Gross investment yield' (%)
362,301
426,230
Net premiums earned
507,449
540,781
Total revenues
17.6%
For the year ended
2013
2014
Change
2015
2016
Major Financial Data'
2012
Reporting Standards (IFRS)
6.6% 440,766 417,883
330,105 324,813
522,794
-48.1%
45,931
23,842
Profit before income tax
312,288 300,562
315,294
Benefits, claims and expenses
15.6%
407,045
Insurance benefits and claims expenses
371,485
322,126
391,557 363,554
404,275
12.8%
463,492
352,219
Under International Financial
RMB million
Financial Summary
H Share Registrar and Transfer Office:
LFC
2628
Exchange
New York Stock
The Stock Exchange of
Hong Kong Limited
China Life
Computershare Hong Kong Investor Services Limited
China Life
601628
ADR
H Share
A Share
Stock Code
Stock Short Name
Stocks are Listed
Shanghai Stock Exchange
Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong
Depositary of ADR:
Deutsche Bank
Annual Report 2016
China Life Insurance Company Limited
Address: 22/F, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong
International Auditor: Ernst & Young
Name of the Signing Auditors: Zhang Xiaodong, Wu Jun
Dongcheng District, Beijing, P.R. China
Address: Level 16, Ernst & Young Tower, Oriental Plaza, No.1 East Changan Avenue,
Domestic Auditor: Ernst & Young Hua Ming LLP
Auditors of the Company:
Debevoise & Plimpton LLP
Latham & Watkins
International Legal Advisers:
King & Wood Mallesons
Domestic Legal Adviser:
60 Wall Street, New York, NY 10005
40,402
29,451
10,968
Net profit attributable to equity holders
-5.9%
11.41
10.74
share
Equity holders' equity pers
0.39
10.05
0.88
-45.7%
1.22
0.66
Earnings per share (basic and diluted)³
Per share (RMB)
2,246,567 1,972,941 1,898,916
1.14
7.80
7.82
Net cash inflow/(outflow) from operating
percentage points
5.38
11.22
12.83
decrease of 5.40
11.56
6.16
Weighted average ROE (%)
Major financial ratio
4.68
2.42
2.77
N/A
(0.67)
3.15
10.2%
7.2% 2,100,870 1,848,681 1,790,838
12.6% 1,959,236 1,750,356 1,675,815
-5.9% 284,121 220,331 221,085
Exchanges on which the
322,492
2,122,101
24,765
32,211
-45.7%
34,514
18,741
of the Company
11,061
Net profit attributable to ordinary share holders
24,765
32,211
-44.9%
34,699
19,127
of the Company
11,061
Net cash inflow/(outflow) from operating activities
89,098
(18,811)
2,389,303
2,287,639
2,453,283
2,448,315
2,696,951
Total equity holders' equity
Total liabilities
Investment assets
2
Total assets
As at 31 December
132,182
68,292
78,247
N/A
303,621
Ratio of assets and liabilities* (%)
Stock Type
12/F, China Life Plaza, 16 Financial Street, Xicheng District, Beijing, P.R. China
115
113
107
106
102
60
117
80
61
48
45
35
10
9
65
5
118
227
CLP&C
CLWM
AMP
Pension Company
AMC
CLIC
120
The Company'
In this annual
Definitions and Material Risk Alert
China Life Insurance Company Limited Annual Report 2016
25252
1
52525
report, unless the context otherwise requires, the following expressions have the following meanings:
3
2
Contents
Financial Summary
Company Profile
Definitions and Material Risk Alert
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 2016, the Company had approximately
246 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 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.
Chairman's Statement
成人达己
點諧中國
Annual Report 2016
Stock Code: 2628
China Life Insurance Company Limited
中国人寿保险股份有限公司
C
成己为人
Management Discussion and Analysis
Report of the Board of Directors
Report of the Supervisory Committee
Annual Report 2016
China Life Insurance Company Limited
Embedded Value
Notes to the Consolidated Financial Statements
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Independent Auditor's Report
Honors and Awards
Internal Control and Risk Management
Corporate Governance
Directors, Supervisors, Senior Management and Employees
Changes in Ordinary Shares and Shareholders Information
Significant Events
CLI
CIRC
CSRC
HKSE
Website: www.e-chinalife.com
Fax: 86-10-66575722
16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Telephone: 86-10-63633333
Current Office Address:
16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Registered Office Address:
Email: ir@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
Fax: 86-10-66575112
Telephone: 86-10-63631191
Office Address: 16 Financial Street, Xicheng District, Beijing, P.R. China
Securities Representative: Li Yinghui
Email: ir@e-chinalife.com
Fax: 86-10-66575112
Email: liyh@e-chinalife.com
3
52525
25252
The Company's Annual Reports may be obtained at:
The Company's H Share Disclosure Websites:
HKExnews website at www.hkexnews.hk
The Company's website at www.e-chinalife.com
www.sse.com.cn
CSRC's Designated Website for the Company's Annual Report Disclosure:
Securities Times
Shanghai Securities News
China Securities Journal
Media for the Company's A Share Disclosure:
Fax: 852-29192638
Telephone: 852-29192628
18 Hung Luen Road, Hung Hom, Kowloon, Hong Kong
Office Address: 16/F, Tower A, China Life Centre, One Harbour Gate,
Hong Kong Office:
Company Profile
China Life Insurance Company Limited Annual Report 2016
Office Address: 16 Financial Street, Xicheng District, Beijing, P.R. China
Telephone: 86-10-63631241
Stock Information:
Board Secretary: Zheng Yong
China Life Insurance Company Limited (“China Life")
China Life Property and Casualty Insurance Company Limited, a non-
wholly owned subsidiary of CLIC
China Life Wealth Management Company Limited, an indirect non-
wholly owned subsidiary of the Company
China Life AMP Asset Management Company Limited, an indirect non-
wholly owned subsidiary of the Company
China Life Pension Company Limited, a non-wholly owned subsidiary of
the Company
China Life Asset Management Company Limited, a non-wholly owned
subsidiary of the Company
China Life Insurance (Group) Company, the controlling shareholder of
the Company
China Life Investment Holding Company Limited, a wholly-owned
subsidiary of CLIC
China Life Insurance Company Limited and its subsidiaries
China or PRC
Articles of Association
Securities Law
Insurance Law
Company Law
SSE
RMB
China Insurance Regulatory Commission
China Securities Regulatory Commission
The Stock Exchange of Hong Kong Limited
Shanghai Stock Exchange
Registered Name in English:
中國人壽保險股份有限公司(簡稱「中國人壽」)
Registered Name in Chinese:
Company Profile
China Life Insurance Company Limited Annual Report 2016
Except for "the Company" referred to in the Consolidated Financial Statements.
1
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”.
Material Risk Alert:
2
Renminbi Yuan
For the purpose of this report, “China” or “PRC” refers to the People's
Republic of China, excluding the Hong Kong Special Administrative
Region, Macau Special Administrative Region and Taiwan region
Articles of Association of China Life Insurance Company Limited
Securities Law of the People's Republic of China
Company Law of the People's Republic of China
Insurance Law of the People's Republic of China
Legal Representative: Yang Mingsheng
88.59
activities per share
Notes:
52525
5
Gross investment yield = (Net investment income + Net realised gains/(losses) on financial assets + Net fair value gains/(losses)
through profit or loss)/((Investment assets at the beginning of the period + Investment assets at the end of the period)/2). The
figures as at the end of the past years were adjusted on the same basis.
5.
4.
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
restricted + Investment properties
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.
1.
2.80
4.88
5.39
percentage points
decrease of 1.83
percentage points
6.39
4.56
88.25
88.72
87.21
increase of 1.91
86.68
25252
China Life Insurance Company Limited Annual Report 2016
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
Yang Mingsheng, Chairman
Harmonizing with the stakeholders. “Victory is ensured when people pool their strength; success is secured when people
pour their talents together." We valued customer interests, offered solutions based on customer needs, and cultivated
new customers while maintaining existing customers so that customer resources became the value engine for corporate
development. We listened to the opinions of investors, and communicated with investors in all respects, and in addition
to ensuring that shareholders shared in the growth of the Company, we also actively included opinions of investors into
the Board's decision making process. Knowing the truth that “prosperity of a business is driven by people", we listened
to employees and agents, improved the talent development system, advanced the China Life “entrepreneur” project,
and built platforms for employees' and agents' career development, thus steadily increasing the income of the sales force
and enhancing the organic driving force. Consciously contributing to the economy and society and actively engaging in
public welfare undertakings, we are an excellent corporate citizen. With the expectations of the Company's stakeholders
being generally satisfied and stronger senses of achievement being fulfilled by employees and agents, the corporate
culture of "s success for
you, success by you" could be further promoted.
Sticking to the inherent rules. “For anything to succeed, it requires thorough consideration and then forceful
execution." As a leader in the industry, the Company's development echoed the path of life insurance industry in China
towards "an insurance superpower” in the world. Just as the leap-frog development of the Chinese insurance industry
has not always been smooth, China Life's development is full of obstacles. In many years of our professional operation,
we learned by doing and did by learning, increasingly realizing the significance of “knowing the rules, following the
rules and practicing the rules", which is the greatest advantage of an insurance operation. Adhering to the philosophy
of "prudent operation and credible service", we controlled the cost of liabilities to a reasonable level and realized
an interactive linkage between assets and liabilities; sticking to the development plan of focusing on value, regular
premiums, individual insurance, sales force and urban areas and taking value as the guide, we coordinated the relations
among shareholders, employees, sales force and customers; we put great efforts into developing long- and medium-term
regular businesses and protection type products, optimizing business structure and reinforcing sustainable development;
we followed a route of business growth driven by development of sales force, including both its size expansion and
quality improvement, and continually expanded our business coverage and the rate of market penetration. While
persisting in our constant recurring rules, we realized “change is the only constant", such that we took “innovation
driven" as the general strategy and have been actively building the Company to be an innovative enterprise. We need
to achieve accelerated growth while building a firm foundation, and look for opportunities and momentum while
embracing the changes.
Seizing opportunities. “A flexible person with good knowledge can win, and a creative person with integrity can make
progress.” Reform and opening-up over three decades has brought profound changes to China's economy and society,
and the consistent improvement of the market economy has laid an institutional foundation for the insurance industry.
In particular, since the issuance of the “Several Opinions of the State Council on Accelerating the Development of the
Modern Insurance Service" in 2014, developing the commercial insurance industry has become a national commitment.
Seizing the opportunities and adhering to the guideline of “development as the first priority", the Company was
committed to continuous growth of the value of our business and the upgrade of insurance supply so as to meet the
increasing insurance demands of customers. Adapting to changes in the demographic structure, changes in the ways of
care for senior citizens, new requirements for social security, and healthcare system reforms, the Company implemented
strategy of "Integrated Pension and Inclusive Healthcare Service". Specifically, the Company undertook more than
250 supplementary major medical insurance projects, providing services for 420 million people; carried out innovative
smart pension services by establishing senior living communities in places such as Beijing, Suzhou, Tianjin, and Sanya;
and creating a healthcare and pension service sub-brand called “China Life Senior Living Homes”, forming a strategic
layout of the senior living communities featuring “Three Points in a Line and Evergreen in Four Seasons"; and the
Company sped up its presence in the healthcare and medicare industry and extended the healthcare industry chain.
Firmly following the anti-poverty strategy of the state, the Company advanced the mode of poverty alleviation by means
of insurance in Ningxia, Gansu and Chongqing and developed inclusive businesses such as micro-insurance to achieve
a unification between economic and social benefits. With the help of the national “Internet+” initiative, the Company
deeply integrated IT innovation results and life insurance business, advancing the construction of “High-tech China
Life” and firmly facilitating reform and innovation throughout the Company.
the
Chairman's Statement
China Life Insurance Company Limited Annual Report 2016
Chairman's Statement
25252
52525
7
In 2016, at the 20th anniversary of the separated operation of life insurance business and the overall adoption of the
individual agent system, the Company has achieved outstanding results in leap-frog development of its business and a
historic breakthrough in business restructuring. What the Company has achieved in 2016 is the result of advancement
with great endeavor and accumulated hard work for many years. Extensive experience in Chinese insurance market tells
us that fulfilling the essence of the insurance industry requires persistence, and the new era of reform needs enthusiasm
and innovation.
