiums rising by 8.6 percentage points
year on year. The Company allocated to yield seeking
assets with long duration while grasping the short-term
opportunities of the market, the gross investment income
registered RMB169,043 million, representing a significant
increase year on year, and the gross investment yield
was 5.24%. The comprehensive investment yield² was
7.28%, representing an increase of 418 BPs from 2018.
Besides, the total number of the Company's sales force
amounted to 1.848 million, and the size of the sales force
was expanded with improved quality. The monthly average
productive agents increased by 34.9% year on year.
Both the quality and size of the Company's sales force
improved against the downward trend, and a new-type
sales team was established.
We continued to deepen technological empowerment,
which comprehensively enhanced our sales and
services. The Company kicked off the three-year action
plan for the "Technology-driven China Life" initiative,
actively applying technologies, such as AI, Big Data and
Internet of Things, to empower the whole insurance value
chain, pushed forward the upgrade of customer-oriented
sales model, and stepped up efforts in providing one-stop
integrated financial and insurance services for customers.
The Company improved the whole chain of services,
accelerated the building of the "One Customer, One
China Life" platform, further transformed and upgraded
its operations and services by promoting integrated,
intelligent and ecological operations and services, and
built up an "Insurance Plus" ecosystem. The Company
further improved the customer experience and introduced
intelligent underwriting and intelligent customer service
systems. The paperless policy application rate for
individual customers reached 97.8%, and the number
of claims settled automatically in the whole process
exceeded 10 million. The Company's service efficiency
was increased significantly with the digitalized service
supply system being further optimized.
2 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 end of the previous year - Securities sold
under agreements to repurchase at the end of the previous year - Derivative financial liabilities at the end of the previous year + Investment assets at the
end of the period - Securities sold under agreements to repurchase at the end of the period - Derivative financial liabilities at the end of the period)/2)
China Life Insurance Company Limited 2019 Annual Report Chairman's Statement
•
13
We continued to reform and innovate, which boosted
vigorous driving forces for our development. The
Company steadily carried out the "Dingxin Project",
upheld the concept of a "strong headquarters, streamlined
provincial branches, optimized city branches and
invigorated field offices", and a development system
of "Yi Ti Duo Yuan" was initially formed, featuring a
strengthened individual agent channel with an emphasis
on its core role of value creation in coordination with
the development of group insurance, bancassurance
and health insurance. By focusing on the value chain,
the Company reconstructed a market-oriented and
professional investment management system. It sped
up the integration of front, middle and back offices and
initially built an integrated intelligent operational system
and a precise financial resource allocation system. It also
optimized and improved the assessment and evaluation
of management personnel, adopting market-oriented
mechanism in talent selection and recruitment. Keeping
in step with the national and regional development
strategies, the Company vigorously pushed forward
business revitalization in key cities, and built the new
organizations, new mechanisms, new teams and new
systems to cater to the urban market. The Company also
implemented the "Gorgeous Counties, Happy Villages"
project to consolidate its competitive strengths in rural
markets of strategic importance, and generated more
sources of growth from the grassroots branches of the
Company.
Principles
We continued to strengthen our capability in risk
control and prevention, and firmly held onto the
bottom line of risks. The Company constantly improved
the top-level design for risk management and control,
After the outbreak of COVID-19 in early 2020, the
Company took immediate actions in providing insurance
protection, donating epidemic prevention supplies, and
offering health-related insurance services, etc. The
Company expanded the scope of insurance coverage of
its current products, upgraded claims settlement services,
and improved online services. It provided complimentary
insurance protection for over 2.48 million people
fighting on the front line of the epidemic. While serving
the national battle against the outbreak, the Company
leveraged on the achievements of "Technology-driven
China Life" to enrich a variety of insurance products sold
online, innovate online sales team management model,
conduct sales online, and strengthen remote service
capabilities, so as to secure the sales force management
and business operation in an orderly manner, and provide
comprehensive protection for the customers' rights.
14 China Life Insurance Company Limited 2019 Annual Report Chairman's Statement
Looking ahead, we firmly believe that the Chinese
economy will maintain its long-term sound development
and its high-quality growth fundamentals remain
unchanged, and that the domestic insurance industry is
still at an important stage full of strategic opportunities.
In 2020, we will continue to pursue high-quality
development, stick to value creation during the whole
process of the Company's reform and development, and
make concrete progress with "China Life Revitalization".
We will vigorously push forward the market-oriented
reforms, accelerate the implementation of the "Dingxin
Project", speed up the digitalization process in business
operation, enhance the application of digital technologies
in sales, services and management, and strengthen
the application of technological empowerment in sales,
services and business operation. We will speed up the
integration of service platforms, and shape the Company's
operation and services to be more integrated, intelligent
and ecological. We will also strengthen risk management
and control, strive to prevent major risks, enhance
asset-liability management, implement "Environmental,
Social and Governance (ESG)" concept, and advance our
corporate governance.
"Many a little makes a mickle." The Company will
continue to uphold its original aspiration of "Protecting
People's Good Life", revitalize China Life, forge
ahead with the reform initiatives, and strive to create
value for our shareholders, customers and society,
making unremitting efforts to promote the high-quality
development of the Chinese insurance industry, build a
moderately prosperous society in all respects, and realise
the first centenary goal of the country.
By Order of the Board
Beijing, China
25 March 2020
•
China Life Insurance Company Limited 2019 Annual Report Chairman's Statement
15
CHINA LIFE
REVITALIZATION
improved the risk management system and the risk
preference transmission mechanism, completed a
closed loop of risk management and control covering
all links of its value chain and all aspects of operation
and management, and established a comprehensive
risk control model with full staff participation and whole
process management. The Company carried out in-
depth risk inspections, comprehensively prevented
and controlled key risks, strengthened the technology
empowerment in risk management and control, continued
to build the intelligent risk control system, and achieved
more accurate prevention and control of fraud risks and
money laundering risks.
incentive and talent development
Insurance benefits and
8,098
An increase in policy loans and
certificates of deposit
The needs for liquidity management
4.9%
35.2%
450,251
608,920
Loans
50,809
Investment properties
53,306
agreements to resell
The needs for liquidity management
-54.9%
9,905
4,467
Securities purchased under
An increase in the fair value of stocks in
securities at fair value through profit or
loss
Cash and cash equivalents
12,141
9,747
24.6%
Investment contracts
The accumulation of insurance liabilities
from new policies and renewals
15.2%
2,216,031
2,552,736
Insurance contracts
Affected by an increase in the fair value of
available-for-sale securities
-89.8%
1,257
128
Deferred tax assets
An increase in investments in associates
and joint ventures
10.6%
201,661
1.2%
Investments in associates
and joint ventures
New investments in investment
properties
An increase in the allocation of stocks in
available-for-sale securities
through profit or loss
2.1%
138,717
31 December
As at
As at
Major Items of the
Consolidated Statement
RMB million
MAJOR ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS AND THE REASONS FOR CHANGE
9
China Life Insurance Company Limited 2019 Annual Report •Prelude
Gross investment yield = (Gross investment income - Interest paid for securities sold under agreements to repurchase)/((Investment assets at the
end of the previous year - Securities sold under agreements to repurchase at the end of the previous year - Derivative financial liabilities at the end of
the previous year + Investment assets at the end of the period - Securities sold under agreements to repurchase at the end of the period – Derivative
financial liabilities at the end of the period)/2)
In calculating the percentage change 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.
Ratio of assets and liabilities = Total liabilities/Total assets
Investment assets = Cash and cash equivalents + Securities at fair value through profit or loss + Available-for-sale securities + Held-to-maturity
securities + Term deposits + Derivative Financial Assets + Securities purchased under agreements to resell + Loans + Statutory deposits-restricted +
Investment properties + Investments in associates and joint ventures
5.
4.
3.
2.
1. 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.
Notes:
31 December
267,804
of Financial Position
2018
141,608
Securities at fair value
21.6%
870,533
1,058,957
Available-for-sale securities
Due to the maturity of term deposits
An increase in the allocation of
government bonds
15.1%
806,717
928,751
Held-to-maturity securities
-4.3%
559,341
535,260
Term deposits
Main Reasons for Change
Change
2019
255,434
222,983
An increase in the scale of universal
insurance accounts
business
0.7%
4.8%
14,984
Accident insurance
24.0%
80,279
Investment income
99,575
2.0%
436,863
445,719
Life insurance business
5.3%
532,023
560,278
Health insurance business
139,919
125,167
11.8%
8,195
Other income
ventures
associates and joint
3.4%
7,745
8,011
Share of net profit of
N/A
(18,278)
19,251
Net fair value gains through
profit or loss
financial assets
N/A
(19,591)
1,831
Net realised gains on
Net premiums earned
Main Reasons for Change
14,881
2018
Bonds payable
other borrowings Note
-0.5%
20,150
20,045
Interest-bearing loans and
balances payable
3.1%
49,465
51,019
Annuity and other insurance
agreements to repurchase
The needs for liquidity management
-38.5%
Change
118,088
Securities sold under
34,990
Deferred tax liabilities.
192,141
N/A
10,330
2019
Consolidated Statement
Major Items of the
For the year ended 31 December
China Life Insurance Company Limited 2019 Annual Report • Prelude
10
Note: Interest-bearing loans and other borrowings include a three-year bank loan of EUR67 million with a maturity date on 18 January 2021, a five-year bank
loan of GBP275 million with a maturity date on 25 June 2024, a five-year bank loan of USD860 million with a maturity date on 16 September 2024,
and a six-month bank loan of EUR127 million with a maturity date on 11 January 2020 which is automatically renewed upon maturity pursuant to the
terms of the agreement. All the above are fixed rate loans. A five-year bank loan of USD970 million with a maturity date on 27 September 2024, a
three-year loan of EUR400 million with a maturity date on 6 December 2020, and a one-year bank loan of USD18 million with a maturity date on 6
November 2020, which are floating rate loans.
of Comprehensive Income
Due to the combined impact of total
comprehensive income and profit
26.8%
318,371
403,764
Equity holders' equity
Affected by an increase in the fair value of
available-for-sale securities
N/A
distribution during the Reporting Period
Issuance of capital supplemental bonds
during the Reporting Period
180
6,153
RMB million
RMB million
31 December
2018
2019
31 December
After one year but within five years
As at
Total
Within one year
Contractual maturity schedule:
-
500
As at
5,833
As at 31 December 2019, the net book value of investment properties which were in process to obtain title certificates
was RMB5,809 million (as at 31 December 2018: RMB3,407 million).
6,333
10.4 Statutory deposits – restricted
Adjustment (i)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
8 INVESTMENT PROPERTIES (continued)
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.
6,333
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 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.
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.
9 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
As at 31 December 2018/31 December 2017
198 China Life Insurance Company Limited 2019 Annual Report • 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 CBIRC. These funds may not be used for any purpose other than for paying off debts
during liquidation proceedings.
The fair value of investment properties of the Group as at 31 December 2019 amounted to RMB14,870 million (as at
31 December 2018: RMB12,449 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.
On 6 December 2017, New Fortune Wisdom Limited and New Capital Wisdom Limited, subsidiaries of Ningbo Meishan
Bonded Port Area Guo Yang Guo Sheng Investment Partnership (Limited Partnership) ("Guo Yang Guo Sheng"), a
subsidiary of the Company, entered into a loan agreement with a subsidiary of Agricultural Bank of China. Guo Yang Guo
Sheng arranged deposits with Beijing Xicheng branch of the Agricultural Bank of China to back these loans. As at 31
December 2019, the amounts of such term deposits and current deposits were RMB2,000 million (as at 31 December
2018: same) and RMB1,069 million (as at 31 December 2018: RMB1,274 million), respectively.
As at 1 January
As at 31 December 2019, the Group's term deposits of RMB3,491 million (as at 31 December 2018: RMB16,691 million)
were deposited in banks to back overseas borrowings and are restricted to use.
CGB
Associates
Name
Percentage of equity
interest held
Place of incorporation
As at 31 December 2018, the major associates and joint ventures of the Group are as follows:
75.00%
The British Virgin Islands
66.67%
The British Cayman Islands
10.29%
PRC
43.86%
PRC
35.00%
PRC
40.00%
PRC
29.59%
Sino-Ocean
CLP&C
COFCO Futures
Pipeline Company
192 China Life Insurance Company Limited⚫ 2019 Annual Report • Financial Report
75.00%
The British Virgin Islands
66.67%
The British Cayman Islands
10.29%
PRC
43.86%
PRC
Hong Kong, PRC
35.00%
40.00%
PRC
29.59%
Hong Kong, PRC
43.686%
PRC
MCL
Joint ventures
Joy City
China Unicom
PRC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
43.686%
Percentage of equity
interest held
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
190 China Life Insurance Company Limited 2019 Annual Report • Financial Report
(2,510)
222,983
(1,500)
1,189
(3,227)
9,159
18,590
198,772
(2,889)
201,661
190,678
Total
52,278
149
(840)
18
9 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
(i) On 1 January 2019, CGB began to adopt IFRS 9. The cumulative effect of initial adoption of IFRS 9 was adjusted to its
equity as at 1 January 2019. Accordingly, the impact was adjusted by the Group based on its percentage of holding. As
at 1 January 2019, The Group's retained earnings were decreased by RMB2,857 million and reserves were increased by
RMB16 million. The Group's equity as at 1 January 2019 was decreased by RMB2,841 million in total.
On 1 January 2019, China Unicom began to adopt IFRS 16. The cumulative effect of initial adoption of IFRS 16 was
adjusted to its equity as at 1 January 2019. Accordingly, the impact was adjusted by the Group based on its percentage
of holding. The Group's retained earnings as at 1 January 2019 were decreased by RMB48 million.
(ii) The 2018 final dividend of RMB0.033 in cash per ordinary share was approved and declared in the Annual General
Meeting of CGB on 16 August 2019. The Company received a cash dividend of RMB284 million.
Place of incorporation
Joint ventures
Joy City
MCL
China Unicom
Pipeline Company
COFCO Futures
CLP&C
Sino-Ocean
CGB
Associates
PRC
Name
9 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 191
(vi) Except for the non-publicly issued stock of China Unicom having a 36-month period restricted for sale, there is no
significant restriction for the Group to dispose of its other associates and joint ventures.
(v) The Group invested in real estate, industrial logistics assets and other industries through these enterprises.
(iv) The 2018 final dividend of RMB0.0533 in cash per ordinary share was approved and declared in the Annual General
Meeting of China Unicom on 8 May 2019. The Company received a cash dividend of RMB170 million. As at 31 December
2019, China Unicom's share price is RMB5.89 per share.
Sino-Ocean, the Group's associate is listed in Hong Kong. On 31 December 2019, the stock price of Sino-Ocean was
HKD3.13 per share. As at 31 December 2018, the cumulative impairment loss of RMB1.01 billion for the investment
in Sino-Ocean had been recognised by the Group. The Group performed an impairment test to this investment on 31
December 2019. An impairment loss of RMB1.50 billion was recognised for this investment valued using the discounted
future cash flow method for the year ended 31 December 2019. 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.
(iii) The 2018 final dividend of HKD0.073 in cash per ordinary share was approved and declared in the Annual General
Meeting of Sino-Ocean on 16 May 2019. The Company received a cash dividend equivalent to RMB145 million. The 2019
interim dividend of HKD0.110 in cash per ordinary share was approved and declared by the board of directors of Sino-
Ocean on 21 August 2019. The Company received a cash dividend equivalent to RMB224 million.
As at 31 December 2019, the major associates and joint ventures of the Group are as follows:
For the year ended 31 December 2019
9 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
The following table illustrates the financial information of the Group's major associates and joint ventures as at 31
December 2019 and for the year ended 31 December 2019:
6,853
8,774
160,781
35,999
2,872
23,330
43,700
164,985
adjustments
the associates and joint ventures after
Total equity attributable to equity holders of
(3,908)
(1,339)
17,454
449
(6,209)
412
Total adjustments (i)
10,761
Proportion of the Group's ownership
43.686%
29.59%
40.00%
9,332
11,387
75,180
Net carrying value of the investments
(2,510)
Impairment
5,140
5,849
22,068
10,113
21,433
9,332
13,897
75,180
Gross carrying value of the investments
75.00%
66.67%
10.29%
43.86%
35.00%
1,550
143,327
35,550
2,872
10,281
564,231
36,327
12,671
91,167
243,700
2,632,798
Total assets
RMB million
24,381
RMB million RMB million RMB million RMB million RMB million
RMB million
MCL
Joy City
China
Unicom
Pipeline
Company
COFCO
Futures
CLP&C
Sino-Ocean
CGB
RMB million
13,024
Total liabilities
178,088
23,330
49,909
164,573
the associates and joint ventures
Total equity attributable to equity holders of
10,761
10,113
323,496
35,550
2,423,234
2,879
65,612
209,564
Total equity
13,620
168
240,735
777
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 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 Agricultural Bank of China. The Company arranged deposits with Beijing Xicheng branch
of Agricultural Bank of China to back these loans. As at 31 December 2019, the amounts of such term deposits were
RMB361 million, RMB380 million and RMB750 million, respectively (as at 31 December 2018: RMB6,861 million,
RMB7,080 million and RMB750 million).
67,837
23,330
39,927
39,927
55,858
Equity Method
("Sino-Ocean") (iii)
Holding Limited
Sino-Ocean Group
43.686%
75,180
276
(284)
5,374
69,814
(2,841)
72,655
45,176
Co., Ltd. ("CGB") (ii) Equity Method
China Guangfa Bank
Associates
impairment
interest
2019
11,245
12,812
12,812
545
COFCO Futures
40.00%
9,332
20
520
849
7,963
7,963
6,000
amount of
Equity Method
Company Limited
Casualty Insurance
China Life Property &
(2,510)
29.59%
11,387
(1,500)
(101)
(369)
("CLP&C")
As at Percentage Accumulated
of equity
Provision of 31 December
impairment
movements
1,118
1,189
(2,903)
(3,227)
7,745
9,159
34,229
18,590
161,472
(1,500)
198,772
201,661
(2,889)
2018
RMB million
RMB million
2019
As at 31 December
Other equity movements
Impairment
Declared dividends
Share of profit or loss
Change of the cost
161,472
Company Limited
222,983
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 189
dividends
profit or loss
the cost
2019
2018 Adjustment (i)
Cost
equity
Declared
Share of
201,661
Change of
31 December
Accounting
method
Other
As at
As at
Movement
9 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
1 January
1,550
("COFCO Futures")
5
661
(162)
224
24
3877
5,787
3877
5,787
6,281
Equity Method
("Joy City")
Property Fund LP.
Joy City Commercial
Joint ventures
(2,510)
170,705
(1,500)
1,040
(2,387)
5,849
66.67%
Mapleleaf Century Limited
("MCL")
Subtotal
41,289
171
(678)
390
13,007
28,399
28,399
41,921
9,141
Equity Method
75.00%
5,140
(22)
(596)
17
5,741
5,741
7,656
Equity Method
Others (v)
5,566
(2,889) 158,845
161,734
China United Network
43.86%
21,433
4
(1,104)
1,146
21,387
21,387
20,000
Communications Limited
("Pipeline Company") Equity Method
East China Gas
Sinopec Sichuan to
35.00%
1,550
1.50
49
1,501
1,501
1,339
Pipeline Co., Ltd.
Equity Method
("China Unicom") (iv)
21,829
134,820
Subtotal
29,755
400
(460)
725
5,566
23,524
23,524
Equity Method
29,231
Others (v)
10.29%
22,068
(59)
(170)
453
21,844
(48)
21,892
Equity Method
21,433
9,792
5,849
22,068
209,302
10,965
206,793
198,879
7,914
276,484
204,029
72,455
415,013
357,058
57,955
191,009
175,622
15,387
228,198
212,449
15,749
Total
118,571
118,571
155,783
155,783
31 December
31 December
As at
As at
196 China Life Insurance Company Limited 2019 Annual Report • Financial Report
Total
After ten years
After five years but within ten years
After one year but within five years
Subordinated bonds/debts
Within one year
Contractual maturity schedule
-
Debt securities
843,543
744,736
98,807
968,575
886,957
81,618
Maturing:
2019
Corporate bonds
Government bonds
157
109,597
209,123
806,717
928,751
147,079
112,702
212,709
198,322
266,986
401,799
179,943
215,928
RMB million
RMB million
31 December
2018
2019
31 December
As at
130
62
20
719,409
Total
RMB million
31 December 2018
Level 2
RMB million
RMB million
RMB million RMB million RMB million
Level 1
Total
31 December 2019
Level 2
Level 1
Debt securities - fair value hierarchy
Government agency bonds
As at
10.1 Held-to-maturity securities (continued)
10 FINANCIAL ASSETS (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 195
As at 31 December 2019, an accumulated impairment loss of RMB17 million (2018: RMB42 million) for the investment of
held-to-maturity securities has been recognised by the Group.
806,717
928,751
696,970
As at
2018
RMB million
RMB million
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 197
450,251
608,920
(2,718)
450,251
611,638
44,313
38,690
99,501
129,596
138,939
229,415
167,498
213,937
2018
RMB million
31 December
As at
RMB million
For the year ended 31 December 2019
10 FINANCIAL ASSETS (continued)
10.3 Term deposits
Maturing:
559,341
535,260
77,400
8,030
323,021
420,191
158,920
107,039
RMB million
2019
RMB million
2019
31 December
31 December
As at
As at
Total
After five years but within ten years
After one year but within five years
Within one year
2018
31 December
As at
450,251
Maturing:
Net value
Impairment
Total
Other loans
Policy loans (i)
10.2 Loans
10 FINANCIAL ASSETS (continued)
For the year ended 31 December 2019
Within one year
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
928,751
372,884
534,659
279,086
241,372
137,840
128,266
16,907
24,454
806,717
As at
After one year but within five years
After ten years
608,920
(2,718)
450,251
611,638
308,086
436,766
142,165
174,872
RMB million
After five years but within ten years
RMB million
2019
31 December
As at
As at
As at 31 December 2019, maturities of policy loans were within 6 months (as at 31 December 2018: same).
(i)
Net value
Impairment
Total
31 December
2018
(i) Unlisted debt securities include those traded on the Chinese interbank market.
220,267
Unlisted (i)
63,654
186,224
2,214,781
Total liabilities
22,266
10,243
541,762
36,467
8,986
83,561
249,362
2,373,291
Total assets
MCL
RMB million
RMB million
RMB million
RMB million
RMB million
RMB million
6,246
1,043
224,822
265
10,369
9,978
140,144
35,424
2,732
19,907
48,385
158,510
associates and joint ventures
RMB million
Total equity attributable to equity holders of the
9,978
316,940
35,424
2,740
19,907
63,138
158,510
Total equity
11,897
10,369
RMB million
Joy City
China
Unicom
Other comprehensive income
348
287
11,264
2,635
153
2,123
4,166
12,581
643
Net profit/(loss)
306
291,435
5,008
793
69,498
56,704
76,312
Total revenues
5,140
795
Total adjustments (i)
152
1
Pipeline
Company
COFCO
Futures
CLP&C
Sino-Ocean
CGB
The following table illustrates the financial information of the Group's major associates and joint ventures as at 31
December 2018 and for the year ended 31 December 2018:
9 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
1,310
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 193
287
10,763
2,635
154
3,433
4,318
13,224
Total
(501)
348
933
Total comprehensive income
470
Total comprehensive income
(245)
1
(503)
(1,518)
4,160
Other comprehensive income
609
438
14,867
9,301
98
121
4,666
10,707
Net profit/(loss)
458
457
290,877
4,746
2,545
643
3,148
99
(4,938)
Listed in Hong Kong, PRC
Listed overseas
Listed in Mainland, PRC
Debt securities
Total
Subordinated bonds/debts
Corporate bonds
Government agency bonds
Government bonds
(382)
Debt securities
10 FINANCIAL ASSETS
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Group had no contingent liabilities with the associates and joint ventures as at 31 December 2019 and 31 December
2018. The Group had a capital contribution commitment of RMB24,430 million with joint ventures as at 31 December 2019
(as at 31 December 2018: RMB20,768 million). The capital contribution commitment amount has been included in the
capital commitments in Note 41.
(i) Including adjustments for the difference of accounting policies, fair value and others.
609
438
9,056
2,545
10.1 Held-to-maturity securities
65,564
194 China Life Insurance Company Limited ⚫ 2019 Annual Report ⚫ Financial Report
59,279
10.29%
43.86%
35.00%
40.00%
29.59%
43.686%
Proportion of the Group's ownership
7,655
8,681
66.67%
158,070
2,732
43,447
159,443
associates and joint ventures after adjustments
Total equity attributable to equity holders of the
(2,714)
(1,297)
48,821
17,926
35,894
75.00%
19,907
72,655
5,741
Total revenues
Gross carrying value of the investments
5,787
21,892
21,387
7,963
12,812
72,655
Net carrying value of the investments
1,501
Impairment
5,741
5,787
13,822
21,892
21,387
1,501
(1,010)
7,963
102,190
95,428
55,066
1,458
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, wealth management products and private equity funds.
216,525
299,987
549,166
373,943
152,293
870,533
1,058,957
162
496,590
2019
442,657
Unlisted
Subtotal
Debt securities Contractual maturity schedule
Total
As at
As at
509,791
31 December
2018
RMB million
RMB million
46,505
53,933
463,286
31 December
Maturing:
496,590
After one year but within five years
Debt securities
Listed overseas
RMB million
RMB million
31 December
2018
31 December
2019
As at
As at
10.6 Securities at fair value through profit or loss
10 FINANCIAL ASSETS (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
509,791
99,647
102,185
214,826
226,421
After five years but within ten years
After ten years
Total
200 China Life Insurance Company Limited 2019 Annual Report Financial Report
As at
31 December
Within one year
2019
RMB million
RMB million
26,075
11,511
155,110
170,606
As at
31 December
2018
Listed in Hong Kong, PRC
Others (i)
Equity securities
28,440
23,758
RMB million
RMB million
31 December
2018
31 December
2019
As at
As at
Total
Equity securities
Available-for-sale securities, at cost
Subtotal
Others (i)
Wealth management products
Preferred stocks
Common stocks
Funds
Government bonds
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
10 FINANCIAL ASSETS (continued)
10.5 Available-for-sale securities
Available-for-sale securities, at fair value
171,189
Debt securities
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Others (i)
Subtotal
Equity securities
Government bonds
Listed in Mainland, PRC
180,273
185,720
Subtotal
Unlisted
Listed in Mainland, PRC
Debt securities
10.5 Available-for-sale securities (continued)
10 FINANCIAL ASSETS (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 199
(i) Other available-for-sale securities mainly include unlisted equity investments, private equity funds, trust schemes and perpetual bonds.
870,533
20,636
20,636
1,058,957
353,307
528,530
53,479
98,904
53,922
21,514
112,467
80,643
509,791
496,590
148,455
102,349
236,323
143,469
58,314
32,707
32,640
31,348
92,304
Government agency bonds
13 REINSURANCE ASSETS
Others
15 INSURANCE CONTRACTS
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
204 China Life Insurance Company Limited ⚫2019 Annual Report • Financial Report
(i) The Group's right-of-use assets include the above land use rights and right-of-use assets disclosed in Note 7.
33,437
34,029
9,904
9,854
23,533
24,175
33,437
34,029
7,986
(a) Process used to decide on assumptions
6,992
757
504
847
8,885
2,665
3,269
3,377
5,615
4,162
5,946
7,906
7,830
RMB million
RMB million
725
2018
(i) 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 reserves.
As at 31 December 2019
As at 31 December 2018
(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
flows. 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%
25.00
% of Premium
RMB Per Policy
25.00
% of Premium
0.85% 0.90%
0.85% 0.90%
45.00
45.00
As at 31 December 2018
As at 31 December 2019
RMB Per Policy
Group Life
Individual Life
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:
(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 determines expense assumptions based on information obtained at the end
of each reporting period and risk margin. Components of expense assumptions include the cost per policy and percentage
of premium as follows:
15 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited • 2019 Annual Report Financial Report 205
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.
(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 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.
3.52% 4.83%
3.47% 4.86%
Discount rate assumptions
As at 31 December 2019
As at 31 December 2018
4.85%
4.85%
Discount rate assumptions
(a) Process used to decide on assumptions (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.
2019
31 December
Land use rights (i)
14 OTHER ASSETS
Total
Non-current
Current
Total
Claims recoverable from reinsurers (Note 15)
Ceded unearned premiums (Note 15)
Due from reinsurance companies
Long-term insurance contracts ceded (Note 15)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 203
As at 31 December 2019, the carrying value of premiums receivable within one year was RMB17,205 million (as at 31
December 2018: RMB15,607 million).
Disbursements
12 PREMIUMS RECEIVABLE
(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.
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 4.4.
(ii)
The estimates and judgements to determine the fair value of financial assets are described in Note 3.2.
(i)
(20,150)
(20,045)
(20,150)
(20,045)
Interest-bearing loans and borrowings
(192,141)
(118,088)
(35,551)
(34,990)
Bonds payable
The fair value of policy loans approximated its carrying value. The fair values of other loans and investment contracts at
amortised cost 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 were classified as Level 3.
31 December
Tax prepaid
Investments receivable and prepaid
As at
As at
4,364
5,161
3,123
3,843
1,241
1,318
4,364
5,161
140
145
370
369
Automated policy loans
731
3,123
RMB million
RMB million
3,839
2018
31 December
31 December
2019
As at
As at
Total
Non-current
Current
Total
Others
Prepayments to constructors
Due from related parties
808
(192,141)
206 China Life Insurance Company Limited ⚫2019 Annual Report • Financial Report
For the year ended 31 December 2019
Gross
RMB million
RMB million
2018
2019
14,805
18,404
12,269
15,623
2,536
2,781
14,805
18,404
467
Ceded
1,667
49,727
(12,876)
(14,551)
(27,165)
(33,244)
13,778
14,805
11,106
12,269
2,672
2,536
RMB million
RMB million
2018
40,601
2019
Net
Ceded
Corporate bonds
11,062
(370)
11,432
12,632
(369)
13,001
As at 31 December
(11,762)
527
(12,289)
(11,062)
370
(11,432)
Gross
Release
(370)
11,432
12,632
(369)
13,001
Increase
11,762
(527)
12,289
11,062
(370)
11,432
As at 1 January
Net
11,062
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
The table below presents movements in unearned premium reserves:
Incurred but not reported
11,432
13,001
14,805
18,404
2,189,794
2,521,331
31 December
2018
RMB million
RMB million
2019
31 December
As at
As at
- Claims and claim adjustment expenses
- Unearned premiums
Total, net
Short-term insurance contracts
2,552,736
Long-term insurance contracts
Total, ceded
- Unearned premiums (Note 13)
- Claims and claim adjustment expenses (Note 13)
Short-term insurance contracts
Long-term insurance contracts (Note 13)
Recoverable from reinsurers
Total, gross
- Unearned premiums
- Claims and claim adjustment expenses
Short-term insurance contracts
Long-term insurance contracts
Gross
(b) Net liabilities of insurance contracts
15 INSURANCE CONTRACTS (continued)
Net
Total as at 31 December - Gross
2,216,031
(3,123)
Notified claims
Total as at 31 December - Gross
- Claims arising in prior years
- Claims arising in current year
Claims incurred
- Cash paid for current year claims
- Cash paid for prior year claims
Cash paid for claims settled
-
Total as at 1 January – Gross
Incurred but not reported
Notified claims
The table below presents movements in claims and claim adjustment expense reserve:
(c) Movements in liabilities of short-term insurance contracts
15 INSURANCE CONTRACTS (continued)
(3,839)
For the year ended 31 December 2019
China Life Insurance Company Limited 2019 Annual Report Financial Report 207
2,212,398
11,062
12,632
2,548,383
14,665
18,259
2,186,671
2,517,492
(3,633)
(4,353)
(370)
(369)
(140)
(145)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
(118,088)
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:
Securities sold under agreements
31 December
As at
202 China Life Insurance Company Limited 2019 Annual Report Financial Report
Total
Non-current
Current
Total
Others
Debt securities
Bank deposits
10.9 Accrued investment income
Total
Within 30 days
Maturing:
2019
10.8 Securities purchased under agreements to resell
1,877
428
RMB million
RMB million
2018
2019
31 December
31 December
As at
As at
Forward contract
Derivative financial Liabilities
Forward contract
Derivative financial assets
Note: The derivative financial instruments of the Company above are all forward contracts to purchase equity securities. The fair value is based on active
quoted price of the equity security with consideration of discounts for lack of marketability, which is classified as Level 3.
10.7 Derivative financial instruments
As at
31 December
2018
RMB million
Statutory deposits - restricted
Term deposits
Loans (iii)
Held-to-maturity securities (ii)
The table below presents the carrying value and estimated fair value of major financial assets and liabilities, and
investment contracts:
11 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
48,402
568
47,834
40,710
993
41,703
48,402
41,703
RMB million
5,111
23,486
25,048
19,805
12,310
RMB million
RMB million
2018
31 December
As at
As at
31 December
2019
9,905
4,467
9,905
4,467
4,345
10 FINANCIAL ASSETS (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Listed in Mainland, PRC
to repurchase
138,717
141,608
50,714
56,402
Total
Subtotal
20
Others
1,506
Wealth management products
35,241
40,281
35,804
Common stocks
16,101
Funds
Equity securities
88,003
85,206
1,351
1,091
79,774
77,215
6,760
6,859
118
41
Subtotal
13,967
39,145
Listed in Hong Kong, PRC
102
China Life Insurance Company Limited 2019 Annual Report • Financial Report 201
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.
138,717
141,608
Total
50,714
56,402
12,103
9,603
6,552
6,418
Subtotal
Unlisted
Listed overseas
97
611
31,962
108
Listed overseas
167
202
Unlisted
49,133
Available-for-sale securities, at fair value
48,548
85,206
88,003
Equity securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
39,770
Subtotal
Securities at fair value through profit or loss
Debt securities
Carrying value
6,333
141,608
428
138,717
141,608
849,897
138,717
428
Securities purchased under agreements
to resell
4,467
Cash and cash equivalents
53,306
Investment contracts (iii)
6,333
1,038,321
(267,804)
53,306
(260,592)
9,905
50,809
(245,803)
Financial liabilities at fair value through
profit or loss
(3,859)
Derivative financial liabilities
(2,680)
(1,877)
(3,859)
208 China Life Insurance Company Limited 2019 Annual Report Financial Report
(1,877)
(2,680)
Derivative financial assets
4,467
849,897
9,905
50,809
(255,434)
1,038,321
Estimated fair value (i)
As at
As at
31 December
2019
31 December
2018
RMB million
As at
31 December
2019
RMB million
As at
31 December
2018
RMB million
928,751
RMB million
559,341
6,333
806,717
535,260
6,333
535,260
458,669
559,341
623,840
450,251
608,920
843,543
968,575
As at
As at
Total
Non-current
31 December
Current
Brokerage and commission payable
Others
Stock appreciation rights (Note 32)
Tax payable
Interest payable of debt instruments
Agent deposits
Payable to constructors
31 December
Total
2019
3,479
RMB million
Salary and welfare payable
1,793
1,998
1,327
3,329
5,268
2018
7,418
11,475
11,739
14,113
9,407
21,400
RMB million
11,199
Interest payable to policyholders
Within 30 days
20 OTHER LIABILITIES
31 December
As at
As at
31 December
Total
After 90 days
252
2019
Maturing:
Stock exchange market
Interbank market
19 SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Bonds payable are measured at amortised cost as described in Note 2.15.
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%.
35,000
Total
2018
RMB million
RMB million
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited • 2019 Annual Report Financial Report 211
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 2019, the carrying value of
securities deposited in the collateral pool was RMB256,700 million (as at 31 December 2018: RMB174,323 million). The
collateral is restricted from trading during the period of the repurchase transaction.
As at 31 December 2019, bonds with a carrying value of RMB92,011 million (as at 31 December 2018: RMB139,784
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.
192,141
118,088
192,141
117,928
160
192,141
118,088
66,353
54,457
125,788
63,631
Payable to the third-party holders of consolidated structured entities
748
Securities purchased under agreements to resell
674
(i)
23 NET REALISED GAINS ON FINANCIAL ASSETS
For the year ended 31 December 2019, the interest income included in investment income was RMB117,115 million
(2018: RMB107,391 million). All interest income was accrued using the effective interest method.
125,167
139,919
281
22,894
27,111
161
22,699
26,695
1,284
981
16,492
21,823
3,869
(ii)
3,546
Debt securities
Subtotal
357
(35)
(42)
399
3,714
(3,749)
RMB million
RMB million
2018
2019
31 December
For the year ended
Total
Subtotal
Realised gains (i)
Impairment (ii)
Equity securities
Realised gains (i)
Impairment (ii)
490
22,991
34,657
Debt securities
22 INVESTMENT INCOME
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
212 China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report
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 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.
21 STATUTORY INSURANCE FUND
58,426
81,114
58,426
81,114
58,426
81,114
14,133
18,632
666
-
21,373
- held-to-maturity securities
- at fair value through profit or loss
38,229
RMB million
2018
RMB million
2019
31 December
For the year ended
For the year ended 31 December 2019
Total
22 March 2029
Loans
Bank deposits
- at fair value through profit or loss
- available-for-sale securities
Equity securities
- available-for-sale securities
22 March 2019
Total
Credit loans
As at
31 December
2018
Deposits received
As at 1 January
The table below presents movements of investment contracts with DPF:
Total
- At fair value through profit or loss
- At amortised cost
Deposits withdrawn, payments on death and other benefits
Investment contracts without DPF
16 INVESTMENT CONTRACTS
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 209
For the year ended 31 December 2018, the change in other assumptions was mainly caused by the change in morbidity rate assumptions of certain
products, which increased insurance contract liabilities by RMB3,877 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 decreased insurance contract
liabilities by RMB931 million.
For the year ended 31 December 2019, the change in other assumptions was mainly caused by the change in morbidity rate assumptions of certain
products, which increased insurance contract liabilities by RMB4,737 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 RMB2,571 million.
Investment contracts with DPF at amortised cost
Policy fees deducted from account balances
Interest credited
As at 31 December
9
10
196,296
206,137
59,129
RMB million
RMB million
61,657
2018
2019
31 December
(3,318)
31 December
As at
As at
17 INTEREST-BEARING LOANS AND BORROWINGS
The release of liabilities mainly consists of release due to death or other benefits and related expenses, release of residual margin and change of
reserves for claims and claim adjustment expenses.
267,804
(ii)
2,189,794
Other movements
- Change in other assumptions (ii)
- Change in discount rates
Change in assumptions
Accretion of interest
Release of liabilities (i)
As at 31 December
Premiums
The table below presents movements in the liabilities of long-term insurance contracts:
(d) Movements in liabilities of long-term insurance contracts
15 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
4,504
(2,638)
1,866
1,831
As at 1 January
2019
2018
RMB million
2,189,794
2,521,331
(551)
(480)
2,946
7,308
(6,020)
(4,906)
99,618
114,234
(385,761)
(282,189)
480,496
497,570
1,999,066
RMB million
(i)
RMB million
255,434
2018
USD LIBOR+1.00%
5,999
3.30%
16 September 2024
27 September 2024
Credit loans
2,515
6,767
3.08%
523
2.50%
18 January 2021
25 June 2024
Credit loans
Credit loans
3,139
525
Total
20,045
20,150
2019
RMB million
35,000
4.28%
Interest rate p.a.
Maturity date
31 December
As at
Issue date
As at 31 December 2019, all bonds payable were the bonds for capital replenishment (the "Bond") with a total carrying
value of RMB34,990 million (as at 31 December 2018: nil), and the fair value of RMB35,551 million (as at 31 December
2018: nil). 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:
18 BONDS PAYABLE
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
210 China Life Insurance Company Limited ⚫2019 Annual Report • Financial Report
(ii) 3.80% when EURIBOR is negative.
2.70% when LIBOR is negative.
(i)
3,126
2019
EURIBOR +3.80% (ii)
126
31 December
As at
As at
31 December
59,129
61,657
1,236
Maturity date
1,287
(38)
4,096
4,238
(2,959)
57,153
RMB million
RMB million
59,129
(38)
Interest rate
2019
2018
989
1.50%
LIBOR+2.70% (i)
6,451
2.40%
6,657
2.30%
2,385
3.54%
993
1.50%
6 November 2020
11 January 2019
17 June 2019
27 September 2019
30 September 2019
11 January 2020
Guaranteed loans
Guaranteed loans
Guaranteed loans
Guaranteed loans
Guaranteed loans
Credit loans
Guaranteed loans
RMB million
RMB million
6 December 2020
(11,785)
313
(19,948)
Total
RMB million
Others
RMB million
RMB million
RMB million
Investments
Insurance
(i)
As at 1 January 2019
- Others
to participating policyholders
available-for-sale securities attributable
- Portion of fair value changes on
- Available-for-sale securities
(Charged)/credited to net profit
(Charged)/credited to other
comprehensive income
As at 31 December 2018
(ii)
(iii)
(6,737)
3,927
(5,308)
35
35
8
8
1,673
1,673
4,412
278
2,713
1,421
(4,871)
2,360
(494)
As at 1 January 2018
2,638
Net deferred tax assets/(liabilities)
(c) As at 31 December 2019 and 31 December 2018, the amounts of deferred tax assets and liabilities are as follows:
(continued)
(i)
1,985
781
342
97
(86)
(ii)
-
239
5,319
(6,771)
(9,589)
(324)
(5,228)
25
According to Cai Shui [2019] No. 72, Notice on Pre-tax Deduction Policy of Commissions and Handling Charges for Insurance Companies, the
commissions and handling charges incurred by insurance companies related to its operating activities, which do not exceed 18% of the total premium
income of the year after deducting surrender premium, etc., are allowed to be deducted in calculating the taxable income, and the excessive part
is allowed to be brought forward to the subsequent years. This notice issued above was effective from 1 January 2019 and applicable to the final
settlement and payment of enterprise income tax filing for the year ended 31 December 2018. Accordingly, the Company's current income tax was
deducted by RMB5, 154 million regarding to the final settlement and payment.
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 donations and other expenses that do not meet the criteria for deduction according to the relevant tax
regulations.
(c) As at 31 December 2019 and 31 December 2018, the amounts of deferred tax assets and liabilities are as follows:
29 TAXATION (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
1,257
10,160
(8,903)
128
(10,330)
RMB million
13,352
(23,554)
RMB million
As at
31 December
2018
2019
31 December
As at
216 China Life Insurance Company Limited ⚫2019 Annual Report • Financial Report
Net deferred tax assets
Net deferred tax liabilities
Deferred tax assets
Deferred tax liabilities
As at 31 December 2019 and 31 December 2018, deferred income tax was calculated in full on temporary differences
under the liability method using the principal tax rate of 25%. The movements in net deferred income tax assets and
liabilities during the period are as follows:
3,480
1,257
3,927
5,844
3,947
7,508
RMB million
RMB million
2018
6,213
2019
31 December
As at
Net deferred tax liabilities
- deferred tax liabilities to be settled within 12 months
Subtotal
- deferred tax liabilities to be settled after 12 months
Deferred tax liabilities:
As at
31 December
13,352
10,160
(19,906)
218 China Life Insurance Company Limited ⚫2019 Annual Report • Financial Report
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.
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.
32 STOCK APPRECIATION RIGHTS
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 2019 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 (2018: same).
31 EARNINGS PER SHARE
Net profit attributable to equity holders of the Company is recognised in the financial statements of the Company to the
extent of RMB53,205 million (2018: RMB6,987 million).
30 NET PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
1,257
(10,202)
(8,903)
(23,554)
(1,413)
(3,648)
(7,490)
- deferred tax assets to be recovered within 12 months
Subtotal
(5,308)
- deferred tax assets to be recovered after 12 months
(d) The analysis of net deferred tax assets and deferred tax liabilities is as follows:
4,880
participating policyholders
- Portion of fair value changes on available-
for-sale securities attributable to
(16,260)
(16,260)
- Available-for-sale securities
4,880
(Charged)/credited to other comprehensive
income
(167)
276
(2,428)
1,985
(8,163)
2,638
(Charged)/credited to net profit
- Others
88
88
29 TAXATION (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 217
Unrecognised deductible tax losses of the Group amounted to RMB1,321 million as at 31 December 2019 (as at
31 December 2018: RMB365 million). Unrecognised deductible temporary differences of the Group amounted to
RMB1 million as at 31 December 2019 (as at 31 December 2018: RMB378 million).
(iii) The deferred tax arising from the others category is mainly related to the temporary differences of employee salaries and welfare costs 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, securities at fair value through profit or loss, and others.
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.
(ii)
(i)
(10,202)
2,914
(14,673)
1,557
As at 31 December 2019
Deferred tax assets:
14,949
1,257
59,795
For the year ended 31 December 2018
509,467
(4,425)
513,892
Total
330,807
Life insurance death and other benefits
(716)
50,783
(611)
51,394
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
127,877
(3,098)
331,523
250,627
(1,891)
248,736
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
214 China Life Insurance Company Limited ⚫ 2019 Annual Report • Financial Report
Benefits of investment contracts are mainly the interest credited to investment contracts.
26 INVESTMENT CONTRACT BENEFITS
479,219
(3,167)
482,386
Total
189,931
(772)
190,703
40,552
(504)
41,056
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
130,975
Life insurance death and other benefits
For the year ended 31 December 2019
RMB million
For the year ended 31 December
25 INSURANCE BENEFITS AND CLAIMS EXPENSES
Total
Derivative financial instruments
Financial liabilities at fair value through profit or loss
Stock appreciation rights
Equity securities
Debt securities
24 NET FAIR VALUE GAINS THROUGH PROFIT OR LOSS
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 213
Realised gains were generated mainly from available-for-sale securities.
During the year ended 31 December 2019, the Group recognised an impairment charge of RMB888 million (2018: RMB4,542 million) of available-
for-sale funds, an impairment charge of RMB1,750 million (2018: RMB3,621 million) of available-for-sale equity securities, an impairment charge of
RMB1,027 million (2018: nil) of available-for-sale debt securities, an impairment charge of RMB2,718 million (2018: nil) of loans and an impairment
charge of RMB4 million (2018: RMB42 million) of held-to maturity securities, for which the Group determined that objective evidence of impairment
existed.
13,921
(19,591)
2019
For the year ended 31 December 2019
2018
RMB million
RMB million
Net
Ceded
Gross
(1,877)
(18,278)
19,251
832
188
(380)
343
(258)
(18,938)
18,279
2,006
778
RMB million
27 FINANCE COSTS
RMB million
Interest on lease liabilities
1,985
781
6,397
(4,412)
614
167
RMB million
RMB million
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2018
For the year ended 31 December
Total tax charges
Deferred taxation
Current taxation - Enterprise income tax
(a) The amount of taxation charged to net profit represents:
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.
2019
For the year ended 31 December 2019
29 TAXATION (continued)
(b) The reconciliation between the Group's effective tax rate and the statutory tax rate of 25% in the PRC (2018: same)
is as follows:
RMB million
RMB million
Interest expenses for securities sold under agreements to repurchase
Interest expenses for interest-bearing loans and borrowings
Interest expenses for bonds payable
2018
2019
For the year ended 31 December
Income tax at the effective tax rate
Others
Tax losses utilised from previous periods
Unused tax losses
Expenses not deductible for tax purposes (ii)
Non-taxable income (ii)
Adjustment on current income tax of previous period (i)
Tax computed at the statutory tax rate
Profit before income tax
29 TAXATION
59
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 215
1,168
For the year ended 31 December
For the year ended 31 December
Profit before income tax is stated after charging/(crediting) the following:
28 PROFIT BEFORE INCOME TAX
4,116
106
4,255
551
589
3,565
RMB million
RMB million
2,392
2018
Total
60
2019
Housing benefits
Contribution to the defined contribution pension plan
Employee salaries and welfare costs
Depreciation and amortisation
194
67
2,638
4,379
2,531
1,061
1,189
2,905
20,125
2018
RMB million
RMB million
2019
Remuneration in respect of audit services provided by auditors
Foreign exchange losses/(gains)
19,268
78
83
(iv)
Property leasing expenses charged by CLI
45
43
Payment of rental, project fee and other expenses to CLRE
284
Dividend from CLP&C
50
51
Rental and a service fee received from CLP&C
2,959
2,297
Payment of an asset management fee to CLI
(iii) (vii)
66
(ii.d) (vii)
Interest of corporate bonds received from Sino-Ocean
529
14
(v)
1,425
2,584
Dividend from Sino-Ocean (Note 9)
Transactions between Sino-Ocean and the Group
Capital contribution to CGB
653
Commission expenses charged by CGB
Interest on deposits received from CGB
Transactions between CGB and the Group
53
Payment of a business management service fee to CL Ecommerce
37
39
Property leasing income received from CLI
Dividend from CGB (Note 9)
16
Transactions with CLIC and its subsidiaries
47
Asset management fee received from CLIC
629
575
(i) (vii)
Policy management fee received from CLIC
RMB million
RMB million
(ii.a)
Notes
2019
For the year ended 31 December
The following table summarises significant transactions carried out by the Group with its significant related parties:
(g) Transactions with significant related parties
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
158
For the year ended 31 December 2019
2018
Claim and other payments received from CLP&C
89
Payment of dividends from the Company to CLIC
48
Agency fee received from CLP&C
Payment of insurance premium to CLP&C
14
14
(ii.c)
Asset management fee received from CLP&C
100
63
(ii.b)
Asset management fee received from CL Overseas
128
122
Distribution of profits from AMC to CLIC
7,729
3,092
86
112
13,012
8,247
426
558
Distribution of profits from the consolidated structured entities to the Company
Distribution of profits from the other subsidiaries to the Company
other subsidiaries and the Company
Transactions between other associates and joint ventures and the Company
Distribution of profits from other associates and joint ventures to the Company
Transactions between the consolidated structured entities/
Capital withdrawal from CL Health
Transactions between the CL Health and the Company
Capital withdrawal from Guo Yang Guo Sheng
Transactions between the Guo Yang Guo Sheng and the Company
Notes:
Rental fee charged by Rui Chong Company
Transactions between Rui Chong Company and the Company
Transactions between Suzhou Pension Company and the Company
(ii.f)
Transactions between AMC HK and the Company
Payment of an investment management fee to AMC HK
2018
RMB million
RMB million
Capital contribution to Suzhou Pension Company
Notes
18
18
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
228 China Life Insurance Company Limited 2019 Annual Report Financial Report
(ii.c) On 15 May 2018, CLP&C renewed an agreement for the management of insurance funds with AMC, entrusting AMC to manage and make
investments for its insurance funds, effective from 1 January 2018 to 31 December 2019. The agreement was subject to an automatic one-year
renewal if no objections were raised by both parties upon expiry. 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.
(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.
(ii.a) In December 2018, 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 2019 to 31 December 2021. 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 on a monthly basis and payable on a seasonal
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 the principal and interests of debt and equity investment schemes, project asset-backed schemes, customised
non-standard products) at the beginning and the end of any given month by the rate of 0.05%, divided by 12. According to specific projects, debt
investment schemes, equity investment plans, project asset-backed plans, and customised non-standard products are based on contractual agreed
rate, without paying for extra management fee. 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.
On 26 December 2017, the Company and CLIC renewed a renewable insurance agency agreement, effective from 1 January 2018 to 31 December
2020. 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 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 RMB8.0 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.
(i)
200
10,965
206
2,210
I
200
100
47
47
47
1,424
369
2019
The following table summarises significant transactions carried out by the Group with its significant related parties:
(continued)
1,326
1,353
(ii.e) (vii)
Payment of an asset management fee to AMC
Transactions between AMC and the Company
2,279
2,574
Distribution of profits from AMC
to the Group (Note 9)
Transaction between other associates and joint ventures and the Group
593
1,003
Contribution to EAP
Transactions between EAP and the Group
27
27
Distribution of profits from other associates and joint ventures
For the year ended 31 December
183
Transactions between Pension Company and the Company
(g) Transactions with significant related parties (continued)
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited 2019 Annual Report Financial Report 227
13
8
193
43
(vi)
Agency fee received from Pension Company for entrusted
sales of annuity funds and other businesses
Marketing fee income for promotion of annuity business from
Pension Company
445
45
54
54
Rental received from Pension Company
54
226 China Life Insurance Company Limited 2019 Annual Report Financial Report
100.00%
Partnership) ("CL Guang De") (i)
As at
31 December
As at
31 December
Name of related party
2018
Increase
Decrease
2019
million
million
million
million
(e) Registered capital of related parties with control relationship and changes during the year
CLIC
RMB4,600
AMC
RMB4,000
RMB4,000
China Life Pension Company Limited
RMB3,400
RMB3,400
("Pension Company")
China Life (Suzhou) Pension and
RMB1,991
RMB1,991
Retirement Investment Company
RMB4,600
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
14,551
(ii) Credit risk ratings for domestic assets are provided by domestic qualified external rating agencies and credit risk ratings for overseas assets are
provided by overseas qualified external rating agencies.
(iii) For financial assets measured at amortised cost, carrying amount before adjusting impairment allowance is disclosed here.
(iv) Mainly including government bonds and policy financial bonds.
222 China Life Insurance Company Limited ⚫2019 Annual Report • Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
35 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
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.
Relationship
with the Company
Immediate and
ultimate holding
company
Nature of
ownership
State-owned
Legal
representative
Wang Bin
(b) Subsidiaries
Refer to Note 42(d) for the basic and related information of subsidiaries.
(c) Associates and joint ventures
Refer to Note 9 for the basic and related information of associates and joint ventures.
(d) Other related parties
Significant related parties
China Life Real Estate Co., Limited ("CLRE")
China Life Insurance (Overseas) Company Limited ("CL Overseas")
China Life Investment Holding Company Limited ("CLI")
China Life Ecommerce Company Limited ("CL Ecommerce")
China Life Enterprise Annuity Fund ("EAP")
Relationship with the Company
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
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 223
Limited ("Suzhou Pension Company")
CL AMP
RMB1,288
RMB1,288
For the year ended 31 December 2019
35 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 2018
CLIC
As at 31 December 2019
Amount
million
Percentage
of holding
Increase
Decrease
Amount
Percentage
of holding
million
million
RMB19,324
68.37%
million
RMB19,324
68.37%
Subsidiaries
As at 31 December 2018
Percentage
As at 31 December 2019
Amount of holding
Increase
million
million
Decrease
million
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Fair value
RMB million
224 China Life Insurance Company Limited ⚫2019 Annual Report • Financial Report
The Group reduced its capital contribution to CL Health by RMB200 million for the year ended 31 December 2019. As at 4 September 2019, CL Health
completed the business registration modification procedure for the registered capital with the amount reduced from RMB1,730 million to RMB1,530
million.
CL Wealth
RMB200
Shanghai Rui Chong Investment Co., Limited
RMB6,800
("Rui Chong Company")
China Life (Beijing) Health Management
RMB1,730
☐
Co., Limited ("CL Health")(i)
China Life Franklin (Shenzhen) Equity
USD2
RMB200
RMB6,800
RMB(200)
RMB1,530
USD2
Investment Fund Management Co., Limited
("Franklin Shenzhen Company")
Xi'an Shengyi Jingsheng Real Estate
RMB1,131
Co., Ltd. ("Shengyi Jingsheng")
Dalian Hope Building Company Ltd.
("Hope Building")
RMB484
RMB1,131
RMB484
(i)
(ii)
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.
Amount
14,272
RMB million
Other financial assets
- Financial assets with contractual terms that give rise on SPPI
- Financial assets with contractual terms that do not give rise on SPPI
Total
1,502,203
528,377
2,169,297
Fair value changes
for the year ended 31 December
2019
2018
RMB million
19,057
RMB million
(16,932)
Financial assets that are managed and whose performance are evaluated on
a fair value basis
6,029
77,741
102,827
38,101
(i) Only including securities at fair value through profit or loss, loans (excluding policy loans), available-for-sale securities and held-to-maturity securities.
220 China Life Insurance Company Limited 2019 Annual Report Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
34 DISCLOSURES ABOUT THE TEMPORARY EXEMPTION FROM IFRS 9 (continued)
(b) The table below presents the credit risk exposure (ii) for aforementioned financial assets with contractual terms that
give rise on SPPI:
Domestic
Rating not required (iv)
AAA
AA+
AA
95,480
(40,447)
Held for trading financial assets
2,618,108
1,615,856
860,644
(i) CG Investments and CL Guang De were newly included in the consolidated financial statements of the Group for the year ended 31 December 2019.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
32 STOCK APPRECIATION RIGHTS (continued)
As at 31 December 2019, there were 55.01 million units outstanding and exercisable (as at 31 December 2018: same). As
at 31 December 2019, the amount of intrinsic value for the vested stock appreciation rights was RMB735 million (as at 31
December 2018: RMB477 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 30% to 36%, an expected dividend yield of no higher
than 3% and a risk-free interest rate ranging from 1.42% to 1.82%.
The Company recognised a loss of RMB258 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 2019 (2018:
fair value gain of RMB343 million). RMB735 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 2019 (as at 31
December 2018: RMB477 million and RMB13 million), respectively. There was no unrecognised compensation cost for
the stock appreciation rights as at 31 December 2019 (as at 31 December 2018: nil).
33 DIVIDENDS
Pursuant to the shareholders' approval at the Annual General Meeting on 30 May 2019, a final dividend of RMB0.16
(inclusive of tax) per ordinary share totalling RMB4,522 million in respect of the year ended 31 December 2018 was
declared and paid in 2019. The dividend has been recorded in the consolidated financial statements for the year ended 31
December 2019.
A distribution of RMB394 million (inclusive of tax) to the holders of Core Tier 2 Capital Securities was approved by
management in 2019 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 25 March 2020, a final dividend of RMB0.73
(inclusive of tax) per ordinary share totalling approximately RMB20,633 million for the year ended 31 December 2019 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 2019.
34 DISCLOSURES ABOUT THE TEMPORARY EXEMPTION FROM IFRS 9
According to IFRS 4 Amendments, the Company made the assessment based on the Group's financial position of 31
December 2015, concluding that the carrying amount of the Group's liabilities arising from contracts within the scope
of IFRS 4, which includes any deposit components or embedded derivatives unbundled from insurance contracts, was
significant compared to the total carrying amount of all its liabilities. And the percentage of the total carrying amount of
its liabilities connected with insurance relative to the total carrying amount of all its liabilities is greater than 90 percent.
There had been no significant change in the activities of the Group since then that requires reassessment. Therefore, the
Group's activities are predominantly connected with insurance, meeting the criteria to apply temporary exemption from
IFRS 9.
Sino-Ocean, China Unicom and certain associates of the Group, have adopted IFRS 9. CGB, an associate of the Group,
has adopted IFRS 9 since 1 January 2019. According to IFRS 4 Amendments, the Group elected not to apply uniform
accounting policies when using the equity method for these associates. The effects of adopting new accounting
standards by CGB upon the Group's consolidated statement of financial position are disclosed in Note 9.
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 219
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
34 DISCLOSURES ABOUT THE TEMPORARY EXEMPTION FROM IFRS 9 (continued)
(a) The tables below present the fair value of the following groups of financial assets (i) under IFRS 9 as at 31 December
2019 and 31 December 2018 and fair value changes for the years ended 31 December 2019 and 31 December 2018:
Fair value as at 31 December
2019
RMB million
141,608
2018
RMB million
138,717
Held for trading financial assets
Financial assets that are managed and whose performance are evaluated on
a fair value basis
Other financial assets
- Financial assets with contractual terms that give rise on specified dates
to cash flows that are solely payments of principal and interest on the
principal amount outstanding ("SPPI")
- Financial assets with contractual terms that do not give rise on SPPI
Total
AA-
Subtotal
Overseas
AAA
118
14
14
25
24
7,794
2,404
1,570,869
1,457,888
China Life Insurance Company Limited • 2019 Annual Report Financial Report 221
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
34 DISCLOSURES ABOUT THE TEMPORARY EXEMPTION FROM IFRS 9 (continued)
(c) The table below presents financial assets without low credit risk for aforementioned financial assets with contractual
terms that give rise on SPPI:
Domestic
Overseas
Total
Domestic
Overseas
Total
As at 31 December 2019
Carrying
amount (iii)
RMB million
Fair value
RMB million
11,834
25
8,237
9
11,859
8,246
As at 31 December 2018
Carrying
amount (iii)
135
14,248
24
493
1,755
A+
A
A-
BBB+
BBB-
Not rated
Subtotal
Total
Carrying amount (iii)
As at
As at
31 December
2019
RMB million
31 December
2018
RMB million
657,905
653,328
893,336
787,908
7,671
13,026
1,163
1,152
3,000
70
1,563,075
1,455,484
30
4,014
3,541
35
Percentage
of holding
14,539
12
AMC
RMB1,530
- RMB (200)
100.00%
RMB1,730
CL Health
indirectly
indirectly
100.00%
USD1,125
100.00%
100.00%
USD1,125
directly
directly
RMB2,435
100.00%
RMB2,435
directly
directly
100.00%
RMB1,876
100.00%
China Century Core Fund Limited
RMB1,876
directly
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 225
Guo Yang Guo Sheng
100.00%
indirectly
indirectly
USD2
100.00%
USD2
Franklin Shenzhen Company
Percentage
of holding
Amount
million
million
directly
Decrease
million
Percentage
of holding
Amount
As at 31 December 2019
As at 31 December 2018
Subsidiaries
(f) Percentages of holding of related parties with control relationship and changes during the year (continued)
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Increase
million
RMB3,250
Sunny Bamboo Limited
directly
100.00%
RMB6,800
Rui Chong Company
indirectly
indirectly
100.00%
-
100.00%
King Phoenix Tree Limited
directly
RMB6,800
directly
100.00%
Golden Phoenix Tree Limited
indirectly
indirectly
100.00%
RMB200
100.00%
RMB200
CL Wealth
indirectly
100.00%
directly
100.00%
directly
100.00%
RMB1,993
100.00%
RMB1,993
Golden Bamboo Limited
directly
directly
100.00%
100.00%
CL Hotel Investor, L.P.
directly
directly
100.00%
100.00%
Glorious Fortune Forever Limited
directly
directly
100.00%
RMB1,167
100.00%
RMB1,167
New Aldgate Limited
directly
99.997%
RMB(100)
RMB3,150
RMB533
99.98%
RMB533
Wuhu Yuanxiang Tianyi Investment
Partnership)
directly
directly
Management Partnership (Limited
99.98%
RMB533
99.98%
99.98%
Wuhu Yuanxiang Tianfu Investment
indirectly
indirectly
100.00%
RMB484
100.00%
RMB484
Hope Building
(Limited Partnership)
directly
RMB533
directly
Management Partnership (Limited
directly
directly
million
Investment Fund Partnership (Limited
99.95%
RMB10
RMB10
China Life Guangde (Tianjin) Equity
directly
LLC ("CG Investments") (i)
99.99%
directly
RMB2,859
RMB2,859
CBRE Global Investors U.S. Investments I,
indirectly
indirectly
100.00%
RMB1,063
100.00%
RMB1,063
Shengyi Jingsheng
Partnership)
-
Bai Ning Investment Partnership
99.98%
RMB1,680
RMB606
Shanghai Yuan Shu Yuan Jiu Investment
indirectly
indirectly
100.00%
USD452
100.00%
USD452
Wisdom Forever Limited Partnership
indirectly
99.98%
indirectly
100.00%
New Fortune Wisdom Limited
indirectly
indirectly
100.00%
100.00%
New Capital Wisdom Limited
directly
directly
99.997%
100.00%
RMB606
99.98%
Management Partnership (Limited
99.98%
RMB1,680
Ningbo Meishan Bonded Port Area
directly
directly
(Limited Partnership)
99.98%
RMB4,000
99.98%
RMB4,000
Shanghai Wansheng Industry Partnership
Partnership)
directly
directly
Management Partnership (Limited
99.98%
RMB606
99.98%
RMB606
Shanghai Yuan Shu Yuan Pin Investment
Partnership)
directly
directly
indirectly
85.03%
Fortune Bamboo Limited
85.03%
indirectly
directly and
RMB1,095
directly and
74.27%
RMB2,746
74.27%
RMB2,746
Pension Company
directly
60.00%
RMB1,680
-
60.00%
RMB1,680
indirectly
China Life Franklin Asset Management
directly
50.00%
indirectly
RMB1,586
100.00%
RMB200
RMB1,786
100.00%
directly
directly
RMB1,095
CL AMP
indirectly
Suzhou Pension Company
HKD130
50.00%
HKD130
Company Limited ("AMC HK")
At 31 December 2019
20,045
34,990
3,091
118,088
(91)
21,400
1,327
(91)
Others
4,255
(3,072)
(31,233)
Foreign exchange movement
137
137
Changes arising from losing
control of consolidated
198,941
structured entities
(501)
2,239
2,239
Interest expense
2
106
4,147
(501)
40 PROVISIONS AND CONTINGENCIES
RMB million
Pending lawsuits
Bonds payable
18
34,990
Derivative financial liabilities
10.7
1,877
Securities sold under agreements to repurchase
42(p)
113,189
188,932
Annuity and other insurance balances payable
51,019
49,465
The following is a summary of the significant contingent liabilities:
Premiums received in advance
46,650
Other liabilities
42(q)
56,701
11,993
488
523
RMB million
31 December
2018
2019
31 December
As at
As at
60,898
(73,552)
20,150
34,988
Securities
bearing
loans and
borrowings
Bonds
payable
RMB million RMB million
Lease
liabilities
RMB million
sold under
agreements to
repurchase
RMB million
holders of
consolidated
payable
related to
structured
financing
entities
activities
Interest-
interest
the third-party
liability-
(24)
(162)
197,221
(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 RMB5,857 million for the year ended 31 December 2019 (2018: RMB1,275 million).
(b) Approved at the Annual General Meeting in May 2019, the Company appropriated RMB1,275 million to the discretionary reserve fund for the year ended
31 December 2018 based on net profit under CAS (2018: RMB3,218 million).
(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 2019, the Company appropriated 10% of net profit under CAS which amounted to RMB5,857 million to the general reserve
for future uncertain catastrophes, which cannot be used for dividend distribution or conversion to share capital increment (2018: RMB1,275 million).
In addition, pursuant to the CAS, the Group appropriated RMB98 million to the general reserve of its subsidiaries attributable to the Company in the
consolidated financial statements (2018: RMB117 million).
Total
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
39 NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
Changes in liabilities arising from financing activities
Other liability-
Other
payable to
China Life Insurance Company Limited • 2019 Annual Report Financial Report 233
(1,348)
RMB million
RMB million
20,150
192,141
9,407
252
221,950
At 1 January 2019
2,842
2,185
192,141
9,407
252
224,135
Changes from financing cash
flows
(242)
At 31 December 2018
4,115
4,115
Interest expense
At 1 January 2018
18,794
- 87,309
6,252
127
112,482
Changes from financing
RMB million
cash flows
104,832
3,155
(3,990)
104,724
Foreign exchange movement
629
629
727
Lease liabilities
1,381
267,804
112,593
300
231
1,942
530
1,306
578
1,133
RMB million
RMB million
2018
2019
31 December
As at
As at
31 December
Total
Later than five years
Later than one year but not later than five years
Not later than one year
2,136
The future minimum rentals receivable under non-cancellable operating leases are as follows:
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 235
For the year ended 31 December 2019
49,230
42(a)
Property, plant and equipment
RMB million
2018
2019
RMB million
Notes
As at
31 December
31 December
As at
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 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 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 2019 and 2018, 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.
ASSETS
As at 31 December 2019
Statement of financial position
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
37,888
as lessor
-
Property, plant and equipment
Investments
Contracted, but not provided for
2018
RMB million
RMB million
2019
As at
31 December
31 December
As at
The Group had the following capital commitments relating to property development projects and investments:
(a) Capital commitments
41 COMMITMENTS
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
234 China Life Insurance Company Limited ⚫2019 Annual Report • Financial Report
Total
-
(b) Operating lease commitments – as lessee
The future minimum lease payments under non-cancellable operating leases are as follows:
(c) Operating lease commitments
The Group adopted IFRS 16 as at the date of 1 January 2019. As a lessee, the Group measured, presented and disclosed
its operating lease commitments as at 31 December 2019 based on IFRS 16 and did not restate the comparative
information. Please refer to Note 2.1.
2,474
52
1,049
1,373
31 December
2018
RMB million
As at
43,192
86,147
4,930
81,217
64,866
3,941
Total
Later than five years
Later than one year but not later than five years
Not later than one year
68,807
2,216,031
255,434
85,071
Right-of-use assets
3,272
Other assets
4,364
5,161
13
Reinsurance assets
15,648
17,281
12
Premiums receivable
47,790
41,005
42(m)
Accrued investment income
9,066
1,963
Deferred tax assets
42(1)
Cash and cash equivalents
LIABILITIES AND EQUITY
Policyholder dividends payable
16
2,552,736
15
3,176,845
3,630,180
47,904
48,802
42(0)
28,687
29,081
42(n)
Investment contracts
Insurance contracts
Liabilities
Total assets
Securities purchased under agreements to resell
428
10.7
927,892
42(f)
Held-to-maturity securities
137,257
154,501
42(e)
Investments in associates and joint ventures
43,543
63,228
42(d)
Investments in subsidiaries
3,525
3,914
42(c)
Investment properties
806,050
Loans
42(g)
594,913
Derivative financial assets
5,653
858,936
125,304
117,473
42(k)
Securities at fair value through profit or loss
1,037,629
42(j)
42(b)
Available-for-sale securities
42(i)
Statutory deposits - restricted
553,428
528,754
42(h)
Term deposits
445,117
5,653
34,645
7,791
756
2019
2018
RMB million
RMB million
Salaries and other benefits
15
For the year ended 31 December
34
230 China Life Insurance Company Limited 2019 Annual Report Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(j) Transactions with state-owned enterprises
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.
The total compensation package for the Company's key management personnel for the year ended 31 December 2019
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 2018 has been approved by the relevant
authorities. The total compensation of 2018 was RMB34 million, including a deferred payment about RMB7 million.
(i) Key management personnel compensation
18
(28)
(68)
(67)
The resulting balances due from and to subsidiaries of the Company
Amount due to AMC
(381)
(218)
Amount due to AMC HK
(9)
(10)
Amount due from Pension Company
30
25
Amount due to Pension Company
Amount due from Rui Chong Company
(35)
118
As at 31 December 2019, 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 2019, a large portion of group insurance business of the Group was 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.
Amount due to CL Ecommerce
36 SHARE CAPITAL
As at 31 December 2019
No. of shares
19,323,530,000
19,324
8,941,175,000
8,941
1,500,000,000
1,500
RMB million
7,441,175,000
28,264,705,000
28,265
Overseas listed shares are traded on the Stock Exchange of Hong Kong Limited and the New York Stock Exchange.
China Life Insurance Company Limited • 2019 Annual Report Financial Report 231
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
7,441
As at 31 December 2019
No. of shares
28,265
RMB million
28,264,705,000
As at 31 December 2019, the Company's share capital was as follows:
Owned by CLIC (i)
Owned by other equity holders
Including: domestic listed
Total
overseas listed (ii)
(i)
All shares owned by CLIC are domestic listed shares.
(!!)
As at 31 December 2018
No. of shares
RMB million
28,265
28,264,705,000
Registered, authorised, issued and fully paid
Ordinary shares of RMB1 each
37 OTHER EQUITY INSTRUMENTS
806
Amount due from CL Ecommerce
China Life Insurance Company Limited 2019 Annual Report Financial Report 229
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
35 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 of the Group are
all unsecured. The balance 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.
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.
As at
As at
31 December
2019
2018
RMB million
RMB million
The resulting balances due from and to significant related parties of the Group
Amount due from CLIC
31 December
On 1 January 2019, the Company and Pension Company renewed an entrusted agency agreement for pension business acted by life business.
The agreement is effective from 1 January 2019 to 31 December 2021. The business means that Pension Company entrusted the Company to sell
enterprise annuity funds, pension security business, occupational pension business and the third-party asset management business. 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 services, 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 are, 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 are 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 and third-party asset management business are in accordance with the provision of annual promotional plans,
which 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 28 December 2018, the Company and CGB signed another insurance agency agreement to distribute corporate group insurance products. The
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 paid on a monthly basis. The agreement is effective for two
years from 1 January 2019, with an automatic one-year renewal if no objections were raised by either party upon expiry.
On 19 October 2018, 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, 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 is effective from the signing date to 16 August 2020.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Transactions with significant related parties (continued)
Notes: (continued)
(ii.d) On 31 December 2018, the Company and CLI renewed a management agreement of alternative investment of insurance funds, effective from
1 January 2019 to 31 December 2020. In accordance with the agreement, the Company entrusted CLI to engage in 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 between 0.05% and 0.6% according to different ranges of returns; for non-fixed-income projects, the management fee rate
for invested projects was 0.3%, the management fee rates for newly signed projects were between 0.05% and 0.3% according to CLI's involvement
in project management and the performance-related bonus is based on the internal return rate upon expiry of the project. 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 10% to positive 15% of the investment management fee in the current
period.
(ii.f)
(ii.e) On 28 December 2018, the Company and AMC renewed a renewable agreement for the management of insurance funds, effective from 1 January
2019 to 31 December 2021. 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 fixed annual service fee
was calculated and payable on a seasonal basis, by multiplying the average net value of the assets under management by the rate of 0.05%; the
variable investment management service fee was payable annually, based on the results of performance evaluation, at 20% of the fixed service fee
per annum. Asset management fees charged to the Company by AMC are eliminated in the consolidated statement of comprehensive income.
On 31 December 2018, the Company and AMC HK renewed the management agreement of insurance funds investment, which is effective from
1 January 2019 to 31 December 2021. 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 seasonal basis and the maximum investment management fee paid annually
is RMB30 million. The management fee rate for financial products, such as investment plans, project asset-backed plans, customised products and
insurance asset management products, set up by AMC HK in the industry permitted by regulatory policies, is set according to contractual terms.
The management fee rate for the directive investment operation of term deposits, common stocks, funds, financial products and other investment
products, universal account B-2 and entrusted assets account alike was 0.02%; the management fee rate for unlisted equity investment was 0.3%;
the management fee rate for customised investment portfolio was agreed upon the management fee of market-oriented entrusted investment. Asset
management fees charged to the Company by AMC HK are eliminated in the consolidated statement of comprehensive income.
(iii)
(iv)
(v)
(vi)
(vii)
On 31 January 2018, the Company and CLP&C signed a new 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 is effective for three years, from 8 March 2018 to 7 March 2021.
On 29 December 2017, the Company renewed a property leasing agreement with CLI, effective from 1 January 2018 to 31 December 2020, pursuant
to which CLI leased to the Company certain buildings of its own. 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.
334
13
350
Amount due from CLP&C
Wealth management products and other securities of CGB
844
115
Amount due from CGB
894
1,557
61,880
Amount due to CGB
(63)
Corporate bonds of Sino-Ocean
605
593
Amount due from Sino-Ocean
8
(75)
59,420
Amount deposited with CGB
2
Amount due to CLP&C
56
68
334
284
(31)
(9)
Amount due from CLI
18
15
Amount due to CLI
(401)
(362)
Amount due from CLRE
2
Amount due from CL Overseas
40,516
(a) Basic information
As at
(197)
(197)
As at 31 December 2018
53,860
1,084
(5,412)
Others
53
33,370
31,933
25
(254)
149,293
Effect of associates' adoption
34,659
5,885
1,392
3,218
(1,986)
(717)
33,384
30,152
30,541
(840)
145,675
Other comprehensive income
for the year
(3,426)
770
586
(2,070)
Appropriation to reserves
1,275
of new accounting standards
1,281
(Note 9)
16
5,857
1,275
5,955
13,087
Other comprehensive income
to retained earnings
Others
Appropriation to reserves
(86)
64
64
As at 31 December 2019
53,860
1,148
28,594
(86)
34,847
(76)
30
As at 1 January 2019
53,860
1,084
(5,412)
69
34,659
33,370
31,933
(254)
149,309
Other comprehensive income
for the year
34,006
687
230
16
Core Tier 2 Capital Securities
Total
53,860
(c)
2019
RMB million
403,764
395,973
As at
31 December
2018
RMB million
318,371
310,580
46,660
31 December
7,791
4,919
5,578
4,919
Refer to Note 33 for the information of distribution to other equity instruments holders of the Company for the year ended
31 December 2019. As at 31 December 2019, there were no accumulated distributions unpaid attributable to other equity
instrument holders of the Company.
232 China Life Insurance Company Limited ⚫2019 Annual Report • Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
5,578
As at
Equity attributable to ordinary equity holders of non-controlling interests
Equity attributable to other equity instruments holders of the Company
Equity attributable to non-controlling interests
As at
31 December
31 December
2018
Increase
RMB million
7,791
7,791
RMB million
Decrease
RMB million
2019
RMB million
7,791
7,791
The Company issued Core Tier 2 Capital Securities at par with the nominal value of USD1,280 million on 3 July 2015,
and listed such securities on the Stock Exchange of Hong Kong Limited on 6 July 2015. The securities were 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. Distributions shall be payable
on the securities semi-annually and the Company has the option to redeem the securities at the end of the fifth year
after issuance and on any distribution payment date thereafter. The initial distribution rate for the first five interest-
bearing years is 4.00%, if the Company does not exercise this option, the rate of distribution will be reset based on the
comparable US treasury yield plus a margin of 2.294% at the end of the fifth year and every five years thereafter.
(b) Equity attributable to equity holders
Equity attributable to equity holders of the Company
Equity attributable to ordinary equity holders of the Company
For the year ended 31 December 2019
As at 1 January 2018
38 RESERVES
Other
reserve Discretionary
General
foreign
the equity
fund reserve fund
reserve
the equity
method
operations
Total
RMB million RMB million RMB million
RMB million RMB million RMB million RMB million RMB million
RMB million RMB million
(a)
(b)
method
for-sale
securities
Other
reserves
Share
premium
gains/
(losses)
Unrealised comprehensive
income
reclassifiable
comprehensive
income non-
Exchange
reclassifiable
from
to profit or
differences
available-
loss under
Statutory
on translating
to profit or
loss under
Other
Deferred tax liabilities
New leases
10,890
1,383
10,951
1,798
52,444
Transfers upon completion
4,282
120
(4,887)
390
(95)
Additions
82
6,684
907
10,175
44
11,488
Transfers into investment properties
(2,194)
(2,194)
Disposals
(155)
(253)
(344)
(14)
(86)
280
(852)
31,628
RMB million
43,192
As at 31 December 2019
31,264
2,763
518
13,657
1,028
49,230
EE
(1)
(19,106)
(25)
As at 1 January 2018
251
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment (continued)
Cost
Office
equipment
furniture and
Motor
Buildings
fixtures
vehicles
Assets
under
construction
Leasehold
improvements
Total
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 237
800
As at 31 December 2018
7,458
(24)
24
Charge for the year
Disposals
| | ||
(24)
As at 31 December 2018
(24)
(25)
Net book value
As at 1 January 2018
22,606
As at 1 January 2018
1,694
10,951
619
36,313
As at 31 December 2018
25,690
2,150
522
14,030
800
43,192
238 China Life Insurance Company Limited 2019 Annual Report Financial Report
42(0)
443
35,837
Impairment
(1,346)
1,319
14,031
2,146
60,791
Accumulated depreciation
(8,998)
(4,990)
(940)
(1,179)
(16,107)
Charge for the year
(1,150)
(17,574)
(556)
(205)
(2,061)
Disposals
25
238
293
38
594
As at 31 December 2018
(10,123)
(5,308)
(797)
(150)
14,030
As at 1 January 2018
2,150
236 China Life Insurance Company Limited 2019 Annual Report Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment
Cost
Buildings
Office
equipment
furniture and
fixtures
Assets
Motor
vehicles
under
construction
Leasehold
improvements
Total
3,176,845
RMB million
35,837
7,458
1,319
14,031
2,146
60,791
Transfers upon completion
6,864
234
(7,802)
532
(172)
As at 1 January 2019
Additions
3,630,180
365,916
Current income tax liabilities
522
Statutory insurance fund
Total liabilities
Equity
Share capital
21
602
2,441
558
3,264,264
2,893,119
36
283,726
28,265
Other equity instruments
Reserves
Retained earnings
Total equity
Total liabilities and equity
42(r)
7,791
7,791
42(s)
194,168
147,278
135,692
28,265
75
100,392
193
(188)
(276)
(2,398)
48
577
162
79
866
As at 31 December 2019
(11,411)
(5,329)
(1,543)
(598)
Impairment
24
(24)
Charge for the year
Disposals
As at 31 December 2019
(24)
(1)
(25)
Net book value
1,002
As at 1 January 2019
25,690
As at 1 January 2019
(1,336)
(823)
Charge for the year
9,258
7,988
Transfers into investment properties
Disposals
(520)
(520)
Disposals
(77)
(602)
(39)
(107)
(996)
As at 31 December 2019
42,699
(171)
8,092
(797)
(17,574)
(5,308)
(10,123)
As at 1 January 2019
(1,346)
68,361
2,571
13,658
1,341
Accumulated depreciation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Other loans
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(g) Loans
For the year ended 31 December 2019
Policy loans
927,892
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 243
806,050
278,851
372,684
534,432
Total
241,155
Impairment
After one year but within five years
Maturing:
As at
137,699
31 December
Total
After five years but within ten years
Within one year
Net value
Maturing:
Net value
Impairment
Total
After ten years
After one year but within five years
After five years but within ten years
Within one year
(h) Term deposits
128,078
927,892
24,227
401,799
As at
31 December
266,986
197,676
212,133
112,702
147,079
806,050
208,909
109,506
718,983
696,544
927,892
806,050
Unlisted debt securities include those traded on the Chinese interbank market.
The estimated fair value of all held-to-maturity securities was RMB967,662 million as at 31 December 2019 (as at 31
December 2018: RMB842,839 million).
As at 31 December 2019, no accumulated impairment loss for the investment of held-to-maturity securities has been
recognised by the Company (as at 31 December 2018: RMB29 million).
31 December
2018
RMB million
RMB million
2019
31 December
As at
As at
16,816
Total
After one year but within five years
Within one year
Maturing:
Contractual maturity schedule
-
Debt securities
After five years but within ten years
After ten years
2019
2018
RMB million
RMB million
102,483
418,441
156,407
319,821
7,830
77,200
528,754
553,428
As at 31 December 2019, the Company's term deposits of RMB1,491 million (as at 31 December 2018: RMB 14,691
million) were deposited in banks to back overseas borrowings and are restricted to use. Please refer to Note 10.3 for the
details.
244 China Life Insurance Company Limited 2019 Annual Report Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(i) Statutory deposits - restricted
Contractual maturity schedule:
Within one year
2018
After one year but within five years
As at
31 December
As at
31 December
2019
RMB million
RMB million
500
5,653
5,153
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 compliance with regulations of the CBIRC. These funds may not be used for any purpose other than for paying off debts
during liquidation proceedings.
(j) Available-for-sale securities
179,852
Total
As at
31 December
RMB million
RMB million
174,872
142,165
422,759
302,952
597,631
445,117
(2,718)
594,913
445,117
As at
As at
31 December
31 December
2019
2018
RMB million
As at
31 December
2019
445,117
(2,718)
594,913
445,117
597,631
44,289
2018
38,540
124,531
135,164
221,464
167,248
213,096
RMB million
98,416
215,715
99.98% directly
RMB million
99.98% directly
Not applicable
Investment
PRC
99.98% directly
Not applicable
Investment
PRC
100.00% indirectly
RMB1,131 million
Investment
USA
99.99% directly
Not applicable
PRC
Investment
99.95% directly
Not applicable
Investment
(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.
China Life Insurance Company Limited 2019 Annual Report • Financial Report 241
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(d) Investments in subsidiaries (continued)
(ii) The table below presents the basic information of the Company's major consolidated structured entities as at 31
December 2019:
Name
Kun Lun Trust • Tianjin Urban
PRC
Investment
Not applicable
99.98% directly
Investment
Not applicable
Investment
The British Virgin Islands
The British Virgin Islands
100.00% indirectly
Not applicable
Investment
100.00% indirectly
Not applicable
Investment
The British
Cayman Islands
100.00% indirectly
Not applicable
Investment
PRC
99.98% directly
Not applicable
PRC
Investment
Not applicable
99.98% directly
PRC
Investment
Communications Construction No. 1
Collective Fund Trust Scheme
RMB484 million
PRC
Investment
Not applicable
Available-for-sale securities, at fair value
PRC
Investment
100.00% indirectly
Jiao Yin Guo Xin • Shaanxi Coal and Chemical
Industry Group Co., Ltd. Debt-to-Equity
Swap Collective Fund Trust Scheme
Shan Guo Tou⚫Jing Tou Corporate Trust
Loan Collective Funds Trust Scheme
China Life China Hua Neng Debt-to-Equity
Swap Investment Scheme
Jiao Yin Guo Xin China Aluminium Co., Ltd.
Supply-side Reform Collective Fund Trust
Scheme
Jian Xin Trust - CL Guo Xin Collective
Fund Trust Scheme
Investment management
99.98% directly
RMB5,000 million
Investment management
242 China Life Insurance Company Limited 2019 Annual Report Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(e) Investments in associates and joint ventures
As at 1 January
Investments in associates and joint ventures
As at 31 December
(f) Held-to-maturity securities
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Total
2018
31 December
31 December
2019
As at
As at
137,257
RMB5,000 million
33,218
137,257
17,244
154,501
2019
RMB million
Total
Unlisted
Listed in Mainland, PRC
Debt securities
2018
RMB million
104,039
RMB million
99.98% directly
RMB5,000 million Investment management
Chongqing Trust Fund • Guo Rong No. 4
Collective Fund Trust Scheme
Jiao Yin Guo Xin Jing Tou Corporate
Collective Funds Trust Scheme
Shang Xin Ningbo Wu Lu Si Qiao PPP
Collective Fund Trust Scheme
Trust/
investments
received
Percentage
of shares held
99.99% directly RMB10,001 million
Principal
activities
Investment management
75.00% directly RMB10,000 million Investment management
and indirectly
100.00% directly RMB10,000 million Investment management
Investment management
100.00% directly RMB10,000 million
99.99% directly RMB10,000 million
Investment management
99.99% directly RMB10,000 million Investment management
85.00% directly RMB10,000 million
RMB9,994 million Investment management
Investment management
91.92% directly
88.02% directly
RMB9,928 million Investment management
China Life - Yanzhou Coal Mining Debt
Investment Scheme
RMB5,370 million Investment management
81.00% directly
and indirectly
100% directly
China Life Hua Neng Development of
Fund Trust Scheme
RMB6,000 million Investment management
83.33% directly
Infrastructure Debt Investment Scheme
Kun Lun Trust • Jizhong Energy Group Loan
Collective Fund Trust Scheme
Jiao Yin Guo Xin • CLI - China Nonferrous
Metal Collective Fund Trust Scheme
RMB6,000 million Investment management
RMB8,000 million Investment management
86.25% directly
Kun Lun Trust China Metallurgical No. 1
Collective Fund Trust Scheme
Zhong Xin Jing Cheng • Tianjin Port Group
Loans Collective Fund Trust Scheme
Jiang Su Trust ⚫Xin Bao Sheng No. 144
(Jing Tou) Collective Fund Trust Scheme
Bridge Heng Yi 604 Collective
Investment management
RMB9,000 million
100.00% directly
100.00% directly
Debt securities
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Government agency bonds
42,006
70,445
77,557
31,058
29,803
581
87
6,418
6,552
8,971
11,305
47,028
47,747
117,473
38,786
125,304
China Life Insurance Company Limited 2019 Annual Report Financial Report 247
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(I) Securities purchased under agreements to sell
Maturing:
Within 30 days
Total
(m) Accrued investment income
Bank deposits
Debt securities
Others
Total
Current
Non-current
Total
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.
168
136
35,383
77,557
Equity securities
Funds
9,699
12,456
Common stocks
37,309
33,785
Wealth management products
1,506
Others
20
47,028
47,747
117,473
125,304
Subtotal
31,523
Total
Subtotal
Unlisted
Listed overseas
Listed in Hong Kong, PRC
(n) Other assets
Listed in Mainland, PRC
Subtotal
Unlisted
Listed overseas
Listed in Mainland, PRC
Debt securities
Total
Equity securities
Land use rights
Tax prepaid
Disbursements
47,265
525
47,790
As at
31 December
31 December
As at
2019
2018
RMB million
RMB million
7,265
7,326
5,615
5,430
4,162
3,377
3,269
28,687
29,081
7,419
7,340
21,268
21,741
40,025
980
41,005
28,687
4,479
4,114
611
661
8,840
2,619
29,081
70,445
47,790
4,910
Automated policy loans
Investments receivable and prepaid
Due from related parties
Others
Total
Current
Non-current
Total
248 China Life Insurance Company Limited 2019 Annual Report Financial Report
As at
31 December
As at
31 December
2019
2018
RMB million
RMB million
1,963
4,243
23,258
24,723
19,622
12,039
RMB million
41,005
RMB million
31 December
As at
As at
31 December
2019
9,066
1,963
9,066
2018
Government bonds
1,206
71,020
91,971
236,241
143,431
58,314
32,707
32,640
31,348
90,733
52,572
519,715
352,029
20,559
1,037,629
20,559
858,936
101,787
(i) Other available-for-sale securities mainly include unlisted equity investments, private equity funds and perpetual bonds.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(j) Available-for-sale securities (continued)
Debt securities
Listed in Mainland, PRC
Unlisted
Subtotal
Equity securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted
Subtotal
Total
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 245
486,348
497,355
73,078
Corporate bonds
Subordinated bonds/debts
Others (i)
Subtotal
Equity securities
Funds
Common stocks
Preferred stocks
Wealth management products
Others (i)
Subtotal
Available-for-sale securities, at cost
Equity securities
Others (i)
Total
As at
As at
101,569
21,514
53,922
183,508
147,109
180,151
As at
171,108
23,647
RMB million
RMB million
31 December
2018
2019
31 December
28,097
31 December
As at
31 December
2019
RMB million
25,578
11,379
146,914
166,622
224,393
210,805
100,470
97,542
497,355
486,348
Health management
For the year ended 31 December 2019
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(k) Securities at fair value through profit or loss
As at
31 December
As at
31 December
64,838
5,254
77
32
4,633
Subtotal
Others
RMB million
Corporate bonds
Government bonds
Debt securities
RMB million
RMB million
2018
2019
Government agency bonds
942
As at
31 December
2018
31 December
2018
RMB million
RMB million
45,900
52,950
451,455
433,398
497,355
486,348
151,940
102,018
95,428
55,066
1,458
162
291,448
215,342
As at
246 China Life Insurance Company Limited 2019 Annual Report Financial Report
Total
After ten years
After five years but within ten years
After one year but within five years
2019
Within one year
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, wealth management products and private equity funds.
858,936
1,037,629
372,588
540,274
Maturing:
USD2 million
Registered capital
RMB4,000 million
RMB3,400 million
100.00% directly
100.00% indirectly
99.997% directly
520
3,883
As at 31 December 2019
As at 1 January 2019
Fair value
As at 31 December 2019
As at 1 January 2019
Net book value
As at 31 December 2019
(16)
Deductions
As at 31 December 2019
Deductions
Additions
As at 1 January 2019
Cost
Buildings
RMB million
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(c) Investment properties
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Accumulated depreciation
As at 1 January 2019
Additions
China Life Insurance Company Limited 2019 Annual Report • Financial Report 239
4,387
(115)
RMB million
Buildings
As at 31 December 2018
As at 1 January 2018
Fair value
As at 31 December 2018
As at 1 January 2018
Net book value
As at 31 December 2018
(358)
Deductions
As at 31 December 2018
Deductions
As at 1 January 2018
Additions
Cost
5,462
4,886
3,914
3,525
(473)
Accumulated depreciation
As at 1 January 2018
Additions
1,718
2,194
The Group had no significant profit or loss from subleasing right-of-use assets or sale and leaseback transactions for the
year ended 31 December 2019.
1
Net book value
As at 31 December 2019
Deductions
Charge for the year
As at 1 January 2019
Impairment
As at 31 December 2019
Deductions
Charge for the year
As at 1 January 2019
As at 1 January 2019
As at 31 December 2019
Deductions
Additions
As at 1 January 2019
Cost
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Right-of-use assets
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
RMB1,530 million
Accumulated depreciation
3,272
As at 31 December 2019
Others
2,579
1
2,578
3,271
(1,176)
29
(1,205)
(1,176)
29
(1,205)
Buildings
4,448
4,447
(130)
1,999
1,999
2,579
1
2,578
RMB million
Total
1
(29)
(130)
(317)
Investment
Not applicable
100.00% directly
Investment
Investment
Investment
Financial service
Investment in
retirement properties
Fund management
Asset management
Hong Kong, PRC
Principal activities
Asset management
Pension and annuity
RMB1,288 million
Not applicable
RMB1,991 million
85.03% indirectly
100.00% indirectly
100.00% directly
100.00% indirectly
100.00% directly
PRC
Hong Kong, PRC
Hong Kong, PRC
The British Jersey Island
PRC
PRC
60.00% directly
74.27% directly
and indirectly
50.00% indirectly
100.00% directly
PRC
RMB200 million
Not applicable
Not applicable
RMB6,800 million
Hong Kong, PRC
100.00% directly
Investment
PRC
3,883
PRC
PRC
Investment
Not applicable
100.00% indirectly
Investment
Not applicable
Not applicable
100.00% directly
Not applicable
100.00% directly
Investment
Not applicable
100.00% directly
The British Virgin Islands
The British Virgin Islands
The British Virgin Islands
The British
Cayman Islands
Not applicable
100.00% directly
USA
Investment
PRC
Investment
Percentage of
equity interest held
43,543
RMB million
2018
2019
RMB million
63,228
As at
31 December
31 December
As at
Unlisted investments at cost
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(d) Investments in subsidiaries
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December 2019:
For the year ended 31 December 2019
The fair value of investment properties of the Company as at 31 December 2019 amounted to RMB5,462 million (as at
31 December 2018: RMB4,886 million), which was estimated by the Company having regards to valuations performed by
independent appraisers. The investment properties were classified as Level 3 in the fair value hierarchy.
4,886
2,688
3,525
1,401
(358)
PRC
13
(54)
240 China Life Insurance Company Limited 2019 Annual Report Financial Report
Name
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Pension Company (i)
CL Guang De (ii)
CG Investments
AMC (i)
Shengyi Jingsheng (i)
Yuanxiang Tianyi (ii)
Yuanxiang Tianfu (ii)
Hope Building (i)
Wansheng (ii)
Bai Ning (ii)
Yuan Shu Yuan Jiu (ii)
Franklin Shenzhen Company (i)
Guo Yang Guo Sheng (ii)
New Capital Wisdom Limited
New Fortune Wisdom Limited
Wisdom Forever Limited
Partnership
CL Health (i)
Yuan Shu Yuan Pin (ii)
AMC HK
CL Hotel Investor, L.P.
Glorious Fortune Forever Limited
Rui Chong Company (i)
New Aldgate Limited
Golden Phoenix Tree Limited
King Phoenix Tree Limited
Place of incorporation
and operation
CL Wealth (i)
Suzhou Pension Company (i)
Golden Bamboo Limited
Sunny Bamboo Limited
Fortune Bamboo Limited
China Century Core Fund Limited
CL AMP (i)
Huang Xin
99.1
1,057.6
282.0
71.3
521.9
118.8
712.0
168.4
1,057.6
712.0
239.9
790.1
541.3
402.9
Song Ping
Li Guodong
706.9
706.9
66.5
99.1
264.1
277.2
Wang Cuifei
Luo Zhaohui
The compensation amounts disclosed above for these supervisors for the year ended 31 December 2018 were restated
based on the finalised amounts determined during 2019.
Xiong Junhong
I
387.2
The supervisors received the compensation amounts disclosed above during their term of office in 2019 and 2018.
Later than one year but not later than five years
For the year ended 31 December 2019, the five individuals whose emoluments were the highest in the Company include
one director and one supervisor (2018: three directors).
90,292
1,491.8
As at
31 December
2018
RMB million
1,001
1,365
52
The Company adopted IFRS 16 as at 1 January 2019. As a lessee, the Company measured, presented and disclosed its
operating lease commitments as at 31 December 2019 based on IFRS 16 and did not restate the comparative information.
(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 five years
Total
252 China Life Insurance Company Limited 2019 Annual Report • Financial Report
(c) Five highest paid individuals
As at
31 December
31 December
2019
2018
7,544
Total
RMB thousand
13,583
489
459
7,085
Basic salaries, housing allowances, other allowances and benefits in kind
Pension scheme contributions
RMB thousand
2018
2019
Details of the remuneration of the five highest paid individuals are as follows:
As at
1,491.8
payment
180.7
Pension
scheme
Benefits
in salary
of salary
included
Subtotal
Performance
related
bonuses
salaries
Name
Basic
Deferred
Deferred
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December 2018 are as
follows:
payment Actual paid
included included
(b) Supervisors' emoluments (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 255
The above remuneration was calculated based on the relevant employment period during the reporting period.
(ix)
(viii) Luo Zhaohui and Huang Xin did not receive remuneration from the Company.
(vii) Wang Xiaoqing was appointed as employee representative supervisor on 27 December 2019.
Cao Qingyang was appointed as employee representative supervisor on 12 July 2019.
(vi)
Song Ping resigned as employee representative supervisor on 3 January 2020.
(v)
Huang Xin resigned as employee representative supervisor on 22 July 2019.
68,844
43 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION (continued)
128.2
income
in kind contributions
1,182.9
589.1
593.8
Shi Xiangming
946.0
300.7
1,246.7
50.2
68.8
300.7
1,127.7
501.2
626.5
income
Jia Yuzeng
343.7
1,402.1
47.5
65.8
343.7
1,288.8
572.8
716.0
Miao Ping
RMB thousand
in total
in total
Total
1,058.4
4,314
Discretionary
85,978
(iv)
premium
securities
reserve fund
reserve fund
General
reserve
RMB million
RMB million
RMB million
RMB million
RMB million
Total
RMB million
As at 1 January 2018
Statutory
53,860
33,336
30,152
30,172
144,240
Other comprehensive income
for the year
(2,730)
(2,730)
Appropriation to reserves
1,275
3,218
1,275
5,768
(3,280)
As at 31 December 2018
Share available-for-sale
Unrealised gains/
46,660
Current
Non-current
Total
56,701
46,660
56,701
46,660
250 China Life Insurance Company Limited ⚫2019 Annual Report • Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(r) Other equity instruments
Equity attributable to equity holders of the Company
(losses) from
Equity attributable to ordinary equity holders of the Company
As at
31 December
As at
31 December
2019
RMB million
2018
RMB million
365,916
358,125
7,791
283,726
275,935
7,791
Refer to Note 33 for the information of distribution to other equity instruments holders for the year ended 31 December
2019. As at 31 December 2019, there were no accumulated distributions unpaid attributable to other equity instruments
holders.
(s) Reserves
Equity attributable to other equity instruments holders of the Company
53,860
(6,010)
34,611
2019
RMB million
2018
RMB million
523
488
China Life Insurance Company Limited • 2019 Annual Report Financial Report 251
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 31 December 2019
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(u) Commitments
(i) Capital commitments
Capital commitments of the Company relating to property development projects and investments:
Contracted, but not provided for
Investments
31 December
Property, plant and equipment
As at
31 December
As at
31 December
2019
2018
RMB million
RMB million
(ii) Operating lease commitments - as lessee
The future minimum lease payments 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
65,339
Total
31 December
As at
As at
33,370
31,447
147,278
As at 1 January 2019
53,860
(6,010)
34,611
33,370
31,447
147,278
Other comprehensive income
for the year
33,901
33,901
Appropriation to reserves
5,857
1,275
5,857
12,989
As at 31 December 2019
53,860
27,891
40,468
34,645
37,304
194,168
(t) Provisions and contingencies
The following is a summary of the significant contingent liabilities:
Pending lawsuits
3,505
Han Bing was appointed as non-employee representative supervisor on 12 July 2019.
The compensation amounts disclosed above for these directors and the chief executive for the year ended 31 December
2018 were restated based on the finalised amounts determined during 2019.
Tang Yong was appointed as non-employee representative supervisor on 2 February 2019 and resigned as non-employee representative supervisor on
22 July 2019.
bonuses
salaries
scheme
Benefits
in salary
of salary
related
Basic
Pension
included
Subtotal
Performance
payment
income
Deferred
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the year ended 31
December 2018 are as follows:
(a) Directors' and chief executive's emoluments (continued)
43 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 253
300.0
320.0
320.0
320.0
(vi) The above remuneration was calculated based on the relevant employment period during the reporting period.
(v) Wang Bin, Su Hengxuan and other non-executive directors did not receive remuneration from the Company.
(iv) Wang Junhui was appointed as non-executive director on 16 August 2019.
Name
Li Mingguang was appointed as executive director on 16 August 2019.
income
Total
Xu Haifeng
2,084.4
630.1
2,714.5
97.7
134.7
630.1
2,482.1
1,050.1
1,432.0
Xu Hengping
2,442.3
626.5
in kind contributions
3,068.8
136.9
626.5
2,834.2
1,044.2
1,790.0
Lin Dairen
Su Hengxuan
Wang Bin
Yang Mingsheng
RMB thousand
in total
Actual
paid included
Deferred
payment
included in
total
97.7
1,432.0
(!!!)
(i) Xu Hengping resigned as executive director on 24 January 2019.
Xu Haifeng resigned as executive director on 28 June 2019.
Wang Bin (v)
Name
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the year ended 31
December 2019 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 2019 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 2019 consolidated financial statements. The final compensation will be disclosed in a separate announcement
when determined.
43 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
972
1,327
124
188
524
Su Hengxuan (v)
739
400
RMB million
RMB million
Number of individuals
RMB1,000,001 - RMB2,000,000
RMB2,000,001 - RMB3,000,000
RMB3,000,001 - RMB4,000,000
RMB4,000,001 - RMB4,500,000
RMBO RMB1,000,000
(c) Five highest paid individuals (continued)
The emoluments fell within the following bands:
43 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
256 China Life Insurance Company Limited 2019 Annual Report Financial Report
14,072
56,701
324
(ii)
Xu Hengping (i)
Yuan Changqing (v)
300.0
320.0
320.0
320.0
692.9
36.2
60.0
596.7
706.0
41.1
59.8
26.4
17.9
Xu Haifeng (ii)
8.5
605.1
Total
Pension scheme
contributions
Benefits
in kind
paid
Remuneration
Leung Oi-Sie Elsie
Tang Xin
Robinson Drake Pike
Chang Tso Tung Stephen
Wang Junhui (iv) (v)
Yin Zhaojun (v)
Liu Huimin (v)
Li Mingguang (iii)
RMB thousand
1,145.6
2,577.6
687.4
2019
2018
5
4
1
For the year ended 31 December 2019, 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 (2018: 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.
44 SUBSEQUENT EVENTS
Since the outbreak of Novel Coronavirus ("COVID-19") pneumonia in the beginning of 2020, the Group has completely
implemented the arrangement of the prevention and control policies of "COVID-19" required by the government. While
taking comprehensive measures that effectively curbed the spread of the disease, the Group took full advantage of its
supporting and safeguarding function provided by the insurance business in response to the pandemic and played an
active role in coping with the potential hazardous impact on business operations that could be brought by "COVID-19".
"COVID-19" has exerted a major impact on general economic operation in a short period. The Group has been witnessing
a domestic trend in which the situation of the containment of the pandemic is making sustained progress and the order of
life and production is being restored at an increasing pace. As of the issue date of these consolidated financial statements,
although the execution of internal policies related to prevention of the spread of "COVID-19" has brought certain
challenges to the Group in respect of the development of insurance business and the investment of insurance funds, the
impact of "COVID-19" on the Group is controllable for the reason that the Group has taken various measures to actively
respond and ensure the orderly operation of business.
The Group will continue to closely focus on both global and domestic situation of "COVID-19", concerning its prevention
and control, and cope with the related impacts on the Company actively.
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 257
OTHER
For the year ended 31 December
INFORMATION
Registered Name in Chinese
Registered Name in English
Legal Representative
Registered Office Address
Postal Code
Current Office Address
Postal Code
Telephone
Fax
Website
Email
Hong Kong Office Address
Telephone
Fax
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")
Wang Bin
BASIC INFORMATION OF THE COMPANY
16 Financial Street, Xicheng District, Beijing, P.R. China
Pension scheme
contributions
1,253.0
(ii)
Shi Xiangming resigned as non-employee representative supervisor on 18 February 2019.
(i)
67.8
8.6
19.6
39.6
439.9
791.8
106.7
47.9
106.2
285.8
200.7
RMB thousand
484.4
63.3
106.1
252.8
9.4
18.4
47.4
-
1,482.5
142.0
91.8
21.8
Total
24.9
95.3
137.7
75.2
422.2
100033
16 Financial Street, Xicheng District, Beijing, P.R. China
100033
320.0
320.0
320.0
300.0
50.0
250.0
Leung Oi-Sie Elsie
320.0
70.0
250.0
Tang Xin
320.0
70.0
320.0
250.0
320.0
70.0
250.0
Chang Tso Tung Stephen
Yin Zhaojun
Liu Huimin
Wang Sidong
Yuan Changqing
2,122.6
687.4
2,810.0
97.7
134.7
Robinson Drake Pike
320.0
320.0
300.0
86-10-63633333
86-10-66575722
www.e-chinalife.com
ir@e-chinalife.com
16/F, Tower A, China Life Centre, One Harbour Gate, 18 Hung Luen Road,
Hung Hom, Kowloon, Hong Kong
852-29192628
852-29192638
258 China Life Insurance Company Limited 2019 Annual Report • Other Information
Benefits
in kind
paid
Remuneration
Wang Xiaoqing (vii)
Cao Qingyang (vi)
Song Ping (v)
Huang Xin (iv)(viii)
Han Bing (iii)
Tang Yong (ii)
Shi Xiangming (i)
Luo Zhaohui (viii)
Jia Yuzeng
Name
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December 2019 are as
follows:
(b) Supervisors' emoluments
43 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION (continued)
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
254 China Life Insurance Company Limited 2019 Annual Report Financial Report
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.
The directors and chief executive received the compensation amounts disclosed above during their term of office in 2019
and 2018.
300.0
(iii)
Total
2,418
17,412
4,880
1,557
As at 31 December 2019
policyholders
- Portion of fair value changes on available-for-
sale securities attributable to participating
(16,181)
(16,181)
4,880
- Available-for-sale securities
(970)
115
(3,070)
1,985
(Charged)/credited to net profit
1,381
(Charged)/credited to other comprehensive income
(15,077)
2,630
(10,890)
6,098
5,588
3,265
6,854
- deferred tax assets to be recovered within 12 months
Subtotal
- deferred tax assets to be recovered after 12 months
Deferred tax assets:
RMB million
RMB million
31 December
2018
2019
31 December
As at
As at
(ii) The analysis of deferred tax assets and deferred tax liabilities during the year is as follows:
2,515
4,174
(5,308)
As at 1 January 2019
RMB million
RMB million
Investments
Insurance
policyholders
sale securities attributable to participating
- Portion of fair value changes on available-for-
- Available-for-sale securities
(Charged)/credited to other comprehensive income
(Charged)/credited to net profit
As at 1 January 2018
(i) The movements in deferred tax assets and liabilities during the year are as follows:
Deferred tax assets/(liabilities)
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(o) Deferred tax
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Others
RMB million
12,442
Total
RMB million
480
1,381
2,515
4,174
(5,308)
As at 31 December 2018
8
8
00
902
902
4,462
(3,991)
2,266
249
2,792
1,421
(6,737)
9,363
13,116
-
10,124
10,300
11,739
14,113
Salary and welfare payable
Interest payable to policyholders
RMB million
RMB million
2018
2019
As at
31 December
As at
31 December
(q) 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 2019, the carrying
value of securities deposited in the collateral pool was RMB253,520 million (as at 31 December 2018: RMB170,873
million). The collateral is restricted from trading during the period of the repurchase transaction.
As at 31 December 2019, bonds with a carrying value of RMB89,779 million (as at 31 December 2018: RMB138,404
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.
Brokerage and commission payable
188,932
7,418
Payable to constructors
Deferred tax liabilities:
Others
500
409
Tax payable
490
748
Stock appreciation rights (Note 32)
190
1,238
Interest payable of debt instruments
1,793
1,998
Agent deposits
3,065
5,268
113,189
3,440
113,029
160
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(p) Securities sold under agreements to repurchase
For the year ended 31 December 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
China Life Insurance Company Limited ⚫ 2019 Annual Report Financial Report 249
1,381
(10,890)
(7,982)
(23,332)
(1,310)
(3,497)
- deferred tax liabilities to be settled within 12 months
Subtotal
(6,672)
(19,835)
188,932
- deferred tax liabilities to be settled after 12 months
Interbank market
Stock exchange market
Net deferred tax liabilities
Maturing:
113,189
188,932
Total
64,414
51,650
124,518
61,539
RMB million
2018
RMB million
2019
As at
31 December
31 December
As at
After 90 days
Total
Within 30 days
2019/4/11
2019/4/11
Notification Letter and Change Request Form to Registered Shareholders
2019/4/11
Reply Slip of H Share Shareholders
26
Notification Letter and Request Form to Non-Registered Shareholders
225
27
Serial No.
2019/4/11
28
Announcement - Approval of Qualification as President by the CBIRC
2019/4/11
China Life Insurance Company Limited 2019 Annual Report • Other Information 261
Items
24
Date of disclosure
29
Notice of Board Meeting
2019/4/11
2019/3/27
23
Announcement of Premium Income
China Life Insurance Company Limited 2018 Corporate Social Responsibility Report
Summary of Solvency Quarterly Report of Insurance Company (Fourth Quarter of
2018)
2019/3/27
2019/3/27
18
Announcement - Nomination of Non-Employee Representative Supervisor
19
China Life Insurance Company Limited - Announcement on Changes in Accounting
Estimates
2019/3/27
Form of Proxy of Holders of H Shares for use at the Annual General Meeting of the
Company to be held on Thursday, 30 May 2019
20
Annual Report 2018
2019/4/11
21
21
Reports of the Board of Directors & Board of Supervisors for 2018, Financial
Report & Profit Distribution Plan for 2018, Remuneration of Directors &
Supervisors, Remuneration & Appointment of Auditors, Election of Non-employee
Representative Supervisor, Amendments to Articles of Association and Procedural
Rules, General Mandate to Issue H Shares, Overseas Issue of Senior Bonds &
Notice of AGM
2019/4/11
22
Notice of Annual General Meeting
2019/4/11
20
2019/4/15
Announcement - Change of Person in Charge of Finance
Announcement ·
Announcement - Resolutions Passed at the Annual General Meeting and
Distribution of Final Dividend
2019/5/30
40
Announcement of Premium Income
2019/6/12
41
Announcement - Resignation of Executive Director
2019/6/28
42
39
17
43
Announcement of Premium Income
2019/7/15
44
Announcement - Nomination of Executive Director
2019/7/23
45
Announcement on Supplementary Information regarding the Compensation of
Directors, Supervisors and Senior Management Members in 2018
2019/7/23
2019/7/9
30
2019/5/14
2019/5/9
-
31
Estimated Profit Increase for the First Quarter of 2019
2019 First Quarter Report
2019/4/18
2019/4/25
32
Summary of Solvency Quarterly Report of Insurance Company (First Quarter of
2019)
2019/4/25
33
2019/5/9
34
2019/4/25
2019/5/9
35
Supplemental Form of Proxy of Holders of H Shares for use at the Annual General
Meeting of the Company to be Held on Thursday, 30 May 2019
2019/5/9
36
37
38
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-Registered Shareholders
Announcement of Premium Income
Announcement - Nomination of Executive Director and Non-executive Director
Supplemental Notice of Annual General Meeting
16
Announcement - Election of Employee Representative Supervisor
2019/3/22
LFC
China Life Insurance Company Limited ⚫ 2019 Annual Report • Other Information 259
OTHER RELEVANT INFORMATION
H Share Registrar and
Transfer Office
Depositary of ADR
Domestic Legal Adviser
International Legal Advisers
Auditors of the Company
Computershare Hong Kong
Investors Services Limited
Deutsche Bank
King & Wood Mallesons
Latham & Watkins LLP
Domestic Auditor
Ernst & Young Hua Ming LLP
Address: Level 16, Ernst &
Young Tower, Oriental Plaza,
No. 1 East Changan Avenue,
Dongcheng District, Beijing,
P.R. China
Name of the Signing Auditors:
Huang Yuedong, Wu Jun
Address: Shops 1712-1716, 17th Floor,
Hopewell Centre, 183 Queen's Road East,
Wanchai, Hong Kong
Address: 60 Wall Street, New York, NY 10005
Debevoise & Plimpton LLP
Ernst & Young
Address: 22/F, CITIC Tower,
New York Stock Exchange
2628
China Life
601628
CSRC's Designated Website for
the Company's Annual Report
Disclosure
The Company's H Share
Disclosure Websites
The Company's Annual Report
may be obtained at
China Securities Journal, Shanghai Securities News, Securities Times
www.sse.com.cn
HKExnews website of Hong Kong Exchanges and
Clearing Limited at www.hkexnews.hk
The Company's website at www.e-chinalife.com
1 Tim Mei Avenue, Central, Hong Kong
12/F, China Life Plaza, 16 Financial Street, Xicheng District, Beijing, P.R. China
Stock Type
A Share
H Share
ADR
Exchanges on which the
Stocks are Listed
Stock Short Name
Stock Code
Shanghai Stock Exchange
The Stock Exchange of
Hong Kong Limited
China Life
STOCK INFORMATION
260 China Life Insurance Company Limited ⚫ 2019 Annual Report • Other Information
INDEX OF INFORMATION DISCLOSURE ANNOUNCEMENTS
Serial No.
Announcement - Forfeiture of Unclaimed Dividends
2019/2/14
9
Announcement of Premium Income
2019/2/18
Announcement - Approval of Qualification as Supervisor by the CBIRC and
2019/2/18
Resignation of Supervisor
11
8
Announcement - Approval from the People's Bank of China on Issuance of Bonds
for Capital Replenishment
12
Announcement of Premium Income
2019/3/13
13
Notice of Board Meeting
2019/3/14
14
15
Announcement on Completion of Issuance of Bonds for Capital Replenishment
Announcement of Results for the Year Ended 31 December 2018
2019/3/6
2019/3/27
2019/1/29
7
Items
1
2
3
4
5
01
Date of disclosure
6
Announcement - Estimated Profit Decrease for the Year 2018
Announcement on the Approval of Issuance of Bonds for Capital Replenishment
Announcement of Premium Income
Election of Language and Means of Receipt of Corporate Communication
Reply Form
Announcement - Resignation of Executive Director
2019/1/14
2019/1/14
2019/1/21
2019/1/21
2019/1/21
2019/1/24
46
Announcement - Connected Transaction
Announcement - Approval of Qualification of Directors by the CBIRC Beijing
Formation of Partnership
2019/12/19
Announcement - Resolutions Passed at the First Extraordinary General Meeting
83
2019/12/19
2019
84
Announcement on the Progress of Connected Transaction in relation to the
Formation of Partnership
2019/12/30
China Life Insurance Company Limited 2019 Annual Report⚫ Other Information 263
Formation of Partnership
DEFINITIONS AND MATERIAL RISK ALERT
China Life, the Company'
CLIC
AMC
Pension Company
AMP
CLWM
CGB
CLP&C
CLI
In this annual report, unless the context otherwise requires, the following expressions have the following meanings:
China Life Capital
_
82
2019/11/12
73
74
75
76
76
77
78
79
Announcement - Connected Transaction
Election of Mr. Zhao Peng as an Executive Director of the Sixth Session of the
Board of Directors, Proposed Amendments to the Articles of Association and the
Procedural Rules for the Board of Directors' Meetings, Renewal of Continuing
Connected Transactions with AMP, Renewal of the Framework Agreement for
Daily Connected Transactions between the Company and CGB
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-Registered Shareholders
Announcement of Premium Income
2019/11/14
2019/11/14
2019/12/12
80
Announcement - Withdrawal of Two Resolutions to be Considered at the First
Extraordinary General Meeting 2019
2019/12/13
81
Announcement. - Renewal of Continuing Connected Transactions between the
Company and Chongqing Trust
2019/12/19
2019/11/14
2019/10/31
CBIRC
CSRC
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
MATERIAL RISK ALERT:
The Company has stated in this annual report the details of its existing risks including risks relating to macro trends,
insurance risk, market risk, credit risk, operational risk, strategic risk, reputation risk, liquidity risk and information safety
risk. 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 annual report.
7 Except for "the Company" referred to in the Consolidated Financial Statements.
264 China Life Insurance Company Limited ⚫ 2019 Annual Report • Other Information
中国人寿保险股份有限公司
China Life Insurance Company Limited
Office Address: 16 Financial Street, Xicheng District, Beijing, P. R. China
Telephone
Website
Articles of Association of China Life Insurance Company Limited
E-mail
: www.e-chinalife.com
ir@e-chinalife.com
TM
MIX
Paper from
FSC
www.fsc.org
responsible sources
FSC™ C007445
: 86-10-63633333
CBIRC Beijing Bureau
Securities Law of the People's Republic of China
The Stock Exchange of Hong Kong Limited
Shanghai Stock Exchange
HKSE
SSE
Company Law
Insurance Law
Securities Law
Articles of Association
China or PRC
RMB
China Life Insurance Company Limited and its subsidiaries
Company Law of the People's Republic of China
Insurance Law of the People's Republic of China
China Life Insurance (Group) Company, the controlling shareholder of the
Company
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
China Life Wealth Management Company Limited, an indirect non-wholly
owned subsidiary of the Company
China Guangfa Bank Co., Ltd., an associate 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 Capital Investment Company, an indirect wholly-owned subsidiary
of CLIC
China Banking and Insurance Regulatory Commission, the predecessors
of which are China Insurance Regulatory Commission and China Banking
Regulatory Commission
Beijing Bureau of the China Banking and Insurance Regulatory Commission
China Securities Regulatory Commission
China Life Asset Management Company Limited, a non-wholly owned
subsidiary of the Company
-
2019/10/31
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-Registered Shareholders
Announcement of Premium Income
53
Announcement - Renewal of Continuing Connected Transactions with AMP
2019/8/22
54
Announcement - Connected Transaction Formation of Partnership
-
2019/8/22
55
Summary of Solvency Quarterly Report of Insurance Company (Second Quarter of
2019)
2019/8/22
2019/8/22
56
2019/8/28
Bureau
262 China Life Insurance Company Limited ⚫ 2019 Annual Report • Other Information
Serial No.
Items
Date of disclosure
57
2019 Interim Report
Media for the Company's
A Share Disclosure
2019/9/9
Cooperation Framework Agreement for Investment Management with Insurance
Funds
62
2019/7/23
47
Announcement - Approval of Qualification of Supervisors by the CBIRC Beijing
Bureau and Resignation of Supervisors
2019/7/23
48
Announcement - Estimated Profit Increase for the First Half of 2019
2019/7/29
49
Notice of Board Meeting
52
2019/8/12
Announcement of Premium Income
2019/8/15
Announcement of Unaudited Interim Results for the Six Months Ended 30 June
51
2019/8/22
2019
Announcement
-
Renewal of Continuing Connected Transactions under the
50
2019/10/31
58
60
2019/10/29
68
68
-
Announcement – Proposed Amendments to the Articles of Association
2019/10/29
69
59
Summary of Solvency Quarterly Report of Insurance Company (Third Quarter of
2019)
2019 Third Quarter Report
2019/10/29
10
Notice of the First Extraordinary General Meeting 2019
2019/10/31
71
Form of Proxy of Holders of H Shares for use at the First Extraordinary General
Meeting 2019 of the Company to be held on Thursday, 19 December 2019
2019/10/31
23
72
Reply Slip of Holders of H Shares
70
59
67
Announcement - Election of Employee Representative Supervisor
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-Registered Shareholders
Announcement of Premium Income
2019/9/9
2019/9/9
2019/9/11
61
Articles of Association of China Life Insurance Company Limited
2019/9/18
62
Announcement of Premium Income
2019/10/23
2019/10/16
Notice of Board Meeting
2019/10/17
64
Announcement - Estimated Profit Increase for the First Three Quarters of 2019
2019/10/18
65
Delay in Dispatch of Circular
2019/10/18
66
63
INFORMATION DISCLOSURE AND PLACE FOR OBTAINING THE REPORT
10
liyh@e-chinalife.com
* Ms. Li Yinghui, Securities Representative of
the Company, is also the main contact person
of the external Company Secretary engaged
by the Company
CONTACT INFORMATION
Name
Office Address
Telephone
Fax
Email
Board Secretary
Li Mingguang
International Auditor
86-10-63631241
86-10-66575112
ir@e-chinalife.com
Securities Representative
Li Yinghui
16 Financial Street, Xicheng District,
Beijing, P.R. China
86-10-63631191
16 Financial Street, Xicheng District,
Beijing, P.R. China
86-10-66575112
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.
As at the end of the Reporting Period, the reserves of insurance contracts of the Company increased by 15.2% from the
end of 2018, which is primarily due to the accumulation of insurance liabilities from new policies and renewal business.
As at the date of the statement of financial position, the reserves of various insurance contracts of the Company passed
the adequacy test.
Analysis of claims and policyholder benefits
For the year ended 31 December
Insurance benefits and claims expenses
Life insurance business
Investment contract benefits
Accident insurance business
12.3%
Policyholder dividends resulting from participation in profits
RMB million
2019
2018
Health insurance business
684,082
8,466
15.2%
31 December
2019
2,385,407
31 December
As at
2018
Change
2,081,822
14.6%
158,800
125,743
26.3%
8,529
2,552,736
Change
0.7%
2,216,031
768,280
509,467
412,876
6.3%
Finance costs
Administrative expenses
Other expenses
Statutory insurance fund contribution
RMB million
2019
Underwriting and policy acquisition costs
2018
81,396
62,705
29.8%
4,255
4,116
3.4%
Change
For the year ended 31 December
Analysis of underwriting and policy acquisition costs and other expenses
During the Reporting Period, insurance benefits and claims expenses rose by 6.3% year on year due to an increase
in reserves for insurance liabilities. In particular, health insurance business rose by 26.4% year on year due to health
insurance business growth. Investment contract benefits declined by 1.9% year on year due to a decrease in the
settlement interest rate of universal insurance accounts. Policyholder dividends resulting from participation in profits
increased by 13.9% year on year due to an increase in investment yield from participating account.
427,673
As at
3.6%
75,471
59,689
26.4%
6,323
6,654
-5.0%
9,157
9,332
-1.9%
22,375
19,646
13.9%
479,219
RMB million
Health insurance
Total of insurance contracts
85.90
86.80
314
6,357
221
6,288
91.10
86.00
42,839
49,511
58,698
11,395
58,287
Policy Persistency Rate (26 months) 2 (%)
Policy Persistency Rate (14 months)² (%)
52,189
As at
As at
31 December
2019
During the Reporting Period, the Company emphasized
its due role of insurance protection, and made great
efforts to develop protection-oriented business. The
Company accelerated the development of protection-
oriented businesses and further diversified its product
mix. Out of the top ten insurance products by first-year
regular premiums, six were protection-oriented products.
The percentage of premiums from designated protection-
oriented insurance business in the first-year regular
premiums rose by 8.6 percentage points year on year,
with an increase in both the number of protection-oriented
insurance policies and average premiums per policy.
During the Reporting Period, the Company vigorously
developed its long-term regular business and its
business structure was further optimized. First-year
regular premiums amounted to RMB109,416 million,
which accounted for 97.89% of long-term first-year
premiums, increasing by 7.73 percentage points year
on year. In particular, first-year regular premiums with a
payment duration of ten years or longer were RMB59,168
million (a year-on-year increase of 42.1%), which
accounted for 54.08% of the first-year regular premiums
(a year-on-year increase of 14.21 percentage points).
Renewal premiums amounted to RMB385,797 million
(a year-on-year increase of 5.8%), which accounted for
68.03% of the gross written premiums.
During the Reporting Period, with a commitment to
high-quality development, the Company achieved a
rapid growth in its business value. Value of one year's
sales of the Company was RMB58,698 million, an increase
of 18.6% year on year. The new business margin of one
year's sales of the exclusive individual agent channel
and the bancassurance channel increased by 3.2 and
5.1 percentage points year on year, respectively. As at
31 December 2019, embedded value of the Company
reached RMB942,087 million, increasing by 18.5% from
the end of 2018. The surrender rate ³ was 1.89%, a
decrease of 2.80 percentage points year on year.
19
China Life Insurance Company Limited ⚫ 2019 Annual Report 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.
2.
1. Numbers may not be additive due to rounding.
Notes:
795,052
2.85
942,087
3.03
Number of long-term in-force policies (hundred million)
Embedded value
2018
31 December
Group insurance channel
Including: residual margin Note
Bancassurance channel
Value of one year's sales¹
2018
2019
RMB million
Key Performance Indicators of 2019
Mr. Zhao Guodong, Mr. Zhan Zhong, Mr. Zhao Peng, Mr. Su Hengxuan, Mr. Li Mingguang, Mr. Ruan Qi, Ms. Yang Hong.
From left to right:
Gross written premiums
134
China Life Insurance Company Limited ⚫ 2019 Annual Report Management Discussion and Analysis
25
Insurance contracts
Life insurance
40,275
Accident insurance
(國壽金賬戶兩全保險(萬能型))
567,086
535,826
Premiums from new policies
Net profit attributable to equity holders of the Company
95,148
169,043
Gross investment income
364,678
385,797
Renewal premiums
41,635
59,168
First-year regular premiums with a payment duration
of ten years or longer
104,419
109,416
Including: First-year regular premiums
171,148
181,289
Including: Exclusive individual agent channel
37,486
25.6%
9,602
1,163
5.
Cash and others include cash, cash at banks, short-term deposits and securities purchased under agreements to resell, etc.
China Life Insurance Company Limited 2019 Annual Report Management Discussion and Analysis
27
As at the end of the Reporting Period, among the major
types of investments, the percentage of investment in
bonds changed to 39.48% from 42.20% as at the end of
2018, the percentage of term deposits changed to 14.98%
from 18.02% as at the end of 2018, the percentage of
investment in debt-type financial products increased to
11.62% from 11.32% as at the end of 2018, and the
percentage of investment in stocks and funds (excluding
money market funds) increased to 11.00% from 9.03% as
at the end of 2018.
The Company's debt-type financial products mainly
concentrated on sectors such as transportation, public
utilities and energy, and the financing entities were
primarily large central-owned enterprises and state-
owned enterprises. As at the end of the Reporting Period,
over 99% of the debt-type financial products held by
the Company had ratings of AAA or above by external
rating institutions. In general, the quality of the debt-type
financial products invested by the Company was in good
condition and the risks were well controlled.
Other equity investments include private equity funds, unlisted equities, preference shares, and equity investment plans, etc.
Investment income
RMB million
2019
2018
Gross investment income
Net investment income
Net income from fixed-maturity investments
Net income from equity investments
For the year ended 31 December
4.
Funds include equity funds, bond funds and money market funds, etc. In particular, the balances of money market funds as at 31 December 2019 and
31 December 2018 were RMB1,829 million and RMB4,635 million, respectively.
3.
Investments in associates and
joint ventures
222,983
6.24%
201,661
6.50%
Total
3,573,154
100.00%
3,104,014
100.00%
Notes:
1. 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.
2.
Other fixed-maturity investments include policy loans, statutory deposits-restricted, and interbank certificates of deposit, etc.
Net income from investment properties
Investment income from cash and others
Share of profit of associates and joint ventures
Net realised gains on financial assets
169,043
(1,148)
Net investment yield¹
4.61%
4.64%
Gross investment yield²
5.24%
3.29%
Notes:
1. Net investment yield = (Net investment income - Interest paid for securities sold under agreements to repurchase)/((Investment assets at the end of the
previous year - Securities sold under agreements to repurchase at the end of the previous year + Investment assets at the end of the period - Securities
sold under agreements to repurchase at the end of the period)/2)
2.
Gross investment yield = (Gross investment income - Interest paid for securities sold under agreements to repurchase)/((Investment assets at the end
of the previous year - Securities sold under agreements to repurchase at the end of the previous year - Derivatives financial liabilities at the end of the
previous year + Investment assets at the end of the period - Securities sold under agreements to repurchase at the end of the period - Derivatives
financial liabilities at the end of the period)/2)
In 2019, the Company's net investment income was
RMB149,109 million, an increase of RMB16,092 million from
2018 and a year-on-year increase of 12.1%. As the Company
increased its allocation in interest-bearing assets such as
bonds with long duration, stocks with high dividends and
non-standard assets in recent years, although the interest
rate fluctuated and trended downwards, the Company's
net investment yield remained stable at 4.61%. In the
meantime, in respect of the equity investments, the
Company followed the long-term investment direction
and effectively implemented tactical allocations under
the established strategic asset allocation guidance, and
the Company's investment income rose significantly.
The gross investment income of the Company reached
RMB169,043 million, an increase of RMB73,895 million
from 2018, and the gross investment yield was 5.24%,
an increase of 195 BPs from the end of 2018. The
comprehensive investment yield taking into account
the current net fair value changes of available-for-sale
securities recognised in other comprehensive income was
7.28%, an increase of 418 BPs from the end of 2018.
Major investments
During the Reporting Period, there was no material equity
investment or non-equity investment of the Company that
is subject to disclosure requirements.
Disposal gains and impairment loss of associates and joint ventures
1.96%
(18,278)
Net fair value gains through profit or loss
95,148
149,109
133,017
116,254
106,422
22,804
17,776
31
105
861
969
9,159
7,745
1,831
(19,591)
19,251
60,714
1.62%
57,773
2,674,261
74.85%
2,407,236
77.55%
535,260
14.98%
559,341
18.02%
1,410,564
39.48%
1,309,831
42.20%
Debt-type financial products¹
415,024
11.62%
Percentage
351,277
Amount
As at 31 December 2018
7,642
1,097
During the Reporting Period, the Company achieved
significant increase in investment income by
constantly enhancing the asset-liability management
and optimizing its asset allocation strategies. The
Company recorded a gross investment income of
RMB169,043 million, a year-on-year increase of 77.7%
from 2018.
6.0%
During the Reporting Period, underwriting and policy acquisition costs rose by 29.8% year on year due to an increase
in the commissions of regular business resulting from the Company's enhanced efforts in business restructuring.
Administrative expenses increased by 7.4% year on year as a result of business growth.
26 China Life Insurance Company Limited ⚫ 2019 Annual Report Management Discussion and Analysis
Investment Business
In 2019, the global economic growth slowed down
synchronously, with repeated trade frictions becoming
the biggest disturbance factor. The growth of domestic
economy slightly slowed down but generally remained
stable. The interest rate of the domestic bond market
fluctuated and declined within a narrow range, and the
stock market saw a significant rise compared to the
beginning of 2019. The Company constantly reinforced its
asset-liability management and increased the allocation
in yield seeking assets and strategic assets. In respect
of fixed-income investment, the Company optimized
the portfolio structure and accumulated assets with
long duration. While grasping opportunities to allocate
to traditional fixed-income assets with long duration, it
increased allocation to non-standard financial assets and
bank capital replenishment instruments, etc. As a result,
the Company's investment yields were increased while
the credit risk was strictly controlled. In respect of its
open market equity investment, the Company achieved
satisfactory investment returns through effectively
implementing tactical allocations, carrying out rebalancing
as appropriate and optimizing the structure of equity
holdings. As at the end of the Reporting Period, the
Company's investment assets reached RMB3,573,154
million, an increase of 15.1% from the end of 2018.
Investment portfolios
As at the end of the Reporting Period, our investment assets categorized by investment object are set out as below:
RMB million
Investment category
Fixed-maturity financial assets
Term deposits
Bonds
As at 31 December 2019
Amount
Percentage
7.4%
11.32%
313,413
32,640
0.91%
32,854
1.06%
Other equity investments4
178,302
4.99%
106,821
3.44%
Investment properties
12,141
0.34%
9,747
0.31%
Cash and others5
Bank wealth management products
Other fixed-maturity investments²
3.42%
3.31%
8.77%
186,787
6.01%
Equity financial assets
605,996
16.95%
424,656
13.68%
Common stocks
276,604
7.74%
178,710
5.76%
Funds³
118,450
106,271
In 2019, the Company kicked off the "Dingxin Project"
under the guidance of "China Life Revitalization" strategy
with "Dual Centers and Dual Focuses" as its strategic
core. As at the end of the Reporting Period, the Company
completed the optimization of its organizational structure
2018
Renewal
premiums
385,797
5.8%
23,239▼
▼4,026 (17.32%)
2.5%
83,865▼
23,820▼
2018
2019
First-year regular premiums from
bancassurance channel (RMB million)
2018
36,731 (46.35%)▼
2019
52,200 (62.24%)▼
exclusive individual agent channel (RMB million)
▼5,925 (24.87%)
79,241▼
First-year regular premiums with a payment
duration of 10 years or longer
First-year regular premiums with a payment
23
China Life Insurance Company Limited ⚫ 2019 Annual Report Management Discussion and Analysis
year on year
36.1%
Monthly average active
insurance planners for
long-term business
increased by
800 166,000
Sales representatives
year on year
34.9%
million
Monthly average
productive agents
increased by
1.613
Exclusive individual agents
Ci
duration of 10 years or longer
First-year regular premiums from
Bancassurance Channel. In 2019, with an emphasis on
regular premium business, the bancassurance channel
furthered its business restructuring, with its new business
margin of one year's sales of the channel rising constantly.
During the Reporting Period, gross written premiums
from the bancassurance channel amounted to RMB70,060
million, a decrease of 8.8% year on year. First-year regular
premiums were RMB23,820 million, an increase of 2.5%
year on year. In particular, first-year regular premiums with
a payment duration of ten years or longer were RMB5,925
million (a year-on-year increase of 47.2%), accounting
for 24.87% of the first-year regular premiums, a year-on-
year increase of 7.55 percentage points. New business
margin of one year's sales of the channel reached 23.8%,
increasing by 5.1 percentage points year on year. Renewal
premiums amounted to RMB44,623 million (a year-on-
year increase of 1.9%), accounting for 63.69% of the
gross written premiums from this channel, a year-on-year
increase of 6.71 percentage points. As at the end of 2019,
as a result of strengthening its sales team management
and improving sales force quality, the number of sales
representatives of the bancassurance channel was
166,000, with the monthly average active insurance
planners for long-term business increasing by 36.1% year
on year.
22 China Life Insurance Company Limited ⚫ 2019 Annual Report Management Discussion and Analysis
Exclusive Individual Agent Channel. In 2019, focusing
on business value growth, the exclusive individual agent
channel deepened transformation and upgrade in its.
sales management, prioritized the growth of protection-
oriented business, reinforced coordinated development
of business, sales force and day-to-day management,
and achieved coordinated growth of business scale and
value, with its new business margin of one year's sales
937
763
First-year business of long-term insurance
24,303
31,559
Other Channels¹
21,268
23,833
Short-term insurance business
1,649
1,995
Renewal business
2,483
2,050
Single
First-year regular
Group Insurance Channel. In 2019, the group insurance
channel consistently deepened business diversification,
stepped up efforts to expand key business segments,
and achieved rapid development of various businesses.
During the Reporting Period, gross written premiums
from the group insurance channel were RMB28,846
million, an increase of 9.2% year on year. Short-term
insurance premiums from the channel were RMB23,833
million, an increase of 12.1% year on year. The Company
actively carried out the pilot program of tax deferred
pension insurance business and consistently promoted
the tax-advantaged health insurance business. With
stricter performance appraisal and seeking for quality
enhancement of its sales team, the number of direct sales
representatives was 65,500 as at the end of 2019, among
which, the number of high-performance representatives
reached 45,000.
763
Single
In 2019, by consistently focusing on business value
growth and accelerating reform and transformation, the
Company's core businesses developed at a faster speed
with its value of one year's sales rising significantly. With
its sales force expanding steadily, quality of the sales
force improved constantly. As at the end of 2019, the
total number of the Company's sales force reached 1.848
million.
The Company's channel premium breakdown was presented based on the separate groups of sales personnel including exclusive individual agent team,
group insurance sales representatives, bancassurance sales team and other distribution channels.
2.
1. Other channels mainly include supplementary major medical expenses insurance business, tele-sales, online sales, etc.
Notes:
535,826
567,086
Total
21,052
28,293
Short-term insurance business
2,314
2,503
Renewal business
2
935
1,004
Direct sales representatives
High-performance
representatives
Surrender
Net increase
in investment
RMB million
Top three insurance products in terms of net increase in investment contract
For the year ended 31 December
China Life Xin Fu Ying Jia Annuity Insurance, China Life Hong Fu Zhi Zun Annuity Insurance (participating insurance) and China Life Xin Ru Yi Annuity
Insurance (platinum version) have been replaced by their upgraded products and are no longer on sale, and the gross written premiums are recorded as
renewal premiums.
2.
Insurance product
28 China Life Insurance Company Limited ⚫ 2019 Annual Report Management Discussion and Analysis
Notes:
(國壽鑫如意年金保險(白金版))
504
Mainly through the channel of
exclusive individual agents
21,276
China Life Xin Ru Yi Annuity Insurance
(platinum version)
1. Standard premiums were 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.
China Life Xin Account Endowment Insurance
(universal type) (exclusive version)
(國壽鑫賬戶兩全保險(萬能型)(尊享版))
Mainly through the channel of
exclusive individual agents
3,385
China Life Jin Account Endowment Insurance
(universal type)
(國壽鑫賬戶兩全保險(萬能型)(鑽石版))
349
Mainly through the channel of
exclusive individual agents
(universal type) (diamond version)
7,598
China Life Xin Account Endowment Insurance
157
Mainly through the channel of
exclusive individual agents
10,107
value
Major sales channel
contract
503
Mainly through the channel of
exclusive individual agents
21,429
China Life Hong Fu Zhi Zun Annuity
Insurance (participating insurance)
(國壽鴻福至尊年金保險(分红型))2
premium
Gross written
China Life Xin Xiang Jin Sheng
Annuity Insurance
(國壽鑫福贏家年金保險)?
China Life Xin Fu Ying Jia
Insurance product
RMB million
For the year ended 31 December
Top five insurance products in terms of gross written premium
Analysis of major insurance products
24 China Life Insurance Company Limited ⚫ 2019 Annual Report Management Discussion and Analysis
The Company actively consolidated internal and external
ecological resources, steadily pushed forward its
coordinated business development with other subsidiaries
of CLIC, carried out market expansion and widened
customer base through the strategy of "One Customer,
One-stop Service". In 2019, premiums from property
insurance cross-sold by the Company increased by 9.4%
year on year, whereas new bids of enterprise annuity
funds and pension security products of Pension Company
cross-sold by the Company grew by 26.7% year on
year. Meanwhile, the Company entrusted CGB to sell
bancassurance products, with first-year regular premiums
for 2019 increasing by 52.8% year on year. The number
of new debit cards and credit cards jointly issued by the
Company and CGB during the year exceeded one million,
which demonstrated the synergy effects of platform
operation, positive interaction and mutual benefits to both
companies.
medical expenses insurance programs, providing services
to nearly 400 million people in 31 provinces and cities.
It also provided supplementary medical insurance
protection for social security in 15 provinces, serving 38
million people, undertook over 600 medical insurance
administration projects, covering more than 100 million
people, and offered long-term care insurance protection
for more than 13 million people. In 2019, the Company
saw a faster growth in its online sales business. The
Company emphasized product innovation, reinforced
quality management and guarded against business risk.
To optimize customer experience, the Company provided
quick and convenient ways for online insurance application
and diversified online services to insurance customers via
various models, including direct sales on the Company's
official website, integration of both online and offline
sales, and collaboration with platform resources.
Other Channels. In 2019, gross written premiums from
other channels reached RMB31,559 million, an increase
of 29.9% year on year. The Company actively developed
policy-oriented health insurance businesses, including
supplementary major medical expenses insurance,
long-term care insurance and supplementary medical
insurance for social security, which consistently led
the market. As at the end of the Reporting Period, the
Company carried out over 230 supplementary major
$45,000
Standard
premiums
from new
policies¹
65,500
37,024
Surrenders
(國壽城鄉居民大病團體醫療保險(A型))
Urban Citizens (Type A)
Expenses Insurance for Rural and
Through other channels
25,757
25,757
China Life Supplementary Major Medical
(國壽鑫享金生年金保險(A款))
140
Mainly through the channel of
exclusive individual agents
Annuity Insurance (Type A)
10,948
36,345
586
Mainly through the channel of
exclusive individual agents
Major sales channel
Premium breakdown (RMB million)
968
3,487
Single
3.7%
94,834
98,342
First-year regular
-5.2%
2,332
106,212
First-year business
2.1%
437,540
446,562
Life Insurance Business
Change
100,674
11,378
-79.5%
Renewal business
16.6%
9,430
11,000
First-year regular
30.6%
50,705
66,213
First-year business
26.3%
83,614
105,581
Health Insurance Business
4.4%
331,328
345,888
2018
2019
RMB million
For the year ended 31 December
2019
Value of one year's sales (RMB million)
First-year
regular premiums
104,419
Ө
55,330
insurance premiums
Short-term
11,399
Single premiums
First-year
insurance premiums
69,515
Short-term
Single premiums
2,358
2019
Renewal
premiums
364,678
2018
Single
Embedded value (RMB million)
As at 31 December 2018
Gross written premiums categorized by business
Insurance Business
BUSINESS ANALYSIS
properly coordinate growth in business scale and value,
and optimize its business structure. The health insurance
channel focused on professional development. In terms
of the investment function, the Company further
improved its top-down investment management system
in line with the investment value creation chain, including
strategic asset allocation, tactical asset allocation,
investment management, strengthened risk management
in all aspects and investment operation support. In terms
of operations, the Company accelerated the integration
of front, middle, and back offices, gradually established
an integrated intelligent operational system and a precise
financial resource allocation system, and started to set up
an operation and financial sharing service center. Based on
the completion of its organizational restructuring in 2019,
the Company will continue to push forward the "Dingxin
Project" reforms, further improve its operational and
management capabilities, and further promote reform and
transformation in sales, investment, product, operations,
technology, and human resources.
and personnel adjustments and actively explored and
established an organizational model and mechanism
in line with the Company's strategy. In terms of sales
function, a development system of "Yi Ti Duo Yuan" was
initially formed, which featured a strengthened individual
agent channel at the core of value creation. The Company
integrated all sales resources for individual insurance
business and consolidated the bancassurance channel's
insurance planners, tele-sales and agent channel's upsales
teams. By separately managing and operating the general
agent team and the new upsales team, which were both
supported by the four functions of individual insurance
planning, individual insurance operation, training and
integrated finance functions, the Company deepened
the transformation and upgrade of individual insurance
business. In the development of the diversification ("Duo
Yuan") system, the Company reinforced and improved
the existing advantages of the other channels. The group
insurance channel focused on the development of its
professional operation capacity. The bancassurance
channel would generate business through bank outlets,
China Life Insurance Company Limited ⚫ 2019 Annual Report Management Discussion and Analysis
20
Surrender Rate = Surrender payment/(Liability of long-term insurance contracts at the beginning of the period + Premiums of long-term insurance contracts)
3
795,052 ▼
18.5%
942,087▼
49,511 ▼
18.6%
58,698▼
As at 31 December 2019
First-year regular
55,213
33.8%
First-year business of long-term insurance
76,841
70,060
Bancassurance Channel
11,835
15,803
23,851
Short-term insurance business
336,676
272
277
Renewal business
Single
79,241
316,930
31,881
First-year regular
23,820
3,018
First-year business of long-term insurance
26,404
28,846
Group Insurance Channel
1,175
1,586
Short-term insurance business
43,785
44,623
8,642
31
Renewal business
Single
23,239
83,865
79,513
84,142
408,278
Total
Renewal business
1.2%
14,231
14,402
1.8%
14,672
14,943
19.6%
32,909
39,368
First-year regular
Single
First-year business
Accident Insurance Business
Renewal business
74
14,328
541
567,086
41,275
155
14,076
1.8%
436,621
First-year regular
First-year business of long-term insurance
Exclusive Individual Agent Channel
2018
2019
RMB million
For the year ended 31 December
Gross written premiums categorized by channel
China Life Insurance Company Limited ⚫ 2019 Annual Report Management Discussion and Analysis 21
During the Reporting Period, by further improving its business structure, gross written premiums from the life insurance
business of the Company amounted to RMB446,562 million, rising by 2.1% year on year; gross written premiums from
the health insurance business reached RMB105,581 million, rising by 26.3% year on year; and gross written premiums
from the accident insurance business were RMB14,943 million, a year-on-year increase of 1.8%.
Note: Single premiums in the above table include premiums from short-term insurance business.
5.8%
22.7%
441
535,826
-52.3%
regular premiums
109,416
increasing significantly. During the Reporting Period, gross
written premiums from the exclusive individual agent
channel amounted to RMB436,621 million, an increase
of 6.9% year on year. First-year regular premiums from
the channel were RMB83,865 million, an increase of
5.8% year on year, which accounted for 99.67% of first-
year premiums of long-term insurance. In particular,
the percentage of first-year regular premiums with a
payment duration of ten years or longer in first-year regular
premiums was 62.24%, an increase of 15.89 percentage
points year on year. Renewal premiums amounted to
RMB336,676 million, an increase of 6.2% year on year.
New business margin of one year's sales of the channel
reached 45.3%, a year-on-year increase of 3.2 percentage
points. In 2019, the sales force of the channel was
improved in both quantity and quality, which substantially
drove business growth. As at the end of 2019, the number
of exclusive individual agents was 1.613 million, an
increase of 12.1% from the end of 2018. The quality of the
sales force was improved constantly, with the number of
monthly average productive agents increasing by 34.9%
year on year and the monthly average number of agents
selling designated protection-oriented products increasing
by 43.8% year on year. As at the end of 2019, the number
of upsales agents which were included in the exclusive
individual agents reached 577,000, an increase of 42.1%
from the end of 2018, outpacing the growth of the
exclusive individual agent force as a whole. In 2019, the
day-to-day management of the channel was strengthened
significantly, with various day-to-day management
indicators being improved.
As at
31
TECHNOLOGICAL EMPOWERMENT
AND OPERATIONS AND SERVICES
Technological Empowerment
During 2019, the Company kicked off its three-year
action plan for the "Technology-driven China Life"
initiative in all aspects. It actively applied advanced
technologies to empower the whole insurance value
chain, constantly strengthened its technological service
capabilities to integrate internal resources and connecting
with customers, and steadily pushed forward digital
transformation to support its high-quality development.
Core Business Empowerment and Intelligent
Upgrade
Sales empowerment and management model upgrade.
The Company adopted technologies such as Al, Big Data
and Internet of Things to achieve data integration, which
help achieve smarter, more accurate and convenient
insurance sales. In 2019, the online customer acquisition
grew by 47% year on year, and the percentage of online
sales force recruitment reached 70%. The Company held
online training sessions for new agents with 4.9 million
person-times participation. More than 60 million person-
times of customers were recommended to the sales team
via the intelligent platform, and the ratio of customers
who purchased long-term insurance policies increased by
five times.
Field offices empowerment and equipment upgrade.
The application of the "Internet of Things" technology
accelerated the real-time interconnection between
different field offices and networks as well as the
intelligent upgrade of daily office operations. In 2019,
the Company added 88,000 sets of intelligent equipment
and achieved full digital coverage at Star Field Offices.
It deployed more than 2,000 self-service terminals at its
service counters across China and set up demonstrative
5G digital field offices in multiple cities. It established a
sales command center that covered the entire country
and had direct access to the frontline, enabling real-time
information transmission and turning its field offices into
the digital bases for further services extension.
Services empowerment and experience upgrade.
The Company continued to advance the application of
Al in the fields of underwriting, policy administration,
claims settlement, services and risk control. In 2019, the
approval rate of individual insurance policies by automatic
underwriting was 89.4%, and the number of claims settled
automatically in the whole process reached more than
11.3 million. The Company introduced a short-term risk
identification model for critical illness insurance with a
91% accuracy rate in identifying risks. It also developed
a platform to utilize intelligent technologies to discover
and verify suspected money-laundering activities, thus
effectively solving the difficulties in identifying and
verifying money laundering activities. The Company also
stepped up efforts in identifying non-compliance of agents
by intelligent means, which enhanced its ability to control
sales risks in a practical manner.
Establishment of Ecosystem to Integrate Internal
Resources and Connect with Customers
Cloud-based infrastructure enabling comprehensive
upgrade. The Company revamped its IT infrastructure
and utilized industry-leading hybrid clouds to achieve the
rapid deployment of front office applications and secure
storage of back office data, which effectively improved
the stability, smoothness and security of the systems.
Specifically, resource allocation efficiency and overall
access speed increased by ten times and three times,
respectively. While substantially expanding the resources
of its basic platform, the Company also managed to
continually reduce the costs of resources.
Roll-out of new digital applications. The Company
unveiled component-based plug-in professional service
modules and efficiently launched various types of flexibly-
combined "light" applications suited to market application
scenarios for its users, which promptly responded to
regulatory requirements and market demand. A series of
innovative applications as represented by cloud video and
cloud desktop transformed its traditional office model,
and provided readily available, mobile, convenient live-
streaming and smart office services for its salespersons
and employees across the country, which helped the
Company vigorously advance digitalized operations.
China Life Insurance Company Limited 2019 Annual Report Management Discussion and Analysis
Digital ecosystem featuring openness and sharing.
Capitalizing on flexible data and resources, the Company
continued to enrich and expand its FinTech ecosystem
based on the digital platform, thus continually improving
its ability to create value by integrating internal resources
and connecting with customers. In 2019, the Company
developed more than 1,000 innovative applications based
on the platform and cooperated with more than 6,000
institutions to carry out various services and over 40,000
activities, which enriched the Company's insurance-
centered ecosystem services.
China Life Insurance Company Limited ⚫ 2019 Annual Report Management Discussion and Analysis
Operations and Services
In 2019, by adhering to the "customer-oriented
approach" and the goal of "strengthening efficiency,
promoting technology-driven development, achieving
value improvements and offering first-class customer
experience", the Company developed a three-year
action plan for excellent services, pushed forward the
construction of a "production, service and control"
structure and rolled out the model featuring "multi-
point access to the front office, integrated and intelligent
headquarters and operation sharing". All these efforts
helped promote the Company's operations and services to
be more integrated, intelligent and ecosystem-based.
Focusing on the market and insurance products being
more diversified. In 2019, closely following the market
trend and demands of its customers, the Company
developed a total of 102 new insurance products,
including 23 life insurance products, 43 health insurance
products, 27 accident insurance products and 9 annuity
insurance products. Among these new products, 89
were protection-oriented products and 13 were long-term
savings products.
Focusing on integration and customer services being
more accessible. The Company improved the integrated
financial service ecology and achieved the goal of "One
Customer, One China Life" by optimizing its service
process throughout the entire service chain. Customers
were able to access various financial services provided
by CLP&C, Pension Company, CGB, AMP and China
Life Insurance (Overseas) Company Limited through
the multi-media Customer Contact Center or China Life
Insurance APP.
Focusing on online services and customer services being
more convenient. The Company made a breakthrough in
its service capability of online platform as well as digital
business processing. The efficiency of claims settlement
was improved significantly, with the time required for
individual claims payment being shortened by 41% year
on year and the direct payment by the Company being
provided in more than 15,000 medical institutions. The
Company established the industry-leading whole process
automatic claims settlement mode, and the rate of
automatic claims settlement increased by 41.5 percentage
points. Insurance policy service became more convenient
with the paperless policy application rate for individual
customers reaching 97.8%, an increase of 7.8 percentage
points year on year. Policy administration processed online
increased by 47% year on year.
Focusing on business scenarios and customer
services being smarter. The Company provided more
differentiated and customized services to customers by
advancing the application of Al technology in business
scenarios. It launched the Intelligent Underwriting System
2.0, improved its differentiated underwriting policies,
applied insurance service records model and launched
underwriting Q&A robots, which helped improve the
service quality of its sales agents and increased the rate
of intelligent underwriting by 5.9 percentage points year
on year. With continuous sophisticated training of the Al
model, product recommendation to targeted customers
reached over 300 million times. The volume of services
provided by the online robots increased by 77% year on
year.
Focusing on demands and services being more
customized. By further enhancing high-quality service
supply system, the Company maintained a high level
of customer satisfaction and loyalty. The Company
continued to push forward the upgrading of its services
by implementing a project of customer experience
improvement, completing a customer experience blueprint
and listening to the customers. The Company also
launched new models such as "Insurance + Health" and
"Insurance + Rescue" and 70 upgraded services such as
Policy Loan ("Suixinjie"). The Company widely promoted
the "Five Exclusive VIP Services" and organized more
than 30,000 value-added service activities of all kinds
such as "Little Painters of China Life" and "China Life 700
Running", providing services of over 40 million customer-
times.
Constantly implementing the strategy of "Inclusive
Healthcare" and "Integrated Aged-care". By consolidating
the resources of healthcare and medical services, the
Company established a healthcare ecosystem covering
all life cycles. It created an innovative model for the
cooperation between medical and insurance entities with
the construction of the online and offline platforms, and
promoted application of the claims settlement model that
integrated government and businesses in the form of
"basic medical insurance + supplemental major medical
expenses insurance + commercial insurance." Meanwhile,
the Company constantly promoted the development and
operation of its "Integrated Aged-care" projects. The
opening and operation of the elderly communities of "China
Life Caregarden Ya Jing" in Yangcheng Lake, Suzhou and
"China Life Caregarden Yi Jing" in Haitang Bay, Sanya
was set to provide a boost to the Company in building
an integrated financial ecosystem featuring "Financial
Insurance + Health Care + Elderly Care". The Company
set up the China Life Integrated Aged Care Fund and China
Life Jiequan Investment Fund (Inclusive Healthcare Fund
II), focusing on companies and funds engaging in inclusive
healthcare-related sectors such as healthcare, elderly care,
health information management, pharmaceutical production
and services, and medical apparatus and instruments
production, with a view to further promoting the strategic
layout in the retirement service and health care industry.
China Life Insurance Company Limited 2019 Annual Report Management Discussion and Analysis 33
PERFORMANCE OF THE CORPORATE
SOCIAL RESPONSIBILITY
32
For the performance by the Company of its corporate
social responsibility during the Reporting Period, please
refer to the full text of the "2019 Environmental, Social
and Governance & Social Responsibility Report" ("ESG
Report 2019") 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). The specific
information on environment is set out in Part 6 of the
"ESG Report 2019".
Details of structured entities controlled by the Company is set out in the Note 42 in the Notes to the Consolidated
Financial Statements in this annual report.
Note: For details, please refer to Note 9 and Note 35 in the Notes to the Consolidated Financial Statements in this annual report.
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 CBIRC
Property loss insurance; liability insurance; credit insurance and
guarantee 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
the CBIRC
3,400
70.74%
is held by the
5,644
4,084
635
Company,
Structured Entities Controlled by the Company
and 3.53% is
18,800
40%
91,167
23,330
2,123
China Guangfa Bank
Co., Ltd.
The businesses approved by the CBIRC include commercial
banking businesses such as public and private deposits, loans,
payment and settlement, and capital business
19,687
2,632,798
209,564
12,581
held by AMC
China Life Asset
FUTURE PROSPECT
Development Strategies and Business Plans of
the Company
Other operating assumptions such as mortality, morbidity,
lapses and expenses are based on the Company's recent
operating experience and expected future outlook.
SUMMARY OF RESULTS
The embedded value as at 31 December 2019, the value of one year's sales for the 12 months ended 31 December 2019,
and the corresponding results as at 31 December 2018 are shown below:
Components of Embedded Value and Value of One Year's Sales
RMB million
31 December
ITEM
A Adjusted Net Worth
2019
31 December
2018
482,793
Economic assumptions: The calculations are based upon
assumed corporate tax rate of 25% for all years. The
investment return is assumed to be 5% per annum.
14% grading to 18% (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 10% per annum.
386,054
509,515
454,786
C Cost of Required Capital
(50,220)
(45,788)
D Value of In-Force Business after Cost of Required Capital (B + C)
459,295
408,998
E Embedded Value (A + D)
F Value of One Year's Sales before Cost of Required Capital
G Cost of Required Capital
B Value of In-Force Business before Cost of Required Capital
Industry Landscape and Development Trends
The life insurance industry in China is still at an important
stage full of strategic opportunities, with high-quality
development as the main theme. Although the global
economic growth has continued to slow down, the
basic trend of the Chinese economy maintaining stable
growth towards long-term sound development remains
unchanged. In 2019, China's per capita GDP exceeded
USD10,000 for the first time, and the demand of people
for insurance protection is increasing. In the meantime,
with the gradual increase in urbanization rate and the
further promotion of a "Healthy China" strategy, there will
continue to be enormous potential for the development
of the life insurance industry. As the insurance regulator
sets explicit requirements and goals for promoting the
high-quality development of the insurance industry, it
is expected to see further acceleration in high-quality
development of this industry. With the full opening of the
insurance market, the entities offering insurance services
will become more diversified and market competition
will further increase, which will help improve consumer
experience and promote the sustainable and healthy
development of the industry. As insurance companies
have promoted the application of information technology
in areas such as sales, management and services, it is set
to accelerate the digital transformation of the insurance
industry.
ASSUMPTIONS
PREPARATION AND REVIEW
In 2020, the Company will take high-quality development
as its fundamental requirement, adhere to the overall
keynote of making progress with stability, and take
"Dual Centers and Dual Focuses" as its strategic core.
The Company will uphold the operational guideline of
"prioritizing business value, strengthening sales force,
achieving stable growth, upgrading technology, optimizing
services, and guarding against risks". The Company will
strengthen its efforts to create value, modernize corporate
governance, and vigorously implement the "Dingxin.
Project". It will step up efforts to develop its protection-
oriented business and long-term savings business, push
forward the transformation and upgrade of sales force,
improve operations and services capabilities, strengthen
technological empowerment, enhance the management
of assets and liabilities, firmly maintain the bottom
line of risks management and control, and ensure that
substantive progress is achieved in the implementation
of various strategic arrangements of "China Life
Revitalization" so as to lay a solid foundation for building a
world-class life insurance company.
Potential Risks
Currently, the global economic growth has continued
to slow down and is still at the stage of in-depth
adjustments following the international financial crisis.
The global landscape is changing rapidly, with a growing
number of new sources of turmoil and risks worldwide.
China is going through a critical stage in transforming
its development model, optimizing economic structure
and switching the driving force for growth. With the
intertwining of structural, institutional and cyclical
problems and the growing impact of the "three-stage
superposition", the Chinese economy faces increasing
downward pressure. The outbreak of COVID-19 in early
2020 will have an impact on the Company's business in
the short term. The Company has taken various measures
to ensure the orderly operation of its business. The
Chinese economy is highly resilient and has enormous
potential. The Company will continue to stay alert and
actively respond to any impacts associated with the
outbreak. In 2020, the Company will continue to enhance
its analysis on complex risk factors and strive to push
forward its high-quality development.
The Company expects that it will have sufficient capital
to meet its insurance business expenditures and new.
general investment needs in 2020. At the same time, the
Company will make corresponding financing arrangements
based on capital market conditions to further implement
its future business development strategies.
34 China Life Insurance Company Limited ⚫ 2019 Annual Report Management Discussion and Analysis
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 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.
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.
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.
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.
China Life Insurance Company Limited 2019 Annual Report Embedded Value 35
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.
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.
942,087
1,286
11,914
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 RMB53,306 million. In addition,
the vast majority of the Company's 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 RMB535,260
million.
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
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 the
Company's ability to sell these investments or sell them at
a fair price.
Liquidity uses
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 its insurance activities
primarily relate to benefit payments under these insurance
products, as well as payments for policy surrenders,
withdrawals and policy loans.
The Company believes that its sources of liquidity are
sufficient to meet its current cash requirements.
China Life Insurance Company Limited 2019 Annual Report Management Discussion and Analysis
29
Consolidated cash flows
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.
For the year ended 31 December
2019
The Company's cash inflows mainly come from insurance
premiums, income from non-insurance contracts, interest
income, dividends 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.
2018
RMB million
Main Reasons for Change
Net cash inflow/(outflow) from
operating activities
286,032
147,552
93.9%
A decrease in surrender
payments and maturity
payments
Net cash inflow/(outflow) from
investing activities
(247,515)
(238,373)
Change
3.8%
Liquidity sources
During the Reporting Period, due to an increase in gross
investment income, profit before income tax from the
life insurance business increased by 2,502.3% year on
year, profit before income tax from the health insurance
business increased by 43.3% year on year, profit before
income tax from the accident insurance business basically
remained flat compared to 2018, and profit before income
tax from other businesses increased by 43.1% year on
year.
ANALYSIS OF SPECIFIC ITEMS
Profit before Income Tax
For the year ended 31 December
Profit before income tax
Life insurance business
Health insurance business
Accident insurance business
Other businesses
2019
2018
RMB million
Change
59,795
Analysis of Cash Flows
13,921
42,418
1,630
2,502.3%
5,875
4,100
43.3%
489
11,013
495
-1.2%
7,696
43.1%
329.5%
10,354
The needs for investment
management
(36,075)
761,367
356,953
303,872
266.71%
250.55%
276.53%
250.56%
The China Risk Oriented Solvency System was formally implemented on 1 January 2016. This table is compiled according to the rules of the system.
As at the end of the Reporting Period, the Company's
comprehensive solvency ratio increased by 25.97
percentage points from the end of 2018, which was due
to an increase in gross investment income, improvement
of business structure and the issuance of capital
supplemental bonds of RMB35 billion.
Sale of Material Assets and Equity
During the Reporting Period, there was no sale of material
assets and equity of the Company.
987,067
30
Major Subsidiaries and Associates of the Company
Company Name
Major Business Scope
RMB million
Registered
Capital
Shareholding
Total Assets
Net Assets
Net Profit
4,000
60%
China Life Insurance Company Limited ⚫ 2019 Annual Report Management Discussion and Analysis
Net cash inflow/(outflow) from
financing activities
761,353
2018
92,963
N/A
The needs for liquidity
management
Foreign exchange gains/(losses)
on cash and cash equivalents
55
81
-32.1%
Net increase/(decrease) in
cash and cash equivalents
2,497
2,223
12.3%
952,030
Solvency Ratio
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
Comprehensive solvency ratio
Note:
RMB million
As at
31 December
31 December
2019
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
795,052
43.686%
54,728
795,052
RMB million
2) Items B through J are explained below:
Notes: 1) Numbers may not be additive due to rounding.
K Embedded Value as at 31 December 2019 (sum A through J)
Other
Shareholder Dividend Distribution and Capital Injection
H Exchange Gains or Losses
G Market Value and Other Adjustments
F Methodology, Model and Assumption Changes
E Investment Experience Variance
C Value of New Business in the Period
D Operating Experience Variance
A Embedded Value at the Start of Year
B Expected Return on Embedded Value
ITEM
Analysis of Embedded Value Movement in 2019
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 2019 Annual Report Embedded Value 37
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.
0.9%
24.3%
66,625
58,698
128
31,906
63,745
38 China Life Insurance Company Limited 2019 Annual Report Embedded Value
Other miscellaneous items.
J
| Reflects dividends distributed to shareholders during 2019.
Reflects the gains or losses due to changes in exchange rate.
H
G Change in the market value adjustment from the beginning of year 2019 to 31 December 2019 and other adjustments.
Reflects the effects of appraisal methodology and model enhancement, and assumption changes.
F
23.8%
0.6%
Compares actual with expected investment returns during 2019.
Reflects the difference between actual operating experience in 2019 (including mortality, morbidity, lapse, and expenses etc.) and the
assumptions.
Value of one year's sales for the 12 months ended 31 December 2019.
C
B Reflects expected impact of covered business, and the expected return on investments supporting the 2019 opening net worth.
942,087
(1,781)
(4,916)
198
3,023
(6,846)
E
18.7%
0.8%
D
23.8%
52,189
2018
31 December
31 December
2019
RMB million
Note: Numbers may not be additive due to rounding.
Total
Group Insurance Channel
Bancassurance Channel
Exclusive Individual Agent Channel
Channel
Value of One Year's Sales by Channel
VALUE OF ONE YEAR'S SALES BY CHANNEL
36 China Life Insurance Company Limited 2019 Annual Report Embedded Value
Note: Numbers may not be additive due to rounding.
49,511
58,698
H Value of One Year's Sales after Cost of Required Capital (F + G)
(5,218)
0.6%
(5,047)
42,839
6,288
The value of one year's sales for the 12 months ended 31 December 2019 by channel is shown below:
221
58,698
45.3%
42.2%
6,357
42.2%
45.3%
2018
2019
2019
31 December
31 December
31 December
2018
Bancassurance Channel
31 December
Channel
Exclusive Individual Agent Channel
The new business margin of one year's sales for the 12 months ended 31 December 2019 by channel is shown below:
New Business Margin of One Year's Sales by Channel
Group Insurance Channel
314
Note:
By FYP
49,511
By APE
Asset Management Agreement between CLIC and AMC
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 2018. On 29 December 2018, CLIC and
AMC entered into the 2019-2021 asset management
agreement, with an entrustment term from 1 January
2019 to 31 December 2021. 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 35 in the Notes to the Consolidated
Financial Statements. The annual caps for the three years
ending 31 December 2021 are RMB320 million, RMB310
million and RMB300 million, respectively.
5
The 2020-2022 framework agreement renewed by the Company and Chongqing Trust was subject to the reporting, announcement and annual review
requirements but were exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules. The Company has
performed its disclosure obligation by way of announcement in respect of the transactions contemplated thereunder for the years from 2020 to 2022.
42
China Life Insurance Company Limited 2019 Annual Report Significant Events
For the year ended 31 December 2019, CLIC paid AMC a
service fee of RMB89.27 million.
31 December 2020
service fee, floating management fee, performance-
based bonus and real estate operation management fee
in respect of the investment and management services
provided by CLI to the Company. For details as to the
method of calculation of the investment management
service fee, floating management fee, performance-
based bonus and real estate operation management fee,
please refer to Note 35 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.
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 31 December 2018. As
approved by the 2017 Annual General Meeting of the
Company, the Company and CLI entered into the 2019
asset management agreement for alternative investments
on 31 December 2018. Such agreement took effect from
1 January 2019, with a term of two years. Unless a party
serves the other party a written notice for non-renewal
prior to 90 working days before the expiry date of the
agreement, the agreement will be automatically renewed
for one year from the expiry date thereof. 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 quasi-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 the investment management
For the three years ending 31 December 2021, the
annual caps on the contractual amount of assets newly
entrusted by the Company to CLI for investment and
management, as well as the annual caps on the amount
of the investment management service fee, floating
management fee, performance-based bonus and real
estate operation management service fee payable by the
Company to CLI are as follows:
For the year ended
31 December 2019
For the year ended 31 December 2019, the Company paid
AMC a service fee of RMB1,352.57 million.
For the year ending
For the year ending
Asset Management Agreement for Alternative Investments
between the Company and CLI
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 2018. On 28 December 2018,
the Company and AMC entered into the 2019-2021 asset
management agreement, with a term of three years
from 1 January 2019 to 31 December 2021. 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 35 in
the Notes to the Consolidated Financial Statements. The
annual cap for the three years ending 31 December 2021
is RMB2,000 million.
China Life Insurance Company Limited 2019 Annual Report Significant Events
Asset Management Agreements
MATERIAL LITIGATIONS OR
ARBITRATIONS
During the Reporting Period, the Company was not
involved in any material litigation or arbitration.
31 December 2021
MAJOR CONNECTED TRANSACTIONS
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
CLIC, CLP&C, CLI, Pension Company and China Life
E-commerce Company Limited ("CLEC"), respectively,
the framework agreement between CLI and AMP4,
the framework agreements entered into by Chongqing
4
International Trust Inc. ("Chongqing Trust") with CLWM
and AMC, respectively, and the framework agreement
between the Company and China Life Capital. 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 CLI, CLEC and China Life Capital. Therefore,
each of CLIC, CLP&C, CLI, CLEC 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. Each of CLWM and AMP is a subsidiary
of AMC, and is therefore a connected subsidiary 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.
The 2020-2022 framework agreement renewed by CLI and AMP was subject to the reporting, announcement, annual review and independent
shareholders' approval requirements under Chapter 14A of the Listing Rules, and the transactions contemplated thereunder for the years from 2020 to
2022 have been approved by the independent shareholders of the Company.
41
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 Trust 5. Such agreements and
the transactions thereunder have been approved by the
independent shareholders of the Company.
During the Reporting Period, the Company also carried
out certain continuing connected transactions, including
the asset management agreement between CLIC and
AMC, and the framework agreement between the
Company and CLWM, which were exempt from the
reporting, announcement, annual review and independent
shareholders' approval requirements under Chapter 14A of
the Listing Rules.
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.
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 2017. 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. For details as to the method of
calculation of the service fee, please refer to Note 35 in
the Notes to the Consolidated Financial Statements. The
annual cap for the three years ending 31 December 2020
is RMB708 million.
For the year ended 31 December 2019, the service fee
paid by CLIC to the Company amounted to RMB574.58
million.
Asset Management Agreement between the Company
and AMC
Amount of Assets Newly
Entrusted for Investment and
Management during the Period
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 (including the
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.
(including the amount for the subscription
of the related financial products: 100,000)
200,000
As approved by the First Extraordinary General Meeting
2019 of the Company, the 2020-2022 framework
agreement was entered into between the Company
and AMP on 31 December 2019 for a term of three
years from 1 January 2020 to 31 December 2022.
Pursuant to the agreement, the Company and AMP will
continue to conduct certain daily transactions, including
the 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 industry
practices. For the three years ending 31 December
2022, 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;
For the year ended 31 December 2019, the subscription
price and corresponding subscription fee for the
subscription of fund products were RMB20,475.00 million,
the redemption price and corresponding redemption fee
for the redemption of fund products were RMB7,951.54
million, the sales commission fee and client maintenance
fee paid by AMP were RMB0.87 million, the management
fee and performance-based fee paid by the Company
for the asset management for specific clients were
RMB31.20 million, and the fees for other daily transactions
were RMB6.68 million.
Framework Agreement between Pension Company and
AMP
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 would continue to conduct
certain daily transactions, including the 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 industry practices. For the three years ended
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
was RMB10,000 million; the annual cap of the sales
commission fee and client maintenance fee payable
by AMP was RMB100 million; the annual cap of the
management fee and performance-based fee payable by
Pension Company for the asset management for specific
clients was RMB100 million; and the annual cap of the
fees for other daily transactions was RMB100 million.
China Life Insurance Company Limited ⚫ 2019 Annual Report • Significant Events
45
Pension Company and AMP originally intended to
enter into the 2020-2022 framework agreement by 31
December 2019 to renew the 2017-2019 framework
agreement, and the 2020-2022 framework agreement has
been approved by the First Extraordinary General Meeting
2019 of the Company. However, due to the adjustment
of business arrangement, it is expected that Pension
Company and AMP will not enter into the 2020-2022
framework agreement.
For the year ended 31 December 2019, the subscription
price and corresponding subscription fee for the
subscription of fund products were RMB1,426.49 million,
the redemption price and corresponding redemption fee
for the redemption of fund products were RMB1,403.22
million, the sales commission fee and client maintenance
fee paid by AMP were RMB0 million, the management
fee and performance-based fee paid by Pension Company
for the asset management for specific clients were RMBO
million, and the fees for other daily transactions were
RMBO million.
Framework Agreement between CLIC and AMP
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 would continue to conduct
certain daily transactions, including the 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 industry
practices. For the three years ended 31 December 2019,
the annual cap of the subscription price and corresponding
subscription fee for the subscription of fund products was
RMB10,000 million; the annual cap of the redemption
price and corresponding redemption fee for the
redemption of fund products was 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 was RMB100 million.
As approved by the First Extraordinary General Meeting
2019 of the Company, the 2020-2022 framework
agreement was entered into between CLIC and AMP on 6
September 2019 for a term of three years from 1 January
2020 to 31 December 2022. Pursuant to the agreement,
CLIC and AMP will continue to 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 the
three years ending 31 December 2022, 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 (including the performance-based
fee) payable by CLIC for the private asset management is
RMB100 million.
For the year ended 31 December 2019, the subscription
price and corresponding subscription fee for the
subscription of fund products were RMB1,100.00 million,
the redemption price and corresponding redemption fee
for the redemption of fund products were RMB1,430.66
million, and the management fee and performance-based
fee paid by CLIC for the asset management for specific
clients were RMB22.96 million.
Framework Agreement between CLP&C and AMP
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 would
continue to conduct certain daily transactions, including
the 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 industry
practices. For the three years ended 31 December 2019,
the annual cap of the subscription price for the fund
products was RMB10,000 million; the annual cap of the
redemption price for the fund products was RMB10,000
million; the annual cap of the subscription fee for the
fund products was RMB100 million; the annual cap of
the redemption fee for the fund products was RMB100
million; the annual cap of the sales commission fee and
client maintenance fee payable by AMP was RMB100
million; the annual cap of the management fee and
performance-based fee payable by CLP&C for the asset
management for specific clients was RMB100 million; and
the annual cap of the fees for other daily transactions was
RMB100 million.
SIGNIFICANT
EVENTS
Framework Agreement between the Company and AMP
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 would continue to conduct
certain daily transactions, including the 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 industry practices. For the three years ended
31 December 2019, the annual cap of the subscription
price and corresponding subscription fee for the
subscription of fund products was RMB72,600 million;
the annual cap of the redemption price and corresponding
redemption fee for the redemption of fund products
was RMB72,600 million; the annual caps of the sales
commission fee and client maintenance fee payable by
AMP were 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 were
RMB300 million, RMB400 million and RMB500 million,
respectively; and the annual cap of the fees for other daily
transactions was RMB100 million.
Framework Agreements with AMP
44 China Life Insurance Company Limited 2019 Annual Report Significant Events
For the year ended 31 December 2019, CLP&C paid the
Company an agency service fee of RMB2,297.42 million.
(including the amount for the subscription
of the related financial products: 100,000)
200,000
(including the amount for the subscription
of the related financial products: 100,000)
Amount of the Investment
Management Service Fee,
Floating Management Fee,
Performance-based Bonus
and Real Estate Operation
Management Service Fee
(RMB million or its
equivalent in foreign currency)
1,391
1,982
2,266
(including the Amount
for Subscription of the Related
Financial Products)
(RMB million or its
equivalent in foreign currency)
200,000
China Life Insurance Company Limited ⚫ 2019 Annual Report • Significant Events
The above amount of assets entrusted by the Company to
CLI for investment and management for the year ended
31 December 2019 would also include the amount of
subscription of the fund products by the Company under
the cooperation framework agreement for investment
management with insurance funds between the Company
and China Life Capital for the year ended 31 December
2019 (for details, please refer to the section headed
"Cooperation Framework Agreement for Investment
Management with Insurance Funds between the Company
and China Life Capital" below).
For the year ended 31 December 2019, the investment
management service fee, floating management fee,
performance-based bonus and real estate operation
management service fee paid by the Company to CLI
amounted to RMB652.75 million, and the contractual
amount of assets newly entrusted by the Company to
CLI for investment and management was RMB13,110.00
million. For the year ended 31 December 2019, the
amount for the subscription of the related financial
products established and issued by CLI or of which CLI
had participated in the establishment and issuance was
RMB13,110.00 million.
Cooperation Framework Agreement for Investment
Management with Insurance Funds between the Company
and China Life Capital
The Company entered into the "Cooperation Framework
Agreement for Investment Management with Insurance
Funds" with China Life Capital on 7 June 2018, with a
term from 7 June 2018 to 31 December 2019. Pursuant
to the agreement, the Company would subscribe in the
capacity of the limited partner for the fund products of
which China Life Capital or any of its subsidiaries served
(individually and jointly with third parties) as the general
partner, and/or the fund products of which China Life
Capital served as the manager (including the fund manager
and co-manager). For the two years ended 31 December
2019, 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 served
as the general partner was RMB5,000 million, and the
annual caps for the management fee charged by China
Life Capital as the general partner or the manager of the
fund products were RMB150 million and RMB200 million,
respectively.
The Company entered into the 2020-2022 framework
agreement with China Life Capital on 31 December 2019,
with a term from 1 January 2020 to 31 December 2022.
Pursuant to the agreement, the Company will continue
to 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 the three years
ending 31 December 2022, 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 RMB200 million.
For the year ended 31 December 2019, 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
RMB3,010.00 million, and the management fee charged
by China Life Capital as the general partner or the manager
of the fund products was RMB38.51 million.
Insurance Sales Framework Agreement
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 2018. 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, 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 35 in the
Notes to the Consolidated Financial Statements. The
annual caps for the three years ending 31 December 2020
are RMB4,260 million, RMB5,540 million and RMB7,050
million, respectively.
43
40 China Life Insurance Company Limited 2019 Annual Report Embedded Value
55,936
For and on behalf of Willis Towers Watson
Lingde Hong
Victoria Xie
541,563
Investment return +50bps
3.
61,684
481,260
Risk discount rate -50bps
2.
46
438,848
Risk discount rate +50bps
1.
58,698
459,295
Base case scenario
RMB million
Value of One Year's
Sales after Cost
of Required Capital
68,296
Value of In-Force
Business after Cost
of Required Capital
4.
377,380
57,867
456,176
10% increase in mortality rate for non-annuity products
and 10% decrease in mortality rate for annuity products
10% decrease in mortality rate for non-annuity products
and 10% increase in mortality rate for annuity products
10% increase in lapse rates
9.
8.
7.
62,050
465,282
10% decrease in expenses
6.
55,346
453,307
10% increase in expenses
5.
49,108
Investment return -50bps
Sensitivity Results
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
China Life Insurance Company Limited ("China Life")
has prepared embedded value results as at 31 December
2019 ("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.
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.
Scope of work
Our scope 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 2019, in accordance with the "CAA
Standards of Actuarial Practice: Appraisal of Embedded
Value" issued by the China Association of Actuaries
("CAA");
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 2019; and
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.
Opinion
Based on the scope of work above, we have concluded
that:
•
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 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 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.
To the Directors of China Life Insurance Company
Limited
WILLIS TOWERS WATSON'S REVIEW
OPINION REPORT ON EMBEDDED
VALUE
39
China Life Insurance Company Limited 2019 Annual Report Embedded Value
458,735
57,534
10. 10% decrease in lapse rates
459,777
59,902
11. 10% increase in morbidity rates
452,934
25 March 2020
56,483
465,808
60,925
13. Using 2018 EV appraisal assumptions
458,961
59,483
14. Allowing for diversification in calculation of VIF
492,975
12. 10% decrease in morbidity rates
China Life Insurance Company Limited 2019 Annual Report Significant Events
59,532
For the year ended 31 December 2019, the subscription
price for the fund products was RMB0 million, the
redemption price for the fund products was RMBO
million, the subscription fee for the fund products was
RMBO million, the redemption fee for the fund products
was RMBO million, the sales commission fee and client
maintenance fee paid by AMP were RMBO million, the
management fee and performance-based fee paid by
CLP&C for the asset management for specific clients were
RMB4.84 million, and the fees for other daily transactions
were RMB0.09 million.
As approved by the First Extraordinary General Meeting
2019 of the Company, the 2020-2022 framework
agreement was entered into between CLP&C and AMP on
3 December 2019 for a term of three years from 1 January
2020 to 31 December 2022. Pursuant to the agreement,
CLP&C and AMP will continue to 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 industry practices. For the
three years ending 31 December 2022, 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 management fee
(including the 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.
462,414
China Life Insurance Company Limited 2019 Annual Report Significant Events
Framework Agreement between CLI and CLWM
The "Framework Agreement in relation to Asset
Management Services and Other Daily Transactions"
dated 3 February 2016 entered into between CLI and
CLWM expired on 31 December 2017. CLI and CLWM
entered into the 2018-2020 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.
Pricing of the transactions under the agreement shall
be determined by the parties through arm's length
negotiations with reference to industry practices. 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
For the year ended 31 December 2019, the management
fee paid by CLP&C for the asset management services
was RMB0.56 million, the advisory fee paid by CLP&C for
the advisory services was RMB5.88 million, and the fees
for other daily transactions were RMB0.01 million.
Framework Agreement between CLP&C and CLWM
The "Framework Agreement in relation to Asset
Management Services and Other Daily Transactions"
dated 9 March 2016 entered into between CLP&C and
CLWM expired on 31 December 2017. CLP&C and
CLWM entered into the 2018-2020 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. Pricing of the transactions under the
agreement shall be determined by the parties through
arm's length negotiations with reference to industry
practices. 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.
For the year ended 31 December 2019, the management
fee paid by CLIC for the asset management services was
RMB1.35 million, and the advisory fee paid by CLIC for the
advisory services was RMB3.04 million.
Framework Agreement between CLIC and CLWM
The "Framework Agreement in relation to Asset
Management Services" dated 26 January 2016 entered
into between CLIC and CLWM expired on 31 December
2017. CLIC and CLWM entered into the 2018-2020
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. Pricing of the transactions
under the agreement shall be determined by the parties
through arm's length negotiations with reference
to industry practices. 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 2019, the management
fee paid by the Company for the asset management
services was RMB3.60 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 RMBO million; and the fees
for other daily transactions were RMB12.28 million.
48
Framework Agreements with CLWM
47
China Life Insurance Company Limited ⚫ 2019 Annual Report • Significant Events
For the year ended 31 December 2019, the subscription
price and corresponding subscription fee for the
subscription of fund products were RMB104.34 million,
the redemption price and corresponding redemption fee
for the redemption of fund products were RMB296.81
million, the management fee and performance-based
fee paid by CLI for the asset management for specific
clients were RMB0 million, and the fees for other daily
transactions were RMBO million.
As approved by the First Extraordinary General Meeting
2019 of the Company, the 2020-2022 framework
agreement was entered into between CLI and AMP on 17
February 2020 for a term of three years from 1 January
2020 to 31 December 2022. Pursuant to the agreement,
CLI and AMP will continue to conduct certain daily
transactions, including the subscription and redemption
of fund products, asset management for specific clients,
advisory 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 industry practices. For the three years ending 31
December 2022, 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 management fee (including
the performance-based fee) payable by CLI and its
subsidiaries for the asset management for specific clients
is RMB150 million; the annual cap of the management
fee (including the performance-based fee) payable by the
subsidiaries of AMP for the asset management for specific
clients is RMB150 million; the annual cap of the advisory
fee payable by CLI and its subsidiaries for the advisory
services is RMB150 million; the annual cap of the advisory
fee payable by AMP and its subsidiaries for the advisory
services is RMB150 million; and the annual cap of the fees
for other daily transactions is RMB150 million.
fee for the subscription of fund products were RMB5,000
million, RMB 7,000 million and RMB7,000 million,
respectively; the annual caps of the redemption price and
corresponding redemption fee for the redemption of fund
products were 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 was
RMB50 million; and the annual cap of the fees for other
daily transactions was RMB50 million.
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 expired on 31 December 2019. Pursuant to the
agreement, CLI and AMP would 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 industry practices. For the
three years ended 31 December 2019, the annual caps
of the subscription price and corresponding subscription
Framework Agreement between the Company and CLWM
The "Framework Agreement in relation to Asset
Management Services and Other Daily Transactions"
dated 30 December 2015 entered into between the
Company and CLWM expired on 31 December 2017.
The Company and CLWM entered into the 2018-2020
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. Pricing of the
transactions under the agreement shall be determined
by the parties through arm's length negotiations with
reference to industry practices. 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.
Framework Agreement between CLI and AMP
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 connected transactions concerning the
formation of partnerships as described above.
Each of CLIIM, China Life Capital, CLP&C, China Life
Jiangsu, CLEI and China Life Qiyuan is a subsidiary of
CLIC, and therefore a connected person of the Company.
The transactions concerning the formation of 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 connected
transaction in relation to the formation of China Life Aged-
care Industry Investment Fund (Limited Partnership)
as described above was subject to consideration and
approval by the shareholders' general meeting of the
Company pursuant to the SSE Listing Rules.
As approved by the First Extraordinary General Meeting
2020 of the Company, the Company (as the limited
partner) will entered into a partnership agreement with
China Life Qiyuan (Beijing) Aged-care Industry Investment
Management Co., Ltd. (tentative name) ("China Life
Qiyuan") (as the general partner) for the formation of
China Life Aged-care Industry Investment Fund (Limited
Partnership). The total initial capital amount of the
partnership shall be RMB10 billion, of which no more
than RMB10 billion shall be contributed by the Company,
and no more than RMB10 million shall be contributed
by China Life Qiyuan. CLEI will serve as the manager of
the partnership. The partnership shall have a term of ten
years. It will focus on the investment in the aged-care
industry, including industrial assets such as continuing
care retirement communities, boutique apartments
for the aged in urban core areas and community home
care services, as well as the upstream and downstream
businesses along the aged-care industry chain which are
in line with the development direction of the industry and
permitted by regulatory authorities.
Formation of Partnership (China Life Aged-care
Industry Investment Fund)
51
Formation of Partnership (Jiangsu China Life
Jiequan Equity Investment Center)
As approved at the eighteenth meeting of the sixth
session of the Board of Directors, the Company, Jiangsu
Provincial Government Investment Fund (Limited
Partnership) and CLP&C (each as a limited partner)
entered into a partnership agreement with China Life
(Jiangsu) Equity Investment Co., Ltd. ("China Life
Jiangsu") (as the general partner) on 30 December 2019
for the formation of Jiangsu China Life Jiequan Equity
Investment Center (Limited Partnership). The total capital
contribution by all partners of the partnership shall be
RMB5 billion, of which RMB3 billion shall be contributed
by the Company. China Life Equity Investment Co., Ltd.
("CLEI") shall serve as the manager of the partnership.
The partnership shall have a term of eight years. It will
primarily invest in any enterprises or funds associated
with the health industries such as medical care, aged
care, health information management, pharmaceutical
production and services, and the production of health
supplements and medical devices, and may apply no more
than 20% of the paid-in capital contribution to investment
in enterprises or funds in high-tech industries, strategic
emerging industries and transformation and upgrade of
traditional industries.
As there might be changes in the investors of the
partnership and the size of the partnership might
decrease, the parties were not able to enter into the
partnership agreement by 31 December 2019 as originally
planned. The Company will promptly make a further
announcement in respect of the connected transaction
when the terms of the partnership agreement are finalized
by the parties.
As approved at the sixteenth meeting of the sixth
session of the Board of Directors, the Company and
other investors (each as a limited partner) originally
intended to enter into a partnership agreement with
China Xiongan Group Fund Management Co., Ltd. and
China Life Industrial Investment Management Co., Ltd.
("CLIIM") (each as a general partner) by 31 December
2019 for the formation of Hebei Xiongan Baiyangdian
Ecological and Environmental Protection Fund (Limited
Partnership). The Company planned to contribute RMB3
billion to the partnership. China Life Capital would serve
as the manager of the partnership. The partnership shall
have a term of fifteen years. It shall invest in ecological
and environmental protection projects in Baiyangdian
watershed, covering water, solid waste treatment and
other industries.
Other Major Connected Transactions
Formation of Partnership (Hebei Xiongan Baiyangdian
Ecological and Environmental Protection Fund)
During the Reporting Period, the Company was not
involved in claims, debt transactions or guarantees of a
non-operating nature with related parties.
China Life Insurance Company Limited ⚫ 2019 Annual Report • Significant Events
MATERIAL CONTRACTS AND THEIR
PERFORMANCE
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.
The Company neither gave external guarantees nor
provided guarantees to its non-wholly owned subsidiaries
during the Reporting Period.
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.
52 China Life Insurance Company Limited 2019 Annual Report Significant Events
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
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.
4. the amounts of the above transactions have not
exceeded the relevant annual caps.
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.
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.
TARGETED POVERTY ALLEVIATION
For the performance by the Company of its social
responsibility for poverty alleviation during the Reporting
Period, please refer to Part 2 of the full text of the "ESG
Report 2019" 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).
OTHERS
As approved by the CBIRC and the People's Bank of
China, the Company issued capital supplemental bonds
(the "Bonds") in the national inter-bank bond market
in a principal amount of RMB35 billion on 20 March
2019 and completed the issuance on 22 March 2019.
The Bonds have a principal amount of RMB35 billion, a
term of 10 years 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. The proceeds from
the issuance of the Bonds will be used to supplement
the Company's capital so as to enhance its solvency
according to applicable laws and approvals from regulatory
authorities. For further details, please refer to the
announcements published by the Company on the website
of the SSE (http://www.sse.com.cn) and the HKExnews
website of Hong Kong Exchanges and Clearing Limited
(http://www.hkexnews.hk).
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.
3. 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
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:
1. the transactions were entered into in the ordinary and
usual course of business of the Company;
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 2019, the management
fee for the asset management services was RMB0.54
million, the advisory fee for the advisory services was
RMBO million, and the fees for other daily transactions
were RMB0 million.
Framework Agreement between Pension Company and
CLWM
Pension Company and CLWM entered into the
"Framework Agreement in relation to Daily Connected
Transactions" on 26 March 2018, pursuant to which
Pension Company 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. Pricing of the
transactions under the agreement shall be determined
by the parties through arm's length negotiations with
reference to industry practices. 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.
For the year ended 31 December 2019, the management
fee paid by Pension Company for the asset management
services was RMB0 million, the advisory fee paid by
Pension Company for the advisory services was RMB0.24
million, and the fees for other daily transactions were
RMBO million.
Framework Agreement between CLEC and CLWM
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.
Pricing of the transactions under the agreement shall
be determined by the parties through arm's length
negotiations with reference to industry practices. 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.
For the year ended 31 December 2019, there was no
relevant transaction between CLEC and CLWM.
Framework Agreements with Chongqing Trust
Framework Agreement between the Company and
Chongqing Trust
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 expired on 31
December 2019. Pursuant to the agreement, the Company
and Chongqing Trust would 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 industry practices. For the three years ended
31 December 2019, the annual cap of the subscription
amount of the trust products was 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 was RMB4,500
million; and the annual cap of the fees for other daily
transactions was RMB100 million.
The Company and Chongqing Trust entered into the 2020-
2022 framework agreement on 27 December 2019, with a
term of three years from 1 January 2020 to 31 December
2022. Pursuant to the agreement, the Company and
Chongqing Trust will continue to conduct the subscription
and redemption of trust 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 industry practices. For the three years ending
31 December 2022, the annual cap of the total amount
of subscription and redemption of the trust products
is RMB30,000 million; the annual cap of the trustee's
remuneration is RMB500 million; and the annual cap of the
fees for other daily transactions is RMB100 million.
China Life Insurance Company Limited 2019 Annual Report Significant Events
49
For the year ended 31 December 2019, the subscription
amount of the trust products was RMB14,300.63 million
(including the trustee's remuneration of RMB20.52 million
received by Chongqing Trust from the trust assets), the
redemption amount of the trust products was RMBO
million, and the fees for other daily transactions were
RMBO million.
2. the transactions were conducted on normal
commercial terms;
Framework Agreement between CLWM and Chongqing
Trust
For the year ended 31 December 2019, there was no
relevant transaction between CLWM and Chongqing
Trust.
Framework Agreement between AMC and Chongqing
Trust
AMC and Chongqing Trust entered into the "Framework
Agreement in relation to Daily Connected Transactions"
on 7 November 2018. The agreement became effective
upon signing by the parties and expired on 31 December
2019. Pursuant to the agreement, AMC and Chongqing
Trust would conduct the subscription of trust products,
asset management 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 industry practices. For the two years ended
31 December 2019, the annual caps of the subscription
amount of the trust products were RMB1,200 million and
RMB1,800 million, respectively (including the trustee's
remunerations of no more than RMB100 million and
RMB150 million, respectively, per year to be received by
Chongqing Trust from the trust assets); the annual caps of
the management fee for the asset management services
were RMB100 million and RMB150 million, respectively;
and the annual cap of the fees for other daily transactions
was RMB100 million.
For the year ended 31 December 2019, there was no
relevant transaction between AMC and Chongqing Trust.
Confirmation by auditor
China Life Insurance Company Limited ⚫ 2019 Annual Report • Significant Events
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;
2. 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;
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
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.
50
China Life Insurance Company Limited 2019 Annual Report Significant Events
Confirmation by Independent Directors
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:
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 would 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
industry practices. For the two years ended 31 December
2019, the annual cap of the subscription amount of the
trust products was 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 was RMB150 million; the
annual cap of the advisory fee for the advisory services
was RMB150 million; and the annual cap of the fees for
other daily transactions was RMB100 million.
53
160
220 240
Tang Xin
Leung Oi-Sie Elsie
(appointed on 16 August 2019)
(appointed on 20 February 2020)
(resigned on 24 January 2019 due to the reason of age)
(resigned on 28 June 2019 due to the reason of age)
(appointed on 16 August 2019)
56 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
From left to right:
Mr. Tang Xin, Mr. Chang Tso Tung Stephen, Mr. Zhao Peng, Mr. Li Mingguang, Mr. Su Hengxuan, Mr. Wang Bin, Mr. Yuan Changqing, Mr. Liu Huimin,
Mr. Yin Zhaojun, Mr. Wang Junhui, Mr. Robinson Drake Pike, Ms. Leung Oi-Sie Elsie
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.
BUSINESS REVIEW
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 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".
Robinson Drake Pike
Environmental policies and performance of the
Company
The Company incorporated ESG concept into its decision
making for investment assessment, with a view to
achieving the coordination and consistency of economic,
environmental and social benefits. AMC officially signed
the United Nations - Supported Principles for Responsible
Investment, making itself the first insurance asset
management company signing such principles and putting
the ESG investment concept into practice. In 2019, the
Company, as a cornerstone investor, invested RMB9
billion in the project of Qinghai Huanghe Hydropower
Development Co., Ltd. for the mixed-ownership reform
and the introduction of strategic investor, becoming
the second largest shareholder of Qinghai Huanghe
Hydropower Development Co., Ltd. and offering its
support to the development of the clean energy industry.
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
57
The Company, as a financial service institution, carries
out its major business activities in a manner that does
not pose any material adverse effect on eco-environment
and natural resources, and gives support to the national
strategic approach of green development by taking full
advantage of its business characteristics. The Company
has actively built digitalized field offices and convened
various meetings by way of webcast for its daily
operations. In 2019, more than 97,000 meetings were
convened via the webcast. In the meantime, the Company
actively established an e-service platform for its insurance
sales development, with insurance policy administration
services on China Life Insurance APP reaching a record
high.
Compliance by the Company with the relevant
laws and regulations that have a significant
impact
With adherence to the customer-oriented approach all
along, the Company is committed to offering high-quality
services to its customers on a continuous basis, and
has provided insurance policy services and value-added
services for more than 500 million customers. In 2019, the
evaluation results of customer satisfaction and customer
loyalty maintained at a high level.
The Company consistently reinforced the protection
of consumers' legitimate rights and interests, fostered
sound corporate governance, clearly defined the duties
and responsibilities of various parties, promoted the
establishment of system, strengthened education on the
rights and interests of insurance consumers and stepped
up efforts on risk alerts.
In 2019, the total number of customer complaints received
by the Company decreased significantly from the last year,
and various indicators continued to be positive.
Please also refer to the "Technological Empowerment
and 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 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 strategy-based and
result-oriented, adopts hierarchical classification, 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
improved the comprehensive quality and professional
skills of employees through various means, such as
the establishment of systems for position training and
promotion education of employees at all levels, and the
development of various types of high-quality learning
models (including face-to-face teaching and online
autonomous learning), so as to facilitate the career
development of employees. 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.
58 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
In active response to the national call for the "Development
of Green Finance", the Company pushed forward the
progressive greening of financial system and took into
account the national economy and the people's livelihood
when developing its investment business. It put into
practice the low carbon concept in its daily operations and
business development and adhered to green operation
for the purpose of making positive contributions to the
objective of building a beautiful China.
260
Chang Tso Tung Stephen
Zhao Peng
Xu Hengping
Xu Haifeng
280
SW
200
W
300 320
NW
40
180
340
NA
SE
E
20
40
Yuan Changqing
Liu Huimin
Yin Zhaojun
Wang Junhui
NEX
120
80
09
CORPORATE
GOVERNANCE
WITH HIGH COMPLIANCE
AND EFFICIENCY
CORPORATE
GOVERNANCE
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:
Wang Bin (Chairman)
EXECUTIVE
DIRECTORS
Su Hengxuan
NON-
EXECUTIVE
DIRECTORS
DIRECTORS
Li Mingguang
100
INDEPENDENT
Relationship between the Company and its
customers
The Company adhered to the code of conduct of "being
trustworthy, assuming risks, emphasizing on services
and being legal compliant" and promoted the compliance
culture and concepts of "being compliant on a voluntary
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 and the "Regulations for the Administration
of Insurance Companies", and implemented the spirit and
requirements of major regulatory documents on product
development and design, sales management, investment
supervision and corporate governance, etc., as released by
the CBIRC in a stringent manner for the purpose of further
carrying out compliance management responsibilities at
all levels and in various lines. The Company consistently
improved the compliance management framework of
"three lines of defense" in business, compliance and audit
to ensure that the three lines of defense performed their
own functions 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 defended
the bottom line of the systematic risk, which guaranteed
the healthy and high-quality development of the Company
on an ongoing basis.
H SHARE STOCK APPRECIATION RIGHTS
61.48
11.50
2.28
63.76
At the 2019 Annual General Meeting to be held on 29 June 2020, the Board will propose a resolution to re-appoint Ernst
& Young Hua Ming LLP as the PRC auditor and the auditor for US Form 20-F of the Company for the year 2020, and Ernst
& Young as the Hong Kong auditor of the Company for the year 2020.
By Order of the Board
Wang Bin
Chairman
Beijing, China
25 March 2020
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
63
REPORT OF THE BOARD OF
SUPERVISORS
ACTIVITIES OF THE BOARD OF SUPERVISORS
Currently, the sixth session of the Board of Supervisors
comprises Mr. Jia Yuzeng, Mr. Luo Zhaohui, Mr. Han
Bing, Mr. Cao Qingyang and Ms. Wang Xiaoqing, with
Mr. Jia Yuzeng acting as the Chairman of the Board of
Supervisors. Of the members of the Board of Supervisors,
Mr. Jia Yuzeng, Mr. Luo Zhaohui and Mr. Han Bing
are Non-employee Representative Supervisors, and
Mr. Cao Qingyang and Ms. Wang Xiaoqing are Employee
Representative Supervisors. In February 2019, Mr. Shi
Xiangming resigned from his position as a Supervisor
of the Company due to the adjustment of work
arrangements. In July 2019, Mr. Tang Yong resigned
from his position as a Supervisor of the Company
due to the adjustment of work arrangements. In July
2019, Mr. Huang Xin resigned from his position as a
Supervisor of the Company due to the adjustment of work
arrangements. In January 2020, Mr. Song Ping resigned
from his position as a Supervisor of the Company due to
the adjustment of work arrangements.
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
2019, the sixth session of 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.
From left to right:
Ms. Wang Xiaoqing, Mr. Cao Qingyang, Mr. Jia Yuzeng, Mr. Luo Zhaohui, Mr. Han Bing
64
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
Fees
RMB million
Total
Non-audit services fee
2. 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. the Company has expressly provided in its Articles
of Association the level of authority required for
approving external guarantees and the approval
procedures.
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.
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 2019.
62 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
MAJOR CUSTOMERS
In 2019, 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.
SUFFICIENCY OF PUBLIC FLOAT
Based on the information publicly available to the
Company and within the knowledge of the Directors as at
the Latest Practicable Date (25 March 2020), 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.
COMPLIANCE WITH THE CORPORATE
GOVERNANCE CODE
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.
AUDITORS
A resolution was passed at the 2018 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 2019, and Ernst & Young as the
Hong Kong auditor of the Company for the year 2019, who
will hold office until the conclusion of the 2019 Annual
General Meeting. Ernst & Young Hua Ming LLP and Ernst
& Young have been serving as the Company's auditors for
seven 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 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.