8
6
New stride in comprehensive strength. As at the end of the Reporting Period, total assets of the Company amounted to
RMB2.70 trillion, an increase of 10.2% year-on-year, remaining at the first place in the industry, and investment assets
amounted to RMB2.45 trillion, an increase of 7.2% year-on-year. Core solvency ratio and comprehensive solvency ratio
of the Company reached 280.34% and 297.16%, respectively. The Company achieved an industry-leading score in the
"Solvency Aligned Risk Management Requirements and Assessment” (“SARMRA") conducted by the CIRC. In order
to accommodate new situations of economic and financial development and meet comprehensive needs of customers,
the Company successfully increased its stakes in China Guangfa Bank Co., Ltd. (“CGB”), and a concerted action plan
between CGB and the Company was initiated, under which insurance products sold by CGB business outlets grew
rapidly and preliminary synergy effects from insurance-banking collaboration have been emerging.
New progress in reform and innovation. Being customer-oriented and accelerating the construction of a “New
Generation of Integrated Business Processing System”, the Company started its business process reengineering,
constructed a new business mode and technological infrastructure, and launched two platforms of “China Life E-Store"
and “China Life E-Bao Mobile Customer Services System", as well as more than twenty new applications, through which
customer experience and operational efficiency have been significantly improved, and as a result, the Company has taken
a solid step in the transformation to an Internet-based operation and management mode. In addition, the Company built
a motivating platform for innovation, and established four operation and management innovation pilot zones where
the atmosphere of reform and innovation was strong and the fruitful results generated by innovation were gradually
emerging.
New enhancement in competitiveness. “No matter how long and difficult the road is, one can reach the destination
with steady walks.” Being market-oriented, centering around the development of individual insurance as the guideline
and pushing forward the three core strategies of developing individual business, focusing on large-and medium-sized
cities and reinforcing rural business development with concerted efforts, the Company was committed to improving
sustainable development capability and the competitiveness in key markets. With a leading market share in terms of
gross written premiums, the Company also took the lead in terms of first-year regular premiums and sales force in the
exclusive agent
channel whose core role has been brought into full play. Competitive landscape in large- and medium-
sized cities has continued to improve and first-mover advantage in rural market has been further reinforced. As at the
end of the Reporting Period, the total number of sales force across all channels was 1.814 million, an increase of 57.1%
year-on-year. The number of productive agents grew significantly, and remarkable achievements have been made in the
size expansion and quality improvement of the sales force.
The percentage of first-year regular premiums in long-term new policy premiums was 56.28%, an increase of 12.06
percentage points year-on-year. The first-year regular premiums surpassed single premiums for the first time since
the listing of the Company. Of these, the percentage of first-year regular premiums with ten years or longer payment
duration in first-year regular premiums was 54.69%, an increase of 2.49 percentage points year-on-year. Along with the
high growth of the businesses, the premium payment duration was also lengthened, resulting in the initial establishment
of a sustainable development model with first-year premiums driven by first-year regular premiums and gross written
premiums driven by renewal businesses. Meanwhile, the Company pushed forward the product diversification strategy,
promoted product innovation, put more efforts into developing protection type businesses, and continually optimized
the business structure. The value of one year's sales was RMB49,311 million, an increase of 56.4% year-on-year, with
the value doubled over the past two years.
China Life Insurance Company Limited Annual Report 2016
Chairman's Statement
Great breakthrough in business restructuring. The Company continued reducing its single premium business in the
bancassurance channel and focused on accelerating the growth of first-year regular premium business. First-year regular
premiums and first-year regular premiums with ten years or longer payment duration doubled over the past two years.
New records for business development. During the Reporting Period, the Company's gross written premiums were
RMB430,498 million, an increase of 18.3% year-on-year, the highest growth since 2009, making the Company the first
and the sole insurance company with premiums exceeding RMB400,000 million in China. First-year regular premiums
were RMB93,945 million, an increase of 51.8% year-on-year, and first-year regular premiums with ten years or longer
payment duration were RMB51,378 million, an increase of 59.0% year-on-year, both indicators setting record highs.
Premiums from short-term insurance were RMB40,060 million, an increase of 23.7% year-on-year. Renewal premiums
were RMB223,502 million, exceeding RMB200,000 million for the first time, realizing an increase of 16.6% year-on-
year, and setting a record high since 2012.
The year 2016 marked the beginning of the “13th Five-Year Plan” and was also a year in which the Company achieved
fruitful results with pioneering spirit. Specifically, we achieved good results, emphasizing on the protection function
of insurance, adhering to the operating guideline of “prioritizing value, strengthening sales force, optimizing business
structure, achieving stable growth and safeguarding against risks”, and actively promoted supply-side reform. We
achieved an incredible result not only in the history of the Company but also in the history of the industry.
2016 OVERVIEW: GROWTH, DEVELOPMENT AND BREAKTHROUGH
RETROSPECTIVE REVIEW: SEIZING OPPORTUNITIES, STICKING TO THE INHERENT
RULES, AND HARMONIZING WITH THE STAKEHOLDERS
Note
0/1
Committee of the fifth session of the Board
Attendance rate
0
Performance of duties by the Audit Committee
China Life Insurance Company Limited
99
Corporate Governance
2.
Independent Director, member of the Audit
Note: At the fourth meeting of the Audit Committee of the fifth session of the Board held on 29 February 2016, Mr. Huang
Yiping gave written authorization for Mr. Chang Tso Tung Stephen to act as his proxy to attend and vote at the meeting.
Number of meetings attended
6/6
Huang Yiping
Name of member
In 2016, attendance records of the resigned Director at the Audit Committee meetings are as follows:
Note: At the eighth meeting of the Audit Committee of the fifth session of the Board held on 27 October 2016, Mr. Robinson
Drake Pike gave written authorization for Mr. Chang Tso Tung Stephen to act as his proxy to attend, vote and chair the
meeting.
Committee of the fifth session of the Board
100%
5/5
Independent Director, member of the Audit
Tang Xin
Committee of the fifth session of the Board
100%
In 2016, 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.
Position
(1)
Corporate Governance
(3)
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.
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. 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.
5/5
Annual Report 2016
China Life Insurance Company Limited
2.
92
The Company established the Management Training and Remuneration Committee on 30 June 2003. On 16
March 2006, the Board resolved to change the name of the Management Training and Remuneration Committee to
the Nomination and Remuneration Committee, with a majority of Independent Directors on the committee. The
Nomination and Remuneration Committee is mainly responsible for reviewing the structure of the Board, its number of
members and composition and drawing up plans for the appointment, succession and appraisal criteria of Directors and
senior management. The committee is also responsible for formulating training and remuneration policies for the senior
management of the Company.
NOMINATION AND REMUNERATION COMMITTEE
Conducting investigation and research of local branches. From 18 to 23 August 2016, 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 local branches of the Company in Gansu Province, Wuwei City, Zhangye
City and Lanzhou City, and examined the implementation of internal audit of Gansu local branch.
Examining the internal audit functions of the Company. The Audit Committee reviewed proposals
including the "Proposal on the 2015 Internal Audit Summary and the 2016 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 2016 and the Internal Audit Work Plan for the Second Half of 2016", 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.
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.
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.
(7)
(6)
(5)
(4)
Corporate Governance
China Life Insurance Company Limited Annual Report 2016
25252
52525
91
Reviewing the change of the auditor for US Form 20-F of the Company for the year 2016. In 2016, the
"Proposal in relation to the Change of the Auditor for US Form 20-F of the Company for the Year 2016"
was considered and approved at the eighth meeting of the Audit Committee of the fifth session of the Board
of Directors and then submitted to the Board and shareholders' general meeting for approval.
Reviewing connected transactions. In 2016, the Audit Committee reviewed the “Proposal in relation to
the Renewal of the ‘Framework Agreement for Daily Connected Transactions' by each of the Company
and Pension Company with AMP", the "Proposal in relation to the Renewal of the 'Framework Agreement
for Daily Connected Transactions' by each of China Life Insurance (Group) Company and CLP&C with
AMP" and the "Proposal in relation to the Renewal of the 'Framework Agreement for Daily Connected
Transactions' between the Company and China Guangfa Bank Co., Ltd.”, and submitted them to the Board
and shareholders' general meeting for approval; and listened to the report on the list of connected persons of
the Company on a regular basis. The Audit Committee reviewed the audit report on connected transactions
for conscientiously implementation of laws and regulations with respect to connected transactions. The
Company entered into written agreements in respect of all new connected transactions, the formalities
of which were fully completed. The contents of the agreements were in compliance with law, and their
approval and disclosure procedures were in compliance with the regulatory requirements. Hence, the
Company better performed its obligations as a listed company pursuant to the regulatory requirements of its
listed jurisdictions.
Reviewing and approving financial reports. The Audit Committee, according to its duties, reviewed and
approved annual, interim and quarterly financial reports 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 report 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.
(2)
Chang Tso Tung Stephen Independent Director, member of the Audit
3.
4/5 Note
5/5
100%
5/5
100%
515
80%
Note
4/5
Number of meetings attended
Attendance rate
Wang Cuifei
Xiong Junhong
Zhan Zhong
Shi Xiangming
Miao Ping
Name of Supervisor
In 2016, five meetings were held by the fifth session of the Supervisory Committee. Attendance records of
individual Supervisors are as follows:
Meetings and attendance
1.
The fifth session of the Supervisory Committee of the Company comprises Mr. Miao Ping, Mr. Shi Xiangming and 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.
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.
The Supervisory Committee is accountable to the shareholders and reports its work to the shareholders' general meeting
according to relevant laws. It is also responsible for appraising the Company's operations, financial reports, connected
transactions and internal control, etc. during the Reporting Period.
The Supervisory Committee consists of Non Employee Representative Supervisors, such as shareholder representatives,
and Employee Representative Supervisors, of which the Employee Representative Supervisors shall not be less than one-
third of the Supervisory Committee. Non Employee Representative Supervisors, such as shareholder representatives, shall
be elected and removed by a shareholders' general meeting while Employee Representative Supervisors shall be elected
and removed by employees of the Company in a democratic manner.
Corporate Governance
Annual Report 2016
China Life Insurance Company Limited
100%
80%
5/5
Note: At the sixth meeting of the fifth session of the Supervisory Committee held on 28 April 2016, Mr. Miao Ping gave written
authorization for Mr. Shi Xiangming to act as his proxy to attend, vote and chair the meeting.
Independent Director, Chairman of the Audit
Committee of the fifth session of the Board
Robinson Drake Pike
Attendance rate
Number of meetings attended
Position
Name of member
In 2016, five regular meetings were held by the Audit Committee of the fifth session of the Board. Attendance
records of individual members are as follows:
Meetings and attendance
1.
All members of the Audit Committee have extensive experience in financial matters. The principal duties of the Audit
Committee are to review and supervise the preparation of the Company's financial reports, assess the effectiveness
of the Company's internal control system, supervise the Company's internal audit system and its implementation,
and recommend the engagement or replacement of external auditors. The Audit Committee is also responsible for
communications between the internal and external auditors and the establishment of the internal reporting mechanism
of the Company.
The Company established its Audit Committee on 30 June 2003. In 2016, the Audit Committee comprised only
Independent Directors of the Company. At present, the Audit Committee of the fifth 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. Mr. Huang Yiping resigned from his position as a member of the Audit
Committee of the fifth session of the Board of the Company pursuant to the relevant policies.
AUDIT COMMITTEE
Corporate Governance
China Life Insurance Company Limited Annual Report 2016
90
06
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69
89
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.
Activities of the Supervisory Committee during the Reporting Period
1.
The Supervisory Committee had no objection in respect of any matters under its supervision
during the Reporting Period.
2.
100%
Meetings and attendance
Annual Report 2016
Name of member
In 2016, six regular meetings were held by the Strategy and Investment Decision Committee of the fifth session of
the Board. Attendance records of individual members are as follows:
Name of member
Position
Tang Xin
Lin Dairen
Wang Sidong
Xu Haifeng
Meetings and attendance
Leung Oi-Sie Elsie
Strategy and Investment Decision Committee
of the fifth session of the Board
Executive Director, member of the Strategy
In 2016, five 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:
Independent Director, member of the Strategy
and Investment Decision Committee of the
fifth session of the Board
Number of meetings attended
Attendance rate
515
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
Non-executive Director, member of the
1.
At present, 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. 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. 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 the relevant policies, and Mr. Anthony Francis Neoh retired from his position as a member
of the Strategy and Investment Decision Committee of the fifth session of the Board due to the expiry of his term of
office.
Corporate Governance
China Life Insurance Company Limited Annual Report 2016
Corporate Governance
2.
Performance of duties by the Risk Management Committee
In 2016, 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 law.
(1) Reviewing the risks on major matters concerning the business operation and management of the Company.
In 2016, the Risk Management Committee reviewed the risk analysis on major matters concerning the
business operation and management of the Company, and reviewed and approved the “Proposal in relation
to the Financial Budget of the Company for the Year 2017" and the "Proposal in relation to the Risk
Analysis on the Investment Plan of the Company for the Year 2017” in accordance with the regulatory
requirements of the CIRC on C-ROSS.