Remuneration paid by the Company to the auditors in 2019 was as follows:
Service/Nature
Audit, review and agreed-up procedures fee
Including: Internal control audit fee
Attending and participating in corporate governance
meetings and actively exercising their supervisory
role. In 2019, the Board of Supervisors attended the
2018 Annual General Meeting and the First Extraordinary
General Meeting 2019 of the Company, and participated
in the regular meetings of the Board. All members of
the Board of Supervisors participated in the regular
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 bringing positive effects on further
enhancement of corporate governance.
1. during the Reporting Period, the Company did not
provide any external guarantee;
Supervising and evaluating the performance of duties
by Directors. The Company commenced an evaluation
of the performance of duties by Directors in accordance
with the requirements such as the "Measures for the
Administration of Independent Directors of Insurance
Institutions" issued by the CBIRC and the "Operational
Guidance for Evaluating the Performance of Duties
by Directors of Insurance Companies" issued by the
Insurance Association of China and after taking into
account the "Provisional Measures for Evaluating the
Performance of Duties by Directors" of the Company.
Based on the performance of duties by Directors in 2019
and by reference to the information obtained during their
participation of meetings of the Board and various special
committees, the members of the Board of Supervisors
evaluated and scored the Directors of the Company and
formed evaluation opinions on them, which therefore
improved the mechanism for the supervision and
evaluation of duty performance of Directors.
Attending training courses and constantly enhancing
performance of duties by the Supervisors. In 2019, all
members of the Board of Supervisors attended a training
course on the topic of "Standards of New Insurance
Contracts and their Effects", with Ernst & Young Hua
Ming LLP and Ernst & Young, the external auditors of
the Company, as the speaker, which gave them the
opportunity to familiarize with and understand the impact
of the standards of new insurance contracts on the
subsequent management of the Company. Pursuant to
the regulatory requirements, all members of the Board of
Supervisors attended the training programs on anti-money
laundering. Pursuant to the regulatory requirements of
the industry, the new Supervisors of the Company sat
for the examinations of the CBIRC regarding the approval
of qualifications of new directors, supervisors and
senior management officers of insurance institutions as
organized by the CBIRC.
No. of H Share shareholders:
27,086
Unit: Shares
Name of shareholder
Nature of shareholder
Percentage of
shareholding
Number of shares
held as at the
end of the
Reporting Period
Increase/decrease
during the
Reporting Period
Number of shares
subject to selling
restrictions
Number of shares
pledged or frozen
China Life Insurance (Group) Company
State-owned legal person
68.37%
19,323,530,000
0
HKSCC Nominees Limited
Overseas legal person
25.91%
7,323,690,703
+3,393,048
Total number of ordinary
share shareholders as
at the end of the month
prior to the disclosure of
the annual report
Actively conducting research and investigation
activities and examining and understanding the
business operation of local branches. In 2019, all
members of the Board of Supervisors carried out
oversight of and conducted investigation and research
on Beijing Branch, Jiangsu Branch, Zhejiang Branch,
Guangxi Zhuang Autonomous Region Branch and other
branches of the Company, respectively. The investigation
and research activities were mainly conducted through
various means such as seminar, individual interview and
on-site inspection. Through the investigation and research
activities, the Board of Supervisors comprehended the
corporate business development of local branches in great
depth, examined the effectiveness of the implementation
by local branches of decisions made by the Board and
the management as well as the establishment of the risk
prevention and control mechanism, discussed matters
in relation to the optimization of the risk prevention and
control mechanism and the promotion of the "Dingxin
Project", and fully listened to the opinions and advices
given by local branches.
Particulars of top ten shareholders of the Company
No. of A Share shareholders:
101,051
China Life Insurance Company Limited 2019 Annual Report Corporate Governance 65
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".
1. 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 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.
2. The authenticity of the financial report. The Company's
annual financial report truly reflected the Company's
financial position and operating results. Ernst &
Young Hua Ming LLP and Ernst & Young have
performed audits and have issued standard and
unqualified auditors' reports in respect of the financial
statements for the year 2019 in accordance with the
China Standards on Auditing of PRC Certified Public
Accountants and the International Standards on
Auditing, respectively.
3. Acquisition and sale of assets. During the Reporting
Period, the prices for acquisition and sale of assets
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.
4. 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.
5. 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 Board of Supervisors of the
Company reviewed the self-evaluation report on the
Company's internal control system and did not raise
any objection against the self-evaluation report of
the Board regarding the Company's internal control
system.
By Order of the Board of Supervisors
Jia Yuzeng
Chairman of the Board of Supervisors
Beijing, China
25 March 2020
66 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
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 of the Company.
ISSUE AND LISTING OF SECURITIES
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.
INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER
Total number of shareholders and their shareholdings
Total number of ordinary
share shareholders as at
the end of the Reporting
Period
No. of H Share shareholders:
27,228
Independent Directors of the Company have rendered
their independent opinions on the Company's external
guarantees, and are of the view that:
MATERIAL GUARANTEES
No management or administration contracts for the whole
or substantial part of any business of the Company were
entered into during the Reporting Period.
2019
2018
2017
60
Number of
bonus
stocks per
ten shares
Amount of
dividends
per ten
shares
Transfer
of public
reserve into
share capital
(RMB)
were distributed
(including
Amount of
cash
dividends
(including
(shares)
tax)
(shares)
tax)
Net profit
attributable to
equity holders of
the Company in
the consolidated
statements for
the year in which
dividends were
distributed
RMB million
Percentage of
amount of
per ten
shares
Year in
which dividends
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.
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 the
Company. 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 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 first meeting of the third session of
the employee representative meeting of the Company
was held in Beijing on 17 December 2019, during which
the "Administrative Work Report" and the "Report on
Financial Situation" of the Company were considered and
approved.
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 headed "Directors,
Supervisors, Senior Management and Employees" in this
annual report.
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 are as follows:
1. 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;
2. 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 218 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;
3. 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.
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 CBIRC 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.
China Life Insurance Company Limited 2019 Annual Report Corporate Governance 59
In accordance with Article 219 of the Articles of
Association, the procedures of reviewing the
Company's profit distribution proposal is as
follows:
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 investors, and give timely reply to concerns
of small- and medium-sized investors.
Profit distribution plan and public reserves
capitalization plan
Profit distribution plan or public reserves capitalization plan
for the year of 2019
In accordance with the profit distribution plan for the year
2019 approved by the Board on 25 March 2020, with the
appropriation to its discretionary surplus reserve fund
of RMB5,857 million (10% of the net profit for 2019),
the Company, based on 28,264,705,000 shares in issue,
proposed to distribute cash dividends amounting to
RMB20,633 million to all shareholders of the Company
at RMB0.73 per share (inclusive of tax). The foregoing
profit distribution plan is subject to the approval by the
2019 Annual General Meeting to be held on 29 June 2020
(Monday). 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.
No public reserve capitalization is provided for in the profit
distribution plan for the current financial year.
cash dividends in
net profit
attributable to
equity holders of
the Company in
the consolidated
statements
7.3
20,633
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 13 June 2019 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 30 May 2019 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.
No H Share stock appreciation rights of the Company were
granted or exercised in 2019. 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.
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
61
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.
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
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 compliance with the
Model Code and the Company's own code of conduct in
the year of 2019.
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.
MANAGEMENT CONTRACTS
INFORMATION OF TAX DEDUCTION FOR
HOLDERS OF LISTED SECURITIES
China Securities Finance Corporation Limited
Details of the movement in share capital of the Company
are set out in Note 36 in the Notes to the Consolidated
Financial Statements in this annual report.
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.
58,287
35%
1.6
4,522
11,395
40%
4.0
11,306
32,253
35%
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
CHANGES IN ACCOUNTING ESTIMATES
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.
RESERVES
Details of the reserves of the Company are set out in Note
38 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
RMB192.80 million.
PROPERTY, PLANT AND EQUIPMENT
SHARE CAPITAL
State-owned legal person
No. of A Share shareholders:
116,377
723,937,634
0.05%
0.04%
12,720,175
+12,720,175
12,400,000
0
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
67
Details of shareholders
1. 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.
2. 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. Industrial and Commercial Bank of China Limited - SSE
50 Exchange Traded Index Securities Investment Fund has Industrial and
Commercial Bank of China Limited as its 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.
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
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 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 national laws and regulations or approved by the State Council of PRC;
other businesses approved by banking and insurance regulatory agencies.
As at 31 December 2019, CLIC held 1,785,098,644 H shares of Town Health
International Medical Group Limited, representing 23.72% of its total shares.
68 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
2.56%
State-owned legal person
State-owned legal person
National Social Security Fund Portfolio 416
China National Nuclear Corporation
Wang Bin
12,806,123
-5,369,800
Central Huijin Asset Management Limited
Hong Kong Securities Clearing Company Limited
China Universal Asset Management Co., Ltd
- Industrial and Commercial Bank
State-owned legal person
0
119,719,900
0
Overseas legal person
0.19%
54,650,164
+23,940,802
Other
0.42%
15,015,845
0.05%
Other
+12,995,533
12,995,533
0.05%
State-owned legal person
National Social Security Fund Portfolio 103
Industrial and Commercial Bank of China Limited
- SSE 50 Exchange Traded Index Securities
Investment Fund
of China Limited - China Universal
- Tianfu Bull No. 53 Asset Management Plan
0 --
0.05%
Supervisor
0
Employee Representative
Supervisor
Female
October 1965
Since 27 December 2019
0
Wang Xiaoqing
Total
2.82
6.78
No
0
0
183.12
241.24
58.12
3.96
No
42.22
15.41
Han Bing
Notes:
Supervisor
Male
November 1971
Since 12 July 2019
0
0
25.28
16.94
No
Employee Representative
Cao Qingyang
Male
May 1963
Since 12 July 2019
0
0
28.58
43.99
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.
In order to consistently carry out the relevant arrangements under the "Notice of the State Council on Issuing the Implementation Plan for Transferring
Part of State-owned Capital to Supplement Social Security Fund" (Guo Fa [2017] No. 49), the CBIRC has approved the one-off transfer by the Ministy of
Finance of 10% of its equity interest in CLIC to the National Council for Social Securit Fund (the "SSF") (the "Gratuitous Transfer") in accordance with
the "Reply for the Approval of Change of Shareholder of China Life Insurance (Group) Company" (CBIRC's Reply [2020] No. 63). Upon completion fo the
Gratuitous Transfer, the Ministry of Finance and the SSF will hold 90% and 10% equity interest in CLIC, respectively.
68.37%
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
69
(Note 1): BlackRock, Inc. was interested in a total of 596,096,797 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, Black Rock Advisors, LLC, BlackRock Japan Co., Ltd., BlackRock Asset Management Canada Limited, BlackRock
Investment Management (Australia) Limited, BlackRock Asset Management North Asia Limited, Black Rock (Netherlands) B.V., BlackRock
Advisors (UK) Limited, BlackRock International Limited, Black Rock 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 BlackRock Investment Management (Taiwan)
Limited were interested in 7,811,000 H shares, 13,660,000 H shares, 172,685,588 H shares, 198,392,000 H shares, 2,147,000 H shares,
15,318,722 H shares, 1,116,000 H shares, 5,388,000 H shares, 24,226,318 H shares, 1,086,000 H shares, 2,829,000 H shares, 1,254,000
H shares, 56,388,918 H shares, 26,547,000 H shares, 28,389,313 H shares, 476,000 H shares, 23,817,331 H shares, 10,588,607 H shares,
3,906,000 H shares, 60,000 H shares, and 10,000 H shares, respectively. All of these entities are either controlled or indirectly controlled
subsidiaries of BlackRock, Inc. Of these 596,096,797 H shares, 9,201,000 H shares were cash settled unlisted derivatives.
BlackRock, Inc. held by way of attribution a short position as defined under Part XV of the SFO in 355,000 H shares (0.00%). These 355,000 H
shares were cash settled unlisted derivatives.
(Note 2): JPMorgan Chase & Co. was interested in a total of 460,067,443 H shares in accordance with the provisions of Part XV of the SFO. Of these
shares, J.P. Morgan Bank Luxembourg S.A.-Amsterdam Branch, J.P. Morgan Securities LLC, JPMORGAN ASSET MANAGEMENT (UK) LIMITED,
JPMorgan Chase Bank, National Association, JPMorgan Asset Management (Asia Pacific) Limited, China International Fund Management Co.,
Ltd., JPMorgan Asset Management (Taiwan) Limited, J.P. Morgan AG, J.P. Morgan Bank Luxembourg S.A.-Stockholm Bankfilial, JPMORGAN
CHASE BANK, N.A.-LONDON BRANCH, J.P. Morgan Investment Management Inc., J.P. Morgan Bank Luxembourg S.A.-Oslo Branch, JPMorgan
Chase Bank, N.A.-Sydney Branch, J.P. Morgan Bank Luxembourg S.A., J.P. Morgan Trust Company of Delaware, JPMorgan Chase Bank, N.A.-
Hong Kong Branch, J.P. MORGAN SECURITIES PLC and J.P. Morgan (Suisse) SA were interested in 4,473,173 H shares, 14,556,596 H shares,
12,485,000 H shares, 65,326,723 H shares, 64,913,000 H shares, 37,000 H shares, 5,798,000 H shares, 1,000 H shares, 3,618,779 H shares,
74,231,967 H shares, 56,762,361 H shares, 267,240 H shares, 3,765,773 H shares, 4,095,000 H shares, 4,640 H shares, 8,717,503 H shares,
136,449,372 H shares and 4,564,316 H shares, respectively. All of these entities are either controlled or indirectly controlled subsidiaries of
JPMorgan Chase & Co.
Included in the 460,067,443 H shares are 157,493,474 H shares (2.11%), 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 460,067,443 H shares, 15,096,000 H shares
were physically settled listed derivatives, 1,840,000 H shares were cash settled listed derivatives, 21,164,574 H shares were physically settled
unlisted derivatives and 43,437,000 H shares were cash settled unlisted derivatives.
JPMorgan Chase & Co. held a short position as defined under Part XV of the SFO in 128,651,185 H shares (1.72%). Of these 128,651,185 H
shares, 12,915,000 H shares were physically settled listed derivatives, 7,316,000 H shares were cash settled listed derivatives, 32,643,315 H
shares were physically settled unlisted derivatives, 73,840,248 H shares were cash settled unlisted derivatives and 2 H shares were convertible
instruments listed derivatives.
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 2019, 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.
Yes
70 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
CURRENT DIRECTORS
Other benefits,
social insurance,
Total
housing
emoluments
Whether
Number
of shares
provident
DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
6
The letter "L" denotes a long position. The letter "S" denotes a short position. The letter "P" denotes interest in a lending pool.
0.56%
BlackRock, Inc. (Note 1)
Interest in controlled
corporation
596,096,797 (L)
8.01%
2.11%
H Shares
355,000 (S)
0.00%
0.00%
JPMorgan Chase & Co. (Note 2)
Interest in controlled corporation,
investment manager, person
having a security interest in
shares, trustee, approved lending
agent
460,067,443 (L)
6.18%
1.63%
H Shares
128,651,185 (S)
157,493,474 (P)
1.72%
0.46%
2.11%
92.80%
0
ten thousands
0
social insurance,
Total
housing
emoluments
Whether
Number
of shares
provident
received from
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:
Number of
received
fund and
the Company
shares held
Reason for
Remuneration
emolument
Name
Salary/
Position
Ministry of Finance
90%
received from
A Shares
Beneficial owner
China Life Insurance
(Group) Company
Percentage of the
total number of
shares in issue
Percentage of the
respective class
of shares
Number of
shares held
Class of
shares
of the PRC
Capacity
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:
So far as is known to the Directors, Supervisors and
the chief executive of the Company, as at 31 December
2019, 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
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
68.37%
China Life Insurance
(Group) Company
National Council for Social
Security Fund
10%
Name of substantial
shareholder
Gender
Date of Birth
Term
Jia Yuzeng
Male
June 1962
Since 11 July 2018
0
0
125.30
22.95
Chairman of the Board of
148.25
Supervisors
Luo Zhaohui
Supervisor
Male
March 1974
Since 11 February 2018
0
0
No
ten thousands
(before tax)
in RMB
held at the
enterprise
during
at the end
changes
paid in RMB
from connected
beginning
annuity
of the year
ten thousands
the Reporting
parties of
of the year
fund paid by
Period in RMB
19,323,530,000 (L)
the Company
the Company
0
received
Number of
Salary/
July 1971
Since 16 August 2019
0
0
0
0
0
Yes
Male
Chang Tso Tung Stephen Independent Director
November 1948
Since 20 October 2014
0
0
32.00
0
32.00
Yes
Male
Robinson Drake Pike
Non-executive Director
Yes
June 1965
Since 31 July 2017
0
0
0
0
0
Yes
Wang Junhui
Yin Zhaojun
Male
July 1965
Since 31 July 2017
0
0
0
0
0
Non-executive Director
Independent Director
Male
October 1951
30.00
0
30.00
Yes
Total
0
0
I
0
185.67
195.29
I
Notes:
1. According to the "Procedural Rules for the 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.
2. 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.
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.
4. Following the election at the 2018 Annual General Meeting of the Company and upon the approval by the CBIRC Beijing Bureau, Mr. Li Mingguang and
Mr. Wang Junhui became an Executive Director and a Non-executive Director of the sixth session of the Board of Directors of the Company, respectively,
on 16 August 2019. After the consideration and approval by the First Extraordinary General Meeting 2019 of the Company and upon the approval by the
CBIRC Beijing Bureau, Mr. Zhao Peng became an Executive Director of the sixth session of the Board of Directors of the Company on 20 February 2020.
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
9.62
0
Since 20 July 2016
April 1939
Since 11 July 2015
0
0
32.00
0
32.00
No
Tang Xin
Leung Oi-Sie Elsie
Independent Director
Independent Director
Male
September 1971
Since 7 March 2016
0
0
32.00
0
32.00
Yes
Female
Male
Other benefits,
Non-executive Director
Yes
connected
of the year
fund paid by
Period in RMB
parties of
the Company
ten thousands
the Company
the Reporting
in RMB
ten thousands
Wang Bin
Chairman of the Board,
Executive Director
Male
November 1958
Since 3 December 2018
0
0
(before tax)
0
annuity
of the year
fund and
the Company
emolument
Name
Position
Gender
Date of Birth
Term
ten thousands
held at the
Reason for
Remuneration
changes
paid in RMB
enterprise
during
from
beginning
shares held
at the end
0
0
3. According to the requirements of the relevant remuneration policies of the Company, the final amount of emoluments of the Chairman of the Board of
Supervisors and the Supervisors is currently subject to review and approval. The result of the review will be disclosed when the final amount is confirmed.
4. Following the election at the third extraordinary meeting of the second session of the employee representative meeting of the Company and upon the
approval by the CBIRC Beijing Bureau, Mr. Cao Qingyang became an Employee Representative Supervisor of the sixth session of the Board of Supervisors
of the Company on 12 July 2019. Following the election at the 2018 Annual General Meeting of the Company and upon the approval by the CBIRC Beijing
Bureau, Mr. Han Bing became a Non-employee Representative Supervisor of the sixth session of the Board of Supervisors of the Company on 12 July
2019. Following the election at the fourth extraordinary meeting of the second session of the employee representative meeting of the Company and
upon the approval by the CBIRC Beijing Bureau, Ms. Wang Xiaoqing became an Employee Representative Supervisor of the sixth session of the Board of
Supervisors of the Company on 27 December 2019.
Zhao Peng
Executive Director
Male
April 1972
Since 20 February 2020
0
0
Yes
No
Yuan Changging
Male
September 1961
Since 11 February 2018
0
0
0
0
0
Non-executive Director
69.29
9.62
59.67
Yes
Su Hengxuan
Executive Director
Male
February 1963
Since 20 December 2018
0
0
0
0
0
Yes
Li Mingguang
Executive Director
Male
July 1969
Since 16 August 2019
0
0
Liu Huimin
72 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
No
Other benefits,
2.78
4.74
0
0
2 February 2019-
22 July 2019
July 1972
Male
Supervisor
7.52
Tang Yong
No
Resigned due to the
420
18 February 2019
14.20
1881
4.67
9.53
adjustment of work
0
552
Resigned due to the
arrangements
Supervisor
22 July 2019
adjustment of work
Yes
0
0
0
arrangements
0
February 1974
Male
Representative
Huang Xin
20 June 2018-
Resigned due to the
Employee
Yes adjustment of work
arrangements
0
Employee
0
Male
19
Vice President
1.79
0.85
0
0
November 1958
Male
November 2014-
January 2019
Xu Hengping
Executive Director
11 July 2015-
Period
ten thousands
in RMB
the Company
fund paid by the Reporting the Company
during
24 January 2019
November 1959
2.64
Resigned due to the
reason of age
Supervisor
25 May 2009-
Shi Xiangming
June 2019
Resigned due to the
reason of age
November 2014-
No
70.60
No
10.09
0
0
May 1959
Male
Executive Director
Vice President
Xu Haifeng
28 June 2019
11 July 2015-
60.51
Resigned due to the
15 March 2018 -
Song Ping
Mr. Zhao Peng, born in 1972, Chinese
76
China Life Insurance Company Limited 2019 Annual Report Corporate Governance 75
Mr. Li became an Executive Director of the Company in August 2019. He has been
the Vice President of the Company since November 2014, the Chief Actuary of the
Company since March 2012, the Chief Actuary of China Life Pension Company Limited
since May 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
and a member of the China National Master of Insurance Education Supervisory
Committee.
Mr. Li Mingguang, born in 1969, Chinese
Mr. Su became an Executive Director of the Company in December 2018. He has been
the President of the Company since April 2019 and the Vice President of China Life
Insurance (Group) Company since December 2017. He was the President of China Life.
Pension Company Limited from March 2015 to February 2018. Mr. Su served various
positions in the Company from 2000 to 2015, including the Deputy General Manager
of Henan Branch, the General Manager of the Individual Insurance Department of the
Company, the General Manager of the Individual Insurance Sales Department of the
Company, an Assistant to the President and the Vice President of the Company. Mr. Su
graduated from Wuhan University and the University of Science and Technology of
China and obtained a doctoral degree in management science and engineering from
the University of Science and Technology of China in 2011. Mr. Su, a senior economist,
has over 35 years of experience in the operation and management of life insurance
business.
Mr. Su Hengxuan, born in 1963, Chinese
Mr. Wang is the Chairman of the Board of Directors of the Company, the Chairman
of the Board of Directors and the Secretary to the Party Committee of China Life
Insurance (Group) Company, the Chairman of the Board of Directors of China Life Asset
Management Company Limited, the Chairman of the Board of Directors of China Life
Insurance (Overseas) Company Limited, and a Director and the Chairman of the Board
of Directors of China Guangfa Bank Co., Ltd. Mr. Wang has successively been employed
by government authorities and financial institutions, with nearly 30 years of experience
in financial management. He worked at the People's Bank of China, participating in
the preparation and establishment of Agricultural Development Bank of China as an
important member. Mr. Wang served as the General Manager of Jiangxi Branch of
Agricultural Development Bank of China, and the President of Tianjin Branch and Beijing
Branch of the Bank of Communications Co., Ltd. (the "Bank of Communications"). He
served as the Vice President of the Bank of Communications from 2005 to 2012 and
concurrently served as an Executive Director of the Bank of Communications from 2010
to 2012. From March 2012 to August 2018, he served as the Chairman of the Board of
Directors and the Secretary to the Party Committee of China Taiping Insurance Group
Ltd. Mr. Wang holds a doctoral degree in economics. He is a researcher, a delegate
to the 19th National Congress of the Communist Party of China, and a member of
the 12th and 13th National Committee of the Chinese People's Political Consultative
Conferences.
Mr. Zhao became an Executive Director of the Company in February 2020. He has
been the Vice President of the Company since March 2018 and the Chief Financial
Officer of China Life Insurance (Group) Company since August 2019. He served as an
Assistant to the President of the Company from October 2017 to March 2018 and the
General Manager of Zhejiang Branch of the Company from January 2015 to October
2017. From 2014 to 2015, he 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.
Mr. Wang Bin, born in 1958, Chinese
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
74
3. According to the requirements of the relevant remuneration policies of the Company, the final amount of emoluments of the Executive Directors,
Supervisors and the Senior Management is currently subject to review and approval. The result of the review will be disclosed when the final amount is
confirmed.
2. The emoluments are calculated based on the terms of office of the resigned and retired Directors, Supervisors and Senior Management during the
Reporting Period.
1. This table sets out the information of Directors, Supervisors and Senior Management who resigned or retired during the Reporting Period and as at the
submission date of this annual report.
Notes:
346.85
75.10
DIRECTORS
271.75
Mr. Yuan Changqing, born in 1961, Chinese
Mr. Liu Huimin, born in 1965, Chinese
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
78
Ms. Leung became an Independent Director of the Company in July 2016. She was the
first Secretary for Justice of Hong Kong, a member of the Executive Council of Hong
Kong, the Deputy Director of the Hong Kong Basic Law Committee of the Standing
Committee of the 2nd, 3rd and 4th National People's Congress and a consultant
of lu, 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, and 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 China Association
for Public Companies, and an Independent Director of each of Harvest Fund
Management Co., Ltd., GF Securities Co., Ltd. and Bank of Guizhou 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
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.
Mr. Robinson Drake Pike, born in 1951, American
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.
77
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 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.
Mr. Chang Tso Tung Stephen, born in 1948, Chinese
Mr. Wang became a Non-executive Director of the Company in August 2019. He has
been the Chief Investment Officer of China Life Insurance (Group) Company and the
President of China Life Asset Management Company Limited since August 2016. He
has been the Chairman of China Life Franklin Asset Management Company Limited
since September 2016 and the Chairman of China Life AMP Asset Management Co.,
Ltd. since December 2016. From 2004 to 2016, he served as an Assistant to the
President and the Vice President of China Life Asset Management Company Limited,
and the President of China Life Investment Holding Company Limited. From 2002 to
2004, he served as the Director of the Investment Department and an Assistant to the
General Manager of Harvest Fund Management Co., Ltd. Mr. Wang graduated from
the School of Computer Science of Beijing University of Technology with a bachelor's
degree in software in 1995, and Chinese Academy of Fiscal Sciences of the Ministry of
Finance of the PRC with a doctoral degree in finance in 2008. He is a senior economist.
Mr. Wang Junhui, born in 1971, Chinese
Mr. Yin became a Non-executive Director of the Company in July 2017. He has been
the President of China Guangfa Bank Co., Ltd. since September 2019 and 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 2019 Annual Report Corporate Governance
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.
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
0
0
Total
0
July 1963
Male
Vice President
July 2016-
Zhao Lijun
Supervisor
3 January 2020
0
adjustment of work
79.18
30.74
48.44
0
0
June 1964
Male
Representative
No
95.47
15.19
August 2019
adjustment of work
arrangements
No
62.05
9.84
52.21
0
0
Resigned due to the
October 2016-
May 2019
September 1968
Male
Vice President
Xiao Jianyou
arrangements
No adjustment of work
Resigned due to the
arrangements
110.66
519
annuity
enterprise the Company from connected
parties of
Reason for changes
0
Chief Actuary since March
July 1969
Male
Chief Actuary,
Li Mingguang
since November 2014,
Vice President,
0
Appointed as Vice President
0
0
0
0
0
Since April 2019
February 1963
Male
Yes
President
143.20
166.20
Male
Vice President
Ruan Qi
Yes
111.36
17.38
93.98
0
23.00
0
April 1972
Male
Vice President
Zhao Peng
since June 2017
2012, Board Secretary
Board Secretary
No
Since March 2018
Su Hengxuan
ten thousands
the Company
emolument
Remuneration
Reason for
share held
the Company
fund and
received
Salary/
Name
Number of
provident
of share
Number
Whether
emoluments
housing
Total
social insurance,
received from
Position
Gender
Date of Birth
ten thousands
(before tax)
in RMB
the Company
from connected
parties of
Period in RMB
fund paid by
of the year
ten thousands
of the year
the Reporting
annuity
beginning
during
enterprise
paid in RMB
changes
at the end
held at the
Term
July 1966
CURRENT SENIOR MANAGEMENT
Since April 2018
0
Salary/
Number of
Number
of share
Other benefits,
social insurance,
RESIGNATION AND RETIREMENT OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
73
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
3. After the consideration by the ninth meeting of the sixth session of the Board of Directors of the Company and upon the approval by the CBIRC, Mr. Su
Hengxuan became the President of the Company on 2 April 2019. After the consideration by the fourteenth and eighteenth meetings of the sixth session
of the Board of Directors of the Company and upon the approval by the CBIRC Beijing Bureau, Mr. Zhan Zhong and Ms. Yang Hong became the Vice
Presidents of the Company, respectively, on 12 July 2019. After the consideration by the sixteenth meeting of the sixth session of the Board of Directors
of the Company and upon the approval by the CBIRC Beijing Bureau, Mr. Zhao Guodong became an Assistant to the President of the Company on 25
October 2019.
share held
2. 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.
Notes:
824.12
153.93
670.19
0
0
No
84.69
1. 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.
31.89
Reason for
Name
emolument
received
emolument
Whether
Total
fund and received from
provident
housing
Remuneration
ten thousands
paid in RMB
changes
beginning
of the year
at the end
held at the
Term
Date of Birth
Previous Position Gender
of the year
52.80
0
0
Female
Vice President
Yang Hong
No
145.81
26.48
119.33
0
February 1967
0
April 1968
Male
Vice President
Zhan Zhong
No
148.25
22.95
125.30
Since July 2019
Since July 2019
0
0
Since July 2018
October 1969
Male
Compliance Officer
Xu Chongmiao
Total
No
21.96
5.71
16.25
0
0
Since October 2019
November 1967
Assistant to the President Male
Zhao Guodong
71
145.85
26.52
119.33
0
CURRENT SUPERVISORS
During the Reporting Period, the Company was awarded
the "2019 Most Respected Company in Asia" by
Institutional Investor, an international authoritative finance
magazine, the "Excellent Award for Investor Relations of
Listed Companies" by the Hong Kong Investor Relations
Association, and the "Best Listed Company Award" by
New Fortune Magazine.
Board of
Supervisors
Employees
Number of
Total
Others
Secondary School
College Diploma
Bachelor
Master or above
Education Level
Education Level
84 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
103,826
Total
3,371
Others
4,749
Other expertise and technicians
25,622
Insurance verification, claims processing and customer services
4,911
Finance and auditing
46,678
Sales and sales management
18,495
Number of
Employees
Management and administration
Class of Expertise
Structure of Expertise
As at the end of the Reporting Period, the composition of the employees of the Company and its major subsidiaries is as
follows:
5,082
20
64,655
1,967
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 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 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 five specialized 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
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.
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
86
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 Board of Supervisors
meetings of the Company have been functioning
independently and coordinately.
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.
Board of Directors' Office/
Company Secretary
Board Secretary
Connected
Transactions
Control Committee
(Corporate Governance Structure Chart)
Strategy and Assets and
Liabilities Management
Committee
Risk Management
and Consumer Rights
Protection Committee
Board of
Directors
Nomination and
Remuneration
Committee
Shareholders'
General
Meeting
Audit
Committee
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.
OVERVIEW OF CORPORATE GOVERNANCE
REPORT OF CORPORATE GOVERNANCE
85
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
of "China Life Revitalization" and the overall objective and
task of "three guarantees and three concentrations". The
Company also enriched training resources, innovated new
forms of training, and organized employees at all levels
within the Company to complete the training tasks for
the year, so as to improve the comprehensive quality and
professional skills of employees and ensure the supply
of talents for promoting the high-quality development of
the Company. Through the implementation of a series of
training and cultivation programs such as the cultivation of
new employees, base platform cultivation, "2551" Project
and Wings Program, the Company effectively promoted
its relevant works in corporate business development,
team building of employees, corporate culture cultivation,
customer service improvement, work efficiency
optimization and compliance risk prevention in 2019.
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 2019, the Company continuously implemented the
work requirements of "close to the frontline, close to the
practice and adapt to the era" for education and training
in a consistent manner, focused on talent cultivation and
made great efforts to provide training courses for cadre
employees by closely upholding the strategic arrangement
Training Plans
The Company has established a remuneration and
incentive system with reference to employee's positions,
the Company's performance and market conditions.
Remuneration Policy for Employees
103,826
3,429
28,693
The Company has carried out the procedures relating to
the resignation and appointment of Directors, Supervisors
and the senior management in compliance with the
regulatory requirements of its listed jurisdictions and
the provisions of its Articles of Association. Mr. Xu
Hengping and Mr. Xu Haifeng resigned from their
positions as Directors, respectively, due to the reason
of age. Mr. Shi Xiangming, Mr. Tang Yong, Mr. Huang
Xin and Mr. Song Ping resigned from their positions as
Supervisors, respectively, due to the adjustment of work
arrangements. The Board subsequently considered and
approved the proposals in relation to the nomination
of Mr. Zhao Peng as the Person-in-Charge of Finance
of the Company, the nomination of Mr. Zhan Zhong as
the Vice President of the Company, the nomination of
Ms. Yang Hong as the Vice President of the Company,
the nomination of Mr. Zhao Guodong as an Assistant to
the President of the Company, and the nomination of
103,826
102,250
Mr. Xu Chongmiao, born in 1969, Chinese
Mr. Zhao became an Assistant to the President of the Company in October 2019. He
has been the General Manager of Jiangsu Branch of the Company in July 2018. 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
of the Company from 2016 to 2018, the Deputy General Manager of each of Fujian
Branch and Hunan Branch of the Company from 2007 to 2016, as well as the Deputy
General Manager of Changde Branch and the General Manager of Yiyang Branch of
the Company in Hunan Province from 2001 to 2007. Mr. Zhao graduated from Hunan
Computer School in 1988, majoring in computer software, and from China Central Radio
and TV University in 2006, majoring in business administration.
Mr. Zhao Guodong, born in 1967, Chinese
Ms. Yang became the Vice President of the Company in July 2019. She has been the
Operation Director of the Company since March 2018 and 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 the
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
81
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
Mr. Zhan became the Vice President of the Company in July 2019. He has been the
Marketing Director of the Company since August 2017 and the General Manager (as
the general manager level of the provincial branches) of the Individual Insurance Sales
Department of the Company since July 2014. He was an Employee Representative
Supervisor of the Company from July 2015 to August 2017. 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 Sales Department of the Company.
From 2005 to 2009, he successively served as the General Manager of the Individual
Insurance Sales Department 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 Chengdu High-tech
Sub-branch of Zhongbao Life Insurance Company, an Assistant to the Manager and the
Manager of the Marketing Department of Chengdu Branch, and the Deputy General
Manager of 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.
Mr. Zhan Zhong, born in 1968, Chinese
Mr. Ruan became the Vice President of the Company in April 2018. He served as
the Chief Information Technology Officer of the Company from January 2018 to April
2018. Mr. Ruan served as the Chief Information Technology Officer and the General
Manager (at the general manager level of the provincial branches) of the Information
Technology Department of the Company from October 2016 to January 2018. He served
as the General Manager (at the general manager level of the provincial branches) of
the Information Technology Department of the Company from March 2016 to October
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 operations) 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.
Mr. Ruan Qi, born in 1966, Chinese
Mr. Li Mingguang, please see the section "Directors" for his profile.
Mr. Zhao Peng, please see the section "Directors" for his profile.
Mr. Su Hengxuan, please see the section "Directors" for his profile.
SENIOR MANAGEMENT
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
80
Ms. Wang became a Supervisor of the Company in December 2019. She has been the
Deputy General Manager of the Risk Management Department of the Company since
April 2018. From May 2016 to April 2018, she served as the Secretary to the Discipline
Inspection Committee of Tibet Autonomous Region Branch of the Company. From
2008 to 2016, she successively served as an Assistant to the General Manager of the
Individual Insurance Sales Department, the Deputy General Manager of No. 5 Business
Management Department in Beijing Branch, an Assistant to the General Manager and
the Deputy General Manager of the County Insurance Management Department, and
the Deputy General Manager of the Audit Department of the Company. From 2001
to 2008, she successively served as the Deputy Division Chief of the Agent Training
Division, the Deputy Division Chief of the Sales Inspection Division, the Division Chief
of the Agent Management Division, and the Division Chief of the Comprehensive
Development Division of the Individual Insurance Sales Department of the Company.
Ms. Wang graduated from Nanjing Communication Engineering College in 1988,
majoring in radio communication engineering with a bachelor's degree in engineering.
Ms. Wang Xiaoqing, born in 1965, Chinese
Mr. Cao became a Supervisor of the Company in July 2019. He has been the General
Manager of the Product Development Department of the Company since February
2011. From 2008 to 2011, he successively served as the Deputy General Manager
of Tianjin Branch and the Group Leader of the Statistics Working Group of the
Company. From 2004 to 2008, he successively served as the General Manager of the
Investor Relations Department, the Deputy Secretary-General of the Board Secretariat
and concurrently the General Manager of the Investor Relations Department, and
the Deputy Secretary-General of the Board Secretariat of the Company. Mr. Cao
graduated from Nankai University in 2004, majoring in finance with a doctoral degree in
economics.
Mr. Cao Qingyang, born in 1963, Chinese
79
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
Mr. Han became a Supervisor of the Company in July 2019. He has been the General
Manager of the Human Resources Department of the Company since December 2018.
He served as the General Manager of the Human Resources Department of China Life
Pension Company Limited from March 2016 to December 2018. During the period
from 2014 to 2016, he successively served as the Deputy General Manager and the
Secretary to the Discipline Inspection Committee of Ningbo Branch, and the Deputy
General Manager and the Secretary to the Discipline Inspection Committee of Tibet
Autonomous Region Branch of the Company. During the period from 2006 to 2014, he
served as the Deputy General Manager of the Human Resources Department of the
Company. Mr. Han graduated from Beijing College of Economics in 1994, majoring in
labour economy with a bachelor's degree in economics.
Mr. Han Bing, born in 1971, Chinese
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 and the General Manager of the Strategic Planning Department of China Life
Insurance (Group) Company in July 2016 and November 2019, respectively. 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.
Mr. Luo Zhaohui, born in 1974, Chinese
Mr. Jia became the Chairman of the Board of Supervisors of the Company in July 2018.
During the period from 2006 to March 2018, he served as a Supervisor, the General
Manager of the Human Resources Department, an Assistant to the President, the Vice
President, the Board Secretary, an Executive Director and the Compliance Officer of
China Life Pension Company Limited. During the period from 2004 to 2006, he served
as the General Manager of the Work Department of the Trade Union, the Executive
Deputy Director of the Trade Union and a Supervisor of the Company. During the period
from 1988 to 2004, he successively served as the Division Head of the General Office
and a secretary (at the deputy director level) of the PRC Ministry of Supervision, the
Deputy Director (responsible for daily operations) of the Minister Office of the General
Supervision Office under the Supervision Department of the Central Commission for
Discipline Inspection, and an inspector (at the director level), supervisor, inspector (at
the deputy bureau chief level) and special supervisor of the General Office of the Central
Commission for Discipline Inspection. Mr. Jia graduated from the Open University
of Hong Kong in 2003, majoring in business administration with a master's degree in
business administration.
Mr. Jia Yuzeng, born in 1962, Chinese
SUPERVISORS
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
doctorate degrees in law. Mr. Xu is admitted as a lawyer and certified public accountant
in the PRC.
1,576
82
COMPANY SECRETARY
which extra costs have to be incurred
Retired employees of the Company and its major subsidiaries for
Employees in total
Number of employees of the Company's major subsidiaries
Number of employees of the Company
Employees
EMPLOYEES
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 RMB15.3821 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
2019 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.
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.
REMUNERATION OF DIRECTORS, SUPERVISORS
AND SENIOR MANAGEMENT
83
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
Since November 2019
Since August 2018
Since December 2017
Since December 2019
Since May 2017
Since September 2013
Since October 2016
Since August 2016
Term
Vice President
Chief Financial Officer
Vice Chairman, President
Vice President
Vice President
Chief Investment Officer
General Manager of
the Strategic Planning
Department
Chairman
Position
China Life Insurance (Group) Company
Luo Zhaohui
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
China Life Insurance (Group) Company
Name of shareholders
Yin Zhaojun
Wang Junhui
Su Hengxuan
Zhao Peng
Yuan Changqing
Liu Huimin
Name
Wang Bin
POSITIONS HELD BY CURRENT DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT IN
SHAREHOLDERS OF THE COMPANY
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 15 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 CIMC-Tian Da Holdings
Company 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.
Mr. Heng Victor Ja Wei, born in 1977, British
China Life Insurance Company Limited 2019 Annual Report Corporate Governance
Mr. Yang Chuanyong as the Person-in-Charge of Audit of
the Company. Following the election at the 2018 Annual
General Meeting of the Company and upon the approval
by the CBIRC, the appointment of Mr. Li Mingguang
and Mr. Wang Junhui as Directors became effective
on 16 August 2019, and the appointment of Mr. Han
Bing as a Supervisor became effective on 12 July 2019.
Following the election at the third extraordinary meeting
of the second session of the employee representative
meeting of the Company and upon the approval by
the CBIRC, the appointment of Mr. Cao Qingyang as a
Supervisor became effective on 12 July 2019. Following
the election at the fourth extraordinary meeting of the
second session of the employee representative meeting
of the Company and upon the approval by the CBIRC,
the appointment of Ms. Wang Xiaoqing as a Supervisor
became effective on 27 December 2019. Following the
election at the First Extraordinary General Meeting 2019
of the Company and upon the approval by the CBIRC,
the appointment of Mr. Zhao Peng as a Director became
effective on 20 February 2020. The Company has complied
with its systems relating to corporate goverance and
strictly implemented the above corporate governance
procedures.
88 China Life Insurance Company Limited 2019 Annual Report Corporate Governance
accurate manner.
The Company has consistently made improvements to its
systems relating to corporate governance. Pursuant to the
regulatory requirements such as the "Measures for the
Administration of Connected Transactions of Insurance
Companies" and the "Guiding Opinions on Banking
and Insurance Institutions Strengthening the Building
of Working Systems and Mechanisms for Protection of
Consumer Rights and Interests" published by the CBIRC,
and after taking into account its actual operation, the
Company has formulated the new "Procedural Rules for
the Connected Transactions Control Committee Meetings
of the Board of Directors" and made amendments to
the "Procedural Rules for the Risk Management and
Consumer Rights Protection Committee Meetings of the
Board of Directors".
China Life Insurance Company Limited 2019 Annual Report Corporate Governance 87
The Board of Directors and the Board of Supervisors
of the Company have conducted in-depth investigation
and research activities. The members of the Board
carried out investigation and research on AMC, received
reports concerning its overall situation, and discussed
with the management of AMC at seminars about its
business operation, investment strategy, allocation plan,
investment return, and risk control and prevention for
the purpose of further understanding the development
of the Company's investment business and its entrusted
investments in great depth. The members of the Board
of Supervisors carried out oversight of and conducted
investigation and research on Beijing Branch, Jiangsu
Branch, Zhejiang Branch, Guangxi Zhuang Autonomous
Region Branch and other branches of the Company,
respectively, for the purposes of being more familiar
with the business development of local branches and
comprehending the circumstances associated with the
implementation by local branches of business decisions of
the Board and the management and their establishment
of risk prevention and control mechanisms, which thus
enhanced the legal compliance and risk prevention of the
Company in a practical manner.
The Company has actively organized Directors and
Supervisors to attend various training courses and
examinations. All members of the the Board of Directors
and the Board of Supervisors attended a training
course on the topic of "Standards of New Insurance
Contracts and their Effects", with the external auditors
of the Company as the speaker, which gave them the
opportunity to familiarize with and understand the impact
of the standards of new insurance contracts on the
subsequent management of the Company. Mr. Liu Huimin
and Mr. Yin Zhaojun, the Non-executive Directors of
the Company, attended the 2nd and 4th special training
courses of 2019 for directors and supervisors of listed
companies within Beijing as organized by the Listed
Companies Association of Beijing, respectively. Pursuant
to the regulatory requirements, all members of the Board
of Directors and the Board of Supervisors attended the
training programs on anti-money laundering. Pursuant
to the regulatory requirements of the industry, Mr. Li
Mingguang and Mr. Wang Junhui, the new Directors of
the Company, and Mr. Han Bing, Mr. Cao Qingyang and
Ms. Wang Xiaoqing, the new Supervisors of the Company,
sat for the examinations of the CBIRC regarding the
approval of qualifications of new directors, supervisors
and senior management officers of insurance institutions
as organized by the CBIRC.
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
6.16
10.49
3.54
decrease
16.47
11.84
Weighted average ROE (%)
5.22
3.15
7.11
of 4.63
6.3%
10.12
10.76
operating activities per share³
Major financial ratios
percentage
89.25
Gearing ratio (%)
4.69
5.16
3.29
point
increase
5.24
5.30
Gross investment yield 5 (%)
percentage
of 0.23
88.59
88.77
90.07
increase
89.02
Net cash inflow/(outflow) from
points
China Life Insurance Company Limited
11.08
10.47
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 2020, the Company had approximately 317
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.
02
| Chairman's Statement
10
03
| Management
The Company is a life insurance company 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 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.
Discussion and Analysis
14
Business Analysis
18
27
Technology Empowerment and
Operations and Services
Performance of the Corporate
30
32
Review of Business Operations
in 2020
中国人寿保险股份有限公司
6
Honors and Awards
Business Highlights
Financial Summary
of 0.06
percentage
10.99
13.7%
14.01
15.92
per share³
Ordinary share holders' equity
2356
10.74
Annual Report 2020
國
錯中國
CONTENTS
01
| Prelude
Core Competitiveness
Stock Code: 2628
point
1. 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.
China Life Insurance Company Limited | Annual Report 2020 | Prelude
The needs for liquidity management
6.2%
8.1%
53,306
608,920
658,535
Loans
56,629
Cash and cash equivalents
agreements to resell
The needs for liquidity management
77.9%
4,467
7,947
Securities purchased under
An increase in the scale of debt-type
assets in securities at fair value through
profit or loss
An increase in the allocation of available-
for-sale securities
An increase in policy loans and
certificates of deposit
Investment properties
14,217
12,141
16.5%
2,552,736
2,973,225
Insurance contracts
Affected by an increase in fair value of
available-for-sale securities
-32.0%
128
through profit or loss
87
An increase in investments in associates
and joint ventures
7.4%
222,983
239,584
Investments in associates
and joint ventures
Deferred tax assets
New investments in investment
properties
17.1%
Social Responsibility
14.1%
141,608
161,570
31 December
As at
As at
Major Items of the
Consolidated Statement
RMB million
MAJOR ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS AND THE REASONS FOR CHANGE
7
31 December
China Life Insurance Company Limited | Annual Report 2020 | Prelude
In calculating the percentage change 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
Investment assets = Cash and cash equivalents + Securities at fair value through profit or loss + Available-for-sale securities + Held-to-maturity
securities + Term deposits + Derivative financial assets + Securities purchased under agreements to resell + Loans + Statutory deposits-restricted +
Investment properties + Investments in associates and joint ventures
5.
4.
3.
2.
Notes:
Gross investment yield = (Gross investment income - Interest paid for securities sold under agreements to repurchase)/((Investment assets at the
end of the previous year - Securities sold under agreements to repurchase at the end of the previous year - Derivative financial liabilities at the end of
the previous year + Investment assets at the end of the period - Securities sold under agreements to repurchase at the end of the period – Derivative
financial liabilities at the end of the period)/2)
6
of Financial Position
2019
Securities at fair value
14.8%
1,058,957
1,215,603
Available-for-sale securities
An increase in the allocation of
government bonds
28.1%
2020
928,751
Held-to-maturity securities.
1.9%
535,260
545,667
Term deposits
Main Reasons for Change
Change
1,189,369
The accumulation of insurance liabilities
from new policies and renewals
Future Prospect
Analysis of Specific Items
-8.9%
59,795
54,488
Profit before income tax
407,045
466,043
13,921
479,219
509,467
580,801
expenses
Insurance benefits and claims
522,794
608,827
14.0%
621,243
41,671
Net profit attributable to equity
31,873
11,011
-13.5%
57,893
50,067
share holders of the Company
23,842
Net profit attributable to ordinary
32,253
11,395
-13.8%
58,287
50,268
holders of the Company
19,127
11.9%
677,690
758,139
2019
2020
Under International Financial Reporting Standards (IFRS)
RMB million
For the year ended
Major Financial Data¹
Change
MAJOR FINANCIAL DATA AND INDICATORS FOR THE PAST FIVE YEARS
LO
China Life Insurance Company Limited | Annual Report 2020 | Prelude
268.92%
6.33%
5.30%
Comprehensive solvency ratio
Financial Summary
2018
2017
2016
Benefits, claims and expenses
426,230
506,910
532,023
7.9%
560,278
604,666
Net premiums earned
540,781
643,355
627,419
10.3%
729,474
804,961
Total revenues
18,741
Net cash inflow/(outflow) from
operating activities
304,024
20,045
-2.4%
other borrowings Note
Deferred tax liabilities
15,286
10,330
19,556
48.0%
Equity holders' equity
450,051
403,764
11.5%
Due to the combined impact of total
comprehensive income and profit
Note:
Affected by an increase in fair value of
available-for-sale securities
Interest-bearing loans and
balances payable
An increase in maturities payable
Investment contracts
288,212
267,804
7.6%
An increase in the scale of universal
insurance accounts
Securities sold under
122,249
118,088
3.5%
The needs for liquidity management
agreements to repurchase
Annuity and other insurance
55,031
51,019
7.9%
8
Comprehensive investment yield
distribution during the Reporting Period
China Life Insurance Company Limited | Annual Report 2020 | Prelude
403,764
450,051
Total equity holders' equity
3,317,392
4,252,410 3,726,734
4,095,454 3,573,154
3,795,479
Total liabilities
14.1% 3,254,403
14.6% 3,104,014
14.4% 2,931,113
11.5% 318,371
Investment assets²
As at 31 December
89,098
200,990
147,552
6.3%
286,032
Total assets
2,897,591
2,753,124 2,573,049
2,696,951
2,572,281
11.5%
14.28
15.92
Equity holders' equity per share³
0.66
1.13
0.39
-13.5%
2.05
1.77
Earnings per share (basic and diluted)³
Per share (RMB)
303,621
320,933
2,389,303
Interest-bearing loans and other borrowings include a three-year bank loan of EUR330 million with a maturity date on 8 September 2023, a five-year
bank loan of GBP275 million with a maturity date on 25 June 2024, a five-year bank loan of USD860 million with a maturity date on 16 September
2024, a six-month bank loan of EUR127 million with a maturity date on 13 January 2021 which is automatically renewed upon maturity pursuant to
the terms of the agreement, a six-month bank loan of EUR78 million with a maturity date on 4 January 2021 which is automatically renewed upon
maturity pursuant to the terms of the agreement. All the above are fixed rate loans. Interest-bearing loans and other borrowings also include a five-
year bank loan of USD970 million with a maturity date on 27 September 2024, and an eighteen-month bank loan of EUR110 million with a maturity
date on 9 March 2022, both of which are floating rate loans.
Gross investment yield
Ж
million
129
Notes to the Consolidated
| Corporate Governance
Cash Flows
127
Consolidated Statement of
Report of the Board of Directors
11.26
126
Consolidated Statement of
06
Comprehensive Income
124
Consolidated Statement of
Changes in Equity
51
Financial Statements
Report of the Board of
Profound and
extensive
customer base
Well-
established
network
and leading
technologies
business and
sound financial
strength
Prominent
principal
Long history
and excellent
brand
Core Competitiveness
83
Report of Corporate Governance
67
Directors, Supervisors, Senior
Management and Employees
Shareholders Information
63
Changes in Ordinary Shares and
Supervisors
59
Financial Position
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, when the People's Republic of China was founded. After the restructuring
and reorganization, the Company was successively listed 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. 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. The brand of China Life has been selected as
one of the "World's 500 Most Influential Brands" published by World Brand Lab for fourteen
consecutive years, ranking No. 127 for the year ended 31 December 2020, and was again
ranked No. 5 on the "2020 (the 17th session) China's 500 Most Valuable Brands" list published
by World Brand Lab.
122
116
50
50
엉엉엉.
Restriction on Major Assets
Targeted Poverty Alleviation
Others
Undertakings
Their Performance
34
Material Contracts and
Material Litigations or Arbitrations 40
Significant Events
05
07
| Embedded Value
04
Major Connected Transactions
34
| Other Information
Basic Information of
Independent Auditor's Report
50
| Financial Report
49
08
49
40
Material Risk Alert
115
Definitions and
Disclosure Announcements
112
Index of Information
the Company
109
Consolidated Statement of
32
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 2020,
the Company's gross written premiums exceeded RMB600 billion, achieving a new record
high. Through the long-term development and accumulation, China Life has solid financial
strength comparable to world-class enterprises in the world. As at 31 December 2020, the
Company's total assets amounted to RMB4,252,410 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 2020, the
total market capitalization of the Company was USD138,900 million.
The Company has an extensive customer base. As at 31 December 2020, the Company
had approximately 317 million long-term individual and group life insurance policies, annuity
contracts and long-term health insurance policies in force, offering insurance services for more
than 500 million customers.
China Life Insurance Company Limited | Annual Report 2020 | Prelude
4
The Heart of the Machine Technology Co., Ltd., an authoritative assessment
and selection organization for artificial intelligence awards in China
"2020 Synced Machine Intelligence Awards"
Al Intelligent Training being awarded the "2020 Synced
Machine Intelligence Award by the Heart of the Machine”
The Ministry of Industry and Information Technology,
the National Development and Reform Commission, the Ministry of Commerce,
the National Government Offices Administration,
the CBIRC and the National Energy Administration
"National Green Data Center 2020"
"National Green Data Center 2020"
Business Highlights
Shanghai Data Center being awarded the
"Assessment and Selection of the 2020 China Securities 'Golden Bauhinia Awards'"
jointly organized by Hong Kong Tai Kung Wen Wei Media Group with the
"Best Investor Relations of Listed Company"
The Chamber of Hong Kong Listed Companies and Centre for
Corporate Governance and Financial Policy of Hong Kong Baptist University
"Hong Kong Corporate Governance Excellence Awards 2020"
"Hong Kong Corporate Governance Excellence Award 2020"
China Business Journal
"Assessment and Selection of the
12th Financial Institutions with Excellent Competitiveness"
- Targeted Poverty Alleviation Contribution Award"
Listed Companies Association of Beijing, the Hong Kong Chinese Enterprises Association,
the Chinese Securities Association of Hong Kong, the Chinese Financial Association of Hong Kong,
the Hong Kong Institute of Chartered Secretaries, Hong Kong Securities Professionals Association
and China Merger and Acquisitions Association (Hong Kong) Limited
H
Gross written premiums
612,265m
198,596m
million
58,373
Gross investment income
Value of one year's sales
million
50,268
Net profit attributable to
equity holders of the Company
million
1,072,140
million
4,252,410mi
Total assets
Embedded value
million
"2020 Excellent Competitiveness
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 Company had approximately 20,000 branches¹ and the number of sales force from
all channels of the Company was over 1.458 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
implemented the "Technology-driven China Life" development strategy in great depth by
adhering to the leading concept of technological innovation, and promoted the development
of enterprise with excellent services, so as to cultivate its first-class operational management,
risk control and customer services. The Company upgraded its operations and services to be
more Internet-based, intelligent, integrated and ecological, providing convenient insurance
services to the public through technology empowerment.
"Assessment and Selection of the 15th People's Corporate Social Responsibility Awards"
- Annual Precedent Award"
Institutional Investor
Fortune China
Forbes
"Most Respected Company in Asia"
"2020 Fortune China 500 List”, ranking 10th
"2020 Forbes Global 2000", ranking 37th
"2020 Best Life Insurance Company in Asia"
"Outstanding Financial Enterprise for Poverty Alleviation of the Year"
Honors and Awards
2
Including branches at the provincial or prefecture level, sub-branches, sales offices and sales & services offices.
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 movement of these personnel which
Imight have a material impact on the Company.
1
and stable core
team
Professional
China Life Insurance Company Limited | Annual Report 2020 | Prelude
21st Century Business Herald
"Golden Dragon Award – 2020 Best Listed Insurance Company"
Financial Times
"People's Corporate Social Responsibility Award
3
China Life Insurance Company Limited | Annual Report 2020 | Prelude
Shanghai Securities News
"Assessment and Selection of the 11th 'Golden Wealth Management""
"Corporate Social Responsibility Award of the Year"
The "18th Financial Annual Champion Awards"
Hexun.com
“Influential Insurance Company of the Year"
National Business Daily
"2020 Assessment and Selection of Golden Tripod Award in China"
"Excellent Life Insurance Company of the Year"
of the Ark Prizes for China's Insurance Industry in 2020"
Securities Times
"Assessment and Selection
"Ark Prize for Golden Insurance Service in 2020"
"Ark Prize for Technological Progress of China's
Insurance Industry in 2020"
"Ark Prize for Insurance Company with
High-quality Development in 2020"
"Gold Medal List of Chinese Financial Institution"
People's Daily Online
11.35
●
Zhao Peng
required
to attend
required
to attend
Chang Tso Tung Stephen
Su Hengxuan
Wang Junhui
Independent Director, Chairman of the Strategy
and Assets and Liabilities Management
Committee of the sixth session of the Board
Executive Director, member of the Strategy
and Assets and Liabilities Management
Committee of the sixth session of the Board
Non-executive Director, member of
the Strategy and Assets and Liabilities
Management Committee of the sixth session
of the Board
4/4
0/4
4/4
0/4
3/4
1/4
Leung Oi-Sie Elsie
Independent Director, member of the Strategy
and Assets and Liabilities Management
Committee of the sixth session of the Board
Attendance records of the resigned Director at meetings are as follows:
H
4/4
0/4
Name of member
Position
Number of
meetings
attended in
person/
Number of
meetings
Number of
meetings
attended by
proxies/
Number of
meetings
meetings
required
to attend
meetings
meetings
attended by
33
0/3
33
3/3
0/3
3/3
33
3/3
Note: The number of meetings attended in person includes attending meetings by the Directors on-site and by telephone or video conference.
Mr. Wang Junhui served as a member of the Risk Management and Consumer Rights Protection Committee from February 2021.
94
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
0/3
0/3
Performance of duties by the Risk Management
and Consumer Rights Protection Committee
In 2020, the Risk Management and Consumer Rights
Protection Committee performed its duties and functions
in strict compliance with the "Procedural Rules for the
Risk Management and Consumer Rights Protection
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, its risk management and construction
in compliance with law. 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.
Reviewing the risk analysis on major matters concerning
the business operation and management of the Company.
In 2020, the Risk Management and Consumer Rights
Protection Committee reviewed the risk analysis on
major matters concerning the business operation and
management of the Company, reviewed and approved
the proposals in relation to the risk compliance analysis
on the asset strategic allocation plan for the years from
2021 to 2023 and the risk compliance analysis on the
asset allocation plan for the year 2021, and gave guiding
opinions on risk control for major matters concerning the
business operation and management of the Company in
accordance with the regulatory requirements of the CBIRC
on the China Risk Oriented Solvency System (C-ROSS).
Providing its opinions for the review of the proposals
on risk management to the Board. In 2020, the Risk
Management and Consumer Rights Protection Committee
closely monitored and controlled and effectively prevented
internal and external risks of the Company, assisted the
Board in reviewing 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 and Consumer Rights Protection
Committee provided its opinions for the review of the
reports on risk management such as the work summary
on anti-money laundering for the year 2019 and the work
plan for the year 2020, the statement of the Company on
risk preference for the year 2020, the audit report on the
solvency risk management system of the Company for the
year 2020, the reputational risk management report and
the work report on fraudulent risk management, which
offered professional support to the Board's decision-
making in a scientific manner.
Reviewing the system of the Company in relation
to consumer rights protection. In 2020, the Risk
Management and Consumer Rights Protection Committee
considered and approved the proposal in relation to the
"Measures for the Administration of Consumer Rights
Protection of the Company (for Trial Implementation)",
and submitted the review opinions to the Board.
STRATEGY AND ASSETS AND LIABILITIES
MANAGEMENT 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
sixth session of the Board comprises Mr. Chang Tso Tung
Stephen and Ms. Leung Oi-Sie Elsie, the Independent
Directors, Mr. Su Hengxuan, an Executive Director, and
Mr. Wang Junhui, a Non-executive Director, with Mr.
Chang Tso Tung Stephen acting as the Chairman. In
April 2020, Mr. Zhao Peng resigned from his position
as a member of the Strategy and Assets and Liabilities
Management Committee of the sixth session of the Board
due to the adjustment of work arrangements.
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance 95
Meetings and attendance
During the Reporting Period, four 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
Number of
meetings
attended in
person/
Number of
Number of
proxies/
Number of
3/3
required
Zhao Peng
to attend
Tang Xin
Independent Director, Chairman of the
Connected Transactions Control Committee of
the sixth session of the Board
6/6
0/6
Independent Director, member of the
Chang Tso Tung Stephen
Connected Transactions Control Committee of
6/6
90
0/6
the sixth session of the Board
Independent Director, member of the
Robinson Drake Pike
Connected Transactions Control Committee of
6/6
0/6
the sixth session of the Board
Independent Director, member of the
Leung Oi-Sie Elsie
Connected Transactions Control Committee of
the sixth session of the Board
6/6
0/6
Note:
The number of meetings attended in person includes attending meetings by the Directors on-site and by telephone or video conference.
Performance of duties by the Connected
Transactions Control Committee
In 2020, 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.
Reviewing connected transactions. In 2020, the
Connected Transactions Control Committee submitted to
the Board its review opinions in respect of the proposals
on connected transactions regarding the investments by
the Company in several partnerships, fully discussed the
necessity, feasibility and risks of the projects and made
important recommendations to the Board.
Reviewing the amendments to the system of the
Company in relation to connected transactions. In
2020, the Connected Transactions Control Committee
considered and approved the proposal on the
amendments to the "Measures for the Administration of
Connected Transactions of the Company", and submitted
the review opinions to the Board.
to attend
to attend
required
meetings
Executive Director, member of the Strategy
and Assets and Liabilities Management
Committee of the sixth session of the Board
0/1
1/1
Notes:
1.
2.
The number of meetings attended in person includes attending meetings by the Directors on-site and by telephone or video conference.
Directors who were unable to attend any meeting of specialized Board committees authorized other Directors to attend and vote at the meeting on their
behalf.
96
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Performance of duties by the Strategy and Assets
and Liabilities Management Committee
In 2020, all members of the Strategy and Assets and
Liabilities Management Committee attended meetings in a
timely manner, reviewed the proposals on the application
of the Company's insurance funds, annual investments,
major strategic projects, assets and liabilities management
and annual related reports. 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 any proposals considered and
discussed at the meetings.
Reviewing annual asset allocation plan and entrusted
investments of the Company. In 2020, the Strategy and
Assets and Liabilities Management Committee carefully
reviewed the proposals on investment plans such as
the annual asset allocation plan of the Company and the
annual investment plan of the Company for self-use real
estate, the proposals on authorization of investments such
as the annual authorization by the Company of investment
in non self-use real estate, the annual authorization of
investment entrusted by the Company in connection with
Renminbi liberalization and the annual authorization 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 CLI
under the entrustment of the Company. The Strategy
and Assets and Liabilities Management Committee fully
reviewed the above proposals and submitted its opinions
to the Board in this regard.
Reviewing the systems of the Company concerning assets
and liabilities management. In 2020, the Strategy and
Assets and Liabilities Management Committee reviewed
and approved the proposal on the amendments to the
measures for the administration of investments by the
Company and the system of the Company concerning
asset allocation, and made recommendations to the
Board.
Discussing the Company's development plans and major
strategic projects. In 2020, the Strategy and Assets
and Liabilities Management Committee discussed and
reviewed the proposals on the 2019 assessment report
for the outline of the 13th five-year development plan
and the strategic asset allocation plan of the Company for
the years from 2021 to 2023, and submitted its review
opinions to the Board.
CONNECTED TRANSACTIONS CONTROL
COMMITTEE
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 six 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
sixth session of the Board comprises Mr. Tang Xin,
Mr. Chang Tso Tung Stephen, Mr. Robinson Drake Pike
and Ms. Leung Oi-Sie Elsie, the Independent Directors,
with Mr. Tang Xin acting as the Chairman.
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 and necessity
of connected transactions and the fairness of their pricing,
which provide an important basis for the Board's decision-
making in connected transaction management.
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance 97
Meetings and attendance
During the Reporting Period, six meetings were held by the Connected Transactions Control 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
Number of
meetings
attended by
proxies/
Number of
meetings
required
to attend
to attend
required
Number of
meetings
attended in
person/
Number of
Number of
meetings
attended by
proxies/
Number of
meetings
meetings
required
required
to attend
to attend
Robinson Drake Pike
Chang Tso Tung Stephen
Tang Xin
Independent Director, Chairman of the Audit
Committee of the sixth session of the Board
Independent Director, member of the Audit
Committee of the sixth session of the Board
Independent Director, member of the Audit
Committee of the sixth session of the Board
6/6
0/6
6/6
0/6
6/6
0/6
Note: The number of meetings attended in person includes attending meetings by the Directors on-site and by telephone or video conference.
90 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Performance of duties by the Audit Committee
In 2020, the Audit Committee performed its relevant
duties and functions in strict compliance with the
"Procedural Rules for the 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 any proposals
considered and discussed at the meetings.
Reviewing and approving financial reports. The Audit
Committee, according to its duties, reviewed and
approved annual, interim and quarterly financial reports 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
statements, 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 arisen
during the audit.
Assessing the work of and strengthening communications
with external auditors. 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. 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.
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 CBIRC, 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.
Examining the internal audit functions of the Company. In
2020, the Audit Committee reviewed proposals including
the proposal on the 2019 internal audit work, and the
proposal on the internal audit work report for the first half
of 2020, with a view to further understanding the duties
of the Company's audit departments and supervising the
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.
NOMINATION AND REMUNERATION COMMITTEE
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 sixth session of the Board comprises Mr. Tang Xin
and Mr. Robinson Drake Pike, the Independent Directors,
and Mr. Yuan Changqing, a Non-executive Director, with
Mr. Tang Xin acting as the Chairman.
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance 91
Position
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
Name of member
Meetings and attendance
Attendance records of the resigned Director of the
Company at the Board meetings are as follows:
Number of
meetings
Number of
meetings
attended in attended by
proxies/
Number of
meetings
required
to attend
Name of Director
Type of Director
person/
Number of
meetings
required
to attend
Executive Director
1/2
Notes:
1/2
1. The number of meetings attended in person includes meetings
attended by the Directors on-site and by way of telephone or video
conference.
2.
Directors who were unable to attend any meeting of the Board
authorized other Directors to attend and vote at the meeting on their
behalf.
Performance of duties by Independent Directors
In 2020, all Independent Directors of the Board of the
Company possessed extensive experience in various
fields, such as macro economy, 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.
All Independent Directors diligently fulfilled their
responsibilities and faithfully performed their duties by
attending meetings of the Board and the specialized
Board committees in 2020, examining and approving
the Company's business development, its 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 relevant personnel, understanding
the daily operations 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 between the Chairman and the
Independent Directors, all Independent Directors put
forward their own views and opinions on various aspects
such as the macro-environment, industry development,
policies of the insurance industry, and corporate
governance, etc., and gave advices and recommendations
on matters including the development strategy of the
Company, development of investment business, brand
and image building, sales team building, and coordinated
development of businesses. 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 2020, 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.
In 2020, Mr. Chang Tso Tung Stephen, Mr. Robinson Drake
Pike, Mr. Tang Xin and Ms. Leung Oi-Sie Elsie, all being
the Independent Directors of the Company, carried out
investigation and research on the individual agent business
sector of the Company by way of video conference, received
reports concerning the development of individual insurance
business of the Company and the method adopted by
sales representatives for business development during the
Covid-19 pandemic, and discussed and communicated in
respect of the relevant issues. Through the investigation
and research, the Independent Directors further understood
the development and status of the Company's businesses
in great depth and examined the effectiveness of the
implementation of decisions of the Board.
During the Reporting Period, no Independent Director has
raised any objection against the proposals and matters
considered by the Board of the Company.
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89
CHAIRMAN AND PRESIDENT
During the Reporting Period, Mr. Wang Bin has 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/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. During the Reporting Period, Mr. Su Hengxuan has
served as 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 policies, drawing
up basic rules and regulations of the Company, submitting
to the Board any 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.
BOARD OF SUPERVISORS
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".
AUDIT COMMITTEE
The Company established its Audit Committee on 30
June 2003. In 2020, the Audit Committee comprised only
Independent Directors. Currently, the Audit Committee
of the sixth 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.
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
whistleblowing mechanism of the Company.
During the Reporting Period, six meetings were held by the Audit Committee of the Board of the Company. Attendance
records of individual members are as follows:
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, 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.
Performance of duties by the Nomination and
Remuneration Committee
In 2020, the Nomination and Remuneration Committee
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 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.
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 (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 and members
of the Board committees and the independence of
Independent Directors, and submitted the opinions in
relation thereto to the Board. It also conducted a careful
assessment on the qualifications, skills, knowledge and
experience of candidates for senior management officers
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. In 2020, the Nomination and Remuneration
Committee reviewed the proposal in relation to the
nomination of Mr. Lam Chi Kuen as an Independent
Director of the Company after fully considering the
educational background of Mr. Lam Chi Kuen and his
professional experience in finance and taking into
account the qualification requirements for appointment
of members of the specialized Board committees. The
Nomination and Remuneration Committee was of the view
that the election of Mr. Lam Chi Kuen as an Independent
Director could further replenish the professional
knowledge of the Board in financial management, and
contribute to the diversity of the Board.
Proposing 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.
Carrying out the performance appraisal of Directors,
Supervisors and senior management officers of the
Company. The Nomination and Remuneration Committee
reviewed proposals such as the results of evaluating the
performance of duties by Directors for 2019, the results
of performance appraisal of senior management officers
for 2019 and the performance target contract of senior
management for 2020, the remuneration of Directors and
Supervisors of the Company, and the remuneration of
senior management officers of the Company, and made
recommendations to the Board in respect of matters such
as the determination of performance target, performance
appraisal procedures and results.
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93
5
RISK MANAGEMENT AND CONSUMER RIGHTS
PROTECTION COMMITTEE
The Company established its Risk Management
Committee on 30 June 2003. In December 2019,
the "Proposal in relation to the Change to the Risk
Management and Consumer Rights Protection Committee
of the Board of Directors" was considered and approved
at the twenty-first meeting of the sixth session of
the Board, pursuant to which the Risk Management
Committee was renamed as the Risk Management and
Consumer Rights Protection Committee, the additional
function of management of consumers' 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. Currently, the Risk Management
and Consumer Rights Protection Committee of the sixth
session of the Board comprises Ms. Leung Oi-Sie Elsie,
an Independent Director, Mr. Li Mingguang, an Executive
Director, and Mr. Wang Junhui5, a Non-executive Director,
with Ms. Leung Oi-Sie Elsie acting as the Chairperson.
Due to the adjustment of work arrangements, Mr. Yin
Zhaojun and Mr. Liu Huimin resigned from their positions
as members of the Risk Management and Consumer
Rights Protection Committee of the sixth session of the
Board in January 2021 and February 2021, respectively.
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 as delegated by the Board or on
its own initiative and the management's response to these
findings, dealing with major risk emergency events or crisis
events or major disagreement 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.
Meetings and attendance
During the Reporting Period, three 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:
Name of member
Position
Leung Oi-Sie Elsie
Liu Huimin
Yin Zhaojun
Li Mingguang
Independent Director, Chairperson of the Risk
Management and Consumer Rights Protection
Committee of the sixth session of the Board
Non-executive Director, member of the Risk
Management and Consumer Rights Protection
Committee of the sixth session of the Board
Non-executive Director, member of the Risk
Management and Consumer Rights Protection
Committee of the sixth session of the Board
Executive Director, member of the Risk
Management and Consumer Rights Protection
Committee of the sixth session of the Board
Number of
meetings
attended in
person/
Number of
meetings
required
Number of
meetings
attended by
proxies/
Number of
meetings
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92
The number of meetings attended in person includes attending meetings by the Directors on-site and by telephone or video conference.
Directors who were unable to attend any meeting of specialized Board committees authorized other Directors to attend and vote at the meeting on their
behalf.
2.
Meetings and attendance
During the Reporting Period, four 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
Number of
meetings
attended by
proxies/
Number of
meetings
required
to attend
to attend
98
Tang Xin
4/4
4/4
Independent Director, member of the
Robinson Drake Pike
Nomination and Remuneration Committee of
the sixth session of the Board
4/4
4/4
Non-executive Director, member of the
Yuan Changqing
Nomination and Remuneration Committee of
the sixth session of the Board
2/4
2/4
Notes:
1.
Independent Director, Chairman of the
Nomination and Remuneration Committee of
the six session of the Board
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
The Strategy and Assets and Liabilities Management
Committee 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, and major strategic
investment decisions of the Company, and making
recommendations in respect thereof.
The Company set up a relatively well-developed system
for strategic risk management, and established an
organizational 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. By taking into full
account of various factors such as market conditions,
risk preference and capital position, the Company made
planning for its medium- and long-term development
and put the same into practice in annual business plans
and work plans, so as to strengthen the formulation,
approval, implementation and evaluation of whole
process management of strategic and development
planning. The Company also created an indicator system
for the daily monitoring of strategic risks to monitor and
analyze strategic risks on a regular basis, which ensured
an effective execution of the Company's strategic risk
management. In 2020, the soundness of the Company's.
strategic risk management system and the effectiveness
of its implementation were maintained.
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.
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.
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99
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.
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, 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.
SHAREHOLDERS' INTERESTS
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, especially the medium
and individual investors, to enable them to have a
deeper understanding of the Company's development
strategies, business operations and major issues. The
Company also optimized the layout of its periodic reports,
increased their readability by various means such as
adding charts and pictures to enable investors to have a
clearer understanding of the core business operation of
the Company. The Company consistently enriched the
information of its periodic and ad-hoc reports. During the
Reporting Period, the Company disclosed the information
of the "Dingxin Project" widely concerned by investors
and its milestone achievements in a timely manner by
closely tracking the progress of the Company's reform
for development, and disclosed for the first time the
layout of sales channels after the formation of the sales.
deployment of "Yi Ti Duo Yuan" and the premiums from
such channels, so as to ensure investors to obtain timely
and accurate information that may affect their value
judgements and investment decisions. The Company also
strengthened the implementation of the basic system
of information disclosure, regularly organized training
courses relating to information disclosure and compliance,
carried out timely study and promotion of regulatory rules
of its listed jurisdictions in the PRC and overseas, and
explained the key tasks for information disclosure and
compliance and any difficulties therein. 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 laws,
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. The Company was awarded Grade A in the
assessment by the SSE on information disclosure for the
year of 2019-2020.
In 2020, facing the unexpected Covid-19 pandemic, the
Company kept abreast with the development pace of
technology era in its investor relations, 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 and mitigated the negative impacts brought by
the pandemic. The works conducted by the Company
for investor relations mainly included holding general
meetings, organizing open days, holding results briefings,
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
2020, due to the impact of the pandemic, the Company
held an annual results briefing fully online for the first time
since its listing and organized a global online business
roadshow across America, Europe, Asia and Oceania.
Looking back to 2020, the Company communicated with
more than 8,900 investors and analysts, including more
than 5,100 investors who attended results briefings and
open days online and offline. The Company held over 280
online and offline meetings with approximately 2,300
investors and analysts for the year, and communicated
with more than 1,400 institutional investors by attending
a total of 49 investors' meetings held locally or
internationally. It also communicated with more than 160
investors in non-deal roadshows for annual and interim
results. In addition, the Company kept in close contact
with investors by various means such as phone and
internet. Within the year, the Company corresponded
more than 2,000 emails, answered more than 310 calls
and emails, and recorded a click-through rate of 28,000
viewers for the live video streaming of results briefings
and open days.
In the annual assessment and selection held by
Institutional Investor, the Company won the award of
the "Most Respected Company in Asia". It also made
a record of being named in all the top six lists for the
insurance sector, including the "Best President/Chief
Executive Officer (number 2)", the "Best Chief Financial
Officer (number 2)", the "Best Investor Relations
Manager (number 1)", the "Best Investor Relations Team
(number 1)", the "Best Investor Relations Implementation
Project (number 2)", and the "Best Environmental,
Social and Governance (number 3)". In the assessment
and selection of the "3rd Session of Best IR of Hong
Kong Listed Companies Awards" organized by New
Fortune Magazine, the Company was awarded the "New
Fortune Best IR of Hong Kong Listed Company". In the
assessment and selection of the "China Securities Golden
Bauhinia Awards" jointly organized by Hong Kong Tai
Kung Wen Wei Media Group with the Listed Companies
Association of Beijing, the Hong Kong Chinese Enterprises
Association, the Chinese Securities Association of Hong
Kong, the Chinese Financial Association of Hong Kong, the
Hong Kong Institute of Chartered Secretaries, Hong Kong
Securities Professionals Association and China Merger
and Acquisitions Association (Hong Kong) Limited, the
Company was awarded the "Best Investor Relations of
Listed Company". In the assessment and selection of the
"4th Session of Excellent IR in China" jointly organized
by Roadshow China and Excellent IR, the Company was
awarded the "Best Communication with the Capital
Market Award", the "Best Digital Investor Relations
Award" and the "Best Leader Award", and was nominated
by the IR Magazine, a global magazine for investor
relations, for the 2020 Excellent Award for the Greater
China Region.
CHANGES OF THE ARTICLES OF ASSOCIATION
During the Reporting Period, the Company did not make
any amendments to the Articles of Association.
INTERNAL CONTROL AND RISK MANAGEMENT
The Company has consistently complied with the
regulatory requirements of relevant regulatory authorities,
such as the SSE, the HKSE, the U.S. Securities and
Exchange Commission (the "SEC") and the New York
Stock Exchange, with respect to corporate internal
control.
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 CBIRC, 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 (2020 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.
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100 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
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.
FOR SENIOR MANAGEMENT
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance 107
108 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
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 Note 4 in the Notes to the
Consolidated Financial Statements of this annual report.
The Company attached great importance to information
safety risk management. Firstly, the Company set up
organizations to offer protection for information safety. It
established the information safety functional departments
at the headquarters and provincial levels for performing
the duty of information safety management at each level.
Secondly, the Company developed various systems
and strictly implemented such systems to ensure the
standardization of information management. Thirdly, the
Company optimized 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 for regular exercises in a bid 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 for the centralized analysis
and coordinated disposal of various safety risks. In
addition, the Company constantly stepped up efforts on
education for the safety awareness of employees to foster
a corporate culture of "everyone places emphasis on
safety", and conducted several assessments on internal
and external risks, which further enhanced the capability
of the Company in information safety risk management.
In 2020, the Company has not had any circumstances
where its operation was affected due to the breakdown of
computers or security breach.
Information safety risk refers to the operational, legal
and reputation risks caused by natural factors, human
factors, technological loopholes or management defects
in the process of applying information technology in the
Company.
Information Safety Risk
The Company established a system for liquidity risk
management to define the organizational 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
organized 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 regulations to ensure the performance of its
obligation and give insurance benefits as scheduled.
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.
Liquidity Risk
The Company established a system for reputation risk
management to define the organizational structure and
responsibilities of reputation risk management in strict
compliance with the regulatory requirements. Further,
the Company developed a mechanism for the evaluation
and responsibility attribution of reputation risks, and
optimized the processes covering the identification
and ex-ante evaluation, monitoring, response and
disposal, reporting, and rectification of reputation risk.
By leveraging on technologies, the Company enhanced
the intellectualization of reputation risk management to
promptly identify reputation risk events and give pre-
warning in respect thereof. The Company also continued
to offer training courses and exercises on reputation risk
management to raise the risk awareness of all employees,
which helped enhance its risk response capability. In
2020, the Company constantly made improvements to
its system for reputation risk management, strengthened
coordinated management between client complaints and
reputation risks, focused on source management, and
took proper measures against such risk. As a result, no
major reputation risk events have occurred for the year.
Reputation risk refers to the risk of losses due to
the negative comments to the Company from the
stakeholders arising from the operation and management
of the Company or external events. Reputation risk
may exist in all aspects of operation and management,
including corporate governance, product design, sales and
promotion, claim services, application of capital, client
complaints, petition through letters and visits and stability
maintenance, information safety, remuneration plans,
personnel management and information disclosure.
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 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.
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 the banking and
insurance administrative and regulatory authorities of the
PRC. The Company currently possesses the "Insurance
Company Legal Person Permit" (Number: 000005) issued
by the CBIRC. 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
Pursuant to the requirements of the "Notice on the Proper
Preparation for Disclosure of 2020 Annual Reports of
Companies Listed on the Main Board" and the "Business
Guide for the Periodic Reports of Listed Companies"
promulgated by the SSE, the Company shall release an
Internal Control Self-assessment Report simultaneously
with the publication of its 2020 annual report. Meanwhile,
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 2020 in its Form 20-F (U.S. Annual
Report) to be 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 2020. Such assessments
are conducted on an annual basis and in two stages,
namely, interim assessment and supplementary test. The
Company has 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 2020.
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 to
be 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 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. 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.
Reputation Risk
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 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.
After the outbreak of the Covid-19 pandemic in 2020, the
Company took prompt actions to offer comprehensive
insurance protection for its customers and continued to
monitor related insurance risks through its convenient
online customer services. So far, there has been limited
impact of the Covid-19 pandemic on the insurance risks
of the Company. 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.
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
analysis and stress test to measure the risk losses to the
Company under stress scenarios and gave pre-warning of
market risks. Currently, the proportion of each investment
asset is in line with the requirements of the CBIRC and
the internal management provisions of the Company.
According to the results of the risk indicator monitoring
and stress test, the market risk of the Company was
within a normal controllable range. The Company primarily
adopted the following risk control measures in 2020:
(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 and the
characteristics of their returns on a regular basis, so as
to constantly optimize the model of assets 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; and (5) conducting analyses on investment
risks with the aid of the new system for investment risk
management and the ancillary quantitative analysis tools,
and meanwhile enhancing risk monitoring and pre-warning
to strengthen risk emergency management.
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
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance 105
To address the credit risks of investment business,
the Company developed and continuously improved
the organizational structure of credit risk management,
and constantly optimized 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 2020: (1) facilitating the
implementation of centralized credit rating projects to
enhance the credit risk management standard; (2) carrying
out credit risk limit management in multiple dimensions, in
order to enhance the level of preventing 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)
stepping up efforts on the research and feasibility study of
any industries and sectors for key investment to enhance
the capability of the Company in risk management and
control during and after investment.
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
assessment on reinsurers through internal rating to select
reinsurers that have higher credit standing to mitigate
credit risks.
Operational Risk
Operational risk refers to the risk of direct or indirect
losses arising from incomplete internal operational
processes, personnel, systems or external events.
The Company consistently implemented regulatory
requirements and its operational risk management
strategies, optimized the operational risk management
system, and regulated the operational risk management
processes, so as to enhance the effectiveness of
operational risk management policies, systems and
process 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
data room for operational risks and key risk indicators
monitoring, and further reinforced the operational risk
management at all levels of branches, so as to facilitate
the vertical expansion of operational risk management
network. In the meanwhile, the Company reported
operational risk governance to the senior management
on a quarterly basis. The operational risk control
measures adopted by the Company mainly included the
following: (1) carrying out the classification management
for operational risk and developing an operational risk
management process 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 data room 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 organize regular monitoring of
any risks that may cause losses and to take relevant
control measures against them; (4) conducting self-
assessments on the operational risk management and
effect on a regular basis and identifying any issues in the
management and control of operational risks, with a view
to constantly increasing the capability of the Company
in operational risk management; and (5) promoting a
culture of operational risk management by organizing
and conducting training courses on operational risk
management. In 2020, the operational risk management
was satisfactory, and losses from operational risks
were controllable. With the continual improvement of
the operational risk control system, the management
foundation of the Company was strengthened
consistently.
Strategic Risk
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 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.
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.
106 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
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 and other relevant
assumptions on the Company's operating results.
The Company managed insurance risks through the
following mechanisms and processes: (1) establishing
an organizational 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; and (5)
transferring and mitigating insurance risk through a
scientific and reasonable reinsurance arrangement.
Reinsurance Risk
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
102 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
rate.
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
2020, there has been no major 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, after taking into account the regulatory
requirements, revised the "Rules for the Administration of
Information Disclosure of China Life Insurance Company
Limited" and the "System of Internal Reporting of
Material Information of China Life Insurance Company
Limited" in 2018. 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 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.
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 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 established a comprehensive
information technology system to cover all aspects of
IT work and formed a closed-loop control mechanism
focusing on centralized 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 standardization and normalization 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 2020, the Company conducted several
internal and external risk assessments to promote
construction by inspection, with a view to consistently
enhancing its capability of managing information safety
risks.
The Risk Management Department, the Audit Department
and the Legal and Compliance Department of the
Company are responsible for the supervision and
inspection of its 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 responsible
persons. In 2020, 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 organizational
structure of internal audit and further strengthen the
mechanism for internal audit management, which
effectively performed the supervisory role of audit. The
Company carried out the economic responsibility audit on
managers at all levels, performed a series of special audits
closely related to the Company's reform for development,
and conducted a variety of regular audits on anti-money
laundering, connected transactions, assets and liabilities.
management, solvency system construction, internal
control over the application of insurance funds, IT system,
compliance of intermediary business, and anti-insurance
fraud management pursuant to regulatory requirements.
Meanwhile, the Company has put more efforts on the
application of audit results, and played a proactive role to
supervise and direct the implementation of rectification
measures for any issues identified in audit, 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 and regulations by employees,
each being implemented by the Legal and Compliance
Department, which ensures that cases involving any
violations of laws and regulations by employees are
handled in a timely manner, and the persons involved
will be attributed to proper responsibility. The Legal
and Compliance Department reports the criminal cases
involving practitioners and manages the responsibility
attribution of such cases in accordance with regulations
such as the "Measures for the Administration of Criminal
Cases Involving Banking and Insurance Institutions (for
Trial Implementation)" issued by the CBIRC and internal
policies such as the "Measures for the Administration
of Criminal Cases (for Trial Implementation)" and the
"Implementing Rules for Responsibility Attribution of
Cases". The Company has constantly optimized three
lines of defense for compliance management to establish
an efficient compliance management system, with a
view to identifying, guarding against and mitigating
material compliance risks. The Company has also
fostered the concept of compliance creating value, and
promoted a good interaction between the compliance
management functional department of the Company and
external regulators, with a view to enhancing the overall
compliance management standard of the Company and
ensuring the achievement of its goal of high-quality
development.
Risk Management
Risk Management System
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance 103
104 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Insurance Risk
Work in relation to Risk Management
Pursuant to the requirements of the CBIRC 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, reputation
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 actively implemented
key risk monitoring and risk pre-warning classification
management, and consistently reinforced the mechanism
for formation, transmission and application of the risk
preference system, which created 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 helped enhanced its risk management standard in
all aspects.
The Company consistently followed the requirements
under anti-money laundering laws and regulations,
kept on improving the system for money-laundering
risk management 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 self-inspection and rectification in key
risk areas, which effectively improved the Company's
precaution capability in key risk areas.
In 2020, the Company vigorously promoted the
informatization of risk management, actively applied
the latest advanced technologies such as big data and
artificial intelligence, and further promoted the intelligent
application of anti-money laundering, thus making
significant breakthroughs in the intelligent identification
of illegal fund-raising risks, monitoring of sale risk
pre-warning, and risk management data mart. The
informatization and intellectualization of risk management
improved significantly, and the risk management capability
of the Company reached a new level, which provided a
strong support to the high-quality development of the
Company.
The Company has established an organizational 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 organizational 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 organize and
commence any work in relation to risk management.
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.
Risk Identification and Control
The major risks of the Company in the course of operation
and management include insurance risk, market risk,
credit risk, operational risk, strategic risk, reputation risk,
liquidity risk and information safety risk.
2020/1/2
2020/1/3
8
Announcement of Premium Income
2020/1/15
10
Election of Language and Means of Receipt of Corporate Communication
Reply Form
2020/1/16
11
Notification Letter and Request Form to Non-Registered Shareholders
Announcement - Approval of Qualification as Supervisor by the CBIRC Beijing
Bureau and Resignation of Supervisor
2020/1/16
12
6
7
Form of Proxy of Holders of H Shares for use at the First Extraordinary General
Meeting 2020 of the Company to be held on Thursday, 20 February 2020
2020/1/2
Notification Letter and Change Request Form to Registered Shareholders
5
2020/1/2
Reply Slip of Holders of H Shares
4
2020/1/2
3
2020/1/2
Notice of the First Extraordinary General Meeting 2020
64
Announcement - Estimated Profit Increase for the Year 2019
2
2020/1/2
6
2020/1/19
18
Clarification Announcement
2020/3/19
Investment in China Life Aged-Care Industry Investment Fund and Notice of the
First Extraordinary General Meeting 2020
2020/3/12
Collection of Questions for 2019 Annual Results Briefing
Announcement of Results for the Year Ended 31 December 2019
Announcement of Premium Income
21
-
Announcement
20
19
222
2020/3/12
Notice of Board Meeting
2020/3/2
Announcement - Approval of Qualification of Director by the CBIRC Beijing Bureau
17
2020
2020/2/13
13
Indicative Announcement - Approval by the CBIRC of Gratuitous Transfer of the
Controlling Shareholder's Partial State-owned Shares
2020/2/14
14
-
12
Announcement – Forfeiture of Unclaimed Dividends
15
Announcement of Premium Income
2020/2/18
Announcement - Resolutions Passed at the First Extraordinary General Meeting
16
2020/2/20
2020/2/17
1
HKExnews website of Hong Kong Exchanges and
Clearing Limited at www.hkexnews.hk
Items
A Share
Stock Type
STOCK INFORMATION
12/F, China Life Plaza, 16 Financial Street, Xicheng District, Beijing, P.R. China
The Company's website at www.e-chinalife.com
2020/3/25
www.sse.com.cn
China Securities Journal, Securities Times, Securities Daily
The Company's Annual Report
may be obtained at
The Company's H Share
Disclosure Websites
the Company's Annual Report
Disclosure
CSRC's Designated Website for
Media for the Company's
A Share Disclosure
2020 Third Quarter Report
H Share
2020/10/28
Announcement - Connected Transaction – Formation of Partnership
2020/10/28
66
Summary of Solvency Quarterly Report of Insurance Company
(Third Quarter of 2020)
2020/10/28
10
-
67
Overseas Regulatory Announcement China Life Insurance Company Limited -
Announcement on Changes in Accounting Estimates
2020/10/28
68
Announcement of Premium Income
2020/11/12
69
65
ADR
110
Exchanges on which the
Stocks are Listed
Shanghai Stock Exchange
The Stock Exchange of
Hong Kong Limited
Serial No.
INDEX OF INFORMATION DISCLOSURE ANNOUNCEMENTS
111
China Life Insurance Company Limited | Annual Report 2020 | Other Information
Name of the Certified Auditor:
Choi Kam Cheong, Geoffrey
1 Tim Mei Avenue, Central, Hong Kong
Address: 22/F, CITIC Tower,
Ernst & Young
International Auditor
Debevoise & Plimpton LLP
Address: 60 Wall Street, New York, NY 10005
Address: Shops 1712-1716, 17th Floor,
Hopewell Centre, 183 Queen's Road East,
Wanchai, Hong Kong
Name of the Signing Auditors:
Huang Yuedong, Xu Ting
Ernst & Young Hua Ming LLP
Address: Level 16, Ernst &
Young Tower, Oriental Plaza,
No. 1 East Changan Avenue,
Dongcheng District, Beijing,
P.R. China
King & Wood Mallesons
Latham & Watkins LLP
Domestic Auditor
Deutsche Bank
Computershare Hong Kong
Investors Services Limited
Stock Short Name
Stock Code
China Life
601628
China Life
2628
Date of disclosure
New York Stock Exchange
China Life Insurance Company Limited | Annual Report 2020 | Other Information
OTHER RELEVANT INFORMATION
H Share Registrar and
Transfer Office
Depositary of ADR
Domestic Legal Adviser
International Legal Advisers
Auditors of the Company
LFC
22
2020/4/16
China Life Insurance Company Limited 2019 Environmental, Social and Governance
(ESG) & Social Responsibility Report
Announcement - Connected Transaction Formation of Partnership
Announcement - Connected Transaction – Formation of Partnership
53
52
2020/8/26
Announcement of Unaudited Interim Results for the Six Months Ended 30 June 2020
51
2020/8/18
Announcement - Unusual Price Movement of A Shares of the Company
50
2020/8/18
Announcement - Collection of Questions for 2020 Interim Results Briefing
49
2020/8/14
Notice of Board Meeting
-
48
Announcement of Premium Income
47
2020/7/23
Announcement - Resignation of Supervisor
46
2020/7/14
Announcement of Premium Income
45
2020/7/6
Notice on Completion of Redemption
44
Distribution of Final Dividend
2020/6/29
43
2020/8/12
2020/8/26
-
2020/8/26
63
2020/10/19
Announcement of Premium Income
62
2020/10/15
Notice of Board Meeting
61
2020/9/29
Supplemental Announcement - Connected Transaction in relation to the Formation
of Partnerships
60
2020/9/11
Announcement of Premium Income
59
2020/9/10
Notification Letter and Request Form to Non-Registered Shareholders
58
2020/9/10
54
Summary of Solvency Quarterly Report of Insurance Company
(Second Quarter of 2020)
2020/8/26
China Life Insurance Company Limited | Annual Report 2020 | Other Information 113
Serial No. Items
Date of disclosure
Announcement - Resolutions Passed at the Annual General Meeting and
55
2020/8/26
56
2020 Interim Report
2020/9/10
57
Notification Letter and Change Request Form to Registered Shareholders
Overseas Regulatory Announcement - China Life Insurance Company Limited
Announcement on Changes in Accounting Estimates
22
2020/6/11
42
31
2020/4/16
30
2020/4/16
Date of disclosure
Reports of the Board of Directors & the Board of Supervisors for 2019, Financial
Report and Profit Distribution Plan for 2019, Remuneration of Directors and
Supervisors, Election of Mr. Lam Chi Kuan as an Independent Director of the
Sixth Session of the Board of Directors, Remuneration of Auditors for 2019 &
Appointment of Auditors for 2020, General Mandate to Issue H Shares, Duty
Report of the Independent Directors of the Board of Directors for 2019, Report on
the Overall Status of Connected Transactions for 2019 & Notice of AGM
Notice of Annual General Meeting
Items
29
29
Serial No.
112 China Life Insurance Company Limited | Annual Report 2020 | Other Information
2020/4/16
2020/4/14
2020/4/9
Form of Proxy of Holders of H Shares for use at the Annual General Meeting of the
Company to be held on Monday, 29 June 2020
2020/3/25
Annual Report 2019
28
Announcement of Premium Income
27
Announcement - Nomination of Independent Non-Executive Director
Notice of Board Meeting
26
25
Announcement - Continuing Connected Transactions under New Asset Management
Agreements and Revision of Annual Caps for Continuing Connected Transactions
24
2020/3/25
Summary of Solvency Quarterly Report of Insurance Company (Fourth Quarter of
2019)
23
23
2020/3/25
2020/3/25
2020/4/16
32
Reply Slip of H Share Shareholders
222
2020/5/27
Notice of Redemption
41
2020/5/26
Announcement - Approval of Qualification of Person in Charge of Finance by CBIRC
Beijing Bureau
40
40
2020/5/14
Announcement of Premium Income
39
2020/4/23
Overseas Regulatory Announcement - China Life Insurance Company Limited -
Announcement on Changes in Accounting Estimates
38
(First Quarter of 2020)
2020/4/23
37
2020/4/16
33
Notification Letter and Change Request Form to Registered Shareholders
2020/4/16
34
Notification Letter and Request Form to Non-Registered Shareholders
Announcement of Premium Income
Voluntary Announcement
2020 First Quarter Report
2020/4/23
36
Announcement - Resignation of Executive Director and Change of Person in
Charge of Finance
2020/4/23
Summary of Solvency Quarterly Report of Insurance Company
35
2020/11/24
2020/10/19
Announcement in relation to Relevant Representation on the 2020 Corporate Day
How our audit addressed the key audit matter
We obtained an understanding, evaluated the design
and tested the operating effectiveness of controls over
the Group's long-term insurance contract liabilities
valuation processes. For example, we tested controls over
management's review of the actuarial models, the actuarial
assumptions, and the data inputs used.
To test the valuation of long-term insurance contract
liabilities, our audit procedures included, among others,
comparing the methodology, actuarial models and actuarial
assumptions used by the Group to recognised actuarial
practices and testing the completeness and accuracy of the
underlying insurance policy data used in the valuation. We
involved our actuarial specialists to assist us with assessing
the reasonableness of the assumptions by comparing them
to industry data, historical experiences and expectations of
the Group. For a sample of selected insurance products, our
actuarial specialists performed an independent recalculation
of the long-term insurance contract liabilities. In addition,
our actuarial specialists assisted in performing analytical
procedures over the movement of long-term insurance
contract liabilities considering changes in the actuarial
assumptions in the reporting period.
The impairment test for investment in an associate
At 31 December 2020, the Group held a 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 RMB11.29 billion. As disclosed in Note 9 to the
consolidated financial statements, as the quoted market
price of this investment has been continuously below its
carrying value, the Group performed an impairment test,
and recognised an impairment loss of RMB707 million in
2020.
Auditing management's impairment test of Sino-Ocean
was complex due to the significant estimates and
judgements involved in management's assessment of
its value in use, including the selling prices of properties
under development, rental prices of investment
properties included in the projection of future cash
flows and the discount rates used. These estimates and
judgements may be affected by unexpected changes in
the future market or economic conditions.
Auditing the Group's long-term insurance contract
liabilities was complex due to the complexity of the
actuarial models and highly judgemental nature of
the actuarial assumptions used by management to
estimate the liabilities. The actuarial assumptions include
mortality, morbidity, lapse rates, discount rates, and
expenses. Changes in these assumptions could have
significant effects on the valuation of the long-term
insurance contract liabilities.
We obtained an understanding, evaluated the design and
tested the operating effectiveness of internal controls over
the Group's investment impairment test of Sino-Ocean. For
example, we tested controls over management's review
of the impairment test methodology and the significant
assumptions used in the valuation.
118 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
OTHER
INFORMATION
BASIC INFORMATION OF THE COMPANY
Registered Name in Chinese
Registered Name in English
Legal Representative
Registered Office Address
Postal Code
To test the impairment test of Sino-Ocean, our audit
procedures included, among others, evaluating the Group's
valuation methodology and testing the completeness and
accuracy of the underlying data used in the cash flows
projection. We compared the selling prices of properties
under development and rental prices of investment
properties used in the cash flow projection to the historical
business results of Sino-Ocean and industry data. We also
involved our valuation specialists to assist us with assessing
the reasonableness of the Group's valuation methodology
with reference to valuation guidelines and industry practice.
In addition, we compared the discount rate used by the
Group with the discount rate developed by our valuation
specialists using information of comparable companies.
At 31 December 2020, the Group had significant insurance
contract liabilities in the amount of RMB2,973.23 billion.
As disclosed in Notes 2.12 and 15 to the consolidated
financial statements, the Group's insurance contract
liabilities are primarily comprised of long-term insurance
contract liabilities. The Group uses the discounted
cash flow method to estimate the reserve of long-term
insurance contracts.
Valuation of insurance contract liabilities
Key audit matter
116 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
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)
OPINION (continued)
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 2020, 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.
BASIS FOR OPINION
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.
KEY AUDIT MATTERS
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 2020 | Financial Report 117
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)
Current Office Address
Postal Code
Telephone
Fax
Office Address
Telephone
Fax
Board Secretary
70
Li Mingguang
16 Financial Street, Xicheng District,
Beijing, P.R. China
86-10-63631241
Securities Representative
Li Yinghui
16 Financial Street, Xicheng District,
Beijing, P.R. China
86-10-63631191
86-10-66575112
Email
liyh@e-chinalife.com
Name
We have audited the consolidated financial statements of China Life Insurance Company Limited (the "Company") and its
subsidiaries (the "Group") set out on pages 122 to 244, which comprise the consolidated statement of financial position
as at 31 December 2020, 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.