(2)
(3)
Attending meetings of the Risk Management Committee of the Board and providing guidance on the
risk management of the Company. In 2016, 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.
Providing its opinions for the review of the proposals on risk management to the Board. In 2016, 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 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 2015 and the work
plan for the year 2016, the risk appetite statement of the Company for the year 2016, and the audit report
on the solvency risk management system of the Company for the year 2016, which offered professional
support to the Board's decision-making in a scientific manner.
(4) Convening special meetings by the Chairman of the Risk Management Committee. On 26 October 2016,
Ms. Leung Oi-Sie Elsie, the Chairperson of the Risk Management Committee, convened special meetings
with the person-in-charge of each of the Legal and Compliance Department and the Risk Management
Department, discussing matters on legal compliance and risk management 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.
96
96
China Life Insurance Company Limited
Annual Report 2016
100%
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99
100%
0/1
Note
Independent Director, member of the Strategy
and Investment Decision Committee of the
fifth session of the Board
Independent Director, Chairman of the Strategy
and Investment Decision Committee of the
fifth session of the Board
Anthony Francis Neoh
Huang Yiping
Attendance rate
2/2
Number of meetings attended
Name of member
In 2016, attendance records of the resigned Directors at the Strategy and Investment Decision Committee
meetings are as follows:
Note: At the ninth meeting of the Strategy and Investment Decision Committee of the fifth session of the Board held on 20
December 2016, Mr. Wang Sidong gave written authorization for Mr. Lin Dairen to act as his proxy to attend and vote at
the meeting.
100%
33
3/3
100%
Position
100%
Note: At the fourth meeting of the Strategy and Investment Decision Committee of the fifth session of the Board held on 29
February 2016, Mr. Huang Yiping gave written authorization for Mr. Anthony Francis Neoh to act as his proxy to attend,
vote and chair the meeting.
0
5/6
Note
83%
98
Finalizing the Company's development plans and reports. In 2016, the Strategy and Investment
Decision Committee discussed and reviewed the assessment report for the outline of the "12th Five-year"
development plan for the year 2015 and at the end of the planning period, and the outline of the “13th
Five-year" development plan of the Company, and submitted its opinions to the Board.
Reviewing annual investment plans and entrusted investments of the Company. In 2016, the Strategy and
Investment Decision Committee carefully reviewed the proposals on investment plans and authorization
of investments, fully reviewed the proposals such as the “Proposal in relation to the Investment Plan of
the Company for the Year 2017”, the “Proposal in relation to the Authorization of Investment in Non
Self-use Real Estate of the Company for the Year 2017”, the “Proposal in relation to the Investment Plan
and the Authorization of Investment in Self-use Real Estate of the Company for the Year 2017", and the
“Proposal in relation to the Authorization of Investment in the Equity Investment Fund of the Company
for the Year 2017”, and submitted its opinions to the Board in this regard. The Strategy and Investment
Decision Committee carefully reviewed the proposals of the Company such as the annual investment
management guidelines, reviewed and approved the “Proposal in relation to the 'Management Guidelines
on the Investment Made by China Life Asset Management Company Limited under the Entrustment of
the Company (2017)"", the "Proposal in relation to the 'Management Guidelines on the Investment Made
by China Life Franklin Asset Management Company Limited under the Entrustment of the Company
(2017) "" and the “Proposal in relation to the 'Management Guidelines on the Investment Made by China
Life Investment Holding Company Limited under the Entrustment of the Company (2017)"", and agreed to
submit the above proposals to the Board for review and approval.
(3)
(2)
(1) Discussing major strategic projects of the Company. In 2016, the Strategy and Investment Decision
Committee reviewed major strategic projects of the Company, such as the acquisition by the Company of
the shares of CGB from Citigroup and IBM Credit, the investment by the Company in China Life Chengda
(Shanghai) Healthcare Equity Investment Center and the investment by the Company in Chongqing Trust -
Collective Fund Trust Scheme for the PPP Project for Qingdao Metro Line 4, fully discussed the necessity,
feasibility and risks of the project proposals and made recommendations to the Board.
In 2016, 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 related annual 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
2.
Corporate Governance
China Life Insurance Company Limited Annual Report 2016
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6/6
52525
and Investment Decision Committee of the
fifth session of the Board
100%
In 2016, the Nomination and Remuneration Committee reviewed the proposal on the remuneration of Directors,
Supervisors and senior management, 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.
93
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China Life Insurance Company Limited Annual Report 2016
Corporate Governance
(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), fully reviewed the professional qualifications and
industrial background of Mr. Liu Huimin and Mr. Yin Zhaojun, both being the candidates for Directors,
and the independence of Ms. Leung Oi-Sie Elsie, a candidate for Independent Director, 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.
ล
(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 "Proposal on the Results of Performance Appraisal of Senior Management
Officers for 2015 and the Performance Target Contract for 2016", and the "Proposal on the Amendment
to the Performance Target Contract for 2016 of Certain Senior Management Officers", and made
recommendations to the Board in respect of matters such as the determination of performance target,
performance appraisal procedures and results.
(4) Revising the system on performance appraisal and remuneration management of Directors, Supervisors
and senior management officers. In 2016, the Nomination and Remuneration Committee reviewed
and approved the “Proposal in relation to the Amendment to the System on Performance Appraisal and
Remuneration Management of Directors, Supervisors and Senior Management Officers" for the purposes
of further standardizing the performance appraisal and remuneration management of Directors, Supervisors
and senior management officers, establishing a well-developed incentive and restraint mechanism and
facilitating the standardized operation and healthy development of the Company, and revised the
"Provisional Measures on the Performance Appraisal of Directors, Supervisors and Senior Management
Officers" and the “Provisional Measures on the Remuneration Management of Directors, Supervisors and
Senior Management Officers" in accordance with the relevant policies and requirements and based on the
actual situation of the Company.
94
4
China Life Insurance Company Limited
Annual Report 2016
Corporate Governance
Performance of duties by the Nomination and Remuneration Committee
RISK MANAGEMENT COMMITTEE
of the fifth session of the Board
100%
Position
Number of meetings attended
Attendance rate
Chang Tso Tung Stephen
95
5/5
100%
of the fifth session of the Board
Robinson Drake Pike
Independent Director, member of the
515
100%
Nomination and Remuneration Committee
of the fifth session of the Board
Miao Jianmin
Non-executive Director, member of the
5/5
Nomination and Remuneration 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, discussing with the management
and assisting them in establishing well-developed risk management and internal control system, 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.
Independent Director, Chairman of the
Nomination and Remuneration Committee
1.
100%
33
3/3
100%
In 2016, attendance records of the resigned Directors at the Risk Management Committee meetings are as follows:
Name of member
Position
Number of meetings attended
Attendance rate
Anthony Francis Neoh
Independent Director, Chairman of the
Risk Management Committee of the
2/2
100%
Zhang Xiangxian
Non-executive Director, member of the
Risk Management Committee of the
fifth session of the Board
2/2
At present, the Risk Management Committee of the fifth session of the Board comprises Ms. Leung Oi-Sie Elsie, an
Independent Director, Mr. Liu Jiade, a Non-executive Director, and Mr. Xu Hengping, an Executive Director, with
Ms. Leung Oi-Sie Elsie acting as the Chairperson. Mr. Anthony Francis Neoh retired from his position as the Chairman
of the Risk Management Committee of the fifth session of the Board due to the expiry of his term of office. Mr. Zhang
Xiangxian resigned from his position as a member of the Risk Management Committee of the fifth session of the Board
due to age reason.
33
3/3
fifth session of the Board
1/1
100%
In 2016, three regular meetings were held by the Risk Management Committee of the fifth session of the Board.
Attendance records of individual members are as follows:
Leung Oi-Sie Elsie
Liu Jiade
Position
Independent Director, Chairperson of the
Risk Management Committee of the
fifth session of the Board
Non-executive Director, member of the
Risk Management Committee of the
Name of member
fifth session of the Board
Attendance rate
Number of meetings attended
fifth session of the Board
Meetings and attendance
Executive Director, member of the
Xu Hengping
Risk Management Committee of the
Internal Control and Risk Management
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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, 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.
China Life Insurance Company Limited Annual Report 2016
Internal Control and Risk Management
102
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 Risk Management Department in its headquarters and branches. The Company
also conducts tests on the management level, assesses the effectiveness of the established and implemented internal
control systems in accordance with the regulatory requirements of the jurisdictions where the Company is listed,
and reports to the Board, the Audit Committee and the management.
China Life Insurance Company Limited Annual Report 2016
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 has also formulated and issued the “Internal Control Implementation Manual of China
Life Insurance Company Limited (2016 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
1.
China Life Insurance Company Limited Annual Report 2016
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.
Pursuant to the requirements of the "Notice on the Proper Preparation for Disclosure of 2016 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 2016 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 2016 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 2016 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 2016. 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 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.
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.
Honors and Awards
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105
It should be noted 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 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.
The Company conducts a self-assessment on solvency risk management capability every year pursuant to the
requirements of the CIRC on the C-ROSS 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. From October to November 2016, the CIRC
conducted an inspection on the solvency risk management of the Company. According to the feedback given by
the CIRC, the Company received a leading score among its peers in the life insurance industry in the "C-ROSS
Solvency Risk Management Assessment” (“SARMRA") of the CIRC in 2016. The Company conducts a risk
assessment 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 the senior management.
Based on the assessment, the overall risk of the Company is within a controllable range.
In 2016, the Company consistently reinforced the construction of its risk management system. Pursuant to the
requirements of the CIRC on the C-ROSS, the Company established a risk management system, with the “Rules
for the Management of Comprehensive Risks" as the general outline, the risk management systems on seven types
of risks (including insurance risk, market risk, etc.) as the focus, and the implementing rules for series of business
as the base, so as to form a fundamental system and standard on the risk control of the Company. The Company
actively pushed forward the adjustment to the organizational structure of risk management by appointing the
chief risk officer, regulating the establishment of risk management departments and creating additional divisions
and offices with relevant functions. The Company also consistently optimized its mechanism for the formation,
transmission and application of risk preference, and applied such risk preference to the work such as budget, assets
allocation and strategic planning.
II. RISK MANAGEMENT
China Life Insurance Company Limited Annual Report 2016
Internal Control and Risk Management
104
The Risk Management Department, Audit Department and Supervision Department of the Company are
responsible for overseeing the implementation of its internal control policies. 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. With the active implementation of the requirements
of regulatory departments and the management of the Company and the adherence to the risk-oriented principle,
the Audit Department has carried out routine audits and a variety of ad-hoc audits, covering the management of
orphan policies, key city projects, supplementary major medical insurance, information system security, solvency
risk management system, internal control of capital application, subsequent audit, connected transactions 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.
Under the management of a unified system, 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 and Risk Management
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China Life Insurance Company Limited Annual Report 2016
With the approval at the 2014 Annual General Meeting held on 28 May 2015, the Company included the “fund sales
business" into its business scope as stipulated in the Articles of Association and amended certain articles pursuant to the
regulatory requirements. For details of such amendment, please refer to the Supplemental Notice of Annual General
Meeting published by the Company on the HKExnews website of the Hong Kong Exchanges and Clearing Limited on 8
May 2015. The amendment was approved by the CIRC on 20 April 2016.
99
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 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, 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.
96
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.
management.
INDEPENDENCE OF THE COMPANY FROM ITS CONTROLLING SHAREHOLDER
Employees: The Company is independent in the aspects of employment, human resources and remuneration
Corporate Governance
Annual Report 2016
China Life Insurance Company Limited
"Forbes"
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 from
the shareholders of the Company and other related parties.
52525
25252
Corporate Governance
CHANGES OF THE ARTICLES OF ASSOCIATION
In the assessment and selection of the "Gold Bull Award for the PRC Listed Companies in 2015" held by China
Securities Journal in 2016, the Company was awarded the titles of the "Gold Bull Award for Top 100 Listed Companies
in 2015" and the "Gold Bull Award for the Most Profitable Companies in 2015”. In the assessment and selection of the
"Golden Governance-Outstanding Board Secretaries of Listed Companies in 2015” held by Shanghai Securities News
in 2016, Mr. Zheng Yong, the Board Secretary, was awarded the title of the “Golden Governance-Board Secretary for
Information Disclosure".
In 2016, 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, 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 the third quarter of 2016, the Company held a global conference call in relation to the release of
its operating results for the first time since its listing to convey the message of the management directly to the capital
market. Looking back to 2016, the Company communicated with more than 3,000 investors and analysts through
different channels, including the reception at the Company of 110 groups of investors and analysts consisting of over
850 individuals in total, communicating with more than 1,000 investors by participating in 16 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 2016, 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 development strategies, business operations and major issues of the Company, and extended the scope and
depth of information disclosure of periodic reports and special reports, so as to ensure investors to obtain timely and
accurate information affecting its 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 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.