CONTACT INFORMATION
852-29192628
Website
Email
Hong Kong Office Address
Telephone
中國人壽保險股份有限公司
China Life Insurance Company Limited ("China Life")
Wang Bin
16 Financial Street, Xicheng District, Beijing, P.R. China
100033
Announcement - Resignation of Independent Non-executive Director
16 Financial Street, Xicheng District, Beijing, P.R. China
100033
86-10-63633333
86-10-66575722
www.e-chinalife.com
ir@e-chinalife.com
16/F, Tower A, China Life Centre, One Harbour Gate, 18 Hung Luen Road,
Hung Hom, Kowloon, Hong Kong
China Life Insurance Company Limited | Annual Report 2020 | Other Information 109
ir@e-chinalife.com
OPINION
FINANCIAL
Announcement - Premium Income Exceeding RMB600 Billion
2020/12/21
114 China Life Insurance Company Limited | Annual Report 2020 | 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 Company6
76
CLIC
AMC
Pension Company
AMP
CLWM
CGB
CLP&C
2020/12/17
Announcement - Supplementary Information regarding Compensation of Directors,
Supervisors and Senior Management Members in 2019
75
2020/12/17
2020/12/7
71
Materials for the China Life 2020 Corporate Day
2020/12/7
72
Announcement of Premium Income
2020/12/11
13
Announcement · - Renewal of Continuing Connected Transactions under the
73
2020/12/17
Insurance Sales Framework Agreement
74
74
Announcement - Renewal of Continuing Connected Transactions under the Policy
Management Agreement
CLI
China Life Capital
CBIRC
CBIRC Beijing Bureau
Beijing Bureau of the 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
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
INFORMATION DISCLOSURE AND PLACE FOR OBTAINING THE REPORT
* Ms. Li Yinghui, Securities Representative of
the Company, is also the main contact person
of the external Company Secretary engaged
by the Company
MATERIAL RISK ALERT:
The risks faced by the Company primarily include risks relating to macro trends, insurance risk, market risk, credit risk,
operational risk, strategic risk, reputation risk, liquidity risk and information safety risk. 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 Insurance Company Limited | Annual Report 2020 | Other Information 115
Independent Auditor's Report
EY**
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
China Banking and Insurance Regulatory Commission, the predecessors
of which are China Insurance Regulatory Commission and China Banking
Regulatory Commission
REPORT
China Life Investment Management Company Limited, the former China Life
Investment Holding Company Limited, a wholly-owned subsidiary of CLIC
China Life Capital Investment Company, an indirect wholly-owned subsidiary
of CLIC
China Guangfa Bank Co., Ltd., an associate of the Company
CSRC
HKSE
SSE
Company Law
Insurance Law
Securities Law
Articles of Association
China or PRC
RMB
China Life Insurance Company Limited and its subsidiaries
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 AMP Asset Management Company Limited, an indirect non-wholly
owned subsidiary of the Company
China Life Wealth Management Company Limited, an indirect non-wholly
owned subsidiary of the Company
China Life Property and Casualty Insurance Company Limited, a non-wholly
owned subsidiary of CLIC
86-10-66575112
Other expenses
(4,255)
End of the year
56,629
53,306
Analysis of balances of cash and cash equivalents
Cash at banks and in hand
Short-term bank deposits
56,510
52,800
119
506
The notes on pages 129 to 244 form an integral part of these consolidated financial statements.
128 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
- Non-controlling interests
- Equity holders of the Company
Total comprehensive income for the year, net of tax
Attributable to:
Other comprehensive income for the year, net of tax
Share of other comprehensive income of associates and joint ventures
under the equity method
Other comprehensive income that will not be reclassified to profit or
loss in subsequent periods:
34,988
25,406
Other comprehensive income that may be reclassified to profit or
loss in subsequent periods
(11,292)
(8,482)
29
Income tax relating to components of other comprehensive income
237
(986)
50,809
Exchange differences on translating foreign operations
53,306
Cash and cash equivalents
(161)
(133)
34,988
Cash received from borrowings
6,822
123
Payment of principal portion of lease liabilities
(1,478)
(1,348)
Cash paid for redemption of other equity instruments
(9,060)
Capital injected into subsidiaries by non-controlling interests
22,846
12,961
Cash received related to other financing activities
1,069
Cash paid related to other financing activities
(1,592)
(761)
Net cash inflow/(outflow) from financing activities
(7,760)
(36,075)
(144)
55
Net increase in cash and cash equivalents
3,323
2,497
Beginning of the year
599
672
(19,521)
Net profit
(781)
(3,103)
29
Income tax
59,795
54,488
28
Profit before income tax
9,159
8,336
8,011
7,666
9
Net gains on investments of associates and joint ventures
Including: share of profit of associates and joint ventures
(677,690)
(758,139)
Total benefits, claims and expenses
(9,602)
(12,208)
(1,163)
(1,229)
21
Statutory insurance fund contribution
(40,275)
(37,687)
Administrative expenses
Attributable to:
51,385
59,014
- Equity holders of the Company
(3,959)
(4,635)
69,600
52,547
(14,386)
joint ventures under the equity method
Share of other comprehensive income of associates and
attributable to participating policyholders
Amount transferred to net profit from other comprehensive income
Portion of fair value changes on available-for-sale securities
Fair value gains on available-for-sale securities
Other comprehensive income that may be reclassified to profit or
loss in subsequent periods:
Other comprehensive income
RMB million
RMB million
(3,747)
Note
2020
For the year ended 31 December 2020
Consolidated Statement of Comprehensive Income (continued)
124 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
The notes on pages 129 to 244 form an integral part of these consolidated financial statements.
RMB2.05
RMB1.77
31
Basic and diluted earnings per share
727
58,287
50,268
1,117
- Non-controlling interests
2019
Foreign exchange gains/(losses) on cash and cash equivalents
(Note 37)
7,791
Independent Auditor's Report (continued)
As at
31 December
31 December
2020
2019
Notes
As at
RMB million
LIABILITIES AND EQUITY
Liabilities
Insurance contracts
Investment contracts
15
16
RMB million
56
As at 31 December 2020
Consolidated Statement of Financial Position
Deferred tax assets
Cash and cash equivalents
Total assets
14
29,021
34,029
(continued)
29
56,629
128
53,306
4,252,410
3,726,734
The notes on pages 129 to 244 form an integral part of these consolidated financial statements.
122 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
87
2,973,225
2,552,736
288,212
19
122,249
118,088
Annuity and other insurance balances payable
55,031
51,019
Securities sold under agreements to repurchase
Premiums received in advance
60,898
Other liabilities
Deferred tax liabilities.
Current income tax liabilities
Statutory insurance fund
Total liabilities
53,021
3,859
3,732
Financial liabilities at fair value through profit or loss
267,804
Policyholder dividends payable
122,510
112,593
Interest-bearing loans and borrowings
17
19,556
20,045
Lease liabilities
2,664
3,091
Bonds payable
18
34,992
34,990
Other assets
5,161
6,095
13
Investment properties
678
52,747
51,758
3,076
3,520
Right-of-use assets
14,217
Investments in associates and joint ventures
9
239,584
222,983
Held-to-maturity securities
10.1
12,141
Property, plant and equipment
RMB million
RMB million
Ernst & Young
Certified Public Accountants
Hong Kong
25 March 2021
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 2020 | Financial Report 121
Consolidated Statement of Financial Position
As at 31 December 2020
ASSETS
As at
As at
31 December
2020
31 December
2019
Notes
1,189,369
Equity
928,751
10.2
428
Securities purchased under agreements to resell
10.8
7,947
4,467
Accrued investment income
10.7
10.9
41,703
Premiums receivable
12
20,730
17,281
Reinsurance assets
45,200
Derivative financial assets
1,058,957
141,608
161,570
658,535
608,920
Term deposits
10.3
545,667
535,260
Statutory deposits - restricted
10.4
6,333
6,333
Available-for-sale securities
10.5
1,215,603
Securities at fair value through profit or loss
10.6
Loans
Share capital
220
104,426
25
(414,797)
(330,807)
26
(9,846)
(9,157)
(50,783)
Policyholder dividends resulting from participation in profits
(22,375)
Underwriting and policy acquisition costs
(84,342)
(81,396)
(4,916)
Finance costs
(28,279)
(52,395)
25
(127,877)
14,583
1,831
24
21,900
19,251
9,315
8,195
804,961
729,474
Life insurance death and other benefits
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
Investment contract benefits
1010100
25
(113,609)
27
23
• 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.
concern.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 119
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.
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 the information
included in the Annual Report, other than the consolidated financial statements and our auditor's report thereon.
OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT
To test the fair value measurement of level III financial
assets, our audit procedures included, among others,
evaluating the Group's valuation methodologies, testing
the significant unobservable inputs used by the Group in
determining the fair values, and testing the mathematical
accuracy of the Group's valuation calculations. We involved
our valuation specialists to assist us with evaluating
the Group's valuation methodologies and assessing
the reasonableness of the significant unobservable
inputs, including discount rates and discounts for lack
of marketability, among others used in the valuations by
comparing them to information available from third-party
sources and market data. For a sample of the Group's
level III financial assets, our valuation specialists also
independently developed fair value estimates and compared
them to the Group's valuation results.
Independent Auditor's Report (continued)
We obtained an understanding, evaluated the design and
tested the operating effectiveness of internal controls over
the Group's fair value measurement of level III financial
assets. For example, we tested management's review
controls over the valuation methodologies and the significant
unobservable inputs used in the fair value measurements.
Auditing the fair value measurement of the Group's level
III financial assets was complex due to the significant
estimates and judgements involved in the assessment
of valuation methodologies and significant unobservable
inputs, including discount rates and discounts for lack
of marketability, among others. The use of different
valuation methodologies and changes in significant
unobservable inputs could result in significantly different
fair value estimates.
At 31 December 2020, the Group held material
investments in certain level III 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 or securities at fair value
through profit or loss with a combined carrying value
of RMB293.92 billion. As disclosed in Note 4.4 to the
consolidated financial statements, these investments are
classified as level III in the fair value hierarchy as their fair
values are measured using valuation methodologies with
significant unobservable inputs.
Fair value of level III 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)
How our audit addressed the key audit matter
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.
• 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
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(Incorporated in the People's Republic of China with limited liability)
To the shareholders of China Life Insurance Company Limited
Independent Auditor's Report (continued)
120 China Life Insurance Company Limited | Annual Report 2020 | 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 judgement and maintain professional scepticism
throughout the audit. We also:
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.
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.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS
The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the
Group's financial reporting process.
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.
• 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.
(Note 36)
28,265
139,919
22
Non-controlling interests
Total equity
37
7,791
38
237,890
Attributable to equity holders of the Company
197,221
170,487
450,051
403,764
6,880
5,578
456,931
4,252,410
183,896
Retained earnings
Reserves
Other equity instruments
81,114
29
15,286
10,330
191
223
21
21
384
602
3,795,479
3,317,392
36
28,265
28,265
409,342
154,497
3,726,734
Approved and authorised for issue by the Board of Directors on 25 March 2021.
Notes
RMB million
RMB million
612,265
567,086
(6,053)
2019
(5,238)
561,848
(1,546)
(1,570)
604,666
560,278
222
606,212
2020
BENEFITS, CLAIMS AND EXPENSES
Insurance benefits and claims expenses
Total revenues
Wang Bin
Director
Su Hengxuan
Director
The notes on pages 129 to 244 form an integral part of these consolidated financial statements.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 123
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
REVENUES
Gross written premiums
Less: premiums ceded to reinsurers
Net written premiums
Net change in unearned premium reserves
Net premiums earned
Investment income
Net realised gains on financial assets
Net fair value gains through profit or loss
Other income
Total liabilities and equity
(20,834)
450,014
(6,505)
(29,546)
28,265
237,890
183,896
6,880
456,931
The notes on pages 129 to 244 form an integral part of these consolidated financial statements.
126 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
CASH FLOWS FROM OPERATING ACTIVITIES
2020
2019
RMB million
RMB million
Profit before income tax
Adjustments for:
134
(36,859)
14,970
(7,791)
51,385
25,699
51
25,750
25,699
50,268
1,168
77,135
Investment income
16,025
(20,834)
(20,834)
(174)
(174)
(7,791)
(1,055)
308
(8,538)
(16,025)
1,117
Net realised and unrealised gains on financial assets
54,488
1,213
Receivables and payables
40,592
50,622
Income tax paid
(3,263)
(8,636)
-
Interest received – securities at fair value through profit or loss
Dividends received – securities at fair value through profit or loss
4,120
3,811
775
964
Net cash inflow/(outflow) from operating activities
304,024
286,032
CASH FLOWS FROM INVESTING ACTIVITIES
3,004
Financial liabilities at fair value through profit or loss
6,858
(21,954)
59,795
(154,497)
(139,919)
(36,483)
(21,082)
419,866
335,971
Depreciation and amortisation
Insurance contracts
5,161
Foreign exchange losses/(gains)
(119)
67
Net gains on investments of associates and joint ventures
(7,666)
(8,011)
Changes in operating assets and liabilities:
Decrease/(increase) in securities at fair value through profit or loss, net
4,379
Disposals and maturities:
50,268
5,578
Dividends paid (Note 33)
Appropriation to reserves (Note 38)
Transactions with owners
Total comprehensive income
Other comprehensive income
Net profit
As at 1 January 2020
As at 31 December 2019
Total transactions with owners
Reserves to retained earnings (Note 38)
Others
Dividends to non-controlling interests
Total comprehensive income
Transactions with owners
Appropriation to reserves (Note 38)
Dividends paid (Note 33)
Other comprehensive income
As at 1 January 2019
Net profit
For the year ended 31 December 2020
Consolidated Statement of Changes in Equity
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 125
Dividends to non-controlling interests
Others
Total transactions with owners
As at 31 December 2020
(Note 38)
149,309
130,117
58,287
4,919
320,401
727
59,014
RMB million RMB million
The notes on pages 129 to 244 form an integral part of these consolidated financial statements.
RMB million
earnings
Reserves
Retained
Other
equity
instruments
Share
capital
Total
Non-
controlling
interests
Attributable to equity holders of the Company
RMB million RMB million RMB million
409,342
792
93,134
86
64
64
13,065
(17,917)
(133)
(4,985)
28,265
7,791
197,221
170,487
5,578
409,342
28,265
7,791
197,221
170,487
(86)
(133)
(133)
(4,916)
75,967
93,926
77,135
34,912
25,750
(76)
344
34,847
1,168
(365)
34,912
_- _- 34,847
58,287
792
93,926
13,087
(13,087)
(4,916)
65
Disposals of debt investments
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, actions taken to eliminate threats or safeguards applied.
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
communication.
112,182
1,141
Net cash inflow/(outflow) from investing activities
Cash received related to other investing activities
(32,707)
(25,858)
Increase in policy loans, net
25,169
29,590
Dividends received
116,846
126,848
5,468
(3,850)
Decrease/(increase) in securities purchased under agreements to resell, net
24,102
(292,797)
(247,515)
The notes on pages 129 to 244 form an integral part of these consolidated financial statements.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 127
(73,552)
(3,072)
(3,779)
4,912
Proceeds from issue of bonds
Dividends paid to non-controlling interests
Dividends paid to equity holders of the Company
Repayment of borrowings
(10,947)
Interest paid
CASH FLOWS FROM FINANCING ACTIVITIES
RMB million
RMB million
2019
2020
For the year ended 31 December 2020
Consolidated Statement of Cash Flows (continued)
Increase/(decrease) in securities sold under agreements to repurchase, net
Decrease/(increase) in term deposits, net
Interest received
(14,942)
1,432
2,175
(23,389)
57
The engagement partner on the audit resulting in this independent auditor's report is Choi Kam Cheong, Geoffrey.
308,406
133,519
198,640
Equity investments
Debt investments
Purchases:
Disposals of subsidiaries
Disposals of property, plant and equipment
Disposals of equity investments
Maturities of debt investments
(593,917)
36,774
72
(7,467)
Property, plant and equipment
(545,657)
(338,306)
(504,292)
(11,415)
Investments in associates and joint ventures
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2020
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2020 (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 129
IFRS 3 Amendments - Definition of a Business
In October 2018, the IASB issued amendments to the definition of a business in IFRS 3 Business Combinations. The
amendments clarify and provide additional guidance on the definition of a business. The amendments clarify that for
an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a
substantive process that together significantly contribute to the ability to create outputs. A business can exist without
including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether
market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on
whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create
outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to
customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance
to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a
simplified assessment of whether an acquired set of activities and assets is not a business. The Group has applied the
amendments prospectively to transactions or other events that occurred on or after 1 January 2020. The amendments did
not have any significant impact on the Group's consolidated financial statements.
1 June 2020
IAS 1 and IAS 8 Amendments
-
1 January 2020
2.1 Basis of preparation (continued)
Notes to the Consolidated Financial Statements (continued)
Amendments
Definition of Material
1 January 2020
1 January 2020
beginning on or after
Effective for
annual periods
Covid-19-Related Rent Concessions (early adopted)
Interest Rate Benchmark Reform
Definition of Material
Definition of a Business
Content
IFRS 9, IAS 39 and IFRS 7
IFRS 16 Amendment
In October 2018, the IASB issued amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors to provide a new definition of material. The new definition states
that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions
that the primary users of general purpose financial statements make on the basis of those financial statements. The
amendments clarify that materiality will depend on the nature or magnitude of information, or both. The amendments did
not have any significant impact on the Group's consolidated financial statements.
For the year ended 31 December 2020
In September 2019, the IASB issued the amendments to IFRS 9 Financial Instruments, IAS 39 Financial Instruments:
Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures to respond to the hedge accounting
induced in the Interbank Offered Rates (IBOR) reform. The amendments provide temporary reliefs which enable hedge
accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark.
The amendments did not have any significant impact on the Group's consolidated financial statements.
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. The Group is
currently assessing the impact of the implementation of the standard.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 133
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In August 2020, the IASB issued IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Amendments Interest Rate Benchmark
Reform - Phase 2. The amendments address issues not dealt with in the previous amendments which affect financial
reporting when an existing interest rate benchmark is replaced with an alternative benchmark rate. The Phase 2
amendments provide a practical expedient to allow the effective interest rate to be updated without adjusting the carrying
amount when accounting for changes in the basis for determining the contractual cash flows of financial assets and
liabilities, if the change is a direct consequence of the interest rate benchmark reform and the new basis for determining
the contractual cash flows is economically equivalent to the previous basis immediately preceding the change. In addition,
the amendments permit changes required by the interest rate benchmark reform to be made to hedge designations
and hedge documentation without the hedging relationship being discontinued. Any gains or losses that could arise on
transition are dealt with through the normal requirements of IFRS 9 to measure and recognise hedge ineffectiveness.
The amendments also provide a temporary relief to entities from having to meet the separately identifiable requirement
when thealternative benchmark rate is designated as a risk component. The relief allows an entity, upon designation of
the hedge, to assume that the separately identifiable requirement is met, provided the entity reasonably expects the
risk component to become separately identifiable within the next 24 months. Furthermore, the amendments require an
entity to disclose additional information to enable users of financial statements to understand the effect of interest rate
benchmark reform on an entity's financial instruments and risk management strategy. The amendments are effective for
annual periods beginning on or after 1 January 2021 and shall be applied retrospectively, but entities are not required to
restate the comparative information.
• Extensive disclosures to provide information on the recognised amounts from insurance contracts and the nature and
extent of risks arising from these contracts.
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Amendments - Interest Rate Benchmark Reform - Phase 2
1 January 2023
No mandatory effective
date yet determined but
available for adoption
IFRS 10 and IAS 28 Amendments Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture
Insurance Contracts
IFRS 17
1 January 2021
beginning on or after
The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
• Insurance services results are presented separately from the insurance finance income or expense;
• Amounts that the policyholder will always receive, regardless of whether an insured event happens (non-distinct
investment components) are not presented in the statement of comprehensive income, but are recognised directly in
the statement of financial position;
• 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;
The Group had certain interest-bearing bank borrowings denominated in US dollars and Euros based on the London
Interbank Offered Rate ("LIBOR") and the Europe Interbank Offered Rate ("EURIBOR") as at 31 December 2020. If the
interest rates of these borrowings are replaced by alternative benchmark rates in a future period, the Group will apply this
practical expedient upon the modification of these borrowings when the "economically equivalent" criterion is met and
expects that no significant modification gain or loss will arise as a result of applying the amendments to these changes.
132 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.3 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 2020 (continued)
IFRS 17 - 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.
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.
The main features of the new accounting model for insurance contracts are as follows:
• 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 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 contractual service margin
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 OCI, determined by an accounting
policy choice;
Effective for
annual periods
Amendments
IFRS 4 and IFRS 16
Interest Rate Benchmark Reform - Phase 2
Effective for
annual periods
beginning on or after
Financial Instruments
Content
IFRS 9
Standards/Amendments
2.1.2 New accounting standards and amendments that are effective but temporary exemption is
applied by the Group for the financial year beginning on 1 January 2020
2.1 Basis of preparation (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
IAS 1 and IAS 8 Amendments
Notes to the Consolidated Financial Statements (continued)
130 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
The Group has early adopted the amendment on 1 January 2020. Because the Group was not provided with a significant
amount of rent concessions arising as a direct consequence of Covid-19, the amendment did not have any significant
impact on the Group's consolidated financial statements.
The practical expedient applies only to rent concessions occurring as a direct consequence of Covid-19 and only if all
of the following conditions are met: (i) the change in lease payments results in revised consideration for the lease that
is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any
reduction in lease payments affects only payments originally due on or before 30 June 2021; (iii) there is no substantive
change to other terms and conditions of the lease. The amendment is effective retrospectively for annual periods
beginning on or after 1 June 2020 with earlier application permitted.
In May 2020, the IASB issued the amendment to IFRS 16 Leases to provide an optional relief to lessees from applying
IFRS 16's guidance on lease modification accounting for rent concessions arising as a direct consequence of Covid-19.
The amendment does not apply to lessors.
IFRS 16 Amendment - Covid-19-Related Rent Concessions (early adopted)
1 January 2018
IFRS 9, IAS 39 and IFRS 7 Amendments - Interest Rate Benchmark Reform
IFRS 9 - Financial Instruments
Classification and measurement
IFRS 9, IAS 39, IFRS 7,
Content
Standards/Amendments
2.1.3 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 2020
2.1 Basis of preparation (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 131
The Group does not apply the 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.
Hedge accounting
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 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
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 elects to record equity
investments at FVOCI, gains and losses would be recognised in retained earnings when the instruments be 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. The Group analysed the contractual cash flow
characteristics of financial assets as at 31 December 2020 and made relevant disclosures in Note 34.
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 that the adoption of IFRS 9
will have a significant impact on the Group's consolidated financial statements. The Group has adopted the temporary
exemption permitted in Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
("IFRS 4 Amendments") to apply IAS 39 rather than IFRS 9, until the effective date of IFRS 17. Refer to Note 34 for more
details.
IFRS 3 Amendments
IFRS 10 and IAS 28 Amendments - Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2020
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.
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.
2.6 Property, plant and equipment
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.
2.5 Foreign currency translation
Standards/Amendments
2.4 Segment reporting
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.
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.
2.3 Associates and joint ventures (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
136 China Life Insurance Company Limited | Annual Report 2020 | 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 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.
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.
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.
2.3 Associates and joint ventures
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 137
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
138 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
At the commencement date of the lease, the Group recognises right-of-use assets representing the right to use the
leased assets, including buildings and land use rights, etc. 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. 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.
Initial measurement
As a lessee
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.
2.7 Leases
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.
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.
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.
3 to 11 years
4 to 8 years
15 to 35 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)
Over the shorter of the remaining term
of the lease and the useful lives
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.
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.
Transactions with non-controlling interests
rights arising from other contractual arrangements; and
• the contractual arrangement with the other vote holders of the investee;
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 ability to use its power over the investee to affect its returns.
• exposure, or rights, to variable returns from its involvement with the investee; and
• power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the
investee);
The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year
ended 31 December 2020. 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:
2.2 Consolidation
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 IASB has deferred the effective date of these amendments indefinitely, but an entity
that early adopts the amendments must apply them prospectively. The Group will apply these amendments when they
become effective.
2.1.3 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 2020 (continued)
2.1 Basis of preparation (continued)
Notes to the Consolidated Financial Statements
1 ORGANISATION AND PRINCIPAL ACTIVITIES
For the year ended 31 December 2020
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.
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.
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 25
March 2021.
2 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.
⚫ 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 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.
134 China Life Insurance Company Limited | Annual Report 2020 | 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.
2.2 Consolidation (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2020
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 135
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.
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 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
• recognises the fair value of any investment retained;
Notes to the Consolidated Financial Statements (continued)
2.2 Consolidation (continued)
• recognises the fair value of the consideration received;
For the year ended 31 December 2020
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (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:
Notes to the Consolidated Financial Statements (continued)
.
derecognises the carrying amount of any non-controlling interests;
• derecognises the cumulative translation differences recorded in equity;
• derecognises the assets (including goodwill) and liabilities of the subsidiary;
2.8 Investment properties
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.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
(i) Securities at fair value through profit or loss
2.9 Financial assets
2.9.a 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
investments in securities fall into the following four categories:
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.
(ii) Held-to-maturity securities
For the year ended 31 December 2020
(iii) Loans and receivables
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.
Notes to the Consolidated Financial Statements (continued)
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.
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.
(ii) Long-term insurance contracts
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.
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.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.7 Leases (continued)
As a lessee (continued)
Initial measurement (continued)
Subsequent measurement
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.
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 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.
The Group assesses whether there is any indication that a right-of-use asset may be impaired at the end of reporting
period. If any such indication exists, the Group performs the impairment test. An impairment loss is recognised in net
profit for the amount by which the carrying amount of the right-of-use asset exceeds its recoverable amount, which is the
higher of the right-of-use asset's net selling price and value in use.
Covid-19-Related Rent Concessions
The Group partly adopts the simplified method for rental concessions arising as a direct consequence of Covid-19
reached by the Group and the lessor on the existing lease contracts of buildings. The Group treats the rent concessions
as variable lease payments. When a concession agreement is reached to relieve the original rent payment obligation, the
undiscounted cash amount will be used to offset the cost of the related asset or expense, and adjust the related liability.
As a lessor
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 139
(iv) Available-for-sale securities
⚫ 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
140 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
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.
2.14 Securities sold under agreements to repurchase
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.
2.15 Bonds payable
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.
2.16 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 assets when fair value is positive and as liabilities when fair value is negative.
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).
2.17 Employee benefits
Pension 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.
Housing benefits
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.
Stock appreciation rights
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.
2.13 Financial liabilities at fair value through profit or loss
146 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Notes to the Consolidated Financial Statements (continued)
2.12 Insurance contracts and investment contracts (continued)
2.12.2 Insurance contracts (continued)
2.12.2.b Liability adequacy test
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.
2.12.2.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.
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.
2.12.3 Investment contracts
For investment contracts with or without DPF, the Company's policy fee income mainly consists of acquisition cost
and various fees (handling fees and management fees, etc.) over the period of which the service is provided. Policy fee
income net of certain acquisition cost is amortised over the expected life of the contracts by period and recognised in
revenue.
Except for unit-linked contracts, of which the liabilities are carried at fair value, the liabilities of investment contracts are
carried at amortised cost.
2.12.4 DPF in long-term insurance contracts and investment contracts
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.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 145
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2020
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.22 Current and deferred income taxation (continued)
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 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.
2.23 Provisions and contingencies
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.
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.
148 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 147
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.
2.18 Share capital
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.
2.19 Other equity instruments
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 unfavourable 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.
2.20 Revenue recognition
Turnover of the Group represents the total revenues which include the following:
Premiums
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Premiums from long-term insurance contracts are recognised as revenue when due from the policyholders.
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.
The policy fee income for investment contracts mainly consists of acquisition costs and various 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 amortised over the expected life of the contracts and recognised as other income.
Investment 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.
2.21 Finance costs
Interest expenses for bonds payable, securities sold under agreements to repurchase, interest-bearing loans, borrowings
and lease liabilities are recognised within finance costs in net profit using the effective interest rate method.
2.22 Current and deferred income taxation
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.
For the year ended 31 December 2020
Policy fee income
144 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
For the year ended 31 December 2020
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.9 Financial assets (continued)
2.9.c Impairment of financial assets other than securities at fair value through profit or loss (continued)
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 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 below their cost for a period of more than one year (including one year) at
the reporting date.
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.
2.10 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
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 are available
to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Notes to the Consolidated Financial Statements (continued)
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 4.4, 8, 11 and 42(c) based on the lowest level input that is
significant to the fair value measurement as a whole.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 141
⚫ it becomes probable that the issuer or debtor will enter into bankruptcy or other financial reorganisation; and
Notes to the Consolidated Financial Statements (continued)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.9 Financial assets (continued)
2.9.b 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.
Term deposits primarily represent traditional bank deposits which have fixed maturity dates and are stated at amortised
cost.
Loans are carried at amortised cost, net of allowance for impairment.
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.
2.9.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:
significant financial difficulty of the issuer or debtor;
• a breach of contract, such as a default or delinquency in payments;
• the disappearance of an active market for that financial asset because of financial difficulties.
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.
•
Notes to the Consolidated Financial Statements (continued)
(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:
guaranteed benefits based on contractual terms, including payments for deaths, disabilities, diseases, survivals,
maturities and surrenders;
The unearned premium reserve represents the portion of the premiums written net of certain acquisition costs relating to
the unexpired terms of coverage.
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.
(i) Short-term insurance contracts
• additional non-guaranteed benefits, such as policyholder dividends; and
• 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) Long-term insurance contracts (continued)
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.
(c) The Group has considered the impact of time value on the reserve calculation for insurance contracts.
(iii) Universal life contracts and unit-linked contracts
Universal life contracts and unit-linked contracts are unbundled into the following components:
• insurance components
• non-insurance components
142 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
The insurance components are accounted for as insurance contracts; and the non-insurance components are accounted
for as investment contracts (Note 2.12.3), which are stated in the investment contract liabilities.
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 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.
2.12.2.a Recognition and measurement (continued)
(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.
2.12 Insurance contracts and investment contracts (continued)
For the year ended 31 December 2020
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.12.2 Insurance contracts (continued)
2.11 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.
2.12 Insurance contracts and investment contracts
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.
2.12.2 Insurance contracts
2.12.1 Classification
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:
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2020
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 143
2.12.2.a Recognition and measurement
Notes to the Consolidated Financial Statements (continued)
4.2 Financial risk (continued)
HK dollar
US dollar
(iii) Currency risk (continued)
4.2.1 Market risk (continued)
For the year ended 31 December 2020
4 RISK MANAGEMENT (continued)
GB pound
As at 31 December 2019
EUR
95,428
Total
Financial assets
Equity securities
- Available-for-sale securities
11,086
106,514
- Securities at fair value through
profit or loss
4,549
Notes to the Consolidated Financial Statements (continued)
871
660
Others
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 157
109,975
19,556
1,297
2,166
358
140
7
2,400
Total
28,228
729
1,370
19,556
864
Financial liabilities
Interest-bearing loans and
other borrowings
11,940
Total
11,940
2,444
5,172
2,444
5,172
141,166
1,292
136,699
Debt securities
3
2,715
Total
35,318
96,564
1,312
2,201
1,304
Financial liabilities
Interest-bearing loans and
20
other borrowings
12,892
12,892
2,515
4,638
2,515
4,638
20,045
20,045
As at 31 December 2020, 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 RMB339 million
(as at 31 December 2019: RMB1,013 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 RMB11,593 million (as at 31 December 2019: RMB10,423 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 2020 were RMB119 million (2019: exchange losses of RMB67 million).
158 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
598
Total
9,538
406
1,842
- Held-to-maturity securities
218
218
- Loans
1,592
1,592
- Available-for-sale securities
7,557
7,557
· Securities at fair value through
444
profit or loss
35
15
9
507
Term deposits
8,026
32
-
8,058
Cash and cash equivalents
448
Cash and cash equivalents
2020
-
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
150 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
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.
3.3 Impairment of investments in associates and joint ventures
For the description of valuation techniques, please refer to Note 4.4. Using different valuation techniques and parameter
assumptions may lead to some differences of fair value estimations.
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
• fair values of other loans are obtained from valuation techniques.
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.
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:
The Group considers a wide range of factors in the impairment assessment as described in Note 2.9.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 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3.2 Financial instruments
For the year ended 31 December 2020
• 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.
Notes to the Consolidated Financial Statements (continued)
3.5 Determination of control over investee
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 2020, the Group has consolidated
some funds, debt investment schemes and asset management products issued and managed by the Company's
subsidiaries, China Life AMP Asset Management Company ("CL AMP"), China Life Asset Management Company Limited
("AMC") and China Life Wealth Management Company ("CL Wealth") and some trust schemes and debt investment
schemes issued and managed by third parties in the consolidated financial statements. Please refer to Note 42(d) for the
details.
2020
For the year ended 31 December
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)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2020
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.
Notes to the Consolidated Financial Statements (continued)
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
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 is carried out by the Company's Risk Management Committee under policies approved by the
Company's Board of Directors.
4 RISK MANAGEMENT
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 151
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 149
The impact of the various assumptions and their changes are described in Note 15.
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.
Hong Ying Participating Endowment (e)
24,398
0.83%
35,403
1.40%
Others (f)
2,265,458
77.15%
6.06%
1,936,680
Total
100.00%
2,521,331
100.00%
152 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
4 RISK MANAGEMENT (continued)
76.80%
152,713
5.56%
163,395
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, expenses assumption and policy
dividend assumptions) that are determined at inception of the contracts and remain unchanged for the duration of the
contracts.
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.
3.1 Estimates of future benefit payments and premiums arising from long-term insurance contracts
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, expense assumptions and policy dividend 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.
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.
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
140
0.01%
Xin Fu Ying Jia (b)
114,111
3.89%
86,876
3.45%
Kang Ning Whole Life (c)
338,286
11.52%
309,519
12.28%
Fu Lu Shuang Xi Participating Endowment (d)
2019
4.1 Insurance risk (continued)
Product name
%
13.59%
11,393
Hong Ying Participating Endowment (e)
3.88%
3,108
4.67%
3,918
Fu Lu Shuang Xi Participating Endowment (d)
7,906
6.39%
6.05%
5,075
Kang Ning Whole Life (c)
2.25%
1,799
2.17%
1,823
Xin Fu Ying Jia (b)
5,119
0.03%
9.87%
61,624
1.05%
30,885
(Celebration Version) (a)
Xin Xiang Zhi Zun Annuity
Liabilities of long-term insurance contracts
%
As at 31 December 2019
RMB million
%
Others (f)
RMB million
100.00%
80,124
100.00%
83,854
Total
77.61%
62,192
73.49%
As at 31 December 2020
21
100.00%
497,570
19,701
3.27%
17,553
Kang Ning Whole Life (c)
7.44%
37,024
4.50%
24,116
3.96%
Xin Fu Ying Jia (b)
238
7.96%
42,657
(Celebration Version) (a)
Xin Xiang Zhi Zun Annuity
Premiums of long-term insurance contracts
%
RMB million
0.05%
Fu Lu Shuang Xi Participating Endowment (d)
12,673
2.36%
100.00%
536,150
85.40%
424,920
81.88%
439,014
(Celebration Version) (a)
Xin Xiang Zhi Zun Annuity
insurance contracts
Insurance benefits of long-term
Total
Others (f)
0.11%
558
0.03%
137
Hong Ying Participating Endowment (e)
3.04%
15,129
RMB million
7,990
4.1.2 Concentration of insurance risks (continued)
(b) 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, and 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. Death
benefit and accidental death benefit are paid only once.
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 10.
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
4 RISK MANAGEMENT (continued)
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 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 2020, 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 RMB627 million (as at 31 December 2019: RMB528 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 RMB13,906 million
(as at 31 December 2019: RMB9,854 million) lower or higher, as a result of a decrease or increase in the fair value of
available-for-sale securities.
156 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
4 RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.1 Market risk (continued)
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.
(ii) Price risk
For the year ended 31 December 2020
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 155
41,442
3 years later
26,655
34,045
4 years later
26,655
Estimated accumulated
claims expenses
Notes to the Consolidated Financial Statements (continued)
26,655
(26,655)
34,045
(34,045)
41,442
(41,442)
Unpaid claims expenses
50,414
(48,229)
2,185
51,994
(32,397)
19,597
204,550
(182,768)
21,782
Accumulated claims expenses paid
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 mainly 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 2020, 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 RMB6,596 million (as at 31 December 2019:
RMB5,641 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 RMB45,939
million (as at 31 December 2019: RMB38,559 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.
- Held-to-maturity securities
220
220
- Loans
1,445
1,445
- Available-for-sale securities
3,615
Debt securities
3,615
profit or loss
297
21
11
10
339
Term deposits
7,990
- Securities at fair value through
6,953
847
1,219
(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.
The following table summarises primary financial assets and financial liabilities denominated in currencies other than RMB
as at 31 December 2020 and 2019, expressed in RMB equivalent:
As at 31 December 2020
US dollar HK dollar
GB pound
EUR
Others
Total
Financial assets
Equity securities
- Available-for-sale securities
9,711
108,493
- - 118,204
- Securities at fair value through
profit or loss
4,352
185
350
34,045
(a) Xin Xiang Zhi Zun Annuity (Celebration Version) is an annuity insurance contract with the options for regular premium
of 3 years and 5 years paid annually or monthly. Its insured period is 10 years. This product is applicable to healthy
policyholders between 28-day-old and 68-year-old. From the first effective date after the fifth policy years to the expiration
period, if the policyholders live to the annual corresponding effective date, the annuity payment shall be paid at 60% of
annual premium according to the basic sum insured if the payment period is 3 years; and the annuity payment shall be paid
at 100% of annual premium according to the basic sum insured if the payment period is 5 years. If the policyholders live
to the annual corresponding effective date of the expiration period, the contract terminates and maturity benefit is paid
at the basic sum insured. If death incurred over insured period, the contract terminates and death benefit is paid at the
premium received (without interest).
26,655
50,414
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 RMB733 million (as at 31 December 2019: RMB670 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:
Short-term insurance contracts (accident year)
Estimated claims expenses
2016
2017
4.1.3 Sensitivity analysis (continued)
2018
Year end
27,120
33,926
40,601
49,727
2020
52,589
Total
1 year later
2019
27,303
4.1 Insurance risk (continued)
For the year ended 31 December 2020
(c) 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. 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.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 153
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
4 RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks (continued)
(d) 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, 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. 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.
4 RISK MANAGEMENT (continued)
(e) Hong Ying Participating Endowment 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
the basic sum multiplied by 3 insured for a single premium policy or the basic sum multiplied by 3 and times the number
of years of premium payments insured 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 the basic sum multiplied by 2 insured for a single premium policy or the
basic sum multiplied by 2 and times the number of years of premium payments insured for a regular premium policy.
4.1.3 Sensitivity analysis
Sensitivity analysis of long-term insurance contracts
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.
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 RMB34,590 million or RMB35,955 million (as at 31
December 2019: RMB28,045 million or RMB29,286 million) lower or higher, 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 RMB707 million or RMB646 million (as at 31 December 2019: RMB1,336
million or RMB1,253 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 RMB114,536 million or RMB131,732 million (as at 31 December
2019: RMB96,131 million or RMB108,946 million) higher or lower, respectively.
154 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
(f) Others consist of various long-term insurance contracts with no significant concentration.
34,845
42,785
51,051
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
2016
2017
2018
2019
Total
21,991
Year end
33,700
40,157
49,175
51,994
1 year later
27,107
34,560
42,280
26,897
19,785
52,589 206,764
(32,804) (184,773)
51,051
(48,845)
2,206
2 years later
26,851
34,328
41,945
3 years later
26,851
34,328
4 years later
26,851
Estimated accumulated
claims expenses
26,851
34,328
41,945
Accumulated claims expenses paid
(26,851)
(34,328)
(41,945)
Unpaid claims expenses
2 years later
2,936,533
Later
Others
and service fee
Investment income
Others managed by affiliated entities Note 2
452,814
10,827
10,827
Investment income
Others managed by third parties Note 2
Note 1
98,003
98,003
37,112
and service fee
Investment income
Note 2: Others included wealth management products, special asset management schemes, and asset-backed plans, etc.
164 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
4 RISK MANAGEMENT (continued)
4.3 Disclosures about interest in unconsolidated structured entities (continued)
(ii) The unconsolidated structured entities that the Group has sponsored but does not have interest in
As at 31 December 2020, the size of the unconsolidated structured entities that the Group sponsored but had no
interest was RMB686,989 million (as at 31 December 2019: RMB600,223 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 2020, the management service fee from these structured entities was RMB2,092
million (2019: RMB1,749 million), which was recorded as other income. The Group did not transfer assets to these
structured entities.
4.4 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 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.
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.
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 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 or liabilities valued by this method
are generally classified as Level 3.
37,112
Debt investment schemes managed by
third parties
Interest held by
the Group
Investment income
Funds managed by third parties
Note 1
106,205
106,205
Trust schemes managed by affiliated entities
6,400
3,588
3,588
Note 1
and service fee
Investment income
Investment income
Note 1
71,707
71,707
and service fee
Investment income
Debt investment schemes managed by
34,025
14,832
14,832
Investment income
affiliated entities
Trust schemes managed by third parties.
As at 31 December 2020, assets classified as Level 1 accounted for approximately 36.56% 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 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 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.
As at 31 December 2020, assets classified as Level 2 accounted for approximately 41.77% 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.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 165
278,255
22,994
301,249
Preferred stocks
53,778
53,778
Wealth management products
13,013
13,013
Others
Common stocks
11,038
96,232
148,671
-
Debt securities
Government bonds
5,838
43,418
49,256
Government agency bonds
25,297
41,401
97,476
97,476
RMB million
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
4 RISK MANAGEMENT (continued)
4.4 Fair value hierarchy (continued)
At 31 December 2020, assets classified as Level 3 accounted for approximately 21.67% 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 comparable companies approach,
etc. The determination of Level 3 is primarily based on the significance of certain unobservable inputs.
For the accounting policies regarding the determination of fair values of financial assets and liabilities, see Note 3.2.
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 2020:
Assets measured at fair value
Available-for-sale securities
- Equity securities
Funds
Fair value measurement using
Quoted prices
in active
markets
Significant
observable
Significant
unobservable
Total
Level 1
inputs
Level 2
inputs
Level 3
RMB million
RMB million
RMB million
Maximum
exposure
RMB million
6,497
RMB million
6,497
185,158
Funds managed by affiliated entities
As at
31 December
2019
RMB million
1,031,947
952,030
1,066,939
987,067
396,749
356,953
260%
267%
269%
RMB million
277%
(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 the Supervision Information System of the China Risk Oriented Solvency System, the latest Integrated Risk
Rating result of the Company was Category A.
4.3 Disclosures about interest in unconsolidated structured entities
The Group's interest in unconsolidated structured entities are recorded as securities at fair value through profit or
loss, available-for-sale securities and loans. 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 3.5 for the Group's consolidation
judgements related to structured entities.
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.
The Group did not guarantee or provide any financing support for the structured entities that the Group had interest in or
sponsored.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 163
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 CBIRC evaluates the comprehensive
solvency of insurance companies and supervises insurance companies by classifying them into four categories:
2020
31 December
As at
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
4 RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.3 Liquidity risk (continued)
The liquidity analysis above does not include policyholder dividends payable of RMB122,510 million as at 31 December
2020 (as at 31 December 2019: RMB112,593 million). As at 31 December 2020, declared dividends of RMB82,154
million (as at 31 December 2019: RMB77,512 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 be surrendered
immediately, it would cause a cash outflow of RMB64,445 million and RMB220,973 million, respectively for the year
ended 31 December 2020 (2019: RMB61,178 million and RMB204,037 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 CBIRC, 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.
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 10.4, Note 21 and Note 38, respectively.
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.
162 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
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
Notes to the Consolidated Financial Statements (continued)
143,716
For the year ended 31 December 2020
4.3 Disclosures about interest in unconsolidated structured entities (continued)
Investment income
and service fee
Investment income
Investment income
Investment income
affiliated entities
Debt investment schemes managed by
third parties
Note 1
27,747
Investment income
and service fee
27,747 Investment income
Others managed by affiliated entities Note 2
290,937
12,681
12,681
1,298
63,229
9,172
Others managed by third parties Note 2
75,551
75,551
Investment income
and service fee
Investment income
Unconsolidated structured entities
Carrying
amount
Size
of assets
As at 31 December 2019
RMB million
Note 1
9,172
18,275
Debt investment schemes managed by
(i) The unconsolidated structured entities that the Group has interest in
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 financial statements relating to its interest in unconsolidated structured entities and the Group's
maximum exposure are shown below:
Unconsolidated structured entities
Carrying
amount
Size
of assets
As at 31 December 2020
RMB million
RMB million
Funds managed by affiliated entities
Funds managed by third parties
158,182
8,232
Maximum
exposure
RMB million
8,232
Interest held by
the Group
Note 1
99,649
99,649
Trust schemes managed by affiliated entities
Trust schemes managed by third parties
2,096
1,298
Note 1
63,229
4 RISK MANAGEMENT (continued)
161
169,013
2,408
6,497
69,200
1,091
Others
7,999
Corporate bonds
362
Government agency bonds
41
8
33
Government bonds
6,859
- Debt securities
40,281
16,101
| | |
20
211
40,070
78
16,023
Others
Common stocks
20
Funds
16
Derivative financial assets
For the year ended 31 December 2020
4 RISK MANAGEMENT (continued)
4.4 Fair value hierarchy (continued)
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 2019:
Assets measured at fair value
168 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
(10) —- —- (10)
(3,869)
(3,869)
Total
profit or loss
Investment contracts at fair value through
77,215
(3,859)
profit or loss
Financial liabilities at fair value through
Liabilities measured at fair value
1,180,357
234,993
530,968
414,396
Total
1,091
428
428
(3,859)
- Equity securities
Securities at fair value through profit or loss
112,467
58,314
Preferred stocks
236,323
22,117
214,206
Common stocks
102,349
102,349
RMB million
RMB million
58,314
RMB million
Level 3
inputs
inputs
Level 2
Level 1
Total
Significant
unobservable
Significant
observable
in active
markets
Quoted prices
Fair value measurement using
RMB million
Wealth management products
Others
32,640
32,640
105,650
6,817
Available-for-sale securities
53,922
52,853
1,069
Subordinated bonds/debts
148,455
143,095
5,360
Corporate bonds
171,189
146,884
24,305
Government agency bonds
23,758
21,138
2,620
Government bonds
Debt securities
98,904
70,585
28,319
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 167
293,924
150,010
1,302
1,638
Government agency bonds
972
3,450
4,422
Corporate bonds
2,957
83,837
9
336
86,803
2,752
2,752
Total
495,927
566,716
293,924
1,356,567
Liabilities measured at fair value
Financial liabilities at fair value through
profit or loss
Others
Government bonds
Debt securities
262
133,617
136,025
Subordinated bonds/debts
6,244
75,551
81,795
Others
816
143,905
144,721
Securities at fair value through profit or loss
- Equity securities
Funds
Common stocks
Others
16,731
104
48,334
524
41
221
16,835
48,858
(3,732)
Corporate bonds
Investment contracts at fair value through
(10)
RMB million
RMB million
RMB million
RMB million
105,650
38,486
128,899
19,953
16
428
234,993
58,439
RMB million
(7)
(128)
653
7,127
7,780
(5,969)
(307)
(6,276)
(884)
(884)
143,905
(121)
Debt
securities
Equity
securities
Total
Total
(3,742)
(3,732)
(10)
(3,742)
166 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
4 RISK MANAGEMENT (continued)
4.4 Fair value hierarchy (continued)
The following table presents the changes in Level 3 financial instruments for the year ended 31 December 2020:
Opening balance
Purchases
Total gains/(losses) recorded in
profit or loss
Total gains/(losses) recorded in
other comprehensive income
Disposals or exercises
Maturity
Closing balance
Available-for-sale securities
Debt
securities
Securities
at fair value
through
profit or loss
Derivative
financial
assets
profit or loss
Funds
China Life Insurance Company Limited | Annual Report 2020 | Financial Report
600,960 (3,720,646)
2,973,225
The amounts set forth in the tables above for insurance and investment contracts in each column are the undiscounted
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.
Investment contracts
Insurance contracts
Expected cash outflows
Financial and insurance liabilities
616,777 2,435,697
905,028
577,939
700,748
3,907,583
Subtotal
56,629
56,629
Cash and cash equivalents
20,730
20,730
Premiums receivable
438
565
44,197
45,200
Accrued investment income
7,947
7,947
agreements to resell
Securities purchased under
288,212
190,123
(29,149)
151,280
(13,861)
(93,971) (5,618,867)
Net cash inflow/(outflow)
(3,732)
3,499,661
Subtotal
2,664
Lease liabilities
34,992
Bonds payable
(14,680)
(4,384)
(2,044)
19,556
other borrowings
720
Interest-bearing loans and
55,031
balances payable
Annuity and other insurance
(3,732)
3,732
through profit or loss
Financial liabilities at fair value
(122,249)
122,249
to repurchase
Securities sold under agreements
Contractual cash outflows
68,882 (798,317)
(55,031)
407,922
6,098
6,333
1 year but 3 years but
Later than Later than
(undiscounted)
Contractual and expected cash flows
The following tables set forth the contractual and expected undiscounted cash flows for primary financial assets and
liabilities and insurance liabilities:
In the normal course of business, the Group attempts to match the maturity of financial assets to the maturity of
insurance and financial liabilities.
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.
4.2.3 Liquidity risk
4.2 Financial risk (continued)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 159
The credit risk associated with securities purchased under agreements to resell, policy loans and most of premium
receivables has not caused a material impact on the Group's consolidated financial statements taking into consideration
their sufficient collateral held and maturity terms of no more than one year as at 31 December 2020 and 2019.
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 2020, 99.9% (as at 31 December 2019: 99.8%)
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 2020, 100.0% (as at 31 December 2019: 100.0%) 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 2020, 99.7% (as at 31 December 2019: 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 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 has not caused a material impact on the Group's consolidated
financial statements as at 31 December 2020 and 2019.
Credit quality
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
2020 and 2019.
Credit risk exposure
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.
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 Banking and Insurance Regulatory Commission ("CBIRC") 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.
4.2.2 Credit risk
4.2 Financial risk (continued)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
not later
Not later
not later
As at 31 December 2020
Statutory deposits - restricted
2,260,215
173,729
1,753
197,867
329,191
75,353
545,667
Term deposits
287,939
129,813
349,334
219,840
235,901
658,535
Loans
136,885
297
1,865,794
700,748
700,748
Equity securities
Contractual cash inflows
Financial assets
than
5 years
5 years
3 years
than
than
than
1 year
Without
maturity
Carrying
value
Debt securities
697,016
- Equity securities
(2,996)
17,281
Cash and cash equivalents
53,306
53,306
Subtotal
3,397,014
605,996
Debt securities
576,417
681,499
Financial and insurance liabilities
Expected cash outflows
Insurance contracts
Investment contracts
2,552,736
267,804
179,925
(24,020)
209,603
(35,264) (5,015,173)
(29,900)
23,462 (606,662)
Contractual cash outflows
Securities sold under agreements
to repurchase
118,088
(118,088)
Financial liabilities at fair value
17,281
Premiums receivable
432
561
(328)
(1,273) (1,250)
(19,951) 128,789
557,988 1,033,817
1,523,748
107,632
319,656
250,805
Loans
608,920
232,715
174,260
117,001
Term deposits
535,260
119,827
through profit or loss
184,707
1,701,886
191,290
8,087
Statutory deposits - restricted
6,333
479
2,315
4,594
Securities purchased under
agreements to resell
4,467
4,467
Accrued investment income
41,703
40,710
294,477
3,859
667,309 1,901,263
Annuity and other insurance
5 years
than
Later
5 years
not later
than
3 years
not later
than
than
1 year
Without
maturity
value
As at 31 December 2019
Carrying
Not later
Financial assets
3 years but
Later than
Later than
(3,859)
4.2.3 Liquidity risk (continued)
4.2 Financial risk (continued)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
160 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
540,179 (3,981,528)
(41)
(331)
(76,598) (6,417,225)
(36,498)
1 year but
Contractual cash inflows
Contractual and expected cash flows
(undiscounted)
605,996
balances payable
Equity securities
51,019
(51,019)
Interest-bearing loans and
other borrowings
(4,776)
(1,572)
(16,111)
Bonds payable
34,990
Lease liabilities
3,091
Subtotal
20,045
(3,859)
3,051,632
605,996
(74)
(440)
(66,349) (5,621,909)
(37,996)
(1,491)
173,644
855,143
(2,996)
(332)
(1,331)
(19,641)
556,776
602,137
345,382
Net cash inflow/(outflow)
Impairment
Deductions
Charge for the year
As at 1 January 2019
Accumulated depreciation
As at 31 December 2019
4,688
(130)
4,686
As at 31 December 2019
(130)
Deductions
2,263
1
As at 1 January 2019
2,262
2
Charge for the year
2,554
3,519
As at 31 December 2019
2,555
178 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
The Group's right-of-use assets include the above assets and land use rights disclosed in Note 14.
The Group had no significant profit or loss from subleasing right-of-use assets or sale and leaseback transactions for the
year ended 31 December 2020 (2019: same).
2,555
3,520
1
1
| | | | |
Deductions
(1,168)
(1,167)
29
29
(1,197)
(1,196)
As at 31 December 2019
As at 1 January 2019
Net book value
(1)
1
Charge for the year
Deductions
As at 1 January 2019
Additions
Disposals
48
579
162
79
868
As at 31 December 2019
(11,811)
(5,484)
(841)
(1,581)
(19,717)
Impairment
(48)
As at 1 January 2019
Charge for the year
Disposals
(24)
EE
(25)
(25)
Net book value
As at 1 January 2019
As at 31 December 2019
26,824
2,215
527
16,901
(24)
(48)
Other additions
(2,490)
Transfers into investment properties
(2,977)
(2,977)
Disposals
(77)
(604)
(171)
(39)
(107)
(998)
As at 31 December 2019
44,771
8,368
1,364
14,378
2,619
71,500
Accumulated depreciation
As at 1 January 2019
(10,414)
(5,443)
(813)
(1,377)
(18,047)
Charge for the year
(1,397)
(620)
(190)
(283)
814
47,281
32,936
2,884
(1,517)
Deductions
329
As at 31 December 2020
(2,355)
33-3
(1,168)
(1)
(1,518)
330
(1)
(2,356)
Impairment
As at 1 January 2020
As at 31 December 2020
Net book value
As at 1 January 2020
As at 31 December 2020
Cost
3,519
1
3,520
3,075
1
3,076
Buildings
Others
Total
RMB million
Charge for the year
2,554
(1)
5,432
523
14,377
1,038
51,758
As at 31 December 2020, the net book value of buildings above which were in process to obtain title certificates was
RMB6,159 million (as at 31 December 2019: RMB8,852 million).
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 177
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
7 LEASES
(a) Right-of-use assets
Cost
Others
Total
Buildings
RMB million
As at 1 January 2020
4,686
Additions
Deductions
As at 31 December 2020
Accumulated depreciation
As at 1 January 2020
1,157
(413)
5,430
212
4,688
1,158
(1)
(414)
(1,167)
As at 31 December 2019
Others
Notes to the Consolidated Financial Statements (continued)
172 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
5 SEGMENT INFORMATION (continued)
Assets
Financial assets
Others
Segment assets
Unallocated
Property, plant and equipment
Life
Health
As at 31 December 2020
Accident
Others
Elimination
Total
RMB million
3,537,020
5,161
222,559
606
1,118
7,666
7,666
8,336
8,336
28,073
11,611
572
14,232
54,488
(3,103)
51,385
50,268
1,117
23,685
1,534
78
402
25,699
3,086
351
10,964
117,237
3,887,780
288,212
Securities sold under agreements to
repurchase
109,156
7,070
358
Others
84,668
6,013
370
5,665
23,288
122,249
114,339
Segment liabilities
3,233,223
225,025
10,824
28,953
3,498,025
16,455
271,757
Investment contracts
2,973,225
10,076
14,939
675
239,584
265,274
3,547,096
237,498
11,639
356,821
Depreciation and amortisation
4,153,054
Others
46,609
Total
4,252,410
Liabilities
Insurance contracts
2,767,642
195,487
10,096
52,747
Unallocated
attributable to equity holders of
the Company
- Non-controlling interests
(52,395)
Increase in insurance contract liabilities
(382,132)
(32,445)
(220)
(414,797)
Investment contract benefits
(9,494)
(352)
(9,846)
Policyholder dividends resulting from
participation in profits
(28,129)
(150)
(28,279)
Underwriting and policy acquisition costs
(60,841)
(15,921)
(5,315)
(7,408)
(2,265)
(44,987)
Accident and health claims and
(2,448)
9,315
Including: inter-segment revenue
2,448
(2,448)
Segment revenues
653,097
120,393
16,539
17,380
(2,448)
804,961
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits
(108,862)
(4,714)
(33)
(113,609)
claim adjustment expenses
(84,342)
Finance costs
(2,798)
(148)
(8)
2,448
Segment benefits, claims and expenses
(625,024)
(108,782)
(15,967)
(10,814)
2,448
(758,139)
Net gains on investments of
associates and joint ventures
Including: share of profit of associates
and joint ventures
Segment results
Income tax
Net profit
Attributable to
- Equity holders of the Company
(2,292)
Including: inter-segment expenses
(12,208)
2,448
(183)
(7)
(759)
(3,747)
Administrative expenses
(23,360)
(8,677)
(2,649)
(3,001)
Other comprehensive income
(37,687)
(833)
(302)
(94)
(1,229)
Other expenses
(8,575)
(1,051)
(241)
(4,789)
Statutory insurance fund contribution
Others
Total
297,454
(3,294)
1,673
(9,602)
Including: inter-segment expenses
(1,573)
(95)
(5)
1,673
Segment benefits, claims and expenses
(552,338)
(102,736)
(15,002)
(9,287)
1,673
(677,690)
Net gains on investments of associates
and joint ventures
Including: share of profit of associates
and joint ventures
(169)
8,011
(692)
Other expenses
(2,328)
(81,396)
Finance costs
(3,288)
(200)
(12)
(755)
(4,255)
Administrative expenses
(25,328)
(9,075)
(2,962)
(2,910)
(40,275)
Statutory insurance fund contribution
(797)
(273)
(93)
(1,163)
(7,120)
8,011
9,159
9,159
917
312
479
4,379
174
China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
5 SEGMENT INFORMATION (continued)
Assets
Life
Health
As at 31 December 2019
Accident
Others
Elimination
Total
RMB million
Financial assets
2,671
Depreciation and amortisation
34,847
946
Segment results
Income tax
Net profit
42,418
5,875
489
11,013
59,795
(781)
(5,443)
59,014
- Equity holders of the Company
- Non-controlling interests
Other comprehensive income
58,287
727
attributable to equity holders of
the Company
31,861
1,931
109
Attributable to
(57,071)
Underwriting and policy acquisition costs
(22,375)
113,950
- Annuity
268,416
Net premiums earned
445,719
99,575
14,984
560,278
Investment income
129,334
7,849
443
2,293
139,919
Net realised gains on financial assets
1,646
100
6
79
- Endowment
61,612
- Whole life
2,584
3,795,479
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 173
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
5 SEGMENT INFORMATION (continued)
For the year ended 31 December 2019
Life
Health
Accident
1,831
Others
Total
RMB million
Revenues
Gross written premiums
446,562
105,581
14,943
567,086
- Term life
Elimination
10,404
Net fair value gains through profit or loss
1,027
(34)
(127,877)
adjustment expenses
(44,613)
(6,170)
(50,783)
Increase in insurance contract liabilities
(303,479)
(27,209)
(119)
(330,807)
Investment contract benefits
(8,810)
(347)
(9,157)
Policyholder dividends resulting from
participation in profits
(22,251)
(124)
(3,649)
(124,194)
Life insurance death and other benefits
Accident and health claims and claim
Insurance benefits and claims expenses
58
1,219
19,251
Other income
1,110
60
8,698
(1,673)
8,195
16,947
Including: inter-segment revenue
(1,673)
Segment revenues
594,756
108,611
15,491
12,289
(1,673)
729,474
Benefits, claims and expenses
1,673
75
1,284
Other income
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.
(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 35, 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 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.
5.3 Allocation basis of assets and liabilities
Financial assets, securities sold under agreements to repurchase and derivative financial liabilities 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.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 171
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
5 SEGMENT INFORMATION (continued)
For the year ended 31 December 2020
Life
5.1 Operating segments
Health
5 SEGMENT INFORMATION
Notes to the Consolidated Financial Statements (continued)
The fair value is inversely related to the
discounts for lack of marketability
N/A
The fair value is inversely related to
discount rate
Debt
securities
31 December 2020:143,905
31 December 2019:105,666
Discounted cash
flow method
Discount rate
Derivative
financial
31 December 2020:
31 December 2019:
428
assets
Comparable
companies
approach
Discounts for lack
of marketability
31 December 2020: N/A
31 December 2019: 15%
31 December 2020: 3.88% -9.82%
31 December 2019: 3.02%-6.22%
The fair value is inversely related to
discount rate
The fair value is inversely related to the
discounts for lack of marketability
170 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
For the year ended 31 December 2020
Accident
10,295
3
Buildings
Office
equipment,
furniture and
Cost
For the year ended 31 December 2020
6 PROPERTY, PLANT AND EQUIPMENT (continued)
Notes to the Consolidated Financial Statements (continued)
176 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
52,747
977
11,332
461
2,658
37,319
As at 31 December 2020
51,758
1,038
14,377
523
2,884
fixtures
Motor Assets under
vehicles
Leasehold
construction improvements
8,656
195
1,026
415
Additions
(173)
532
(8,164)
288
between fair value and
unobservable inputs
7,171
65,353
2,191
16,902
1,340
7,658
37,262
As at 1 January 2019
RMB million
Total
Transfers upon completion
Relationships
31 December 2020: 3.80%-6.07%
31 December 2019: 3.80%-6.38%
N/A
35,453
46,561
RMB million
179,248
82,014
RMB million
(1,877)
RMB million
(1,877)
Transferred into Level 3
16
16
Transferred out of Level 3
(15,866)
(15,866)
Total gains/(losses)
recorded in profit or loss
428
428
404
404
Total gains/(losses)
100,000
79,248
Opening balance
Purchases
RMB million
For the year ended 31 December 2020
4 RISK MANAGEMENT (continued)
4.4 Fair value hierarchy (continued)
The following table presents the changes in Level 3 financial instruments for the year ended 31 December 2019:
Securities
at fair value
Available-for-sale securities
through
profit or loss
Derivative
financial
Derivative
recorded in other
assets
financial
liabilities
Total
liabilities
Debt
securities
Equity
securities
Debt
securities
RMB million
RMB million
RMB million
Total
assets
32,936
comprehensive income
3,205
For the year ended 31 December 2020
4 RISK MANAGEMENT (continued)
4.4 Fair value hierarchy (continued)
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 2020 and 31 December 2019:
Valuation
Fair value
techniques
Significant
unobservable
inputs
Equity
securities
31 December 2020: 28,162
31 December 2019: 26,265
Comparable
companies
Discounts for lack
of marketability
31 December 2020: 36,697
31 December 2019: 28,346
31 December 2020: 84,212
31 December 2019: 72,477
approach
Net asset value
method
Discounted cash
flow method
N/A
Discount rate
Range
31 December 2020: 12%-35%
31 December 2019: 11%-35%
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 169
As at 31 December 2020 and 2019, 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. The fair value
was not significantly sensitive to reasonable changes in these significant unobservable inputs.
For the years ended 31 December 2020 and 2019, 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.
Disposals or exercises
(200)
(4,000)
Maturity
(9,072)
(1,001)
Closing balance
105,650
128,899
221
16
3,426
(4,200)
1,473
1,473
(10,073)
428
234,993
The assets and liabilities whose fair value measurements are classified under Level 3 above do not have material impact
on the profit or loss of the Group.
For the assets and liabilities measured at fair value on a recurring basis, during the year ended 31 December 2020,
RMB12,084 million (2019: RMB13,307 million) debt securities were transferred from Level 1 to Level 2 within the fair
value hierarchy, whereas RMB9,825 million (2019: RMB9,716 million) debt securities were transferred from Level 2 to
Level 1. No material equity securities were transferred from Level 1 to Level 2 (2019: same), whereas no material equity
securities were transferred from Level 2 to Level 1 (2019: RMB853 million).
60
Segment assets
As at 1 January 2020
(25)
2,385,407
Insurance contracts
Liabilities
3,726,734
Total
49,090
Others
51,758
Property, plant and equipment
3,625,886
299,890
10,652
195,251
3,120,093
244,617
222,983
572
12,109
8,953
158,800
3,381,269
8,529
Investment contracts
186,376
2,824,966
Segment liabilities
110,757
23,904
346
5,687
80,820
Others
118,088
4,899
365
6,447
106,377
repurchase
Securities sold under agreements to
267,804
15,442
252,362
2,552,736
76,907
10,080
183,142
604,666
Investment income
140,963
9,202
462
3,870
154,497
Net realised gains on financial assets
13,523
877
44
139
14,583
Net fair value gains through profit or loss
17,727
1,148
58
2,967
21,900
15,975
109,091
479,600
Net premiums earned
3,111,140
Unallocated
Others
RMB million
Elimination
Total
Revenues
Gross written premiums
480,593
9,240
115,089
612,265
- Term life
2,674
- Whole life
73,747
- Endowment
- Annuity
109,275
294,897
16,583
Net book value
28,803
Unallocated
(2,873)
(377)
(189)
(725)
(1,582)
Charge for the year
(19,717)
(1,581)
(841)
(5,484)
(11,811)
As at 1 January 2020
Accumulated depreciation
74,002
2,798
11,333
1,352
8,091
50,428
Disposals
As at 31 December 2020
308
139
(1)
(24)
As at 31 December 2020
Disposals
Charge for the year
(25)
(1)
(24)
24
As at 1 January 2020
Impairment
(21,230)
(1,821)
(891)
(5,433)
(13,085)
As at 31 December 2020
1,360
137
776
3,049,385
(1,767)
(143)
44,771
As at 1 January 2020
RMB million
Total
construction improvements
vehicles
fixtures
Buildings
Leasehold
8,368
Motor Assets under
Cost
6 PROPERTY, PLANT AND EQUIPMENT
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 175
3,317,392
Total
268,007
Others
Office
equipment,
furniture and
(143)
1,364
2,619
(906)
(575)
Disposals
(2,098)
(2,098)
Transfers into investment properties
6,488
5,509
14,378
131
222
Additions
(121)
322
(6,456)
3
6,010
Transfers upon completion
71,500
626
(16,554)
509,791
PRC
17,512
RMB million
RMB million
231,291
213,937
287,196
229,415
114,885
129,596
27,606
38,690
660,978
611,638
(2,443)
(2,718)
658,535
2019
608,920
2020
31 December
2,809,822
RMB million
RMB million
200,730
174,872
460,248
436,766
660,978
611,638
(2,443)
(2,718)
658,535
608,920
As at
As at
31 December
As at
31 December
As at
31 December
31 December
31 December
2020
2019
RMB million
RMB million
180
6,333
6,153
6,333
6,333
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 CBIRC. These funds may not be used for any purpose other than for paying off debts
during liquidation proceedings.
10.5 Available-for-sale securities
Available-for-sale securities, at fair value
Debt securities
As at
As at
Total
After one year but within five years
2020
2019
RMB million
RMB million
63,079
480,848
1,740
545,667
107,039
420,191
8,030
193,806
535,260
186 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
10 FINANCIAL ASSETS (continued)
10.4 Statutory deposits – restricted
Contractual maturity schedule:
Within one year
As at 31 December 2020, the Group's term deposits of RMB750 million (as at 31 December 2019: RMB3,491 million)
were deposited in banks to back overseas borrowings and are restricted to use.
80,379
1,068
251,001
20,676
1,612
10,620
14,502
79,974
Gross carrying value of the investments
75.00%
66.67%
10.29%
43.86%
35.00%
40.00%
29.59%
43.686%
Proportion of the Group's ownership
22,433
5,779
4,736
Impairment
5,259
2,193
77,990
61,271
80,525
Total revenues
4,736
6,314
5,779
20,676
1,612
10,620
11,285
79,974
Net carrying value of the investments
(3,217)
22,433
Government bonds
8,669
34,292
52,273
173,159
the associates and joint ventures
Total equity attributable to equity holders of
10,854
10,221
331,474
33,865
3,055
26,551
69,722
218,150
Total equity
13,342
85
26,551
3,048
33,865
147,709
3,048
26,551
45,745
175,771
after adjustments
the associates and joint ventures
Total equity attributable to equity holders of
164,690
(4,540)
16,981
427
(6,528)
2,612
Total adjustments (i)
10,854
10,221
(1,552)
306,490
Government agency bonds
Subordinated bonds/debts
188 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
As at
As at
31 December
2020
31 December
2019
RMB million
RMB million
36,870
26,075
125,202
155,110
271,394
226,421
147,344
Total
102,185
After ten years
After one year but within five years
152,293
108,493
95,428
278
1,458
325,768
299,987
634,793
549,166
1,215,603
1,058,957
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 quotations, wealth management products and private equity funds.
Debt securities - Contractual maturity schedule
Maturing:
Within one year
After five years but within ten years
580,810
Total liabilities
24,196
75.00%
66.67%
The British Virgin Islands
The British Cayman Islands
10.29%
PRC
43.86%
PRC
35.00%
40.00%
PRC
29.59%
Hong Kong, PRC
43.686%
PRC
The following table illustrates the financial information of the Group's major associates and joint ventures as at 31
December 2020 and for the year ended 31 December 2020:
CGB
Sino-Ocean
CLP&C
10,306
582,475
34,933
20,567
106,930
263,528
3,027,972
200,254
Total assets
RMB million
RMB million RMB million RMB million RMB million
MCL
Joy City
China
Unicom
Pipeline
Company
COFCO
Futures
RMB million RMB million RMB million
509,791
580,810
463,286
23,758
169,013
171,189
136,025
148,455
81,795
53,922
144,721
112,467
580,810
509,791
97,476
102,349
301,249
236,323
49,256
31 December
2019
RMB million
RMB million
2020
Others (i)
Subtotal
Equity securities
Funds
Common stocks
Preferred stocks
Wealth management products
53,778
Others (i)
Available-for-sale securities, at cost
Equity securities
Others (i)
Total
As at
As at
31 December
Subtotal
Corporate bonds
58,314
32,640
Listed overseas
Unlisted
Subtotal
Total
As at
As at
31 December
31 December
2020
2019
RMB million
RMB million
42,154
46,505
538,656
Listed in Hong Kong, PRC
Listed in Mainland, PRC
Equity securities
Subtotal
148,671
98,904
614,187
528,530
20,606
1,215,603
20,636
1,058,957
13,013
(i) Other available-for-sale securities mainly include unlisted equity investments, private equity funds, trust schemes and perpetual bonds.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
10 FINANCIAL ASSETS (continued)
10.5 Available-for-sale securities (continued)
Debt securities
Listed in Mainland, PRC
Unlisted
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 187
equity interest held
360
Net profit/(loss)
973,480
62
70
157
148
209,123
215,671
928,751
1,189,369
112,702
104,668
198,322
201,988
401,799
617,515
719,409
215,928
1,189,369
As at 31 December 2020, an accumulated impairment loss of RMB20 million (2019: RMB17 million) for the investment of
held-to-maturity securities has been recognised by the Group.
11111
RMB million
15,749
RMB million
As at 31 December 2019
Level 1
Level 2
275,770
RMB million RMB million RMB million
Total
As at 31 December 2020
Level 1
Level 2
Total
Subordinated bonds/debts
Corporate bonds
Government agency bonds
Government bonds
Debt securities - fair value and hierarchy
928,751
265,198
2019
RMB million
RMB million
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
184 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
The Group had no contingent liabilities with the associates and joint ventures as at 31 December 2020 and 31 December
2019. The Group had a capital contribution commitment of RMB25,364 million with joint ventures as at 31 December 2020
(as at 31 December 2019: RMB24,430 million). The capital contribution commitment amount has been included in the
capital commitments in Note 41.
(i) Including adjustments for the difference of accounting policies, fair value and others.
348
348
795
༄'$
287
10,763
2,635
(501)
14
154
10 FINANCIAL ASSETS
10.1 Held-to-maturity securities
Debt securities
Government bonds
2020
31 December
31 December
As at
As at
(i) Unlisted debt securities include those traded on the Chinese interbank market.
Total
631,203
Unlisted (i)
Listed in Hong Kong, PRC
Listed in Mainland, PRC
Debt securities
Total
Subordinated bonds/debts
Corporate bonds
Government agency bonds
Listed overseas
Total
RMB million
37,134
Total
Other loans
Policy loans (i)
10.2 Loans
10 FINANCIAL ASSETS (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 185
928,751
1,189,369
534,659
811,252
241,372
206,134
128,266
Impairment
Net value
Maturing:
Within one year
31 December
31 December
As at
As at
Total
After five years but within ten years
After one year but within five years
146,463
Within one year
10.3 Term deposits
(i) As at 31 December 2020, maturities of policy loans were within 6 months (as at 31 December 2019: same).
Net value
Impairment
Total
After ten years
After one year but within five years
After five years but within ten years
Maturing:
3,433
24,454
RMB million
118,571
206,793
198,879
7,914
209,873
108,694
96,362
12,332
205,440
4,433
228,198
415,013
212,449
357,058
57,955
559,488
71,715
238,636
118,571
125,614
1,099,926
1,225,540
RMB million
2019
As at
31 December
31 December
2020
As at
Total
25,520
After ten years
After one year but within five years
Within one year
Maturing:
Debt securities - Contractual maturity schedule
968,575
886,957
81,618
After five years but within ten years
853
4,318
Total comprehensive income
10,281
564,231
36,327
12,671
91,167
243,700
2,632,798
Total assets
RMB million
RMB million
RMB million
RMB million
RMB million
RMB million
RMB million
24,381
RMB million
Total liabilities
178,088
10,761
10,113
323,496
35,550
2,879
23,330
65,612
209,564
Total equity
13,620
168
240,735
777
9,792
67,837
2,423,234
MCL
Joy City
China
Unicom
(25)
(1,706)
(5)
1,991
630
(1,944)
Other comprehensive income
185
339
12,525
2,823
208
1,730
4,675
13,812
650
Total comprehensive income
11,868
5,305
Pipeline
Company
COFCO
Futures
CLP&C
Sino-Ocean
CGB
The following table illustrates the financial information of the Group's major associates and joint ventures as at 31
December 2019 and for the year ended 31 December 2019:
9 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
Total equity attributable to equity holders of
For the year ended 31 December 2020
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 183
835
314
10,819
2,823
203
3,721
Notes to the Consolidated Financial Statements (continued)
the associates and joint ventures
164,573
49,909
Total revenues
5,140
5,849
22,068
21,433
1,550
9,332
11,387
75,180
Net carrying value of the investments
(2,510)
Impairment
5,140
5,849
22,068
76,312
56,704
69,498
793
1
1,310
152
643
Other comprehensive income
287
11,264
21,433
2,635
2,123
4,166
12,581
Net profit/(loss)
306
291,435
5,008
153
13,224
1,550
13,897
the associates and joint ventures
Total equity attributable to equity holders of
(3,908)
(1,339)
17,454
449
(6,209)
412
Total adjustments (i)
10,761
10,113
143,327
35,550
2,872
23,330
after adjustments
164,985
43,700
23,330
75,180
Gross carrying value of the investments
75.00%
66.67%
10.29%
43.86%
35.00%
9,332
40.00%
43.686%
Proportion of the Group's ownership
6,853
8,774
160,781
35,999
2,872
29.59%
2020
Percentage of
MCL
9,159
(5,253)
(3,227)
228
1,189
(707)
(1,500)
8,336
239,584
Movement
As at
Share of
Other
As at
Percentage Accumulated
Accounting
222,983
31 December
198,772
18,590
RMB million
222,983
13,997
As at 31 December 2020, the net book value of investment properties which were in process to obtain title certificates
was RMB1,044 million (as at 31 December 2019: RMB5,809 million).
The fair value of investment properties of the Group as at 31 December 2020 amounted to RMB17,285 million (as at
31 December 2019: RMB14,870 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.
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.
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.
180 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
RMB million
9 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Share of profit or loss
Declared dividends
Other equity movements
Impairment
As at 31 December
2020
2019
As at 1 January
Change of the cost
Change of
profit
Declared
(841)
79,974
43.686%
Sino-Ocean Group Holding Limited
("Sino-Ocean") (ii)
Equity Method
11,245
241
11,387
717
(178)
66
(707)
11,285 29.59%
(3,217)
China Life Property & Casualty
17
(550)
6,185
75,180
method
Cost
2019
the cost
or loss
dividends
equity
movements
Provision of 31 December
impairment
2020
of equity
interest
amount of
impairment
Associates
China Guangfa Bank Co., Ltd.
("CGB") (i)
Equity Method
45,176
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.
Insurance Company Limited
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.
12,449
440
2
1,892
3
1,746
Buildings
RMB million
259
Cost
As at 31 December 2020
Accumulated depreciation
As at 1 January 2020
Additions
As at 31 December 2020
Net book value
As at 1 January 2020
As at 31 December 2020
Fair value
As at 1 January 2020
Additions
As at 1 January 2020
1,197
113
1,518
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
7 LEASES (continued)
(b) The amounts recognised in profit or loss in relation to leases are as follows:
Interest on lease liabilities
Depreciation charge of right-of-use assets
Expense relating to short-term leases
Expense relating to leases of low-value assets
(except for short-term lease liabilities)
106
Total
As at
31 December
As at
Place of incorporation
2020
2019
RMB million
RMB million
8 INVESTMENT PROPERTIES
As at 31 December 2020
12,898
2,487
15,385
As at 1 January 2019
As at 31 December 2019
Fair value
As at 1 January 2019
As at 31 December 2019
Buildings
RMB million
10,227
Net book value
3,022
12,898
(480)
(325)
48
(757)
9,747
12,141
(351)
As at 31 December 2019
Deductions
As at 1 January 2019
Additions
(757)
(411)
(1,168)
12,141
14,217
14,870
17,285
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 179
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
8 INVESTMENT PROPERTIES (continued)
Cost
As at 1 January 2019
Additions
Deductions
As at 31 December 2019
Accumulated depreciation
14,870
("CLP&C")
31 December
6,000
228
(707)
239,584
(3,217)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 181
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
(5,253)
9. INVESTMENT IN ASSOCIATES AND JOINT VENTURES (continued)
(ii) The 2019 final dividend of HKD0.026 in cash per ordinary share was approved and declared in the Annual General
Meeting of Sino-Ocean on 20 May 2020. The Company received a cash dividend equivalent to RMB54 million. The 2020
interim dividend of HKD0.062 in cash per ordinary share was approved and declared by the Board of Directors of Sino-
Ocean on 17 August 2020. The Company received a cash dividend equivalent to RMB124 million.
Sino-Ocean, the Group's associate is listed in Hong Kong. On 31 December 2020, the stock price of Sino-Ocean was
HKD1.55 per share. As at 31 December 2019, the cumulative impairment loss of RMB2.51 billion for the investment in
Sino-Ocean had been recognised by the Group. The Group performed an impairment test to this investment on 30 June
2020. A further impairment loss of RMB707 million was recognised for this investment valued using the discounted future
cash flow method. On 31 December 2020, the Group continued to perform an impairment test to this investment and
no further impairment loss should be made, which involved significant assumptions including selling prices of properties
under development, rental prices of investment properties and discount rates, and the Group used 10% as the discount
rate of cash flow for properties under development and investment properties (As at 31 December 2019: 10% for
properties under development and 8% for investment properties).
(iii) The 2019 final dividend of RMB0.0604 in cash per ordinary share was approved and declared in the Annual General
Meeting of China Unicom on 22 May 2020. The Company received a cash dividend of RMB193 million. On 31 December
2020, China Unicom's share price was RMB4.46 per share.
(iv) The Group invested in real estate, industrial logistics assets and other industries through these enterprises.
(v) There is no significant restriction for the Group to dispose of its associates and joint ventures.
As at 31 December 2020, the major associates and joint ventures of the Group are as follows:
Name
(i) The 2019 final dividend of RMB0.0639 in cash per ordinary share was approved and declared in the Annual General
Meeting of CGB on 23 June 2020. The Company received a cash dividend of RMB550 million.
Associates
8,336
222,983
41,289
865
277
(1,110)
(407)
40,914
Subtotal
13,997
56,723
865
(100)
(1,264)
(350)
51,429
Total
204,675
52,278
CGB
Sino-Ocean
CLP&C
75.00%
182 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
9 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
As at 31 December 2019, the major associates and joint ventures of the Group are as follows:
Name
Associates
The British Virgin Islands
CGB
CLP&C
COFCO Futures
Pipeline Company
China Unicom
Joint ventures
Joy City
Equity Method
Sino-Ocean
66.67%
The British Cayman Islands
10.29%
COFCO Futures
Pipeline Company
China Unicom
Joint ventures
Joy City
MCL
Place of incorporation
Percentage of
equity interest held
PRC
43.686%
Hong Kong, PRC
29.59%
PRC
40.00%
PRC
35.00%
PRC
43.86%
PRC
42,786
Equity Method
2019
75.00%
Equity Method
20,000
21,433
1,231
(1,998)
10
20,676 43.86%
("Pipeline Company")
China United Network
("China Unicom") (iii)
Equity Method
21,801
22,068
(28)
516
(193)
Communications Limited
Pipeline Co., Ltd.
Sinopec Sichuan to East China Gas
1,612 35.00%
9,332
Others (iv)
746
40
813
83
10,620
40.00%
COFCO Futures Company Limited
("COFCO Futures")
Equity Method
1,339
1,550
73
100
(10)
(1) -
70
22,433
(271)
Others (iv)
Fund L.P. ("Joy City")
Equity Method
6,281
5,849
100
(154)
(16)
Joy City Commercial Property
5,779
Mapleleaf Century Limited ("MCL")
Equity Method
7,656
5,140
73
4,736
10.29%
66.67%
Joint ventures
(477)
188,155
(3,217)
42,391
13,160
(1,032)
(789)
461
41,555
Subtotal
29,755
170,705
OT
147,952
(707)
578
Equity Method
(3,989)
8,436
13,132
A decrease in interest paid for securities
sold under agreements to repurchase
Due to a decrease in expenses amid the
COVID-19 pandemic and the reinforced
cost administration by the Company
Due to the impact from the adjustment
of the policy on pre-tax deduction of
underwriting and policy acquisition costs
adopted in 2019
Company
-13.8%
58,287
50,268
Net profit attributable to
equity holders of the
781
-11.9%
3,103
Income tax
40,275
37,687
Administrative expenses
297.3%
-6.4%
In 2020, facing unprecedented challenges, we firmly.
upheld the original aspiration of "Protecting People's
Good Life" by focusing on our principal businesses and
taking on social responsibilities. With strong development
resilience, we enhanced social well-being in serving the
overall national development plan, created long-term
business value in pursuing high-quality development,
strengthened driving forces in reform and innovation, and
advanced steady operations to support modernization of
corporate governance.
adjustment of the policy on pre-tax
deduction of underwriting and policy
acquisition costs adopted in 2019 and the
change in gross investment income
2021 is the beginning of the 14th Five-Year Plan and
also a critical year for the Company's high-quality
development. We will further push forward the "China
Life Revitalization" initiative, and continue to maintain
high-quality development. We will also fully engage
in the new development pattern of "dual circulation"
and strive to achieve stable development, business
quality improvement, reform and innovation, and risk
prevention and control. We will take development as
the top priority, emphasize business value, and achieve
business development driven by a productive sales
force; fully push forward the "Dingxin Project" reforms,
accelerate marketization, and further enhance internal
driving forces; continue to reinforce the technology and
innovation driven development, accelerate operational
digitalization, and provide customers with "convenient,
quality and caring" services; continue to strengthen asset-
liability interaction, strictly implement the regulatory
requirements, continuously improve the risk prevention
and control system, strictly prevent key risks, and enhance
our corporate governance capability.
12 China Life Insurance Company Limited | Annual Report 2020 | Chairman's Statement
The 14th Five-Year Plan marks the first five years of
China's new journey toward fully building a modern
socialist country, in which the insurance industry
will undertake the new mission of contributing to
the modernization of a national governance system
and governance capability. With economic and social
development, social well-being will reach a new level, and
the expansion of the middle-income group will accelerate.
Deeply grounded in China's economy which has strong
resilience and great potential, the life insurance industry
is at an important stage full of strategic opportunities, and
will have a broader space for development. At the same
time, we also see that the COVID-19 pandemic is still
continuing around the world with wide and far-reaching
impacts and uncertainties, which has affected the release
of demands for insurance and posed challenges to assets
allocation and traditional insurance operation modes
at the liability end. We will seize the new changes of
current opportunities and challenges, further mobilize the
advantage of risk management expertise in our principal
businesses, implement the new development concept,
actively explore to build and achieve a new development
pattern for the life insurance industry, continuously
deepen the supply side structural reform with customer-
centric principle, accelerate transformation and upgrade,
and constantly enhance the match and fit between our
own development and the needs of the times, so as
to protect people's well-being and promote economic
and social development with strengthened services
capabilities.
In the past year, we advanced the corporate
governance system with scientific and effective
risk prevention and control mechanisms. Aiming at
the best practices of corporate governance of listed
companies in the three listing venues, we actively
improved the corporate governance mechanism and
effectively enhanced the modernization of our corporate
governance, and received the "Hong Kong Corporate
Governance Excellence Award" for 2020. We accelerated
the integration of "Environmental, Social and Governance"
("ESG") management into our operation and management
system and put the ESG investment concept into
practice. AMC, the Company's non-wholly owned
subsidiary, was the first insurance asset management
company in China to sign the United Nations - Supported
Principles for Responsible Investment (UNPRI), and
was deeply engaged in the "Green Finance" with
new green investments in the year reaching RMB30.6
billion. Adhering to the principle of prudent and steady
operation, we continued to pay attention to and proactively
prevented and mitigated major financial risks, effectively
followed the law of asset-liability management and paid
great attention to interest risk, market risk, credit risk
and compliance risk, so as to strictly prevent any external
risk incidents from penetrating into the Company. We
also carried out special governance on key risks and
greatly promoted intelligent risk control. In the integrated
risk rating by the regulatory authority, the Company has
received the rating of Class A for 11 consecutive quarters.
China Life Insurance Company Limited | Annual Report 2020 | Chairman's Statement 11
In the past year, we accelerated transformation and
upgrade, with digitalized operations creating strong
driving forces. We pushed forward the "Dingxin Project"
in great depth and primarily completed the customer-
centric sales deployment of "Yi Ti Duo Yuan". The
individual agent business sector saw increased capability
in value creation, and the diversified business sector
went through steady transformation in operation modes.
The market-oriented incentive and restraint mechanism
for talents in key fields such as sales and investment
was gradually established. Keeping up with the "digital
era", we built the online digital platform based on our
profound offline strength, and established the industry-
leading hybrid clouds. Technology empowerment
mitigated negative impacts of the pandemic by providing
foundational power, and the technology operation.
model of "Collective Wisdom, Agility, Iteration set a
new exemplary model in the industry. Empowered by
technologies adopted under the "Technology-driven China
Life" strategy, operations and services were upgraded in
all aspects, becoming more Internet-based, intelligent,
integrated and ecological, effectively meeting the needs of
customers for high-quality services.
In the past year, we further advanced high-quality
development and enhanced our capability in value
creation. By prioritizing business value growth and
sticking to the protection role of insurance, we increased
effective insurance supplies and achieved coordinated
growth of business value and scale. During the Reporting
Period, despite the impact of the pandemic, the business
structure of the Company was further optimized, and
its protection-oriented business maintained a growing
trend. Value of one year's sales of the Company
reached RMB58,373 million, generally remaining stable
compared to 2019. With the reinforced asset-liability
management and interaction, the Company registered a
gross investment income of RMB198,596 million in 2020,
reaching a record high.
In the past year, we proactively leveraged advantages
of our principal businesses to firmly serve the overall
national development. In the fight against the COVID-19
pandemic, we took immediate actions to donate funds
and supplies to the front line of pandemic prevention and
control and offer complimentary insurance protection
for 2.5 million medical workers fighting on the front
line and over 14 million people with a sum assured of
nearly RMB3.3 trillion on a cumulative basis. We also
expanded insurance coverage of existing insurance plans
and introduced special services and measures, playing
the role of insurance as a "shock absorber". We actively
supported the targeted poverty alleviation, inputting over
RMB87 million on a cumulative basis in 1,281 poverty
alleviation localities, lifting all of them out of poverty.
Poverty alleviation through consumption amounted to over
RMB30 million. By leveraging our principal businesses,
we developed exclusive insurance products to support
poverty alleviation and risk coverage, covering more
than 18 million people from registered poverty-stricken
households as well as those on the edge of the poverty
line, underwriting a sum assured of RMB3.4 trillion. In
building a moderately prosperous society in all respects
and fighting against poverty, one team and one individual
of the Company received honorary titles of National
Advanced Team and Individual in Poverty Alleviation
respectively. By sticking to the role of finance in serving
the real economy, we actively participated in the strategic
regional developments, including the coordinated
development of the Beijing-Tianjin-Hebei Region, the
Yangtze River Economic Belt developments, the building
of the Guangdong-Hong Kong-Macao Greater Bay Area
and the integrated development along the Yangtze River
Delta, supporting the development of the country to be a
manufacturer of quality and with a strong transportation
network, as well as the building of a "Green China". As at
the end of the Reporting Period, the existing investments
made by the Company serving the real economy exceeded
RMB2.3 trillion, and new investments made in the year
exceeded RMB600 billion.
10 China Life Insurance Company Limited | Annual Report 2020 | Chairman's Statement
distribute an annual cash dividend of RMB0.64 per share
(inclusive of tax) and such proposal will be submitted to the
2020 Annual General Meeting for review and discussion.
During the Reporting Period, the Company's comprehensive
strength was further enhanced and its leading market
position was consolidated. The Company's gross written
premiums amounted to RMB612,265 million, exceeding
RMB600 billion for the first time and achieving a new
record high. The embedded value of the Company
exceeded RMB1 trillion, reaching RMB1,072,140 million
and leading the industry. Total assets exceeded RMB4
trillion, amounting to RMB4,252,410 million, an increase
of 14.1% from the end of 2019. Net profit attributable to
equity holders of the Company was RMB50,268 million.
As at the end of the Reporting Period, the core solvency
ratio and the comprehensive solvency ratio were 260.10%
and 268.92%, respectively. The Board has proposed to
Looking back at the past year, in the face
of the unexpected COVID-19 pandemic
and a complicated and tough external
environment, China Life closely followed the
national guidance, maintained its strategic
consistency, and continued to seek high-
quality development. We proceeded well with
both the pandemic control and the reform and
development, and achieved a steady growth
of our key performance indicators, including
embedded value and premium income,
serving the overall stable development of the
life insurance industry and fully achieving
the goal for the first stage of the "China Life
Revitalization" initiative as well as the targets
set in the "13th Five-Year Plan”. I, on behalf
of the Company's board of directors (the
"Board"), hereby report to shareholders and
the public on the Company's operating results
for the year of 2020.
Chairman's Statement
9
China Life Insurance Company Limited | Annual Report 2020 | Prelude
Due to the combined impact of the update
of discount rate assumptions for reserves
of traditional insurance contracts, the
4,255
benefits
Finance costs
claims expenses
14.0%
509,467
580,801
Insurance benefits and
13.7%
8,195
9,315
Other income
ventures
A decrease in the profits of certain
associates
An increase in spread income of stocks
in securities at fair value through profit
or loss
An increase in spread income of equity
assets in available-for-sale securities
An increase in interest income from
debt-type investments and dividends
from stocks
With a profound historical accumulation, China Life has
always played an important role of an explorer and pioneer
of China's life insurance industry. Time goes by with
dreams ahead. In this new promising era, we will stick to
our original aspiration and forge ahead on the journey of
building a world-class life insurance company, with a view
to rewarding our shareholders and people from all walks of
life with satisfactory operating performances.
Investment contract
3,747
9,846
7.5%
acquisition costs
Due to the Company's business growth
3.6%
81,396
84,342
Underwriting and policy
in profits
An increase in investment yield from the
participating accounts
resulting from participation
26.4%
22,375
28,279
Policyholder dividends
An increase in the scale of universal
insurance accounts
An increase in income of investment
management service fees by subsidiaries
An increase in the change of insurance
contract liabilities
9,157
By Order of the Board
Wang Bin
Chairman
Net profit attributable to equity holders of the Company
China Life Insurance Company Limited | Annual Report 2020 | Chairman's Statement
1.89
1.09
85.90
82.40
86.80
85.70
As at
56,972
58,698
58,373
58,287
50,268
Policy Persistency Rate (26 months) 2 (%)
Surrender Rate³ (%)
Policy Persistency Rate (14 months)² (%)
57,669
As at
31 December
2020
31 December
During the Reporting Period, the Company continued
to prioritize business value, and its business structure
was further optimized. Premiums from new policies
amounted to RMB 193,939 million, an increase of 7.0%
year on year. In particular, first-year regular premiums
amounted to RMB115,421 million (a year-on-year increase
of 5.5%), which accounted for 97.96% of long-term
first-year premiums. The percentage of premiums from
designated protection-oriented products in the first-year
regular premiums rose by 0.6 percentage point year on
year, with a continuous increase in the average premiums
per policy. Renewal premiums amounted to RMB418,326
million (a year-on-year increase of 8.4%), which accounted
for 68.32% of the gross written premiums (a year-on-year
increase of 0.29 percentage point). Facing a complicated
external environment in 2020, first-year regular premiums
with a payment duration of ten years or longer reached
RMB56,398 million, a decrease of 4.7% year on year. In
2020, the value of one year's sales of the Company was
RMB58,373 million, a decrease of 0.6% year on year,
basically remaining stable. As for the end of the Reporting
Period, the number of long-term in-force policies was 317
million, an increase of 4.6% from the end of 2019. During
the Reporting Period, the surrender rate was 1.09%, a
decrease of 0.80 percentage point year on year.
16 China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
year on year, maintaining its industry leadership position.
As at the end of the Reporting Period, the embedded
value of the Company exceeded RMB1 trillion, reaching
RMB1,072,140 million, an increase of 13.8% from the end
of 2019.
During the Reporting Period, despite the impact of the
pandemic, the Company demonstrated development
resilience with key business indicators reaching their
record high. In 2020, the Company's gross written
premiums amounted to RMB612,265 million, exceeding
RMB600 billion for the first time, an increase of 8.0%
3. Surrender Rate = Surrender payment/(Liability of long-term insurance contracts at the beginning of the period + Premiums of long-term insurance
contracts)
The results of individual agent business sector for the year 2019 have been restated to allow for new sector definitions on a pro forma basis.
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.
2.
1.
Notes:
3.03
942,087
1,072,140
3.17
Number of long-term in-force policies (hundred million)
Embedded value
2019
Including: Individual agent business sector¹
Value of one year's sales
of associates and joint
169,043
RMB million
Key Performance Indicators of 2020
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis 15
Service Center. Its business operation became more
intelligent and integrated, and customer satisfaction.
continued to rise. The Company optimized the technology
development mode by implementing an IT product
operation mechanism with emphasis on the pan-
product development teams, and the supporting ability,
responsiveness and stability of technologies saw great
improvement. New technologies, such as mobile services
and digital field offices, were also widely applied. The
Company accelerated the intellectualization of its risk.
management, realized active risk detection and real-time
monitoring in respect of risk prevention and control, which
effectively improved the efficiency of risk management
and control. By upholding the principle of "strong
headquarters, streamlined provincial branches, optimized
city branches and invigorated field offices", the Company
established a classified and hierarchical management
system for its branches, upgrading and downgrading
branches at different levels per their performances, and
further increased allocation of financial resources to the
basic operational units, which significantly energized their
development.
Meanwhile, the Company firmly implemented the "China
Life Revitalization" initiative, and pushed forward reforms
under the "Dingxin Project". In 2020, while continuing
to optimize its organizational structure, the Company
kicked off a series of transformation programs in all
aspects, and further advanced the gradual implementation
of new business models and operation mechanisms.
The customer-centric sales deployment of "Yi Ti Duo
Yuan" was implemented in greater depth. The value
creation capability of the individual agent business
sector was prominent with its focus on the individual
customer market. The standardized and regulated
management system for the basic operational units
was also rolled out. The diversified business sector
targeted institutional customers and further defined its
positioning so as to effectively improve its professional
operation capability. The Company's investment
capability was improved significantly, and an investment
management system which adapted to investment value
chain and a market-oriented compensation incentive
system were established. The Company reinforced the
standardization of its business operation and services,
and fully launched the establishment of the Shared
Mr. Zhao Guodong, Mr. Zhan Zhong, Ms. Huang Xiumei, Mr. Su Hengxuan, Mr. Li Mingguang, Mr. Ruan Qi, Ms. Yang Hong
From left to right:
14 China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
Transformations, Dual Centers and Dual Focuses, Asset-
liability Interaction", and upheld the operational guideline
of "prioritizing business value, strengthening sales force,
achieving stable growth, upgrading technology, optimizing
customer services and guarding against risks”. The
Company proceeded well with both the pandemic control
and the reform and development, and realized a steady
and sound growth of its key performance indicators, such
as embedded value and premium income. During the
Reporting Period, the Company achieved the coordinated
growth of business scale and value, pushed forward the
asset-liability interaction, accelerated the implementation
of technological achievements, improved both the quality
and efficiency of operations and services, and achieved
remarkable results for the Company's high-quality
development.
Despite a tough and complicated external environment,
the Company pushed forward high-quality development,
adhered to the strategic core of "Three Major
In 2020, the unexpected outbreak of the COVID-19
pandemic posed great challenges to the development
of the insurance industry. On the one hand, as the
macro economy slowed down significantly, demands
for insurance was difficult to be fully released; on the
other hand, the onsite insurance operation activities were
restricted, affecting both the business development and
agent team-building. Under the combined influence of
multiple factors, the growth of the life insurance industry
for the year declined.
REVIEW OF BUSINESS OPERATIONS
IN 2020
DISCUSSION AND
ANALYSIS
MANAGEMENT
13
2020
Beijing, China
25 March 2021
2019
612,265
198,596
Gross investment income
385,797
418,326
Renewal premiums
59,168
56,398
First-year regular premiums with ten years or
longer payment duration
109,416
115,421
Including: First-year regular premiums
181,289
193,939
Premiums from new policies
567,086
Gross written premiums
-4.3%
2019
7,666
2020
2019
Change
480,593
446,562
7.6%
RMB million
108,205
7.5%
106,001
98,342
7.8%
2,204
2,332
100,674
Total
Renewal business
Single
Insurance Business
For the year ended 31 December
Life Insurance Business
First-year business
First-year regular
Single
Renewal business
Health Insurance Business
First-year business
First-year regular
Single
Renewal business
Accident Insurance Business
First-year business
First-year regular
-5.5%
BUSINESS ANALYSIS
372,388
7.7%
14,402
11.2%
12
74
-83.8%
16,000
571
612,265
16,012
14,328
541
567,086
5.5%
8.0%
Note: Single premiums in the above table include premiums from short-term insurance business.
During the Reporting Period, gross written premiums from the life insurance business of the Company amounted to
RMB480,593 million, rising by 7.6% year on year; gross written premiums from the health insurance business reached
RMB115,089 million, rising by 9.0% year on year, and gross written premiums from accident insurance business were
RMB16,583 million, rising by 11.0% year on year.
18 China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
11.7%
11.0%
14,943
16,583
115,089
105,581
9.0%
69,722
66,213
5.3%
9,408
11,000
-14.5%
60,314
55,213
9.2%
45,367
39,368
15.2%
345,888
17
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
942,087 ▼
Accident insurance
The Company greatly developed health
insurance business
Due to the steady growth of life insurance
business
9.6%
99,575
109,091
business
Health insurance business
7.6%
445,719
479,600
Life insurance business
7.9%
560,278
RMB million
15,975
14,984
6.6%
Net gains on investments
13.8%
19,251
21,900
Net fair value gains through
profit or loss
financial assets
696.5%
1,831
14,583
Net realised gains on
10.4%
139,919
154,497
Investment income
Due to the growth of accident insurance
business
604,666
Net premiums earned
Main Reasons for Change
Change
69,515
First-year
regular
premiums
109,416
2019
Renewal premiums
385,797
Value of one year's sales (RMB million)
2020
2019
58,373 ▼
58,698 ▼
Embedded value (RMB million)
As at 31 December 2020
As at 31 December 2019
1,072,140 ▼
13.8%
2,358
8,011
premiums
insurance
2020
of Comprehensive Income
Consolidated Statement
Major Items of the
For the year ended 31 December
During the Reporting Period, the Company continued
to enhance the asset-liability management and
the asset-liability interaction created synergy on
two ends. With enhanced emphasis on asset-liability
management, the Company strengthened its asset-liability
matching, established a management system with clear
rights and responsibilities as well as orderly operation,
and improved relevant systems and processes. To fully
implement the asset-liability management philosophy,
the Company effectively coordinated various processes,
including business planning, operations and services,
product development and investment management.
In 2020, the Company adhered to the market-oriented
approach, achieved significant improvement in its asset
allocation capability and realized a stable increase in
its investment income. The gross investment income
reached RMB198,596 million, an increase of 17.5% year
on year. Due to the combined impact of the update of
discount rate assumptions for reserves of traditional
insurance contracts, the adjustment of the policy on pre-
tax deduction of underwriting and policy acquisition costs
adopted in 2019 and the change in gross investment
income, net profit attributable to equity holders of the
Company was RMB50,268 million, a decrease of 13.8%
year on year.
(RMB million)
Short-term
insurance
premiums
Single
premiums
2,402
76,116
First-year
regular
premiums
115,421
2020
Renewal premiums
418,326
Short-term Single
premiums
Gross written premiums categorized by business
Gross written premiums breakdown
5,161
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 191
As at 31 December 2020, the carrying value of premiums receivable within one year was RMB20,458 million (as at 31
December 2019: RMB17,205 million).
12 PREMIUMS RECEIVABLE
(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.
The fair value of policy loans approximated its carrying value. The fair values of other loans and investment contracts at amortised cost 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 were classified as Level 3.
(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 4.4.
The estimates and judgements to determine the fair value of financial assets are described in Note 3.2.
(i)
Notes to the Consolidated Financial Statements (continued)
(20,045)
(20,045)
(19,556)
Interest-bearing loans and borrowings
(35,551)
(35,602)
(34,990)
(34,992)
(19,556)
For the year ended 31 December 2020
13 REINSURANCE ASSETS
Long-term insurance contracts ceded (Note 15)
Total
Others
Prepayments to constructors
Due from related parties
Investments receivable and prepaid
Tax prepaid
Automated policy loans
Disbursements
Land use rights (i)
14 OTHER ASSETS
Total
Non-current
Current
Total
Claims recoverable from reinsurers (Note 15)
Ceded unearned premiums (Note 15)
Due from reinsurance companies
Bonds payable
Current
(118,088)
(118,088)
428
1,194,997
161,570
6,333
6,333
6,333
1,038,321
141,608
161,570
1,194,997
1,038,321
141,608
6,333
545,667
535,260
545,667
Derivative financial assets
Securities at fair value through profit or loss
Available-for-sale securities, at fair value
Statutory deposits - restricted
535,260
428
Securities purchased under agreements
to resell
(122,249)
to repurchase
Securities sold under agreements
(3,859)
(3,732)
(3,859)
(3,732)
profit or loss
Financial liabilities at fair value through
53,306
(260,592)
4,467
7,947
56,629
(276,521)
4,467
53,306
(267,804)
(288,212)
Investment contracts (iii)
7,947
56,629
Cash and cash equivalents
(122,249)
Non-current
Total
As at
As at
31 December
Issue date
Maturity date
Interest rate p.a.
22 March 2019
Total
22 March 2029
As at 31 December 2020, all bonds payable were the bonds for capital replenishment (the "Bond") with a total carrying
value of RMB34,992 million (as at 31 December 2019: RMB34,990 million), and the fair value of RMB35,602 million (as
at 31 December 2019: RMB35,551 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:
4.28%
As at
31 December
2019
RMB million
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%.
Bonds payable are measured at amortised cost as described in Note 2.15.
2020
RMB million
35,000
18 BONDS PAYABLE
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
Credit loans
Credit loans
Total
25 June 2024
16 September 2024
27 September 2024
3.08%
2,444
2,515
3.30%
5,611
5,999
USD LIBOR+1.00% (v)
6,329
6,767
19,556
20,045
(i) 2.70% when LIBOR is negative.
(ii) 3.80% when EURIBOR is negative.
(iii) The loan has been repaid in advance.
(iv) 3.00% when EURIBOR is negative.
(v) 1.00% when USD LIBOR is negative.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 197
19 SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Interbank market
Stock exchange market
Total
160
118,088
As at 31 December 2020, bonds with a carrying value of RMB113,454 million (as at 31 December 2019: RMB92,011
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 2020, the carrying value of
securities deposited in the collateral pool was RMB256,062 million (as at 31 December 2019: RMB256,700 million). The
collateral is restricted from trading during the period of the repurchase transaction.
198 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
145
209
369
523
808
1,135
3,839
RMB million
RMB million
4,228
2019
31 December
31 December
2020
As at
122,249
Term deposits
140
8
122,101
Maturing:
Within 30 days
More than 30 days within 90 days
After 90 days
Total
As at
31 December
As at
31 December
2020
RMB million
2019
RMB million
97,974
63,631
24,275
54,457
122,249
118,088
117,928
2,648
623,840
608,920
Equity securities
85,206
95,615
Subtotal
49,133
62,948
Unlisted
Listed in Mainland, PRC
167
Listed overseas
102
72
Listed in Hong Kong, PRC
35,804
32,333
Listed in Mainland, PRC
262
Listed in Hong Kong, PRC
Listed overseas
Unlisted
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 189
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 quotations.
141,608
161,570
56,402
65,955
9,603
10,033
6,418
4,213
611
80
39,770
51,629
Total
Subtotal
Debt securities
For the year ended 31 December 2020
Total
161,570
As at
As at
Subtotal
Others
Common stocks
Funds
Equity securities
31 December
2020
RMB million
Subtotal
Corporate bonds
Government agency bonds
Government bonds
Debt securities
10.6 Securities at fair value through profit or loss
10 FINANCIAL ASSETS (continued)
For the year ended 31 December 2020
Others
31 December
2019
RMB million
1,638
56,402
65,955
20
262
40,281
48,858
16,101
16,835
85,206
95,615
1,091
2,752
77,215
86,803
6,859
4,422
41
141,608
10 FINANCIAL ASSETS (continued)
10.7 Derivative financial assets
Forward contracts
The table below presents the carrying value and estimated fair value of major financial assets and liabilities, and
investment contracts:
11 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
41,703
45,200
993
Carrying value
1,003
44,197
41,703
45,200
4,345
6,176
25,048
26,454
40,710
Estimated fair value (i)
As at
As at
658,535
Loans (iii)
968,575
1,225,540
928,751
1,189,369
Held-to-maturity securities (ii)
RMB million
2019
31 December
As at
As at
31 December
2020
RMB million
RMB million
RMB million
31 December
2019
2020
31 December
12,310
12,570
RMB million
RMB million
Debt securities
Bank deposits
10.9 Accrued investment income
Total
Within 30 days
Maturing:
10.8 Securities purchased under agreements to resell
The derivative financial assets of the Company above were all forward contracts to purchase equity securities. The fair
value was based on active quoted price of the equity security with consideration of discounts for lack of marketability,
which was classified as Level 3.
428
RMB million
RMB million
2019
2020
31 December
31 December
As at
As at
Others
667,545
Total
Non-current
2019
31 December
31 December
2020
As at
As at
4,467
4,467
7,947
7,947
RMB million
RMB million
2019
2020
As at
31 December
31 December
As at
190 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Total
Current
3.10%
8 September 2023
883
The table below presents movements in claims and claim adjustment expense reserve:
Notified claims
Incurred but not reported
Total as at 1 January - Gross
Cash paid for claims settled
- Cash paid for current year claims
-
(c) Movements in liabilities of short-term insurance contracts
Cash paid for prior year claims
Claims incurred
- Claims arising in prior years
Total as at 31 December - Gross
Notified claims
Incurred but not reported
Total as at 31 December - Gross
As at
As at
- Claims arising in current year
Total, net
- Unearned premiums
- Claims and claim adjustment expenses
15 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
Recoverable from reinsurers
Long-term insurance contracts (Note 13)
Short-term insurance contracts
- Claims and claim adjustment expenses (Note 13)
- Unearned premiums (Note 13)
Total, ceded
Net
Long-term insurance contracts
Short-term insurance contracts
31 December
For the year ended 31 December 2020
31 December
RMB million
12,632
2,968,265
2,548,383
2020
2019
RMB million
RMB million
18,259
2,781
15,623
12,269
18,404
14,805
(32,804)
(33,244)
(16,682)
2,536
21,782
14,178
2,517,492
2,932,305
2019
RMB million
2,936,533
2,521,331
21,991
18,404
14,701
13,001
2,973,225
2,552,736
(4,228)
(3,839)
(209)
(145)
(523)
(369)
(4,960)
(4,353)
2020
Notes to the Consolidated Financial Statements (continued)
194 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
(v) The Group applied a consistent method to determine risk margin. The Group considers risk margin for the discount
rate, mortality and morbidity and expense assumptions to compensate for the uncertain amount and timing of future cash
flows. 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.
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.
5,615
1,559
2,665
722
757
187
847
2,257
6,852
29,021
34,029
19,706
24,175
9,315
9,854
29,021
6,992
3,377
3,522
5,946
1,867
1,318
4,228
3,843
6,095
5,161
As at
As at
31 December
31 December
2020
2019
RMB million
RMB million
8,056
7,830
5,866
34,029
(i) The Group's right-of-use assets include the above land use rights and right-of-use assets disclosed in Note 7.
192 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
(a) Process used to decide on assumptions (continued)
(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 determines expense assumptions based on information obtained at the end
of each reporting period and risk margin. Components of expense assumptions include the cost per policy and percentage
of premium as follows:
As at 31 December 2020
As at 31 December 2019
Individual Life
Group Life
RMB Per Policy
% of Premium
RMB Per Policy
% of Premium
45.00
45.00
0.85% 0.90%
0.85% 0.90%
25.00
0.90%
25.00
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.
15 INSURANCE CONTRACTS (continued)
(14,551)
For the year ended 31 December 2020
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 193
For the year ended 31 December 2020
15 INSURANCE CONTRACTS
(a) Process used to decide on assumptions
(i) 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 reserves.
In developing discount the rate assumptions, the Group considers investment experience, the current investment
portfolio and the 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:
As at 31 December 2020
As at 31 December 2019
Discount rate assumptions
4.85%
4.85%
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 are as follows:
As at 31 December 2020
As at 31 December 2019
Discount rate assumptions
3.09% 4.80%
3.52% 4.83%
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 the consideration of risk margin.
(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 with the age of the insured and contract type.
The Group bases its mortality assumptions on 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 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 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.
Risk margin is considered in the Group's mortality and morbidity assumptions.
Notes to the Consolidated Financial Statements (continued)
52,589
49,727
484
As at
As at
31 December
31 December
2020
2019
RMB million
64,950
17 INTEREST-BEARING LOANS AND BORROWINGS
RMB million
223,252
206,137
10
10
288,212
267,804
2020
61,657
As at 31 December
Interest credited
Policy fees deducted from account balances
The release of liabilities mainly consists of release due to death or other benefits and related expenses, release of residual margin and change of
reserves for claims and claim adjustment expenses.
For the year ended 31 December 2020, the change in other assumptions was mainly caused by the change in morbidity rate assumptions of certain
products, which increased insurance contract liabilities by RMB2,081 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 RMB1,391 million.
For the year ended 31 December 2019, the change in other assumptions was mainly caused by the change in morbidity rate assumptions of certain
products, which increased insurance contract liabilities by RMB4,737 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 RMB2,571 million.
196 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
16 INVESTMENT CONTRACTS
Investment contracts with DPF at amortised cost
Investment contracts without DPF
- At amortised cost
-
At fair value through profit or loss
Total
The table below presents movements of investment contracts with DPF:
As at 1 January
Deposits received
Deposits withdrawn, payments on death and other benefits
2019
(ii)
RMB million
61,657
11 January 2020
6 November 2020
6 December 2020
4 January 2021
1.50%
LIBOR+2.70% (i)
EURIBOR+3.80% (ii)
989
9 March 2022
126
1.80%
626
1.50%
1,015
2.50%
523
EURIBOR+3.00% (iv)
3,126
13 January 2021
18 January 2021 (iii)
Guaranteed loans
Credit loans
Guaranteed loans
Credit loans
Guaranteed loans
Credit loans
Guaranteed loans
Guaranteed loans
Credit loans
RMB million
59,129
5,000
(3,008)
4,238
(2,959)
(39)
(38)
1,340
1,287
64,950
61,657
As at
31 December
As at
31 December
Maturity date
Interest rate
2020
RMB million
2019
RMB million
Notes to the Consolidated Financial Statements (continued)
(i)
2,936,533
RMB million
Gross
Ceded
Net
Gross
Ceded
Net
RMB million
13,001
12,632
11,432
(370)
11,062
14,701
(523)
14,178
(369)
2019
2020
As at 31 December
1,667
21,991
18,404
4,319
2,781
17,672
15,623
21,991
18,404
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 195
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
15 INSURANCE CONTRACTS (continued)
(c) Movements in liabilities of short-term insurance contracts (continued)
The table below presents movements in unearned premium reserves:
As at 1 January
Increase
Release
13,001
2,521,331
(369)
(13,001)
14,701
2020
2019
RMB million
2,521,331
RMB million
2,189,794
536,150
497,570
(288,959)
(282,189)
129,679
114,234
35,071
(4,906)
3,472
7,308
(211)
(480)
As at 31 December
Other movements
- Change in other assumptions (ii)
- Change in discount rates
369
(12,632)
(11,432)
370
(11,062)
(523)
14,178
13,001
12,632
6,095
12,632
(d) Movements in liabilities of long-term insurance contracts
The table below presents movements in the liabilities of long-term insurance contracts:
As at 1 January
Premiums
Release of liabilities (i)
Accretion of interest
Change in assumptions
(369)
29 TAXATION (continued)
For the year ended 31 December 2020
Bank deposits
30 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 RMB44,594 million (2019: RMB53,205 million).
31 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 2020 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 (2019: same).
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 205
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
32 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. 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.
As at 31 December 2020, there were 55.01 million units outstanding and exercisable (as at 31 December 2019: same). As
at 31 December 2020, the amount of intrinsic value for the vested stock appreciation rights was RMB480 million (as at 31
December 2019: RMB735 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 35% to 40%, an expected dividend yield of no higher
than 6% and a risk-free interest rate ranging from 0.03% to 0.51%.
The Company recognised a gain of RMB255 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 2020 (2019:
fair value loss of RMB258 million). RMB480 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 2020 (as at 31
December 2019: RMB735 million and RMB13 million), respectively. There was no unrecognised compensation cost for
the stock appreciation rights as at 31 December 2020 (as at 31 December 2019: nil).
(10,202)
33 DIVIDENDS
A distribution of RMB201 million (inclusive of tax) to the holders of Core Tier 2 Capital Securities was approved by
management in 2020 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 25 March 2021, a final dividend of RMB0.64
(inclusive of tax) per ordinary share totalling approximately RMB18,089 million for the year ended 31 December 2020 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 2020.
206 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
34 DISCLOSURES ABOUT THE TEMPORARY EXEMPTION FROM IFRS 9
According to IFRS 4 Amendments, the Company made the assessment based on the Group's financial position of 31
December 2015, concluding that the carrying amount of the Group's liabilities arising from contracts within the scope
of IFRS 4, which includes any deposit components or embedded derivatives unbundled from insurance contracts, was
significant compared to the total carrying amount of all its liabilities. The percentage of the total carrying amount of its
liabilities connected with insurance relative to the total carrying amount of all its liabilities is greater than 90 percent.
There had been no significant change in the activities of the Group since then that requires reassessment. Therefore, the
Group's activities are predominantly connected with insurance, meeting the criteria to apply temporary exemption from
IFRS 9.
Sino-Ocean, China Unicom, CGB and certain associates of the Group, have adopted IFRS 9. According to IFRS 4
Amendments, the Group elected not to apply uniform accounting policies when using the equity method for these
associates.
(a) The tables below present the fair value of the following groups and fair value changes for the years of financial
assets(i) under IFRS 9:
Held for trading financial assets
Financial assets that are managed and whose performance are evaluated on
a fair value basis
Other financial assets
- Financial assets with contractual terms that give rise on specified dates
to cash flows that are solely payments of principal and interest on the
principal amount outstanding ("SPPI")
- Financial assets with contractual terms that do not give rise to SPPI
Total
Pursuant to the shareholders' approval at the Annual General Meeting on 29 June 2020, a final dividend of RMB0.73
(inclusive of tax) per ordinary share totalling RMB20,633 million in respect of the year ended 31 December 2019 was
declared and paid in 2020. The dividend has been recorded in the consolidated financial statements for the year ended 31
December 2020.
(15,199)
(23,554)
(32,373)
Payable to the third-party holders of consolidated structured entities
20 OTHER LIABILITIES
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
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:
- deferred tax liabilities to be settled after 12 months
- deferred tax liabilities to be settled within 12 months
Subtotal
Net deferred tax liabilities
As at
As at
31 December
31 December
2020
2019
RMB million
RMB million
10,882
7,508
6,292
5,844
17,174
13,352
(28,107)
(19,906)
(4,266)
(3,648)
Held for trading financial assets
Financial assets that are managed and whose performance are evaluated on
a fair value basis
Other financial assets
-
AA
AA-
Subtotal
Overseas
AAA
A+
A
A-
BBB+
BBB-
Not rated
Subtotal
Total
208 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Carrying amount (iii)
As at
As at
31 December
2020
RMB million
31 December
2019
RMB million
719,142
657,905
1,207,034
893,336
4,197
7,671
170
1,163
3,000
3,000
AA+
Interest payable to policyholders
AAA
Domestic
- Financial assets with contractual terms that do not give rise to SPPI
Total
For the year ended 31 December
2020
RMB million
161,570
2019
RMB million
141,608
1,978,361
929,597
3,069,528
1,615,856
860,644
2,618,108
Fair value changes
for the year ended 31 December
2020
RMB million
2019
RMB million
22,414
19,057
(11,064)
6,029
55,151
77,741
66,501
102,827
(i) Only including securities at fair value through profit or loss, loans (excluding policy loans), available-for-sale securities and held-to-maturity securities.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 207
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
34 DISCLOSURES ABOUT THE TEMPORARY EXEMPTION FROM IFRS 9 (continued)
(b) The table below presents the credit risk exposure(ii) for aforementioned financial assets with contractual terms that
give rise to SPPI:
Rating not required (iv)
Salary and welfare payable
Brokerage and commission payable
Payable to constructors
(i) Realised gains were generated mainly from available-for-sale securities.
1,287
288
3,714
(3,749)
1,575
(35)
24,925
4,504
(11,917)
(2,638)
13,008
1,866
14,583
1,831
(ii) During the year ended 31 December 2020, the Group recognised an impairment charge of RMB111 million (2019: RMB888 million) of available-for-sale
funds, an impairment charge of RMB11,732 million (2019: RMB1,750 million) of available-for-sale sale stock securities, an impairment charge of RMB74
million (2019: nil) of available-for-sale other equity securities, an impairment reverse of RMB16 million (2019: an impairment charge of RMB1,027
million) of available-for-sale debt securities, an impairment reverse of RMB275 million (2019: an impairment charge of RMB2,718 million) of loans and
an impairment charge of RMB3 million (2019: RMB4 million) of held-to-maturity securities, for which the Group determined that objective evidence of
impairment existed.
200 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
24 NET FAIR VALUE GAINS THROUGH PROFIT OR LOSS
For the year ended 31 December
2020
2019
Debt securities
Equity securities
Stock appreciation rights
Financial liabilities at fair value through profit or loss
Derivative financial instruments
Total
RMB million
(583)
RMB million
22,997
Total
778
18,279
Subtotal
Equity securities
RMB million
2019
RMB million
44,757
38,229
22,695
21,373
3,482
3,546
24,185
21,823
798
981
25,860
31,948
772
26,695
27,111
161
154,497
139,919
For the year ended 31 December 2020, the interest income included in investment income was RMB129,514 million
(2019: RMB117,115 million). All interest income was accrued using the effective interest method.
23 NET REALISED GAINS ON FINANCIAL ASSETS
For the year ended 31 December
2020
2019
RMB million
RMB million
Debt securities
Realised gains (i)
Impairment (ii)
Subtotal
Realised gains (i)
Impairment (ii)
1,933,543
255
(648)
1,998
1,811
3,329
2,594
7,418
7,051
11,475
11,318
14,113
16,139
21,400
42,654
RMB million
RMB million
2019
2020
31 December
31 December
As at
As at
Total
Non-current
Current
Total
Others
Stock appreciation rights (Note 32)
Tax payable
Interest payable of debt instruments
Agent deposits
1,320
(258)
1,327
674
2020
For the year ended 31 December
Total
Securities purchased under agreements to resell
Loans
(380)
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
22 INVESTMENT INCOME
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 199
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 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.
21 STATUTORY INSURANCE FUND
81,114
104,426
81,114
104,426
81,114
104,426
18,632
20,157
748
493
889
1,563,075
Financial assets with contractual terms that give rise to SPPI
25
313
495
239
35
97
3,103
781
(i) According to Cai Shui [2019] No. 72, Notice on Pre-tax Deduction Policy of Commissions and Handling Charges for Insurance Companies, the
commissions and handling charges incurred by insurance companies related to its operating activities, which do not exceed 18% of the total premium
income of the year after deducting surrender premium, etc., are allowed to be deducted in calculating the taxable income, and the excessive part is
allowed to be brought forward to subsequent years. This notice issued above was effective from 1 January 2019 and applicable to the final settlement
and payment of enterprise income tax filing for the year ended 31 December 2018. Accordingly, the Company's current income tax for the year ended
31 December 2019 was deducted by RMB5,154 million regarding to the final settlement and payment.
(ii) Non-taxable income mainly includes interest income from government bonds, dividend income from applicable equity securities, etc. Expenses not
deductible for tax purposes mainly include donations and other expenses that do not meet the criteria for deduction according to the relevant tax
regulations.
(c) As at 31 December 2020 and 31 December 2019, the amounts of deferred tax assets and liabilities are as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets
Net deferred tax liabilities
As at
31 December
2020
RMB million
17,174
(32,373)
As at
31 December
2019
RMB million
13,352
(23,554)
87
(15,286)
128
(10,330)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 203
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
29 TAXATION (continued)
(c) As at 31 December 2020 and 31 December 2019, the amounts of deferred tax assets and liabilities are as follows
(continued):
As at 31 December 2020 and 31 December 2019, deferred income tax was calculated in full on temporary differences
under the liability method using the principal tax rate of 25%. The movements in net deferred income tax assets and
liabilities during the period were as follows:
Net deferred tax assets/(liabilities)
As at 1 January 2019
202
30
(9,589)
(5,228)
RMB million
6,588
(3,485)
RMB million
614
167
3,103
781
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
29 TAXATION (continued)
(d) The analysis of net deferred tax assets and deferred tax liabilities is as follows:
(b) The reconciliation between the Group's effective tax rate and the statutory tax rate of 25% in the PRC (2019: same)
is as follows:
Profit before income tax
Tax computed at the statutory tax rate
Adjustment on current income tax of previous period (i)
Non-taxable income (ii)
Expenses not deductible for tax purposes (ii)
Unused tax losses
Others
Income tax at the effective tax rate
For the year ended 31 December
2020
2019
RMB million
RMB million
54,488
59,795
13,622
14,949
(464)
(10,787)
2019
- Available-for-sale securities
· Portion of fair value changes on
88
1,557
(14,673)
2,914
(10,202)
1,557
(14,673)
2,914
(10,202)
1,787
1,759
(61)
3,485
990
4,334
(9,446)
(26)
(22,386)
2,853
(9,446)
990
(26)
(15,199)
(i)
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.
(ii) The deferred tax arising from the investments category is mainly related to the temporary differences of unrealised gains/(losses) on available-for-sale
securities, securities at fair value through profit or loss, and others.
(iii) 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 RMB3,300 million as at 31 December 2020 (as at 31
December 2019: RMB1,321 million). Unrecognised deductible temporary differences of the Group amounted to RMB1
million as at 31 December 2020 (as at 31 December 2019: RMB1 million).
204 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
88
-
4,880
(16,260)
available-for-sale securities attributable
to participating policyholders
- Others
As at 31 December 2019
As at 1 January 2020
(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
. Others
As at 31 December 2020
Insurance
Investments
RMB million
RMB million
Others
RMB million
Total
RMB million
(i)
(ii)
(iii)
(5,308)
3,927
1,985
(2,428)
2,638
276
1,257
(167)
4,880
(16,260)
2020
(Charged)/credited to net profit
(Charged)/credited to other
comprehensive income
202 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
117,129
(3,520)
113,609
Accident and health claims and claim adjustment expenses
53,073
(678)
52,395
Increase in insurance contract liabilities
415,186
414,797
Total
585,388
(4,587)
580,801
For the year ended 31 December 2019
Life insurance death and other benefits
130,975
(3,098)
127,877
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
51,394
(611)
50,783
331,523
(716)
Life insurance death and other benefits
330,807
For the year ended 31 December 2020
RMB million
4,014
For the year ended 31 December
3,654
3,541
45
35
112
135
13
14
24
25
3,873
7,794
1,937,416
1,570,869
(121)
832
21,900
19,251
25 INSURANCE BENEFITS AND CLAIMS EXPENSES
Gross
Ceded
Net
RMB million
RMB million
Total
(389)
(4,425)
RMB million
2020
Remuneration in respect of audit services provided by auditors
Foreign exchange losses/(gains)
Depreciation and amortisation
Contribution to the defined contribution pension plan
Housing benefits
Employee salaries and welfare costs
For the year ended 31 December
Profit before income tax is stated after charging/(crediting) the following:
28 PROFIT BEFORE INCOME TAX
4,255
3,747
106
113
2019
RMB million
589
19,523
1,317
Total tax charges
Deferred taxation
Current taxation – Enterprise income tax
(a) The amount of taxation charged to net profit represents:
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.
29 TAXATION
60
63
67
513,892
4,379
5,161
2,905
2,455
1,189
20,125
566
(119)
1,503
509,467
1,168
Benefits of investment contracts are mainly the interest credited to investment contracts.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 201
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
27 FINANCE COSTS
Interest expenses for securities sold under agreements to repurchase
Interest expenses for bonds payable
Interest expenses for interest-bearing loans and borrowings
Interest on lease liabilities
26 INVESTMENT CONTRACT BENEFITS
For the year ended 31 December
2020
2019
RMB million
RMB million
1,565
2,392
Total
indirectly
100.00%
USD452
100.00%
100.00%
USD452
100.00%
indirectly
indirectly
100.00%
New Fortune Wisdom Limited
indirectly
indirectly
Wisdom Forever Limited Partnership
100.00%
RMB571
Shanghai Yuan Shu Yuan Jiu Investment
directly
Management Partnership (Limited
99.98%
RMB571
RMB35
99.98%
RMB606
directly
directly
Management Partnership (Limited
Partnership) ("Yuan Shu Yuan Jiu")
Shanghai Yuan Shu Yuan Pin Investment
99.98%
New Capital Wisdom Limited
RMB35
99.98%
RMB606
indirectly
directly
Increase
89.997%
RMB1,530
100.00%
RMB1,530
100.00%
directly
directly
CL Health
Franklin Shenzhen Company
USD2
100.00%
indirectly
indirectly
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 211
directly
100.00%
indirectly
indirectly
Guo Yang Guo Sheng
Percentage
of holding
Amount
million
RMB2,835
million
RMB315
99.997%
million
Decrease
As at 31 December 2020
Percentage
of holding
As at 31 December 2019
Subsidiaries
(f) Percentages of holding of related parties with control relationship and changes during the year (continued)
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
Amount
million
RMB3,150
directly
Partnership) ("Yuan Shu Yuan Pin")
99.99%
RMB4,000
RMB801
99.99%
CBRE Global Investors U.S. Investments I, RMB2,859
indirectly
indirectly
100.00%
-
RMB1,063
RMB1,063
Shengyi Jingsheng
Partnership) ("Yuanxiang Tianyi")
directly
directly
Management Partnership (Limited
100.00%
RMB3,660
LLC ("CG Investments")
directly
RMB9
("CL Pension Industry") (i)
Beijing China Life Pension Industry
Partnership) ("CL Guang De")
100.00%
directly
directly
Investment Fund Partnership (Limited
99.95%
RMB295
RMB285
99.95%
RMB10
China Life Guangde(Tianjin) Equity
directly
99.98%
RMB533
99.98%
RMB533
directly
Ning Investment Partnership (Limited
99.98%
- RMB1,680
99.98%
RMB1,680
Ningbo Meishan Bonded Port Area Bai
Wansheng")
directly
directly
(Limited Partnership) ("Shanghai
99.98%
RMB4,012
RMB12
99.98%
directly
Shanghai Wansheng Industry Partnership
Partnership) ("Bai Ning")
RMB484
Wuhu Yuanxiang Tianyi Investment
Partnership) ("Yuanxiang Tianfu")
directly
directly
Management Partnership (Limited
99.98%
RMB533
99.98%
RMB533
Wuhu Yuanxiang Tianfu Investment
indirectly
indirectly
100.00%
- RMB484
100.00%
Hope Building
USD1,125
USD2
USD1,125
Shanghai Rui Chong Investment Co., Limited
RMB200
CL Wealth
RMB1,288
CL AMP
("Suzhou Pension Company")
Retirement Investment Company Limited
RMB1,991
RMB1,991
China Life (Suzhou) Pension and
("Pension Company")
RMB3,400
RMB3,400
China Life Pension Company Limited
RMB4,000
RMB4,000
AMC
2020
million
RMB4,600
RMB4,600
CLIC
million
million
million
Decrease
Increase
2019
Name of related party
RMB6,800
│││
RMB1,288
RMB200
RMB6,800
Amount
million
As at 31 December 2020
CLIC
As at 31 December 2019
Shareholder
(f) Percentages of holding of related parties with control relationship and changes during the year
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
210 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
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.
("Hope Building")
RMB484
As at
31 December
RMB1,131
Dalian Hope Building Company Ltd.
RMB1,131
Xi'an Shengyi Jingsheng Real Estate Co., Ltd.
("Shengyi Jingsheng")
("Franklin Shenzhen Company")
Investment Fund Management Co., Limited
USD2
RMB1,530
USD2
China Life Franklin (Shenzhen) Equity
Co., Limited ("CL Health")
RMB1,530
China Life (Beijing) Health Management
("Rui Chong Company")
RMB484
Percentage
of holding
31 December
(e) Registered capital of related parties with control relationship and changes during the year
(ii) Credit risk ratings for domestic assets are provided by domestic qualified external rating agencies and credit risk ratings for overseas assets are provided
by overseas qualified external rating agencies.
8,246
11,859
Fair value
RMB million
8,237
9
11,834
25
RMB million
Carrying
amount (iii)
As at 31 December 2019
4,970
7,391
4
24
4,966
7,367
RMB million
RMB million
Fair value
Carrying
amount (iii)
As at 31 December 2020
Total
Domestic
Overseas
Total
Overseas
Domestic
34 DISCLOSURES ABOUT THE TEMPORARY EXEMPTION FROM IFRS 9 (continued)
(c) The table below presents financial assets without low credit risk for aforementioned financial assets with contractual
terms that give rise to SPPI:
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
(iii) For financial assets measured at amortised cost, the carrying amount before adjusting impairment allowance is disclosed here.
(iv) Mainly including government bonds and policy financial bonds.
35 SIGNIFICANT RELATED PARTY TRANSACTIONS
(a) Related parties with control relationship
Information of the parent company is as follows:
Under common control of CLIC
Under common control of CLIC
A pension fund jointly set up by
the Company and others
Under common control of CLIC
Under common control of CLIC
Under common control of CLIC
Relationship with the Company
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 Investment Management Company Limited (Formerly known
China Life Insurance (Overseas) Company Limited ("CL Overseas")
RMB9
China Life Real Estate Co., Limited ("CLRE")
Significant related parties
(d) Other related parties
Refer to Note 9 for the basic and related information of associates and joint ventures.
(c) Associates and joint ventures
Refer to Note 42(d) for the basic and related information of subsidiaries.
As at
(b) Subsidiaries
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 209
Wang Bin
State-owned
Legal
representative
Nature of
ownership
Relationship
with the Company
Immediate and
ultimate holding
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;
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.
Principal business
Location of
registration
Beijing, China
CLIC
Name
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
100.00%
Percentage
million
100.00%
Glorious Fortune Forever Limited
directly
directly
100.00%
RMB1,167
100.00%
RMB1,167
New Aldgate Limited
directly
directly
100.00%
RMB6,800
100.00%
RMB6,800
Rui Chong Company
indirectly
indirectly
100.00%
100.00%
King Phoenix Tree Limited
directly
directly
100.00%
100.00%
Golden Phoenix Tree Limited
indirectly
100.00%
directly
directly
CL Hotel Investor, L.P.
China Century Core Fund Limited
directly
directly
100.00%
RMB2,435
100.00%
RMB2,435
Fortune Bamboo Limited
directly
directly
100.00%
RMB1,876
100.00%
indirectly
RMB1,876
directly
directly
100.00%
RMB1,993
100.00%
RMB1,993
Golden Bamboo Limited
directly
directly
100.00%
RMB95
RMB95
100.00%
Sunny Bamboo Limited
Increase
100.00%
100.00%
74.27%
RMB2,746
Pension Company
directly
directly
60.00%
RMB1,680
60.00%
RMB1,680
AMC
million
Percentage
of holding
Amount
Decrease
million
million
million
Increase
Amount of holding
As at 31 December 2020
As at 31 December 2019
Percentage
Subsidiaries
68.37%
of holding
Amount
million
RMB19,324
68.37%
RMB19,324
Decrease
million
- R
RMB2,746
74.27%
directly and
RMB200
CL Wealth
indirectly
indirectly
85.03%
RMB1,095
85.03%
RMB1,095
CL AMP
directly
directly
100.00%
RMB1,991
RMB200
RMB205
RMB1,786
Suzhou Pension Company
indirectly
indirectly
Company Limited ("AMC HK")
50.00%
HKD130
50.00%
HKD130
China Life Franklin Asset Management
indirectly
indirectly
directly and
100.00%
99.90%
284
China Life Qihang Phase I (Tianjin)
Amount due from CL Overseas
The resulting balances due from and to significant related parties of the Group
Amount due from CLIC
RMB million
RMB million
As at
31 December
2019
2020
31 December
As at
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.
(h) Amounts due from/to significant related parties
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report
216
(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.
On 25 November 2020, the Company and CLHI signed a new aged-care projects management service agreement, effective from 1 January 2020 to
31 December 2021. 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 seasonal basis, by multiplying the total amount of the
investments under management (based on the daily weighted average investment amount) by the annual rate of 2.7%.
Amount due from CLP&C
348
334
43
Amount deposited with CGB
(38)
Amount due to CLHI
2
2
Amount due from CLRE
(401)
(447)
On 1 January 2019, the Company and Pension Company renewed an entrusted agency agreement for pension business acted by life business.
The agreement is effective from 1 January 2019 to 31 December 2021. The business means that Pension Company entrusted the Company to sell
enterprise annuity funds, pension security business, occupational pension business and the third-party asset management business. 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 services, 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), decreasing annually. 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
commissions of occupation annuity and third-party asset management business are in accordance with the provision of annual promotional plans,
which 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.
18
(31)
(22)
Amount due to CLI
Amount due from CLI
Amount due to CLP&C
334
245
56
32
On 28 December 2018, the Company and CGB signed another insurance agency agreement to distribute corporate group insurance products. The
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 paid on a monthly basis. The agreement is effective for two
years from 1 January 2019, with an automatic one-year renewal if no objections were raised by either party upon expiry.
On 19 October 2018, 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, 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. On 22 August 2020, the Company and CGB renewed an insurance agency agreement
to distribute insurance products, effective from the signing date to 22 August 2022.
On 29 December 2017, the Company renewed a property leasing agreement with CLI, effective from 1 January 2018 to 31 December 2020, pursuant
to which CLI leased to the Company certain buildings of its own. 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. On 31 December
2020, the Company renewed a property leasing agreement with CLI, effective from 1 January 2021 to 31 December 2021.
(g) Transactions with significant related parties (continued)
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
214 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
10,965
206
301
Distribution of profits from the other subsidiaries to the Company
Notes:
14,429
other subsidiaries and the Company
Transactions between the consolidated structured entities/
2,210
3,864
to the Company
Distribution of profits from other associates and joint ventures
and the Company
Transaction between other associates and joint ventures
Distribution of profits from the consolidated structured entities
to the Company
71,419
(i)
(ii.a) In December 2018, 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 2019 to 31 December 2021. 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 on a monthly basis and payable on a
seasonal basis, by multiplying the average book value of the assets under management (after deducting the funds and interests of positive repurchase
transactions and deducting the principal and interests of debt and equity investment schemes, project asset-backed schemes and customised
non-standard products) at the beginning and the end of any given month by the rate of 0.05%, divided by 12. According to specific projects, debt
investment schemes, equity investment plans, project asset-backed plans, and customised non-standard products are based on the contractual
agreed rate, without paying for an extra management fee. 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. In July 2020, CLIC revised the asset
management agreement with AMC, effective from 1 July 2020 to 31 December 2022. The annual rate of the basic service fee has been changed from
0.05% to 0.08%, and the other terms mentioned above remain unchanged.
On 31 January 2018, the Company and CLP&C signed a new insurance agency framework agreement, whereby CLP&C entrusted the Company to act
as an agent to sell designated insurance products in certain authorised jurisdictions. The agency fee was determined based on cost (tax included) plus
a margin. The agreement is effective for three years, from 8 March 2018 to 7 March 2021.
On 31 December 2018, the Company and AMC HK renewed the management agreement of insurance funds investment, which is effective from
1 January 2019 to 31 December 2021. 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 seasonal basis and the maximum investment management fee paid annually
is RMB30 million. The management fee rate for financial products, such as investment plans, project asset-backed plans, customised products and
insurance asset management products, set up by AMC HK in the industry permitted by regulatory policies, is set according to contractual terms.
The management fee rate for the directive investment operation of term deposits, common stocks, funds, financial products and other investment
products, universal account B-2 and entrusted assets account alike was 0.02%; the management fee rate for unlisted equity investment was 0.3%;
the management fee rate for customised investment portfolio was agreed upon the management fee of market-oriented entrusted investment. Asset
management fees charged to the Company by AMC HK are eliminated in the consolidated statement of comprehensive income.
(vii)
(vi)
(v)
(iv)
(iii)
(ii.f)
On 26 December 2017, the Company and CLIC renewed a renewable insurance agency agreement, effective from 1 January 2018 to 31 December
2020. 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 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 RMB8.0 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. On 31 December 2020, the Company and the CLIC renewed the insurance agency agreement. This agreement
is effective from 1 January 2021 to 31 December 2021.
Notes (continued):
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 215
(ii.e) On 28 December 2018, the Company and AMC renewed the agreement for the management of insurance funds, effective from 1 January 2019 to 31
December 2021. 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 fixed annual service fee was calculated
and payable on a seasonal basis, by multiplying the average net value of the assets under management by the rate of 0.05%; the variable investment
management service fee was payable annually, based on the results of performance evaluation, at 20% of the fixed service fee per annum. On 1 July
2020, the Company and AMC revised the agreement for the management of insurance funds, effective from 1 July 2020 to 31 December 2022. The
calculation method of the fixed annual service fee has been changed from five ten thousandths of the net value of the total investment assets to daily
accrued fixed service fee 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 other terms above remain unchanged. Asset management fees charged to the Company by AMC are eliminated in the
consolidated statement of comprehensive income.
(ii.d) On 31 December 2018, the Company and CLI renewed a management agreement of alternative investment of insurance funds, effective from
1 January 2019 to 31 December 2020. In accordance with the agreement, the Company entrusted CLI to engage in 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 between 0.05% and 0.6% according to different ranges of returns; for non-fixed-income projects, the management fee rate
for invested projects was 0.3%, the management fee rates for newly signed projects were between 0.05% and 0.3% according to CLI's involvement
in project management and the performance-related bonus is based on the internal return rate upon expiry of the project. 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 10% to positive 15% of the investment management fee in the current
period.
(ii.c) On 15 May 2018, CLP&C renewed an agreement for the management of insurance funds with AMC, entrusting AMC to manage and make
investments for its insurance funds, effective from 1 January 2018 to 31 December 2019. The agreement was subject to an automatic one-year
renewal if no objections were raised by both parties upon expiry. From 1 January 2020, the agreement automatically renewed for one year. 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. On 1 July 2020, CLP&C formulated asset management investment guidelines. The guidelines
were effective from 1 July 2020 and modified the fixed service fee rate with AMC from the annual investment management fee rate for assets of each
category under management to 0.08%, while the other terms above remained unchanged.
(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.
(g) Transactions with significant related parties (continued)
10
59,420
603
overseas listed (ii)
Total
Including: domestic listed
Owned by other equity holders
Owned by CLIC (i)
As at 31 December 2020, the Company's share capital was as follows:
28,264,705,000
Registered, authorised, issued and fully paid
Ordinary shares of RMB1 each
RMB million
As at 31 December 2020
No. of shares
36 SHARE CAPITAL
As at 31 December 2020, 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 2020, a large portion of group insurance business of the Group was 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.
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.
(j) Transactions with state-owned enterprises
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
(i)
All shares owned by CLIC are domestic listed shares.
As at 31 December 2019
No. of shares
RMB million
Investment Fund (Limited Partnership)
218 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
(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
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 217
1,500,000,000
8,941,175,000
19,324
19,323,530,000
RMB million
No. of shares
As at 31 December 2020
28,265
28,265 28,264,705,000
8,941
The total compensation package for the Company's key management personnel for the year ended 31 December 2020
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 2019 has been approved by the relevant
authorities. The total compensation of 2019 was RMB29 million, including a deferred payment about RMB6 million.
29
15
(68)
(17)
Amount due to CL Ecommerce
13
12
8
7
Amount due from Sino-Ocean
The resulting balances due from and to subsidiaries of the Company
922
Corporate bonds of Sino-Ocean
(75)
(51)
Amount due to CGB
894
1,240
Amount due from CGB
844
361
Wealth management products and other financial instruments of CGB
Amount due to AMC
(381)
Salaries and other benefits
RMB million
RMB million
2019
2020
For the year ended 31 December
(i) Key management personnel compensation
118
(1,293)
114
(35)
(43)
Amount due to Pension Company
30
39
Amount due from Pension Company
(8)
Amount due to AMC HK
Amount due from Rui Chong Company
285
Amount due from CL Ecommerce
Transaction between CL Guang De and the Company
71
(iv)
Property leasing expenses charged by CLI
43
43
Payment of rental, project fee and other expenses to CLRE
271
Dividend from CLP&C (Note 9)
51
54
Rental and a service fee received from CLP&C
2,297
2,211
(iii) (viii)
Agency fee received from CLP&C
16
14
78
Retained asset management fee received from CLI
3
13
Commission expenses charged by CGB
2,584
2,938
Interest on deposits received from CGB
Transactions between CGB and the Group
106
(vii)
Payment of a operation management service fee to CLHI
Claim and other payments received from CLP&C
5
Payment of real estate purchase to CLI
39
63
Property leasing income received from CLI
653
651
(ii.d) (viii)
Payment of asset management fee to CLI
135
48
52
14
2020
For the year ended 31 December
The following table summarises significant transactions carried out by the Group with its significant related parties:
(g) Transactions with significant related parties
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
212 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
2019
(i) CL Pension Industry and China Life Qihang Fund I were newly included in the consolidated financial statements of the Group for the year ended 31
December 2020.
99.99%
RMB1
RMB1
directly
Qihang Fund I") (i)
(Limited Partnership) ("China Life
Capital contribution to CL Guang De
Equity Investment Fund Partnership
directly
(v)
Notes
RMB million
41
(ii.c)
86
73
Asset management fee received from CL Overseas
Asset management fee received from CLP&C
Payment of insurance premium to CLP&C
122
147
3,092
RMB million
14,106
125
(ii.a)
Asset management fee received from CLIC
Distribution of dividends from the Company to CLIC
Distribution of profits from AMC to CLIC
575
564
(i) (viii)
Policy management fee received from CLIC
Transactions with CLIC and its subsidiaries
89
189
(ii.b)
Dividend from CGB (Note 9)
Transaction between Rui Chong Company and the Company
Capital contribution to Suzhou Pension Company
Transaction between Suzhou Pension Company and the Company
(ii.f)
Payment of an asset management fee to AMC HK
Transaction between AMC HK and the Company
2019
RMB million
RMB million
Notes
2020
For the year ended 31 December
The following table summarises significant transactions carried out by the Group with its significant related parties:
(continued)
(g) Transactions with significant related parties (continued)
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 213
Rental fee charged by Rui Chong Company
Transaction between CL Hotel Investor, L.P. and the Company
Capital contribution to CL Hotel Investor, L.P.
Capital withdrawal from CL Health
Transaction between Guo Yang Guo Sheng and the Company
Capital withdrawal from Guo Yang Guo Sheng
801
Transaction between CG Investments and the Company
Capital contribution to CG Investments
158
12
Transaction between Shanghai Wansheng and the Company
Capital contribution to Shanghai Wansheng
35
Transaction between Yuan Shu Yuan Pin and the Company
Capital withdrawal from Yuan Shu Yuan Pin
35
00
Transaction between Yuan Shu Yuan Jiu and the Company
Capital withdrawal from Yuan Shu Yuan Jiu
200
47
95
445
200
205
18
18
100
8
Transaction between CL Health and the Company
Marketing fee income for promotion of annuity business from Pension
Company
Distribution of profits from other associates and joint ventures
Transaction between other associates and joint ventures and the Group
1,003
1,140
Contribution to EAP
2
27
26
to the Group (Note 9)
20
Management fee charged by Sino-Ocean
Interest of corporate bonds received from Sino-Ocean
369
178
14
Dividend from Sino-Ocean (Note 9)
550
Transactions between Sino-Ocean and the Group
30
4,254
Transaction between EAP and the Group
Transactions between AMC and the Company
(vi)
2,574
sales of annuity funds and other businesses
54
Agency fee received from Pension Company for entrusted
54
40
Rental received from Pension Company
Transactions between Pension Company and the Company
68
57
220
Distribution of profits from AMC
1,353
2,089
(ii.e) (viii)
183
Payment of an asset management fee to AMC
578
1,133
231
As at 31 December 2020
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS
1,942
For the year ended 31 December 2020
Statement of financial position
2,487
Notes to the Consolidated Financial Statements (continued)
31 December
RMB million
RMB million
2019
2020
31 December
As at
Later than five years
Total
As at
As at
222 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
768
1,526
193
31 December
6,162
2020
Investments in associates and joint ventures
63,228
Later than one year but not later than five years
42(e)
88,951
42(d)
Investments in subsidiaries
3,914
42(c)
Investment properties
3,272
2,823
42(b)
49,230
50,159
42(a)
Right-of-use assets
Property, plant and equipment
ASSETS
RMB million
RMB million
Notes
2019
As at
31 December
Not later than one year
223,435
(b) Operating lease commitments
2019
2020
31 December
31 December
As at
As at
The following is a summary of the significant contingent liabilities:
40 PROVISIONS AND CONTINGENCIES
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
RMB million
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 221
42,654
122,249
2,664
34,992
19,556
At 31 December 2020
(78)
Others
157,401
(78)
1,320
As lessor, the future minimum rentals receivable under non-cancellable operating leases are as follows:
RMB million
523
68,807
82,017
64,866
3,941
3,063
78,954
RMB million
RMB million
2019
2020
31 December
403
31 December
As at
Total
Property, plant and equipment
Investments
Contracted, but not provided for
The Group had the following capital commitments relating to property development projects and investments:
(a) Capital commitments
41 COMMITMENTS
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 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 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 2020 and 2019, 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.
Pending lawsuits
As at
154,501
59,219
42(f)
Annuity and other insurance balances payable
113,189
116,584
42(p)
Securities sold under agreements to repurchase
34,990
34,992
18
Bonds payable
2,842
55,031
2,416
112,593
267,804
288,212
122,510
Policyholder dividends payable
2,552,736
2,973,225
56
16
15
Investment contracts
Lease liabilities
Insurance contracts
51,019
53,021
3,721,503
3,747
Total liabilities and equity
Total equity
Retained earnings
Other equity instruments
Share capital
Equity
Total liabilities
Reserves
Premiums received in advance
602
21
Statutory insurance fund
10,890
15,909
42(0)
Deferred tax liabilities
56,701
42(q)
Other liabilities
60,898
384
Liabilities
LIABILITIES AND EQUITY
3,630,180
Derivative financial assets
1,037,629
117,473
127,404
42(k)
Securities at fair value through profit or loss
1,187,153
42(j)
Available-for-sale securities
5,653
5,653
10.7
42(i)
528,754
521,886
42(h)
Term deposits
594,913
638,849
42(g)
Loans
927,892
1,188,509
Statutory deposits - restricted
428
Securities purchased under agreements to resell
42(1)
4,127,416
Total assets
48,802
50,692
Cash and cash equivalents
29,081
24,479
42(n)
Other assets
5,161
6,095
13
Reinsurance assets
17,281
20,730
12
Premiums receivable
41,005
44,582
42(m)
Accrued investment income
1,963
5,888
Held-to-maturity securities
3,632
activities
2
20,045
At 31 December 2019
(91)
(91)
Others
4,255
4,147
106
2
Interest expense
34,990
2,239
New leases
(501)
(501)
structured entities
137
137
(31,233)
(3,072)
11,993
(73,552)
2,239
(1,348)
3,091
21,400
93
54,268
1,402
45,525
(3,639)
21,254
4,912
40,502
(1,618)
317
118,088
cash flows
198,941
1,327
21,400
118,088
3,091
34,990
20,045
At 1 January 2020
198,941
1,327
Changes from financing
34,988
(242)
224,135
interest
the third-party
liability-
payable to
Other
Other liability-
control of consolidated
Changes arising from losing
Foreign exchange movement
cash flows
Interest-
Changes from financing
39 NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
Changes in liabilities arising from financing activities
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
220 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
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.
(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 2020, the Company appropriated 10% of net profit under CAS which amounted to RMB5,009 million to the general reserve
for future uncertain catastrophes, which cannot be used for dividend distribution or conversion to share capital increment (2019: RMB5,857 million).
In addition, pursuant to the CAS, the Group appropriated RMB150 million to the general reserve of its subsidiaries attributable to the Company in the
consolidated financial statements (2019: RMB98 million).
(b) Approved at the Annual General Meeting in June 2020, the Company appropriated RMB5,857 million to the discretionary reserve fund for the year ended
31 December 2019 based on net profit under CAS (2019: RMB1,275 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 RMB5,009 million for the year ended 31 December 2020 (2019: RMB5,857 million).
237,890
182
At 1 January 2019
bearing
Securities
loans and
252
9,407
192,141
2,185
20,150
RMB million
RMB million
RMB million
RMB million
RMB million
RMB million RMB million
Total
3,264,264
entities
financing
structured
related to
payable
holders of
consolidated
sold under
agreements to
repurchase
Lease
liabilities
Bonds
payable
borrowings
53,860
113
As at 31 December 2020
(1,055)
method
fund reserve fund
reserve
operations
method
Total
RMB million RMB million RMB million
RMB million RMB million RMB million RMB million RMB million
RMB million RMB million
(a)
the equity
As at 1 January 2019
1,084
(5,412)
69
34,659
33,370
31,933
(254)
149,309
Other comprehensive income
for the year
53,860
34,006
foreign
reserve Discretionary
Interest expense
1,156
1,156
New leases
(751)
(751)
structured entities
control of consolidated
Changes arising from losing
(806)
General
(806)
21,226
available-
loss under
Statutory
on translating
loss under
Share
premium
Other
reserves
for-sale
securities
the equity
Foreign exchange movement
687
230
20
1,148
28,594
756
40,516
34,645
37,888
(24)
(162)
197,221
Other comprehensive income
53,860
for the year
646
(965)
344
25,699
Appropriation to reserves
5,009
5,857
5,159
16,025
Others
25,674
As at 1 January 2020
197,221
(162)
(76)
34,847
Appropriation to reserves
5,857
1,275
5,955
13,087
Other comprehensive income
to retained earnings
(86)
(86)
Others
64
64
As at 31 December 2019
53,860
1,148
28,594
756
40,516
34,645
37,888
(24)
(1,055)
36
Charge for the year
28,265
Total
Others
Buildings
As at 31 December 2019
As at 1 January 2019
Net book value
As at 31 December 2019
Deductions
Charge for the year
As at 1 January 2019
RMB million
Impairment
Deductions
Charge for the year
As at 1 January 2019
Accumulated depreciation
As at 31 December 2019
Deductions
Additions
As at 1 January 2019
Cost
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Right-of-use assets (continued)
As at 31 December 2019
For the year ended 31 December 2020
2,578
2,579
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 227
The Group had no significant profit or loss from subleasing right-of-use assets or sale and leaseback transactions for the
year ended 31 December 2020 (2019: same).
3,272
1
2,579
1
2,578
3,271
(1,176)
1
29
(1,176)
29
(1,205)
4,448
1
4,447
(130)
(130)
1,999
1,999
(1,205)
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(c) Investment properties
Notes to the Consolidated Financial Statements (continued)
2,823
Deductions
Charge for the year
As at 1 January 2020
Impairment
As at 31 December 2020
Deductions
Charge for the year
As at 1 January 2020
Accumulated depreciation
As at 31 December 2020
As at 31 December 2020
Deductions
RMB million
Total
Others
Buildings
Cost
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Right-of-use assets
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 225
49,230
As at 1 January 2020
Additions
226 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Net book value
4,447
1
2,822
As at 31 December 2020
3,272
1
3,271
(2,238)
391
(1,453)
(2,238)
As at 1 January 2020
391
(1,176)
(1,453)
5,061
1
5,060
(490)
(490)
1,103
1,103
4,448
1
(1,176)
Cost
As at 1 January 2020
Additions
As at 31 December 2020
2020
RMB million
2019
RMB million
450,051
450,051
403,764
395,973
7,791
6,880
5,578
6,880
5,578
As at
31 December
Refer to Note 33 for the information of distribution to other equity instruments holders of the Company for the year ended
31 December 2020.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
38 RESERVES
Other
Unrealised comprehensive
gains/
income
(losses)
reclassifiable
from
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 219
to profit or
31 December
Equity attributable to ordinary equity holders of non-controlling interests
43,047
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
37 OTHER EQUITY INSTRUMENTS
(a) Basic information
Core Tier 2 Capital Securities
Total
As at
As at
31 December
31 December
As at
2019
RMB million
7,791
7,791
RMB million
Decrease
RMB million
(7,791)
2020
RMB million
(7,791)
The Company issued Core Tier 2 Capital Securities at par with the nominal value of USD1,280 million on 3 July 2015,
and listed such securities on the Stock Exchange of Hong Kong Limited on 6 July 2015. The securities were 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. Distributions shall be payable on
the securities semi-annually and the Company has the option to redeem the securities at the end of the fifth year after
issuance and on any distribution payment date thereafter. The initial distribution rate for the first five interest-bearing
years is 4.00% and if the Company does not exercise this option, the rate of distribution will be reset based on the
comparable US treasury yield plus a margin of 2.294% at the end of the fifth year and every five years thereafter. The
Company has redeemed the securities at the end of the fifth year.
(b) Equity attributable to equity holders
Equity attributable to equity holders of the Company
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
Increase
Exchange
differences
Other
comprehensive
income non-
reclassifiable
As at 31 December 2019
As at 1 January 2019
Fair value
As at 31 December 2019
As at 1 January 2019
Net book value
As at 31 December 2019
Accumulated depreciation
As at 1 January 2019
Additions
As at 31 December 2019
Deductions
Buildings
RMB million
As at 1 January 2019
Additions
As at 31 December 2020
As at 1 January 2020
Fair value
As at 31 December 2020
As at 1 January 2020
Net book value
As at 31 December 2020
Additions
As at 1 January 2020
Accumulated depreciation
Cost
4,387
2,409
6,796
to profit or
228 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
The fair value of investment properties of the Company as at 31 December 2020 amounted to RMB7,878 million (as at 31
December 2019: RMB5,462 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.
5,462
4,886
3,914
3,525
(473)
(115)
(358)
4,387
(16)
520
3,883
RMB million
Buildings
7,878
5,462
6,162
3,914
(634)
(161)
(473)
1,028
13,657
518
2,763
Disposals
(2,762)
(372)
(189)
(690)
(1,511)
Charge for the year
(19,106)
(1,543)
(823)
308
(5,329)
As at 1 January 2020
Accumulated depreciation
70,698
2,746
10,568
1,330
7,773
48,281
As at 31 December 2020
(1,761)
(11,411)
(143)
771
137
2,763
31,264
As at 1 January 2020
Net book value
(25)
(1)
(24)
As at 31 December 2020
Disposals
Charge for the year
138
(25)
(24)
As at 1 January 2020
Impairment
(20,514)
(1,778)
(874)
(5,248)
(12,614)
As at 31 December 2020
1,354
(1)
(142)
(901)
(575)
under
Motor
vehicles
fixtures
Buildings
Assets
Office
equipment
furniture and
Cost
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
Leasehold
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 223
4,127,416
365,916
405,913
135,692
143,577
194,168
234,071
42(s)
7,791
42(r)
3,630,180
construction improvements
Total
RMB million
Disposals
(2,098)
(2,098)
Transfers into investment properties
6,317
5,459
131
580
147
Additions
(121)
318
(6,451)
2
6,010
Transfers upon completion
68,361
2,571
13,658
1,341
8,092
42,699
As at 1 January 2020
518
28,265
13,657
49,230
866
79
162
577
48
Disposals
(2,398)
(276)
(188)
(598)
As at 31 December 2019
(1,336)
(1,346)
(797)
(5,308)
(10,123)
As at 1 January 2019
Accumulated depreciation
68,361
2,571
13,658
1,341
(17,574)
8,092
(11,411)
(823)
31,264
As at 31 December 2019
43,192
800
14,030
522
2,150
25,690
As at 1 January 2019
Net book value
(5,329)
(25)
(24)
As at 31 December 2019
Disposals
Charge for the year
(25)
(24)
As at 1 January 2019
Impairment
(19,106)
(1,543)
(1)
42,699
As at 31 December 2019
(996)
As at 1 January 2019
RMB million
Total
Leasehold
improvements
under
construction
vehicles
Motor
Assets
Office
equipment
furniture and
fixtures
Buildings
35,837
Cost
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
224 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
50,159
968
10,567
456
2,525
35,643
As at 31 December 2020
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment (continued)
7,458
1,319
14,031
(107)
(39)
(171)
(602)
(77)
Disposals
(520)
(520)
Transfers into investment properties
9,258
7,988
193
1,002
75
Additions
(172)
532
(7,802)
234
6,864
Transfers upon completion
60,791
2,146
1,028
(989)
Notes to the Consolidated Financial Statements (continued)
Within one year
47,028
53,166
8,971
9,349
6,418
4,213
Subtotal
Unlisted
Listed overseas
581
64
31,058
39,540
Total
Listed in Hong Kong, PRC
Equity securities
70,445
74,238
Subtotal
136
38,786
47,889
Unlisted
31,523
26,132
217
Listed overseas
Listed in Mainland, PRC
Debt securities
Total
Listed in Mainland, PRC
Subtotal
127,404
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 quotations.
As at
236 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Total
Current
Non-current
Total
Others
Due from related parties
Investments receivable and prepaid
Tax prepaid
Automated policy loans
Disbursements
Land use rights
(n) Other assets
117,473
Total
Current
Total
Others
Debt securities
Bank deposits
(m) Accrued investment income
Total
Within 30 days
Maturing:
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(I) Securities purchased under agreements to sell
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 235
Non-current
117,473
127,404
47,028
2019
2020
As at
31 December
31 December
As at
Others
Common stocks
Funds
Equity securities
Subtotal
Others
Corporate bonds
Government agency bonds
RMB million
Government bonds
(k) Securities at fair value through profit or loss
Total
After ten years
After five years but within ten years
After one year but within five years
Within one year
Maturing:
Debt securities - Contractual maturity schedule
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(j) Available-for-sale securities (continued)
For the year ended 31 December 2020
234 China Life Insurance Company Limited | Annual Report 2020 | 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 quotations, wealth management products and private equity funds.
1,037,629
Debt securities
RMB million
36,802
25,578
53,166
20
262
37,309
9,699
9,771
43,133
70,445
74,238
942
1,485
64,838
68,569
4,633
32
1,469
2,715
RMB million
RMB million
2019
31 December
As at
As at
31 December
2020
497,355
565,102
100,470
137,665
224,393
266,057
146,914
124,578
31 December
As at
31 December
2020
2019
1,787
(Charged)/credited to net profit
(10,890)
2,630
(15,077)
1,557
As at 1 January 2020
(10,890)
2,630
(15,077)
1,557
As at 31 December 2019
4,880
1,710
4,880
(16,181)
(16,181)
(970)
1,381
2,515
115
(3,070)
1,985
4,174
(5,308)
Total
RMB million
Others
RMB million
RMB million
Investments
policyholders
(84)
3,413
(Charged)/credited to other comprehensive income
(27,921)
- deferred tax liabilities to be settled after 12 months
- deferred tax liabilities to be settled within 12 months
Deferred tax liabilities:
12,442
16,057
5,588
6,006
6,854
10,051
- deferred tax assets to be recovered within 12 months
Subtotal
- deferred tax assets to be recovered after 12 months
Deferred tax assets:
RMB million
RMB million
31 December
2019
2020
31 December
As at
As at
(ii) The analysis of deferred tax assets and deferred tax liabilities during the year is as follows:
990
(15,909)
2,546
(22,789)
990
4,334
As at 31 December 2020
- Portion of fair value changes on available-for-
sale securities attributable to participating
policyholders
(9,422)
(9,422)
- Available-for-sale securities
Insurance
1,187,153
sale securities attributable to participating
- Available-for-sale securities
As at
31 December
As at
31 December
41,005
44,582
980
980
40,025
43,602
41,005
44,582
4,243
6,191
2020
24,723
12,039
12,298
RMB million
2019
31 December
As at
As at
31 December
2020
RMB million
1,963
5,888
1,963
5,888
RMB million
RMB million
26,093
2019
RMB million
RMB million
(Charged)/credited to other comprehensive income
(Charged)/credited to net profit
As at 1 January 2019
(i) The movements in deferred tax assets and liabilities during the year are as follows:
Net deferred tax assets/(liabilities)
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(o) Deferred tax
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
29,081
24,479
7,340
7,572
21,741
16,907
29,081
24,479
4,114
3,574
661
714
2,619
1,554
5,615
2,257
3,377
3,522
5,430
5,349
7,265
7,509
- Portion of fair value changes on available-for-
540,274
622,051
291,448
1,188,509
534,432
811,027
241,155
205,928
128,078
146,287
24,227
25,267
RMB million
RMB million
As at
31 December
2019
2020
927,892
31 December
232 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Net value
Impairment
Total
After one year but within five years
After five years but within ten years
After ten years
Within one year
Maturing:
Net value
Impairment
Total
Other loans
Policy loans
(g) Loans
As at
As at
As at
31 December
2020
27,256
124,531
103,666
221,464
279,286
213,096
231,084
RMB million
2019
31 December
As at
RMB million
2020
31 December
As at
594,913
638,849
(2,718)
(2,443)
597,631
641,292
422,759
440,562
174,872
200,730
RMB million
2019
31 December
RMB million
Total
38,540
After ten years
After one year but within five years
17,244
137,257
154,501
2,900
157,401
RMB million
RMB million
2019
2020
Total
Listed in Mainland, PRC
Unlisted
Debt securities
Total
Subordinated bonds/debts
Government agency bonds
Corporate bonds
154,501
Government bonds
(f) Held-to-maturity securities
As at 31 December
Investments in associates and joint ventures
As at 1 January
(e) Investments in associates and joint ventures
Collective Fund Trust Scheme
Investment management
RMB5,000 million
99.98% directly
Jiao Yin Guo Xin ⚫ CLI-China Nonferrous Metal
Investment management
RMB5,000 million
99.98% directly
Debt securities
As at
As at
31 December
2020
Maturing:
Debt securities - Contractual maturity schedule
As at 31 December 2020, no accumulated impairment loss for the investment of held-to-maturity securities has been
recognised by the Company (as at 31 December 2019: same).
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(f) Held-to-maturity securities (continued)
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 231
The estimated fair value of all held-to-maturity securities was RMB1,224,617 million as at 31 December 2020 (as at 31
December 2019: RMB967,662 million).
Unlisted debt securities include those traded on the Chinese interbank market.
927,892
1,188,509
718,983
973,052
208,909
215,457
927,892
1,188,509
112,702
104,668
197,676
201,343
401,799
617,515
215,715
264,983
RMB million
RMB million
2019
31 December
After five years but within ten years
(19,835)
641,292
(2,443)
20,559
1,037,629
20,559
1,187,153
519,715
601,492
90,733
137,287
32,640
13,013
58,314
53,778
236,241
301,106
101,787
(i) Other available-for-sale securities mainly include unlisted equity investments, private equity funds and perpetual bonds.
96,308
565,102
101,569
130,734
53,922
81,795
147,109
134,513
171,108
168,912
23,647
49,148
RMB million
RMB million
497,355
Debt securities
Listed in Mainland, PRC
Unlisted
313,421
1,458
278
95,428
108,493
151,940
199,859
497,355
565,102
451,455
523,636
45,900
41,466
RMB million
RMB million
2019
2020
31 December
31 December
As at
As at
Total
Subtotal
Unlisted
Listed overseas
Listed in Hong Kong, PRC
Listed in Mainland, PRC
Equity securities
Subtotal
2019
597,631
2020
31 December
As at
Total
After one year but within five years
Within one year
Contractual maturity schedule:
As at 31 December 2020, the Company's term deposits of RMB750 million (as at 31 December 2019: RMB 1,491 million)
were deposited in banks to back overseas borrowings and are restricted to use. Please refer to Note 10.3 for the details.
(i) Statutory deposits - restricted
528,754
7,830
418,441
102,483
60,324
459,822
1,740
521,886
RMB million
RMB million
31 December
2019
As at
31 December
31 December
As at
After five years but within ten years
Total
After one year but within five years
Within one year
Maturing:
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(h) Term deposits
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
594,913
638,849
(2,718)
2020
2020
RMB million
As at
31 December
2019
RMB million
As at
Total
Others (i)
Equity securities
Available-for-sale securities, at cost
Subtotal
Others (i)
Wealth management products
Preferred stocks
Common stocks
Funds
Equity securities
Subtotal
Others (i)
Subordinated bonds/debts
Corporate bonds
Government agency bonds
Government bonds
Debt securities
Available-for-sale securities, at fair value
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(j) Available-for-sale securities
For the year ended 31 December 2020
Notes to the Consolidated Financial Statements (continued)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 233
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 CBIRC. These funds may not be used for any purpose other than for paying off debts
during liquidation proceedings.
5,653
5,653
5,653
5,653
As at
31 December
(4,045)
RMB million
Subtotal
Investment
PRC
99.99% directly
Not applicable
Investment
(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.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 229
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(d) Investments in subsidiaries (continued)
(ii) The table below presents the basic information of the Company's major consolidated structured entities as at 31
December 2020:
Name
CL Asset-Yuanliu No.1 Insurance Asset
Management Product
CL Investment-China Eastern Airlines Group
Equity Investment Scheme
Kun Lun Trust ⚫Tianjin Urban Communications
Construction No. 1 Collective Fund Trust Scheme
Jiao Yin Guo Xin • Shaanxi Coal and Chemical
Industry Group Co., Ltd. Debt-to-Equity Swap
Collective Fund Trust Scheme
Shan Guo Tou⚫Jing Tou Corporate Trust Loan
Collective Funds Trust Scheme
China Life-China Hua Neng Debt-to-Equity Swap
Investment Scheme
Jiao Yin Guo Xin • China Aluminium Co., Ltd.
Supply-side Reform Collective Fund Trust Scheme
Jian Xin Trust • CL Guo Xin Collective Fund
Trust Scheme
Guang Da Hui Ying No. 8 Collective Fund
Trust Scheme
Chongqing Trust Fund • Guo Rong No.4 Collective
Fund Trust Scheme
Percentage
of shares held
Trust/
investments
received
Principal
activities
37.72% directly RMB21,103 million Investment management
and indirectly
Not applicable
100.00% directly RMB11,000 million
99.90% directly
China Life Qihang Fund I (ii)
Not applicable
Investment
PRC
99.98% directly
Not applicable
Investment
PRC
99.98% directly
Not applicable
Investment
PRC
99.98% directly
Not applicable
Investment
PRC
100.00% indirectly
RMB1,131 million
Investment
USA
99.99% directly
Not applicable
Investment
PRC
99.95% directly
Not applicable
Investment
CL Pension Industry (ii)
PRC
99.98% directly
Investment management
75.00% directly RMB10,000 million Investment management
and indirectly
Zhong Xin Jing Cheng • Tianjin Port Group Loans
Collective Fund Trust Scheme
100.00% directly
RMB6,000 million
Investment management
CL Investment-COSCO Marine Debt Investment
71.67% directly
RMB6,000 million Investment management
Scheme
Guang Da Hui Ying No. 11 Collective Fund
Trust Scheme
72.41% directly
RMB5,800 million Investment management
China Life-Tianjin Metro Infrastructure Debt
Investment Scheme
93.91% directly
RMB5,750 million Investment management
230 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(d) Investments in subsidiaries (continued)
(ii) The table below presents the basic information of the Company's major consolidated structured entities as at 31
December 2020 (continued):
Name
Bridge Heng Yi 604 Collective Fund Trust Scheme
China Life-Hua Neng Development of Infrastructure
Debt Investment Scheme
Percentage
of shares held
80.97% directly
and indirectly
100% directly
Trust/
investments
received
RMB5,330 million
Principal
activities
Investment management
RMB5,000 million
RMB7,900 million Investment management
99.99% directly RMB10,001 million Investment management
88.61% directly
Investment management
100.00% directly RMB10,000 million
Investment management
100.00% directly RMB10,000 million Investment management
Investment management
99.99% directly RMB10,000 million Investment management
99.99% directly RMB10,000 million
89.00% directly RMB10,000 million Investment management
85.00% directly
RMB9,998 million
Investment management
Jiao Yin Guo Xin Jing Tou Corporate Collective
Funds Trust Scheme
91.93% directly
(3,497)
Shang Xin-Ningbo Wu Lu Si Qiao PPP Collective
Fund Trust Scheme
88.02% directly
RMB9,343 million Investment management
China Life-Yanzhou Coal Mining Debt Investment
100.00% directly
RMB9,000 million
Investment management
Scheme
Zhong Hang Trust Fund • Tian Qi [2020] No.372
China Eastern Airlines Equity Instrument
Investment Collective Fund Trust Scheme
Kun Lun Trust-China Metallurgical No.1 Collective
Fund Trust Scheme
99.99% directly
RMB9,000 million Investment management
86.25% directly
RMB8,000 million
Investment management
Jiang Su Trust-Xin Bao Sheng No.144 (Jing Tou)
Collective Fund Trust Scheme
84.00% directly
RMB8,000 million
China Life-Huaneng International Infrastructure
Debt Investment Scheme
PRC
Investment
RMB484 million
Rui Chong Company (i)
New Aldgate Limited
PRC
50.00% indirectly
100.00% directly
Not applicable
RMB1,991 million
PRC
PRC
85.03% indirectly
100.00% indirectly
Hong Kong, PRC
The British Jersey Island
PRC
100.00% directly
100.00% indirectly
100.00% directly
RMB1,288 million
RMB200 million
Not applicable
Not applicable
RMB6,800 million
Principal activities
Asset management
Pension and annuity
Asset management
Investment in
retirement properties
Fund management
Financial service
Investment
Investment
Investment
Hong Kong, PRC
100.00% directly
Not applicable
Investment
Glorious Fortune Forever Limited
Hong Kong, PRC
100.00% directly
Not applicable
Investment
CL Hotel Investor, L.P.
King Phoenix Tree Limited
Golden Bamboo Limited
Sunny Bamboo Limited
Fortune Bamboo Limited
Golden Phoenix Tree Limited
CL AMP (i)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(d) Investments in subsidiaries
Unlisted investments at cost
As at
31 December
As at
31 December
2020
2019
RMB million
88,951
RMB million
63,228
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December 2020:
Name
AMC (i)
Pension Company (i)
AMC HK
Place of incorporation
and operation
Percentage of
equity interest held
PRC
60.00% directly
PRC
74.27% directly
Registered capital
RMB4,000 million
RMB3,400 million
and indirectly
Hong Kong, PRC
Suzhou Pension Company (i)
CL Wealth (i)
China Century Core Fund Limited
CL Health (i)
Franklin Shenzhen Company (i)
Guo Yang Guo Sheng (ii)
New Capital Wisdom Limited
New Fortune Wisdom Limited
Wisdom Forever Limited Partnership
Yuan Shu Yuan Jiu (ii)
The British Virgin Islands
The British Cayman Islands
100.00% indirectly
Not applicable
Investment
100.00% indirectly
Not applicable
Investment
PRC
99.98% directly
Not applicable
Investment
Yuan Shu Yuan Pin (ii)
Hope Building (i)
Shanghai Wansheng (ii)
Bai Ning (ii)
Yuanxiang Tianfu (ii)
Yuanxiang Tianyi (ii)
Shengyi Jingsheng (i)
CG Investments
CL Guang De (ii)
PRC
99.98% directly
Not applicable
Investment
PRC
100.00% indirectly
Investment
Not applicable
100.00% indirectly
The British Virgin Islands
USA
100.00% directly
Not applicable
Investment
The British Virgin Islands
100.00% directly
Not applicable
Investment
The British Virgin Islands
100.00% directly
Not applicable
Investment
The British Virgin Islands
The British Cayman Islands
Investment management
100.00% directly
Investment
PRC
PRC
100.00% indirectly
100.00% directly
100.00% indirectly
Not applicable
RMB1,530 million
USD2 million
Investment
Health management
Investment
PRC
89.997% directly
Not applicable
Investment
Not applicable
Kun Lun Trust ⚫Jizhong Energy Group Loan
Collective Fund Trust Scheme
RMB9,988 million Investment management
Total
RMB million
RMB million
95,901
61,539
20,683
51,650
116,584
2019
113,189
113,029
140
8
160
116,584
113,189
As at 31 December 2020, bonds with a carrying value of RMB111,233 million (as at 31 December 2019: RMB89,779
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.
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 2020, the carrying
value of securities deposited in the collateral pool was RMB250,407 million (as at 31 December 2019: RMB253,520
million). The collateral is restricted from trading during the period of the repurchase transaction.
116,436
2020
As at
31 December
31 December
(23,332)
Net deferred tax liabilities
(15,909)
(10,890)
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 237
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(p) Securities sold under agreements to repurchase
Interbank market
Stock exchange market
Total
Maturing:
Within 30 days
After 30 days within 90 days
After 90 days
Total
As at
(q) Other liabilities
(31,966)
As at
31 December
2020
RMB million
59,219
56,701
59,219
Total
Non-current
Current
56,701
56,701
59,219
17,412
19,372
Others
748
493
Stock appreciation rights (Note 32)
409
1,238
238 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
1,249
Interest payable of debt instruments
2019
RMB million
Interest payable to policyholders
Salary and welfare payable
16,139
14,113
10,060
10,300
Brokerage and commission payable
7,051
7,418
Payable to constructors
2,410
3,065
Agent deposits
1,811
1,998
As at
31 December
634
Tax payable
RMB thousand
Yin Zhaojun (iii)
Wang Junhui (iii)
Chang Tso Tung Stephen (ii)
Robinson Drake Pike
Tang Xin
Leung Oi-Sie Elsie
Remuneration
Benefits
paid
in kind
Pension scheme
contributions
Total
RMB thousand
1,253.0
139.9
86.1
1,479.0
320.0
320.0
320.0
300.0
320.0
320.0
320.0
300.0
(i) Zhao Peng was appointed as executive director on 20 February 2020 and resigned as executive director on 23 April 2020. He did not receive
remuneration from the Company.
(ii) Chang Tso Tung Stephen resigned as independent non-executive director on 19 October 2020. He will continue to perform as independent non-
executive director until the qualification of new independent non-executive director is approved by CBIRC.
Liu Huimin (iii)
(iii) Wang Bin, Su Hengxuan and other non-executive directors did not receive remuneration from the Company.
Yuan Changqing (iii)
Li Mingguang
240 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
As at
As at
31 December
2020
31 December
2019
RMB million
RMB million
553
400
953
739
162
188
1,668
1,327
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
43 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION
Tang Xin
The total compensation package for the directors, supervisors, chief executive and senior management for the year ended
31 December 2020 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 2020 consolidated financial statements. The final compensation will be disclosed in a separate announcement
when determined.
Total
(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 2020 are as follows:
Name
Wang Bin (iii)
Su Hengxuan (iii)
Zhao Peng (i)
included
in total
(iv) The above remuneration was calculated based on the relevant employment period during the reporting period.
Notes to the Consolidated Financial Statements (continued)
931.6
358.0
1,289.6
36.2
60.0
358.0
1,193.4
Actual paid
596.7
Li Mingguang
840.3
313.3
1,153.6
41.1
59.8
313.3
1,052.7
522.1
530.6
Xu Haifeng
26.4
26.4
17.9
8.5
8.5
Xu Hengping
Su Hengxuan
Yuan Changqing
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 241
Liu Huimin
Wang Junhui
For the year ended 31 December 2020
43 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 2019 are as follows:
Name
Wang Bin
Basic
salaries
Performance
related
bonuses
Subtotal
of salary
Deferred
payment
included in
Pension
Benefits
scheme
income salary income
in kind contributions
Total
Deferred
payment
included
in total
320.0
70.0
250.0
Robinson Drake Pike
320.0
70.0
250.0
Chang Tso Tung Stephen
Yin Zhaojun
596.7
| 23 |
250.0
70.6
200.7
106.7
1,718.1
70.6
1,647.5
Cao Qingyang
285.8
520.5
806.3
106.2
47.9
960.4
960.4
Wang Xiaoqing
39.6
70.8
110.4
19.6
1,410.7
8.6
927.2
Song Ping
277.5
Luo Zhaohui
Tang Yong
47.4
74.9
122.3
18.4
9.4
150.1
150.1
Han Bing
252.8
553.0
805.8
106.1
63.3
975.2
975.2
Huang Xin
483.5
138.6
138.6
The compensation amounts disclosed above for these supervisors for the year ended 31 December 2019 were restated
based on the finalised amounts determined during 2020.
: www.e-chinalife.com
: 86-10-63633333
E-mail
Website
Telephone
Office Address: 16 Financial Street, Xicheng District, Beijing, P. R. China
China Life Insurance Company Limited
中国人寿保险股份有限公司
FSC™ C007445
www.fsc.org
FSC
responsible sources
Paper from
MIX
TM
244 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
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 2020, 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 (2019: nil).
ir@e-chinalife.com
5
2019
2020
The supervisors received the compensation amounts disclosed above during their term of office in 2020 and 2019.
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 243
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
43 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION (continued)
(c) Five highest paid individuals
For the year ended 31 December 2020, the five individuals whose emoluments were the highest in the Company include
one director and one supervisor (2019: one director and one supervisor).
Details of the remuneration of the five highest paid individuals are as follows:
Basic salaries, housing allowances, other allowances and benefits in kind
Pension scheme contributions
33.0
Total
RMBO - RMB 1,000,000
RMB1,000,001 - RMB2,000,000
RMB2,000,001 - RMB3,000,000
RMB3,000,001 - RMB4,000,000
RMB4,000,001 - RMB4,500,000
2020
2019
RMB thousand
7,317
431
7,748
RMB thousand
14,125
459
14,584
Number of individuals
For the year ended 31 December
The emoluments fell within the following bands:
310.5
21.8
24.9
Jia Yuzeng
Han Bing
Cao Qingyang
Wang Xiaoqing
Luo Zhaohui (i)
Song Ping (ii)
Remuneration
Benefits
paid
in kind
Pension scheme
contributions
Total
RMB thousand
1,432.0
139.4
86.1
1,657.5
505.5
207.3
129.7
842.5
593.6
Name
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December 2020 are as
follows:
(b) Supervisors' emoluments
43 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION (continued)
70.0
320.0
Leung Oi-Sie Elsie
250.0
50.0
300.0
320.0
320.0
320.0
207.9
320.0
320.0
300.0
300.0
The compensation amounts disclosed above for these directors and the chief executive for the year ended 31 December
2019 were restated based on the finalised amounts determined during 2020.
The directors and chief executive received the compensation amounts disclosed above during their term of office in 2020
and 2019.
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.
242 China Life Insurance Company Limited | Annual Report 2020 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
320.0
GI
127.6
518.4
Total
in total
in total
RMB thousand
Jia Yuzeng
1,432.0
1,432.0
2,864.0
859.2
137.7
91.8
3,093.5
859.2
2,234.3
Shi Xiangming
98.9
164.9
263.8
33.0
in kind contributions
income salary income
Actual paid
included
Deferred
payment
included
206.9
115.6
840.9
42.1
20.2
8.5
(i) Luo Zhaohui resigned as non-employee representative supervisor on 22 July 2020 and did not receive remuneration from the Company.
(ii) Song Ping resigned as non-employee representative supervisor on 3 January 2020.
(iii) The above remuneration was calculated based on the relevant employment period during the reporting period.
929.1
70.8
Basic
Name
salaries
Performance
related
bonuses
Subtotal
of salary
Deferred
payment
included in
Benefits
Pension
scheme
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December 2019 are as
follows:
Later than five years
Equity attributable to ordinary equity holders of the Company
Not later than one year
RMB million
Total
RMB million
As at 1 January 2019
53,860
(6,010)
34,611
33,370
31,447
147,278
Other comprehensive income
for the year
33,901
33,901
Appropriation to reserves
5,857
1,275
5,857
12,989
As at 31 December 2019
53,860
27,891
40,468
34,645
37,304
194,168
As at 1 January 2020
53,860
RMB million
27,891
RMB million
General
Later than one year but not later than five years
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(r) Other equity instruments
Equity attributable to equity holders of the Company
Equity attributable to other equity instruments holders of the Company
As at
31 December
As at
31 December
2020
2019
RMB million
405,913
405,913
RMB million
365,916
358,125
7,791
Refer to Note 33 for the information of distribution to other equity instruments holders for the year ended 31 December
2020.
(s) Reserves
Unrealised gains/
(losses) from
Other available-for-sale
Share
premium
reserves
RMB million
RMB million
securities
RMB million
Statutory
reserve fund
Discretionary
reserve
40,468
reserve fund
37,304
403
523
China Life Insurance Company Limited | Annual Report 2020 | Financial Report 239
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2020
42 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(u) Commitments
(i) Capital commitments
Capital commitments of the Company relating to property development projects and investments:
Contracted, but not provided for
Investments
Property, plant and equipment
Total
31 December
As at
31 December
2020
2019
RMB million
RMB million
94,586
65,339
3,051
3,505
97,637
68,844
(ii) Operating lease commitments
As lessor, the future minimum rentals receivable under non-cancellable operating leases are as follows:
34,645
RMB million
RMB million
As at
Other comprehensive income
194,168
2019
for the year
25,297
25,297
Appropriation to reserves
5,009
5,857
15,875
Others
(1,269)
(1,269)
As at 31 December 2020
53,860
5,009
(1,269)
31 December
As at
As at
Pending lawsuits
The following is a summary of the significant contingent liabilities:
(t) Provisions and contingencies
31 December
2020
42,313
40,502
45,477
53,188
234,071
The Company's investment portfolio also provides it with
a source of liquidity to meet unexpected cash outflows.
It 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.
572
14,232
489
17.0%
11,013
29.2%
Liquidity sources
Analysis of Cash Flows
The Company's cash inflows mainly come from insurance
premiums, income from non-insurance contracts, interest
income, 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.
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 RMB56,629 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 RMB545,667 million.
Liquidity uses
97.6%
During the Reporting Period, profit before income tax from
the life insurance business decreased by 33.8% year on
year due to the combined impact of the update of discount
rate assumptions for reserves of traditional insurance
contracts and the change in gross investment income.
Profit before income tax from the health insurance
business rose by 97.6% year on year mainly due to the
growth of short-term health insurance business and
business quality improvement. Profit before income tax
from the accident insurance business rose by 17.0% year
on year mainly due to the growth of the accident insurance
business and business quality improvement. Profit before
income tax from other businesses rose by 29.2% year on
year mainly due to an increase in profits from subsidiaries.
5,875
For the year ended 31 December
-33.8%
42,418
28,073
-8.9%
59,795
54,488
Change
RMB million
2019
2020
Health insurance business
Accident insurance business
Other businesses
Life insurance business
Profit before income tax
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 its insurance activities
primarily relate to benefit payments under these insurance
products, as well as payments for policy surrenders,
withdrawals and policy loans.
11,611
The Company believes that its sources of liquidity are
sufficient to meet its current cash requirements.
-
Consolidated cash flows
Profit before Income Tax
3,323
on cash and cash equivalents
Net increase/(decrease) in
cash and cash equivalents
N/A
55
(144)
Foreign exchange gains/(losses)
The needs for liquidity management
-78.5%
(36,075)
(7,760)
Net cash inflow/(outflow) from
financing activities
management
The needs for investment
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis 27
An increase in premiums due to the
steady growth of the Company's
business
(247,515)
(292,797)
Net cash inflow/(outflow) from
investing activities
6.3%
286,032
304,024
Net cash inflow/(outflow) from
operating activities
Main Reasons for Change
Change
2019
2020
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.
18.3%
ANALYSIS OF SPECIFIC ITEMS
5.
26
22,804
24,983
116,254
127,673
149,109
162,783
169,043
198,596
Net realised gains on financial assets
Share of profit of associates and joint ventures
Net income from investment properties
Investment income from cash and others
Net income from fixed-maturity investments
Net income from equity investments
Net investment income
Gross investment income
(50)
2020
RMB million
For the year ended 31 December
Investment income
25
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
from 14.98% as at the end of 2019, the percentage of
investment in debt-type financial products changed to
11.08% from 11.62% as at the end of 2019, and the
percentage of investment in stocks and funds (excluding
money market funds) rose to 11.31% from 11.00% as at
the end of 2019.
As at the end of the Reporting Period, the Company's
investment assets reached RMB4,095,454 million, an
increase of 14.6% from the end of 2019. Among the
major types of investments, the percentage of investment
in bonds rose to 41.97% from 39.48% as at the end of
2019, the percentage of term deposits changed to 13.32%
Other equity investments include private equity funds, unlisted equities, preference shares, and equity investment plans, etc.
Cash and others include cash, cash at banks, short-term deposits and securities purchased under agreements to resell, etc.
2,497
4.
Funds include equity funds, bond funds and money market funds, etc. In particular, the balances of money market funds as at 31 December 2020 and
31 December 2019 were RMB1,206 million and RMB1,829 million, respectively.
3.
Other fixed-maturity investments include policy loans, statutory deposits-restricted, and interbank certificates of deposits, etc.
1. 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.
2019
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
31
861
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 end of the previous year - Securities sold
under agreements to repurchase at the end of the previous year - Derivative financial liabilities at the end of the previous year + Investment assets at the
end of the period - Securities sold under agreements to repurchase at the end of the period - Derivative financial liabilities at the end of the period)/2)
During the Reporting Period, there was no material equity
investment or non-equity investment of the Company that
is subject to disclosure requirements.
Major investments
The Company insisted on the prudent investment
philosophy and carried out comprehensive risk
management to prevent various investment risks. Based
on a disciplined and scientific internal rating system and
a multi-dimensional management mechanism of risk
limits, the Company scrutinized credit profiles of targets
and risk exposure concentration before investment in a
prudent manner and carried out ongoing tracking after
investment, effectively controlling credit risks through
early detection, early warning and early disposal. Under a
market environment where credit default events occurred
frequently, no credit default event occurred for the
Company in 2020.
and state-owned enterprises. As at the end of the
Reporting Period, over 99% of the debt-type financial
products were rated AAA or above by external rating
institutions. In general, the quality of the Company's debt-
type financial assets was in good condition and the credit
risks were well controlled.
2
The Company's debt-type financial products mainly
concentrated on the sectors such as transportation,
finance, public utilities and energy, and the financing
entities were primarily large central-owned enterprises
Credit risk management
During the Reporting Period, the Company's net
investment income was RMB162,783 million, an increase
of RMB13,674 million from 2019, rising by 9.2% year on
year. Due to the impact of an overall decline in interest
rate during 2020 as well as the maturity of the existing
investment assets, the net investment yield was 4.34%,
down by 27 base points from 2019. By closely keeping
pace with equity market fluctuations and paying constant
attention to risk exposures, the Company timely cashed-
in spread income, continued to optimize its position
structure, and achieved stable investment income.
The gross investment income of the Company reached
RMB198,596 million, an increase of RMB29,553 million
from 2019. The gross investment yield was 5.30%, up by
6 base points from 2019. The comprehensive investment
yield2 taking into account the current net fair value
changes of available-for-sale securities recognized in other
comprehensive income was 6.33%, down by 95 base
points from 2019.
Gross investment yield = (Gross investment income - Interest paid for securities sold under agreements to repurchase)/((Investment assets at the
end of the previous year - Securities sold under agreements to repurchase at the end of the previous year - Derivative financial liabilities at the end of
the previous year + Investment assets at the end of the period - Securities sold under agreements to repurchase at the end of the period - Derivative
financial liabilities at the end of the period)/2)
Net investment yield = (Net investment income - Interest paid for securities sold under agreements to repurchase)/((Investment assets at the end of the
previous year - Securities sold under agreements to repurchase at the end of the previous year + Investment assets at the end of the period - Securities
sold under agreements to repurchase at the end of the period)/2)
2.
1.
Notes:
1,841
5.24%
Gross investment yield²
4.61%
4.34%
Net investment yield¹
(1,148)
(670)
Disposal gains and impairment loss of associates and joint ventures
19,251
21,900
Net fair value gains through profit or loss
1,831
14,583
9,159
8,336
5.30%
33.1%
30,838
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
28
Renewal business
25,109
12,516
Short-term insurance business
374
406
Group Insurance Channel
28,872
28,846
First-year business of long-term insurance
2,040
3,018
First-year regular
9
110
Single
1,930
2,050
Renewal business
1,862
1,995
Short-term insurance business
24,970
23,833
Other Channels³
First-year business of long-term insurance
First-year regular
Single
Renewal business
968
31,109
Single
15,748
Gross written premiums categorized by channel
For the year ended 31 December
RMB million
2020
20191
Individual Agent Business Sector²
511,044
484,517
First-year business of long-term insurance
99,838
96,237
First-year regular
99,555
95,957
12,488
Single
280
Renewal business
391,272
371,140
Short-term insurance business
19,934
17,140
Bancassurance Channel
41,240
25,438
First-year business of long-term insurance
15,757
12,516
First-year regular
283
Solvency Ratio
28,285
3
First-year regular premiums with a payment
duration of 10 years or longer
15,748 ▼
2020
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
28
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 decreased by 7.61
percentage points from the end of 2019, which was due to
a consistent growth in insurance business and investment
assets, dividends payment, a decline in solvency
reserve assessment rate and redemption of other equity
instruments.
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.
276.53%
268.92%
266.71%
260.10%
356,953
3.7%
95,957 ▼
396,749
1,066,939
952,030
1,031,947
2019
31 December
31 December
2020
RMB million
As at
As at
Comprehensive solvency ratio
Core solvency ratio
Minimum capital
Actual capital
Core capital
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:
987,067
188
57,468 ▼
56,183 ▼
8
3
180
83
146
Short-term insurance business
Notes:
28,136
Total
612,265
567,086
Notes:
1. According to the sales deployment of "Yi Ti Duo Yuan", data for the year 2019 were adjusted on a pro forma basis.
2.
99,555 ▼
Premiums of individual agent business sector included premiums of the general sales team and the upsales team.
In 2020, the Company continued to push forward
the customer-centric sales deployment of “Yi Ti Duo
Yuan". The individual agent business sector focused
on the individual customer market and the capability in
value creation was prominent. The diversified business
sector targeted institutional customers and its business
positioning was clearly defined, which saw effective
improvement in its professional operation capability. With
emphasis on business development driven by productive
sales force, the structure of its sales force was further
optimized. As at the end of the Reporting Period, the
Company's total sales force was approximately 1.458
million, maintaining the leading position in the industry.
Individual Agent Business Sector
In 2020, facing the severe impact of the pandemic on
the economic and social development as well as the
insurance industry, the individual agent business sector
adhered to the priority of business value, pushed forward
transformation and upgrade of its sales management,
continued to optimize its business structure, and realized
continuous growth in both business scale and value
against unfavourable market conditions. During the
Reporting Period, the gross written premiums from the
sector amounted to RMB511,044 million, an increase
of 5.5% year on year. First-year regular premiums were
RMB99,555 million, an increase of 3.7% year on year.
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
19
The designated protection-oriented business continued to
grow, with its first-year regular premiums and the average
premiums per policy rising significantly year on year. As
affected by the pandemic, first-year regular premiums
with a payment duration of ten years or longer in the
sector were RMB56,183 million, a decrease of 2.2% year
on year. Renewal premiums amounted to RMB391,272
million, an increase of 5.4% year on year. The capability
of the individual agent business sector in value creation
was prominent. The value of one year's sales of the sector
was RMB57,669 million, an increase of 1.2% year on year.
New business margin of one year's sales of the sector
was 47.9%, which remained stable compared to 2019.
In 2020, the individual agent business sector firmly
implemented the strategy of business development driven
by productive sales force, and fully upgraded the Agent
Management and Compensation System in line with the
deployment of "Dingxin Project" to enhance the quality
of the sales force. Despite certain fluctuation in the size
of the sales force due to the impact of the pandemic, the
Company firmly adhered to high-quality development by
further tightening the agent recruitment, strengthening
sales force management and optimizing the structure of
the sales force. As at the end of the Reporting Period, the
number of agents of the sector was 1,378,000, including
841,000 agents from the general agent team and 537,000
agents from the upsales team, and the monthly average
productive agents increased by 9.7% year on year.
First-year regular premiums of
individual agent business sector
(RMB million)
Diversified Business Sector
In 2020, the transformation and upgrade under "Dingxin
Project" was carried out in the diversified business sector
in great depth. By concentrating on the development
philosophy of "professional operation, enhancement of
quality and efficiency, transformation and innovation, and
regulatory compliance", the diversified business sector
coordinated well with the individual agent business sector,
and focused on the development of bancassurance,
group insurance and health insurance business. Although
business development was generally affected by the
pandemic, the diversified business sector consolidated
its advantages, and demonstrated an upward trend in
business development. During the Reporting Period,
gross written premiums from the sector amounted to
RMB101,221 million, an increase of 22.6% year on year.
Bancassurance Channel. With equal emphasis on
business scale and value as its long-term goal, the
bancassurance channel focused on bank agency business
and steadily pushed forward the business transformation.
During the Reporting Period, gross written premiums from
the channel amounted to RMB41,240 million, an increase
of 62.1% year on year. First-year regular premiums
amounted to RMB15,748 million, an increase of 26.1%
year on year. Renewal premiums amounted to RMB25,109
million (a year-on-year increase of 100.6%), accounting for
60.89% of the gross written premiums from the channel
(a year-on-year increase of 11.69 percentage points). The
bancassurance channel constantly strengthened sales
team management, and the quality of the sales force
Gross written premiums of
bancassurance channel (RMB million)
2020
2019
3. Premiums of other channels mainly included premiums of government-sponsored health insurance business and online sales, etc.
100.00%
2.
100.00%
Insurance contracts
22 China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
291
Mainly through the channel of exclusive
individual agents
3,406
261
Mainly through the channel of exclusive
individual agents
7,883
Surrender
payment
121
Mainly through the channel of exclusive
individual agents
Major sales channel
Net increase
in investment
contracts
11,630
RMB million
China Life Xin Account Endowment Insurance
(Universal Insurance) (Diamond Version)
(國壽鑫賬戶兩全保險(萬能型)(鑽石版))
China Life Xin Account Annuity Insurance
(Universal Insurance) (Excellent Version)
(國壽鑫賬戶年金保險(萬能型)(卓越版))
(Universal Insurance) (Exclusive Version)
(國壽鑫賬戶兩全保險(萬能型)(尊享版))
China Life Xin Account Endowment Insurance
Insurance product
For the year ended 31 December 2020
Top three insurance products in terms of net increase in investment contracts
2. China Life Xin Xiang Jin Sheng Annuity Insurance (Type A), China Life Xin Fu Ying Jia Annuity Insurance and China Life Hong Fu Zhi Zun Annuity
Insurance (Participating Insurance) have been replaced by their upgraded products, and the gross written premiums were recorded as renewal
premiums.
1. Standard premiums were 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.
745
Mainly through the channel of
exclusive individual agents
20,271
779
Mainly through the channel of
exclusive individual agents
506
Notes:
3,573,154
Life insurance
Health insurance
Accident insurance
Total of insurance contracts
Accident insurance business
Health insurance business
Life insurance business
Insurance benefits and claims expenses
For the year ended 31 December
Analysis of claims and policyholder benefits
As at the end of the Reporting Period, the reserves of insurance contracts of the Company were RMB2,973,225 million,
16.5% up from RMB2,552,736 million as at the end of 2019, which was primarily due to the accumulation of insurance
liabilities from new policies and renewal business. 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.
9.0%
768,280
16.5%
2,552,736
18.4%
8,529
China Life Hong Fu Zhi Zun Annuity
10,096
2,973,225
837,293
158,800
195,487
16.0%
2,385,407
Change
2019
As at
31 December
2,767,642
31 December
2020
As at
RMB million
Note
Including: Residual margin N
23.1%
(國壽鑫福贏家年金保險)2
Annuity Insurance
24,116
Other Channels. In 2020, gross written premiums from
other channels reached RMB31,109 million, an increase
of 10.0% year on year. The Company actively participated
in all kinds of government-sponsored health insurance
businesses, which maintained the leading market position.
As at the end of the Reporting Period, the Company
carried out over 220 supplementary major medical
expenses insurance programs, providing services to 360
million people. It also undertook over 300 health care
entrusted programs, covering 170 million people, provided
supplementary medical insurance to 54 million people, and
offered long-term care insurance protection to 15 million
people.
from the end of 2019
133.3%
High-performance
personnels increased by
51,000
Direct sales representatives
Short-term insurance premiums
28,846 ▼
23,833 ▼
4.8%
28,872 ▼
24,970 ▼
2019
2020
The Company pushed forward its online insurance
business, consistently increased the supply of online
insurance products, enhanced its online insurance
operations and promoted integration of online and offline
sales to provide a more diversified and convenient channel
for customers seeking insurance products and services.
In 2020, the Company's online insurance business saw
greater development opportunities, which resulted in a
rapid growth of its development.
Gross written premiums of group
insurance channel (RMB million)
was improved steadily. As at the end of the Reporting
Period, the number of bancassurance channel account
managers was 29,000, and both the quarterly average
active managers and the production capacity per manager
increased substantially.