Corporate Governance
Annual Report 2016
China Life Insurance Company Limited
100
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.
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.
If the number of Directors is less than the number stipulated in the Company Law or two-thirds of the number specified
by the Articles of Association, or the uncovered losses incurred amount to one-third of the Company's total share capital
or if the Board or the Supervisory Committee deems necessary, or more than half of the Directors (including at least
two Independent Directors) request, or shareholders holding 10% or more shares of the Company make a requisition,
the Board shall convene an extraordinary shareholders' general meeting within two months. Where shareholders holding
10% or more shares request an extraordinary shareholders' general meeting, such shareholders shall make a request in
writing to the Board with a clear agenda. The Board shall, upon receipt of such a written request, convene a meeting
as soon as possible. If the Board fails to convene a meeting within 30 days of the receipt of such a written request,
shareholders making such a request may convene a meeting by themselves at the cost of the Company within four
months of the receipt by the Board of such a written request.
To safeguard shareholders' interests, in addition to the right to participate in the Company's affairs by attending
shareholders' general meetings, shareholders have the right to convene extraordinary shareholders' general meetings
under certain circumstances.
SHAREHOLDERS' INTERESTS
101
"FORTUNE China"
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 2016, 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 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 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.
Hexun.com the "14th China's Financial Annual
Champion Awards of 2016"
We have audited the consolidated financial statements of China Life Insurance Company Limited (the "Company")
and its subsidiaries (the “Group”) set out on pages 113 to 226, which comprise the consolidated statement of financial
position as at 31 December 2016, 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 2016, 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.
107
25252
China Life Insurance Company Limited Annual Report 2016
Independent Auditor's 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
Valuation of insurance contract liabilities
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 key assumptions
changes on the performance of the Group.
How our audit addressed the key audit matter
In our audit, we involved our internal actuarial specialists
to assist us in performing the following audit procedures
in this area, which included among others:
•
•
Assessing the design and testing the operating
effectiveness of internal controls over the insurance
contract liabilities' processes including management's
determination and approval processes for experience
analysis and setting of assumptions, calculation
processes for actuarial estimation and actual result,
and so on;
Assessing the assumptions by reference to the
industry data, and considering both historical
experience and business expectation of the Group;
Establishing models independently to test the
valuation of liabilities for selected insurance
products; and
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.
108
-
OPINION
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
The Group had significant insurance contract liabilities
stated at RMB1,847.99 billion as at 31 December 2016,
representing 77.34% 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,
expenses, lapse rates, and so on, are set up applying estimates
and judgements based on the experience analysis and future
expectations by management.
52525
EY 安永
"The Asset" magazine
"2016 Forbes Global 2000", ranking No. 49
"2016 Top 500 Chinese Enterprises", ranking No. 12
"2016 Most Influential Life Insurance Company"
"The Asset Triple A Country Awards: Best Transaction of
the Year in China/Best Bonds of the Year in China"
"The Asset Triple A Regional Awards: Best Bonds of Fixed
Income Assets"
Millward Brown
"National Business Daily" - Assessment and
Selection of the "Golden Tripod Award"
(the 7th Session)
"21st Century Business Herald" - "Assessment
and Selection of the Competitiveness of Asian
Financial Enterprises in 2016"
"Assessment and Selection of the Supervisory
Committees of Listed Companies with the
Best Practice" jointly organized by the Listed
Companies Association of the PRC, the Shanghai
Stock Exchange and the Shenzhen Stock
Exchange
China Association for Quality Promotion - "2nd
Chinese Conference on Services"
China Association for Quality Promotion - "3.15
Themed Activities on Consumption and Right
Protection of China Association for Quality
Promotion in 2016"
"2016 BrandZ Top 100 Global Most Valuable Brands",
ranking No. 59
"Financial Times" - "2016 Gold Medal List of
Chinese Financial Institutions (the 9th Session)"
"2016 Excellent Customer Service Award"
"2016 Best Life Insurance Company in Asia"
"Top 20 Supervisory Committees of Listed Companies with
the Best Practice"
"Five-star Award of the China Service Stars"
"Service Quality and Innovation Award"
Independent Auditor's Report
106
-
China Life Insurance Company Limited Annual Report 2016
"2016 China
"2016 China Charitable Enterprise"
China Philanthropy Times
Charity Annual Conference"
"2016 Golden Dragon Award - Best Life Insurance
Company of the Year"
Other equity
Total
Retained
interests
Non-controlling
Share
capital
RMB million
Reserves
RMB million
RMB million
earnings
RMB million
RMB million
year ended 31 December 2016
RMB million
instruments
For the
- Non-controlling interests
Attributable to equity holders
42,324
(Note 34)
Attributable to:
- Equity holders of the Company
(6,647)
41,775
456
of the Company
549
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
China Life Insurance Company Limited Annual Report 2016
Consolidated Statement of Changes in Equity
As at 1 January 2015
Net profit
Other comprehensive income
Total comprehensive income
Transactions with owners
116
(Note 35)
(11,491)
28,265
instruments holders
7,791
7,791
Appropriation to reserves (Note 36)
10,090
Dividends paid (Note 32)
(10,090)
(11,491)
Capital paid in by other equity
(6,191)
(117)
(117)
296
296
GaGas
Total transactions with owners
7,791
Dividends to non-controlling interests
Others
(Note 36)
80
80
145,919
109,937
3,210
287,331
34,699
488
35,187
60
7,076
7,137
7,076
34,699
549
42,324
Capital paid in by
non-controlling interests
61
7,137
2015
Total comprehensive income for the year, net of tax
Profit before income tax
27
23,842
45,931
Income tax
Net profit
Attributable to:
1,974
28
(10,744)
19,585
35,187
- Equity holders of the Company
- Non-controlling interests
Basic and diluted earnings per share
19,127
458
(4,257)
34,699
488
5,855
Share of profit of associates and joint ventures, net
26
(4,767)
(4,320)
Administrative expenses
(31,854)
(27,458)
Other expenses
8
(4,859)
Statutory insurance fund contribution
20
(1,048)
(743)
Total benefits, claims and expenses
(522,794)
(463,492)
(7,428)
(25,776)
30
RMB1.22
(32,297)
17,372
(12,767)
(864)
353
Exchange differences on translating foreign operations
21
(6,038)
Income tax relating to components of other comprehensive income
8,242
10
(2,242)
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods
(25,776)
7,137
Other comprehensive income that will not be reclassified to
profit or loss in subsequent periods
Other comprehensive income for the year, net of tax
28
RMB0.66
54,080
Share of other comprehensive income of associates and joint ventures
under the equity method
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
115
25252
China Life Insurance Company Limited Annual Report 2016
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
Notes
(44,509)
2016
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
10,386
(21,581)
(6,191)
(3,441)
1,225
Dividends received – securities at fair value through profit or loss
526
313
Net cash inflows/(outflows) from operating activities
89,098
(18,811)
5,465
CASH FLOWS FROM INVESTING ACTIVITIES
Disposals of debt securities
Maturities of debt securities
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
Disposals of equity securities
Property, plant and equipment
Disposal of subsidiaries
Purchases:
Debt securities
Disposals and maturities:
10,447
Interest received – securities at fair value through profit or loss
(9,331)
(582)
(812)
Share of profit of associates and joint ventures, net
(5,855)
(1,974)
Changes in operating assets and liabilities:
Securities at fair value through profit or loss
(8,380)
(76,318)
Financial liabilities at fair value through profit or loss
1,539
403
Receivables and payables
124,466
70,482
Income tax paid
(100,089)
Foreign exchange gains
11,546
41,806
Decrease/(increase) in securities purchased under agreements to resell, net
(22,035)
(9,602)
Interest received
78,891
81,688
Dividends received
124,838
20,390
Decrease/(increase) in policy loans, net
(7,483)
(11,305)
Net cash inflows/(outflows) from investing activities
(104,703)
67,047
118
8,828
50,101
37,515
(766)
508,476
400,451
114
199
(11)
3,875
(173,628)
Decrease/(increase) in term deposits, net
(53,340)
(537,012)
(522,787)
Property, plant and equipment
(5,310)
(8,384)
Capital contribution to associates and joint ventures
(65,158)
Equity securities
(37)
2,036
Depreciation and amortisation
(2)
(25,776)
Total comprehensive income
(25,774)
19,127
456
Finance costs
(25,774)
Transactions with owners
- 7,367
(7,367)
Dividends paid (Note 32)
(12,257)
(12,257)
Dividends to non-controlling
interests
Appropriation to reserves (Note 36)
Others
Other comprehensive income
458
As at 31 December 2015
28,265
7,791
163,381
123,055
3,722
326,214
19,585
As at 1 January 2016
7,791
163,381
123,055
3,722
326,214
Net profit
19,127
28,265
2,083
(151)
33
2015
RMB million
RMB million
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax
23,842
45,931
Adjustments for:
2016
Investment income
(97,582)
Net realised and unrealised losses/(gains) on financial assets
1,056
(42,506)
Insurance contracts
131,354
112,142
(109,147)
(151)
For the year ended 31 December 2016
China Life Insurance Company Limited Annual Report 2016
33
Total transactions with owners
7,400
(19,624)
(151)
(12,375)
As at 31 December 2016
Consolidated Statement of Cash Flows
28,265
145,007
122,558
4,027
307,648
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
117
25252
7,791
(35,569)
(5,316)
Underwriting and policy acquisition costs
47,175
Held-to-maturity securities
9.1
594,730
504,075
Loans
9.2
226,573
207,267
Term deposits
9.3
538,325
562,622
Statutory deposits – restricted
9.4
119,766
8
Investments in associates and joint ventures
1,237
As at 31 December 2016
31 December
2016
As at
As at
31 December
2015
Notes
6,333
RMB million
GAGAG
Property, plant and equipment
Investment properties
67
30,389
26,974
1,191
RMB million
6,333
Available-for-sale securities
9.5
Cash and cash equivalents
12
23
2,134
1,420
13
22,013
Other assets
23,642
76,096
Total assets
2,696,951
2,448,315
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
113
25252
67,046
Consolidated Statement of Financial Position
Reinsurance assets
13,421
766,423
770,516
Securities at fair value through profit or loss
9.6
209,124
137,990
Securities purchased under agreements to resell
11,913
9.7
21,503
Accrued investment income
9.8
55,945
49,552
(52,022)
11
43,538
China Life Insurance Company Limited Annual Report 2016
ASSETS
23 March 2017
109
25252
China Life Insurance Company Limited Annual Report 2016
Independent Auditor's 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
We tested valuation, verification and model approval
processes, and evaluated the design and operating
effectiveness of the internal controls over those processes.
How our audit addressed the key audit matter
On 29 August 2016, the Group completed the acquisition
of an additional 23.686% equity interest in an existing
associate, China Guangfa Bank Co., Ltd. (“CGB”), which
remained an associate accounted for under the equity
method. The Group performed a purchase price allocation
exercise that involved valuing the identifiable net assets
of CGB, especially for the identifiable intangible assets
which are mainly the core deposit intangibles and the
credit card client relationship arising from the acquisition.
The Group engaged an external valuer to perform the
valuation of the identifiable intangible assets, as the
valuation involved complex assumptions and judgements,
the change to which can have a material impact on the
valuation adopted in the financial statements.
Please refer to Note 3.3 for the key assumptions involved
in the valuation.
Our internal valuation specialists were involved to assist us
to review the valuation methodologies and key valuation
assumptions used by management, and the procedures
included among others:
Assessing the methodology of the valuation of the
intangible assets;
Testing the cash flow projection by comparing the
key assumptions it based on against the historical
business data and market practice; and
Assessing the discount rate by verifying the selection
of comparable companies based on bank industry
experience and performing a corroborative analysis
using the Capital Asset Pricing Model independently.
We assessed the objectivity and capability of the external
valuer and tested the historical financial information, from
which the assumptions for the cash flow projection were
generated.
Valuation of identifiable intangible assets generated from an acquisition
OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT
Our internal valuation specialists were involved to assist
us 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.
Calculating the Weighted Average Cost of Capital
using the Capital Asset Pricing Model.
China Life Insurance Company Limited Annual Report 2016
Independent Auditor's Report
52525
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
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 of the external valuer.
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 RMB12.68 billion as at
31 December 2016. As the quoted market price of this
investment had been below its carrying value for more
than one year, the Group performed an impairment
test with the assistance from an external valuer in 2015,
based on which an impairment loss of RMB1.01 billion
was recorded as at 31 December 2015. During 2016,
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 2016 as well, with the result that no
further impairment loss 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.