41,240 ▼
20 China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
29,000
Bancassurance channel
account managers
19.7% year on year
Monthly average productive
agents increased by
1.378 million
Agents of individual agent business sector
First-year regular premiums
2019
25,438 ▼
12,488 ▼
26.1%
Group Insurance Channel. The group insurance channel
continued to deepen its diversified business development
and improve profitability, reinforced the expansion of
key business sectors, and achieved steady development
in different business fields. During the Reporting
Period, gross written premiums from the channel were
RMB28,872 million, an increase of 0.1% year on year.
Short-term insurance premiums were RMB24,970
million, an increase of 4.8% year on year. As at the
end of the Reporting Period, the number of direct sales
representatives was 51,000, and the number of high-
performance personnel increased by 33.3% from the end
of 2019.
Investment contract benefits
Being customer-centric, the Company fully leveraged
the collaborative advantages of the fellow members of
CLIC and actively provided customers with a series of
quality financial and insurance service solutions. In 2020,
premiums from property insurance cross-sold by the
Company exceeded RMB20 billion for the first time, an
increase of 14.0% year on year, whereas new bids of
enterprise annuity funds and pension security products
of Pension Company cross-sold by the Company grew
by 20.7% year on year. The Company entrusted CGB
to sell bancassurance products, with first-year regular
premiums increasing by 29.0% year on year. The number
of new debit cards and credit cards jointly issued by the
Company and CGB exceeded 1,150,000. Meanwhile,
the Company gave full play to the brand advantages on
the comprehensive financial strength, and worked with
CGB and CLP&C to carry out various operation activities
to provide customers with diversified and individualized
services, thus fostering a sound synergy and mutual
benefits.
21
China Life Xin Fu Ying Jia
(國壽城鄉居民大病團體醫療保險(A型))
Urban Citizens (Type A)
Health Insurance for Rural and
Through other sales channels
26,955
26,955
Mainly through the channel of
exclusive individual agents
34,828
170
Mainly through the channel of
exclusive individual agents
12,813
42,657
payment
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
Major sales channel
premium
Surrender
Standard
premiums
from new
Gross written
RMB million
China Life Critical Illness Group
Annuity Insurance (Type A)
(國壽鑫享金生年金保險(A款))2
China Life Xin Xiang Jin Sheng
Insurance (Celebration Version)
(國壽鑫享至尊年金保險(慶典版))
China Life Xin Xiang Zhi Zun Annuity
Insurance product
For the year ended 31 December 2020
Top five insurance products in terms of gross written premiums
Analysis of major insurance products
policies¹
Policyholder dividends resulting from participation in profits
Insurance (Participating Insurance)
(國壽鴻福至尊年金保險(分红型))2
2019
8.55%
350,107
Common stocks
16.95%
605,996
17.10%
700,748
Equity financial assets
8.77%
313,413
8.75%
358,382
Other fixed-maturity investments²
11.62%
415,024
11.08%
453,641
Debt-type financial products¹
39.48%
1,410,564
41.97%
1,718,639
Bonds
14.98%
535,260
13.32%
545,667
74.85%
2,674,261
276,604
7.74%
Funds³
114,311
2020
Total
6.24%
222,983
5.85%
239,584
Investments in associates and joint ventures
1.62%
57,773
1.58%
64,576
Cash and others5
0.34%
12,141
75.12%
0.35%
Investment properties
4.99%
178,302
5.44%
223,317
Other equity investments4
0.91%
32,640
0.32%
13,013
Bank wealth management products
3.31%
118,450
2.79%
14,217
3,076,329
4,095,454
Amount
2020
Statutory insurance fund contribution
Other expenses
Administrative expenses
Finance costs
Underwriting and policy acquisition costs
For the year ended 31 December
Analysis of underwriting and policy acquisition costs and other expenses
23
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
During the Reporting Period, insurance benefits and claims expenses rose by 14.0% year on year due to an increase in
the change of insurance contract liabilities. In particular, insurance benefits and claims expenses of the life insurance
business rose by 14.8% year on year mainly due to the steady growth of the life insurance business. Investment contract
benefits rose by 7.5% year on year due to an increase in the scale of universal insurance accounts. Policyholder dividends
resulting from participation in profits increased by 26.4% year on year due to an increase in investment yield from
participating accounts.
26.4%
22,375
28,279
2019
7.5%
9,846
21.2%
6,323
7,661
8.8%
75,471
82,146
14.8%
427,673
490,994
14.0%
509,467
580,801
Percentage
9,157
RMB million
RMB million
Change
84,342
Change
As at 31 December 2020
Percentage
Amount
Fixed-maturity financial assets
Term deposits
Investment category
RMB million
As at the end of the Reporting Period, our investment assets categorized by investment object are set out as below:
Investment portfolios
24 China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
investment.
In 2020, the Company reshaped its organizational
structure according to investment value chain and
established a market-oriented incentive and restraint
mechanism, which resulted in a significant improvement
of its coordinated management capability in asset
allocation. In respect of entrusted management, the
Company introduced a competitive mechanism that
compared entrusted asset managers within and outside
China Life, eliminating bad performers through strict
assessment. The constant optimization of investment
management system was expected to have long-term
and far-reaching effects on the Company's insurance fund
plan for assets with medium- and long-terms, and made
flexible tactical allocation based on market situations. In
2020, the Company mainly allocated to three major asset
types. Firstly, in respect of the liability-matching portfolios,
the Company effectively seized the opportunity of interest
rate recovery and a supply increase in the second half
of 2020, and increased allocation mainly in government
bonds with long duration to further lengthen the duration
of assets and narrow the duration gap between assets
and liabilities; secondly, in respect of non-standard
fixed income assets and quasi-fixed income assets with
stable cash flows and higher interest income, to which
the Company insisted on allocating as much as possible
on the premise of controlling credit risks by proactively
dealing with the situation of the decreasing financing
demands and intensified market competitions; thirdly, in
respect of equity assets with potential elastic return in the
future, the Company continued to increase its allocation
to core assets under the structural market environment,
and optimized the tactical investment of equity assets to
increase the yields from the asset portfolios.
The Company actively responded to the complex and
ever-changing investment environment, adhered to
the fundamental principle of asset-liability interaction
management, firmly implemented its strategic allocation
In 2020, the global economy was severely impacted
by the COVID-19 pandemic, which then started to
recover as governments around the world introduced
macro hedging policies. By effectively coordinating the
pandemic prevention and control and the economic and
social development, and accelerating the formation of a
new development pattern of "dual circulation", China's.
economy was the first to pick up and continued to recover
from the impact of the pandemic, and China was the
world's only major economy to achieve growth in 2020.
Throughout the year, the interest rate of the domestic
bond market fluctuated greatly, which rebounded
significantly after falling to a historical low level in early
April and went higher than the level at the beginning of
2020; at the same time, the stock market also fluctuated
upward after falling to the lowest level of the whole year
at the end of March with an obvious structural market
characteristics.
Investment Business
As at 31 December 2019
5.7%
During the Reporting Period, underwriting and policy
acquisition costs rose by 3.6% year on year due to the
Company's business growth. Finance costs decreased
by 11.9% year on year due to a decrease of interest
paid for securities sold under agreements to repurchase.
Administrative expenses decreased by 6.4% year on
year due to a decrease in expenses amid the COVID-19
pandemic and the reinforced cost administration by the
Company.
81,396
3.6%
3,747
4,255
37,687
-11.9%
-6.4%
12,208
9,602
27.1%
1,229
1,163
40,275
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 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 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.
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.
Net assets, defined as assets less corresponding policy
liabilities and other liabilities valued; and
34
China Life Insurance Company Limited | Annual Report 2020 | Embedded Value
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:
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.
BACKGROUND
Potential Risks
EMBEDDED
33
The Company believes that it will have sufficient capital
to meet its insurance business expenditures and new
general investment needs in 2021. At the same time, the
Company will make corresponding financing arrangements
based on capital market conditions to further implement
its future business development strategies.
will reinforce its research and judgement on the macro-
economic situations, enhance asset-liability management
and flexibly adjust asset allocation for the purpose
of achieving stable investment income. Moreover,
the Company will adhere to the market-oriented and
customer-centered principle, push forward reform and
transformation and fully enhance the quality of business
operation and management. In the future, the Company
will continuously focus on and enhance the analysis of
complex risk factors including the COVID-19 pandemic,
and strive to promote its high-quality development.
The international economic and financial situation
remains complicated and challenging, there are many
uncertainties in the impact of the pandemic at home and
abroad and the external environment, and the foundation
for the recovery of the domestic economy is not yet
very solid, which together bring challenges for the stable
development of the insurance business. Insurance funds
investment is facing challenges such as downward
trend of the benchmark interest rate in the domestic
market, an increase of defaults in the bond market and
shortages of assets with long duration, which result in
more pressure on asset allocation. The Company will
take a variety of measures to actively deal with risks and
challenges. On the one hand, it will closely follow market
conditions and customer demands, put more efforts to
product innovation, optimize product structure, improve
service quality, and actively expand the insurance supply
with enhanced quality; on the other hand, the Company
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
32
2021 is the critical year for the Company's high-quality
development. The Company will push forward "China Life
Revitalization" initiative in all aspects, taking development
as the top priority, adhering to the strategic core of “Three
Major Transformations, Dual Centers and Dual Focuses,
Asset-liability Interaction", upholding the operational
guideline of "prioritizing business value, strengthening
the sales force, achieving stable growth, upgrading
technology, optimizing services, and guarding against
risks", in order to achieve steady business development,
improve development quality, deepen reform and
innovation, and constantly enhance risk prevention and
control. These efforts will greatly power the Company's
high-quality development during the "14th Five-Year Plan"
period.
Development Strategies and Business Plans of
the Company
Industry Landscape and Development Trends
China is still in an important period of strategic opportunity
for development at present and for the foreseeable
future, and the foundation for long-term economic growth
remains solid. With the full kick-off of the “14th Five-Year
Plan", a new development pattern of "dual circulation" is
to be fostered, propelling sustained and healthy growth
of China's economy, which will provide a favourable
external environment for the high-quality development
of the insurance industry. Recently, insurance regulatory
authorities issued a number of policies to strengthen long-
term strong oversight of the industry, and put great efforts
to address market disorders so as to maintain economic
and financial security, laying a solid foundation for the
healthy development of the industry. China has initiated
the "Healthy China" program to actively cope with the
aging population, and healthcare and aged-care sectors
will become the important growth drivers for life insurance
industry in the next stage of development. The insurance-
technology integration will be further accelerated, and
with cloud computing, big data, Al and other technologies
further empowering the insurance value chain in aspects
such as sales and services, operation and management
and risk prevention and control, digital transformation
of the industry will be further sped up. As the insurance
market fully opening up, there will be more insurance
providers in the industry, which will further enhance the
market sophistication. Given the multiple positive factors,
there is still great development potential and broad
development space for China's life insurance industry.
FUTURE PROSPECT
For the performance of the corporate social responsibility by
the Company during the Reporting Period, please refer to the
full text of the "2020 Environmental, Social and Governance
(ESG) & Social Responsibility Report" ("ESG Report 2020")
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). The specific information on
environment is set out in Part 6 of the "ESG Report 2020".
PERFORMANCE OF THE CORPORATE
SOCIAL RESPONSIBILITY
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.
VALUE
Constantly implementing the strategy of "Inclusive
Healthcare" and "Integrated Aged-care". The Company
actively participated in the "Healthy China" program.
By consolidating the resources of healthcare and
medical services, the Company established a healthcare
ecosystem covering full life cycles to constantly
improve its health service capabilities, and promoted
the construction of the online and offline platforms by
enhancing cooperation with technology companies to
explore the possible feasibility that insurance businesses
were propelled by health services. As at the end of the
Reporting Period, more than a hundred types of services
were available on China Life Inclusive Healthcare Service
Platform, and the accumulated number of its registered
users led the industry. During the pandemic, the Company
quickly established the "Healthcare Service Zone"
especially for the prevention and control of the pandemic.
In 2020, the Company created an innovative model for the
cooperation between medical and insurance entities and
promoted application of the integrated claims settlement
model of "basic medical insurance + supplementary major
medical expenses insurance + commercial insurance".
The Company continued to extend the deployment of
China Life aged care, and invested in the construction
of several large retirement communities in Suzhou,
Hainan, Chengdu and other cities. The Company set up
the China Life Integrated Aged Care Fund, steadily made
investments by focusing on real assets such as continuing
care retirement communities, medical care complexes in
urban core areas and boutique aged care apartments, and
deployed high-quality resources in the aged care industry
such as rehabilitation, medical and care, hospital, health
care big data and health industrial parks, so as to further
meet the needs of customers in the strategic regions such
as Beijing-Tianjin-Hebei, the Yangtze River Economic Belt
and Guangdong-Hong Kong-Macao.
C Cost of Required Capital
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.
31
503,553
(50,220)
(62,244)
509,515
565,797
482,793
568,587
2019
2020
31 December
31 December
RMB million
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
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.
F Value of One Year's Sales before Cost of Required Capital
G Cost of Required Capital
D Value of In-Force Business after Cost of Required Capital (B + C)
B Value of In-Force Business before Cost of Required Capital
A Adjusted Net Worth
ITEM
The embedded value as at 31 December 2020, the value of one year's sales for the 12 months ended 31 December 2020,
and the corresponding results as at 31 December 2019 are shown below:
Components of Embedded Value and Value of One Year's Sales
SUMMARY OF RESULTS
35
China Life Insurance Company Limited | Annual Report 2020 | Embedded Value
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% per annum.
16% grading to 20% (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 10% per annum.
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.
PREPARATION AND REVIEW
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.
E Embedded Value (A + D)
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
26,551
Insurance policy services became more friendly.
To meet customers' needs, the Company provided
"convenient and caring" services of premium quality in
claims settlement with integrated internal and external
resources. A network of over 20,000 medical institutions
was established, providing direct claims payment services
for customers of more than five million person-times
in 2020. With the promotion of "Claims Settlement for
Critical Illness within One Day", the time required for
making a claims payment was further shortened, and
customers with critical illness could be paid soon after
their diagnosis was confirmed. The scope of services and
service efficiency were comprehensively improved as
more service contact points were available for customers
and self-service channels were enriched in terms of policy
administration.
and 3.53% is
held by AMC
Company,
817
4,931
6,789
70.74%
is held by the
3,400
Taking public deposits; granting short-term, mid-term and long-
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
notarization businesses; other businesses approved by the CBIRC
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 CBIRC
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 CBIRC
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
China Guangfa Bank
Co., Ltd.
China Life Property
and Casualty
Insurance Company
Limited
China Life Pension
Company Limited
Management
Company Limited
China Life Asset
2,133
12,237
13,897
60%
4,000
Net Profit
Net Assets
Total Assets
Shareholding
Registered
Capital
RMB million
Major Business Scope
459,295
18,800
Deployment of ecological services was accelerated.
The Company completed a framework for customer
experience management, designed a route panorama
for future customer services and established a customer
experience improvement mechanism driven by
customers' needs to constantly optimize its business
process. In 2020, the Company upgraded the online +
offline scenario-based ecological service model, and the
number of participants in the customer festival and the
online visits of the "Little Painters of China Life" event
increased by 20% and 300% year on year, respectively.
430 million recommendations of personalized service
scenarios to customers were made, effectively extending
the customer experience chain.
40%
1,730
Intelligent services were convenient and efficient. The
Company further applied Al technologies in a variety of
business processes to provide customers with efficient
and precise services. The use of intelligent models for
review and quality inspection in the process of insurance
application helped increase efficiencies of underwriting
and dual recordings by 40% and 25%, respectively,
year on year. The Company also sped up application
of intelligent technologies in its contacting services
with intelligent online customer services and intelligent
outbound-call services up by 158% year on year, and
the volume of electronic follow-up calls for new policies
reaching 92%. The application of intelligent models
promoted the automated approval rates of underwriting
and policy administration to be 92.7% and 99%,
respectively.
Online services were expanded with increased quality.
The Company focused on usage habits of its customers
and designed more online service applications available
at the fingertips through the Internet. Service contents
were enriched continuously to promote online and
offline service coordination. The number of active users
of China Life Insurance App increased by 48% year on
year, paperless application rate of long-term individual
insurance reached 99.9% and the promotion of paperless
application rate of group insurance reached 97.9%, the
online processing rate of policy administration and claims
settlement for individual and group insurance rose by 20,
28 and 37 percentage points year on year respectively, and
the number of electronic notification messages increased
by 82.5% year on year.
Product supply was enriched constantly. In 2020, the
Company adhered to the product development concept
of being "customer centric, market oriented and value
focused", strengthened asset-liability management and
continued to intensify product development such as the
protection-oriented products. High-quality development
of the Company was properly supported through product
innovation and upgrade. The Company currently had a
product system catering to all types of customers, and
created a variety of brand products in the market. In 2020,
the Company newly developed and upgraded a total of 237
products, including 19 life insurance products, 198 health
insurance products, 7 accident insurance products and 13
annuity insurance products. Out of these products, 216
were protection-oriented products and 21 were long-term
savings products.
In 2020, focusing on customer demands, the Company
adhered to the operation and management objective
of "strengthening efficiency, promoting technology
driven development, achieving value improvements and
offering first-class customer experience" and upheld the
"convenient, quality and caring" service concept to push
forward operations and services to be more Internet-
based, intelligent, integrated and ecological and provide
customers with high-quality services. In early 2020, the
Company upgraded a variety of services to overcome
severe challenges during the pandemic. The Company
made a quick response to simplify claims settlement
procedures, implemented remote claims settlement
and remote investigation over video, and completed the
payment of more than 1,000 coronavirus-related claims. It
also introduced a new service mode, namely the "Online
Customer Service Agent", through which customers
could easily connect to the online customer service agent
with one click, and offered the special telephone voice.
navigation and 24/7 customer services so as to fully meet
customers' needs.
Operations and Services
30 China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
Digital services, enhancing customers' new experience.
Being customer-centric, the Company pushed forward
intelligent upgrade of online services. The "Contactless
Services" facilitated customers accessing insurance
services just at home by employing Internet video and
intelligent identification technology. Based on big data
and Al technologies, the intelligent claims settlement
model for health insurance, covering 19 key risks in
five categories, made claims settlement services more
efficient and convenient, and the big data-based intelligent
policy "health check" with the family of customers as the
focus provided thoughtful suggestions for customers to
make the best choices.
Digital field offices, creating new intelligent bases.
Cutting-edge technologies such as 5G, "Internet of
Things" and edge computing were widely applied in the
Company's 30,000 field offices across China (including
branches and sales & services offices), and the newly
equipped electronic facilities such as the self-service
terminals for business processing, intelligent sensing
equipment and visualized smart screen brought new
vitality to field offices. Given the application of the
automatic Internet access, digital coaching and training,
multi-dimensional and visualized performance tracking,
and Al real-time performance reporting, the field offices
were established to be important digital supports for
service extension.
chain.
Digital sales, creating new driving forces for
development. The Company launched online agent
recruitment, online agent training and online business
development by employing digital technologies. The full-
process online agent recruitment was quickly put into
use; 155,000 Al online training sessions were carried out,
with the number of participations reaching 11.10 million
person-time; live video streaming of morning assemblies
and cloud innovation meetings, etc., were held intensively,
with a daily average number of 2,200 meetings during
the pandemic; the "Golden Manual 2.0" was upgraded
in all aspects to facilitate precise marketing with more
powerful intelligent algorithm, so as to realize the overall
empowerment of digital tools of the insurance sales value
Empowerment upgrade, advancement of digital
transformation in all aspects
such as medical and healthcare institutions, etc., to
carry out nearly 170,000 services and activities, which
consistently enriched the Company's insurance-centered
digital ecosystem services.
Digital ecosystem, bringing out the synergy effect.
With the continued expansion of an interconnecting, open
and shared social ecosystem based on the digital platform,
the Company released more than 1,700 standardized
services and launched more than 740 innovative micro-
applications. It also cooperated with different institutions
Technology as a driver, activating innovation vitality.
The Company reinforced its technological innovation
in terms of its four technological innovation-themed
laboratories, namely InsurTech, cloud computing and
infrastructures, cyber security and block chain. Nearly
50 research projects in cutting-edge technologies were
further advanced, and 28 intelligent application scenarios
covering various aspects were introduced. A flexible
and nimble hybrid cloud with a powerful hash rate was
innovated with great efforts, which fully supported
the seamless shift of the Company's operations and
management from offline to online and effectively ensured
continuity of the Company's business operations during
the pandemic.
Technological deployment, demonstrating China
Life's strength. Centering on the strategic core of "Dual
Centers and Dual Focuses" and optimizing technological
governance and deployment, the Company implemented
the tech products-based management system,
accelerated the establishment of innovation incubation
center and R&D sub-centers for technological application,
and continued to improve the technology-empowered
ability in value creation and the diversification of supply.
Leveraging on the established advantages of its sales
force and service network, the Company intensified online
and offline integration with offline digital field offices and
online digital platform, which enabled frequent interaction
between the Company, its agents and customers under
the "Technology-driven China Life" layout, and provided
convenient, efficient and precise financial and insurance
services to customers.
Great leap in capability, technological innovation
at full speed
In 2020, the Company pushed forward digital transformation
in all aspects, accelerated technological innovation,
proactively applied digital technologies to reinforce
technology empowerment and support its high-quality
development in various fields.
Technology Empowerment
TECHNOLOGY EMPOWERMENT AND
OPERATIONS AND SERVICES
29
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
Details of structured entities controlled by the Company is set out in Note 42 in the Notes to the Consolidated Financial
Statements in this annual report.
Structured Entities Controlled by the Company
Note: For details, please refer to Note 9 and Note 35 in the Notes to the Consolidated Financial Statements in this annual report.
13,812
218,150
3,027,972
43.686%
19,687
106,930
1,072,140
China Life Insurance Company Limited | Annual Report 2020 | Management Discussion and Analysis
64,354
10% increase in expenses
5.
48,499
409,278
Investment return -50bps
4.
68,247
598,225
61,344
528,297
55,630
480,522
58,373
503,553
Risk discount rate -50bps
Investment return +50bps
1. Risk discount rate +50bps
Base case scenario
3.
2.
Sales after Cost
of Required Capital
RMB million
Value of One year's
Value of In-Force
Business after Cost
of Required Capital
Sensitivity Results
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
37
China Life Insurance Company Limited | Annual Report 2020 | Embedded Value
Other miscellaneous items.
J
497,088
Reflects dividends distributed to shareholders during 2020 and redemption of other equity instruments.
54,817
10% decrease in expenses
Company Name
China Life Insurance Company Limited | Annual Report 2020 | Embedded Value
38
545,333
14. Allowing for diversification in calculation of VIF
59,106
501,482
13. Using 2019 EV appraisal assumptions
60,631
510,867
12. 10% decrease in morbidity rates
56,121
496,380
11. 10% increase in morbidity rates
59,735
504,252
10. 10% decrease in lapse rates
57,061
502,802
9. 10% increase in lapse rates
59,310
507,089
8. 10% decrease in mortality rate for non-annuity products
and 10% increase in mortality rate for annuity products
57,440
499,989
10% increase in mortality rate for non-annuity products
and 10% decrease in mortality rate for annuity products
7.
61,930
510,018
6.
942,087
|
H
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 2020
The following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period:
MOVEMENT ANALYSIS
36 China Life Insurance Company Limited | Annual Report 2020 | Embedded Value
Note 2: The results of individual agent business sector for the year 2019 have been restated to allow for new sector definitions on a pro forma basis.
Note 1: 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.
49.4%
49.4%
47.9%
48.1%
2019
2020
31 December
31 December
By Annual Premium Equivalent
By First Year Premium
New Business Margin of One Year's Sales of Individual Agent Business Sector
The new business margin of one year's sales of individual agent business sector for the 12 months ended 31 December
2020 is shown below:
Note 2: The results of individual agent business sector for the year 2019 have been restated to allow for new sector definitions on a pro forma basis.
Note 1: Numbers may not be additive due to rounding.
56,972
57,669
58,698
58,373
(5,047)
(5,981)
63,745
D Operating Experience Variance
Reflects the gains or losses due to changes in exchange rate.
E Investment Experience Variance
G Market Value and Other Adjustments
Change in the market value adjustment from the beginning of year 2020 to 31 December 2020 and other adjustments.
G
Reflects the effects of appraisal methodology and model enhancement, and assumption changes.
F
Compares actual with expected investment returns during 2020.
E
Reflects the difference between actual operating experience in 2020 (including mortality, morbidity, lapse, and expenses etc.) and the
assumptions.
D
Value of one year's sales for the 12 months ended 31 December 2020.
C
Reflects expected impact of covered business, and the expected return on investments supporting the 2020 opening net worth.
B
1,072,140
585
(28,626)
950
(1,293)
(518)
24,024
567
58,373
75,991
942,087
RMB million
Notes: Items B through J are explained below:
K Embedded Value as at 31 December 2020 (sum A through J)
Others
J
|
Shareholder Dividend Distribution and Capital Changes
H Exchange Gains or Losses
F Methodology, Model and Assumption Changes
Major Subsidiaries and Associates of the Company
48
China Life Insurance Company Limited | Annual Report 2020 | 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;
the operating assumptions used by China Life have
been set with appropriate regard to past, current and
expected future experience; and
42
2,266
1,982
1,391
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;
Amount of the Investment
Management Service Fee,
Floating Management Fee,
Performance-based Bonus
and Real Estate Operation
Management Service Fee
(RMB million or its
equivalent in foreign currency)
(including the amount for the subscription
of the related financial products: 100,000)
200,000
(including the amount for the subscription
of the related financial products: 100,000)
200,000
200,000
(including the Amount
for Subscription of the Related
Financial Products)
(RMB million or its
equivalent in foreign currency)
Amount of Assets Newly
Entrusted for Investment and
Management during the Period
For the three years ending 31 December 2021, the
annual caps on the contractual amount of assets newly
entrusted by the Company to CLI for investment and
management, as well as the annual caps on the amount
of the investment management service fee, floating
management fee, performance-based bonus and real
estate operation management service fee payable by the
Company to CLI are as follows:
(including the amount for the subscription
of the related financial products: 100,000)
•
•
•
To the Directors of China Life Insurance Company
Limited
China Life Insurance Company Limited ("China Life").
has prepared embedded value results as at 31 December
2020 ("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.
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.
Scope of Work
Our scope 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 2020, in accordance with the "CAA
Standards of Actuarial Practice: Appraisal of Embedded
Value" issued by the China Association of Actuaries
("CAA");
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 2020; and
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.
Opinion
Based on the scope of work above, we have concluded
that:
•
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 the investment management service fee, floating
management fee, performance-based bonus and real
estate operation management fee in respect of the
investment and management services provided by CLI to
the Company. For details as to the method of calculation
of the investment management service fee, floating
management fee, performance-based bonus and real
estate operation management fee, please refer to Note 35
in the Notes to the Consolidated Financial Statements.
In addition, the assets entrusted by the Company to CLI
would also be partially used for the subscription of the
related financial products established and issued by CLI
or of which CLI had participated in the establishment and
issuance, and such related financial products would be
limited to infrastructure investment schemes and project
asset-backed schemes.
31 December 2021
For the year ending
31 December 2020
China Life Insurance Company Limited | Annual Report 2020 | Significant Events
40
The 2021 policy management agreement renewed by the Company and CLIC was exempt from the reporting, announcement, annual review and
independent shareholders' approval requirements under Chapter 14A of the Listing Rules.
3
the framework agreement between the Company and
Chongqing International Trust Inc. ("Chongqing Trust"),
and the framework agreement between the Company
and China Life Capital. 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 CLI,
CLEC and China Life Capital. Therefore, each of CLIC,
CLP&C, CLI, CLEC 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. CLWM
is a subsidiary of AMC, and is therefore also a connected
subsidiary 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 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 CLIC³, 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
CLIC, CLP&C, CLI, Pension Company and China Life
E-commerce Company Limited ("CLEC"), respectively,
MAJOR CONNECTED TRANSACTIONS
Continuing Connected Transactions
During the Reporting Period, the Company was not
involved in any material litigation or arbitration.
MATERIAL LITIGATIONS OR
ARBITRATIONS
EVENTS
SIGNIFICANT
39
China Life Insurance Company Limited | Annual Report 2020 | Embedded Value
Stanley Lu
25 March 2021
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, CLIC, CLP&C and CLI, respectively, and the
asset management agreement for alternative investments
between the Company and CLI. Such agreements and
the transactions thereunder have been approved by
the independent shareholders of the Company. AMP
is a subsidiary of AMC, and is therefore a connected
subsidiary of the Company.
WILLIS TOWERS WATSON'S REVIEW
OPINION REPORT ON EMBEDDED
VALUE
During the Reporting Period, the Company also carried
out certain continuing connected transactions, including
the asset management agreement between CLIC and
AMC, and the framework agreement between the
Company and CLWM, which were exempt from the
reporting, announcement, annual review and independent
shareholders' approval requirements under Chapter 14A of
the Listing Rules.
Policy Management Agreement
For the year ended
For the year ended
31 December 2019
As approved by the 2017 Annual General Meeting of the
Company, the Company and CLI entered into the 2019
asset management agreement for alternative investments
on 31 December 2018. Such agreement took effect
from 1 January 2019, with a term of two years until 31
December 2020. Unless a party served the other party a
written notice for non-renewal prior to 90 working days
before the expiry date of the agreement, the agreement
would be automatically renewed for one year from the
expiry date thereof. 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 quasi-securitization financial products), on
a discretionary basis, within the scope of utilization of
insurance funds as specified by regulatory authorities
Asset Management Agreement for Alternative Investments
between the Company and CLI
For the year ended 31 December 2020, CLIC paid AMC a
service fee of RMB125.36 million.
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 35 in the Notes to the Consolidated
Financial Statements. The annual cap for the three years
ending 31 December 2022 is RMB500 million.
41
China Life Insurance Company Limited | Annual Report 2020 | Significant Events
Asset Management Agreement between CLIC and AMC
CLIC and AMC entered into the 2019-2021 asset
management agreement on 29 December 2018, with an
entrustment term from 1 January 2019 to 31 December
2021. In order to optimize the structure of service fees
and further enhance the performance incentives for
AMC, CLIC and AMC entered into the 2020-2022 asset
management agreement on 1 July 2020 to replace
the 2019-2021 asset management agreement, and to
revise the annual caps in light of the needs for business
development and the revised structure of service fees.
Pursuant to the 2020-2022 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
For the year ended 31 December 2020, the Company paid
AMC a service fee of RMB2,089.15 million.
The Company and AMC entered into the 2019-2021
asset management agreement on 28 December 2018,
with a term from 1 January 2019 to 31 December 2021.
In order to optimize the structure of service fees and
further enhance the performance incentives for AMC,
the Company and AMC entered into the 2020-2022
asset management agreement on 1 July 2020 to replace
the 2019-2021 asset management agreement, and to
revise the annual caps in light of the needs for business
development and the revised structure of service fees.
Pursuant to the 2020-2022 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 35 in the Notes to the
Consolidated Financial Statements. The annual caps for
the three years ending 31 December 2022 are RMB3,000
million, RMB4,000 million and RMB5,000 million,
respectively.
Asset Management Agreement between the Company
and AMC
Asset Management Agreements
For the year ended 31 December 2020, the service fee
paid by CLIC to the Company amounted to RMB563.70
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 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 35 in
the Notes to the Consolidated Financial Statements. The
annual cap for the three years ended 31 December 2020
was RMB708 million. The Company and CLIC entered
into the 2021 policy management agreement on 31
December 2020, with a term from 1 January 2021 to 31
December 2021. Pursuant to the agreement, the Company
will continue to accept CLIC's entrustment to provide
policy administration services relating to non-transferred
policies. The annual cap in respect of the service fee to
be paid by CLIC to the Company for the year ending 31
December 2021 is RMB599 million.
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.
For and on behalf of Willis Towers Watson
Lingde Hong
the EV Results have been prepared, in all material
respects, in accordance with the methodology and
assumptions set out in the Embedded Value section.
Framework Agreements with AMP
Framework Agreement between CLI and AMP
As approved by the First Extraordinary General Meeting
2019 of the Company, CLI and AMP entered into the 2020-
2022 framework agreement on 17 February 2020, with a
term of three years from 1 January 2020 to 31 December
2022. Pursuant to the agreement, CLI and AMP will
continue to conduct certain daily transactions, including
the subscription and redemption of fund products, asset
management for specific clients, advisory 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 industry practices. For the
three years ending 31 December 2022, 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 management fee (including the performance-based
fee) payable by CLI and its subsidiaries for the asset
management for specific clients is RMB150 million;
the annual cap of the management fee (including the
performance-based fee) payable by the subsidiaries
of AMP for the asset management for specific clients
is RMB150 million; the annual cap of the advisory fee
payable by CLI and its subsidiaries for the advisory
services is RMB150 million; the annual cap of the advisory
fee payable by AMP and its subsidiaries for the advisory
services is RMB150 million; and the annual cap of the fees
for other daily transactions is RMB150 million.
44 China Life Insurance Company Limited | Annual Report 2020 | Significant Events
For the year ended 31 December 2020, the subscription
price and corresponding subscription fee for the
subscription of fund products were RMB1,057.00 million,
the redemption price and corresponding redemption fee
for the redemption of fund products were RMB549.65
million, the management fee (including the performance-
based fee) paid by CLI and its subsidiaries for the asset
management for specific clients was RMBO million, the
management fee (including the performance-based fee)
paid by the subsidiaries of AMP for the asset management
for specific clients was RMB0 million; the advisory fee
paid by CLI and its subsidiaries for the advisory services
was RMBO million; the advisory fee paid by AMP and its
subsidiaries for the advisory services was RMBO million,
and the fees for other daily transactions were RMB3.32
million.
Framework Agreement between the Company and CLWM
The Company and CLWM entered into the 2018-2020
framework agreement on 28 December 2017, pursuant
to which the Company would 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. Pricing of the
transactions under the agreement should be determined
by the parties through arm's length negotiations with
reference to industry practices. For the three years ended
31 December 2020, the annual cap of the management
fee payable by the Company for the asset management
services was 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, was
RMB100 million; and the annual cap of the fees for other
daily transactions was RMB100 million.
For the year ended 31 December 2020, the management
fee paid by the Company for the asset management
services was RMB3.60 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 RMB7.19 million.
For the year ended 31 December 2020, the subscription
price for the fund products was RMBO million, the
redemption price for the fund products was RMBO
million, the subscription fee for the fund products was
RMBO million, the redemption fee for the fund products
was RMBO million, the management fee (including the
performance-based fee) paid by CLP&C for the asset
management for specific clients was RMB7.03 million,
and the fees for other daily transactions were RMB0.10
million.
Framework Agreement between CLIC and CLWM
For the year ended 31 December 2020, the management
fee paid by CLIC for the asset management services was
RMB1.35 million, and the advisory fee paid by CLIC for the
advisory services was RMB1.63 million.
Framework Agreement between CLP&C and CLWM
CLP&C and CLWM entered into the 2018-2020 framework
agreement on 29 December 2017, pursuant to which
CLP&C would 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. Pricing of the
transactions under the agreement should be determined
by the parties through arm's length negotiations with
reference to industry practices. For the three years ended
31 December 2020, the annual caps of the management
fee payable by CLP&C for the asset management services
were RMB50 million, RMB150 million and RMB240
million, respectively; the annual caps of the advisory fee
payable by CLP&C for the advisory services were RMB40
million, RMB80 million and RMB120 million, respectively;
and the annual caps of the fees for other daily transactions
were RMB150 million, RMB400 million and RMB700
million, respectively.
For the year ended 31 December 2020, the management
fee paid by CLP&C for the asset management services
was RMB2.36 million, the advisory fee paid by CLP&C for
the advisory services was RMB2.74 million, and the fees
for other daily transactions were RMB0.01 million.
China Life Insurance Company Limited | Annual Report 2020 | Significant Events
45
Framework Agreement between CLI and CLWM
CLIC and CLWM entered into the 2018-2020 framework
agreement on 27 December 2017, pursuant to which
CLIC would 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. Pricing of the transactions
under the agreement should be determined by the
parties through arm's length negotiations with reference
to industry practices. For the three years ended 31
December 2020, the annual caps of the management fee
payable by CLIC for the asset management services were
RMB50 million, RMB120 million and RMB180 million,
respectively; and the annual caps of the advisory fee
payable by CLIC for the advisory services were RMB50
million, RMB80 million and RMB120 million, respectively.
negotiations with reference to industry practices. For the
three years ending 31 December 2022, 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 management fee
(including the 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
As approved by the First Extraordinary General Meeting
2019 of the Company, CLP&C and AMP entered into the
2020-2022 framework agreement on 3 December 2019,
with a term of three years from 1 January 2020 to 31
December 2022. Pursuant to the agreement, CLP&C and
AMP will continue to 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
For the year ended 31 December 2020, the subscription
price and corresponding subscription fee for the
subscription of fund products were RMB700.00 million,
the redemption price and corresponding redemption fee
for the redemption of fund products were RMB1,470.58
million, and the management fee (including the
performance-based fee) paid by CLIC for the private asset
management was RMB23.79 million.
China Life Insurance Company Limited | Annual Report 2020 | Significant Events
For the year ended 31 December 2020, the investment
management service fee, floating management fee,
performance-based bonus and real estate operation
management service fee paid by the Company to CLI
amounted to RMB650.74 million, and the contractual
amount of assets newly entrusted by the Company to
CLI for investment and management was RMB58,385.07
million. For the year ended 31 December 2020, the
amount for the subscription of the related financial
products established and issued by CLI or of which CLI
had participated in the establishment and issuance was
RMB7,550.00 million.
Cooperation Framework Agreement for Investment
Management with Insurance Funds between the
Company and China Life Capital
The Company and China Life Capital entered into the
2020-2022 framework agreement on 31 December 2019,
with a term from 1 January 2020 to 31 December 2022.
Pursuant to the agreement, the Company will continue
to 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 the three years
ending 31 December 2022, 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 RMB200 million.
For the year ended 31 December 2020, 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
RMBO million, and the management fee charged by China
Life Capital as the general partner or the manager of the
fund products was RMB93.16 million.
Insurance Sales Framework Agreement
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 entrust the
Company to act as an agent to sell selected insurance
products within the authorized 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 35 in the Notes to the Consolidated Financial
Statements. The annual caps for the three years ended
31 December 2020 were RMB4,260 million, RMB5,540
million and RMB7,050 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. Unless
a party serves the other party a written notice for non-
renewal within 30 days before the expiration of the 2021
insurance sales framework agreement, the agreement
will be automatically extended for one year to 7 March
2024. 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, 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 2023 are RMB3,500 million,
RMB3,830 million and RMB4,240 million, respectively.
For the year ended 31 December 2020, CLP&C paid the
Company an agency service fee of RMB2,211.17 million.
Framework Agreement between the Company and AMP
As approved by the First Extraordinary General Meeting
2019 of the Company, the Company and AMP entered into
the 2020-2022 framework agreement on 31 December
2019, with a term of three years from 1 January 2020
to 31 December 2022. Pursuant to the agreement, the
Company and AMP will continue to conduct certain daily
transactions, including the 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 industry practices. For the three years ending 31
December 2022, 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 (including the
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.
China Life Insurance Company Limited | Annual Report 2020 | Significant Events
43
For the year ended 31 December 2020, the subscription
price and corresponding subscription fee for the
subscription of fund products were RMB2,939.00 million,
the redemption price and corresponding redemption fee
for the redemption of fund products were RMB3,430.25
million, the sales commission fee and client maintenance
fee paid by AMP were RMB2.50 million, the management
fee (including the performance-based fee) paid by the
Company for the asset management for specific clients
was RMB37.51 million, and the fees for other daily
transactions were RMB9.28 million.
Framework Agreement between CLIC and AMP
As approved by the First Extraordinary General Meeting
2019 of the Company, CLIC and AMP entered into the
2020-2022 framework agreement on 6 September 2019,
with a term of three years from 1 January 2020 to 31
December 2022. Pursuant to the agreement, CLIC and
AMP will continue to 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 the three years
ending 31 December 2022, 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 (including the performance-based
fee) payable by CLIC for the private asset management is
RMB100 million.
CLI and CLWM entered into the 2018-2020 framework
agreement on 20 December 2017, pursuant to which
CLI would 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. Pricing of the
transactions under the agreement should be determined
by the parties through arm's length negotiations with
reference to industry practices. For the three years ended
31 December 2020, the annual caps of the management
fee for the asset management services were RMB40
million, RMB80 million and RMB120 million, respectively;
the annual caps of the advisory fee for the advisory
services were RMB40 million, RMB80 million and
RMB120 million, respectively; and the annual caps of the
fees for other daily transactions were RMB20 million,
RMB80 million and RMB160 million, respectively.
For the year ended 31 December 2020, there was no
relevant transaction between CLI and CLWM.
Framework Agreements with CLWM
Pension Company and CLWM entered into the 2018-
2020 framework agreement on 26 March 2018, pursuant
to which Pension Company would 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.
Pricing of the transactions under the agreement should
be determined by the parties through arm's length
negotiations with reference to industry practices. For the
three years ended 31 December 2020, the annual caps
of the management fee payable by Pension Company for
the asset management services were RMB100 million,
RMB150 million and RMB200 million, respectively; the
annual caps of the advisory fee payable by Pension
Company for the advisory services were RMB40 million,
RMB80 million and RMB90 million, respectively; and the
annual caps of the fees for other daily transactions were
RMB90 million, RMB180 million and RMB270 million,
respectively.
Other Major Connected Transaction
Formation of Hebei Xiongan Baiyangdian
Ecological and Environmental Protection Fund
(Limited Partnership)
As approved at the sixteenth meeting of the sixth
session of the Board of Directors of the Company, the
Company, Hebei Xiongan Industrial Investment Guidance
Fund (Limited Partnership), China Communications
Construction Company Ltd., Power Construction
Corporation of China, Ltd. and Qihui Huaxing Investment
(Beijing) Company Ltd. (each as a limited partner) entered
into a partnership agreement with China Xiongan Group
Fund Management Co., Ltd. and China Life Industrial
Investment Management Co., Ltd. ("CLIIM") (each as a
general partner) on 31 December 2020 for the formation of
Hebei Xiongan Baiyangdian Ecological and Environmental
Protection Fund (Limited Partnership). The total capital
contribution by all partners of the partnership shall be
RMB6,502 million, of which RMB2,000 million shall be
contributed by the Company. China Life Capital serves
as the manager of the partnership. The partnership
has a term of fifteen years. It will invest in ecological
and environmental protection projects in Baiyangdian
watershed, covering water, solid waste treatment and
other industries.
Formation of Beijing China Life Aged-care
Industry Investment Fund (Limited Partnership)
As approved by the First Extraordinary General Meeting
2020 of the Company, the Company (as the limited
partner) entered into a partnership agreement with China
Life Qiyuan (Beijing) Aged-care Industry Investment
Management Co., Ltd. ("China Life Qiyuan") (as the
general partner) on 27 November 2020 for the formation
of Beijing China Life Aged-care Industry Investment Fund
(Limited Partnership). The total initial capital amount of
the partnership shall be RMB10,000 million, of which
RMB9,990 million shall be contributed by the Company.
China Life Equity Investment Co., Ltd. ("CLEI") serves
as the manager of the partnership. The partnership has
a term of ten years. It will focus on the investment in
the aged-care industry, including industrial assets such
as continuing care retirement communities, boutique
apartments for the aged in urban core areas and
community home care services, as well as the upstream
and downstream businesses along the aged-care industry
chain which are in line with the development direction of
the industry and permitted by regulatory authorities.
China Life Insurance Company Limited | Annual Report 2020 | Significant Events
47
Formation of Zhongguancun Science City
Technological Innovation and Space Resources
Investment Fund (Limited Partnership)
As approved at the twenty-eighth meeting of the sixth
session of the Board of Directors of the Company,
the Company and Beijing Haidian State-owned Assets
Operation and Management Center (each as a limited
partner) entered into a partnership agreement with
China Life Properties Investment Management
Company Limited ("China Life Properties") and Beijing
Zhongguancun Venture Street Technology Services
Co., Ltd. (each as a general partner) on 31 December
2020 for the formation of Zhongguancun Science
City Technological Innovation and Space Resources
Investment Fund (Limited Partnership). The total capital
contribution by all partners of the partnership shall be
RMB5,002 million, of which RMB4,750 million shall be
contributed by the Company. China Life Capital serves
as the manager of the partnership. The partnership has a
term of eight years. It will primarily focus on education and
scientific research, and commercial and office properties
in Haidian District, Beijing with clear and complete
titles and property rights that meet the requirements of
investment for insurance funds.
Formation of Guangzhou Xincheng Industry
Investment Fund Partnership (Limited
Partnership)
As approved at the twenty-eighth meeting of the sixth
session of the Board of Directors of the Company,
the Company, CLP&C and Guangzhou Xinyue Industry
Investment Partnership (Limited Partnership) (each as
a limited partner) entered into a partnership agreement
with Guangzhou Jinhui Industry Investment Company
Limited ("Guangzhou Jinhui") (as the general partner)
on 9 November 2020 for the formation of Guangzhou
Xincheng Industry Investment Fund Partnership (Limited
Partnership). The total capital contribution by all partners
of the partnership shall be RMB2,000 million, of which
RMB1,500 million shall be contributed by the Company.
China Life Jinshi Asset Management Company Limited
("China Life Jinshi") serves as the manager of the
partnership. The partnership has a term of six years. It will
primarily invest in financial assets and related assets in the
inclusive financing sector.
Framework Agreement between Pension Company and
CLWM
As approved at the twenty-ninth meeting of the sixth
session of the Board of Directors of the Company,
the Company (as the limited partner) entered into a
partnership agreement with China Life Properties (as the
general partner) on 20 November 2020 for the formation
of China Life Qihang Phase I (Tianjin) Equity Investment
Fund Partnership (Limited Partnership). The total capital
contribution by all partners of the partnership shall be
RMB9,001 million, of which RMB9,000 million shall be
contributed by the Company. China Life Capital serves
as the manager of the partnership. The partnership has a
term of six years. It will focus on equity investment in real
estate projects located in first-tier and strong performing
second-tier cities of the PRC, as well as investment in
ancillary facilities in compliance with the requirements of
laws, regulations and regulatory policies.
Each of CLIIM, China Life Capital, China Life Qiyuan,
CLEI, China Life Properties, CLP&C, Guangzhou Jinhui
and China Life Jinshi is a subsidiary of CLIC, and therefore
a connected person of the Company. The transactions
concerning the formation of partnership 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 connected transaction in relation
to the formation of Beijing China Life Aged-care Industry
Investment Fund (Limited Partnership) as described
above was subject to consideration and approval by the
shareholders' general meeting of the Company pursuant
to the SSE Listing Rules.
The Company has complied with the disclosure
requirement under Chapter 14A of the Listing Rules in
respect of the connected transactions concerning the
formation of partnership as described above.
Statement on Claims, Debt Transactions and
Guarantees etc. of a Non-operating Nature with
Related Parties
During the Reporting Period, the Company was not
involved in claims, debt transactions or guarantees of a
non-operating nature with related parties.
4. the amounts of the above transactions have not
exceeded the relevant annual caps.
3. 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
Formation of China Life Qihang Phase I (Tianjin)
Equity Investment Fund Partnership (Limited
Partnership)
1. the transactions were entered into in the ordinary and
usual course of business of the Company;
2. the transactions were conducted on normal
commercial terms;
For the year ended 31 December 2020, the management
fee paid by Pension Company for the asset management
services was RMB0 million, the advisory fee paid by
Pension Company for the advisory services was RMB0.01
million, and the fees for other daily transactions were
RMBO million.
Framework Agreement between CLEC and CLWM
CLEC and CLWM entered into the 2018-2020 framework
agreement on 29 December 2017, pursuant to which
CLEC would 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. Pricing of the transactions under the
agreement should be determined by the parties through
arm's length negotiations with reference to industry
practices. For the three years ended 31 December 2020,
the annual caps of the management fee payable by CLEC
for the asset management services were RMB5 million,
RMB10 million and RMB15 million, respectively; the
annual caps of the advisory fee payable by CLEC for the
advisory services were RMB5 million, RMB10 million and
RMB15 million, respectively; and the annual caps of the
fees for other daily transactions were RMB200 million;
RMB300 million and RMB400 million, respectively.
Framework Agreement between the Company
and Chongqing Trust
The Company and Chongqing Trust entered into the 2020-
2022 framework agreement on 27 December 2019, with a
term of three years from 1 January 2020 to 31 December
2022. Pursuant to the agreement, the Company and
Chongqing Trust will continue to conduct the subscription
and redemption of trust 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 industry practices. For the three years ending
31 December 2022, the annual cap of the total amount
of subscription and redemption of the trust products
is RMB30,000 million; the annual cap of the trustee's
remuneration is RMB500 million; and the annual cap of the
fees for other daily transactions is RMB100 million.
For the year ended 31 December 2020, the total amount
of subscription and redemption of the trust products was
RMB2,999.98 million, the trustee's remuneration was
RMB0.06 million, and the fees for other daily transactions
were RMB0 million.
46
For the year ended 31 December 2020, there was no
relevant transaction between CLEC and CLWM.
Confirmation by auditor
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:
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;
2. 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;
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
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.
China Life Insurance Company Limited | Annual Report 2020 | Significant Events
Confirmation by Independent Directors
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:
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 investors, and give timely reply to concerns
of small- and medium-sized investors.
3. The Company shall give priority to cash dividends as its
profit distribution manner.
In accordance with Article 218 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;
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 CBIRC 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.
3. 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.
In accordance with Article 219 of the Articles of
Association, the procedures of reviewing the
Company's profit distribution proposal is as
follows:
2. 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;
Profit distribution plan and public reserves
capitalization plan
54 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
In accordance with Article 217 of the Articles
of Association, the basic principles of the
Company's profit distribution are as follows:
1. 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;
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
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 headed "Directors,
Supervisors, Senior Management and Employees" in this
annual report.
(2020 Revision)"", the "Measures for the Administration of
Employees of Branches of China Life Insurance Company
Limited", and the "Measures for the Administration
of Performance of Employees of Branch (Sub-Branch)
Offices of China Life Insurance Company Limited" were
considered and approved.
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
2020, the Company held three extraordinary employee
representative meetings, during which the "Provisions
of China Life Insurance Company Limited on Handling
Employees with Violations (2020 Revision)", the "Notice
on Relevant Issues Concerning the Implementation of
the 'Provisions on Handling Employees with Violations
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
team management mechanism with the characteristics of
focus on basic level, combination of training and utilization
of employees, hierarchical responsibility and unified
regulation; a performance management mechanism that
is strategy-based and result-oriented, adopts hierarchical
classification, 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, and is compatible with the
high-quality development requirements of the Company.
The Company also emphasized on the growth and
cultivation of employees by stepping up its effort on the
development of training system for employees, pursued
innovation for development to apply education and training
in the entire process of growth of cadre 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 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.
Relationship between the Company and its
employees
53
Please also refer to the "Technology Empowerment
and Operations and Services" in the section headed
"Management Discussion and Analysis" in this annual
report and Part 4 of the "ESG Report 2020" separately
disclosed by the Company.
The Company reinforced the protection of consumers'
legitimate rights and interests, fostered sound corporate
governance, clearly defined the duties and responsibilities
of various parties, promoted the establishment of systems
and mechanisms, constantly promoted the rights and
interests of insurance consumers and made notice on risk
alerts.
Adhering to the customer-oriented approach firmly, the
Company is committed to offering high-quality services to
its customers, and has provided insurance services and
value-added services for more than 500 million customers.
Regulatory Commission on Administrative Licensing
Procedures", the "Measures of the China Banking and
Insurance Regulatory Commission on Administrative
Punishment", the "Provisions on the Supervision and
Administration of Insurance Agents", the "Measures
for Oversight of Online Insurance Business", and the
"Measures for the Administration of the Handling
of Banking and Insurance Consumer Complaints",
consistently made improvement to its systems and
mechanism, and implemented the spirit and requirements
of major regulatory documents on product development
and design, sales management, investment supervision
and corporate governance, etc., as released by the CBIRC
in a stringent manner for the purpose of further carrying
out compliance management responsibilities at all levels
and in various lines. The Company consistently improved
the compliance management framework of "three lines
of defense" to ensure that the three lines of defense
performed their own functions 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 defended the bottom line of the
systematic risk, which guaranteed the healthy and high-
quality development of the Company on an ongoing basis.
Relationship between the Company and its
customers
Profit distribution plan or public reserves capitalization
plan for the year of 2020
FORMULATION AND IMPLEMENTATION OF
PROFIT DISTRIBUTION POLICY
In accordance with the profit distribution plan for the year
2020 approved by the Board on 25 March 2021, with the
appropriation to its discretionary surplus reserve fund
of RMB5,009 million (10% of the net profit for 2020),
the Company, based on 28,264,705,000 shares in issue,
proposed to distribute cash dividends amounting to
RMB18,089 million to all shareholders of the Company
at RMB0.64 per share (inclusive of tax). The foregoing
profit distribution plan is subject to the approval by the
2020 Annual General Meeting to be held on 30 June 2021
(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.
Compliance by the Company with the relevant
laws and regulations that have a significant
impact
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.
The Company adhered to the code of conduct of "being
trustworthy, assuming risks, emphasizing on services
and being legal compliant" and promoted the compliance
culture and concepts of "being compliant on a voluntary
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 "Regulations
for the Administration of Insurance Companies",
the "Provisions of the China Banking and Insurance
4,522
20,633
7.3
1.6
18,089
6.4
2018
2019
2020
tax)
Amount of
cash
dividends
(including
per ten
shares
(shares)
tax)
(shares)
distributed
(including
(RMB)
Transfer
of public
reserve into
share capital
per ten
Number of
bonus
stocks per
ten shares
dividends were
Year in which
Amount of
dividends
The dividend distribution of the Company for the recent 3 years is as follows:
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance 55
No public reserve capitalization is provided for in the profit
distribution plan for the current financial year.
The Company, as a financial service institution, is always
committed to green operation and carries out its major
business activities in a manner that does not pose
any material adverse effect on eco-environment and
natural resources. The Company keeps on reducing the
consumption of resources during its operation and pushes
forward the environmental-friendly mode of production. In
2020, the Company quickly expanded its digitalized field
offices, with "Cloud Desktop" supporting online office
operation to a maximum of 135,000 person-times daily and
"Cloud Video" hosting over 2,200 live streaming sessions
daily during the pandemic. The Company pushed ahead
online services in full swing by encouraging customers to
opt for electronic invoices, reducing the number of paper
invoices in an effective manner. Paperless insurance
application rate of long-term individual insurance reached
99.9%, which resulted in saving approximately 365.6 tons
of paper, and the promotion of paperless application rate
of group insurance reached 97.9%. More than 100 million
cases were processed through online paperless insurance
policy services, which helped save approximately 800
tons of paper. In addition, the Company proactively put
into practice green procurement, and clearly specified its
requirements for the management of ESG supply chains
in its "Measures for the ESG and Social Responsibility
Management of China Life Insurance Company Limited
(for trial implementation)", and achieved the green
management of supply chains, thus giving support to
China in its pursue of green development and ecological
civilization.
For the performance by the Company of its social
responsibility for poverty alleviation during the Reporting
Period, please refer to the special section of the full text of
the "ESG Report 2020" separately disclosed by the Company
on the website of the SSE (http://www.sse.com.cn) and the
HKExnews website of Hong Kong Exchanges and Clearing
Limited (http://www.hkexnews.hk).
52
Directors of the Company during the Reporting Period and up to the date of this report were as follows:
REPORT OF THE BOARD OF DIRECTORS
GOVERNANCE
CORPORATE
50 China Life Insurance Company Limited | Annual Report 2020 | Significant Events
Net profit
attributable to
equity holders of
the Company in
the consolidated
statements for
the year in which
dividends were
distributed
TARGETED POVERTY ALLEVIATION
In order to consistently carry out the relevant arrangements
under the "Notice of the State Council on Issuing the
Implementation Plan for Transferring Part of State-
owned Capital to Supplement Social Security Fund"
(Guo Fa [2017] No. 49), the CBIRC has approved the
one-off transfer by the Ministy of Finance of 10% of its
equity interest in CLIC to the National Council for Social
Security Fund (the "SSF") (the "Gratuitous Transfer") in
accordance with the "Reply for the Approval of Change
of Shareholder of China Life Insurance (Group) Company"
(CBIRC's Reply [2020] No. 63). Following completion of the
Gratuitous Transfer, the Ministry of Finance and the SSF
hold 90% and 10% equity interest in CLIC, respectively.
CLIC is the controlling shareholder of the Company, and
the Ministry of Finance is the effective controller of the
Company. The Gratuitous Transfer would not result in any
change of the controlling shareholder or effective controller
of the Company. For further details, please refer to the
announcements published by the Company on the website
of the SSE (http://www.sse.com.cn) and the HKExnews
website of Hong Kong Exchanges and Clearing Limited
(http://www.hkexnews.hk) on 15 February 2020 and 14
February 2020, respectively.
OTHERS
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.
RESTRICTION ON MAJOR ASSETS
EXECUTIVE
DIRECTORS
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.
China Life Insurance Company Limited | Annual Report 2020 | Significant Events
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.
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.
DIRECTORS, SUPERVISORS, SENIOR
MANAGEMENT OR OTHER RELATED
PARTIES WHICH ARE EITHER
GIVEN OR EFFECTIVE DURING THE
REPORTING PERIOD
UNDERTAKINGS OF THE COMPANY,
SHAREHOLDERS, EFFECTIVE
CONTROLLERS, ACQUIRERS,
Except as otherwise disclosed in this report, the Company
had no other material contracts during the Reporting
Period.
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 mainly adopted 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, CLI and its subsidiaries and Pension
Company. 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 non-wholly owned 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.
MATERIAL CONTRACTS AND THEIR
PERFORMANCE
49
Wang Bin (Chairman)
Su Hengxuan
Li Mingguang
Zhao Peng
The Company proactively explored the ways of incorporating
environmental, social and governance ("ESG") elements
into its investment business. It proposed in the "Guidelines
for the Authorization by China Life Insurance Company
Limited to China Life Asset Management Company Limited
for Investment Management (2020)" to take an active
role in exploring and putting ESG investment concept into
practice, and adopted it as a basic principle of the guidelines
for investment management. In its investment in "AMC -
ESG Select No. 1 Insurance Asset Management Product",
the Company attached great importance to its sustainable
development and performance of duties in ESG during
the entire process of portfolio management. In 2020, the
Company kicked off several green investment projects. In
particular, State Power Investment Corporation Limited
and CLIC entered into a strategic partnership cooperation
agreement for the joint investment in establishing a clean
energy fund. The fund has a total size of RMB8 billion, and
will be used for the construction of large-scale clean energy
projects at the national level, in which the Company has
invested.
system. With adherence to green operation, the Company
integrated the "low carbon" environmental protection
concept into the whole process of its daily office work
and insurance operations and services for the purpose
of facilitating the accomplishment of "carbon neutral"
objective of China.
The Company vigorously developed green finance by
consistently improving its green investment management
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 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".
Overall operation of the Company during the
Reporting Period
BUSINESS REVIEW
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.
PRINCIPAL BUSINESS
Mr. Tang Xin, Mr. Chang Tso Tung Stephen, Mr. Li Mingguang, Mr. Su Hengxuan, Mr. Wang Bin, Mr. Yuan Changqing, Mr. Wang Junhui,
Mr. Robinson Drake Pike, Ms. Leung Oi-Sie Elsie
From left to right:
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance 51
Note: The Board of the Company received a letter of resignation from Mr. Chang Tso Tung Stephen, an Independent Director of the Company, on 19
October 2020. As Mr. Chang had consecutively served as an Independent Director for six years, he tendered his resignation for such position to the
Board of the Company pursuant to the relevant regulations. Mr. Lam Chi Kuen has been elected as an Independent Director of the sixth session
of the Board of the Company at the 2019 Annual General Meeting of the Company held on 29 June 2020 as the successor of Mr. Chang Tso Tung
Stephen. The qualification of Mr. Lam Chi Kuen as a Director is subject to the approval of the CBIRC. Since the resignation of Mr. Chang Tso Tung
Stephen will result in the number of Independent Directors of the Company falling below the minimum number required by the relevant regulations
and the Articles of Association of the Company, Mr. Chang Tso Tung Stephen will continue to perform his duties as an Independent Director until
the qualification of Mr. Lam Chi Kuen is approved by the CBIRC.
Leung Oi-Sie Elsie
Tang Xin
Robinson Drake Pike
Chang Tso Tung Stephen Note
(resigned on 15 January 2021 due to the adjustment of work
arrangements)
(resigned on 7 February 2021 due to the adjustment of work
arrangements)
(appointed on 20 February 2020 and resigned on 23 April 2020
due to the adjustment of work arrangements)
INDEPENDENT
DIRECTORS
Wang Junhui
Yin Zhaojun
Yuan Changqing
Liu Huimin
NON-
EXECUTIVE
DIRECTORS
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
RMB million
shares
amount of
Based on the information publicly available to the
Company and within the knowledge of the Directors as at
the Latest Practicable Date (25 March 2021), 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.
SUFFICIENCY OF PUBLIC FLOAT
In 2020, 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.
MAJOR CUSTOMERS
57
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
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 2020.
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.
RESPONSIBILITY STATEMENT OF DIRECTORS
ON FINANCIAL REPORTS
3. the Company has expressly provided in its Articles
of Association the level of authority required for
approving external guarantees and the approval
procedures.
2. 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
1. during the Reporting Period, the Company did not
provide any external guarantee;
Independent Directors of the Company have rendered
their independent opinions on the Company's external
guarantees, and are of the view that:
MATERIAL GUARANTEES
No management or administration contracts for the whole
or substantial part of any business of the Company were
entered into during the Reporting Period.
MANAGEMENT CONTRACTS
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.
COMPLIANCE WITH THE CORPORATE
GOVERNANCE CODE
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.
AUDITORS
A resolution was passed at the 2019 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 2020, and Ernst & Young as the
Hong Kong auditor of the Company for the year 2020, who
I will hold office until the conclusion of the 2020 Annual
General Meeting. Ernst & Young Hua Ming LLP and Ernst
& Young have been serving as the Company's auditors for
eight consecutive years.
Percentage of
58 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
25 March 2021
Beijing, China
By Order of the Board
Wang Bin
Chairman
The Company is actively carrying out the selection process
for appointment of auditors for 2021. For details of any
further information, investors are advised to pay attention
to the announcements to be published by the Company in
jurisdictions where its shares are listed.
66.13
3.49
PRE-EMPTIVE RIGHTS AND ARRANGEMENTS
FOR SHARE OPTIONS
11.36
62.64
procedures fee
Fees
RMB million
Audit, review and agreed-up
Service/Nature
was as follows:
Remuneration paid by the Company to the auditors in 2020
Including: Internal control audit fee
Non-audit services fee (tax services.
and consultation services)
Total
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.
Remuneration paid by the Company to the auditors is
subject to the 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.
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 compliance with the Model
Code and the Company's own code of conduct in the
year 2020.
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
The total amount of charitable donations made by the
Company during the Reporting Period was approximately
RMB337.31 million.
CHARITABLE DONATIONS
Details of the reserves of the Company are set out in Note
38 in the Notes to the Consolidated Financial Statements
in this annual report.
RESERVES
CHANGES IN ACCOUNTING ESTIMATES
40%
35%
36%
statements
11,395
58,287
50,268
net profit
attributable to
equity holders of
the Company in
the consolidated
PERMITTED INDEMNITY PROVISION
cash dividends in
SHARE CAPITAL
Details of the movement in share capital of the Company
are set out in Note 36 in the Notes to the Consolidated
Financial Statements in this annual report.
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.
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
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.
INFORMATION OF TAX DEDUCTION FOR
HOLDERS OF LISTED SECURITIES
DIRECTORS' AND SUPERVISORS' RIGHTS TO
ACQUIRE SHARES
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.
OR CONTRACTS
MATERIAL TRANSACTIONS, ARRANGEMENTS
INTERESTS OF DIRECTORS AND SUPERVISORS
(AND THEIR CONNECTED ENTITIES) IN
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).
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 "Report of Corporate Governance" in this
annual report.
56 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
DISCLOSURE OF INTERESTS OF DIRECTORS,
SUPERVISORS AND THE CHIEF EXECUTIVE IN
THE SHARES OF THE COMPANY
DAY-TO-DAY OPERATIONS OF THE BOARD
No H Share stock appreciation rights of the Company were
granted or exercised in 2020. The Company will deal with
such rights and related matters in accordance with the
PRC governmental policies.
H SHARE STOCK APPRECIATION RIGHTS
During the Reporting Period, the Company and its
subsidiaries did not purchase, sell or redeem any of the
Company's listed securities.
PURCHASE, SALE OR REDEMPTION OF THE
COMPANY'S SECURITIES
by the Company on the website of the SSE on 10 July
2020 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 29 June 2020 for
the information on income tax in respect of the dividend
distributed to H Share shareholders during the Reporting
Period.
enterprise
emolument
ten thousands
paid in RMB
0
0
Since 3 December 2018
0
during
Remuneration
November 1958
ten thousands
annuity
the Reporting
fund paid by
Period in RMB
the Company
parties of
the Company
0
ten thousands
in RMB
(before tax)
from connected
0
0
Executive Director
No
Chairman of the Board of
Yuan Changging
147.90
22.60
125.30
0
Since 16 August 2019
July 1969
Male
Executive Director
Li Mingguang
Yes
0
0
0
0
0
Since 20 December 2018
February 1963
Male
Executive Director
Su Hengxuan
Yes
Jia Yuzeng
51.84
REPORT OF THE BOARD OF
SUPERVISORS
92.91
No
Supervisor
Wang Xiaoqing
Employee Representative
Supervisor
Female
October 1965
Since 27 December 2019
0
0
Non-executive Director
32.25
84.09
No
Total
1
0
0
I
304.95
122.05
427.00
Notes:
33.55
59.36
0
0
Since 11 July 2018
0
0
143.20
22.55
165.75
No
Supervisors
Han Bing
Supervisor
Male
Male
November 1971
0
0
50.55
33.70
84.25
No
Employee Representative
Cao Qingyang
Male
May 1963
Since 12 July 2019
Since 12 July 2019
Male
No
Since 11 February 2018
received
fund and
the Company
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
The Board of the Company received a letter of resignation from Mr. Chang Tso Tung Stephen, an Independent Director of the Company, on 19 October
2020. As Mr. Chang Tso Tung Stephen had consecutively served as an Independent Director for six years, he tendered his resignation for such position
to the Board of the Company pursuant to the relevant regulations. Mr. Lam Chi Kuen has been elected as an Independent Director of the sixth session of
the Board of the Company at the 2019 Annual General Meeting of the Company held on 29 June 2020 as the successor of Mr. Chang Tso Tung Stephen.
The qualification of Mr. Lam Chi Kuen as a Director is subject to the approval of the CBIRC. Since the resignation of Mr. Chang Tso Tung Stephen will
result in the number of Independent Directors on the Board falling below the minimum number required by the relevant regulations and the Articles of
Association, Mr. Chang Tso Tung Stephen will continue to perform his duties as an Independent Director until the qualification of Mr. Lam Chi Kuen is
approved by the CBIRC.
4.
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.
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.
According to the "Procedural Rules for the 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.
2.
1.
Notes:
273.90
22.60
251.30
0
0
Total
Yes
30.00
0
30.00
0
Salary/
0
received from
Whether
Pursuant to the Articles of Association, Supervisors serve for a term of three years and may be re-elected.
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.
2.
67
CURRENT SUPERVISORS
Other benefits,
social insurance,
Total
Number
of shares
Number of
shares held
Name
Position
Gender
Date of Birth
Term
held at the
at the end
Reason for
changes
beginning
of the year
of the year
housing
emoluments
provident
September 1961
Since 20 July 2016
Female
0
Since 20 October 2014
November 1948
Male
Independent Director
Chang Tso Tung Stephen
Yes
0
0
0
0
0
Since 16 August 2019
July 1971
Male
Non-executive Director
Wang Junhui
Yes
0
0
0
0
0
0
April 1939
32.00
32.00
Independent Director
Yes
32.00
0
32.00
0
0
Since 7 March 2016
September 1971
Male
Independent Director
Tang Xin
Leung Oi-Sie Elsie
32.00
0
32.00
0
0
Since 11 July 2015
October 1951
Male
Independent Director
Robinson Drake Pike
Yes
0
1.
10,000,000
Wang Bin
Number of shares
Increase/decrease
during the
Reporting Period
Number of shares
held as at the
end of the
Reporting Period
Percentage of
shareholding
Nature of shareholder
Name of shareholder
Unit: Shares
No. of H Share shareholders:
26,014
No. of A Share shareholders:
176,351
Total number of ordinary
share shareholders as
at the end of the month
prior to the disclosure of
the annual report
Particulars of top ten shareholders of the Company
No. of H Share shareholders:
26,202
No. of A Share shareholders:
167,218
Total number of ordinary
share shareholders as at
the end of the Reporting
Period
INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER
Total number of shareholders and their shareholdings
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 ORDINARY SHARES AND SHAREHOLDERS INFORMATION
CHANGES IN SHARE CAPITAL
62 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
25 March 2021
Beijing, China
Chairman of the Board of Supervisors
By Order of the Board of Supervisors
Jia Yuzeng
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 Board of Supervisors of the Company
reviewed the self-evaluation report on the Company's
internal control system and did not raise any objection
against the self-evaluation report of the Board regarding
the Company's internal control system.
Number of shares
subject to selling
pledged or frozen
restrictions
China Universal Asset Management Co., Ltd
+27,456,051
27,456,051
0.10%
Other
-6,228,459
48,421,705
0.17%
Overseas legal person
119,719,900
0.42%
State-owned legal person
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.
Central Huijin Asset Management Limited
Hong Kong Securities Clearing Company Limited
Ping An Life Insurance Company of China, Ltd.
-Proprietary Fund
2.56%
State-owned legal person
China Securities Finance Corporation Limited
+3,644,543
7,327,335,246
25.92%
Overseas legal person
HKSCC Nominees Limited
19,323,530,000
68.37%
State-owned legal person
China Life Insurance (Group) Company
723,937,634
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.
The authenticity of the financial report. The Company's
annual financial report truly reflected the Company's
financial position and operating results. Ernst & Young
Hua Ming LLP and Ernst & Young have performed audits
and have issued standard and unqualified auditors' reports
in respect of the financial statements for the year 2020
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
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.
0/2
2/2
of meetings
required to attend
of meetings
required to attend
0/0
Name of Supervisor
Song Ping
meetings attended meetings attended
in person/number by proxies/number
Number of
Number of
Attendance records of the resigned Supervisors at the
meetings of the Board of Supervisors are as follows:
in person/number by proxies/number
meetings attended meetings attended
Number of
Luo Zhaohui
Number of
MEETINGS AND ATTENDANCE
Currently, the sixth session of the Board of Supervisors
of the Company comprises Mr. Jia Yuzeng, Mr. Han
Bing, Mr. Cao Qingyang and Ms. Wang Xiaoqing, with
Mr. Jia Yuzeng acting as the Chairman of the Board
of Supervisors. Mr. Jia Yuzeng and Mr. Han Bing are
Non-employee Representative Supervisors, whereas
Mr. Cao Qingyang and Ms. Wang Xiaoqing are Employee
Representative Supervisors. In January 2020, Mr. Song
Ping resigned from his position as a Supervisor of the
Company due to the adjustment of work arrangements. In
July 2020, Mr. Luo Zhaohui resigned from his position as a
Supervisor of the Company due to the adjustment of work
arrangements.
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 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 necessary.
59
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Ms. Wang Xiaoqing, Mr. Cao Qingyang, Mr. Jia Yuzeng, Mr. Han Bing
From left to right:
M
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.
manner.
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
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
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.
During the Reporting Period, five meetings were held by
the Board of Supervisors of the Company. Attendance
records of individual Supervisors are as follows:
- Industrial and Commercial Bank
Note: The number of meetings attended in person includes meetings
attended by the Supervisors on-site and by way of telephone or
video conference.
of meetings
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.
INDEPENDENT OPINION OF THE BOARD OF
SUPERVISORS ON CERTAIN MATTERS
61
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Attending training courses and constantly enhancing
performance of duties by the Supervisors. In 2020,
all members of the Board of Supervisors attended the
training programs on anti-money laundering. Mr. Jia
Yuzheng, the Chairman of the Board of Supervisors,
attended a series of online training courses for the
chairmen of the board of supervisors of listed companies
in 2020 organized by the China Association for Public
Companies.
Actively conducting research and investigation
activities, examining and understanding the business
operations of local branches. In consideration of the
Covid-19 pandemic prevention and control, the members
of the Board of Supervisors conducted investigation
and research through a combination of online and
offline methods. Through the investigation and research
activities, the Board of Supervisors comprehended the
corporate business development of local branches in great
depth, examined the effectiveness of the implementation
by local branches of decisions made by the Board and
the management as well as the establishment of the risk
prevention and control mechanism, discussed matters
in relation to the optimization of the risk prevention
and control mechanism, the implementation of the
"Dingxin Project" and the promotion of the high-quality
development of the Company's businesses, and fully
listened to the opinions and advices given by local
branches.
Supervising and evaluating the performance of duties
by Directors. The Company commenced an evaluation
of the performance of duties by Directors in accordance
with the requirements such as the "Measures for the
Administration of Independent Directors of Insurance
Institutions" issued by the CBIRC and the "Operational
Guidance for Evaluating the Performance of Duties
by Directors of Insurance Companies" issued by the
Insurance Association of China and after taking into
account the "Provisional Measures for Evaluating the
Performance of Duties by Directors" of the Company.
Based on the performance of duties by Directors in 2020
and by reference to the information obtained during their
participation of meetings of the Board and various special
committees, the members of the Board of Supervisors
evaluated and scored the Directors of the Company and
formed evaluation opinions on them, which therefore
improved the mechanism for the supervision and
evaluation of duty performance of Directors.
Supervising the performance of duties by the Board and
senior management in reputation risk management.
Members of the Board of Supervisors received an annual
reputation 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 reputation risk management.
Attending and participating in corporate governance
meetings and actively exercising their supervisory
role. In 2020, the Board of Supervisors attended the
First Extraordinary General Meeting 2020 and the 2019
Annual General Meeting of the Company, and participated
in the regular meetings of the Board. All members of
the Board of Supervisors participated in the regular
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 bringing positive effects on further
enhancement of corporate governance.
60 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
0/5
5/5
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
2020, the sixth session of 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.
0/5
0/5
ខខខ
5/5
5/5
5/5
Cao Qingyang
Wang Xiaoqing
Han Bing
Jia Yuzeng
required to attend
required to attend
Name of Supervisor
of meetings
0/5
Male
Other
15,015,845
emolument
the Company
fund and
Salary/
Number of
received
Whether
emoluments
received from
provident
Number
of shares
housing
Total
Other benefits,
social insurance,
DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
CURRENT DIRECTORS
66 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
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 2020, 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.
BlackRock, Inc. held by way of attribution a short position as defined under Part XV of the SFO in 403,000 H shares (0.01%). These 403,000 H
shares were cash settled unlisted derivatives.
BlackRock, Inc. was interested in a total of 516,306,981 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 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, BlackRock Asset Management (Schweiz) AG and BlackRock Mexico Operadora were
interested in 4,595,645 H shares, 9,383,000 H shares, 125,661,588 H shares, 174,993,000 H shares, 873,000 H shares, 47,928,096 H shares,
1,109,000 H shares, 3,975,000 H shares, 23,100,787 H shares, 966,000 H shares, 2,164,000 H shares, 1,440,000 H shares, 51,806,211 H shares,
3,407,000 H shares, 32,814,923 H shares, 494,000 H shares, 20,600,488 H shares, 8,948,828 H shares, 1,530,000 H shares, 77,660 H shares
and 438,755 H shares, respectively. All of these entities are either controlled or indirectly controlled subsidiaries of BlackRock, Inc. Of these
516,306,981 H shares, 3,152,000 H shares were cash settled unlisted derivatives.
(Note):
65
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
In order to consistently carry out the relevant arrangements under the "Notice of the State Council on Issuing the Implementation Plan for Transferring
Part of State-owned Capital to Supplement Social Security Fund" (Guo Fa [2017] No. 49), the CBIRC has approved the one-off transfer by the Ministy of
Finance of 10% of its equity interest in CLIC to the SSF in accordance with the "Reply for the Approval of Change of Shareholder of China Life Insurance
(Group) Company" (CBIRC's Reply [2020] No. 63). Following the completion of the Gratuitous Transfer, the Ministry of Finance and the SSF hold 90%
and 10% equity interest in CLIC, respectively.
4
The letter "L" denotes a long position. The letter "S" denotes a short position.
1.83%
0.00%
Name
Position
Gender
Date of Birth
Chairman of the Board,
ten thousands
the Company
ten thousands
(before tax)
in RMB
the Company
parties of
Period in RMB
fund paid by
ten thousands
of the year
of the year
0.01%
connected
annuity
beginning
from
during
enterprise
paid in RMB
changes
Remuneration
Reason for
shares held
at the end
held at the
Term
the Reporting
6.94%
516,306,981 (L)
403,000 (S)
H Shares
China Life Insurance (Group) Company
Shareholdings in other
subsidiaries and affiliates
listed in China or abroad
during the Reporting Period
Major businesses
Date of incorporation
Legal representative
Name of company
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:
2. 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.
Industrial and Commercial Bank of China Limited - SSE 50 Exchange Traded
Index Securities Investment Fund has Industrial and Commercial Bank of China
Limited as its 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.
1. 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.
Details of shareholders
63
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Wang Bin
-3,449,200
0.03%
State-owned legal person
3. According to the requirements of the relevant remuneration policies of the Company, the final amount of emoluments of the Chairman of the Board
of Supervisors and the Supervisors is currently subject to review and approval. The result of the review will be disclosed when the final amount is
confirmed.
0.04%
State-owned legal person
China International Television Corporation
China National Nuclear Corporation
-408,847
12,397,276
0.04%
Other
- Tianfu Bull No. 53 Asset Management Plan
Industrial and Commercial Bank of China Limited
- SSE 50 Exchange Traded Index Securities
Investment Fund
of China Limited - China Universal
8,950,800
0.05%
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
former China Insurance Regulatory Commission in 2003, China Life Insurance Company
was restructured as CLIC)
As at 31 December 2020, CLIC held 1,785,098,644 H shares of Town Health
International Medical Group Limited, representing 23.72% of its total shares.
Interest in controlled
corporation
BlackRock, Inc. (Note)
68.37%
92.80%
19,323,530,000 (L)
A Shares
Beneficial owner
China Life Insurance (Group)
Company
Percentage of the
total number of
shares in issue
Percentage of the
respective class
of shares
Number of
shares held
Class of
shares
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 banking and insurance regulatory agencies.
Capacity
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:
So far as is known to the Directors, Supervisors and
the chief executive of the Company, as at 31 December
2020, 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
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.
10%
China Life Insurance
Company Limited
China Life Insurance
(Group) Company
68.37%
National Council for Social
Security Fund
90%
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:
64 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Name of substantial
shareholder
68 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
June 1962
22.53
February 1967
Since July 2019
0
0
125.30
22.56
147.86
2 2 2
No
No
Zhao Guodong
Assistant to the President
Male
November 1967
Since October 2019
0
0
Female
65.00
Vice President
165.73
Vice President
Male
July 1966
Since April 2018
0
0
125.30
22.22
147.52
Zhan Zhong
Vice President
Male
April 1968
Since July 2019
0
0
143.20
Yang Hong
22.44
87.44
No
Total
0
0
737.16
164.86
902.02
Notes:
1.
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. 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.
3.
As considered by the twenty-fifth meeting of the sixth session of the Board of Directors of the Company and upon approval by the CBIRC Beijing Bureau,
Ms. Huang Xiumei served as the Person in Charge of Finance of the Company since 20 May 2020. As considered by the eighteenth meeting of the sixth
session of the Board of Directors of the Company and upon approval by the CBIRC Beijing Bureau, Mr. Yang Chuanyong served as the Person in Charge
of Audit of the Company since 25 December 2020.
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
69
RESIGNATION AND RETIREMENT OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Other benefits,
social insurance,
Total
emolument
No
7.94
3.10
4.84
Xu Chongmiao
Compliance Officer
Male
October 1969
Since July 2018
0
0
52.75
Ruan Qi
34.24
No
Yang Chuanyong
Person in Charge of Audit
Male
March 1963
Since December 2020
0
0
86.99
Person in Charge of Finance
No
110.64
Term
held at the
enterprise
during
at the end
changes
paid in RMB
beginning
annuity
the Reporting
of the year
ten thousands
from connected
parties of
of the year
fund paid by
Period in RMB
Date of Birth
Gender
Position
Name
social insurance,
Total
housing
emoluments
Whether
Number
of share
provident
the Company
received from
Salary/
received
fund and
the Company
share held
Reason for
Remuneration
emolument
Number of
Number
of share
ten thousands
in RMB
0
125.30
22.60
147.90
No
Board Secretary
2012, Board Secretary
since June 2017
Vice President
Huang Xiumei
Female
June 1967
Since May 2020
0
0
95.47
15.17
0
Chief Actuary since March
July 1969
Male
(before tax)
ten thousands
Su Hengxuan
President
Male
February 1963
Since April 2019
0
the Company
0
0
0
Yes
Appointed as Vice President
Vice President
since November 2014,
Li Mingguang
Chief Actuary
0
Other benefits,
housing
provident
Number of
Notes:
1.
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 submission date of this annual report.
2. The emoluments are calculated based on the terms of office of the resigned and retired Directors, Supervisors and Senior Management during the
Reporting Period.
3. According to the requirements of the relevant remuneration policies of the Company, the final amount of emoluments of the Executive Directors,
Supervisors and Senior Management is currently subject to review and approval. The result of the review will be disclosed when the final amount is
confirmed.
70 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
DIRECTORS
Mr. Wang Bin, born in 1958, Chinese
Mr. Wang became the Chairman of the Board of Directors of the Company in December
2018. He is the Chairman of the Board of Directors and the Secretary to the Party
Committee of China Life Insurance (Group) Company, the Chairman of the Board of
Directors of China Life Asset Management Company Limited, and a Director and the
Chairman of the Board of Directors of China Guangfa Bank Co., Ltd. Mr. Wang has
successively been employed by government authorities and financial institutions, with
nearly 30 years of experience in financial management. He worked at the People's Bank
of China, participating in the preparation and establishment of Agricultural Development
Bank of China as an important member. Mr. Wang served as the President of Jiangxi
Branch of Agricultural Development Bank of China, Tianjin Branch and Beijing Branch of
the Bank of Communications Co., Ltd. (the "Bank of Communications"). He served as
the Vice President of the Bank of Communications from 2005 to 2012 and concurrently
served as an Executive Director of the Bank of Communications from 2010 to 2012.
From March 2012 to August 2018, he served as the Chairman of the Board of Directors
and the Secretary to the Party Committee of China Taiping Insurance Group Ltd. Mr.
Wang holds a doctoral degree in economics. He is a researcher, a delegate to the 19th
National Congress of the Communist Party of China, and a member of the 12th and 13th
National Committee of the Chinese People's Political Consultative Conferences.
Mr. Su Hengxuan, born in 1963, Chinese
Mr. Su became an Executive Director of the Company in December 2018. He has
been the President of the Company since April 2019, the Vice President of China Life
Insurance (Group) Company since December 2017 and a Director of China Guangfa
Bank Co., Ltd. since September 2020. He was the President of China Life Pension
Company Limited from March 2015 to February 2018. Mr. Su served various positions
in the Company from 2000 to 2015, including the Deputy General Manager of Henan
Branch, the General Manager of the Individual Insurance Department of the Company,
the General Manager of the Individual Insurance Sales Department of the Company, an
Assistant to the President and the Vice President of the Company. Mr. Su graduated
from Wuhan University and the University of Science and Technology of China and
obtained a doctoral degree in management science and engineering from the University
of Science and Technology of China in 2011. Mr. Su, a senior economist, has over 35
years of experience in the operation and management of life insurance business.
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
71
Mr. Li Mingguang, born in 1969, Chinese
Mr. Li became an Executive Director of the Company in August 2019. He has been
the Vice President of the Company since November 2014, the Chief Actuary of the
Company since March 2012, the Chief Actuary of China Life Pension Company Limited
since May 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
and a member of the China National Master of Insurance Education Supervisory
Committee.
Mr. Yuan Changqing, born in 1961, 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 served 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.
| |
7.08
2.87
4.21
Employee
15 March 2018 -
Song Ping
Representative
Supervisor
Male
June 1964
0
0
72
3 January 2020
4.21
2.87
7.08
Resigned due to the
No adjustment of work
arrangements
0
0
1
Total
arrangements
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Mr. Wang became a Non-executive Director of the Company in August 2019. He has
been the Chief Investment Officer of China Life Insurance (Group) Company and the
President of China Life Asset Management Company Limited since August 2016. He
has been the Chairman of China Life AMP Asset Management Company Limited since
December 2016. From 2004 to 2016, he served as an Assistant to the President and the
Vice President of China Life Asset Management Company Limited, and the President
of China Life Investment Holding Company Limited. From 2002 to 2004, he served as
the Director of the Investment Department and an Assistant to the General Manager of
Harvest Fund Management Co., Ltd. Mr. Wang graduated from the School of Computer
Science of Beijing University of Technology with a bachelor's degree in software in
1995, and Chinese Academy of Fiscal Sciences of the Ministry of Finance of the PRC
with a doctoral degree in finance in 2008. He is a senior economist.
76
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
SENIOR MANAGEMENT
Mr. Su Hengxuan, please see the section "Directors" for his profile.
Mr. Li Mingguang, please see the section "Directors" for his profile.
Ms. Huang Xiumei, born in 1967, Chinese
Ms. Huang became the Vice President and the Person in Charge of Finance of the
Company in May 2020. Ms. Huang has been a Director of Sino-Ocean Group Holding
Limited since March 2021, a Director of China Life Franklin Asset Management
Company Limited since February 2021, and a Director of China Life Pension Company
Limited since July 2018. From 2016 to 2020, she served as the Vice President, the
Board Secretary and the Person in Charge of Finance of China Life Pension Company
Limited. From 2014 to 2016, she served as the Financial Controller and the General
Manager of the Financial Management Department of the Company. From 2005 to
2014, Ms. Huang held various positions at the Company's Fujian Branch, including an
Assistant to the General Manager, the Deputy General Manager, the Branch Head, the
Deputy General Manager (responsible for daily operations) and the General Manager.
From 1999 to 2005, she served as the Deputy Division Chief of the Planning and Finance
Division, the Manager of the Planning and Finance Department and the Manager of the
Finance Department of the Company's Fujian Branch, and during the period from 2004
to 2005, she concurrently served as the Deputy General Manager of the Company's
Fuzhou Branch. Ms. Huang graduated from Fuzhou University, majoring in accounting
with a bachelor's degree. She is a senior accountant.
Mr. Ruan Qi, born in 1966, Chinese
Mr. Ruan became the Vice President of the Company in April 2018. He served as
the Chief Information Technology Officer of the Company from January 2018 to April
2018. Mr. Ruan served as the Chief Information Technology Officer and the General
Manager (at the general manager level of the provincial branches) of the Information
Technology Department of the Company from October 2016 to January 2018. He served
as the General Manager (at the general manager level of the provincial branches) of
the Information Technology Department of the Company from March 2016 to October
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 operations) 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 2020 | Corporate Governance
77
Mr. Zhan Zhong, born in 1968, Chinese
Mr. Zhan became the Vice President of the Company in July 2019. He has been the
Marketing Director of the Company since August 2017 and the General Manager (at
the general manager level of the provincial branches) of the Individual Insurance Sales
Department of the Company since July 2014. He was an Employee Representative
Supervisor of the Company from July 2015 to August 2017. 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 Sales Department of the Company.
From 2005 to 2009, he successively served as the General Manager of the Individual
Insurance Sales Department 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 Chengdu High-tech
Sub-branch of Zhongbao Life Insurance Company, an Assistant to the Manager and the
Manager of the Marketing Department of Chengdu Branch, and the Deputy General
Manager of 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.
Ms. Yang Hong, born in 1967, Chinese
Ms. Yang became the Vice President of the Company in July 2019. She has been the
Operation Director of the Company since March 2018 and 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 the
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.
78
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Ms. Wang became a Supervisor of the Company in December 2019. She has
successively been the Deputy General Manager and the General Manager of the Risk
Management Department of the Company since April 2018. From May 2016 to April
2018, she served as the Secretary to the Discipline Inspection Committee of Tibet
Autonomous Region Branch of the Company. From 2010 to 2016, she successively
served as an Assistant to the General Manager and the Deputy General Manager of the
County Insurance Management Department, and the Deputy General Manager of the
Audit Department of the Company. From 2003 to 2010, she successively served as the
Deputy Division Chief of the Training Division, the Deputy Division Chief of the Business
Inspection Division, the Division Chief of the Agent Management Division, the Senior
Manager of the Comprehensive Development Division of the Individual Insurance Sales
Department of the Company, and the Deputy General Manager of No.5 Sales Office
in Beijing Branch of the Company. Ms. Wang graduated from Nanjing Communication
Engineering College in 1988, majoring in radio communication engineering with a
bachelor's degree in engineering.
Ms. Wang Xiaoqing, born in 1965, Chinese
Mr. Cao became a Supervisor of the Company in July 2019. He has been the General
Manager of the Product Development Department of the Company since February
2011. From 2008 to 2011, he successively served as the Deputy General Manager
of Tianjin Branch and the Group Leader of the Statistics Working Group of the
Company. From 2004 to 2008, he successively served as the General Manager of the
Investor Relations Department, the Deputy Secretary-General of the Board Secretariat
and concurrently the General Manager of the Investor Relations Department, and
the Deputy Secretary-General of the Board Secretariat of the Company. Mr. Cao
graduated from Nankai University in 2004, majoring in finance with a doctoral degree in
economics.
Mr. Cao Qingyang, born in 1963, Chinese
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 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.
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.
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
73
Mr. Tang Xin, born in 1971, 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, a member of the Legal Professional Advisory Committee of the Shenzhen
Stock Exchange, the Chairman of the Independent Director Committee of China
Association for Public Companies, and an Independent Director of each of Harvest
Fund Management Co., Ltd. and Bank of Guizhou 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. Wang Junhui, born in 1971, Chinese
Ms. Leung Oi-Sie Elsie, born in 1939, Chinese
74
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
SUPERVISORS
Mr. Jia Yuzeng, born in 1962, Chinese
Mr. Jia became the Chairman of the Board of Supervisors of the Company in July
2018. He has been an Executive Director of the Insurance Society of China since July
2020 and a Director of China Insurance Security Fund Co., Ltd. since December 2020.
During the period from 2006 to March 2018, he served as a Supervisor, the General
Manager of the Human Resources Department, an Assistant to the President, the Vice
President, the Board Secretary, an Executive Director and the Compliance Officer of
China Life Pension Company Limited. During the period from 2004 to 2006, he served
as the General Manager of the Work Department of the Trade Union, the Executive
Deputy Director of the Trade Union and a Supervisor of the Company. During the period
from 1988 to 2004, he successively served as the Division Head of the General Office
and a secretary (at the deputy director level) of the PRC Ministry of Supervision, the
Deputy Director (responsible for daily operations) of the Minister Office of the General
Supervision Office under the Supervision Department of the Central Commission for
Discipline Inspection, and an inspector (at the director level), supervisor, inspector (at
the deputy bureau chief level) and special supervisor of the General Office of the Central
Commission for Discipline Inspection. Mr. Jia graduated from the Open University
of Hong Kong in 2003, majoring in business administration with a master's degree in
business administration.
Mr. Han Bing, born in 1971, Chinese
Mr. Han became a Supervisor of the Company in July 2019. He has been the General
Manager of the Human Resources Department of the Company since December 2018.
He served as the General Manager of the Human Resources Department of China Life
Pension Company Limited from March 2016 to December 2018. During the period
from 2014 to 2016, he successively served as the Deputy General Manager and the
Secretary to the Discipline Inspection Committee of Ningbo Branch, and the Deputy
General Manager and the Secretary to the Discipline Inspection Committee of Tibet
Autonomous Region Branch of the Company. During the period from 2006 to 2014, he
served as the Deputy General Manager of the Human Resources Department of the
Company. Mr. Han graduated from Beijing College of Economics in 1994, majoring in
labour economy with a bachelor's degree in economics.
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance 75
Ms. Leung became an Independent Director of the Company in July 2016. She was the
first Secretary for Justice of Hong Kong, a member of the Executive Council of Hong
Kong, the Deputy Director of the Hong Kong Basic Law Committee of the Standing
Committee of the 2nd, 3rd and 4th National People's Congress and a consultant
of lu, 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, and an Independent
Non-executive Director of PetroChina Company Limited since June 2017.
Yes adjustment of work
Resigned due to the
arrangements
in RMB
Reason for changes
the Company
the Company
in RMB
ten thousands
(before tax)
ten thousands
Zhao Peng
Executive Director
Vice President
Male
April 1972
20 February 2020-
23 April 2020
0
0
0
0
0
the Reporting from connected
parties of
fund paid by
Period
enterprise
annuity
share held
Reason for
Name
Previous Position Gender
Date of Birth
Term
held at the
at the end
March 2018-May 2020
changes
of the year
of the year
Salary/
Remuneration
paid in RMB
ten thousands
the Company
Whether
received
fund and
during
emolument
beginning
Non-executive
31 July 2017-
Yin Zhaojun
Luo Zhaohui
Supervisor
Male
March 1974
0
0
0
0
0
22 July 2020
Resigned due to the
Yes adjustment of work
arrangements
Resigned due to the
Yes adjustment of work
arrangements
Resigned due to the
Yes adjustment of work
11 February 2018-
received from
7 February 2021
0
Male
July 1965
0
0
0
0
0
Director
15 January 2021
Non-executive
31 July 2017-
Liu Huimin
Male
June 1965
0
0
0
0
Director
CURRENT SENIOR MANAGEMENT
Unit: Persons
Remuneration Policy for Employees
Mr. Yang Chuanyong, born in 1963, Chinese
in person
for the year
Wang Bin
Su Hengxuan
Li Mingguang
Yuan Changqing
Liu Huimin
Executive Director
2
1
Executive Director
2
1
Executive Director
to attend
2
Non-executive Director
2
1
Non-executive Director
2
1
Non-executive Director
2
0
Non-executive Director
2
2
required
meetings
Shareholders' general meetings convened during the Reporting Period are as follows:
Session of the meeting
Date of the meeting
First Extraordinary General Meeting 2020 20 February 2020
2019 Annual General Meeting
29 June 2020
Index for websites on which
resolutions were published
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
Date of publication
of resolutions
meetings
attended
20 February 2020
84
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
The "Proposal in relation to the Investment by the
Company in China Life Aged-care Industry Investment
Fund" was considered and approved by a combination of
on-site and online voting at the First Extraordinary General
Meeting 2020 held in Beijing on 20 February 2020.
Eight proposals including: the "Proposal in relation to the
Report of the Board of Directors of the Company for the
Year 2019", the "Proposal in relation to the Report of the
Board of Supervisors of the Company for the Year 2019",
the "Proposal in relation to the Financial Report of the
Company for the Year 2019", the "Proposal in relation to
the Profit Distribution Plan of the Company for the Year
2019", the "Proposal in relation to the Remuneration
of Directors and Supervisors of the Company", the
"Proposal in relation to the Election of Mr. Lam Chi Kuen
as an Independent Director of the Sixth Session of the
Board of Directors of the Company", the "Proposal in
relation to the Remuneration of Auditors of the Company
for the Year 2019 and the Appointment of Auditors of
the Company for the Year 2020" and the "Proposal in
relation to the General Mandate for the Issuance of H
Shares by the Company", were considered and approved
by a combination of on-site and online voting, and the
"Duty Report of the Independent Directors of the Board
of Directors of the Company for the Year 2019" and the
"Report on the Overall Status of Connected Transactions
of the Company for the Year 2019" were received and
reviewed at the 2019 Annual General Meeting held in
Beijing on 29 June 2020.
Attendance records of Directors at the shareholders'
general meetings convened during the Reporting Period:
Number of
shareholders'
Number of
general
Name of Director
Type of Director
29 June 2020
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.
1
1
Executive Director
0
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
85
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.
Currently, the Board comprises nine members,
including three 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 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 of Directors, the Board of Supervisors or the
senior management, including between Mr. Wang Bin,
the Chairman of the Board, and Mr. Su Hengxuan, the
President of the Company.
In 2020, Independent Directors of the Board of the
Company possessed extensive experience in various
fields, such as macro economy, 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.
86
Zhao Peng
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Directors by type:
Executive
Director
Non-executive
Director
3 persons
2 persons
Directors by location:
Mainland
China
Hong Kong,
China
The Company has developed a relatively 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 gender, age, culture,
educational background, professional experience, skills
and knowledge will be considered in the selection of
candidates for Directors. Currently, the Board comprises
nine members with extensive experience in various
fields, such as finance and insurance, macro economy,
financial accounting, law and management. The diversified
composition of the Board is as follows:
2
for the year
in person
Independent Director
2
1
Independent Director
2
Leung Oi-Sie Elsie
Independent Director
2
2
Yin Zhaojun
Wang Junhui
to attend
Chang Tso Tung Stephen Independent Director
Robinson Drake Pike
Attendance records of the resigned Director at the
shareholders' general meetings:
Number of
shareholders'
Number of
general
Name of Director
Type of Director
meetings
meetings
attended
required
Tang Xin
Shareholders' General Meeting
During the Reporting Period, the Company was awarded
the prizes such as the "Hong Kong Corporate Governance
Excellence Award" 2020 ("Main Board Companies - Hang
Seng Index Constituent Companies" Category) by the
Chamber of Hong Kong Listed Companies and the Centre
for Corporate Governance and Financial Policy of Hong
Kong Baptist University, the "Best IR of Hong Kong Listed
Company" by New Fortune Magazine, the "Best Investor
Relations of Listed Company" in the 2020 China Securities
Golden Bauhinia Awards, as well as the "Most Respected
Company", the "Best Investor Relations Team" and the
"Best Investor Relations Manager" in the Asian Region in
2020 by Institutional Investor.
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.
Management and administration
Class of Expertise
Structure of Expertise
As at the end of the Reporting Period, the composition of
the employees of the Company and its major subsidiaries
is as follows:
20
104,160
1,657
102,503
Unit: Persons
Number of the resigned and retired
employees whose costs were
covered by the Company and its
major subsidiaries
Sales and sales management
Number of employees of the
Company's major subsidiaries
Employees in total
EMPLOYEES
Employees
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 RMB14.6210 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
2020 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 remuneration of the Company.
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.
REMUNERATION OF DIRECTORS, SUPERVISORS
AND SENIOR MANAGEMENT
80 China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Since August 2016
Since May 2017
Since December 2017
Since August 2018
Number of employees of the Company
Term
Unit: Persons
19,061
Total
Others
Secondary School
College Diploma
Bachelor
Master or above
Education Level
Education Level
81
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Number of
Employees
104,160
3,744
Others
4,212
Other expertise and technicians
and customer services
24,430
Insurance verification, claim processing
5,412
Finance and auditing
47,301
Total
China Life Insurance (Group) Company Chief Investment Officer
China Life Insurance (Group) Company Vice Chairman, President
China Life Insurance (Group) Company Chairman
China Life Insurance (Group) Company Vice President
REPORT OF CORPORATE GOVERNANCE
OVERVIEW OF CORPORATE GOVERNANCE
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
Audit
Committee
Nomination and
Remuneration
Committee
Board of
Directors
Board of
Supervisors
Risk Management
and Consumer Rights
Protection Committee
Strategy and Assets and
Liabilities Management
Committee
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
(Corporate Governance Structure Chart)
Board Secretary
Board of Directors' Office/
Company Secretary
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.
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 Board of Supervisors
meetings 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 operation,
development strategies and marketing tactics to the
Board, which provides a basis for the Board's decision-
making.