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 RMB91.24 billion as at 31 December 2016. These
investments are classified as level 3 in the fair value
hierarchy, as their fair value 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
In our audit, our internal valuation specialists were
involved to assist us in reviewing the technique and the
discount rate used in the impairment test with reference
to valuation guidelines and industry practices, which
including:
•
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
the Group; and
Disclosure of the impairment of this investment is
disclosed in Note 8.
China Life Insurance Company Limited Annual Report 2016
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
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
China Life Insurance Company Limited Annual Report 2016
Independent Auditor's Report
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.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
25252
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.
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.
The engagement partner on the audit resulting in this independent auditor's report is Ng Chi Keung.
Ernst & Young
Certified Public Accountants
112
Hong Kong
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.
thereon.
111
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group's internal control.
In 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.
110
China Life Insurance Company Limited Annual Report 2016
Independent Auditor's Report
52525
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People's Republic of China with limited liability)
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
RESPONSIBilities of THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL
STATEMENTS
In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the
Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors of the Company either intend to liquidate the Company or to
cease operations or have no realistic alternative but to do so.
The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the
Group's financial reporting process.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Our report is made solely to you, as a body, and for no other purpose. We do not assume responsibility towards or
accept liability to any other person for the contents of this report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
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.
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.
Consolidated Statement of Financial Position
Premiums receivable
LIABILITIES AND EQUITY
2015
RMB million
As at 31 December 2016
Gross written premiums
Less: premiums ceded to reinsurers
Net written premiums
Net change in unearned premium reserves
Net premiums earned
2016
RMB million
430,498
(1,758)
(978)
428,740
362,993
(2,510)
(692)
426,230
363,971
362,301
Notes
Consolidated Statement of Comprehensive Income
163,381
122,558
123,055
Lin Dairen
Director
303,621
322,492
For the year ended 31 December 2016
4,027
307,648
326,214
2,696,951
2,448,315
114
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
China Life Insurance Company Limited Annual Report 2016
3,722
145,007
Investment income
109,147
(253,157)
(221,701)
Accident and health claims and claim adjustment expenses
24
(27,269)
(21,009)
Increase in insurance contract liabilities
24
24
(109,509)
Investment contract benefits
25
(2,264)
Policyholder dividends resulting from participation in profits
(15,883)
(33,491)
(126,619)
21
Life insurance death and other benefits
BENEFITS, CLAIMS AND EXPENSES
97,582
Net realised gains on financial assets
22
6,038
32,297
Net fair value gains/(losses) through profit or loss
23
Insurance benefits and claims expenses
(7,094)
Other income
6,460
5,060
540,781
507,449
GAGAG
Total revenues
10,209
36
REVENUES
28,265
107,774
Interest-bearing loans and borrowings
Bonds payable
675
16
16,170
2,643
87,725
17
67,994
Financial liabilities at fair value through profit or loss
2,031
856
Securities sold under agreements to repurchase
18
81,088
37,998
31,354
Policyholder dividends payable
195,706
Liabilities
Insurance contracts
31 December
As at
As at
31 December
2016
84,106
2015
RMB million
RMB million
14
1,847,986
1,715,985
7,791
15
Notes
Annuity and other insurance balances payable
Investment contracts
30,092
Share capital
Other equity instruments
Reserves
Retained earnings
Attributable to equity holders of the Company
Non-controlling interests
Total equity
Equity
Total liabilities and equity
2,389,303
2,122,101
རལ
34
35
28,265
7,791
39,038
Approved and authorised for issue by the Board of Directors on 23 March 2017.
Total liabilities
Yang Mingsheng
Director
491
Premiums received in advance
217
Other liabilities
Deferred tax liabilities
Current income tax liabilities
35,252
32,266
19
Statutory insurance fund
26,514
28
7,768
16,953
1,214
36,836
5,347
20
Cash repaid to lenders
Foreign exchange gains/(losses) on cash and cash equivalents
(19,415)
6,270
Cash paid related to other financing activities
(13,200)
(30,000)
Net increase/(decrease) in cash and cash equivalents
Net cash inflows/(outflows) from financing activities
Cash and cash equivalents
47,034
year
285
241
(9,050)
29,062
76,096
67,046
76,096
End of the year
2,630
Beginning of the
2,939
RMB million
13,831
Analysis of balances of cash and cash equivalents
China Life Insurance Company Limited Annual Report 2016
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
2016
2015
RMB million
CASH FLOWS FROM FINANCING ACTIVITIES
Increase/(decrease) in securities sold under agreements to
repurchase, net
49,999
(13,757)
Cash received from issuing other equity instruments
7,791
Interest paid
(4,891)
(4,471)
Dividends paid to equity holders of the Company
(12,257)
(11,491)
Dividends paid to non-controlling interests
(151)
(117)
Cash received from borrowings
Capital injected into subsidiaries by non-controlling interests
Cash at banks and in hand
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.
74,135
The consolidated financial statements include the financial statements of the Company and its subsidiaries
for the year ended 31 December 2016. 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 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 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.
125
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
126
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.2 Consolidation (continued)
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it:
derecognises the assets (including goodwill) and liabilities of the subsidiary;
2.2 Consolidation
In addition, the Annual Improvements 2014-2016 Cycle issued in December 2016 set out amendments to
other standards. There are no material changes to the accounting policies of the Group as a result of these
annual improvements.
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
application now.
IFRS 10 and IAS 28 Amendments - Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture
In July 2014, the IASB issued the final version of IFRS 9, bringing together all phases of the financial
instruments project to replaces 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. The Group is currently
assessing the impact of the standard upon adoption, and expects that the adoption of IFRS 9 will have an
impact on the classification, measurement and impairment of the Group's financial instruments in the
Group's consolidated financial statements.
IFRS 15 - Revenue from Contracts with Customers and IFRS 15 Amendments
IFRS 15 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. 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, early adoption is permitted. The Group plans to adopt the new standard on the required effective date
using the full retrospective method.
Given insurance contracts are scoped out of IFRS 15, the Group expects the main impact of the new
standard to be on the accounting for income from administrative and investment management services.
The Group does not expect the impact to be significant. The Group is currently assessing the impact on the
Group's consolidated financial statements.
123
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
derecognises the carrying amount of any non-controlling interests;
2.1 Basis of preparation (continued)
IFRS 16 Leases
IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRS Interpretations Committee
Interpretation No.4 Determining whether an Arrangement contains a Lease, Standing Interpretations
Committee ("SIC”) Interpretation No.15 Operating Leases-Incentives and SIC-27 Evaluating the Substance
of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition,
measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single
on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes
two recognition exemptions for lessees-leases of low-value assets and short-term leases (i.e., leases with a
lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability
to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying
asset during the lease term (i.e., the right-of-use asset). 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. In 2017, the Group plans
to assess the potential effect of IFRS 16 on its consolidated financial statements.
124
2
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
GAGAG
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 2016 (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 2016 (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 the upcoming
new insurance contracts standard (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 entities whose activities are
predominantly connected with insurance to defer the implementation date of IFRS 9 until the earlier of
the effective date of the new insurance contracts standard and annual reporting periods beginning on or
after 1 January 2021. 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. The Group is currently performing an assessment of the amendments to conclude which approach to
apply.
derecognises the cumulative translation differences recorded in equity;
recognises the fair value of the consideration received;
recognises the fair value of any investment retained;
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.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.5 Foreign currency translation
The Company's functional currency is RMB. Each entity in the Group determines its own functional
currency and items included in the financial statements of each entity are measured using that functional
currency. The reporting currency of the consolidated financial statements of the Group is RMB.
Transactions in foreign currencies are translated at the exchange rates ruling at the transaction dates.
Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates ruling
at the end of the reporting period. Exchange differences arising in these cases are recognised in net profit.
2.6 Property, plant and equipment
Property, plant and equipment, are stated at historical costs less accumulated depreciation and any
accumulated impairment losses, except for those acquired prior to 30 June 2003, which are stated at deemed
cost less accumulated depreciation and any accumulated impairment losses.
The historical costs of property, plant and equipment comprise its purchase price, including import
duties and non-refundable purchase taxes, and any directly attributable costs of bringing the asset to its
working condition and location for its intended use. Expenditure incurred after terms of property, plant
and equipment have been put into operation, such as repairs and maintenance, is normally charged to the
statement of comprehensive income in the period in which it is incurred. In situations where the recognition
criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the assets
as a replacement. Where significant parts of property, plant and equipment are required to be replaced at
intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them
accordingly.
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:
China Life Insurance Company Limited Annual Report 2016
Estimated useful lives
Buildings
Office equipment, furniture and fixtures
Motor vehicles
Leasehold improvements
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
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.
64,364
128
IFRS 9 - Financial Instruments
25252
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 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.
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
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
127
GAGAG
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.
The Group's share of post-acquisition profit or loss of its associates and joint ventures is recognised in net
profit, and its share of post-acquisition movements in OCI is recognised in the consolidated statement
of comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying
amount of the investment. When the Group's share of losses in an associate or joint venture equals or
exceeds its interest in the associate or joint venture, including any other unsecured receivables, the Group
does not recognise further losses unless it has obligations to make payments on behalf of the associate or
joint venture.
Unrealised gains on transactions between the Group and its associates or joint ventures are eliminated to the
extent of the Group's interests in the associates or joint ventures. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the asset transferred. Associates and joint ventures'
accounting policies have been changed where necessary to ensure consistency with the policies adopted by
the Group.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net
identifiable assets of acquired associates or joint ventures at the date of acquisition. Goodwill on acquisitions
of associates and joint ventures is included in investments in associates and joint ventures and is tested
annually for impairment as part of the overall balance. Impairment losses on goodwill are not reversed.
Gains or losses on the disposal of an entity take into consideration the carrying amount of goodwill relating
to the entity sold.
The Group determines at each reporting date whether there is any objective evidence that the investments in
associates and joint ventures are impaired. If this is the case, an impairment loss is recognised for the amount
by which the investment's carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of the investment's fair value less costs of disposal and value in use. The impairment of investments in
the associates and joint ventures is reviewed for possible reversal at each reporting date.
The investments in associates and joint ventures are stated at cost less impairment in the Company's
statement of financial position. The results of associates and joint ventures are accounted for by the
Company on the basis of dividends received and receivable.
2.4 Segment reporting
The Group's operating segments are presented in a manner consistent with the internal management
reporting provided to the operating decision maker-president office for deciding how to allocate resources
and for assessing performance.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
statements.
recognises any surplus or deficit in profit or loss; and
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 2016 (continued)
IFRS 2 Amendments - Classification and Measurement of Share-based Payment Transactions
IAS 27 Amendments
IFRS 10, IFRS 12 and
IAS 28 Amendments
IFRS 11 Amendments
Equity Method in Separate Financial Statements
Investment Entities: Applying the
1 January 2016
1 January 2016
Consolidation Exception
Accounting for Acquisitions of Interests
in Joint Operations
1 January 2016
2
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
GAGAG
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 2016 (continued)
Amendments to IAS 1 – Disclosure Initiative
The amendments to IAS 1 clarify, rather than significantly change, existing IAS 1 requirements. The
amendments clarify: the materiality requirements in IAS 1; that specific line items in the statement of
comprehensive income and the statement of financial position should be disaggregated; that entities have
flexibility as to the order in which they present the notes to financial statements; that the share of other
comprehensive income (“OCI”) of associates and joint ventures accounted for using the equity method
must be presented in aggregate as a single line item, and classified between those items that will or will not
be subsequently reclassified to profit or loss. Furthermore, the amendments clarify the requirements that
apply when additional subtotals are presented in the statement of financial position and the statement of
comprehensive income. The Group's consolidated financial statements have complied with the amendments.
IAS 27 Amendments - Equity Method in Separate Financial Statements
The amendments to IAS 27 allow entities to use the equity method to account for investments in
subsidiaries, joint ventures and associates in their separate financial statements. The Group does not elect
to change to the equity method in the separate financial statements, and the amendments do not have any
impact on the Group's consolidated financial statements.
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 to IFRS 10 and IFRS 12 do not 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
Group applied the amendments to IAS 28 when accounting for associates which are investment entities
themselves.
1 January 2016
Effective for annual periods
beginning on or after
Disclosure Initiative
Content
Short-term bank deposits
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 the employee's tax obligations 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. 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
2,682
1,961
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
119
52525
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
IFRS 11 Amendments - Accounting for Acquisitions of Interests in Joint Operations
1
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 and authorised for issue by the Board of
Directors on 23 March 2017.
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 2016
Standards/Amendments
IAS 1 Amendments
2
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 not relevant to the Group, since the Group
had no joint operation as at 31 December 2016.
120
1 January 2018
Applying IFRS 9 Financial Instruments
with IFRS 4 Insurance Contracts
Leases
Sale or Contribution of Assets
Associate or Joint Venture
1 January 2017
1 January 2018
1 January 2018
1 January 2018
1 January 2018
1 January 2019
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
122
Revenue from Contracts with Customers
Clarifications to IFRS 15 Revenue from
Contracts with Customers
yet
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. The amendments will result in additional disclosure to be
provided in the financial statements. The Group expects to adopt the amendments from 1 January 2017.
IAS 12 Amendments – Recognition of Deferred Tax Assets for Unrealised Losses
Amendments to IAS 12 were issued with the purpose of addressing the recognition of deferred tax assets
for unrealised losses related to debt instruments measured at fair value, although they also have a broader
application for other situations. The amendments 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 expects to adopt the
amendments from 1 January 2017.
2
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
GAGAG
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. There are no material changes to the accounting policies of the Group as a result of
these annual improvements.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
effective.
Share-based Payment Transactions
Financial Instruments
between an Investor and its
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 2016
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
121
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
Classification and Measurement of
Effective for annual period
beginning on or after
1 January 2017
Standards/Amendments
IAS 12 Amendments
IAS 7 Amendments
IFRS 9
IFRS 15
IFRS 15 Amendments
IFRS 4 Amendments
IFRS 16
IFRS 10 and IAS 28
Amendments
Content
Disclosure Initiative
Recognition of Deferred Tax Assets for
Unrealised Losses
IFRS 2 Amendments
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2.11.2.a Recognition and measurement
The Group issues contracts that transfer insurance risk or financial risk or both. The contracts issued by
the Group are classified as insurance contracts and investment contracts. Insurance contracts are those
contracts that transfer significant insurance risk. They may also transfer financial risk. Investment contracts
are those contracts that transfer financial risk without significant insurance risk. A number of insurance
and investment contracts contain a discretionary participating feature ("DPF"). This feature entitles the
policyholders to receive additional benefits or bonuses that are, at least in part, at the discretion of the
Group.
2.11.2 Insurance contracts
2.11.1 Classification
The unearned premium reserve represents the portion of the premiums written net of certain
acquisition costs relating to the unexpired terms of coverage.
Short-term insurance contracts
Reserves for claims and claim adjustment expenses consist of the reserves for reported and unreported
claims and reserves for claim expenses with respect to insured events. In developing these reserves, the
Group considers the nature and distribution of the risks, claims cost development, and experiences in
deriving the reasonable estimated amount and the applicable margins. The methods used for reported
and unreported claims include the case-by-case estimation method, average cost per claim method,
chain ladder method, etc. The Group calculates the reserves for claim expenses based on the reasonable
estimates of the future payments for claim expenses.
(ii)
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.
2.11 Insurance contracts and investment contracts
(i)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
China Life Insurance Company Limited Annual Report 2016
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
25252
131
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 39(b) based on the lowest
level input that is significant to the fair value measurement as a whole.
Long-term insurance contracts
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.
2
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.
contracts.
132
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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.
133
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 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; and
guaranteed benefits based on contractual terms, including payments for deaths,
disabilities, diseases, survivals, maturities and surrenders;
•
•
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:
(a)
(ii) 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)
GAGAG
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
2
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:
in the principal market for the asset or liability, or
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.8 Financial assets (continued)
China Life Insurance Company Limited Annual Report 2016
25252
129
Available-for-sale securities are non-derivative financial assets that are either designated in this
category or not classified in any of the other categories.
(iv) Available-for-sale securities
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market other than those that the Group intends to sell in the short term
or held as available-for-sale. Loans and receivables mainly comprise term deposits, loans, securities
purchased under agreements to resell, accrued investment income and premium receivables as
presented separately in the statement of financial position.
(iii) Loans and receivables
Held-to-maturity securities are non-derivative financial assets with fixed or determinable payments
and fixed maturities that the Group has the positive intention and ability to hold to maturity and
do not meet the definition of loans and receivables nor designated as available-for-sale securities or
securities at fair value through profit or loss.
(ii) 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 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.
(i)
The Group classifies its financial assets into the following categories: securities at fair value through profit
or loss, held-to-maturity securities, loans and receivables and available-for-sale securities. Management
determines the classification of its financial assets at initial recognition which depends on the purpose for
which the assets are acquired. The Group's investments in securities fall into the following four categories:
Securities at fair value through profit or loss
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.
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 forms 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.
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.
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.
2.7 Investment properties
GAGAG
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
GAGAG
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
2
130
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;
•
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:
2.8.c Impairment of financial assets other than securities at fair value through profit or loss
(continued)
the disappearance of an active market for that financial asset because of financial difficulties.
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:
2.8.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 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.
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.
2.8.b Recognition and measurement
2.8 Financial assets (continued)
it becomes probable that the issuer or debtor will enter into bankruptcy or other financial
reorganisation; and
For the year ended 31 December 2016
contracts
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the end of the reporting period.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised. Conversely, previously unrecognised deferred tax assets are reassessed by the
end of each reporting period and are recognised to the extent that it is probable that sufficient taxable profit
will be available to allow all or part of the deferred tax asset to be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates
and joint ventures except where the timing of the reversal of the temporary difference can be controlled and
it is probable that the temporary difference will not be reversed in the foreseeable future.
Deferred income tax is recognised, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Substantively enacted tax rates are used in the determination of deferred income tax.
Current income tax assets and liabilities for the current period are calculated on the basis of the tax laws
enacted or substantively enacted at the end of each reporting period in the jurisdictions where the Company
and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken
with respect to situations in which applicable tax regulation is subject to interpretation.
Income tax expense for the period comprises current and deferred tax. Income tax is recognised in net profit,
except to the extent that it relates to items recognised directly in OCI where the income tax is recognised in
OCI.
2.21 Current and deferred income taxation
method.
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
2.20 Finance costs
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
GAGAG
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
2
Investment income comprises interest income from term deposits, cash and cash equivalents, debt securities,
securities purchased under agreements to resell, loans and dividend income from equity securities. Interest
income is recorded on an accrual basis using the effective interest rate method. Dividend income is
recognised when the right to receive dividend payment is established.
Investment income
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:
2.19 Revenue recognition
2.22 Operating leases
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.
Leases where substantially all the risks and rewards of ownership of assets remain with the lessor company
are accounted for as operating leases.
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.
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
138
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 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.
3.1 Estimate of future benefit payments and premiums arising from long-term insurance
Areas susceptible to changes in critical estimates and judgements, which affect the carrying value of assets and
liabilities, are set out below. It is possible that actual results may be different from the estimates and judgements
referred to below.
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates
and judgements are continually evaluated and based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. The Group exercises
significant judgement in making appropriate assumptions.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Dividend distribution to the Company's equity holders is recognised as a liability in the Group's
consolidated financial statements in the year in which the dividends are approved by the Company's equity
holders.
2.24 Dividend distribution
A contingent liability is not recognised in the consolidated statement of financial position but is disclosed in
the notes to the consolidated financial statements. When a change in the probability of an outflow occurs so
that such outflow is probable and can be reliably measured, it will then be recognised as a provision.
A contingent liability is a possible obligation that arises from past events and whose existence will only be
confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within
the control of the Group. It can also be a present obligation arising from past events that is not recognised
because it is not probable that outflow of economic resources will be required or the amount of obligation
cannot be measured reliably.
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
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3
2
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
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137
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.
2.18 Other equity instruments
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of equity
instruments are shown in equity as a deduction, net of tax, from the proceeds.
2.17 Share capital
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
GAGAG
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
2
134
Except for unit-linked contracts, of which the liabilities are carried at fair value, the liabilities of investment
contracts are carried at amortised cost.
contracts.
Revenue from investment contracts with or without DPF is recognised as policy fee income, which consists
of various fee incomes (policy fees, handling fees and management fees, etc.) during the period. Policy fee
income net of acquisition cost is deferred as unearned revenue and amortised over the expected life of the
2.11.3 Investment contracts
The Group assesses its reinsurance assets for impairment as at the end of reporting period. If there is
objective evidence that the reinsurance asset is impaired, the Group reduces the carrying amount of the
reinsurance asset to its recoverable amount and recognises that impairment loss in net profit.
The benefits to which the Group is entitled under its reinsurance contracts held are recognised as
reinsurance assets. Amounts recoverable from or due to reinsurers are measured consistently with the
amounts associated with the reinsured insurance contracts and in accordance with the terms of each
reinsurance contract. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and
are recognised as expenses when due.
Contracts with reinsurers under which the Group is compensated for losses on one or more contracts
issued by the Group and that meet the classification requirements for insurance contracts are classified as
reinsurance contracts held. Contracts with reinsurers that do not meet these classification requirements are
classified as financial assets. Insurance contracts entered into by the Group under which the contract holder
is another insurer (inwards reinsurance) are included with insurance contracts.
2.11.2.c Reinsurance contracts held
The Group assesses the adequacy of insurance contract reserves using the current estimate of future cash
flows with available information at the end of each reporting period. If that assessment shows that the
carrying amount of its insurance liabilities (less related intangible assets, if applicable) is inadequate in light
of the estimated future cash flows, the insurance contract reserves will be adjusted accordingly, and any
changes of the insurance contract liabilities will be recognised in net profit.
2.11.2.b Liability adequacy test
The insurance components are accounted for as insurance contracts; and the non-insurance
components are accounted for as investment contracts (Note 2.11.3), which are stated in the
investment contract liabilities.
non-insurance components
insurance components
Universal life contracts and unit-linked contracts are unbundled into the following components:
(iii) Universal life contracts and unit-linked contracts
2.11.2.a Recognition and measurement (continued)
2.11.2 Insurance contracts (continued)
2.11 Insurance contracts and investment contracts (continued)
2.11 Insurance contracts and investment contracts (continued)
2.11.4 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 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.
as
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/(losses) through profit or loss
in net profit. The related liability is included in other liabilities.
Stock appreciation rights
All full-time employees of the Group are entitled to participate in various government-sponsored housing
funds. The Group contributes on a monthly basis to these funds based on certain percentages of the salaries
of the employees. The Group's liability in respect of these funds is limited to the contributions payable in
each year.
Housing benefits
Full-time employees of the Group are covered by various government-sponsored pension plans under which
the employees are entitled to a monthly pension based on certain formulae. These government agencies
are responsible for the pension liability to these employees upon retirement. The Group contributes on a
monthly basis to these pension plans. In addition to the government-sponsored pension plans, the Group
established an employee annuity fund pursuant to the relevant laws and regulations in the PRC, whereby the
Group is required to contribute to the schemes at fixed rates of the employees' salary costs. Contributions to
these plans are expensed as incurred. Under these plans, the Group has no legal or constructive obligation
for retirement benefit beyond the contributions made.
Pension benefits
2.16 Employee benefits
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2
136
ended 31 December 2016
year
2
For the
China Life Insurance Company Limited Annual Report 2016
25252
135
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
Notes to the Consolidated Financial Statements
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
- Available-for-sale securities
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.
The Group manages insurance risks through two types of reinsurance agreements, ceding on a quota share
basis or a surplus basis, to cover insurance liability risk. Reinsurance contracts cover almost all products,
which contain risk liabilities. The products reinsured include: life insurance, accident and health insurance
or death, disability, accident, illness and assistance in terms of product category or function, respectively.
These reinsurance agreements spread insured risk to a certain extent and reduce the effect of potential
losses to the Group. However, the Group's direct insurance liabilities to the policyholder are not eliminated
because of the credit risk associated with the failure of reinsurance companies to fulfil their responsibilities.
4
RISK MANAGEMENT (continued)
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks
RISK MANAGEMENT
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.
For the
year
ended 31 December
Product name
2016
2015
RMB million
%
RMB million
%
Premiums of long-term insurance contracts
New Xin Feng Endowment (Type A) (a)
38,059
The table below presents the Group's major products of long-term insurance contracts:
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 2016, the Group has consolidated some fund products issued and
managed by the Company's subsidiary, China Life AMP Asset Management Company (“CL AMP”), an asset
management plan issued and managed by the Company's subsidiary, China Life Wealth Management Co.,
Limited (“CL Wealth”) and some trust schemes issued and managed by third parties in the consolidated
financial statements. Please refer to Note 39 (c) for the details.
The Group applies its judgment to determine whether the control indicators set out in Note 2.2 indicate
that the Group controls structured entities such as funds and asset management products.
3.6 Determination of control over investee
For the year ended 31 December 2016
G2525
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3.2 Financial instruments
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 considers a wide range of factors in the impairment assessment as described in Note 2.8.c.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. When the fair values of financial assets
and liabilities recorded in the consolidated statement of financial position cannot be measured based on
quoted prices in active markets, their fair value is measured using valuation techniques which require a
degree of judgements. The methods and assumptions used by the Group in measuring the fair value of
financial instruments are as follows:
•
•
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.