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
83
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 five specialized 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
specialized 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 authorized by the Board,
for the purpose of improving the Board's efficiency and
intensifying the Board's functions.
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 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 has consistently made improvements to
its systems relating to corporate governance. Pursuant to
the relevant regulatory requirements and after taking into
account its actual operation, the Company has revised the
"Procedural Rules for the Audit Committee Meetings".
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.
Connected
Transactions
Control Committee
82
stringent management into practice, concentrated on
the development of a quality system that covers source
cultivation, follow-up cultivation and whole-process
cultivation, and consistently enhanced the suitability
and effectiveness of education and training plans for
employees to facilitate the healthy growth of cadre
employees and their teams, thus offering a strong support
to make itself as a world-class insurance company.
In 2020, the Company continuously implemented the
work requirements of "close to the frontline, close to
the practice and adapt to the era" for education and
training in a consistent manner, focused on cadre team
building and professional talent cultivation, and further
strengthened the development of training content system,
institutional system and teaching resource system by
closely upholding the strategic deployment of "China
Life Revitalization". The Company also took proactive
actions to defuse any impacts brought by the pandemic
prevention and control, applied technological means to
innovate training models, and adopted a combination of
online and offline methods for training, so as to ensure the
successful completion of education and training plans for
employees at all levels. The implementation of a series of
training and cultivation programs, such as the cultivation
of new employees, base platform cultivation, "2551"
Project, Wings Program and training for professional
managers, offered a powerful support to the supply of
talents for the growth of the Company's business and its
high-quality development.
With a commitment to upholding its established
ideas and beliefs, the Company has been developing
its education and training plans for employees with
a focus on enhancing their overall capability of
corporate management. The Company has integrated
real situations into its education and training and put
Position
Name of shareholders
Yuan Changqing
Wang Junhui
Su Hengxuan
Name
Wang Bin
POSITIONS HELD BY CURRENT DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT IN
SHAREHOLDERS OF THE COMPANY
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 15 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 Lee & Man Chemical Company Limited,
Matrix Holdings Limited, Best Food Holding Company Limited and Veson Holdings
Limited (formerly known as SCUD Group Limited), all of which are listed on the main
board of the HKSE.
Mr. Heng Victor Ja Wei, born in 1977, British
COMPANY SECRETARY
79
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
Mr. Yang became the Person in Charge of Audit of the Company in December 2020.
He served as the General Manager of the Audit Department of the Company from June
2019 to February 2021. He served as the General Manager of the Company's Branch
of Guangxi Zhuang Autonomous Region from 2017 to 2019. From 2012 to 2017, he
successively served as the General Manager of the Legal and Compliance Department
and the Director of the Office of the Company. From 2004 to 2012, he successively
served as an Assistant to the Director and the Deputy Director of the Office, the General
Manager of the Strategic Planning Department, and the Deputy General Manager of
Beijing Branch of the Company. Mr. Yang graduated from the Tsinghua University with
an EMBA degree in January 2010, majoring in business administration for executives.
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
doctorate degrees in law. Mr. Xu is admitted as a lawyer and certified public accountant
in the PRC.
Mr. Xu Chongmiao, born in 1969, Chinese
Mr. Zhao became an Assistant to the President of the Company in October 2019. He
has been the General Manager of Jiangsu Branch of the Company in July 2018. 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
of the Company from 2016 to 2018, 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 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 TV University in 2006, majoring
in business administration.
Mr. Zhao Guodong, born in 1967, Chinese
Number of
Employees
5,516
66,800
27,164
1,711
2,969
104,160
The Company has established a remuneration and
incentive system with reference to employee's positions,
the Company's performance and market conditions.
Training Plans
6 persons
2 persons
1
Independent
Director
9/10
Non-executive Director
Yin Zhaojun
Wang Junhui
0/10
10/10
Non-executive Director
Liu Huimin
3/10
7/10
Non-executive Director
Yuan Changqing
0/10
10/10
Executive Director
0/10
1/10
Non-executive Director
9/10
1/10
Directors by gender:
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
88
0/10
10/10
Independent Director
Leung Oi-Sie Elsie
10/10
0/10
Independent Director
Tang Xin
0/10
Independent Director
0/10
10/10
Chang Tso Tung Stephen Independent Director
Robinson Drake Pike
10/10
Executive Director
10/10
2/10
Meetings and attendance
The Company has consistently improved its corporate
governance structure, regulated the acts of Directors in
performing their duties, and optimized the mechanism
for supervising and evaluating the performance of
duties by Directors. Pursuant to the "Measures for the
Administration of Independent Directors of Insurance
Institutions" published by the CBIRC, the "Operational
Guidance for Evaluating the Performance of Duties
by Directors of Insurance Companies" issued by the
Insurance Association of China, the "Provisional Measures
for Evaluating the Performance of Duties by Directors" 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 2020.
In 2020, all members of the Board of Directors developed
and refreshed their knowledge and skills by attending
special training courses covering topics such as macro
economy and the development of the insurance industry.
All members of the Board of Directors of the Company
attended the training programs on anti-money laundering
and a training course on the "New ESG Requirements"
offered by the HKSE. Mr. Li Mingguang, an Executive
Director of the Company, attended a follow-up training
course provided by the SSE for the secretaries to the
board of directors of listed companies and special training
courses offered by the Listed Companies Association of
Beijing. Mr. Wang Junhui, a Non-Executive Director of the
Company, attended a basic course on risk management of
insurance companies and a training course on anti-money
laundering online practices as organized by the Insurance
Association of China, and a training course on GL10:
Guideline on the Corporate Governance of Authorized
Insurers as organized by the Insurance Authority of Hong
Kong. Mr. Tang Xin, an Independent Director of the
Company, attended a follow-up training course provided
by the SSE for independent directors. Ms. Leung Oi-Sie
Elsie, an Independent Director of the Company, attended
training courses on ESG report and risk management,
economic entity and trust and family asset management,
the future of arbitration in Hong Kong, as well as the
editing background and structure of the Civil Code of the
PRC and its innovative provisions.
Currently, the sixth session of the Board comprises the
following members: Mr. Wang Bin, Mr. Su Hengxuan and
Mr. Li Mingguang, all being Executive Directors, Mr. Yuan
Changqing and Mr. Wang Junhui, 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. Wang Bin as the
Chairman of the Board. Due to the adjustment of work
arrangements, Mr. Zhao Peng, Mr. Yin Zhaojun and Mr. Liu
Huimin resigned from their positions as Directors in April
2020, January 2021 and February 2021, respectively.
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.
87
China Life Insurance Company Limited | Annual Report 2020 | Corporate Governance
During the Reporting Period, five regular Board meetings
and five ad-hoc Board meetings were held by the Board of
the Company. Attendance records of individual Directors
are as follows:
Regular Board meetings are held mainly to review the
quarterly, interim and 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 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.
8 persons
Male
Female
1 person
Europe and
America
Su Hengxuan
Li Mingguang
4 persons
1 person
Name of Director
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 2020, 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.
Number of
meetings
Executive Director
8/10
Number of
meetings
Wang Bin
to attend
required
required
meetings
to attend
Number of
Number of
attended in attended by
Type of Director
person/
meetings
proxies/
Stock Code 2628
"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"
C
中国人寿保险股份有限公司
CASAS H
China Life Insurance Company Limited
National Business Daily
Securities Times
"2023 China Golden Tripod Awards"
"2023 Top 50 List of
03
"Annual Insurance Protection Brand Award"
"Annual Protection-oriented Insurance Product Award"
"Annual Insurance Service Award"
Shanghai Securities News
"2023 Assessment and Selection of the 'Golden Wealth Management""
Chinese Listed Company Governance"
China Corporate Governance Experts 50 Forum
"2023 Top 100 Chinese Listed Companies with ESG Best
Practices selected by Wind"
"2023 Financial Institution with High-quality Development"
私諧中國
Wind
Annual Report 2023 | Prelude
20
02
ωρ
12
Chinatimes.net.cn
Review of Business
Operations
MANAGEMENT
12
DISCUSSION AND
ANALYSIS
03
9
CHAIRMAN'S
STATEMENT
6
Financial Summary
S
235
Core Competitiveness
Honors and Awards
Business Highlights
PRELUDE
01
CONTENTS
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.
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.
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.
Report
Annual
3
2
2
"Investment Golden Bull Award
million
China Securities Journal
Ж
First-year
regular premiums
112,573
million
First-year regular premiums
with a payment duration of
ten years or longer
49.522
Business Analysis
Number of long-term
in-force policies
3.28
hundred million
Annual Report 2023 | Prelude
+K
05
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.
MAJOR FINANCIAL DATA AND INDICATORS FOR THE PAST FIVE YEARS¹
RMB million
Under International Financial Reporting Standards (IFRSS)
Major financial data
2023
2022
Change
2021
2020
2019
FINANCIAL SUMMARY
218.54%
Comprehensive
solvency ratio
million
"Assessment and Selection of the 3rd Investment Golden Bull Awards for China's Insurance Industry"
"Best Insurance Company for
Responsible Investment"
Sina Finance
"2023 China Corporate ESG 'Golden Responsibility Award""
04
Annual Report 2023 | Prelude
BUSINESS HIGHLIGHTS
Ж
(
Gross written
premiums
641,380
million
Total assets
5,802,086
million
Investment
assets
5,659,250
million
|Ж
EXT
Embedded value
1,260,567
million
Value of one
year's sales
36,860
for the Insurance Industry"
15
41
24
Employees
Senior Management and
59
Directors, Supervisors,
Information
Shares and Shareholders
56
Changes in Ordinary
Supervisors
52
Report of the Board of
"Ark Prize for Insurance Company with High-quality
Development in 2023"
43
GOVERNANCE
CORPORATE
06
Financial Statements
43
129
Notes to the Consolidated
Cash Flows
127
Consolidated Statement of
42
Report of the Board of
Directors
Other Matters
"2023 Gold Medal List of Chinese Financial Institution
- Golden Dragon Award"
"Best Listed Insurance Company of the Year"
For the year ended
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.
Long history
and
excellent
brand
CORE COMPETITIVENESS
Financial Times
Governance
73
Report of Corporate
stable core
team
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.
02
Annual Report 2023 | Prelude
HONORS AND AWARDS
"2023 Forbes Global 2000", ranking 62nd
"2023 Forbes China ESG Innovative Enterprise"
Forbes
"2023 Fortune China 500 List”, ranking 12th
Fortune China
33
Analysis of Specific Items
Changes in Equity
Consolidated Statement of
115
Definitions and Material
Disclosure Announcements
112
Index of Information
110
Basic Information of the
Company
35
55
Information on Delisting and
Deregistration of American
Depositary Shares
55
Risk Alert
35
05
110
OTHER INFORMATION
07
29
EMBEDDED VALUE
04
28
28
Technology Capabilities,
Operations and Services
Future Prospect
27
SIGNIFICANT EVENTS
126
Material Litigations or
"Ark Prize for Innovation in the Insurance Industry in 2023"
"Ark Prize for Excellent Social Responsibility in the Insurance
Industry in 2023"
42
Restriction on Major Assets
Comprehensive Income
Imposed and Rectification
124
Consolidated Statement of
and Regulations, Penalties
42
Alleged Violation of Laws
Financial Position
122
35
Consolidated Statement of
Undertakings
116
Independent Auditor's Report
Performance
Material Contracts and Their
116
08 FINANCIAL REPORT
35
Major Connected Transactions
Arbitrations
55
41
Total revenue
Change
370,861
10.92
11.81
16.46
of 7.61
percentage
points
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
17.26 A decrease
89.00
5.30
5.24
Notes:
1.
2.
3.
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
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
4.98
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.
9.65
Major financial ratios
315.0%
3,344
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
Weighted average ROE (%)
The needs for liquidity management
38,533
19,759
Financial assets purchased
A decrease in deductible temporary
differences
-47.0%
46,126
24,431
Deferred tax assets.
10.76
10.12
activities per share³
-48.7%
value through profit or loss
06
INFORMATION ON THE DIFFERENCE BETWEEN THE FINANCIAL STATEMENTS
PREPARED UNDER ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
AND INTERNATIONAL FINANCIAL REPORTING STANDARDS
Adjustment related to IFRS 17
Deferred tax effects
Equity holders' equity under IFRSS
460,110
198,144
(176,854)
(4,307)
477,093
436,169
N/A
(93,967)
23,819
366,021
Adjustment related to IFRS 9
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.
07
MAJOR ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS WITH
CHANGE OF OVER 30% AND THE REASONS FOR CHANGE Note
RMB million
Major items of the
As at
As at
consolidated statement of
31 December
financial position
2023
31 December
2022
Annual Report 2023 | Prelude
Annual Report 2023 | Prelude
Reconciling items:
2022
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.
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:
RMB million
2023
2022
Net profit attributable to equity holders of the Company under ASBE
Reconciling items:
21,110
32,082
Adjustment related to IFRS 9
(6,685)
N/A
Equity holders' equity under ASBE
Adjustment related to IFRS 17
39,593
46,013
(7,837)
(11,415)
Net profit attributable to equity holders of the Company under IFRSS
46,181
66,680
As at
As at
31 December
2023
31 December
Deferred tax effects
344,746
An increase in the scale of commercial
pension products of subsidiaries
477,093
11.3%
286,446
303,990
286,008
As at 31 December
Total assets
5,802,086 5,010,068
Including: Investment assets²
Total liabilities
5,659,250 4,811,893
5,315,052
4,635,095
384,366 345,284
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
477,093
366,021
30.3%
479,061
450,688
404,448
Per share (RMB)
Earnings per share (basic and diluted)³
1.63
2.36
-30.7%
Equity holders' equity
1.80
share holders of the Company
Net cash inflow/(outflow) from
operating activities
50,020
-7.0%
824,933
805,049
729,503
Profit before income tax
44,576
70,060
-36.4%
50,340
54,440
59,758
57,857
Net profit attributable to equity
66,680
-30.7%
50,766
50,221
58,251
holders of the Company
Net profit attributable to ordinary
46,181
66,680
-30.7%
50,766
46,181
Equity holders' equity
1.77
Equity holders' equity per share³
An increase in the net profits of certain
associates and joint ventures
Due to the combined effect of changes in
profit before income tax and non-taxable
income
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
Note: The items significantly affected by IFRS 9 - Financial Instruments are not presented because of no comparability with the same items last year.
08 Annual Report 2023 | Prelude
Income tax
associates and joint
ventures
RMB million
103.0%
3,979
8,079
equity holders of the
Company
Investment income from
Change
2022
2023
comprehensive income
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
Main reasons for change
2.05
-30.7%
46,181
16.88
12.95
30.3%
16.95
15.95
14.31
Ordinary share holders' equity
16.88
12.95
30.3%
16.95
66,680
15.95
per share³
Net cash inflow/(outflow) from operating
13.60
12.22
11.3%
10.13
Main reasons for change
(2,971)
1,948
N/A
Net profit attributable to
14.03
Position
Chen Jie
Huang Yiping
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
1/3
13
Notes:
Zhao Peng
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
Li Mingguang
4.
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.
92
Annual Report 2023 | Corporate Governance
Performance of Duties by the Strategy and Assets
and Liabilities Management Committee
93
Annual Report 2023 | Corporate Governance
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.
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.
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.
Four proposals, including the "Proposal in relation to the Results of
Performance Appraisal of the Company for the Year 2022", were
considered and approved.
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
2/6
14 December 2023
22 November 2023
Thirteenth meeting of the Strategy and Assets
and Liabilities Management Committee of
the seventh session of the Board
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
28 March 2023
Meetings convened
The meetings convened are as follows:
Fourteenth meeting of the Strategy and Assets
and Liabilities Management Committee of
the seventh session of the Board
Independent Director, Chairperson of the
Connected Transactions Control Committee of the
seventh session of the Board
4/6
6/6
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.
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.
Thirteenth meeting of the Risk Management
and Consumer Rights Protection Committee
of the seventh session of the Board
14 December 2023
Twelfth meeting of the Risk Management
and Consumer Rights Protection Committee
of the seventh session of the Board
22 November 2023
Eleventh meeting of the Risk Management
and Consumer Rights Protection Committee
of the seventh session of the Board
25 October 2023
and Consumer Rights Protection Committee
of the seventh session of the Board
Tenth meeting of the Risk Management
22 August 2023
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.
Description
Ninth meeting of the Risk Management
and Consumer Rights Protection Committee
of the seventh session of the Board
28 March 2023
Meetings convened
The meetings convened are as follows:
89
Annual Report 2023 | Corporate Governance
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.
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.
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.
90 Annual Report 2023 | Corporate Governance
Performance of Duties by the Risk Management and
Consumer Rights Protection Committee
required to
attend
meetings
attended by
proxies/Number
of meetings
Number of
attend
meetings
attended in
person/Number
of meetings
required to
Number of
Independent Director, member of the Strategy and
Assets and Liabilities Management Committee of
the seventh session of the Board
Independent Director, Chairman of the Strategy
and Assets and Liabilities Management Committee
of the seventh session of the Board
Huang Yiping
Zhai Haitao
Position
0/6
Name of member
Meetings and Attendance
91
Annual Report 2023 | Corporate Governance
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.
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.
STRATEGY AND ASSETS AND LIABILITIES
MANAGEMENT COMMITTEE
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.
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.
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 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).
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.
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:
Number of
meetings
attended in
person/Number
of meetings
required to
attend
Number of
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.
CONNECTED TRANSACTIONS CONTROL
COMMITTEE
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.
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.
Independent Director, Chairman of the Risk
Management and Consumer Rights Protection
Committee of the seventh session of the Board
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.
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
Name of member
Position
Name of member
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:
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
1/5
15
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.
4/5
Non-executive Director, member of the Risk
Management and Consumer Rights Protection
Committee of the seventh session of the Board
4/4
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.
Meetings and Attendance
Zhuo Meijuan
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.
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.
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
1/5
4/5
Independent Director, member of the Connected
Transactions Control Committee of the seventh
session of the Board
The meetings convened are as follows:
Huang Yiping
5/5
Independent Director, member of the Connected
Transactions Control Committee of the seventh
session of the Board
Zhai Haitao
0/5
5/5
Independent Director, member of the Connected
Transactions Control Committee of the seventh
session of the Board
Lam Chi Kuen
0/5
5/5
required to
attend
meetings
attended by
proxies/Number
of meetings
0/5
The number of meetings attended in person includes meetings attended on-site and by way of telephone or video conference.
Meetings convened
Tenth meeting of the Connected
Transactions Control Committee of the
seventh session of the Board
Employees: The Company is independent in the aspects
of employment, human resources and remuneration
management.
INDEPENDENCE OF THE COMPANY FROM ITS
CONTROLLING SHAREHOLDER
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.
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
96 Annual Report 2023 | Corporate Governance
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.
28 March 2023
Fourteenth meeting of the Connected
Transactions Control Committee of the
seventh session of the Board
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.
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.
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.
Description
Twelfth meeting of the Connected
Transactions Control Committee of the
seventh session of the Board
28 June 2023
Eleventh meeting of the Connected
Transactions Control Committee of the
seventh session of the Board
26 April 2023
14 December 2023
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.
During the Reporting Period, no amendment was made to
the Articles of Association by the Company.
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.
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
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.
Operational 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.
Reinsurance Credit Risk
Annual Report 2023 | Corporate Governance 105
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.
Credit Risk of Investment Business
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 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.
Credit Risk
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.
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.
Market Risk
104 Annual Report 2023 | Corporate Governance
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.
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.
Strategic Risk
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.
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.
108 Annual Report 2023 | Corporate Governance
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.
ESG Risk
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.
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.
Annual Report 2023 | Corporate Governance 107
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.
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.
Liquidity 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.
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.
Reputational Risk
106 Annual Report 2023 | Corporate Governance
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.
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.
Information Safety Risk
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.
-
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.
100 Annual Report 2023 | Corporate Governance
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.
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.
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.
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.
TRAINING OF COMPANY SECRETARY
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.
CHANGES OF THE ARTICLES OF ASSOCIATION
99
Annual Report 2023 | Corporate Governance
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.
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.
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.
Annual Report 2023 | Corporate Governance 101
Risk Identification and Control
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.
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 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.
Annual Report 2023 | Corporate Governance 103
Insurance Risk
Risk Management
102 Annual Report 2023 | Corporate Governance
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.
Risk Management System
OTHER RELEVANT INFORMATION
H Share registrar and
transfer office
Domestic legal adviser
International legal advisers
Auditors of the Company
PricewaterhouseCoopers Center,
2 Link Suqare, 202 Hubin Road,
Huangpu District, Shanghai, PRC
King & Wood Mallesons
Latham & Watkins LLP
Domestic auditor
Address: 11/F,
Name of the Signing Auditors:
Zhou Xing, Huang Chen
2628
Computershare Hong Kong
Investors Services Limited
PricewaterhouseCoopers
Zhong Tian LLP
STOCK INFORMATION
The Stock Exchange of Hong Kong
Limited
601628
China Life
Shanghai Stock Exchange
Stock code
Stock short name
Exchanges on which the stocks
are listed
H Share
A Share
Stock type
Address: Shops 1712-1716, 17th Floor,
Hopewell Centre, 183 Queen's Road
East, Wanchai, Hong Kong
Tower A, China Life Plaza, 16 Financial Street, Xicheng District, Beijing,
P.R. China
The Company's website at www.e-chinalife.com
China Life
Debevoise & Plimpton LLP
Announcement of Premium Income
PricewaterhouseCoopers
CBIRC
HKExnews website of Hong Kong Exchanges and
Clearing Limited at www.hkexnews.hk
7
2023/3/3
60
Announcement - Approval of Qualification of Person in Charge of Finance by the
2023/2/13
2023/2/1
Forfeiture of Unclaimed Dividends
2023/1/16
2023/1/16
2023/1/13
Date of disclosure
Election of Language and Means of Receipt of Corporate Communication
Reply Form
5
4
3
2
1
Serial No. Items
INDEX OF INFORMATION DISCLOSURE ANNOUNCEMENTS
Announcement of Premium Income
Announcement
111
Annual Report 2023 | Other Information
Name of the Certified Auditor:
Yip Siu Foon, Linda
Address: 22/F, Prince's Building,
Central, Hong Kong
Overseas auditor
www.sse.com.cn
16 Financial Street, Xicheng District, Beijing, P.R. China
The Company's annual report
may be obtained at
86-10-63633333
100033
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
Fraud Risk
118 Annual Report 2023 | Financial Report
8
86-10-63631241
Shanghai Securities News (www.cnstock.com)
Securities Times (www.stcn.com)
Securities Daily (www.zqrb.cn)
95519
www.e-chinalife.com
The Company's H Share
disclosure websites
CSRC's designated website for the
Company's annual report disclosure
Media and websites for the
Company's A Share disclosure
INFORMATION DISCLOSURE AND PLACE FOR OBTAINING THE REPORT
* 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
86-10-63631191
16 Financial Street, Xicheng District,
Beijing, P.R. China
Li Yinghui
Securities Representative
ir@e-chinalife.com
86-10-66575112
86-10-63631241
16 Financial Street, Xicheng District,
Beijing, P.R. China
Zhao Guodong
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
2023/3/3
Announcement - Change of Board Secretary and Authorised Representative
Announcement of Premium Income
Notification Letter and Request Form to Non-registered Shareholders
NFRA
2023/12/1
78
2023/11/29
2023/11/29
2023/11/29
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
76
67
77
75
75
2023/11/29
2023/11/10
Announcement - Approval of Qualification as President of the Company by the NFRA
Supplemental Notice of the First Extraordinary General Meeting 2023
74
73
2023/11/9
2023/11/8
79
Announcement of Premium Income
2023/12/11
80
CGB
China Life AMP
Pension Company
AMC
CLIC
China Life, the Company
In this report, unless the context otherwise requires, the following expressions have the following meanings:
DEFINITIONS AND MATERIAL RISK ALERT
114 Annual Report 2023 | Other Information
2023/11/8
2023/12/15
82
62
2023/12/15
Announcement - Renewal of Continuing Connected Transactions under the Insurance
Sales Framework Agreement
81
2023/12/15
Resolutions Passed at the First Extraordinary General Meeting 2023
-
Announcement
Announcement - Supplementary Information regarding Compensation of Directors,
Supervisors and Senior Management Members in 2022
CLP&C
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-registered Shareholders
Announcement of Premium Income
237
Date of disclosure
Announcement in relation to the Disclosure of Relevant Representation on the 2023
Corporate Day
63
Serial No. Items
Annual Report 2023 | Other Information 113
2023/10/26
Summary of Solvency Quarterly Report of Insurance Company (Third Quarter of 2023)
62
2023/10/26
2023/10/18
Voluntary Announcement - Convening of 2023 Third Quarter Results Briefing
2023 Third Quarter Report
61
60
2023/10/13
Notice of Board Meeting
59
2023/10/11
2023/9/21
2023/9/13
2023/10/30
64
Materials for the China Life 2023 Corporate Day: Past Experiences Herald a Promising
Future - China Life 2023 Corporate Day
2023/10/30
71
70
2023/11/8
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
69
2023/11/8
Notice of the First Extraordinary General Meeting 2023
68
2023/11/8
72
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
67
2023/10/30
Materials for the China Life 2023 Corporate Day: Progress Intergration Prospects -
Individual Sales System Reform
66
99
2023/10/30
Materials for the China Life 2023 Corporate Day: Insurance + Senior Care Make Life
Better China Life's Distinctive Senior Care Ecosystem
-
65
67
CLI
China Life Capital
Ministry of Finance
Valuation of liabilities for remaining coverage and insurance revenue recognition for insurance contracts not using the
premium allocation approach
•
Key audit matters identified in our audit are summarised as follows:
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
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.
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
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.
Our opinion
• the notes to the consolidated financial statements, comprising material accounting policy information and other explanatory
information.
the consolidated statement of cash flows for the year then ended; and
•
What we have audited (continued)
OPINION (continued)
Independent Auditor's Report (continued)
116 Annual Report 2023 | Financial Report
Fair value of level 3 financial assets
Annual Report 2023 Financial Report
117
Independent Auditor's Report (continued)
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:
the consolidated statement of changes in equity for the year then ended;
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.
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.
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.
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.
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.
Refer to Notes 2.8, 14 and 20 to the consolidated financial
statements.
Valuation of liabilities for remaining coverage and insurance
revenue recognition for insurance contracts not using the
premium allocation approach
Key Audit Matter
KEY AUDIT MATTERS (continued)
How our audit addressed the Key Audit Matter
the consolidated statement of comprehensive income for the year then ended;
•
the consolidated statement of financial position as at 31 December 2023;
Ministry of Finance of the People's Republic of China
China Life Capital Investment Company Limited, an indirect wholly-owned subsidiary
of CLIC
China Life Investment Management Company Limited, a wholly-owned subsidiary of
CLIC
China Life Property and Casualty Insurance Company Limited, a non-wholly owned
subsidiary of CLIC
China Guangfa Bank Co., Ltd., an associate of the Company
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
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 Insurance Company Limited and its subsidiaries
RMB
National Financial Regulatory Administration, the predecessor of which is China
Banking and Insurance Regulatory Commission
ESG
C-ROSS (Phase II) Regulation
SARMRA
Articles of Association
Securities Law
Insurance Law
Company Law
SSE
HKSE
CSRC
NFRA
China or PRC
Announcement - Change of Composition of the Special Committees of the Board
Announcement of Premium Income
China Securities Regulatory Commission
Company Law of the People's Republic of China
Insurance Law of the People's Republic of China
•
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:
What we have audited
OPINION
To the Shareholders of China Life Insurance Company Limited
(incorporated in the People's Republic of China with limited liability)
pwc
FINANCIAL
REPORT
Independent Auditor's Report
Annual Report 2023 | Other Information 115
The Stock Exchange of Hong Kong Limited
Shanghai Stock Exchange
Except for "the Company" referred to in the Consolidated Financial Statements.
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.
Material Risk Alert:
Renminbi Yuan
Environmental, Social and Governance
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
Solvency Aligned Risk Management Requirements and Assessment
Solvency Regulatory Rules II for Insurance Companies
Articles of Association of China Life Insurance Company Limited
Securities Law of the People's Republic of China
6
2023/3/13
15
57
Announcement Connected Transaction - Investment in Partnership through Equity
Investment Plan
26
-
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
25
25
2023/4/27
2023/4/19
Voluntary Announcement - Convening of 2023 First Quarter Results Briefing
2023 First Quarter Report
24
23
2023/4/19
2023/4/19
2023/4/27
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-registered Shareholders
27
Announcement - Connected Transaction - Investment in Partnership through Equity
Investment Plan
32
31
Serial No. Items
112 Annual Report 2023 | Other Information
2023/5/8
Announcement in relation to Relevant Representation on the Implementation of IFRS17
& IFRS9
30
2023/4/27
Overseas Regulatory Announcement - China Life Insurance Company Limited.
Announcement on Changes in Accounting Estimates
29
29
2023/4/27
Summary of Solvency Quarterly Report of Insurance Company (First Quarter of 2023)
28
58
27
21
2023/4/19
Annual Report 2022
2023/3/29
China Life Insurance Company Limited 2022 Environmental, Social and Governance &
Social Responsibility Report
13
2023/3/29
Announcement of Results for the Year Ended 31 December 2022
12
2023/3/20
Voluntary Announcement - Convening of 2022 Annual Results Briefing
11
2023/3/14
Notice of Board Meeting
10
2023/3/13
Clarification Announcement in relation to Premium Income
9
14
-
Summary of Solvency Quarterly Report of Insurance Company (Fourth Quarter of 2022)
Announcement
Investment Plan
2023/3/29
20
22222
2023/4/17
Notice of Board Meeting
19
2023/4/10
Announcement of Premium Income
33
18
Final Dividend for the Year Ended 31 December 2022
17
2023/3/29
Overseas Regulatory Announcement - China Life Insurance Company Limited -
Announcement on Changes in Accounting Estimates
16
2023/3/29
Connected Transaction - Investment in Partnership through Equity
2023/3/29
Briefing on IFRS17 & IFRS9 Updates
2023/4/27
Date of disclosure
2023/8/10
Notice of Board Meeting
49
2023/8/9
Announcement of Premium Income
48
2023/8/4
2023/8/4
2023/7/10
2023/6/29
2023/6/28
Announcement - Nomination of Directors
Announcement - Change of President and Chief Actuary
Announcement of Premium Income
Announcement - Resignation of Supervisor
Announcement of Premium Income
Voluntary Announcement - Convening of 2023 Interim Results Briefing
2023/8/15
51
56
2023/9/13
Notification Letter and Change Request Form to Registered Shareholders
55
2023/9/13
2023 Interim Report
54
Final Dividend for the Year Ended 31 December 2022 (Updated)
2023/9/11
53
2023/8/23
Summary of Solvency Quarterly Report of Insurance Company (Second Quarter of
2023)
62
52
2023/8/23
Announcement of Unaudited Interim Results for the Six Months Ended 30 June 2023
Announcement of Premium Income
47
50
45
Notification Letter and Change Request Form to Registered Shareholders
37
2023/5/23
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
Notice of Annual General Meeting
35
2023/5/23
2023/5/12
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
34
2023/5/8
2023/5/10
46
-
2023/5/23
38
36
2023/5/23
44
Notification Letter and Request Form to Non-registered Shareholders
Announcement - Approval of Qualification as Director and Supervisor by the NFRA
23
43
42
2023/6/28
Announcement - Resolutions Passed at the Annual General Meeting and Distribution of
Final Dividend
2023/6/28
41
2023/6/21
Announcement - Resignation of Supervisor
40
2023/6/9
Announcement of Premium Income
39
41
As at
1 January
2022
RMB million
RMB million
(Restated,
Note 2.1.1.b)
RMB million
(Restated,
Note 2.1.1.b)
Investment properties
Property, plant and equipment
Right-of-use assets
Investments in associates and joint ventures
Term deposits
Statutory deposits - restricted
31 December
2022
ASSETS
2023
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.
As at
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.
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.
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.
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.
The engagement partner on the audit resulting in this independent auditor's report is Yip Siu Foon, Linda.
PricewaterhouseCoopers
31 December
Certified Public Accountants
27 March 2024
Annual Report 2023 Financial Report
121
Consolidated Statement of Financial Position
As at 31 December 2023
Notes
As at
Hong Kong
7
13
•
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
OTHER INFORMATION
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.
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)
53,710
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.
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.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
Other assets
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:
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.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS
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.
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.
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.
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
54,559
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.
8
(1,229)
25,848
Total comprehensive income for the year, net of tax
(84)
42
Non-controlling interests
(487)
Financial changes in insurance contracts
under the equity method
(1,636)
660
Share of other comprehensive income of associates and joint ventures
N/A
1,122
Changes in fair value of investment in equity instruments at fair value
through other comprehensive income
Other comprehensive income that may not be reclassified to profit or
loss in subsequent periods:
545
679
Financial changes in reinsurance contracts
4,967
(97,940)
Attributable to:
Financial changes in insurance contracts
- Equity holders of the Company
24,440
(Note 35)
(Note 34)
RMB million
RMB million
RMB million
RMB million
RMB million
Total
interests
earnings
Reserves
Non-
controlling
Retained
Share
capital
Attributable to equity holders of the Company
For the year ended 31 December 2023
Consolidated Statement of Changes in Equity
Annual Report 2023 Financial Report 125
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
(2,577)
1,348
1,408
- Non-controlling interests
1,102
325
Exchange differences on translating foreign operations
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
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
19,327
RMB1.63
30
Basic and diluted earnings per share
1,432
1,366
66,680
46,181
68,112
47,547
(1,948)
2,971
70,060
44,576
22
Other comprehensive income that may be reclassified to profit or loss
in subsequent periods:
2023
2022
RMB million
(3,015)
(51)
Share of other comprehensive income of associates and joint ventures
under the equity method
(8,371)
N/A
(62,849)
N/A
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)
2.1.1.b)
Allowance for credit losses on investment in debt instruments at fair
value through other comprehensive income
(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)
(21,741)
(69,341)
(21,699)
RMB million
(Restated,
Note 2.1.1.b)
N/A
29
As at 31 December 2021
As at 1 January 2022 (Restated, Note
46,181
(21,741)
Total comprehensive income
(21,699)
42
(21,741)
Other comprehensive income
47,547
1,366
46,181
Net profit
475,081
8,958
278,074
159,784
28,265
As at 1 January 2023
100,108
6
39,351
60,751
1,408
(Note 2.1.1.a)
25,848
Transactions with shareholders
9,941
302,895
145,933
28,265
As at 31 December 2023
55,632
(13,895)
(425)
(21,360)
7,890
Total transactions with shareholder
380
94
(94)
380
(13,850)
(425)
(425)
(13,850)
(7,604)
7,604
Reserves to retained earnings (Note 35)
Others
Appropriation to reserves (Note 35)
Dividends declared (Note 32)
Dividends to non-controlling interests
Impact of initial application of IFRS 9
374,973
8,952
68,112
1,432
66,680
396,493
8,073
203,478
156,677
28,265
(90,641)
2,437
(93,078)
487,134
8,073
201,041
249,755
28,265
Dividends to non-controlling interests
Reserves to retained earnings (Note 35)
Others
Transactions with shareholders
Appropriation to reserves (Note 35)
Dividends declared
Total comprehensive income
Other comprehensive income
Net profit
(69,257)
(84)
(69,341)
- (69,257)
238,723
99,033
28,265
As at 31 December 2022 (Restated,
Note 2.1.1.b)
(20,291)
(469)
(31,435)
11,613
Total transactions with shareholders
(1,450)
Impact of initial application of IFRS 17 (Note
2.1.1.b)
(1,450)
(74)
(469)
(469)
(18,372)
(18,372)
(13,137)
13,137
(1,229)
1,348
66,680
74
487,034
28
(18,131)
272
29
Deferred tax liabilities
113,133
117,751
126,750
17
Other liabilities
34,994
34,997
36,166
16
Bonds payable
19,222
12,774
12,857
15
Interest-bearing loans and other borrowings
154
160
188
999
14.3
Current tax liabilities
238
Attributable to equity holders of the Company
Retained earnings
Reserves
Share capital
Equity
3,416
4,268,874
4,635,095
5,315,052
Total liabilities
3,344
13,878
Financial liabilities at fair value through profit or loss
239,446
47,546
49,654
148,958
216,851
18
Financial assets sold under agreements to repurchase
48,878
Premiums received in advance
248
309
Reinsurance contract liabilities
3,809,716
4,266,947
60,459
127,594
149,305
Cash and cash equivalents
48,538
49,580
51
Accrued investment income
12,915
38,533
19,759
11.11
Financial assets purchased under agreements to resell
24,180
46,126
24,431
29
Deferred tax assets
33,981
22,004
37,318
Total assets
5,802,086
5,010,068
4,665,367
4,859,175
14.2
Insurance contract liabilities
Liabilities
LIABILITIES AND EQUITY
(Restated,
Note 2.1.1.b)
(Restated,
Note 2.1.1.b)
1 January
2022
RMB million
RMB million
RMB million
Non-controlling interests
2022
31 December
31 December
As at
As at
As at
Notes
As at 31 December 2023
Consolidated Statement of Financial Position (continued)
122 Annual Report 2023 | Financial Report
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
2023
(15,212)
Total equity
34
4,438
Less: Amounts recovered from reinsurers
(4,726)
Allocation of reinsurance premiums paid
(131,614)
(150,353)
25
25
Insurance service expenses
370,861
344,746
Total revenues
8,944
10,603
Other income
3,979
8,079
10
Investment income from associates and joint ventures
(12,156)
N/A
Insurance finance income/(expenses) from insurance contracts
issued
24
26
(4,119)
6,274
(148,700)
(3,150)
N/A
1,217
27
27
(4,863)
(5,308)
583
616
- Non-controlling interests
- Equity holders of the Company
Attributable to:
Net profit
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
(127,923)
Net fair value gains through profit or loss
12,707
N/A
Approved and authorised for issue by the Board of Directors on 27 March 2024.
4,665,367
5,010,068
5,802,086
396,493
8,073
8,952
374,973
9,941
487,034
388,420
366,021
477,093
203,478
238,723
302,895
156,677
99,033
145,933
35
28,265
28,265
28,265
Bai Tao
Director
Li Mingguang
Director
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
23
Net realised gains on financial assets
174,809
(9,375)
22
N/A
122,994
21
182,578
(Restated,
Note 2.1.1.b)
Total liabilities and equity
2022
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
RMB million
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
RMB2.36
Consolidated Statement of Cash Flows
(5,436)
(4,217)
Investments in associates and joint ventures
(3,076)
(4,171)
(819,785)
(836,048)
(519,495)
(881,317)
4,395
363
1,051
Decrease/(increase) in term deposits, net
513,350
Property, plant and equipment
Equity investments and subsidiaries
Debt investments
Purchases:
Disposals of subsidiaries
Disposals of property, plant and equipment
Disposals of equity investments
309,801
168,656
210,688
Maturities of debt investments
Disposals of debt investments
556,929
Disposals and maturities:
80,787
Decrease/(increase) in financial assets purchased under agreements to resell,
to repurchase, net
Increase/(decrease) in financial assets sold under agreements
CASH FLOWS FROM FINANCING ACTIVITIES
(Restated,
Note 2.1.1.b)
RMB million
2022
RMB million
2023
For the year ended 31 December 2023
Consolidated Statement of Cash Flows (continued)
Annual Report 2023 | Financial Report 127
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
44,273
(158,271)
Net cash inflow/(outflow) from investing activities
(198)
Cash paid related to other financing activities
34,330
33,373
Dividends received
141,680
145,824
Interest received
net
(27,327)
21,837
(424,236)
CASH FLOWS FROM INVESTING ACTIVITIES
345,284
384,366
458,817
460,499
(551)
N/A
3,150
N/A
(1,217)
N/A
(122,994)
(174,809)
9,375
70,060
5,016
44,576
RMB million
RMB million
2022
2023
Investment income from associates and joint ventures
Foreign exchange gains/(losses)
Depreciation and amortisation
Insurance contracts and reinsurance contracts held
Net realised and unrealised gains on financial assets
Other impairment losses
126 Annual Report 2023 | Financial Report
Expected credit losses.
(Restated,
Note 2.1.1.b)
5,291
381
(8,079)
Net cash inflow/(outflow) from operating activities
N/A
615
N/A
7,317
Interest received - financial assets at fair value through profit or loss
Dividends received - financial assets at fair value through profit or loss
699
N/A
5,401
N/A
Interest received – securities at fair value through profit or loss
Dividends received - securities at fair value through profit or loss
-
982
(1,036)
Income tax paid
12,265
5,877
3,175
(2,187)
N/A
(13,777)
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
(35,286)
N/A
Decrease/(increase) in securities at fair value through profit or loss, net
69
(3,979)
Cash received from borrowings
67,129
43
251,226
688
Investment in debt instruments at fair value through
11.4
2,744,169
N/A
other comprehensive income
Investment in equity instruments at fair value through
11.5
138,005
N/A
N/A
other comprehensive income
Financial assets at fair value through profit or loss
N/A
11.6
N/A
N/A
Held-to-maturity securities
11.7
N/A
1,574,204
1,533,753
Loans
11.8
N/A
342,083
429,878
1,705,375
N/A
211,349
11.3
Profit before income tax
Adjustments for:
Investment income
Interest income
1,480
1,810
2,518
9
12,753
CASH FLOWS FROM OPERATING ACTIVITIES
For the year ended 31 December 2023
(90,711)
13,193
13,374
10
258,760
262,488
258,933
11.1
413,255
485,567
529,488
11.2
6,520
6,333
6,333
Investment in debt instruments at amortised cost
Available-for-sale securities
11.9
N/A
1,738,108
64
Foreign exchange gains/(losses) on cash and cash equivalents
(120,095)
60,273
Net cash inflow/(outflow) from financing activities
(1,769)
750
Cash received related to other financing activities
5,896
18,035
Capital injected into subsidiaries by non-controlling interests
(1,307)
(1,149)
Payment of lease liabilities
Interest paid
(7,921)
(7,545)
(469)
Repayment of borrowings
N/A
(577)
(8,275)
Dividends paid to equity holders of the Company
(13,850)
(18,372)
(418)
Dividends paid to non-controlling interests
217
Net increase in cash and cash equivalents
Cash paid related to other financing activities
67,135
1,429,287
Securities at fair value through profit or loss
11.10
N/A
223,790
206,771
Reinsurance contract assets
20,467
25,846
24,096
128 Annual Report 2023 | Financial Report
The notes on pages 129 to 272 form an integral part of these consolidated financial statements.
4,452
608
14.3
147,453
Beginning of the period
123,142
End of the period
127,594
148,061
60,459
Analysis of balances of cash and cash equivalents
Cash at banks and in hand
Short-term bank deposits
127,594
Cash and cash equivalents
N/A
11
1,738,108
N/A
223,790
9
Interest-bearing loans and other borrowings
342,083
12
=23
12,782
12,774
36,167
149,022
148,958
N/A
34,997
13
Financial assets sold under agreements to repurchase
Financial liabilities at fair value through profit or loss
1,574,204
6,445
231,896
N/A
RMB million
3,344
Term deposits
Statutory deposits - restricted
Investment in debt instruments at amortised cost
123
498,294
485,567
6,333
N/A
Investment in debt instruments at fair value through other
comprehensive income
4
2,341,964
N/A
Investment in equity instruments at fair value through other
comprehensive income
LO
5
119,913
N/A
Financial assets at fair value through profit or loss
Held-to-maturity securities
Loans
Available-for-sale securities
Securities at fair value through profit or loss
Liabilities
Including:
8
67% 10
1,353,748
N/A
3,344
Presentation adjustments: Interest receivable
Notes to the Consolidated Financial Statements (continued)
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
Add: Transfer from available-for-sale securities
4. Investment in debt instruments at fair value through other comprehensive income
31 December 2022
529,652
Add: Transfer from loans
83,236
Add: Transfer from held-to-maturity securities
1,572,220
28,225
Remeasurement: From amortised cost to fair value
128,631
1 January 2023
2,341,964
As at
31 December
2022
Add: Transfer from available-for-sale securities
1,984
6,445
(8)
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:
1. Term deposits
31 December 2022
Presentation adjustments: Interest receivable
Remeasurement: ECL
1 January 2023
2. Statutory deposits - restricted
31 December 2022
Presentation adjustments: Interest receivable
Remeasurement: ECL
1 January 2023
3. Investment in debt instruments at amortised cost
31 December 2022
Add: Transfer from held-to-maturity securities
Carrying amount
RMB million
485,567
13,051
(324)
498,294
6,333
120
Annual Report 2023 | Financial Report 131
1 January
2023
RMB million
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.
Notes
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.
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 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.
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 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.
The principal or the most advantageous market must be accessible by the Group at the measurement date.
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:
(iii) Accounting policy for financial instruments related to IAS 39 applicable as of 31 December 2022 (continued)
Fair value measurement
2.1.1.b IFRS 17 - Insurance Contracts
2.1.1.a IFRS 9 – Financial Instruments (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)
136 Annual Report 2023 | Financial Report
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 20% below their cost for a period of at least six months at the
reporting date; and
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
1 ORGANISATION AND PRINCIPAL ACTIVITIES
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)
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.
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.
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;
138 Annual Report 2023 | Financial Report
5. Investment in equity instruments at fair value through other comprehensive income
31 December 2022
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;
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:
A contractual service margin represents the unearned profit of the insurance contracts and will be recognised in profit
or loss over the coverage period;
•
•
•
•
2.1.1.b IFRS 17 - Insurance Contracts (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 137
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;
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.
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).
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.
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.
(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.
2.1.1.a IFRS 9 Financial Instruments
Classification and measurement
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.
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.
130 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)
2.1 Basis of preparation (continued)
Definition of Accounting Estimates
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)
Impairment
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.
Hedge accounting
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
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.
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.
STATEMENT OF FINANCIAL POSITION
Assets
Including:
2.1.1.a IFRS 9 – Financial Instruments (continued)
IFRS Practice Statement 2
Amendments to IAS 8
Amendments to IAS 1 and
Amendments to IAS 12
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.
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 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.
Annual Report 2023 | Financial Report 129
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
Standards/Amendments
IFRS 9
IFRS 17
Amendments to IAS 12
Content
Financial Instruments
Insurance Contracts
Deferred Tax related to Assets and Liabilities arising
from a Single Transaction
Effective for
annual periods
beginning on or after
1 January 2018(i)
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 2023
As at
Add: Transfer from available-for-sale securities (note)
Bonds payable
119,913
119,913
751
1,390
Provision for impairment of fair value through
other comprehensive income - debt instruments
investment
Provision for impairment of available-for-sale
securities
Sub-total
Total
1,739
886
2,625
(18,588)
18,588
(16,849)
886
2,625
21,570
(19,192)
(2,343)
2,982
Sub-total
660
Impairment
provision under
IAS 39
adjustment Remeasurement
IFRS 9
RMB million
Provision for impairment of term deposits
Provision for impairment of statutory deposits
Provision for impairment of investment in debt
instruments at amortised cost
Provision for impairment of loans
1,637
324
8
8
398
398
2,343
(2,343)
Provision for impairment of other assets
639
21
324
Presentation
4,015
Notes to the Consolidated Financial Statements (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 (continued):
Financial assets (continued)
Recognition and measurement (continued)
Term deposits primarily represent traditional bank deposits which have fixed maturity dates and are stated at amortised cost.
Loans are carried at amortised cost, net of allowance for impairment.
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.
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 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:
•
significant financial difficulty of the issuer or debtor;
•
a breach of contract, such as a default or delinquency in payments;
•
it becomes probable that the issuer or debtor will enter into bankruptcy or other financial reorganisation; and
• the disappearance of an active market for that financial asset because of financial difficulties.
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 market price of the equity securities was more than 50% below their cost at the reporting date;
1 January 2023
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)
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)
(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
134 Annual Report 2023 | Financial Report
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.
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
(b) Held-to-maturity securities
Impairment
provision under
18,588
(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:
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
223,790
1,080,735
37,933
1,535
3,632
6,123
1,353,748
1,574,204
(1,984)
(1,572,220)
342,083
1 January 2023
Less: Transfer to investment in debt instruments at fair value through other comprehensive
income
Less: Transfer to investment in debt instruments at amortised cost
31 December 2022
Note:
Measurement categories
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.
132 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)
2.1 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)
(37,933)
(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):
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
1 January 2023
7. Held-to-maturity securities
6. Financial assets at fair value through profit or loss
(220,914)
2.1.1.a IFRS 9 – Financial Instruments (continued)
31 December 2022
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
1,170
36,167
148,958
64
(83,236)
149,022
Remeasurement: Interest payable
31 December 2022
34,997
Less: Transfer to financial assets at fair value through profit or loss
1 January 2023
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)
11. Interest-bearing loans and other borrowings
(7,808)
Less: Transfer to investment in equity instruments at fair value through other comprehensive
income
1,738,108
(119,913)
1 January 2023
Annual Report 2023 | Financial Report 133
Notes to the Consolidated Financial Statements (continued)
(529,652)
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)
-
31 December 2022
(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):
For the year ended 31 December 2023
10. Securities at fair value through profit or loss
Carrying amount
RMB million
Equity instruments
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
For the year ended 31 December 2023
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)
Based on these factors, the Group classifies its debt instruments into the following three measurement categories:
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.
(b) cash flow characteristics of financial assets (whether the cash flows are solely payments of principal and interest on
the principal amount outstanding).
For the year ended 31 December 2023
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:
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.
Equity instruments are financial instruments that meet the definition of equity instruments when analysed from the issuer's
perspective.
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.
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.
2.4 Financial 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:
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)
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
(a) the Group's business model for managing assets; and
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.
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.
Impairment
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)
For the year ended 31 December 2023
2.4 Financial instruments (continued)
2.4.2 Financial liabilities (continued)
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.
2.3 Associates and joint ventures (continued)
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.
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.
Financial liabilities are classified into financial liabilities at amortised cost and financial liabilities at fair value through profit
or loss at initial recognition.
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.
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.
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.
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)
2.4.1 Financial assets (continued)
Impairment (continued)
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.
2.4.2 Financial liabilities
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
the contractual arrangement with the other vote holders of the investee;
Notes to the Consolidated Financial Statements (continued)
1 January 2024
No mandatory effective
date yet determined but
available for adoption
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
•
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 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.
•
rights arising from other contractual arrangements; and
•
1 January 2024
1 January 2024
beginning on or after
Lack of Convertibility
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
the Group's voting rights and potential voting rights.
Amendments to IFRS 16
IAS 28
Amendments to IAS 7, 'Cash
Flow Statement' and IFRS
7, 'Financial Instruments:
Disclosures'
Amendments to IAS 21
Content
Classification of Liabilities as Current or Non-current
Non-current Liabilities with Covenants
Lease Liability in a Sale and Leaseback
Sale or Contribution of Assets between an Investor or
its Associate or Joint Venture
Financing Arrangements of Supplier
Amendments to IFRS 10 and
For the year ended 31 December 2023
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.
Notes to the Consolidated Financial Statements (continued)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
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.
2.3 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 the 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.
Annual Report 2023 | Financial Report 141
140 Annual Report 2023 | Financial Report
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.
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.
For the year ended 31 December 2023
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.2 Consolidation (continued)
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.
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;
Annual Report 2023 | Financial Report 139
•
•
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.
derecognises the carrying amount of any non-controlling interests;
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.
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
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.
(b) a group of contracts that at initial recognition has no significant possibility of becoming onerous subsequently;
(a) a group of contracts that is onerous at initial recognition;
The Group divides a portfolio of insurance contracts into a minimum of the following groups:
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 identifies portfolios of insurance contracts as contracts subject to similar risks and are managed together.
2.8.4 Classification
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.
Investment component is the amount that an insurance contract requires to repay to policyholders regardless of whether
an insured event occurs.
(c) promises to transfer distinct goods or services other than insurance contract services.
(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;
9
(a) embedded derivatives meeting the separation conditions of accounting policies for financial instruments under IFRS
Financial Instruments;
An insurance contract may contain one or more components, the Group separates the following components:
2.8.3 Separation
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.
2.8.2 Combination
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.
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.
(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:
(a) the contractual terms specify that the policyholder participates in a share of a clearly identified pool of 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
(c) a group of the remaining contracts in the portfolio.
(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.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (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.
Annual Report 2023 | Financial Report 147
148 Annual Report 2023 | Financial Report
2.8 Insurance Contracts (continued)
146 Annual Report 2023 | Financial Report
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
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.
2.7 Financial assets purchased under agreements to resell
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.
2.6 Cash and cash equivalents
2.8 Insurance Contracts
2.8.1 Definition
The contracts issued by the Group are classified into insurance contracts and investment contracts.
Notes to the Consolidated Financial Statements (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.
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:
For the year ended 31 December 2023
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)
2.8.6 Measurement of insurance contracts (continued)
154 Annual Report 2023 | Financial Report
2.8.6 Measurement of insurance contracts
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.
(iv) Simplified approach for measurement of groups of insurance contracts (premium allocation approach)
(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.
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;
(iv) Simplified approach for measurement of groups of insurance contracts (premium allocation approach) (continued)
Initial 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.
Subsequent measurement
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.
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.
(c) any cash flows arising from the reinsurance contracts held in the group at that date;
(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;
(a) the fulfilment cash flows;
On initial recognition for a group of reinsurance contracts held, the Group calculates the sum of:
(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.
(i) Groups of reinsurance contracts not measured using the premium allocation approach
2.8.7 Measurement of groups of reinsurance contracts held
The Group recognises the liabilities for incurred claims of the insurance contracts as the amount of fulfilment cash flow
related to the incurred compensation.
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.
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.
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)
Annual Report 2023 | Financial Report 153
2.8 Insurance Contracts (continued)
(a) the beginning of the coverage period of the group of reinsurance contracts held; and
(b) the date the Group recognises an onerous group of underlying insurance contracts.
For the reinsurance contracts held that provide proportionate coverage, they are recognised from the earliest of the following:
(a) the later of the beginning of the coverage period or that any underlying insurance contract is initially recognised;
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 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 change in the amount of the Group's share of the fair value of the underlying items, except to the extent that:
(a) the effect of any new contracts added to the group;
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:
(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)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 149
On initial recognition, the Group measures a group of insurance contracts at the total of the fulfilment cash flows and the
contractual service margin.
Initial measurement
(i) General provisions (general measurement model)
Reinsurance contracts held are recognised from the earliest of the following:
(c) when it becomes onerous.
(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;
(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 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
(b) the date the Group recognises an onerous group of underlying insurance contracts.
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:
2.8.6 Measurement of insurance contracts (continued)
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.
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.8 Insurance Contracts (continued)
2.8.4 Classification (continued)
Portfolios of reinsurance contracts held are assessed for aggregation separately from portfolios of insurance contracts issued.
The Group divides a portfolio of reinsurance contracts held into at least the following groups:
(a) a group of contracts for which there is a net gain at initial recognition;
(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.
The Group classifies reinsurance contracts held within a period of no longer than one year into the same group of reinsurance
contracts held.
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.
2.8.5 Recognition
The Group recognises a group of insurance contracts it issues from the earliest of the following:
For the year ended 31 December 2023
156 Annual Report 2023 | Financial Report
(a) the date of initial recognition is the date the Group becomes party to the contract;
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 151
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:
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.
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 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.
Subsequent measurement
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.
(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.
(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.
(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)
(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)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
2.8 Insurance Contracts (continued)
2.8.6 Measurement of insurance contracts (continued)
(i) General provisions (general measurement model) (continued)
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)
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
152 Annual Report 2023 | Financial Report
(e) changes in risk adjustment for non-financial risk that relate to future service.
For the year ended 31 December 2023
(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;
(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.
(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;
(a) the effect of any new contracts added to the group;
Subsequent measurement (continued)
(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;
Notes to the Consolidated Financial Statements (continued)
Notes to the Consolidated Financial Statements (continued)
(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.
(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.
(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;
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:
2.8.8 Investment contracts with discretionary participation features
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 157
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.
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.
(ii) Groups of reinsurance contracts measured using the premium allocation approach
(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.
(e) the effect of any currency exchange differences in the period arising on the contractual service margin;
(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;
(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;
(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;
(a) the effect of contracts added to the group of contracts in the period on the contractual service margin;
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:
(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)
2.8.9 Modification and derecognition
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:
(a) if the modified terms had been included at contract inception:
.
(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;
The estimates of future cash flows:
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.
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.
150 Annual Report 2023 | Financial Report
The fulfilment cash flows do not reflect the non-performance risk of the Group.
158 Annual Report 2023 | Financial Report
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.
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.
(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.
(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
the modified contract would have been included in a different group of contracts.
the modified contract would have had a substantially different contract boundary; or
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 been excluded from the scope of the accounting policies related to insurance contracts;
.
.
(c) a risk adjustment for non-financial risk.
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;
Notes to the Consolidated Financial Statements (continued)
3.6 Investment properties
Notes to the Consolidated Financial Statements (continued)
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.
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)
164 Annual Report 2023 | Financial Report
3.7 Employee benefits
Pension benefits
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.
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.
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
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.
Subsequent measurement
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES (continued)
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.
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.
Annual Report 2023 | Financial Report 167
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
4 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.
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.
4.1 Insurance contracts
4.1.1 Portfolios of contracts
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.
4.1.2 Investment components
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.
4.1.3 Determination of coverage unit
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.
4.1.4 Estimates of future benefit payments and premiums arising from insurance contracts not using
the premium allocation approach
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.
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.
The description of the above assumptions is detailed in Note 14.1.
4.2 Financial instruments
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.
4.2.1 Classification of financial assets
Significant judgements made by the Group in the classification of financial assets include business model and analysis on
contractual cash flow characteristics.
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.
Housing benefits
3.12 Dividend distribution
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.
Stock appreciation rights
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.
3.8 Premiums received in advance
The advance premiums received by the Group are mainly premiums received for insurance contracts that have not yet met
the criteria for initial recognition.
3.9 Share capital
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.
3.10 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 regulations are subject to interpretation.
166 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
3 SUMMARY OF OTHER ACCOUNTING POLICIES (continued)
3.10 Current and deferred income taxation (continued)
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 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
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.
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.
168 Annual Report 2023 | Financial Report
2.8 Insurance Contracts (continued)
(i) Insurance revenue
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;
(b) the effect of financial risk and changes in financial risk.
160 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 (continued)
2.8.10 Presentation (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.
2.8.11 The effect of accounting estimates made in interim financial statements
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
(d) changes that relate to future service - onerous contract losses or reversals of those losses.
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.
(c) changes that relate to past service – changes in the fulfilment cash flow relating to the liabilities for incurred claims;
and
(a) claims and other related expenses incurred in the period, excluding investment components;
- 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.
•
amounts of the contractual service margin amortised; and
• other.
(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.
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.
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:
(b) amortisation of insurance acquisition cash flows;
2.8.10 Presentation
(i) Modified retrospective approach
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:
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.
Depreciation
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 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:
Buildings
Office equipment, furniture and fixtures
Motor vehicles
Leasehold improvements
Estimated useful lives
claims and other related expenses incurred in the period measured at the amounts expected at the beginning of the
period, excluding:
•
•
(a) Amounts related to the changes in the liabilities for remaining coverage;
For contracts not measured using the premium allocation approach, insurance revenue includes the following:
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.
The Group recognises the reduction in the liabilities for remaining coverage because of services provided in the period as
insurance revenue.
162 Annual Report 2023 | Financial Report
Contracts without 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.
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.
(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;
(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
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)
2.8.12 Transition date approach (continued)
(i) Modified retrospective approach (continued)
Contracts with direct participation features
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
- amounts allocated to the loss component;
-
56,125
1,773
Total liabilities for incurred claims
risk adjustment for non-financial
risk and discounting, etc.
Effect of indirect claims expenses,
7
before 2019
Total liabilities - Accident years
23,041
21,417
1,173
320
102
29
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
24,821
51,540
Annual Report 2023 | Financial Report 175
5 RISK MANAGEMENT (continued)
Investment in equity instruments at fair
or loss
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)
5.2 Financial risk (continued)
5 RISK MANAGEMENT (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
176 Annual Report 2023 | Financial Report
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.
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.
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.
(i) Interest rate risk
5.2.1 Market 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.
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.
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'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.
5.2 Financial risk
Notes to the Consolidated Financial Statements (continued)
2 years later
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
5.1 Insurance risk (continued)
5.1.1 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
%
Premiums of life insurance contracts (i)
Xin Xiang Wei Lai Participating Endowment (a)
Kang Ning Whole Life (b)
Fu Lu Shuang Xi Participating Endowment (c)
Sheng Shi Zun Xiang Annuity (d)
Mei Man Yi Sheng Annuity (e)
Others (f)
Total
38,632
6.84%
5
0.00%
11,233
1.99%
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
170 Annual Report 2023 | Financial Report
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.
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.
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.
4.2.2 Measurement of ECL
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.
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.
4.3 Impairment of investments in associates and joint ventures
US dollar HK dollar
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.
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
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 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.
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.
Annual Report 2023 | Financial Report 169
13,247
GB pound
Others
314
3
7
8
296
Securities at fair value through profit or loss
6,692
6,692
Available-for-sale securities
1,278
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
68,733
58,413
10,320
Available-for-sale securities
Equity securities
Financial assets
Term deposits
RMB million
2,176
Cash and cash equivalents
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
6,756
Interest-bearing loans and other borrowings
Financial liabilities
90,256
884
1,355
610
59,089
28,318
Total
3,262
7
136
208
62
62
2,849
2,176
Total
Others
EUR
2,575
Cash and cash equivalents
2,850
2,850
Term deposits
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
Debt investments
8,886
8,886
value through other comprehensive
income
64,840
1,074
1,426
541
40,871
20,928
RMB million
Total
99
52
102
2
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
EUR
2,495
2,495
6,984
Total
6,984
Interest-bearing loans and other borrowings
Financial liabilities
86,267
1,081
1,542
614
49,856
33,174
Total
2,830
3,378
53,416
52,694
2.45%
0.90%
3,285
Lapse rate
Decrease by 10%
(2,606)
(2,322)
(5,562)
(5,340)
(918)
(672)
(3,508)
(3,315)
Sensitivity analysis of contracts measured using the premium allocation approach
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.
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)
5.1 Insurance risk (continued)
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:
Contracts measured using the premium allocation approach (accident year)
Estimated accumulated undiscounted
claims expenses (before
reinsurance)
2019
2020
3,468
2021
529
5,294
After
reinsurance
RMB million
RMB million
Mortality/Morbidity rate
Increase by 10%
(5,407)
(3,556)
(4,928)
(3,184)
(4,773)
(3,436)
(3,509)
(2,219)
Mortality/Morbidity rate
Decrease by 10%
5,540
3,651
5,299
3,471
4,920
3,563
3,734
2,388
Lapse rate
Increase by 10%
2,499
2,229
5,505
762
2022
RMB million
2023
21,973
24,104
Total liabilities - Accident years
before 2019
7
Effect of indirect claims expenses,
risk adjustment for non-financial
risk and discounting, etc.
Total liabilities for incurred claims
2,610
26,721
The following table indicates the claim development for contracts measured using the premium allocation approach with
taking into account the impacts of ceded business:
Contracts measured using the premium allocation approach (accident year)
2019
2020
2021
2022
RMB million
2023
Total
Estimated accumulated undiscounted
claims expenses (after reinsurance)
Year end
50,012
52,774
56,651
1 year later
51,611
52,405
1,659
339
104
29
Total
Year end
1 year later
2 years later
50,564
53,369
57,727
55,256
62,411
52,248
53,202
57,642
54,879
52,197
Before
reinsurance
52,769
3 years later
52,239
52,043
4 years later
51,842
Accumulated claims expenses paid
(51,813)
(51,939)
(56,551)
(53,220)
(40,438)
(253,961)
Total liabilities - Accident years from
2019 to 2023
56,890
5,065
reinsurance
After
82.79%
114,430
100.00%
1111
2.49%
5,453
3,800
6.27%
4.37%
0.58%
2,616
74,594
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
%
Liabilities of life insurance contracts (i)
Xin Xiang Wei Lai Participating Endowment (a)
28,876
0.68%
4
0.00%
94,723
Kang Ning Whole Life (b)
2,854
Mei Man Yi Sheng Annuity (e)
Others (f)
9,379
1.73%
61
0.01%
7,492
1.39%
19
0.00%
14
0.00%
509,867
90.26%
510,789
94.43%
564,877
100.00%
540,926
100.00%
Insurance benefits of life insurance
contracts (i)
Xin Xiang Wei Lai Participating Endowment (a)
Kang Ning Whole Life (b)
6,618
0.02%
5.78%
Fu Lu Shuang Xi Participating Endowment (c)
3,053
2.67%
Sheng Shi Zun Xiang Annuity (d)
7,157
6.25%
Total
392,552
9.24%
386,218
(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
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
5.1 Insurance risk (continued)
5.1.3 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
2022
Assumptions
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
(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.
5.1.2 Concentration of insurance risks (continued)
60,896
5 RISK MANAGEMENT (continued)
10.06%
Fu Lu Shuang Xi Participating Endowment (c)
184,863
4.35%
181,523
4.73%
Sheng Shi Zun Xiang Annuity (d)
48,176
1.13%
54,528
1.42%
Mei Man Yi Sheng Annuity (e)
Others (f)
154,698
3.64%
reinsurance
158,469
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.
172 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
4.13%
5.1 Insurance risk (continued)
For the year ended 31 December 2023
5.2 Financial risk (continued)
2,988
4,604
988
4,063
Reinsurance contract assets
Statutory deposits - restricted
100,235
226,337
195,048
Term deposits
3,306,607
118,063
78,902
137,926
333,258
Loans
422,088
467,372
264,690
Debt securities
890,926
187,138
114,391
201,044
-
315,435
11,860
218,911
230,771
Subordinated bonds
1,718
3,047
Others
39,388
agreements to resell
27,090
(6)
8
307,043
Net cash inflow/(outflow)
Sub-total
Lease liabilities
Bonds payable
borrowings
Interest-bearing loans and other
through profit or loss
Financial liabilities at fair value
agreements to repurchase
Securities sold under
Reinsurance contract liabilities
Insurance contract liabilities
liabilities
Financial and insurance
3,464,058
605,990
835,901
1,019,966
890,926
Sub-total
127,594
Cash and cash equivalents
290
52,161
38,548
Accrued investment income
Securities purchased under
Investment in equity instruments at fair
value through other comprehensive income
Common stocks
profit or loss
Total
188 Annual Report 2023 | Financial Report
(13,878)
(13,878)
(13,878)
(13,878)
Equity securities
Financial and insurance assets
RMB million
years
Later than 5
Later than 3
years but not
later than 5
years
Later than 1
year but not
later than 3
years
Not later than
1 year
Without
maturity
Contractual and expected cash flows (undiscounted)
As at 31 December 2022
5.2.3 Liquidity 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)
182 Annual Report 2023 | Financial Report
(8,454,628)
(4,310,312)
(22)
(89)
(318,074)
309,829
13,787
826,711
874,057
Financial liabilities at fair value through
Liabilities measured at fair value
4,587,549
100,068
14,273
514
14,787
Preferred stocks
50,445
50,445
Others
32,577
10,579
29,617
72,773
Investment in debt instruments at fair value
through other comprehensive income
Government bonds
(273,556)
250,592
184,458
244,238
1,533,140
494,830
1,717,598
Corporate bonds
Subordinated bonds/debts
399,469
408,921
Others
22,268
2,631
22,752
Total
1,292,496
2,688,048
97,437
607,005
Government agency bonds
1,085,723
(7,787,599)
(145)
(3,344)
Fair value measurement using
Corporate bonds
Government agency bonds.
Government bonds
Debt investments
Others
Common stocks
Funds
Equity investments
or loss
Financial assets at fair value through profit
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:
5.4 Fair value hierarchy (continued)
5 RISK MANAGEMENT (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 187
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.
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.
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.
5.4 Fair value hierarchy (continued)
5 RISK MANAGEMENT (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
186 Annual Report 2023 | Financial Report
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.
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.
5.4 Fair value hierarchy
(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.
Quoted prices
Note 2: Others included wealth management products, special asset management schemes, asset-backed plans, etc.
in active
Significant
unobservable
5 RISK MANAGEMENT (continued)
45
179,308
7,785
6,813
6,131
682
3,622
3,213
409
339,220
210,550
58,131
70,539
415,413
15,241
400,172
206,963
281
206,682
RMB million
RMB million
RMB million
RMB million
Total
inputs
Level 3
inputs
Level 2
Level 1
markets
Significant
observable
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.
service fee
Investment income
service fee
Investment income and
10,096
10,096
185,894
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 183
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).
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.
(4,324,023)
332,233
816,271
1,173,091
(7,788,081)
(273,757)
(19,630)
153,125
(3,344)
887,582
(20)
(98)
(790)
(919)
(36,498)
(328)
(317)
(97)
(9,426)
(3,675)
Funds managed by third parties
Trust schemes managed by affiliated entities
Trust schemes managed by third parties
Note 1
service fee
Investment income
Investment income and
100,892
5.2.4 Capital management
100,892
Note1
Others managed by third parties Note 2
13,067
13,067
87,959
Others managed by affiliated entities Note 2
46,458
46,458
Note 1
Debt investment schemes managed by third parties
(149,004)
Investment income and
22,781
60,850
Debt investment schemes managed by affiliated
entities
Investment income
47,674
47,674
Note1
Investment income
1,295
1,295
1,992
Investment income
126,573
126,573
22,781
Net cash inflow/(outflow)
9,452
484
(13,878)
5.3 Disclosures about interest in unconsolidated structured entities (continued)
5 RISK MANAGEMENT (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 185
Investment income
service fee
103,825
87,662
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
Investment income and
31,035
31,035
73,722
Debt investment schemes managed by affiliated
entities
Investment income
56,551
56,551
Note1
(i) The unconsolidated structured entities that the Group has interest in (continued)
As at 31 December 2022
Unconsolidated structured entities
Carrying amount
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.
Measurement of ECL (continued)
5.2 Financial risk (continued)
5.2.2 Credit 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 179
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.
The parameters and assumptions involved in ECL model are described below:
Parameters for measuring expected credit losses
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.
Measurement of ECL
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.
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.
Trust schemes managed by third parties
Credit quality
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.
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.
Credit risk exposure
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)
Interest held by
the Group
exposure
RMB million
of assets
RMB million
RMB million
Size
Maximum
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.
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.
Investment income
1,284
Notes to the Consolidated Financial Statements (continued)
184 Annual Report 2023 | Financial Report
ii) Category B: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational risk and liquidity
risk are low;
i) Category A: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational risk and liquidity
risk are very low;
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:
207%
144%
219%
158%
487,290
449,160
699,688
1,007,601
981,594
710,527
31 December
2022
RMB million
RMB million
2023
31 December
As at
As at
Comprehensive solvency ratio
Core solvency ratio
Minimum capital
Actual capital
Core capital
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:
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.
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.
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.
For the year ended 31 December 2023
5 RISK MANAGEMENT (continued)
5.2 Financial risk (continued)
5.2.4 Capital management (continued)
2,090
Trust schemes managed by affiliated entities
Investment income
174,195
174,195
Note 1
Funds managed by third parties
service fee
Investment income and
9,794
9,794
175,402
Funds managed by affiliated entities
RMB million
1,284
Interest held by
the Group
of assets
RMB million
RMB million
Size
Carrying amount
Unconsolidated structured entities
As at 31 December 2023
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:
(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.
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;
Maximum
exposure
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.
103,825
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.
1,128
2,799
5,590
706
4,111,034
499,102
120,329
144,278
188,436
664,719
422,558
1,099,601 122 664719
under agreements to resell
Cash and cash equivalents
Statutory deposits - restricted
Reinsurance contract assets
Financial assets purchased
Equity investments
Debt investments
Term deposits
Financial and insurance assets
RMB million
Funds managed by affiliated entities
years
Later than 5
Later than 3
years but not
later than 5
years
Later than 1
year but not
later than 3
years
1 year
Without Not later than
maturity
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.
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.
5.2.3 Liquidity risk
5.2 Financial risk (continued)
5,461
3,011
5 RISK MANAGEMENT (continued)
33,282
149,305
Sub-total
(580)
(757)
Lease liabilities
(36,498)
Bonds payable
(13,259)
borrowings
Interest-bearing loans and other
(13,878)
through profit or loss
Financial liabilities at fair value
(217,237)
agreements to repurchase
Financial assets sold under
(54)
(8,454,552)
(317,979)
(6)
14,374
(7)
355,437
(24)
Criteria for judging significant changes in credit risk
Insurance contract liabilities
Financial and insurance liabilities
4,144,316
627,903
812,924
786,395
1,099,601
Sub-total
19,800
For the year ended 31 December 2023
Reinsurance contract liabilities
Annual Report 2023 | Financial Report 181
Stage 3
Stage 2
Stage 1
Carrying amount
The following table presents the credit risk exposures of financial instruments under the scope of expected credit loss.
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.
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.
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.
Forward-looking information and management overlay
Criteria for judging significant changes in credit risk (continued)
5.2.2 Credit risk (continued)
5.2 Financial risk (continued)
5 RISK MANAGEMENT (continued)
For the year ended 31 December 2023
RMB million
Notes to the Consolidated Financial Statements (continued)
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.
Purchase or originate a financial asset at a significant discount that reflects the fact that a credit loss has occurred.
Disappearance of an active market for that financial asset because of financial difficulties; or
•
It becoming probable that the borrower will enter bankruptcy or financial re-organisation; 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
A breach of contract, such as a default or past due event; or
Significant financial difficulty of the issuer or counterparty; or
•
•
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:
Definition of financial assets that are credit-impaired
Notes to the Consolidated Financial Statements (continued)
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.
180 Annual Report 2023 | Financial Report
Cash and cash equivalents
•
Financial assets purchased under agreements to
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.
3,581,675
149,305
77
2,744,169
37,318
77
211,349
19,759
413,255
149,305
exposure
Maximum
credit risk
8,592
37,241
3,573,006
Total
8,592
6,520
through other comprehensive income
Other assets
2,735,577
19,759
413,255
Statutory deposits
Term deposits
6,520
restricted
cost
resell
211,349
--
Investment in debt instruments at fair value
Investment in debt instruments at amortised
430,423
Short-term
Renewal premiums
430,567
21,737
Renewal premiums
Single premiums
breakdown (RMB million)
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.
Annual Report 2023 | Management Discussion and Analysis 13
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.
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.
4.
3.
2.
insurance premiums
76,503
Notes:
1.
Gross written premiums
Value of one year's sales (RMB million)
2022
2023
Figures of Gross Written Premiums
176,277
66,680
BUSINESS 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.
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
1,194,220
5.6%
1,260,567
As at 31 December 2022
First-year
As at 31 December 2023
Embedded value (RMB million)
Short-term
insurance premiums
74,264
14,077
Single premiums
32,944 ▼
11.9%
36,860
2022
regular premiums
112,573
First-year
regular premiums
96,426
123,082
46,181
Renewal premiums
2023
32,944
36,860
Value of one year's sales1
430,423
430,567
41,821
49,522
First-year regular premiums with a payment duration of
ten years or longer
96,426
112,573
Including: First-year regular premiums
184,767
210,813
Premiums from new policies
615,190
641,380
Gross written premiums
2023
Gross Written Premiums Categorised by Business
Including: Individual agent business sector¹
34,646
31,385
Policy persistency rate (14 months) 2 (%)
3.25
1,194,220
1,260,567
3.28
Net profit attributable to equity holders of the Company
Gross investment income4
Number of long-term in-force policies (hundred million)
Embedded value¹
2022
2023
2022
31 December
As at
As at
0.95
1.11
74.20
79.10
Policy persistency rate (26 months) 2 (%)
Surrender rate³ (%)
83.00
90.40
31 December
For the year ended 31 December
2023
First-year business
12.6%
▼ 81,508
First-year regular premiums
Agents of individual
agent business sector
Life insurance business
501,580 ▼
1.9%
492,439 ▼
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
▼ 91,807
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
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)
The growth rate is calculated based on the restated results for 2022 using the 2023 embedded value economic assumptions.
2022
2023
Gross written premiums of individual
agent business sector (RMB million)
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
Notes:
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.
16 Annual Report 2023 | Management Discussion and Analysis
Insurance Business
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
20,735 ▼
2023
39.4%
14,879 ▼
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.
1
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.
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.
REVIEW OF BUSINESS OPERATIONS
AND ANALYSIS
MANAGEMENT
DISCUSSION
Annual Report 2023 | Chairman's Statement 11
27 March 2024
Bai Tao
Chairman
bitha'
By Order of the Board
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.
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.
10 Annual Report 2023 | Chairman's Statement
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
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.
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 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
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.
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.
Annual Report 2023 | Chairman's Statement 09
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
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.
CHAIRMAN'S
STATEMENT
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.
Renewal business
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.
Annual Report 2023 | Management Discussion and Analysis
2022
First-year regular premiums
Account managers of
bancassurance channel
23,000
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
2022
RMB million
Key Performance Indicators of 2023
Mr. Bai Kai, Mr. Ruan Qi, Mr. Li Mingguang, Ms. Liu Hui, Mr. Zhao Guodong
From left to right:
12
Single
634,000
Other channels²
65,655
65,777
3,460
5,149
First-year regular
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.
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%.
Annual Report 2023 | Management Discussion and Analysis
15
115,329
Gross Written Premiums Categorised by Channel
114,023
381,783
First-year regular
Single
Renewal business
Health insurance business
First-year business
First-year regular
Single
Renewal business
Accident insurance business
First-year business
First-year regular
Single
Renewal business
Total
RMB million
2023
2022
512,622
485,642
130,839
105,291
109,112
91,273
21,727
14,018
380,351
For the year ended 31 December
2
2023
Renewal business
RMB million
38,112
36,200
Short-term insurance business
63,415
445
First-year business of long-term insurance
394
Group insurance channel
28,154
24,059
24,974
Short-term insurance business
1,345
1,234
Renewal business
1,892
1,931
Single
37
15
First-year regular
1,929
27,333
11,942
1,946
19,456
14,879
2022
Individual agent business sector¹
501,580
492,439
First-year business of long-term insurance
92,127
81,732
First-year regular
91,807
81,508
Single
320
224
Renewal business
391,218
392,849
Short-term insurance business
18,235
17,858
Bancassurance channel
78,748
40,191
26,821
First-year regular
20,735
Single
First-year business of long-term insurance
861
1,118
39,593
Total revenue: 344,746
(432,368)
IFRS 17
Consolidated statement of
comprehensive income
(6,895)
(60,745)
Adjustment
IFRS 9
RMB million
For the year ended 31 December 2023
Net profit before income tax: 11,878
Operating income: 837,859
Segment information
The reconciliation of segment information to the consolidated statement of comprehensive income is as follows:
5,016
233
2,804
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).
Total gains/(losses) recorded in other
For the year ended 31 December 2023
1,042
1,848
9,526
12,416
937
6,872
7,809
(8,176)
(934)
(9,110)
(26,013)
(19,302)
(45,868)
80,062
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)
5.4 Fair value hierarchy (continued)
529,329
112,429
Notes to the Consolidated Financial Statements (continued)
205,281
24,385
Financial assets
at fair value
through profit
or loss- Debt
RMB million
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
comprehensive income
Disposals or exercised
Settlement
Closing balance
Investment
in equity
instruments
at fair value
through other
comprehensive comprehensive
Investment
in debt
instruments
at fair value
through other
income
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
Total
RMB million
(553)
comprehensive income
11,878
125
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)
Gains/(losses) on disposal of assets
69
5
2,110
(1)
Other operating income
165
177,373
12,287
386
581
190,627
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)
11
73
II. Operating expenses
(689,444)
Transferred out of Level 3
349,127
96,946
2,671
45
188,583
44,778
160,499
49,497
Purchases
Opening balance
Total
RMB million
RMB million
RMB million
Debt securities
Equity securities
profit or loss
Available-for-sale securities
Debt securities
RMB million
Securities at fair
value through
The following table presents the changes in Level 3 financial instruments for the year ended 31 December 2022:
5.4 Fair value hierarchy (continued)
5 RISK MANAGEMENT (continued)
(10)
(10)
Total gains/(losses) recorded in profit or loss
(1,714)
(117,405)
(13,625)
(8,876)
3,732
(825,618)
Surrenders
Claims expense
(46,383)
(2,335)
Investment income
(22)
(103,907)
(63,894)
(7,018)
Less: Claims recoverable from reinsurers
506
Increase in insurance contracts reserve
Less: Insurance reserves recoverable from
(375,952)
(1,532)
182
(48,740)
For the year ended 31 December 2023
(1,244)
(1,156)
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
The Group operates in the life insurance business segment, the health insurance business segment, the accident insurance
business segment and other business segment:
(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)
unobservable inputs
Discounts for lack of
marketability
Health insurance business relates primarily to the sale of health insurance policies, including those health insurance policies
without significant insurance risk transferred.
Significant
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:
(1,829)
(168)
(1,997)
Disposals or exercised
(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.
Valuation techniques
Comparable companies
method
(iii) Accident insurance business (Accident)
Accident insurance business relates primarily to the sale of accident insurance policies.
(iv) Other businesses (Others)
(3,732)
837,859
Premiums earned
511,355
106,757
14,029
632,141
Premium income
512,622
114,023
14,735
641,380
Less: Premiums ceded to reinsurers
(1,267)
(6,110)
(618)
(7,995)
Change in unearned
premium reserves
12,655
14,424
119,459
695,053
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.
-
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).
6.2 Allocation basis of income and expenses
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)
(88)
For the year ended 31 December 2023
For the year ended 31 December 2023
Life
Health
Accident
Others
Elimination
Total
RMB million
I. Operating income
6 SEGMENT INFORMATION (continued)
Notes to the Consolidated Financial Statements (continued)
(3,351)
(3,344)
(11,695)
Tax and surcharges
(889)
(202)
(21)
(305)
(1,417)
Underwriting and policy acquisition costs
(47,281)
(9,833)
(4,260)
(1,718)
(63,092)
Administrative expenses
(24,825)
(10,592)
(2,059)
(3,600)
(41,076)
(81)
Less: Expenses recoverable from reinsurers
(11,614)
Policyholder dividends resulting from
inputs
Significant
unobservable
Profit before income tax: 44,576
observable
in active
markets
Significant
Quoted prices
Fair value measurement using
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:
6,164
(31,089)
339
(170)
(174,819)
7,009
(407,211)
reinsurers
97
151
39
287
participation in profits
376
342
10
799
3,779
12,241
81
6
7
94
(425)
(29)
(1)
(2)
(457)
IV. Net profit before income tax
Supplementary Information:
Depreciation and amortisation expenses
5,265
2,031
798
3,784
2,054
5,609
Less: Non-operating expenses
Add: Non-operating income
728
Other operating expenses
(30,238)
(2,629)
(353)
(3,103)
3,732
(32,591)
Including: inter-segment transactions
inputs
(3,484)
(8)
3,732
Impairment losses
(49,334)
(3,407)
(110)
(150)
(53,001)
III. Operating profit
(240)
Level 1
Level 2
Level 3
7,235
2,387
Government agency bonds
1,805
1,144
661
Government bonds
Debt securities
265
173
18,552
1,272
17,280
92
Others
Common stocks
13,444
358
13,086
Funds
9,622
Corporate bonds
3,018
149,284
190 Annual Report 2023 | Financial Report
(3,351)
Total
profit or loss
Investment contracts at fair value through
(3,344)
profit or loss
Financial liabilities at fair value through
Liabilities measured at fair value
- Equity securities
1,944,764
27,755
2,105
25,521
766,574
782,037
Total
129
Others
152,347
45
396,153
Total gains/(losses) recorded in other
174,398
1,096
Securities at fair value through profit or loss
Others
Subordinated bonds
Corporate bonds
Government agency bonds
Government bonds
RMB million
· Debt securities
Others
Preferred stocks
Common stocks
Funds
- Equity securities
Available-for-sale securities
Assets measured at fair value
RMB million
RMB million
RMB million
Total
131,897
--
131,897
396,163
156,024
102,830
53,194
188,563
184,885
3,678
313,270
235,288
77,982
173,302
47,188
36,945
244,964
170,179
29,260
45,525
50,522
50,522
414,148
17,985
10,243
Annual Report 2023 | Financial Report 193
198 Annual Report 2023 | Financial Report
For the year ended 31 December 2023
353
1,465
148,954
Claims payable
57,178
3,327
314
60,819
Policyholder deposits
9,375
355,743
374,742
Unearned premium reserves
9,474
3,634
13,108
Claim reserves
22,232
3,921
26,153
18,999
Reserves for life insurance
137,761
Financial assets sold under agreements to
6,333
Separate account assets
Total distributable asset
4,727,296
328,884
12,279
63,110
5,131,569
Undistributable assets
repurchase
Other assets
120,415
5,251,984
II. Liabilities
Financial liabilities at fair value through profit
or loss
3,112
212
8
12
3,344
Total
680
3,605,769
3,607,236
As at 31 December 2022
Segment information
Assets: 5,251,984
Liabilities: 4,806,863
196 Annual Report 2023 | Financial Report
IFRS 9
Adjustment
IFRS 17
Consolidated statement
Impact of
Deferred tax
The reconciliation of segment information to the consolidated statement of financial position is as follows:
of financial position
N/A
N/A
(265,735)
(171,768)
23,819
Assets: 5,010,068
Liabilities: 4,635,095
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
7 PROPERTY, PLANT AND EQUIPMENT
Cost
RMB million
1,467
4,806,863
289,188
Reserves for long-term health insurance
233,663
233,663
Long-term borrowings
12,774
12,774
Separate account liabilities
7
7
Total
Other distributable liabilities
Total distributable liabilities
4,194,074
2,287
299,569
84
36,875
9,781
14,251
4,517,675
Non-distributable liabilities
Other liabilities
34,504
Buildings
14
5,280
14,162
534
983
223,782
Financial assets purchased under
agreements to resell
35,956
2,447
92
208,103
38
Interest receivables
48,606
3,308
125
270
52,309
Premiums receivables
8,268
10,966
38,533
463
or loss
128,953
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
Life
Health
Financial assets at fair value through profit
Accident
Elimination
Total
RMB million
I. Assets
Cash fund
114,111
7,766
293
6,783
Others
359
19,697
726
485,567
Available-for-sale financial assets
1,608,279
109,451
4,126
16,252
1,738,108
Held-to-maturity investments
1,468,207
6,732
99,919
2,312
1,574,204
Long-term equity investments
218,649
14,880
561
27,089
261,179
Statutory deposits
3,766
Unearned premium reserves receivable from
reinsurers
1,147
447,250
48
Claim reserves receivable from reinsurers
Reserves for life insurance receivables from
reinsurers
441
295
||
774
736
603
603
30,438
Reserves for long-term health insurance
4,294
4,294
Loans
563,977
29,727
815
1,971
596,490
Term deposits
receivables from reinsurers
Office
equipment,
furniture and
fixtures
Motor Assets under
Leasehold
2,692
Transfers into investment properties
(266)
(266)
Disposals
(110)
(299)
(44)
(320)
2,124
(773)
62,954
8,884
1,268
5,026
2,206
80,338
Accumulated depreciation
As at 1 January 2022
(14,644)
31 December 2022
(5,786)
1
64
Buildings
fixtures
vehicles
construction improvements
Total
RMB million
As at 1 January 2022
59,826
8,394
503
1,311
2,433
78,754
Transfers upon completion
3,174
286
(3,622)
93
(69)
Additions
6,790
Leasehold
(996)
(23,097)
Net book value
As at 1 January 2022
As at 31 December 2022
(24)
(1)
45,158
46,290
2,608
315
6,789
As at 31 December 2022
762
2,565
197
5,025
482
54,559
EIE
(25)
(25)
Notes to the Consolidated Financial Statements (continued)
55,632
(1,671)
Disposals
(24)
Charge for the year
(2,079)
(819)
(118)
(335)
(3,351)
Disposals
83
286
Charge for the year
43
694
As at 31 December 2022
(16,640)
(6,319)
(1,071)
(1,724)
(25,754)
Impairment
As at 1 January 2022
282
Motor Assets under
Office
equipment,
furniture and
Cost
(112)
(183)
(1,681)
As at 31 December 2023
63,486
9,963
1,345
5,183
2,215
(185)
82,192
As at 1 January 2023
(16,640)
(6,319)
(1,071)
(1,724)
(25,754)
Charge for the year
(2,107)
(1,120)
Accumulated depreciation
(95)
(1,201)
3,543
vehicles construction improvements
Total
RMB million
As at 1 January 2023
62,954
8,884
1,268
5,026
2,206
Disposals
80,338
1,619
(2,063)
192
(8)
Additions
114
1,020
189
2,220
Transfers upon completion
(240)
(3,562)
Disposals
(23)
Net book value
As at 1 January 2023
46,290
2,565
197
5,025
482
54,559
2
As at 31 December 2023
2,702
288
5,182
416
53,710
Annual Report 2023 | Financial Report 197
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
7 PROPERTY, PLANT AND EQUIPMENT (continued)
45,122
(1)
(25)
EE
405
178
109
165
857
As at 31 December 2023
(18,342)
(7,261)
(1,057)
(1,799)
(28,459)
Impairment
As at 1 January 2023
(24)
(1)
Charge for the year
-
Disposals
2
As at 31 December 2023
(22)
Profit before income tax: 70,060
Total revenue: 370,861
244
N/A
216,704
Claims payable
60,979
5,302
311
66,592
Policyholder deposits
466,619
19,864
2,100
486,483
10,490
3,730
14,220
Claim reserves
20,608
3,853
24,461
Reserves for life insurance
3,981,728
Unearned premium reserves
1,705
436
200,368
Total distributable assets
5,294,112
373,294
11,784
70,317
5,749,507
Undistributable assets
Other assets
138,972
13,800
Total
II. Liabilities
Financial liabilities at fair value through profit
or loss
5,106
352
11
5,469
Financial assets sold under agreements to
repurchase
5,888,479
8,416
3,983,433
266,376
IFRS 9
IFRS 17
Impact of
Deferred tax
Consolidated statement of
financial position
RMB million
Assets: 5,888,479
198,743
(279,280)
Liabilities: 5,418,437
Segment information
590
(5,856)
(1,549)
Assets: 5,802,086
Liabilities: 5,315,052
194 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
6 SEGMENT INFORMATION (continued)
For the year ended 31 December 2022
Life
(102,426)
Reserves for long-term health insurance
Adjustment
The reconciliation of segment information to the consolidated statement of financial position is as follows:
266,376
Long-term borrowings
Separate account liabilities
7
12,719
8,409
12,719
8,416
Other distributable liabilities
35,745
As at 31 December 2023
Total distributable liabilities
2,291
339,083
71
38,107
10,117
23,228
5,122,980
Non-distributable liabilities
Other liabilities
Total
295,457
5,418,437
4,750,552
Health
8,409
Separate account assets
35
122
Interest receivables
47,248
3,254
103
274
Premiums receivables
8,119
1,117
12,939
Unearned premium reserves receivable from
reinsurers
586
56
Claim reserves receivable from reinsurers
Reserves for life insurance receivables from
313
334
II
149,566
253,879
463
17,487
16,213
Financial assets purchased under
6 SEGMENT INFORMATION (continued)
(455,194)
46,013
Life
Health
As at 31 December 2023
Accident
Others
Elimination
Total
RMB million
agreements to resell
I. Assets
132,636
9,135
289
7,506
Financial assets at fair value through profit
or loss
235,852
16,244
513
1,270
Cash fund
7
50,879
642
13,924
2,263,047
Held-to-maturity investments
1,591,004
109,581
3,462
2,394
1,706,441
Long-term equity investments
4,569
215,217
468
27,098
257,606
Statutory deposits
5,278
364
11
680
6,333
14,823
21,521
144,633
Available-for-sale financial assets
647
reinsurers
700
700
Reserves for long-term health insurance
receivables from reinsurers
4,573
4,573
Loans
2,099,921
570,812
673
1,982
603,639
Term deposits
371,105
25,560
808
6,658
404,131
30,172
Accident
Item
Elimination
(25,505)
(10,174)
(2,751)
(3,783)
(42,213)
Less: Expenses recoverable from reinsurers
284
718
23
Administrative expenses
1,025
(28,159)
(3,183)
(672)
(1,572)
3,199
(30,387)
Including: inter-segment transactions
(2,988)
(203)
Other operating expenses
(8)
(54,777)
(4,165)
285
6,720
(461,204)
(33)
91
253
311
Policyholder dividends resulting from
participation in profits
(20,566)
(1,485)
(119)
Tax and surcharges
(900)
(204)
(21)
(136)
(1,261)
Underwriting and policy acquisition costs
(37,731)
(11,396)
(20,685)
(36,662)
3,199
(1,358)
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:
7,424
Segment information
Adjustment
Consolidated statement of
comprehensive income
IFRS 9
IFRS 17
RMB million
Operating income: 826,055
N/A
Net profit before income tax: 24,047
Others
For the year ended 31 December 2022
(19,956)
11,439
Supplementary Information:
(51)
(31)
(21,396)
III. Operating profit
11,758
7,446
1,943
3,236
24,383
Depreciation and amortisation expenses
Add: Non-operating income
6
8
108
Less: Non-operating expenses
(413)
(28)
(2)
(444)
IV. Net profit before income tax
94
(424,827)
Impairment losses
301
Change in unearned premium
reserves
157
748
Investment income
202,599
13,949
520
707
(437)
905
217,775
associates and joint ventures
3,909
266
Other gains
104
7
Fair value gains/(losses)
(8,139)
(554)
Including: Investment income from
Foreign exchange gains/(losses)
(6,695)
Less: Premiums ceded to reinsurers
RMB million
I. Operating income
Total
Increase in insurance contracts reserve
Less: Insurance reserves recoverable from
reinsurers
681,622
122,358
15,031
10,243
(3,199)
(1,138)
826,055
484,504
108,791
14,530
607,825
Premium income
485,642
115,329
14,219
615,190
Premiums earned
871
(8,270)
॰ 'དྲེས༔
122
II. Operating expenses
(669,864)
(114,912)
(13,088)
(7,007)
3,199
Surrenders
(35,268)
(1,835)
(19)
(37,122)
Claims expense
(77,609)
(56,803)
(6,271)
59
(140,683)
Less: Claims recoverable from reinsurers
6,013
406
(1)
8
(801,672)
2
115
3,628
176
(21)
(37)
(8,751)
(1,001)
(69)
Other operating income
65
1,568
(557)
98
10,510
(3,199)
8,977
Including: inter-segment transactions
3,199
(3,199)
Gains/(losses) on disposal of assets
Total equity
3,417,906
Total assets
22
Joy City
RMB million
246,072
RMB million RMB million
RMB million
MCL
RMB million
29,306
25,889
644,687
9,710
23,957
Total liabilities
3,156,057
12,773
198,186
1,369
297,413
RMB million
37,315
RMB million
(444)
Pipeline
2,841
Other comprehensive income
261,849
(243)
3
319
Total comprehensive income
18,860
(21,228)
242
Company China Unicom
3,030
141
(73)
204 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
10 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
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:
CGB
Sino-Ocean
COFCO
Futures
19,032
47,886
8,056
35,946
170,408
7,924
4,737
Proportion of the Group's
ownership
43.686%
29.59%
35.00%
43.86%
10.03%
36,330
66.67%
Gross carrying value of the
investments
98,085
1,737
21,569
22,602
5,283
Impairment
371
3,553
75.00%
3,417
3,407
217,227
347,274
9,688
11,184
Total equity attributable to equity
holders of the associates and
joint ventures
216,858
31,747
3,407
35,946
154,370
23,957
9,688
Total adjustments (i)
369
(7,790)
384
16,038
(1,764)
(6,447)
Total equity attributable to equity
holders of the associates and
joint ventures after adjustments
11,184
141
MCL
RMB million
3,030
12,826
Total equity
276,985
20,792
3,584
14,384
357,935
9,622
11,301
Total equity attributable to equity
7
holders of the associates and
joint ventures
7,029
3,571
14,384
159,241
9,622
11,301
Total adjustments (i)
251
9,514
362
231,993
15,565
304,910
22,585
For the year ended 31 December 2023
10 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
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:
CGB
Sino-Ocean
COFCO
Futures
Pipeline
Company
China
Unicom
Joy City
RMB million RMB million RMB million RMB million RMB million RMB million
7,430
(5,862)
Total liabilities
3,509,522
206,172
26,169
21,814
662,845
9,629
24,127
3,232,537
185,380
Total assets
(1,501)
(7,267)
Total equity attributable to equity
Impairment provision
(5,862)
Net carrying value of the
investments
104,645
1,795
12,104
23,052
5,414
3,025
3,025
Total revenues
43,380
3,779
6,213
379,643
155
973
Net profit/(loss)
16,019
(20,985)
239
69,678
5,414
23,052
12,104
holders of the associates and
joint ventures after adjustments
232,244
16,543
3,571
14,746
174,806
8,121
4,034
Proportion of the Group's
ownership
43.686%
29.59%
35.00%
43.86%
10.03%
66.67%
75.00%
Gross carrying value of the
investments
104,645
5,862
1,795
18,713
Net carrying value of the
Notes to the Consolidated Financial Statements (continued)
98,085
637
132
57
210,523
211,349
Level 1
RMB million
As at 31 December 2023
Level 2
RMB million
Level 3
RMB million
Total
211,349
RMB million
128,994
55,494
178
2,437
32,276
34,891
178
2,437
216,764
219,379
128,994
55,494
As at
(350)
34,448
Unlisted (ii)
Total
For the year ended 31 December 2023
(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.
Fair value hierarchy
Trust schemes
Debt investment plans
Others
Total
Contractual maturity schedule
211,699
Maturing:
After one year but within five years
After five years but within ten years
Over ten years
Total
As at
31 December
2023
RMB million
123,996
53,255
Within one year
Listed overseas
31 December
RMB million
After five years but within ten years
Over ten years
Total
Impairment provision
31 December
2023
RMB million
494,830
1,717,598
408,921
22,752
100,068
2,744,169
After one year but within five years
395,189
179
2,348,743
2,744,169
172,999
398,475
207,198
1,965,497
2,744,169
(1,432)
Notes to the Consolidated Financial Statements (continued)
58
2023
Within one year
Contractual maturity schedule
44,921
92,002
67,097
7,329
211,349
Annual Report 2023 | Financial Report 207
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
11 FINANCIAL ASSETS (continued)
11.4 Investment in debt instruments at fair value through other comprehensive income
Maturing:
Government bonds
Corporate bonds
Subordinated bonds
Others (i)
Total
By place of listing:
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted (ii)
Total
Government agency bonds
investments
Listed in Hong Kong, PRC
By place of listing:
190
10
(1,750)
Total comprehensive income
12,763
(21,836)
225
3,128
16,841
(154)
6
(976)
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.
Annual Report 2023 | Financial Report 205
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
11 FINANCIAL ASSETS
11.1 Term deposits
Maturing:
Within one year
After one year but within five years
Sub-total
(i) Total adjustments include accounting policy difference adjustments, fair value adjustments and other adjustments.
Impairment provision
Total
(6,186)
Other comprehensive income
2,194
1,737
21,569
22,602
5,283
3,553
Total revenues
75,154
42,447
3,222
(2,765)
6,097
(145)
883
Net profit/(loss)
15,528
(15,650)
219
3,128
16,651
(164)
774
361,123
Listed in Mainland, PRC
As at
31 December
31 December
2022
RMB million
RMB million
517
3,933
6,010
2,400
6,527
6,333
(7)
2023
6,520
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.
206 Annual Report 2023 | Financial Report
11 FINANCIAL ASSETS (continued)
11.3 Investment in debt instruments at amortised cost
Trust schemes
Debt investment plans
Others (i)
Sub-total
Impairment provision
Total
6,333
As at
31 December
As at
31 December
2023
2022
RMB million
RMB million
174,513
183,832
238,951
301,735
413,464
As at
485,567
413,255
485,567
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).