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.
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.
fair value of other Loans are obtained from valuation techniques.
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 The fair value of identifiable intangible assets arising from acquisition
When the Group performed a purchase price allocation exercise of the investment in China Guangfa Bank
Co., Ltd. ("CGB") (refer to Note 8), the fair value of the identifiable net assets of CGB should be evaluated.
Identifiable intangible assets arising from the acquisition are mainly the core deposit intangibles and the
credit card client relationship, and the valuation of the fair value involved complex assumptions. The Group
applied the appropriate methodology to estimate the core deposit intangibles and the credit card client
relationship. The Group estimated the future cash flow data based on the historical business data of CGB
and chose the appropriate discount rate to determine the discount rate of present value of future cash flows.
3.4 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.
139
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
140
3
4
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3.5 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.
9.75%
Notes to the Consolidated Financial Statements
38,314
Xin Annuity (b)
0.04%
80
0.07%
Xin Annuity (b)
132
0.07%
13
0.01%
Xin Fu Nian Nian Annuity (c)
5,366
2.98%
120
0.10%
67
Kang Ning Whole Life (d)
2.20%
3,692
3.20%
Hong Ying Participating Endowment (e)
73,261
40.72%
499
0.43%
Others (f)
97,127
53.99%
110,873
96.19%
3,949
New Xin Feng Endowment (Type A) (a)
insurance contracts
Insurance benefits of long-term
30,944
7.93%
35,606
10.74%
Xin Fu Nian Nian Annuity (c)
29,739
7.62%
888
0.27%
Kang Ning Whole Life (d)
22,420
5.74%
23,508
7.09%
Hong Ying Participating Endowment (e)
4,968
1.27%
7,388
2.23%
Others (f)
264,308
67.69%
225,878
68.12%
Total
390,438
100.00%
331,582
100.00%
11.55%
Total
China Life Insurance Company Limited Annual Report 2016
2,643
164
- Securities at fair value through
profit or loss
348
14
3
13
378
Term deposits
6,106
-
6,106
Cash and cash equivalents
164
2,685
145
39
9
4,961
Total
20,177
15,002
1,274
2,517
1,305
40,275
Financial liabilities
Interest-bearing loans and
2,083
- Held-to-maturity securities
Debt securities
8,759
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
GAGAG
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.1 Market risk (continued)
(iii) Currency risk (continued)
The following table summarises financial assets and financial liabilities denominated in currencies
other than RMB as at 31 December 2016 and 2015, expressed in RMB equivalent:
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
other borrowings
3
13,100
13,100
266
- Securities at fair value
through profit or loss
371
15
8
402
Term deposits
5,431
5,431
Cash and cash equivalents
3,743
636
266
132
6
4,531
Total
18,007
9,148
1,286
2,212
1,242
31,895
Financial liabilities
Interest-bearing loans and borrowings
Total
2,643
14
- Available-for-sale securities
68
68
2,339
731
16,170
2,339
731
16,170
As at 31 December 2015
US dollar
HK dollar
GB pound
EUR
Others
Total
Financial assets
Equity securities
4,715
8,442
172
13,329
- Securities at fair value
through profit or loss
3,413
70
1,139
2,190
1,056
7,868
Debt securities
Held-to-maturity securities
Total
179,902
8
115,277
1 year later
8,035
11,743
17,127
21,262
2 years later
7,997
11,645
16,589
3 years later
7,997
11,645
4 years later
26,897
7,997
claims expenses
7,997
11,645
16,589
21,262
26,897
84,390
Accumulated claims
expenses paid
(7,997)
(11,645)
(16,589)
(20,487)
Estimated accumulated
(16,237)
20,359
11,331
21,427
27,120
85,171
Accumulated claims
expenses paid
(8,123)
(11,775)
(16,726)
(20,645)
(16,364)
(73,633)
Unpaid claims
expenses
16,379
782
11,538
144
The following table indicates the claim development for short-term insurance contracts taking impacts of
ceded business into account:
Short-term insurance contracts (accident year)
Estimated claims expenses
2012
2013
2014
2015
2016
Total
Current year
7,916
10,756
16,726
(72,955)
expenses
As at 31 December 2016, 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 RMB3,263
million or RMB3,400 million (as at 31 December 2015: RMB2,248 million or RMB2,248 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 RMB24,999 million or RMB28,153 million (as at 31 December 2015: RMB22,999 million or
RMB22,999 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.
146
2,643
2,643
147
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2016
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.
4
4.2 Financial risk (continued)
4.2.1 Market risk (continued)
(iii) Currency risk (continued)
As at 31 December 2016, 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 RMB420 million (as at 31 December 2015: RMB1,592 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 RMB1,743 million (as at 31 December 2015:
RMB1,085 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 2016
were RMB582 million (2015: exchange gains of RMB812 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 2016 and 2015.
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.
148
100.00%
RISK MANAGEMENT (continued)
Unpaid claims
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.
(ii)
775
10,660
11,435
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
GAGAG
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 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.
4.2.1 Market risk
(i) Interest rate risk
Price 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 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 2016, 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 RMB160 million (as at 31
December 2015: RMB416 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 RMB6,948 million (as at 31
December 2015: RMB6,928 million) lower or higher respectively, as a result of a decrease or increase
in the fair value of available-for-sale securities.
145
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2016
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.
11,775
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.
claims expenses
1,336,958
73.21%
1,213,738
71.45%
Total
1,825,956
100.00%
1,698,773
100.00%
141
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
Others (f)
For the
ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks (continued)
(a)
(b)
(c)
(d)
(e)
(f)
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 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.
year
11.05%
187,781
6.46%
100.00%
8,123
GAGAG
As at 31 December 2016
RMB million
%
As at 31 December 2015
RMB million
%
Liabilities of long-term insurance contracts
New Xin Feng Endowment (Type A) (a)
43,794
2.40%
43,788
2.58%
Xin Annuity (b)
69,846
3.83%
38,917
2.29%
Xin Fu Nian Nian Annuity (c)
13,300
0.73%
429
0.03%
Kang Ning Whole Life (d)
244,112
13.37%
214,120
Hong Ying Participating Endowment (e)
117,946
Xin Fu Nian Nian Annuity is an annuity insurance contract with regular premium of 3 years,
5
years or 10 years and it is sold with Xin Fu Nian Nian Pension Annuity as a product portfolio. Its
insured period extends from the effective date of the Xin Fu Nian Nian Annuity to the contractual
date starting to claim of Xin Fu Nian Nian Pension Annuity. This product is applicable to healthy
policyholders between 28-day-old and 65-year-old. The annuity payment of first policy year is paid at
12% of the first premium of Xin Fu Nian Nian Annuity and Xin Fu Nian Nian Pension Annuity, the
following annuity payments are paid at 15% of the basic sum insured by Xin Fu Nian Nian Annuity;
maturity benefit is paid at the premium received (without interest) of Xin Fu Nian Nian Annuity;
death benefit is paid at the premium received (without interest) of Xin Fu Nian Nian Annuity or the
cash value of Xin Fu Nian Nian Pension Annuity, whichever greater.
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.
12.60%
Others consist of various long-term insurance contracts with no significant concentration.
Estimated claims expenses
2012
2013
2014
2015
2016
Total
Current year
8,056
11,476
16,499
20,497
1 year later
Short-term insurance contracts (accident year)
8,164
17,265
21,427
2 years later
8,123
11,775
16,726
3 years later
8,123
11,775
4 years later
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.
8,123
Estimated accumulated
11,872
The following table indicates the claim development for short-term insurance contracts without taking
impacts of ceded business into account:
27,120
4.1.3 Sensitivity analysis (continued)
4.1
Sensitivity analysis of short-term insurance contracts (continued)
Insurance risk (continued)
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
GAGAG
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.
4 RISK MANAGEMENT (continued)
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 RMB16,746 million
or RMB17,492 million (as at 31 December 2015: RMB14,597 million or RMB15,253 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 RMB2,823 million or RMB2,953 million (as at 31
December 2015: RMB4,032 million or RMB4,229 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 RMB57,591million or RMB65,427
million (as at 31 December 2015: RMB45,811 million or RMB52,049 million) higher or lower,
respectively.
Sensitivity analysis of short-term insurance contracts
142
Insurance risk (continued)
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 RMB372 million (as at 31 December 2015: RMB315 million)
lower or higher, respectively.
143
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2016
4
4.1
RISK MANAGEMENT (continued)
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.
4,104
1,319
(4,800)
39,449
(390)
22,678
2,785
39,449
3,664
(719)
352
352
501
(4,800)
3,664
(329)
542
(870)
501
in other comprehensive income
Sales
Closing balance
62,343
Total gains/(losses) recorded
in profit or loss
(856)
(14)
21,635
Securities at fair
value through
profit or loss
Total
Debt securities
RMB million
Equity securities
RMB million
Equity securities
RMB million
RMB million
Available-for-sale securities
1,884
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.
4
Accident insurance business relates primarily to the sale of accident insurance policies.
(iv) Other businesses (Others)
Other businesses relate primarily to income and allocated cost of insurance agency business in respect
of services to CLIC as described in Note 33, net share of profit of associates and joint ventures,
income and expenses of subsidiaries, and unallocated income and expenditure of the Group.
5.2 Allocation basis of income and expenses
Investment income, net realised gains/(losses) 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 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
157
(iii) Accident insurance business (Accident)
25252
Notes to the Consolidated Financial Statements
For the
year
SEGMENT INFORMATION (continued)
Total gains/(losses) recorded
ended 31 December 2016
5
China Life Insurance Company Limited Annual Report 2016
64,728
Health insurance business relates primarily to the sale of health insurance policies, including those
health insurance policies without significant insurance risk transferred.
Life insurance business relates primarily to the sale of life insurance policies, including those life
insurance policies without significant insurance risk transferred.
RISK MANAGEMENT (continued)
4.3 Fair value hierarchy (continued)
5
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
The assets whose fair value measurements are classified under Level 3 above do not have any
on the profit or loss of the Group.
(ii) Health insurance business (Health)
material impact
For the years ended 31 December 2016 and 2015, 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 2016 and 2015, 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.
SEGMENT INFORMATION
5.1 Operating segments
The Group operates in four operating segments:
(i)
Life insurance business (Life)
For the assets and liabilities measured at fair value, during the year ended 31 December 2016, RMB8,932
million (2015: RMB59,214 million) debt securities were transferred from Level 1 to Level 2 within the fair
value hierarchy, whereas RMB8,668 million (2015: RMB12,129 million) debt securities were transferred
from Level 2 to Level 1. No material equity securities were transferred between Level 1 and Level 2.