11.2 Statutory deposits - restricted
contractual maturity schedule:
Within one year
After one year but within five years
Sub-total
Impairment provision
Total
(209)
Annual Report 2023 | Financial Report 203
4
The British Cayman Islands
The British Virgin Islands
As at 31 December 2023
Fair value
As at 1 January 2023
As at 31 December 2023
15,226
1
(5)
15,222
(2,033)
(437)
As at 1 January 2023
1
13,193
12,753
16,854
16,677
200 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
9 INVESTMENT PROPERTIES (continued)
Cost
As at 1 January 2022
Additions
(2,469)
Deductions
Net book value
Deductions
As at
31 December
2022
RMB million
RMB million
54
939
74
1,139
319
324
As at 31 December 2023
1
1,537
Buildings
RMB million
Cost
As at 1 January 2023
Additions
Deductions
As at 31 December 2023
Accumulated depreciation
As at 1 January 2023
Additions
1,313
As at 31
December
2023
31 December 2022
As at 1 January 2022
Additions
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.
Annual Report 2023 | Financial Report 201
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
10 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
As at 1 January
Change of the cost
Share of profit or loss
Dividends declared
Other equity movements
Change of provision for impairment
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.
As at 31 December
2022
RMB million
RMB million
262,485
258,933
(8,252)
12,877
8,079
3,979
(4,854)
2023
Accumulated depreciation
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.
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.
Deductions
As at 31 December 2022
Net book value
As at 1 January 2022
As at 31 December 2022
Fair value
As at 1 January 2022
As at 31 December 2022
For the year ended 31 December 2023
Buildings
RMB million
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).
14,971
266
15,226
(1,597)
(437)
1
(2,033)
13,374
13,193
16,626
16,854
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.
(11)
(5,373)
9 INVESTMENT PROPERTIES
Expense relating to leases of low-value assets
(except for short-term lease liabilities)
As at 31 December 2023
Net book value
As at 1 January 2023
As at 31 December 2023
31
4,204
637
(1,267)
3,574
(938)
1,239
As at 1 January 2023
(2,091)
21 13
(2)
(2,394)
(939)
1,239
(2,094)
1,809
1
1,810
1,479
1
1,480
(3)
Buildings
Impairment
Deductions
(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.
Notes to the Consolidated Financial Statements (continued)
8 LEASES
(a) Right-of-use assets
For the year ended 31 December 2023
Buildings
Others
Total
RMB million
Cost
As at 31 December 2023
As at 1 January 2023
Deductions
As at 31 December 2023
Accumulated depreciation
As at 1 January 2023
Charge for the year
4,201
636
(1,267)
3,570
(2,392)
Additions
Total
Others
RMB million
(2,394)
As at 31 December 2022
Impairment
As at 1 January 2022
As at 31 December 2022
Net book value
As at 1 January 2022
As at 31 December 2022
2,517
1,809
1
(2,392)
2,518
1,810
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).
The Group's right-of-use assets include the above assets and land use rights disclosed in Note 13.
Annual Report 2023 | Financial Report 199
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
8 LEASES (continued)
(b) The amounts recognised in profit or loss in relation to leases are as follows:
Interest on lease liabilities
Depreciation charge of right-of-use assets
Expense relating to short-term leases
1
Total
1,599
Deductions
Cost
As at 1 January 2022
Additions
5,370
639
21
5,372
Deductions
(1,808)
640
(1,808)
31 December 2022
1,599
4,201
4,204
Accumulated depreciation
As at 1 January 2022
(2,853)
(1)
(2,854)
Charge for the year
(1,138)
(1)
(1,139)
3
1,302
(4,778)
(3,150)
46,042
Sub-total
64,058
54,328 54,328
1,028
585 (1,362)
(98)
54,481
Total
220,699
132
262,488
(8,252)
8,079 (4,854) 1,302
258,760
(6,367)
(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.
(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.
202 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
10 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
262,485
(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.
590 (1,200)
45,492 45,492
Joint ventures
Joy City Commercial Property Fund L. P.
Equity method
6,281
5,283 5,283
23
293
(162)
162
5,414 66.67%
1,028
("Joy City")
Equity method
7,656
3,553 3,553
(298)
(230)
3,025
75.00%
Others (iv)
Equity method
50,121
Mapleleaf Century Limited ("MCL")
(6,367)
On 31 December 2023, the stock price of China Unicom was RMB4.38 per share.
(v) There is no significant restriction for the Group to dispose of its associates and joint ventures.
As at 31 December 2022, the major associates and joint ventures of the Group are as follows:
Place of incorporation
Percentage of equity
interest held
Name
Associates
CGB
Sino-Ocean
COFCO Futures
Pipeline Company
China Unicom
66.67%
75.00%
Joint ventures
Joy City
PRC
43.686%
Hong Kong, PRC
29.59%
PRC
35.00%
PRC
43.86%
PRC
10.03%
MCL
(iv) The Group invested in real estate, industrial logistics assets and other industries through these enterprises.
The British Virgin Islands
10.03%
As at 31 December 2023, the major associates and joint ventures of the Group are as follows:
Name
Associates
CGB
Sino-Ocean
COFCO Futures
Pipeline Company
China Unicom
Joint ventures
Joy City
The British Cayman Islands
MCL
Percentage of equity
interest held
PRC
43.686%
Hong Kong, PRC
29.59%
PRC
35.00%
PRC
43.86%
PRC
Place of incorporation
204,279
1,400
7,494 (3,492)
amount of
impairment
(Restated, Note
2.1.1.b)
RMB million
RMB million
Associates
China Guangfa Bank Co., Ltd. ("CGB") (i)
Equity method
53,201
of equity
interest
98,085
6,061
(742)
244
1,241
104,645
43.686%
Sino-Ocean Group Holding Limited
Equity method
11,245
2,194
98,085
2,194
2023
loss
258,760
262,488
Movements in the current year
As at 31
As at 1
Share of
Other
Accounting
method
Investment
December
declared movements impairment
January
profit or
Dividends
equity
Provision
for
As at 31 Percentage Accumulated
December
cost
2022
2023
the cost
Change of
(2,194)
29.59%
(5,862)
21,801
22,602 22,602
14
774
360
(390)
66
23,052
10.03%
Limited ("China Unicom") (iii)
Equity method
Others (iv)
59,055
61,973 61,970
Sub-total
156,641
208,160 208,157
720
(9,280)
1,438 (1,545)
100
62,683
(505)
Equity method
China United Network Communications
Company")
Gas Pipeline Co., Ltd. ("Pipeline
("Sino-Ocean") (ii)
COFCO Futures Company Limited
Equity method
1,339
1,737
1,737
137
83
26
(26)
1
1,795
35.00%
("COFCO Futures")
China Pipe Group Sichuan to East China
Equity method
10,000
21,569
21,569 (10,000) 1,332
(789)
(8)
12,104
43.86%
66.67%
75.00%
208 Annual Report 2023 | Financial Report
As at
1,720,974
Unlisted debt securities refer to debt securities traded in Chinese interbank market.
For the year ended 31 December 2023
As at
31 December
2022
RMB million
378,105
1,004,162
178,203
13,734
1,574,204
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:
Within one year
After one year but within five years
After five years but within ten years
Over ten years
Total
As at 31 December 2022
Level 1
Total
Unlisted (i)
Listed overseas
Listed in Hong Kong, PRC
315,435
230,771
743,779
206,963
415,413
339,220
961,596
1,705,375
50,058
693,721
743,779
422,464
41,877
10,230
RMB million
487,025
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
Government agency bonds.
Corporate bonds
Total
Debt securities
Listed in Mainland, PRC
961,596
Level 2
RMB million
Total
RMB million
240,597
104,751
719
2022
RMB million
(Restated (i))
344,426
(2,343)
342,083
As at
31 December
2022
RMB million
(Restated (i))
52,989
180,686
97,081
13,670
344,426
(2,343)
31 December
342,083
212 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
11 FINANCIAL ASSETS (continued)
11.9 Available-for-sale securities
Available-for-sale securities, at fair value
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds
Others (i)
Sub-total
Equity securities
Funds
(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.
187,138
As at
Impairment
177,217
976,103
417,814
1,080,854
185,426
186,145
15,993
346,067
1,354,739
15,993
1,700,806
As at
31 December
2022
RMB million
Net value
33,961
160,527
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
Maturing:
Within one year
After one year but within five years
After five years but within ten years
Over ten years
Total
83,894
1,295,822
6,813
3,622
2023
RMB million
(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)
216 Annual Report 2023 | Financial Report
For the year ended 31 December 2023
12 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
The fair values of the underlying items of the Group's Insurance contracts with direct participation features are as follows:
31 December
As at
As at
Total
Others (ii)
Tax prepaid
Prepayments to constructors
Due from related parties
Disbursements
Investments receivable and prepaid
Land use rights (i)
Notes to the Consolidated Financial Statements (continued)
13 OTHER ASSETS
(216,851)
loss
N/A
342,083
N/A
351,285
Available-for-sale securities, at fair value
N/A
31 December
2023
N/A
1,720,974
Securities at fair value through profit or loss
N/A
223,790
N/A
223,790
Financial assets sold under agreements to
Financial assets purchased under agreements to
38,533
19,759
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)
19,759
For the year ended 31 December 2023
1,937,657
186,876
Annual Report 2023 | Financial Report 209
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
11 FINANCIAL ASSETS (continued)
11.6 Financial assets at fair value through profit or loss
Debt investments
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds
Others (i)
Sub-total
Equity investments
Funds
The dividends income of investment in equity instruments at fair value through other comprehensive income recognised
during the year are described in Note 22.
Common stocks
Sub-total
Total
Debt investments
Listed in Mainland, PRC
Unlisted (iii)
Sub-total
Equity investments
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted (iii)
Sub-total
Total
As at
31 December
Others (ii)
2,087,550
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.
72,152
167,942
59,482
N/A
715,824
N/A
178,972
N/A
2022
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
11 FINANCIAL ASSETS (continued)
11.5 Investment in equity instruments at fair value through other comprehensive income
Common stocks
Preferred stocks
Others (i)
138,005
Total
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.
As at
31 December
2023
RMB million
14,787
50,445
72,773
138,005
56,962
8,891
By place of listing:
As at
Subordinated bonds
2022
485,567
6,333
211,349
N/A
219,379
N/A
cost (ii)
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
2,744,169
N/A
2,744,169
N/A
138,005
N/A
138,005
413,255
6,520
N/A
N/A
1,705,375
N/A
Held-to-maturity securities (ii)
N/A
As at
31 December
As at
31 December
2023
31 December
2022
RMB million
RMB million
Cash and cash equivalents
1,705,375
Term deposits
6,333
Investment in debt instruments at amortised
Above 30 days
Total
As at
As at
31 December
31 December
2023
2022
RMB million
RMB million
19,682
77
19,759
38,215
318
38,533
12 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
485,567
The table below presents the carrying amount and estimated fair value of major financial assets and liabilities:
Carrying amount
As at
As at
31 December
2023
RMB million
31 December
2022
RMB million
As at
31 December
2023
RMB million
As at
31 December
2022
RMB million
Term deposits
Statutory deposits - restricted
Estimated fair value (i)
Within 30 days
47,693
131,206
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
14 INSURANCE CONTRACTS
14.1 Significant actuarial assumptions
(1) Estimates of future cash flows
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.
77
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.
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%
Loans (ii)
1,700,806
N/A
1,574,204
The Group adjusts the estimates of future cash flows to reflect the time value of money.
34,993
95
1,005
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
963
Held-to-maturity securities
Securities at fair value through profit or loss
Other miscellaneous items
Total
N/A
564,510
RMB million
RMB million
(Restated, Note
2.1.1.b)
7,861
8,092
7,765
1,029
4,662
3,299
Available-for-sale securities, at fair value
Maturing:
413,255
6,520
11 FINANCIAL ASSETS (continued)
Annual Report 2023 | Financial Report 213
Notes to the Consolidated Financial Statements (continued)
11.11 Financial assets purchased under agreements to resell
Debt securities
11.10 Securities at fair value through profit or loss
11 FINANCIAL ASSETS (continued)
Notes to the Consolidated Financial Statements (continued)
879,443
315,980
239,004
206,086
118,373
RMB million
As at
31 December
2022
214 Annual Report 2023 | Financial Report
1,738,108
Total
17,134
244,964
188,563
156,024
174,398
879,443
Common stocks
Preferred stocks
Others (i)
Sub-total
Available-for-sale securities, at cost
Equity securities
Others (i)
Total
131,897
414,148
50,522
841,531
Over ten years
After five years but within ten years
After one year but within five years
31 December
As at
Total
Sub-total
Unlisted (ii)
Listed in Hong Kong, PRC
Listed overseas
Listed in Mainland, PRC
Equity securities
Sub-total
Unlisted (ii)
Listed overseas
Listed in Hong Kong, PRC
Listed in Mainland, PRC
Debt securities
11.9 Available-for-sale securities (continued)
2022
RMB million
85,450
38
contractual maturity schedule
Within one year
-
Maturing:
Debt securities
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.
(i)
313,270
1,738,108
378,824
59
59,495
420,287
879,443
793,861
94
858,665
47,188
For the year ended 31 December 2023
Listed in Hong Kong, PRC
Debt securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted (ii)
Sub-total
Equity securities
Listed in Mainland, PRC
11 FINANCIAL ASSETS (continued)
Listed overseas
Unlisted (ii)
Total
Sub-total
32,261
For the year ended 31 December 2023
As at
31 December
265
2022
RMB million
1,805
9,622
152,347
27,755
Total
Subtotal
Others
Common stocks
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 215
(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.
(i) Other debt securities at fair value through profit or loss mainly include inter-bank certificates of deposits.
223,790
32,261
10,490
4,233
637
16,901
191,529
154,760
RMB million
293
21
36,455
223,790
Government bonds
Government agency bonds.
Corporate bonds
Others (i)
Sub-total
Equity securities
Funds
191,529
13,444
18,552
(12,088)
Financial changes in insurance contracts
(3,131)
(65,689)
Impact of insurance contracts initially recognised in
the period
51,093
51,093
Changes in estimates with adjustment to
contractual service margin
(21,347)
11,175
(12,512)
(22,684)
Changes relating to future service
(21,347)
11,175
38,581
28,409
17,111
(50,470)
Changes relating to current service
37,383
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
521
3,932
Total
285,163
769,137
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
133,890
612,200
As at 1 January 2023
RMB million
Total
transition date Other contracts
transition date
approach at the
approach at the
783,473
the fair value
contracts
Insurance
retrospective
the modified
measured using
Insurance
contracts
(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)
measured using
1,901
696
As at 31 December 2023
389
696
193
4,441
4,634
Gains or losses on reinsurance contracts
Financial changes in reinsurance contracts held
389
(4,141)
4,441
493
1,337
107
1,444
Total amounts recognised in comprehensive
193
income
3,549
(196)
as at 1 January 2023
12,685
1,990
6,859
21,534
Allocation of reinsurance premiums paid
3,745
(4,141)
Recovery of incurred claims and other
expenses
Recognition and reversals of loss-recovery
component
Changes to assets for incurred claims
recovered from reinsurers
Amounts recovered from reinsurers
(4,141)
(2,804)
300
4,441
24,297
Reinsurance contract assets as at 31
December 2023
15,043
2,290
7,087
7,106
24,420
December 2023
(142)
19
(123)
228 Annual Report 2023 | Financial Report
47,966
Reinsurance contract liabilities as at 31
2,290
14,901
Net assets/(liabilities) of reinsurance contract
as at 31 December 2023
1,937
Investment components
(1,674)
1,674
Reinsurance premiums paid
6,694
6,694
Incurred claims and other expenses recovered
from reinsurers
(5,868)
(5,868)
Total cash flows
6,694
(5,868)
826
Net assets/(liabilities) of reinsurance contract
22,944
(135)
(157)
805,433
Changes relating to current service
(35,167)
(7,643)
(463)
(43,273)
139,178
Impact of insurance contracts initially recognised in
47,966
47,966
Changes in estimates with adjustment to
contractual service margin
(36,736)
(1,216)
the period
(10,873)
666,255
RMB million
557,494
136,909
74,734
769,137
Insurance
contracts
As at 1 January 2022
Insurance
the modified
retrospective
approach at the
contracts
transition date
measured using
the fair value
approach at the
transition date
Other contracts
Total
measured using
(48,825)
Changes relating to future service
(36,736)
Assets for remaining coverage
recovered from reinsurers
Excluding
Assets for
incurred claims
loss-recovery Loss-recovery recovered from
component component
reinsurers
Total
(1) Reconciliation of remaining coverage and incurred claims for reinsurance contracts held
Contracts not measured using the premium allocation approach
RMB million
12,842
1,990
6,837
21,669
Reinsurance contract liabilities as at 1
January 2023
Reinsurance contract assets as at 1 January
2023
14.3 Reinsurance contract assets/(liabilities)
14 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2023
(1,216)
37,093
(859)
Financial changes in insurance contracts
17,848
3,571
753
22,172
As at 31 December 2022
612,200
133,890
37,383
783,473
Annual Report 2023 | Financial Report 227
Notes to the Consolidated Financial Statements (continued)
22
47,966
Changes to liabilities for incurred claims
17
Losses and reversals of
losses on onerous contracts
689
689
Changes to liabilities for
incurred claims
Total insurance service
16,531
(3,250)
(3,934)
expenses
16,531
(980)
35,946
(166)
51,331
(684)
Insurance service result
16,531
Amortisation of insurance
the modified retrospective
approach at transition
(108)
Other contracts
(52,039)
Total insurance revenue
(52,147)
acquisition cash flows
(108)
(52,147)
Incurred claims and other
expenses
(1,669)
39,196
518
38,045
(52,039)
Contracts measured using
(35,616)
35,946
79,681
Insurance acquisition cash flows
paid
(16,857)
(16,857)
Claims and other expenses paid
Total cash flows
79,681
62,824
(66,101)
(3,277)
Insurance contract liabilities as
at 31 December 2023
6,251
798
26,143
(66,101)
(66,101)
(980)
Premiums received
(25,665)
(166)
(816)
Financial changes in insurance
contracts
1,297
674
20
25,665
1,991
comprehensive income
(34,319)
(980)
36,620
(146)
1,175
Investment components
Total amounts recognised in
35,872
724
29,959
43,041
(47,630)
Financial changes in insurance contracts
139,633
399
140,032
Total amounts recognised in comprehensive
9,521
income
9,920
43,041
92,402
Investment components
(171,236)
171,236
Premiums received
39,441
622,108
(100,192)
79,541
42,532
41,407
Amortisation of insurance acquisition cash
flows
26,979
26,979
Losses and reversals of losses on onerous
contracts
Insurance service result
10,646
Changes to liabilities for incurred claims
509
509
Total insurance service expenses
26,979
9,521
43,041
10,646
622,108
Insurance acquisition cash flows paid
(43,884)
Insurance contract liabilities as
liabilities for remaining
coverage
Excluding loss
liabilities for
incurred claims
Risk
Contracts measured using the premium allocation approach
Present value
of future cash
flows
RMB million
adjustment
for non-
financial risk
Total
component component
at 1 January 2023
3,411
1,778
Loss
(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)
(43,884)
Claims and other expenses paid
(212,884)
(212,884)
Total cash flows
578,224
(212,884)
365,340
Insurance contract liabilities as at
31 December 2022
4,176,033
20,169
34,873
4,231,075
Annual Report 2023 | Financial Report 221
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
578
33,770
222 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
29,959
724
35,872
Annual Report 2023 | Financial Report 223
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
14 INSURANCE CONTRACTS (continued)
1,778
14.2 Insurance contract liabilities (continued)
Risk
Present value adjustment for
of future cash non-financial
flows
Contractual
risk service margin
RMB million
Total
Insurance contract liabilities as at 1 January
2023
(2) Reconciliation of fulfilment cash flows and contractual service margin for insurance contracts issued
Contracts not measured using the premium allocation approach
3,413,416
3,411
Insurance contract liabilities as
Investment components
(22,770)
22,770
Premiums received
76,305
76,305
Insurance acquisition cash flows
at 31 December 2022
paid
(16,913)
Claims and other expenses paid
Total cash flows
59,392
(58,613)
(58,613)
(58,613)
779
(16,913)
34,186
Contractual service margin recognised for
the service provided
521
Changes in estimates with adjustment to
contractual service margin
22,655
29
(22,684)
Changes in estimates without adjustment to
51,093
contractual service margin
661
12,074
Changes relating to future service
(17,753)
1,939
28,409
12,595
11,413
1,249
(51,821)
recognised in the period
Change in the risk adjustment for non-
783,473
4,231,075
(65,689)
(65,689)
financial risk
Current experience adjustment
Changes relating to current service
(1,771)
(1,771)
(6,658)
(6,658)
(6,658)
(1,771)
(65,689)
(74,118)
Impact of insurance contracts initially
(1,290)
(1,125)
31
1,079
risk
Total
RMB million
3,766
699
31,225
693
non-financial
36,383
(18,160)
Other contracts
(37,247)
(37,247)
Total insurance revenue
(55,407)
(55,407)
(18,160)
Incurred claims and other
adjustment for
component
For the year ended 31 December 2023
14 INSURANCE CONTRACTS (continued)
14.2 Insurance contract liabilities (continued)
(1) Reconciliation of the liabilities for remaining coverage and the liabilities for incurred claims for
insurance contracts issued (continued)
Contracts measured using the premium allocation approach (continued)
liabilities for remaining
coverage
Insurance contract liabilities as
Present value
of future cash
flows
at 1 January 2022
the modified retrospective
approach at transition
liabilities for
incurred claims
Risk
Excluding loss
Loss
component
Contracts measured using
expenses
(691)
37,718
52,073
(38,362)
1,079
33,935
14
(3,334)
Insurance service result
14
Financial changes in insurance
1,385
642
17
2,044
Total amounts recognised in
comprehensive income
(36,977)
contracts
33,935
1,079
17,045
648
37,675
Amortisation of insurance
acquisition cash flows
17,045
17,045
Losses and reversals of
losses on onerous contracts
1,770
1,770
Changes to liabilities for
incurred claims
(3,783)
(634)
(4,417)
Total insurance service
expenses
34,577
Incurred claims and other expenses
(127,171)
(127,171)
(63)
9,937
contractual service margin
Changes in estimates without adjustment to
(48,825)
(4,906)
53,731
9,874
contractual service margin
772
47,966
1,790
(48,984)
recognised in the period
Impact of insurance contracts initially
(58,785)
Changes in estimates with adjustment to
(43,273)
Changes relating to future service
(3,179)
Financial changes in insurance contracts
(47,630)
(44,132)
(5,193)
1,695
Insurance service result
509
14,684
3
Changes relating to past service
509
3
506
Changes to liabilities for incurred claims
10,646
(859)
506
(2,017)
(13,495)
Changes relating to current service
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)
Risk
adjustment for
non-financial
224 Annual Report 2023 | Financial Report
769,137
36,928
4,019,340
Insurance contract liabilities as at 31
December 2023
398,437
398,437
Total cash flows
4,825,405
Contractual
risk service margin
Total
RMB million
(13,495)
(13,495)
Current experience adjustment
(2,017)
(2,017)
financial risk
Change in the risk adjustment for non-
(43,273)
(43,273)
the service provided
Contractual service margin recognised for
3,773,333
805,433
37,884
2,930,016
2022
Insurance contract liabilities as at 1 January
116,365
(255,365)
1,495
140,032
667,559
Others
46,670
2,610
44,060
54,854
1,649
13,217
53,205
(737,251)
(22,061)
(715,190)
(787,451)
(14,355)
(773,096)
future cash inflows
Insurance acquisition cash flows
Estimates of the present value of
680,776
20,206
1,773
1,249
51,093
51,093
Contractual service margin
10
1,239
Risk adjustment for non-financial risk
621,391
688,267
665,451
735,630
14,866
720,764
future cash outflows
Estimates of the present value of
641,597
22,816
RMB million
Total
Onerous
contracts
Total cash flows
(212,884)
(212,884)
Claims and other expenses paid
(43,884)
(43,884)
Insurance acquisition cash flows paid
365,340
622,108
Premiums received
92,402
(21,960)
(3,698)
118,060
income
Total amounts recognised in comprehensive
622,108
365,340
Insurance contract liabilities as at 31
December 2022
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
14.2 Insurance contract 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 225
4,231,075
783,473
34,186
3,413,416
22,172
1,790
(255,365)
(51,110)
income
138,540
10,735
46,618
195,893
Investment components
(209,261)
Total amounts recognised in comprehensive
209,261
704,912
704,912
Insurance acquisition cash flows paid
(51,110)
(51,110)
Claims and other expenses paid
(255,365)
Premiums received
(255,365)
257,169
256,720
12,595
12,595
5
247
247
Total insurance service expenses
42,118
449
10,286
99,022
Insurance service result
(118,180)
10,286
46,618
(61,276)
Financial changes in insurance contracts
46,618
Total cash flows
653,802
(255,365)
RMB million
Insurance contract liabilities as at
1 January 2022
3,729,604
10,249
33,480
3,773,333
Total
Contracts measured using the modified
retrospective approach at transition
Contracts measured using the fair value
approach at transition
(107,477)
(17,179)
(17,179)
Other contracts
(2,515)
(2,515)
Total insurance revenue
(107,477)
component incurred claims
component
Liabilities for
398,437
Insurance contract liabilities as at
31 December 2023
4,759,114
30,904
35,387
4,825,405
220 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
14 INSURANCE CONTRACTS (continued)
14.2 Insurance contract liabilities (continued)
(1) Reconciliation of the liabilities for remaining coverage and the liabilities for incurred claims for
insurance contracts issued (continued)
Contracts not measured using the premium allocation approach (continued)
Liabilities for remaining
coverage
Excluding loss
Loss
contracts
Claims and other expenses paid
Losses and reversals of losses on onerous
42,118
Insurance service result
247
5
242
Changes relating to past service
247
Notes to the Consolidated Financial Statements (continued)
(24,169)
For the year ended 31 December 2023
14.1 Significant actuarial assumptions (continued)
(1) Estimates of future cash flows (continued)
Mortality/Morbidity
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.
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 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.
Expense assumptions
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.
14 INSURANCE CONTRACTS (continued)
Lapse rates
173
(61,276)
(51,110)
Insurance acquisition cash flows paid
704,912
704,912
Premiums received
195,893
(14,336)
(37,280)
2,742
income
Total amounts recognised in comprehensive
257,169
22,944
2,569
231,656
Financial changes in insurance contracts
207,487
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.
Policy dividend assumption
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.
(122,628)
(122,628)
(20,943)
(20,943)
Other contracts
(16,727)
(16,727)
Contracts measured using the modified
retrospective approach at transition
Contracts measured using the fair value
approach at transition
Total insurance revenue
(160,298)
Incurred claims and other expenses
(2,309)
46,371
44,062
Amortisation of insurance acquisition cash
flows
(160,298)
4,231,075
34,873
20,169
(2) Risk adjustment for non-financial risk
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.
Annual Report 2023 | Financial Report 219
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
14 INSURANCE CONTRACTS (continued)
14.2 Insurance contract liabilities
(1) Reconciliation of the liabilities for remaining coverage and the liabilities for incurred claims for
insurance contracts issued
Contracts not measured using the premium allocation approach
Liabilities for remaining
coverage
Excluding loss
component
Loss Liabilities for
component incurred claims
Total
RMB million
Insurance contract liabilities as at
1 January 2023
4,176,033
42,118
Changes to liabilities for incurred claims
242
For the year ended 31 December 2023
Total amounts recognised in
93
9
32
|
61
contracts held
Financial changes in reinsurance
323
5
LO
979
35
(696)
contracts
Gains or losses on reinsurance
1,019
5
979
35
115
(6)
121
comprehensive income
I
(635)
1,011
2,786
58
(454)
December 2022
reinsurance contract as at 31
Net assets/(liabilities) of
747
(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
5
35
12
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)
2,402
31 December 2022
recovered from reinsurers
Changes to assets for incurred claims
389
3,370
(241)
(2,740)
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
(27)
36
(9)
recognised in the period
Impact of reinsurance contracts held initially
(352)
(1,097)
(592)
696
857
696
696
826
Total cash flows
(5,868)
(5,868)
from reinsurers
Incurred claims and other expenses recovered
6,694
6,694
Reinsurance premiums paid
1,937
3,614
(36)
(1,641)
1,444
(613)
557
1,500
493
4,227
(593)
(3,141)
Gains or losses on reinsurance contracts held
Financial changes in reinsurance contracts held
Total amounts recognised in comprehensive
income
696
Changes relating to past service
Reinsurance contract assets as at
(352)
Changes relating to current service.
Total
Contractual
risk service margin
RMB million
flows
Present value adjustment for
of future cash non-financial
Risk
(2) Reconciliation of fulfilment cash flows and contractual service margin for reinsurance contracts held
Contracts not 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 231
(25)
29
1
(55)
at 31 December 2022
Reinsurance contract liabilities as
2,427
12
2,757
57
67
(399)
Reinsurance contract assets as at 1 January
(1,097)
2023
7,870
(1,097)
Current experience adjustment
(352)
financial risk
Change in the risk adjustment for non-
857
857
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)
27,998
230 Annual Report 2023 | Financial Report
(65)
(6
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
1,146
Financial changes in reinsurance contracts held
1,832
(2,833)
5,103
551
as at 31 December 2022
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
12,685
Net assets/(liabilities) of reinsurance contract
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
Loss-recovery
component
component
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)
(29)
(585)
(196)
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
Assets for incurred claims
recovered from reinsurers
Present value Risk adjustment
of future cash
flows
RMB million
2,402
Notes to the Consolidated Financial Statements (continued)
paid
(585)
(2)
21
(165)
(29)
(810)
(11)
(799)
contracts
Gains or losses on reinsurance
30
30
826
Amounts recovered from 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)
reinsurers
Net assets/(liabilities) of reinsurance contract
as at 31 December 2023
Allocation of reinsurance premiums
7,894
704
181
340
23,509
21,318
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
834
148,958
1,298
1,241
Tax payable
Stock appreciation rights (Note 31)
Others
Total
As at
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
1,107
Agency deposits
Total
Within 30 days
Total
238 Annual Report 2023 | Financial Report
For the year ended 31 December
2023
2022
RMB million
RMB million
50,712
54,925
1,779
1,994
65,689
43,273
42,118
26,979
160,298
127,171
52,147
55,407
212,445
182,578
(524)
(13,806)
857
Contracts measured using the premium allocation approach
Maturing:
Sub-total
Contractual service margin recognised for the service provided
More than 30 days within 90 days
Total
216,579
272
148,958
216,851
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
Amortisation of insurance acquisition cash flows
Interest payable of debt instruments
Payable to constructors
Brokerage and commission payable
6,984
6,756
436
Annual Report 2023 | Financial Report 235
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
Maturity date
Interest rate p. a.
2023
RMB million
2022
RMB million
22 March 2019
Total
22 March 2029
2,307
4.28%
2,495
2,605
27,119
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%
E
6M SOFR+1.15%
LPR (i)
LPR+0.53% (i)
LPR+0.63% (i)
8 March 2024
8 March 2024
25 June 2024
773
742
2,450
35,000
35,000
35,000
Other contracts
RMB million
the modified
retrospective
approach at the
transition date
contracts held
measured using
Reinsurance
(10,716)
(131)
(10,585)
(613)
(15)
(598)
3,370
408
2,962
3,397
435
2,962
(27)
(27)
857
(14,330)
17 OTHER LIABILITIES
Payable to the third-party holders of consolidated structured entities
Salary and welfare payable
Total
(25,593)
814
(25,593)
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
(14,330)
(524)
(13,806)
RMB million
(1,004)
(1,000)
11,448
(525)
11,973
11,616
(357)
11,973
(168)
(168)
819
5
(4)
Total
15 June 2034
retrospective
approach at the
transition date
266
11,448
(815)
(10,367)
Changes relating to future service
266
10
256
contractual service margin
Changes in estimates without adjustment to
11,616
(887)
(10,729)
contractual service margin
Changes in estimates with adjustment to
(168)
62
106
recognised in the period
Impact of reinsurance contracts held initially
732
819
(344)
Changes to assets for incurred claims
257
recovered from reinsurers
834
(2,833)
(2,833)
from reinsurers
Incurred claims and other expenses recovered
3,384
3,384
Reinsurance premiums paid
3,049
11,263
(780)
(7,434)
1,217
(1,004)
379
1,842
1,832
12,267
(1,159)
(9,276)
Gains or losses on reinsurance contracts held
Financial changes in reinsurance contracts held
Total amounts recognised in comprehensive
income
834
834
Changes relating to past service
834
Changes relating to current service
257
257
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)
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)
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)
Other contracts
Contractual
risk service margin
Total
RMB million
Reinsurance contract assets as at 1 January
2022
Current experience adjustment
(344)
(344)
financial risk
Change in the risk adjustment for non-
819
819
the service provided
Contractual service margin recognised for
17,934
(25,593)
Total cash flows
8,710
as at 1 January 2022
Net assets/(liabilities) of reinsurance contract
(124)
(22)
(159)
January 2022
Reinsurance contract liabilities as at 1
18,058
(25,571)
8,653
34,976
34,817
551
57
Net assets/(liabilities) of reinsurance contract
as at 31 December 2022
1,587
797
RMB million
As at
31 December
2023
234 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 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.
(4) Expected amortisation of contractual service margin
Total
(168)
2
(170)
(27)
9
(36)
Contractual service margin
(1,040)
62
62
36
1,308
9
2,395
10,716
contracts held
measured using
the modified
551
Reinsurance
As at 31 December 2022
Financial changes in reinsurance contracts held
Changes relating to future service
service margin
Changes in estimates with adjustment to contractual
Impact of reinsurance contracts initially recognised in
the period
Changes relating to current service
As at 1 January 2022
As at 31 December 2023
Financial changes in reinsurance contracts held
Changes relating to future service
Changes in estimates with adjustment to contractual
service margin
Impact of reinsurance contracts initially recognised in
the period
Changes relating to current service
As at 1 January 2023
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)
4,629
27
(5) Reconciliation of contractual service margin for reinsurance contracts held not measured using
the premium allocation approach
(6)
For the year ended 31 December
Estimates of the present value of
(3) Impact of the initial recognition of the reinsurance contracts in the current period
Contracts not 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 233
(135)
(131)
60
2023
(64)
21,669
(14,199)
7,870
27,998
December 2022
Reinsurance contract assets as at 31
21,534
27,934
Risk adjustment for non-financial risk
(14,330)
7,930
Reinsurance contract liabilities as at 31
2022
December 2022
Reinsurance
(760)
(209)
(551)
Reinsurance
future cash outflows
Estimates of the present value of
1,146
1,142
751
191
560
(1,034)
4
Total
a net cost
RMB million
RMB million
a net gain
Total
contracts
with a net
Reinsurance
gain
future cash inflows
Reinsurance
contracts with contracts with
contracts
with a net
cost
Recognised
in other
comprehensive
income in the
current year
As at
31 December
2022
(Restated, Note
RMB million
Provision for asset impairment
7,596
7,596
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
(603)
2.1.1.b)
2021
45,854
As at
852
securities
Accrued payroll
(852)
Others
1,147
1,147
Net value
(33,024)
12,830
527
4,212
1,670
7,389
24,431
Impact of
31 December
2,883
(22,927)
(169)
Others
Net value
(22,927)
(534)
(7,360)
23,779
852
(534)
1,190
491
1,147
30,541
23,181
242
22,431
Fair value changes on available-for-sale
45,854
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
(418)
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:
changes in fair value through net profit
For the year ended 31 December 2023
29 TAXATION (continued)
(c) As at 31 December 2023 and 31 December 2022, the amounts of deferred tax assets and liabilities are as follows
(continued):
As at
31 December
2022
(Restated, Note
Impact of
initial
application of
Recognised in
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
As at
31 December
2023
Notes to the Consolidated Financial Statements (continued)
RMB million
244 Annual Report 2023 | Financial Report
46,126
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).
31 December
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)
24,431
(272)
418
Provision for asset impairment
6,993
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)
(62,540)
Fair value changes in securities reflecting
5,170
Accrued payroll
7,185
Deductible losses
(5,058)
1,935
(324)
298
1,909
2,714
2,714
(851)
1,863
Insurance contract liabilities
26,545
26,545
(9,457)
32,583
49,671
7,185
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
As at
Hong Kong, PRC
The British
Jersey Island
100.00% directly
Not applicable
Investment
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
100.00%
Not applicable
Investment
indirectly
100.00% directly
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
The British
Virgin Islands
China Life Franklin Asset Management Company Limited
("AMC HK")
Sunny Bamboo Limited
Investment
PRC
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
Golden 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
(c) As at 31 December 2023 and 31 December 2022, the amounts of deferred tax assets and liabilities are as follows:
73,487
1,948
240 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
24 NET FAIR VALUE GAINS THROUGH PROFIT OR LOSS
Debt securities
Equity securities
Stock appreciation rights
(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.
Financial liabilities at fair value through profit or loss
Total
For the year ended
31 December
2022
RMB million
(1,613)
(10,956)
(49)
462
25 INSURANCE SERVICE EXPENSES
(i) Realised gains or losses were generated mainly from available-for-sale securities.
12,707
3,742
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
RMB million
7,344
1,621
8,965
23,573
(19,831)
(12,156)
Contracts not measured using the premium allocation approach
Incurred claims and other expenses
Amortisation of insurance acquisition cash flows
Losses and reversals of losses on onerous contracts
Changes to liabilities for incurred claims
150,353
131,614
26 NET INVESTMENT RETURNS AND FINANCIAL CHANGES IN INSURANCE
CONTRACTS
Net investment returns
Returns on investment recognised in profit or loss
For the year ended 31 December
2023
RMB million
2022
RMB million
Interest income
Investment income
Net realised gains on financial assets
122,994
(9,375)
52,073
Debt securities
51,331
99,022
Sub-total
Contracts measured using the premium allocation approach
Total
For the year ended 31 December
2023
RMB million
2022
RMB million
44,062
41,407
42,118
26,979
12,595
10,646
247
509
79,541
N/A
174,809
23 NET REALISED GAINS ON FINANCIAL ASSETS
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.
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
(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.
N/A
N/A
(17,388)
(18,206)
18,131
15,212
The disclosure above does not include underwriting and policy acquisition costs in the fulfilment cash flows.
29 TAXATION
(19,719)
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.
Current taxation - Enterprise income tax
Deferred taxation
Taxation charges
For the year ended 31 December
2023
2022
(a) The amount of taxation charged to net profit represents:
(19,151)
22,636
27,013
Less: Expenses directly attributable to insurance contracts
Insurance acquisition cash flows recognised in liabilities for
remaining coverage
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
RMB million
RMB million
(Restated, Note
2.1.1.b)
1,241
(4,212)
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
(2,971)
2022
Remuneration in respect of audit services provided by auditors
Others
2023
Deductible losses for which no deferred tax asset was recognised
Others
2,190
(242)
(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)
Expenses not deductible for tax purposes (i)
Income tax at the effective tax rate
Net fair value gains through profit or loss
Depreciation and amortisation
Salary and bonus
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
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
Annual Report 2023 | Financial Report 241
direct participation features
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
Interest expense
75,028
223,824
Total
12,707
(12,156)
Investment income from associates and joint ventures
8,079
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)
For the year ended 31 December
2023
2022
RMB million
Investment in debt instruments at amortised cost
Term deposits
Statutory deposits - restricted
Other receivables
Total
242 Annual Report 2023 | Financial Report
(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:
(1,107)
Social security and other benefits
RMB million
For the year
ended 31
December
RMB million
66,193
25,693
88,070
104,897
42,896
259,160
142,076
127,923
148,700
131,237
(6,624)
259,160
142,076
Investment in debt instruments at fair value through other comprehensive income
2023
2022
Not applicable
99.98% directly
99.98% directly
RMB23
RMB479
99.98% directly
Yuanxiang Tianyi
RMB502
99.98% directly
RMB23
Shengyi Jingsheng
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
RMB502
Yuanxiang Tianfu
indirectly
indirectly
Yuan Shu Yuan Pin
RMB540
RMB35
RMB35
RMB505
99.98% directly
RMB505
99.98% directly
Shanghai Wansheng
RMB4,036
99.98% directly
99.95% directly
RMB12
Bai Ning
RMB1,680
99.98% directly
RMB1,680
99.98% directly
Hope Building
RMB484
100.00%
RMB484
100.00%
RMB4,048 99.98% directly
99.98% directly
RMB120
RMB1,436 99.95% directly
indirectly
indirectly
CL Jiayuan
RMB300
99.99%
RMB300
99.99%
indirectly
indirectly
Tianjin Pension Company
RMB1,216
99.99%
RMB1,216
99.99%
indirectly
indirectly
CL Qingdao (i)
RMB210
RMB210
100.00%
indirectly
99.99%
RMB65
99.99%
RMB65
CL Pension Industry
RMB2,392
99.90% directly
RMB1,595
RMB3,987 99.90% directly
CL Qihang Fund I
RMB6,915
99.99% directly
RMB57
RMB6,972
RMB4,111 99.99% directly
99.99% directly
RMB3,765
99.98%
RMB3,765
99.98%
indirectly
indirectly
CL Nianfeng
90.81% directly
90.81% directly
CL Hangzhou
CL Xingwan
RMB540
Yuan Shu Yuan Jiu
indirectly
indirectly
RMB200
100.00%
- RMB200
indirectly
85.03%
indirectly
100.00%
indirectly
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
RMB1,095
85.03%
RMB2,181 100.00% directly
RMB2,181 100.00% directly
RMB1,095
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
100.00% directly
Amount
RMB1,680
RMB2,746
HKD130
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
holding
RMB6,100 100.00% directly
RMB1,167 100.00% directly
100.00% directly
RMB285 100.00% directly
(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
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
holding
million
million
million
Wisdom Forever Limited
USD452
100.00%
USD452
100.00%
Partnership
indirectly
million
CL Qinhuangdao (i)
For the year ended 31 December 2023
Annual Report 2023 | Financial Report 253
RMB285 100.00% directly
RMB3,101 100.00% directly
RMB3,101 100.00% directly
RMB2,359 100.00% directly
RMB2,435 100.00% directly
USD1,125
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%
Notes to the Consolidated Financial Statements (continued)
indirectly
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
RMB2,835 89.9
China Life Franklin Asset
100.00%
Zhuhai Xinwan (i)
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
483
549
248
241
83
475
(v)
30
57
40
75
and the Company
Transaction between the consolidated structured entities
Capital contribution to Yuanxiang Tianyi
Capital contribution to Yuanxiang Tianfu
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
76
Dividends from AMC
Dividends from the other subsidiaries
Agency fee received
Agency fee from Pension Company
Rental received
Rental received from Pension Company
Capital increase in subsidiaries (Note 33(e))
Capital contribution to Pension Industry Fund
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
Dividends from Pension Company
Payment of an asset management fee
1,595
264
(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.
(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.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.
Annual Report 2023 | Financial Report 257
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
(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.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.
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.
(i)
120
700
57
850
12
12
35
31
35
31
1,888
23
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:
46
Transactions between other subsidiaries and the Company
(f) Transactions with significant related parties (continued)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
463
463
(ii.a)
141
150
Agency fee received from CLP&C
(iii)
1,706
Rental and a service fee received from CLP&C
Dividends from CLP&C
Asset management fee received from CLIC
(ii.c)
2868
1,516
99
80
जै४
99
75
42
43
(i)
12,941
9,806
RMB million
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
CLI
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Transactions with CLIC and its subsidiaries
CLIC
Distribution of dividends from the Company and AMC to
CLIC
Policy management fee received from CLIC
Asset management fee received from CLIC
CLP&C
For the year ended 31 December
2023
2022
Note
RMB million
(f) Transactions with significant related parties
Payment of asset management fee to CLI
(ii.d)
542
For the year ended 31 December
2023
Note
RMB million
2022
RMB million
2,453
742
2,747
774
(iv)
252
Transaction between EAP and the Group
Contribution to EAP
218
173
37
7
4,032
4,463
1,051
1,355
Annual Report 2023 | Financial Report 255
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
163
indirectly
ventures (Note 10)
and the Group
637
CLHI
Payment of operation management service fee to CLHI
(vi)
74
14
96
96
CL Overseas
Asset management fee received from CLIC
Dividends from other associates and joint
(ii.b)
108
Transactions with associates and joint ventures
CGB
Interest received on deposits
Dividends from CGB
Commission expenses charged by CGB
Rental fee from CGB
Sino-Ocean
Interest of corporate bonds received from Sino-Ocean
Transaction between other associates and joint ventures
102
Pension Company
Investment
As at 31 December 2022
Percentage of
holding
directly
applicable
Guang De") (ii)
Beijing China Life Pension Industry Investment
PRC
99.90%
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)
China Life Xing Wan (Tianjin) Enterprise
PRC
Management Partnership (Limited Partnership)
Fund Partnership (Limited Partnership) ("CL
Investment
Not
99.95%
Investment
Management Partnership (Limited Partnership)
directly
applicable
("Yuanxiang Tianyi") (ii)
Xi'an Shengyi Jingsheng Real Estate Co., Ltd.
PRC
100.00%
RMB831
Investment
99.98%
indirectly
("Shengyi Jingsheng") (i)
CBRE Global Investors U. S. Investments I, LLC
USA
99.99%
million
Not
Investment
("CG Investments")
directly
applicable
China Life Guangde (Tianjin) Equity Investment
PRC
indirectly
Not
Not
applicable
("CL Xingwan") (ii)
99.99%
indirectly
million
RMB1,551
consultation
Investment
million
management
Pension Company")(i)
China Life (Qingdao) Health Management Co.,
PRC
Ltd. ("CL Qingdao") (i)
99.50%
indirectly
RMB211
Health
million
management
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)
Investment Company Limited ("Tianjin
PRC
China Life (Tianjin) Pension & Retirement
indirectly
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%
Investment
RMB65
Hangzhou")(i)
indirectly
million
management
China Life Jiayuan (Xiamen) Health Management
PRC
99.99%
RMB1,500
Health
Company Limited ("CL Jiayuan")(i)
agent
Hotel
99.98%
PRC
Wuhu Yuanxiang Tianyi Investment
Name
Percentage of
equity interest
Place of
incorporation
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December
2023 (continued):
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(b) Subsidiaries (continued)
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Virgin Islands
indirectly
New Fortune Wisdom Limited
Wisdom Forever Limited Partnership
The British
100.00%
Not applicable
Investment
Virgin Islands
indirectly
The British
100.00%
Not applicable
Investment
China Century Core Fund Limited
and operation
held
The British
100.00%
The British
Investment
Not applicable
89.997% directly
PRC
Investment
RMB100 million
100.00%
indirectly
PRC
Cayman
management
100.00% directly RMB1,530 million
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)
China Life (Beijing) Health Management Co., Limited ("CL
Health") (i)
Principal
activities
Investment
Registered
capital
Not applicable
100.00%
indirectly
Cayman
Islands
Health
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
100.00%
RMB484
Investment
indirectly
Shanghai Wansheng Industry Partnership
PRC
99.98%
million
Not
Investment
Principal
activities
(Limited Partnership) ("Shanghai Wansheng")
applicable
(ii)
Wuhu Yuanxiang Tianfu Investment
PRC
99.98%
Management Partnership (Limited Partnership)
directly
AMC
Investment
("Yuanxiang Tianfu") (ii)
directly
indirectly
Registered
capital
and operation
PRC
99.98% directly
Not applicable
Investment
PRC
99.98% directly
Not applicable
Investment
PRC
99.98% directly
Percentage
of equity
interest held
Not applicable
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
Dalian Hope Building Company Ltd. ("Hope
Building") (i)
Investment
million
Not
applicable
100.00%
Pension Company
RMB3,400
RMB3,400
Suzhou Pension Company
RMB2,181
RMB1,055
RMB3,236
CL AMP
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
RMB4,000
RMB4,000
AMC
RMB4,600
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
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
RMB831
As at
As at
31 December
Name of related party
2022
million
Increase
million
Decrease
2023
million
million
CLIC
RMB4,600
31 December
Hope Building
RMB484
RMB544
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
Notes to the Consolidated Financial Statements (continued)
Amount
million
million
million
million
RMB19,324
68.37%
RMB19,324
68.37%
Subsidiaries
PRC
As at 31 December 2023
Percentage of
holding
China Life Real Estate Co., Limited ("CLRE")
252 Annual Report 2023 | Financial Report
RMB211
RMB33
CL Hangzhou
RMB65
CL Jiayuan
RMB1500
RMB1,530
RMB100
RMB831
RMB484
RMB544
RMB65
RMB6,800
RMB1,500
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.
RMB700
RMB851
Tianjin Pension Company
Significant related parties
CL Nianfeng
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
75.88% directly
RMB23,648 million
Investment
management
CL Asset-Yuanliu No.3 Insurance Asset Management Product
72.78% directly
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
Principal activities
received
RMB112,779 million
68.75% directly
held
RMB6,800
(c) Other related parties
indirectly
million
services
Real estate
management
250 Annual Report 2023 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
RMB10,000 million
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(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
(b) Subsidiaries (continued)
Investment
management
Investment
management
RMB8,000 million
RMB9,970 million
Investment
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
Investment
management
86.25% directly
91.98% directly
RMB8,000 million
management
Jiang Su Trust Xin Bao Sheng No.144 (Jing Tou)
84.00% directly
RMB8,000 million
Investment
management
Annual Report 2023 | Financial Report 251
•
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2023
Investment
Investment
management
management
RMB9,992 million
Shan Guo Tou Jing Tou Corporate Trust Loan Collective Funds Trust
Scheme
98.40% directly
RMB10,000 million
Investment
management
Jiao Yin Guo Xin China Aluminium Co., Ltd. Supply-side Reform
Collective Fund Trust Scheme
99.99% directly
RMB10,000 million
90.00% directly and
RMB10,000 million
Guang Da Hui Ying No. 8 Collective Fund
Bai Rui Heng Yi No.817 Collective Fund Trust Scheme (Zhong Guo
Guo Xin)
Investment
management
Investment
management
RMB10,000 million
Investment
management
Chongqing Trust Fund • Guo Rong No.4 Collective Fund
.
Jiao Yin Guo Xin Jing Tou Corporate Collective Funds
indirectly
89.00% directly
85.00% directly
Zhong Hang Trust Fund Tian Qi [2020] No.372 China Eastern
reclassifiable
differences
contracts
reclassifiable
contracts
non-
income non-
income reinsurance
Exchange
(losses) from
available-
28,265
reclassifiable
on translating
to profit or
reclassifiable
Share
premium
Other
reserves
for-sale
securities (i)
under the equity
method
gains/
to profit or
loss
to profit or loss
insurance
RMB million
comprehensive contracts and
Statutory
As at 31 December 2023
No. of shares
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)
Financial
changes in
Financial
Other insurance
Other
changes in
Unrealised
comprehensive
Discretionary
Other comprehensive income
foreign
IFRS 17 (Note 2.1.1.b)
19,597
(4)
(112,671)
249,755
(93,078)
As at 1 January 2022
(Restated, Note 2.1.1.b)
53,905
1,098
68,516
2,631
(112,671)
50,621
45,511
48,320
(1,377)
123
156,677
(71,220)
(3,015)
28,265 28,264,705,000
5,512
Impact of initial application of
General
123
48,320
loss under the
to profit or
reserve fund
reserve fund
reserve
operations
equity method
loss
Total
RMB million RMB million RMB million
RMB million RMB million RMB million
RMB million RMB million
RMB million
RMB million RMB million RMB million
(a)
(c)
As at 31 December 2021
53,905
1,098
48,919
2,635
50,621
45,511
(1,377)
260 Annual Report 2023 | Financial Report
As at
All shares owned by CLIC are domestic listed shares.
(53)
5
5
(483)
(528)
4
4
Amount due to CLHI
(30)
(61)
Amount deposited with CGB
43,707
57,904
Wealth management products and other securities of CGB
8,059
8,027
Amount due to CGB
(74)
(66)
Corporate bonds of Sino-Ocean
234
648
Amount due from CL Ecommerce
(68)
3
Amount due from CLRE
Amount due from CLI
1,102
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
31 December
31 December
2023
2022
RMB million
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 to CLI
4
Amount due to CL Ecommerce
(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.
Annual Report 2023 | Financial Report 259
Notes to the Consolidated Financial Statements (continued)
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
As at 31 December 2023, the Company's share capital is as follows:
Owned by CLIC (i)
Owned by other equity holders
Including: Domestic listed
Total
Overseas listed (ii)
(i)
18
RMB million
RMB million
2022
(29)
Amounts due from and to subsidiaries of the Company
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
(ii) Overseas listed shares are traded on the Stock Exchange of Hong Kong Limited.
Amount due to AMC HK
274
(1,771)
(782)
(73)
(123)
(5)
(7)
(h) Key management personnel compensation
Salaries and other benefits
For the year ended 31 December
2023
10
268 Annual Report 2023 | Financial Report
(1,636)
Appropriation to reserves
Total liabilities
5,183,796
4,532,209
4,165,173
Equity
Share capital
28,265
28,265
28,265
Reserves (Note 39(b))
Retained earnings
Total equity
Total liabilities and equity
147,745
95,578
152,959
305,843
247,826
205,190
232,496
481,853
203,605
Financial assets sold under
Reinsurance contract liabilities
4,859,175
4,266,947
3,809,716
188
160
154
Bonds payable
36,166
34,997
34,994
Other liabilities
35,784
39,860
40,267
Premiums received in advance
48,878
49,654
47,546
agreements to repurchase
Insurance contract liabilities
371,669
5,665,649
non-
from available-
to profit or loss
reclassifiable
on translating
to profit or loss
reclassifiable
Share
premium
Other
reserves
for-sale
securities (i)
under the equity
method
to profit or
loss
Statutory
reserve fund
Discretionary
reserve fund
General
foreign
reclassifiable
386,414
contracts
Exchange
differences
4,903,878
4,551,587
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.
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
changes in
insurance
reclassifiable
contracts
income non-
under the equity
Liabilities
RMB million
(Restated, Note
2.1.1.b)
other comprehensive income
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
N/A
324,557
410,789
Available-for-sale securities
N/A
1,644,704
Investment in equity instruments at fair value through
1,370,035
N/A
2,908,332
170,387
Investments in associates and joint ventures
Term deposits
Statutory deposits - restricted
217,717
222,069
216,315
322,298
(69,257)
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
N/A
RMB million
(Restated, Note
2.1.1.b)
Securities at fair value through profit or loss
93,657
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)
LIABILITIES AND EQUITY
As at
As at
As at
31 December
2023
31 December
2022
1 January
2022
RMB million
135,645
N/A
Cash and cash equivalents
47,159
120,191
Reinsurance contract assets
25,846
24,096
19,327
Other assets
29,627
22,778
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
to profit or
reserve
operations
RMB million RMB million
RMB million
RMB million RMB million RMB million
RMB million RMB million RMB million
RMB million RMB million RMB million
53,360
934
(4,578)
(1,817)
(107,159) 54,505
50,607
51,341
(1,615)
95,578
of IFRS 9 (Note
2.1.1.a)
121,314
28 (55,453)
As at 1 January 2023
Total
53,360
loss
under the equity to profit or
on
reclassifiable
non-
through other
to profit or loss reclassifiable
Statutory
translating
to profit or loss reclassifiable
Share
premium
reserves
Other comprehensive
income
under the equity to profit or
method loss
reserve
Discretionary
General
fund
reserve fund
reserve
foreign
operations
method
reclassifiable contracts
934
(1,789) (162,612) 54,505
(21,128)
7,438
(92)
62
67
(96)
As at 31 December 2023
53,360
64
998
2
64
192,944
(1,383) (260,646)
56,258
54,539
53,094
13
(1,012)
(420) 147,745
(487)
116,736
695
13
50,607
51,341
Other comprehensive
income
Appropriation to reserves
Other comprehensive
income to retained
earnings
Others
76,279
406 (98,034)
1,753
17753
3,932
1,753
753
65,889
(1,615)
161,467
31
fair value
contracts
income non-
As at 1 January 2022
2.1.1.b)
(Restated, Note
Other comprehensive
income
Appropriation to reserves
Other comprehensive
53,360
1,580
67,201
(4) (112,671)
50,573
45,511
47,409
152,959
(71,779)
(1,813)
5,512
(1,559)
(93,078)
(69,639)
(112,671)
19,597
method
loss
Total
RMB million RMB million
RMB million
RMB million RMB million RMB million
RMB million RMB million RMB million
RMB million RMB million RMB million
As at 31 December 2021
(Restated, Note
39(a))
53,360
1,580
47,604
50,573
45,511
47,409
246,037
Impact of initial application
of IFRS 17 (Note
2.1.1.b)
(4)
3,932
5,096
3,932
For the year ended 31 December 2023
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Reserves (continued)
As at 31 December 2022
(Restated, Note
2.1.1.b)
Impact of initial application
Financial
changes in
insurance
Other
contracts
Financial
comprehensive
and
assets at
income reinsurance
Exchange
differences
Other
comprehensive
Financial
changes in
insurance
Notes to the Consolidated Financial Statements (continued)
95,578
Annual Report 2023 | Financial Report 267
(1,615)
12,960
income to retained
earnings
Others
As at 31 December 2022
(Restated, Note
2.1.1.b)
(646)
53,360
246,115
934
(1,817)
(107,159) 54,505
50,607
51,341
(56)
99
664g6
(646)
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.
(4,578)
315,929
140,591
6,191
272,215
72
73,845
148,958
1,569
34,997
12,774
At 31 December 2022
At 31 December 2022
223
(197)
Others
4,863
4,786
74
3
26
12,774
34,997
1,569
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
Interest expense
817
817
New leases
RMB million
RMB million
RMB million
RMB million
RMB million
RMB million
Total
activities
entities
repurchase
financing
related to
to structured
agreements consolidated
Lease
liabilities
Bonds
payable
and other
borrowings
RMB million
73,934
At 1 January 2022
34,994
of consolidated structured
entities
Changes arising from losing control
1,139
1,139
Foreign exchange movement
(98,695)
(5,073)
5,983
(90,711)
(1,307)
(7,587)
Changes from financing cash flows
364,065
359
67,862
239,446
2,182
19,222
payable
273,474
(1,073)
As at
As at
(b) Operating lease commitments
Total
Property, plant and equipment
Investments
Contracted, but not provided for
31 December
The Group had the following capital commitments relating to property development projects and investments:
38 COMMITMENTS
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.
Pending lawsuits
531
583
RMB million
RMB million
(a) Capital commitments
31 December
2023
2022
31 December
31 December
As at
As at
264 Annual Report 2023 | Financial Report
Total
Later than five years
Later than one year but not later than five years
Not later than one year
As lessor, the future minimum rentals receivable under non-cancellable operating leases are as follows:
93,135
88,056
91,727
1,408
1,466
86,590
RMB million
RMB million
2022
2023
31 December
31 December
669
Interest expense
(4)
810
810
New leases
(4)
entities
of consolidated structured
Changes arising from losing control
479
479
Foreign exchange movement
70,969
10,361
64,330
(1,149)
(1,500)
1,499
Changes from financing cash flows
54
5,104
As at
As at
37 PROVISIONS AND CONTINGENT LIABILITIES
The following is a summary of the significant contingent liabilities:
For the year ended 31 December 2023
Notes to the Consolidated Financial Statements (continued)
Annual Report 2023 | Financial Report 263
351,424
84,295
216,851
1,255
36,166
12,857
At 31 December 2023
592
621
(29)
Others
2,882
2023
holders of
third-party
loss under the
Other comprehensive
Share
premium
to profit or reclassifiable
translating
Statutory
to profit or reclassifiable
to profit or
through other
reclassifiable
on
reclassifiable contracts
fair value
contracts
income non-
differences
non-
reserve
Discretionary
General
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
operations equity method
reserve
reserve fund
fund
loss
equity method
income
reserves
to profit or
foreign loss under the
income reinsurance
assets at
insurance
Exchange comprehensive
(384)
(2,704)
(352)
53,905
(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
3,932
(107,159)
(a)
54,553
(275)
and
Financial comprehensive
changes in
Other
contracts
Other
Financial
insurance
changes in
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)
50,607 52,429
interest
(b)
As at 31 December 2022
54,539
56,306
(259,873)
(407)
188,476
28
53,905
54,348
As at 31 December 2023
(94)
67
51
380
Others
(92)
retained earnings
380
50
(1,019)
(420)
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
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.
(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).
(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
Other comprehensive income to
7,604
.
1,919
60,751
28 (55,453)
116,176
IFRS 9 (Note 2.1.1.a)
Impact of initial application of
99,033
(1,587)
(275)
52,429
50,607
54,553
(107,159)
(384)
(2,704)
(352)
53,905
(Restated, Note 2.1.1.b)
As at 1 January 2023
(c)
53,905
113,472
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
50,607
54,553
(162,612)
(356)
(352)
2022
RMB million
914
1,413
RMB million
(Restated, Note
2.1.1.b)
ASSETS
Property, plant and equipment
6,266
6,063
Investment properties
2,239
1,595
1,364
51,116
49,856
48,775
Investments in subsidiaries
RMB million
(Restated, Note
2.1.1.b)
RMB million
Right-of-use assets
As at
RMB million
893
1 January
2022
1,478
198
160
2,531
Notes to the Consolidated Financial Statements (continued)
2,525
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS
(a) Statement of financial position
As at
31 December
2023
As at
31 December
2022
For the year ended 31 December 2023
175.0
245.0
Huang Yiping (vi)
125.0
50.0
Chen Jie (vi)
420.0
50.0
175.0
420.0
420.0
420.0
70.0
125.0
175.0
1,533.9
245.0
245.0
Yuan Changqing (i)
Wang Junhui (v)
Lam Chi Kuen
300.0
120.0
Leung Oi-Sie Elsie (vi)
420.0
300.0
120.0
420.0
Tang Xin (vi)
175.0
70.0
Zhai Haitao
245.0
Notes to the Consolidated Financial Statements (continued)
245.0
(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)
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION (continued)
Lai Jun
Remuneration
Benefits in
paid
kind
Total
RMB thousand
Niu Kailong (iii)
245.0
For the year ended 31 December 2023
270 Annual Report 2023 | Financial Report
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.
437.0
(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.
(v) Wang Junhui is a non-executive director and does not receive any remuneration from the Company.
(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.
(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.
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.
(iv) Huang Xiumei resigned as executive director in November 2022 and did not receive any remuneration from the Company from October 2022.
1,970.9
Li Mingguang
108.6
Total
RMB thousand
417.7 50.3 84.2 552
552.2
420.0
420.0
scheme
contributions
420.0
(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 did not receive remuneration from the Company, and resigned as executive director in August 2023.
(iii) Li Mingguang did not receive remuneration from the Company from May 2023.
(iv) Wang Junhui is a non-executive director and does not receive any remuneration from the Company.
(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
kind
Benefits in
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:
paid
Name
Li Mingguang (iii)
Wang Junhui (iv)
Zhuo Meijuan (v)
Lam Chi Kuen
Zhai Haitao
Huang Yiping
Chen Jie
Pension
Remuneration
Bai Tao (i)
Zhao Peng (ii)
420.0
420.0
Annual Report 2023 | Financial Report 269
1,432.0
1,145.6
2,577.6
687.4
144.3
288.2
1,267.9
3,010.1
2,322.7
Huang Xiumei (iv)
939.8
728.3
1,668.1
437.0
687.4
Su Hengxuan (iii)
Zhao Peng (ii)
Bai Tao (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 (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
194.2
151.9
614.8
1,645.0
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)
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.
(c) Five highest paid individuals
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).
Details of the remuneration of the five highest paid individuals are as follows:
Basic salaries, housing allowances, other allowances and benefits in kind
Pension scheme contributions
Total
The emoluments fell within the following bands:
RMBO - 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
271
For the year ended 31 December
Annual Report 2023 Financial Report
(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.
209.0
2,198.8
470.7
1,728.1
Lai Jun
768.8
1,370.0
2,138.8
548.0
117.3
210.6
2,466.7
548.0
1,918.7
Niu Kailong (iii)
(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.
2023
2022
RMB thousand
中国人寿保险股份有限公司
China Life Insurance Company Limited
Office Address :
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
FSC™ C008061
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.
272 Annual Report 2023 | Financial Report
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.
RMB thousand
6,872.0
12,820.2
1,136.0
1,301.2
8,008.0
14,121.4
117.7
Number of individuals
2023
2022
IIIGI
5
2
||32 I
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).
For the year ended 31 December
225.2
470.7
1,176.8
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
Deferred
payment
Actual paid
Total included in total included in total
RMB thousand
Jia Yuzeng (i)
1,148.6
584.7
(iv) The above remuneration was calculated based on the relevant employment period during the reporting period.
1,733.3
(iii) Niu Kailong did not receive remuneration from the Company.
(i) Ye Yinglan was appointed as employee representative supervisor in June 2023.
465.1
65.3
91.4
621.8
485.4
62.4
87.8
635.6
452.3
62.4
100.1
1,021.9
125.5
218.0
1,365.4
(ii) Hu Zhijun and Wang Xiaoqing resigned as employee representative supervisor in June 2023
350.8
113.5
237.6
1,328.6
274.1
1,054.5
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
115.8
66.4
274.1
1,146.4
2,084.4
350.8
1,733.6
Cao Weiging (i)
104.4
83.5
187.9
1,872.1
50.1
23.4
225.8
50.1
175.7
Cao Qingyang (ii)
461.2
685.2
14.5
Pension
scheme
contributions
Major business scope
13,193
Net investment income
Net income from fixed-maturity investments
Net income from equity investments
123,082
176,277
185,866
178,870
144,216
142,913
29,117
29,704
Net income from investment properties
102
87
Investment income from cash and others
4,352
2,187
Share of profit of associates and joint ventures
N/A
Gross investment yield²
- Impairment losses of investment assets
Net investment yield²
N/A
(1,282)
- Expected credit losses of investment assets
Gross investment income
(8,751)
+ Unrealised gains or losses
27,518
(31,280)
+ Realised disposal gains
3,979
8,079
(32,786)
20221
2023
RMB million
4,811,893
100.00%
5,659,250
Total
5.45%
262,488
100.00%
4.57%
Investments in associates and joint ventures
3.45%
166,127
2.99%
169,064
Cash and others6
258,760
21,360
Notes:
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.
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.
1.
6.
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.
Other equity investments include private equity funds, unlisted equities, preference shares and equity investment plans, etc.
0.28%
3.70%
2.43%
783,473
-1.8%
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.
Analysis of Cash Flows
Liquidity Sources
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.
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.
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.
Liquidity Uses
The Company believes that its sources of liquidity are
sufficient to meet its current cash requirements.
24 Annual Report 2023 | Management Discussion and Analysis
Consolidated Cash Flows
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.
For the year ended 31 December
RMB million
2023
2022
Change
Main reasons for change
An increase in the scale of
universal insurance accounts
The needs for investment
management
The needs for liquidity
management
financing activities
N/A
(120,095)
60,273
Net cash inflow/(outflow) from
769,137
168.0%
(424,236)
Net cash inflow/(outflow) from
investing activities
11.3%
345,284
384,366
Net cash inflow/(outflow) from
operating activities
(158,271)
13.9%
4,266,947
4,859,175
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.
Insurance Contract Liabilities
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.
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%.
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.
2.
1.
Notes:
3.90%
Credit Risk Management
3.96%
Insurance contract liabilities of long-term insurance business
Insurance contract liabilities of short-term insurance business
Including: Contractual service margin
-5.9%
35,872
33,770
14.0%
4,231,075
4,825,405
Total of insurance contract liabilities
Change
2023
RMB million
31 December
As at
31 December
As at
2022
Foreign exchange gains/(losses) on
China Life Property
and Casualty
Insurance Company
Limited²
12,753
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
414
channel of exclusive
China Life Xin Fu Lin Men Annuity Insurance
35,278
10,932
(國壽鑫福臨門年金保險)
China Life Critical Illness Group Health Insurance for
25,517
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
36,629
For the year ended 31 December 2023
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
25,517
Top Three Insurance Products in terms of Net Increase in Policyholder Deposits note
China Life Xin Yao Dong Fang Annuity Insurance
(國壽鑫耀東方年金保險)
individual agents
97
19
Annual Report 2023 | Management Discussion and Analysis
Including premiums from online insurance business acquired by different sales channels of the Company.
4
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.
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.
Analysis of Insurance Products
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.
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.
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
Integrated Financial 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.
Online Insurance Business
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.
Inclusive Healthcare and Integrated Senior-care Service
System
354
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.
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.
Mainly through the
channel of exclusive
payment
Major sales channel
Surrender
from new
policies Note
11,600
38,632
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,
China Life Xin Xiang Wei Lai Endowment Insurance
(國壽鑫享未來兩全保險)
Gross
written
premiums
Insurance product
RMB million
For the year ended 31 December 2023
Top Five Insurance Products in terms of Gross Written Premiums
20 Annual Report 2023 | Management Discussion and Analysis
Standard
premiums
0.23%
China Life Xin Zun Bao Whole Life Insurance
(universal insurance) (type C)
(國壽鑫尊寶終身壽險(萬能型)(C款))
Debt-type financial products²
484,828
8.57%
455,026
9.46%
Other fixed-maturity investments³
61,215
1.08%
80,126
1.67%
Equity financial assets
1,099,601
19.43%
890,926
18.51%
Common stocks
430,200
Investment properties
6.50%
312,885
8.17%
462,438
Other equity investments5
51.09%
3.02%
3.66%
206,963
Funds4
8.99%
432,700
7.60%
145,341
2,458,440
55.83%
3,159,774
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.
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.
321
19,564
(國壽鑫賬戶兩全保險(萬能型)(鑽石版))
(universal insurance) (diamond version)
China Life Xin Account Endowment Insurance
56
Mainly through the channel of
exclusive individual agents
Mainly through the channel of
exclusive individual agents
32,152
As at the end of the Reporting Period, the Company's investment assets categorised by investment object are set out as
below:
Investment category
10.09%
485,567
7.30%
413,255
72.31%
3,479,159
RMB million
72.78%
Percentage
Amount
As at 31 December 20221
As at 31 December 2023
Amount Percentage
Bonds
Fixed-maturity financial assets
Term deposits
4,119,072
64
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.
equivalents
158.19%
143.59%
206.78%
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.
Sale of Material Assets and Equity
During the Reporting Period, there was no sale of material assets and equity of the Company.
Annual Report 2023 | Management Discussion and Analysis
25
Major Subsidiaries and Associates of the Company¹
487,290
RMB million
Net
Company name
China Life Asset
Management
Company Limited
China Life Pension
Company Limited
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
Net
449,160
1,007,601
981,594
217
-70.5%
cash and cash equivalents
Net increase in cash and cash
20,467
67,135
-69.5%
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 the Company's solvency ratios as at the end of the Reporting Period:
Core capital
Actual capital
Minimum capital
Core solvency ratio
Comprehensive solvency ratio
RMB million
As at
As at
31 December
2023
31 December
2022
710,527
699,688
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
218.54%
"
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%
assets assets profit
capital Shareholding
4,000
Total
FUTURE PROSPECT
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.
1.
2.
Registered
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.
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.
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.
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
invoices for medical charges. "Advanced Claims Payment"
delivered heart-warming protection in advance to customers
on medical treatments, benefiting 27,800 customers.
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.
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.
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.
Technology Capabilities
TECHNOLOGY CAPABILITIES,
OPERATIONS AND SERVICES
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
26
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.
Annual Report 2023 | Management Discussion and Analysis
(8,324)
(7,213)
34,646
36,860
32,944
31,385
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
G Cost of Required Capital
1,260,567
45,184
1,194,220
544,596
584,807
(73,124)
617,721
Notes:
(64,040)
40,157
2.
Notes:
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:
648,848
ITEM
Analysis of Embedded Value Movement in 2023
The following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period:
MOVEMENT ANALYSIS
31
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.
1. The corresponding results for the year 2022 have been restated using 2023 EV economic assumptions.
Numbers may not be additive due to rounding.
2.
27.4%
31.0%
29.9%
31.3%
31 December
2022
2023
31 December
By Annual Premium Equivalent
By First Year Premium
New Business Margin of One Year's Sales of Individual Agent Business Sector
1.
649,623
1,230,519
36,004
2022
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.
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.
Net assets, defined as assets less corresponding policy
liabilities and other liabilities valued; and
•
"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.
DEFINITIONS OF EMBEDDED VALUE
AND VALUE OF ONE YEAR'S SALES
Annual Report 2023 | Embedded Value 29
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.
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.
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.
BACKGROUND
EMBEDDED
VALUE
A Embedded Value at the Start of Year
B Expected Return on Embedded Value
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
1,293,269
41,035
2023
F Value of One Year's Sales before Cost of Required Capital
E Embedded Value (A + D)
D Value of In-Force Business after Cost of Required Capital (B + C)
B Value of In-Force Business before Cost of Required Capital
C Cost of Required Capital
A Adjusted Net Worth
ITEM
31 December
675,760
31 December
Components of Embedded Value and Value of One Year's Sales
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:
SUMMARY OF RESULTS
30 Annual Report 2023 | Embedded Value
Other operating assumptions such as mortality, morbidity,
lapses and expenses are based on the Company's recent
operating experience and expected future outlook.
annum.
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
ASSUMPTIONS
RMB million
C Value of New Business in the Period
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.
E Investment Experience Variance
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
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.
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.
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
Agreement for Entrusted Investment and Management
and Operating Services with respect to Alternative
Investments with Insurance Funds between the
Company and CLI
For the year ended 31 December 2023, CLIC paid AMC a
service fee of RMB140.82 million.
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.
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.
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.
Annual Report 2023 | Significant Events
Cooperation Framework Agreement for Investment
Management with Insurance Funds between the
Company and China Life Capital
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.
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.
35,094
595,090
38,628
629,037
Embedded Value
Value of One Year's Sales after Cost of Required Capital
RMB million
31 December
2023
31 December
2022
Change
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
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
•
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.
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.
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.
Basis of Opinion, Reliance and Limitation
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.
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
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%
•
574,794
•
The economic assumptions used by China Life have taken
into account the current investment market conditions
and the investment strategy of China Life;
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
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.
MAJOR CONNECTED TRANSACTIONS
Continuing Connected Transactions
During the Reporting Period, the Company was not involved
in any material litigation or arbitration.
MATERIAL LITIGATIONS OR
ARBITRATIONS
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
D Operating Experience Variance
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 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;
37,701
For and on behalf of
Using 2022 Economic Assumptions
2.
Items B through J are explained below:
B Reflects expected impact of covered business, and the expected return on investments supporting the 2023 opening net worth.
C
Value of one year's sales for the 12 months ended 31 December 2023.
D
Reflects the difference between actual operating experience in 2023 (including mortality, morbidity, lapse, and expenses etc.) and the assumptions.
E
Numbers may not be additive due to rounding.
Compares actual with expected investment returns during 2023.
Reflects the effects of appraisal methodology and model enhancement, and assumption changes.
G
Change in the market value adjustment from the beginning of year 2023 to 31 December 2023 and other adjustments.
H
Reflects the gains or losses due to changes in exchange rate.
|
Reflects dividends distributed to shareholders during 2023.
J Other miscellaneous items.
F
1.
1,260,567
1,462
592,494
F Methodology, Model and Assumption Changes
G Market Value and Other Adjustments
H Exchange Gains or Losses
Shareholder Dividend Distribution and Capital Changes
|
J
Others
K Embedded Value as at 31 December 2023 (sum A through J)
Notes:
RMB million
1,230,519
83,473
(624)
(73,807)
(40,643)
37,044
132
(13,850)
32
Annual Report 2023 | Embedded Value
36,860
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:
6. 10% decrease in expenses
592,487
40,516
7. 10% increase in mortality rate for non-annuity products and
580,222
35,996
10% decrease in mortality rate for annuity products
8. 10% decrease in mortality rate for non-annuity products and
33,204
589,427
9. 10% increase in lapse rates
577,213
36,081
10. 10% decrease in lapse rates
11.10% increase in morbidity rates
12.10% decrease in morbidity rates
SENSITIVITY RESULTS
13. Allowing for diversification in calculation of VIF
37,730
577,127
10% increase in mortality rate for annuity products
26,112
Value of In-Force
Business after Cost
of Required Capital
Sensitivity Results
5. 10% increase in expenses
RMB million
Value of One Year's
Sales after Cost
of Required Capital
Base case scenario
2. Risk discount rate -50bps
584,807
36,860
1. Risk discount rate +50bps
555,649
34,647
456,240
616,352
39,263
3. 10% increase in investment return
713,980
4. 10% decrease in investment return
47,644
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.
41
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.
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.
UNDERTAKINGS MADE BY
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.
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
Except as otherwise disclosed in this report, the Company
had no other material contracts during the Reporting Period.
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
5
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.
Directors of the Company during the Reporting Period and up to the date of this report were as follows:
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
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.
42
Annual Report 2023 | Significant Events
CORPORATE
GOVERNANCE
REPORT OF THE BOARD OF DIRECTORS
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
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.
(resigned on 4 August 2023 due to the adjustment of work arrangements)
(appointed on 21 June 2023)
RESTRICTION ON MAJOR ASSETS
As at the end of the Reporting Period, the external guarantee
balance of the holding subsidiaries of the Company was
RMB447 million 5.
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:
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.
Annual Report 2023 | Corporate Governance
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.
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.
Confirmation by Auditor
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:
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;
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;
•
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
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
the transactions were entered into in the ordinary and
usual course of business of the Company;
the transactions were conducted on normal commercial
terms;
• 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
. the amounts of the above transactions have not exceeded
the relevant annual caps.
Other Major Connected Transactions
Investment in Jiangxi Jiaotou Expressway
Investment Fund (Limited Partnership)
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.
Annual Report 2023 | Significant Events
39
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.
Investment in Beijing MTR 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 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.
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 has complied with the disclosure requirements
under Chapter 14A of the Listing Rules in respect of the
above one-off connected transactions.
Statement on Claims, Debt Transactions and
Guarantees etc. of a Non-operating Nature with
Related Parties
During the Reporting Period, the Company was not involved
in claims, debt transactions or guarantees of a non-operating
nature with related parties.
40
Annual Report 2023 | Significant Events
MATERIAL CONTRACTS AND THEIR
PERFORMANCE
During the Reporting Period, China Life Insurance Company
Limited neither gave external guarantees nor provided
guarantees to its holding subsidiaries.
43
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.
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
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;
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;
The Company shall give priority to cash dividends as its
profit distribution manner.
In accordance with Article 218 of the Articles of
Association, the Company's Profit Distribution
Policy is as follows:
•
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 in recent three years;
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.
In accordance with Article 219 of the Articles of
Association, the Procedures of Reviewing the
Company's Profit Distribution Proposal are as
follows:
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 47
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.
Profit Distribution Plan and Public Reserves
Capitalisation Plan for the Year 2023
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.
No public reserve capitalisation is provided for in the profit
distribution plan for the year.
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.
DISTRIBUTABLE RESERVES
As at the end of 31 December 2023, the distributable
reserves of the Company was RMB207,030 million.
PROPERTY, PLANT AND EQUIPMENT
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.
SHARE CAPITAL
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.
MANAGEMENT CONTRACTS
No management or administration contracts for the whole
or substantial part of any business of the Company were
entered into during the Reporting Period.
PENSION PLAN
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.
48
Annual Report 2023 | Corporate Governance
Framework Agreement between CLI and China Life
AMP
•
From left to right:
•
In accordance with Article 217 of the Articles of
Association, the Basic Principles of the Company's
Profit Distribution Policy are as follows:
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.
BUSINESS REVIEW
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
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
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.
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
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.
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
Annual Report 2023 | Corporate Governance 45
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.
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
•
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.
44 Annual Report 2023 | Corporate Governance
China Securities Finance Corporation Limited State-owned legal person
117,165,585
Hong Kong Securities Clearing Company
Limited
Overseas legal person
0.16%
44,354,939 +2,694,922
Industrial and Commercial Bank of China
Limited SSE 50 Exchange Traded Index
Securities Investment Fund
Other
0.07%
20,306,703 +6,446,000
Guosen Securities Co., Ltd. - Founder Fubon
CSI Insurance Theme Index Securities
Investment Fund
Other
0.41%
0.05%
Industrial and Commercial Bank of China
Limited Huatai-PineBridge CSI 300
Exchange Traded Index Securities
Other
0.04% 12,402,733 +5,682,600
Investment Fund
National Social Security Fund Portfolio 114
Other
0.04% 12,000,000 +12,000,000
State-owned legal person
0.04%
11,108,837 +11,108,837
56
Annual Report 2023 | Corporate Governance
13,701,912 -7,164,617
State-owned legal person
Central Huijin Asset Management Limited
708,240,246
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.
ON FINANCIAL REPORTS
RESPONSIBILITY STATEMENT OF DIRECTORS
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.
PRE-EMPTIVE RIGHTS AND ARRANGEMENTS
FOR SHARE OPTIONS
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.
PERMITTED INDEMNITY PROVISION
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.
DISCLOSURE OF INTERESTS OF DIRECTORS,
SUPERVISORS AND THE CHIEF EXECUTIVE IN
THE SHARES OF THE COMPANY
49
Annual Report 2023 | Corporate Governance
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.
DIRECTORS' AND SUPERVISORS' RIGHTS TO
ACQUIRE SHARES
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.
INTERESTS OF DIRECTORS AND SUPERVISORS
(AND THEIR CONNECTED ENTITIES) IN
MATERIAL TRANSACTIONS, ARRANGEMENTS
OR 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).
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 "Report of Corporate Governance" in this
annual report.
DAY-TO-DAY OPERATIONS OF THE BOARD
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.
H SHARE STOCK APPRECIATION RIGHTS
During the Reporting Period, the Company and its subsidiaries
did not purchase, sell or redeem any of the Company's listed
securities.
PURCHASE, SALE OR REDEMPTION OF THE
COMPANY'S 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.
INFORMATION OF TAX DEDUCTION FOR
HOLDERS OF LISTED SECURITIES
The total amount of charitable donations made by the
Company during the Reporting Period was approximately
RMB37.59 million.
CHARITABLE DONATIONS
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.
INTEREST-BEARING LOANS AND OTHER
BORROWINGS
Notes:
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.
1.
3.
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%
FMR LLC (Note 1)
Interest in controlled
corporation
H Shares
449,298,275 (L)
6.04%
Percentage of
the respective
class of shares
1.59%
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.
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.
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.
58 Annual Report 2023 | Corporate Governance
BlackRock, Inc. (Note 2)
Number of
shares held
Class of shares
Capacity
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
2.51%
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
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
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:
Name of substantial
shareholder
2.
MAJOR CUSTOMERS
China National Nuclear Corporation Capital
Holdings Co., Ltd.
SUFFICIENCY OF PUBLIC FLOAT
CHANGES IN ORDINARY SHARES AND SHAREHOLDERS INFORMATION
55
Annual Report 2023 | Corporate Governance
27 March 2024
Chairman of the Board of Supervisors
By Order of the Board of Supervisors
Cao Weiqing
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.
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.
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.
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.
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.
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.
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.
CHANGES IN SHARE CAPITAL
INDEPENDENT OPINION OF THE BOARD OF
SUPERVISORS ON CERTAIN MATTERS
54
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.
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.
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.
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.
Annual Report 2023 | Corporate Governance 53
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.
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.
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.
The number of meetings attended in person includes meetings attended
on-site and by way of telephone or video conference.
222
2.
1.
Annual Report 2023 | Corporate Governance
During the Reporting Period, there was no change in the total number of shares and the share capital structure of the
Company.
ISSUE AND LISTING OF SECURITIES
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.
25.92% 7,327,523,802 +1,830,411
Overseas legal person
HKSCC Nominees Limited
68.37% 19,323,530,000
State-owned legal person
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.
Period
Increase/
Number of
shares held as
at the end of
the Reporting
Percentage of
shareholding
Nature of shareholder
Name of shareholder
pledged or
frozen
of shares
Number
Unit: Shares
to selling
restrictions
shares subject
Number of
Reporting
Period
decrease
during the
No. of H Share shareholders:
24,280
No. of A Share shareholders:
99,815
Total number of ordinary
share shareholders as at
the end of the month prior
to the disclosure of the
annual report
Particulars of Top Ten Shareholders of the Company
the end of the Reporting No. of H Share shareholders:
Period
24,368
Total number of ordinary No. of A Share shareholders:
share shareholders as at 107,594
Total Number of Shareholders and their Shareholdings
INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER
Notes:
Hu Zhijun
China Life Insurance (Group) Company
2/2
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.
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.
Mr. Lai Jun, Mr. Cao Weiqing, Mr. Niu Kailong, Ms. Ye Yinglan
From left to right:
REPORT OF THE BOARD OF SUPERVISORS
Annual Report 2023 | Corporate Governance 51
27 March 2024
By Order of the Board
Bai Tao
Chairman
64.73
Total
consultation services)
0.55
Non-audit services fee (tax services and
4.00
Including: Internal control audit fee
procedures fee
64.18
Fees
RMB million
Audit, review and agreed-upon
Service/Nature
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.
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.
Remuneration paid by the Company to PricewaterhouseCoopers
Zhong Tian LLP and PricewaterhouseCoopers in 2023 was
as follows:
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.
AUDITORS
50 Annual Report 2023 | Corporate Governance
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.
of meetings
required to attend
0/2
0/2
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.
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.
52 Annual Report 2023 | Corporate Governance
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.
Wang Xiaoqing
Name of Supervisor
meetings attended
meetings attended
Number of
in person/Number by proxies/Number
Number of
Attendance records of the resigned Supervisors at the
meetings of the Board of Supervisors are as follows:
1/3
2/3
Ye Yinglan
1/5
of meetings
required to attend
Lai Jun
MEETINGS AND ATTENDANCE
4/5
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
2/2
Name of Supervisor
meetings attended
Cao Weiqing
of meetings
required to attend
5/5
Niu Kailong
5/5
0/5
No adjustment of work
arrangements
Resigned due to the
arrangements
adjustment of work
14.24
36.12
December 2021-August 2023
October 1969
Male
Person in Charge of Audit
50.36
Resigned due to the
November 1971
Person in Charge of Finance Female
February 2023 March 2024
70.74
26.33
Yes adjustment of work
arrangements
Total
388.58
130.49
519.07
Liu Fengji
Notes:
1.
Hu Jin
97.07
163.68
1
July 2019-June 2023
2.
62.65
20.27
82.92
No
reasons
Resigned due to the
Yang Hong
Vice President
Female
February 1967
No
July 2019 March 2024
38.38
No
adjustment of work
arrangements
Assistant to the President
Zhang Di
Chief Investment Officer
Female
January 1968
December 2021 January 2023
January 2022 - January 2023
Resigned due to the
1
125.30
3.
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.
None of the resigned or retired Directors, Supervisors and senior management of the Company held any shares of the Company during the Reporting
Period.
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
Mr. Niu Kailong, born in 1974, 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 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 67
Mr. Zhao Guodong, born in 1967, Chinese
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.
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
42.00
April 1968
Mr. Ruan Qi, born in 1966, Chinese
4.
Mr. Cao Weiqing, born in 1965, Chinese
Annual Report 2023 | Corporate Governance
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.
Annual Report 2023 | Corporate Governance
61
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.
SUPERVISORS
62
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.
Mr. Lam Chi Kuen, born in 1953, Chinese
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 Haitao, born in 1969, Chinese
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.
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
Male
0
Resigned due to personal
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
No
38.72
Hou Jin
Female
42.00
No
Chen Jie
Independent Director
Female
April 1970
Since 13 July 2022
February 1978
Female
Temporary Person in
Charge of Finance
Yuan Ying
No
8.71
3.42
5.29
Since November 2023
January 1980
Chief Actuary
42.00
114.86
June 1974
enterprise
in RMB
the Company
Period in RMB
ten thousands
the Reporting
paid in RMB
Term
Date of birth
Gender
Position
Name
emolument
Remuneration
the Company
fund and
received
annuity
fund paid by
Since August 2023
ten thousands
(before tax)
parties of
Male
Vice President
Bai Kai
Board Secretary since February 2023
Board Secretary
No
153.12
38.26
114.86
Appointed as a Vice President since
August 2023,
November 1967
Male
Zhao Guodong
Vice President
ten thousands
during
the Company
from connected
Since 13 July 2022
March 1964
Independent Director
Non-executive Director
Zhuo Meijuan
Yes
Since 16 August 2019
July 1971
Male
Vice President
Non-executive Director
Wang Junhui
Yes
55.22
13.45
41.77
since 16 August 2019,
President since November 2023
President
July 1969
Male
Female
Li Mingguang
July 1964
Yes
42.00
42.00
Since 14 October 2021
January 1969
Male
Independent Director
Zhai Haitao
No
NNO
42.00
0
42.00
Since 29 June 2021
April 1953
Male
Independent Director
Lam Chi Kuen
Since 21 June 2023
Executive Director
Appointed as an Executive Director
Since 31 May 2022 .. Ye
emolument
Remuneration
the Company
fund and
received
Salary/
received from
provident
Whether
emoluments
housing
Total
Other benefits,
social insurance,
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Current Directors, Supervisors and Senior Management
DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
Yes
Huang Yiping
Name
Position
Gender
Date of birth Term
Executive Director
March 1963
Male
Bai Tao
Chairman of the Board
ten thousands
(before tax)
in RMB
ten thousands
Salary/
the Company
the Company
from connected
Period in RMB
fund paid by
the Reporting
during
enterprise
annuity
paid in RMB
ten thousands
parties of
received from
Male
Whether
45.23
October 1965
Female
27 December 2019
Employee Representative
Supervisor
Wang Xiaoqing
Resigned due to the
October 2022-August 2023
President
adjustment of work
Yes
-4 August 2023
April 1972
Male
Executive Director
Zhao Peng
Resigned due to the
16.25
28 October 2022
61.48
adjustment of work
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.
arrangements
arrangements
adjustment of work
No
63.56
15.02
664
48.54
13 July 2022-29 June 2023
July 1971
Female
Employee Representative
Supervisor
Hu Zhijun
Resigned due to the
arrangements
-21 June 2023
No
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.
ten thousands
in RMB
Whether
emoluments
Total
Other benefits,
social insurance,
Resigned and Retired Directors, Supervisors and Senior Management
60 Annual Report 2023 | Corporate Governance
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.
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.
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.
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 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, Mr. Zhao Guodong and
Mr. Bai Kai served as Vice Presidents of the Company from 4 August 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.
provident
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 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 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.
Name
(before tax)
Previous position
Date of birth
parties of the
Company
ten thousands
by the Company
Period in RMB
thousands
annuity fund paid
from connected
the Reporting
Reason for changes
emolument
Company during
and enterprise
received
received from the
housing
provident fund
Salary/
Remuneration
paid in RMB ten
Term
Gender
Zhan Zhong
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.
7.
Chief Investment Officer since
Chief Investment Officer
No
68.00
15.79
52.21
July 2023,
Female February 1970
December 2023
Liu Hui
Appointed as a Vice President since
No
62.18
15.67
46.51
Since 21 June 2023
October 1974
Female
Vice President
Appointed as a Vice President since
Vice President
Chief Risk Officer
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
July 1966
Male
Chief Risk Officer since December
April 2018,
Ruan Qi
Employee Representative
Supervisor
8.
Ye Yinglan
136.54
September 1965 Since 4 November 2022
Male
Chairman of the Board of
Supervisors
Cao Weiqing
No
42.00
Since March 2024
Total
No
1,000.04
272.55
1,272.59
Notes:
1.
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.
3.
4.
5.
6.
126.79
No
37.71
No
Non-employee
Niu Kailong
Male
September 1974 Since 14 October 2021
Yes
Representative Supervisor
34.35
102.19
Since 14 October 2021
164.50
May 1964
Lai Jun
Employee Representative
Supervisor
Male
2
Non-executive Director
2
2
Independent Director
2
2
Non-executive Director
Risk Management
and
2
Shareholders' general meetings convened during the Reporting Period are as follows:
74 Annual Report 2023 | Corporate Governance
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.
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 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 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 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 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 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.
73
Annual Report 2023 | Corporate Governance
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.
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.
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.
(Corporate Governance Structure Chart)
Department
Board Secretary
Company Secretary
Board of Directors' Office/
Investor Relations
Connected
Transactions
Control
Committee
Strategy and
Assets and
Liabilities
Management
Committee
Board of
Supervisors
Consumer Rights
Protection
Committee
2
Board of
Directors
General Meeting
Shareholders'
Nomination
and
Remuneration
Committee
Session of the meeting
1
Date of the meeting
28 June 2023
Executive Director
1
2
Executive Director
the year
person
required to
attend for
attended in
meetings
Name of Director Type of Director
general
Number of
Number of
shareholders'
meetings
Attendance records of the current Directors at the
shareholders' general meetings convened during the
Reporting Period are as follows:
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.
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.
15 December 2023
28 June 2023
Date of publication of
resolutions
www.hkexnews.hk
www.e-chinalife.com
www.sse.com.cn
www.e-chinalife.com
www.sse.com.cn
www.hkexnews.hk
Index for websites on which
resolutions were published
15 December 2023
First Extraordinary General
Meeting 2023
2022 Annual General Meeting
Independent Director
Name of Director Type of Director
2
the seventh session of the Board
25 May 2023
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
the seventh session of the Board
18 January 2023
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.
Twenty-fifth meeting of
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.
28 June 2023
Twenty-sixth meeting of
Audit
Committee
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.
One proposal, namely the "Proposal in relation to the
'Product Tracing Report of the Company for 2022"'", was
considered and approved.
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.
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
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
4 persons
attend for
person
required to
attended in
meetings
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
2
2
Independent Director
Chen Jie
2
2
Independent Director
Huang Yiping
the year
Zhao Peng
Executive Director
1
6 persons
Male
Directors by gender
Number of Directors
5 persons
Number of Directors
Mainland China
Directors by location
2 persons
2 persons
Number of Directors
2
Executive
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:
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
Non-executive Independent
Director
Director
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.
Class of education level
REPORT OF CORPORATE GOVERNANCE
Total
Others
Other expertise and technicians
and customer services
19,341
44,187
4,545
22,559
Insurance verification, claim processing
Finance and auditing
Sales and sales management
Management and administration
Number of
employees
Class of professional composition
As at the end of the Reporting Period, the composition of
the employees of the Company and its major subsidiaries
is as follows:
60
100,000
98,065
1,935
Retired employees of the Company and
its major subsidiaries for which extra
Icosts have to be incurred
Employees in total
Master and above
major subsidiaries
Bachelor
Secondary school
OVERVIEW OF CORPORATE GOVERNANCE
72
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
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.
Training Plans
The Company has established a remuneration and incentive
system with reference to employee's positions, the
Company's performance and market conditions.
Remuneration Policy for Employees
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%.
Employee Diversity
100,000
20,582
6,758
69,799
Number of
employees
5,783
3,585
100,000
Total
Others
College diploma
Number of employees of the Company's
953
1,908
EMPLOYEES AND BRANCHES
Employees
China Life Insurance (Group) Company
China Life Insurance (Group) Company
China Life Insurance (Group) Company
Li Mingguang
Wang Junhui
Bai Tao
Name of shareholders
Name
Positions Held by Current Directors, Supervisors and Senior Management in Shareholders of the
Company
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.
Mr. Heng Victor Ja Wei, born in 1977, British
COMPANY SECRETARY
Annual Report 2023 | Corporate Governance 69
Ms. Yuan Ying, born in 1978, 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. Hou Jin, born in 1980, 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. Hu Zhijun, born in 1971, Chinese
Number of employees of the Company
Annual Report 2023 | Corporate Governance
Zhuo Meijuan
China Life Insurance (Group) Company
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.
China Life Insurance (Group) Company
Annual Report 2023 | Corporate Governance
Niu Kailong
71
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.
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.
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.
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.
Remuneration of Directors, Supervisors and Senior
Management
Since December 2022
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.
Since November 2023
Since August 2016
70 Annual Report 2023 | Corporate Governance
Since March 2022
Term
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
Since September 2023
Position
Chairman
Vice President
5/5
Independent Director, member of the Audit
Committee of the seventh session of the Board
0/5
5/5
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
0/5
Lam Chi Kuen
Zhai Haitao
Number of
meetings
attended by
proxies/Number
of meetings
required to
attend
Independent Director, member of the Audit
Committee of the seventh session of the Board
Meetings convened
0/5
96
Note: The number of meetings attended in person includes meetings attended on-site and by way of telephone or video conference.
Annual Report 2023 | Corporate Governance
83
The meetings convened are as follows:
28 March 2023
Eighth meeting of the Audit Committee
of the seventh session of the Board
26 April 2023
Ninth meeting of the Audit Committee
of the seventh session of the Board
22 August 2023
Position
Tenth meeting of the Audit Committee
of the seventh session of the Board
5/5
Name of member
Communications between Independent Directors and All
Parties of the Company
Meetings and Attendance
25 October 2023
7
3
3
1
0
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.
80 Annual Report 2023 | Corporate Governance
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.
Attendance of Meetings by Independent Directors
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.
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.
Investigation and Research by Independent Directors and
the Trainings for Them
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:
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.
Annual Report 2023 | Corporate Governance 81
Performance of Other Duties
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.
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.
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.
CHAIRMAN AND PRESIDENT
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.
BOARD OF SUPERVISORS
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".
82 Annual Report 2023 | Corporate Governance
AUDIT COMMITTEE
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.
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.
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.
Eleventh meeting of the Audit Committee
of the seventh session of the Board
Independent Director, member of the Nomination
and Remuneration Committee of the seventh
session of the Board
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
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
Executive Director
6/6
90
0/6
Notes:
14 December 2023
Twelfth meeting of the Nomination and
Remuneration Committee of the seventh
session of the Board
6/6
25 October 2023
4 August 2023
Tenth meeting of the Nomination and
Remuneration Committee of the seventh
session of the Board
26 April 2023
Ninth meeting of the Nomination and
Remuneration Committee of the seventh
session of the Board
28 March 2023
Eighth meeting of the Nomination and
Remuneration Committee of the seventh
session of the Board
18 January 2023
Meetings convened
The meetings convened are as follows:
Annual Report 2023 | Corporate Governance
86
2.
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.
Eleventh meeting of the Nomination and
Remuneration Committee of the seventh
session of the Board
Description
Nomination and Remuneration Committee of the
seventh session of the Board
Independent Director, Chairperson of the
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
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.
Chen Jie
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.
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
required to
attend
NOMINATION AND REMUNERATION COMMITTEE
Zhao Peng
Zhai Haitao
proxies
the seventh session of the Board
Thirty-third meeting of
the seventh session of the Board
15 December 2023
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 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
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.
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.
Two proposals, including the "Proposal in relation to Project
Huizhi", were considered and approved.
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.
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.
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.
Annual Report 2023 | Corporate Governance 79
Meetings and Attendance
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:
Number of
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
22 November 2023
Thirty-second meeting of
26 October 2023
the seventh session of the Board
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.
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.
RISK MANAGEMENT AND CONSUMER RIGHTS
PROTECTION COMMITTEE
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.
and seriously appraised the performance of Directors in the
discharge of their duties.
88 Annual Report 2023 | Corporate Governance
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,
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.
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.
Performance of Duties by the Nomination and
Remuneration Committee
87
Annual Report 2023 | Corporate Governance
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.
tools
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.
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.
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 Nomination of
Ms. Liu Hui as a Vice President of the Company", was considered
and approved.
Description
Session of the meeting
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
Eight proposals, including the "Proposal in relation to the Nomination of
Mr. Li Mingguang as the President of the Company", were considered
and approved.
tools
Bai Tao
Zhuo Meijuan
Lam Chi Kuen
1
Chen Jie
Independent Director
14
10
4
0
Number of
meetings
absent
0
0
0
0
oooo O o O 0
0
0
0
313 o o o
Attendance record of the resigned Director of the Company at the Board meetings convened during the Reporting Period
is as follows:
Number of
Thirteenth meeting of the Nomination and
Remuneration Committee of the seventh
session of the Board
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
4
9
14
Independent Director
Executive Director
14
7
4
Executive Director
14
Non-executive Director
14
16
9
4
7
4
Li Mingguang
Wang Junhui
Non-executive Director
7
2
Independent Director
14
10
4
Independent Director
14
10
4
0
0
Huang Yiping
9
Name of Director