Transferred out of Level 3
Notes to the Consolidated Financial Statements
Purchases
4
RISK MANAGEMENT (continued)
156
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 2015:
Assets measured at fair value
Fair value measurement using
ended 31 December 2016
Total
Significant
observable
inputs
Level 1
Level 2
Significant
unobservable
inputs
Level 3
RMB million
RMB million
Quoted prices
in active
markets
RMB million
year
China Life Insurance Company Limited Annual Report 2016
(67)
Total gains/(losses) recorded
For the year ended 31 December 2016
in other comprehensive income
2,331
2,331
Maturity
For the
(301)
Closing balance
13,733
76,445
1,061
91,239
155
25252
(301)
Transferred into Level 3
RMB million
- Equity securities
Total
312,817
510,154
64,728
887,699
Liabilities measured at fair value
Financial liabilities at fair value
94,984
through profit or loss
Investment contracts at fair value
through profit or loss
(14)
Total
(870)
The following table presents the changes in Level 3 assets for the year ended 31 December 2015:
Opening balance
(856)
Available-for-sale securities
76,680
- Debt securities
233,527
51,940
62,343
347,810
- Debt securities
20,575
380,823
18,304
501
Securities at fair value through
profit or loss
- Equity securities
40,411
711
1,884
43,006
401,899
Life
890
Accident
(2,334)
(31,854)
Other expenses
(3,666)
(256)
(467)
(1,360)
890
(4,859)
Including: inter-segment expenses
(853)
(34)
(3)
890
Statutory insurance fund contribution
(2,899)
(4,373)
(22,248)
Administrative expenses
participation in profits
(15,787)
(96)
(15,883)
Underwriting and policy acquisition costs
(38,459)
(6,906)
(804)
(4,441)
(52,022)
Finance costs
(4,395)
(174)
(17)
(181)
(4,767)
(2,216)
(138)
(106)
(1,048)
Attributable to
- Equity holders of the Company
- Non-controlling interests
19,127
458
Other comprehensive income attributable
to equity holders of the Company
(23,433)
158
(930)
2,083
1,490 257 196 140
Depreciation and amortisation
(25,774)
(1,320)
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
(67)
(91)
Policyholder dividends resulting from
19,585
(4,257)
Segment benefits, claims and expenses
(451,372)
(52,681)
(13,540)
(6,091)
(522,794)
Share of profit of associates and joint ventures, net
Net profit
5,855
Segment results
14,732
2,093
852
6,165
23,842
Income tax
5,855
(5,316)
(225)
(5,091)
50,590
13,991
426,230
Investment income
103,723
4,122
403
361,649
899
Net realised gains/(losses) on financial assets
5,823
231
23
(39)
6,038
Net fair value gains/(losses) through profit or loss
109,147
(6,436)
Net premiums earned
188,415
Others
RMB million
Elimination
Total
Revenues
Gross written premiums
361,905
140,095
54,010
430,498
- Term life
3,871
- Whole life
29,524
- Endowment
- Annuity
14,583
Health
(255)
(378)
Life insurance death and other benefits
(251,155)
(1,977)
(25)
(253,157)
Accident and health claims and claim
adjustment expenses
Insurance benefits and claims expenses
(21,958)
(27,269)
Increase in insurance contract liabilities
(109,767)
(16,578)
(274)
(126,619)
Investment contract benefits
(5,311)
(25)
expenses
540,781
(7,094)
Other income
1,345
86
5,919
(890)
6,460
Benefits, claims and
Including: inter-segment revenue
(890)
Segment revenues
466,104
54,774
14,392
6,401
(890)
890
in profit or loss
4.3 Fair value hierarchy (continued)
(3,938)
232
6,404
484
6,333
Statutory deposits-restricted
128,322
296,268
190,658
562,622
Term deposits
41,634
56,003
48,829
96,901
207,267
Loans
910,196
170,658
214,106
130,340
1,000,958
Debt securities
411,623
411,623
Equity securities
Securities purchased under
Contractual cash inflows
agreements to resell
21,503
(44,697)
(81,630)
1,715,985
Investment contracts
Insurance contracts
Expected cash outflows
Financial and insurance liabilities
951,830
355,222
583,934
559,113
411,623
2,347,867
Subtotal
76,096
76,096
Cash and cash equivalents
11,913
11,913
Premiums receivable
7
18,327
31,218
49,552
Accrued investment income
21,503
Financial assets
5 years
than 5 years
(219,498)
(2,031)
2,220,017
Subtotal
(39,032)
37,998
Bonds payable
(16,159)
(1,138)
16,170
borrowings
Interest-bearing loans and other
(39,038)
39,038
balances payable
Annuity and other insurance
(2,031)
2,031
value through profit or loss
Financial liabilities at fair
(81,088)
81,088
agreements to repurchase
Securities sold under
Contractual cash outflows
46,930
1,960
(3,489,299)
Net cash inflows/(outflows)
than 3 years
than 1 year
maturity
Later than
but not later
but not later
Not later
Without
Carrying
value
As at 31 December 2015
Later than 1 year Later than 3 years
GAGAG
26,347
Contractual and expected cash flows (undiscounted)
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
4.2.3 Liquidity risk (continued)
4.2 Financial risk (continued)
RISK MANAGEMENT (continued)
4
(2,411,261)
349,741
584,526
480,631
419,352
301,441
For the year ended 31 December 2016
(2,789,186)
84,106
(16,199)
297%
280%
228,080
677,768
639,396
As at 31 December 2016
RMB million
Comprehensive solvency ratio
Core solvency ratio
Minimum capital
Core capital
Actual capital
The table below summarises the core and comprehensive solvency ratio, core capital, actual capital and
minimum capital of the Company under Solvency II as at 31 December 2016:
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 computes the solvency ratio in
accordance with Solvency II, identifying, assessing and managing various risks starting from 1 January 2016.
4.2.4 Capital management (continued)
4.2 Financial risk (continued)
GAGAG
For the year ended 31 December 2016
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
RISK MANAGEMENT (continued)
4
330%
197,144
85,676
282,820
As at 31 December 2015
RMB million
Actual capital
Minimum capital
Solvency surplus
Solvency ratio
According to the solvency ratios results mentioned above, and the unquantifiable evaluation results of
operational risk, strategic risk, reputational risk and liquidity risk of insurance companies, the CIRC
evaluates the comprehensive solvency of insurance companies and supervises insurance companies by
classifying them into four categories:
(i)
(ii)
Category A: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational
risk and liquidity risk are very low;
Total gains/(losses) recorded
RISK MANAGEMENT (continued)
4
Note 3.2.
For the accounting policies regarding the determination of fair values of financial assets and liabilities, see
At 31 December 2016, assets classified as Level 3 accounted for approximately 9.55% 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.
As at 31 December 2016, assets classified as Level 2 accounted for approximately 58.84% 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 2016, assets classified as Level 1 accounted for approximately 31.61% 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 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 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.
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.
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
152
154
4
ended 31 December 2016
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
25252
153
According to Cai Kuai Bu Han [2017] No.457 Notification of the Evaluation Results of Integrated Risk Rating
(Classification Regulation) for the Fourth Quarter of 2016, released by the CIRC, 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;
Category B: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational
risk and liquidity risk are low;
RISK MANAGEMENT (continued)
(259,905)
According to Bao Jian Hui Ling [2008] No.1, Solvency Regulations of Insurance Companies (“Solvency I"),
the table below summarises the solvency ratio, the actual capital, the minimum capital and the solvency
surplus of the Company under Solvency I as at 31 December 2015:
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.
(2,693)
(214)
(39,774)
(33,424)
67,994
Bonds payable
For the year ended 31 December 2016
2,643
borrowings
Interest-bearing loans and
(30,092)
30,092
balances payable
Annuity and other insurance
(856)
856
value through profit or loss
Financial liabilities at fair
(31,354)
31,354
agreements to repurchase
Securities sold under
Contractual cash outflows
(108,091)
(11,334)
(16,207)
Subtotal
1,933,030
(856)
(192,806)
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.
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 RMB53,271 million
and RMB140,565 million, respectively for the year ended 31 December 2016 (2015: RMB49,905 million
and RMB33,471 million, respectively), payable within one year.
The liquidity analysis above does not include policyholder dividends payable amounting to RMB87,725
million as at 31 December 2016 (as at 31 December 2015: RMB107,774 million). As at 31 December
2016, declared dividends of RMB64,623 million (as at 31 December 2015: RMB56,597 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)
RISK MANAGEMENT (continued)
4
ended 31 December 2016
year
For the
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.
Notes to the Consolidated Financial Statements
25252
151
(1,945,447)
367,542
483,042
366,307
410,767
414,837
Net cash inflows/(outflows)
(2,897,277)
12,320
(100,892)
China Life Insurance Company Limited Annual Report 2016
(33,128)
(107)
(15,880)
year
ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.3 Liquidity risk (continued)
The following tables set forth the contractual and expected undiscounted cash flows for financial assets and
liabilities and insurance liabilities:
Contractual and expected cash flows (undiscounted)
Later than 1 year Later than 3 years
As at 31 December 2016
Carrying
value
Without
maturity
Not later
than 1 year
but not later
than 3 years
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
25252
The following table presents the Group's quantitative disclosures of fair value measurement hierarchy for
assets and liabilities measured at fair value as at 31 December 2016:
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
GAGAG
but not later
than 5 years
4.2.2 Credit risk (continued)
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 2016,
99.0% (as at 31 December 2015: 98.9%) 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 2016, 99.9% (as at 31 December
2015: 99.6%) of the subordinated bonds or debts held by the Group either have credit ratings of AA/A-2
or above, or were issued by national commercial banks. The bonds, debts or their issuers' credit ratings
are assigned by a qualified appraisal institution in the PRC at the time of its issuance and updated at each
reporting date.
As at 31 December 2016, 99.5% (as at 31 December 2015: 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 will not cause a material impact on the Group's
consolidated financial statements as at 31 December 2016 and 2015.
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 2016 and 2015.
4.2.3 Liquidity risk
Liquidity risk is the risk that the Group is unable to obtain funds at a reasonable funding cost when required
to meet a repayment obligation and fund its asset portfolio within a certain time.
In the normal course of business, the Group attempts to match the maturity of financial assets to the
maturity of insurance and financial liabilities.
149
Credit quality
Fair value measurement using
Later than
5 years
Contractual cash inflows
8,858
Statutory deposits-restricted
6,333
1,909
4,720
209
Securities purchased under
agreements to resell
43,538
43,538
Accrued investment income
55,945
44,722
11,100
123
117,012
260,065
199,657
538,325
Equity securities
421,383
421,383
Debt securities
1,148,894
210,589
214,105
Financial assets
188,740
Loans
226,573
119,247
47,606
41,697
55,106
Term deposits
1,014,074
Total
Quoted prices
in active
Significant
Debt securities
RMB million
Total
profit or loss
Available-for-sale securities
value through
(2,043)
(12)
(2,031)
GAGAG
Securities at fair
The following table presents the changes in Level 3 assets for the year ended 31 December 2016:
(2,043)
Total
Investment contracts at fair value
through profit or loss
(2,031)
Equity securities
RMB million
Equity securities
RMB million
RMB million
(1,884)
(34,147)
(2,054)
2,454
1,128
1,326
26,032
through profit or loss
12,499
1,884
62,343
501
13,533
Transferred out of Level 3
Transferred into Level 3
Purchases
Opening balance
64,728
Financial liabilities at fair value
Liabilities measured at fair value
954,710
86,161
183,222
- Equity securities
Available-for-sale securities
Assets measured at fair value
RMB million
RMB million
- Debt securities
RMB million
Level 3
Level 2
Level 1
Significant
unobservable
inputs
inputs
markets
observable
RMB million
Premiums receivable
28,562
76,445
13,733
91,239
561,725
301,746
Total
154,406
117,234
37,172
357,463
- Debt securities
1,061
867
52,790
- Equity securities
through profit or loss
Securities at fair value
345,828
399,758
54,718
13,421
(12)
1,078,038
97,236
(43,322)
1,847,986
Insurance contracts
Expected cash outflows
Financial and insurance liabilities
150
347,781
537,596
700,129
421,383
2,521,458
35,088
Subtotal
67,046
Cash and cash equivalents
195,706
13,421
Investment contracts
67,046
(3,229,394)
426
137
36
(942)
(14,131)
(148)
(1,801)
22
621
Segment revenues
As at 31 December 2016
(130)
(622)
(901)
year
Charge for the
(1,005)
(4,738)
(7,446)
As at 1 January 2016
Disposals
(8,311)
(4,934)
(998)
1,903
426
10,548
485
30,389
162
6
China Life Insurance Company Limited Annual Report 2016
17,027
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
Buildings
Office
equipment,
furniture and
fixtures
Motor
vehicles
Assets under
Leasehold
construction improvements
Total
PROPERTY, PLANT AND EQUIPMENT (continued)
Accumulated depreciation
As at 31 December 2016
366
(1,068)
(15,311)
Impairment
As at 1 January 2016
(24)
(24)
Charge for the
year
26,974
Disposals
(24)
(24)
Net book value
As at 1 January 2016
16,783
1,878
382
7,565
As at 31 December 2016
45,724
(432)
10,548
Assets under
Motor
Office
equipment,
furniture and
fixtures
Buildings
Cost
6 PROPERTY, PLANT AND EQUIPMENT
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
25252
161
2,122,101
188,889
Total
vehicles
Others
1,933,212
4,485
7,001
71,293
1,850,433
Segment liabilities
101,767
3,499
401
3,278
94,589
Others
31,354
986
Unallocated
construction improvements
Leasehold
Total
1,424
6,837
25,362
As at 31 December 2016
(1,178)
(27)
(475)
(140)
RMB million
(104)
Disposals
5,779
16
4,896
177
653
37
RMB million
As at 1 January 2016
24,253
6,616
1,387
7,565
1,553
1,308
Transfers upon completion
1,176
(1,438)
256
(6)
Additions
41,129
GAGAG
Cost
As at 1 January 2015
As at 31 December 2016
Fair value
As at 1 January 2016
As at 31 December 2016
164
Buildings
RMB million
1,435
1,435
(198)
(46)
(244)
1,237
1,191
2,238
2,201
As at 1 January 2016
Net book value
As at 31 December 2016
As at 1 January 2016
Charge for the year
7,565
366
26,974
163
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
7 INVESTMENT PROPERTIES (continued)
For the
ended 31 December 2016
7 INVESTMENT PROPERTIES
Cost
As at 1 January 2016
Additions
As at 31 December 2016
Accumulated depreciation
year
382
Cost
Additions
1,283
1,237
2,080
2,238
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.
There were no investment properties without title certificates as at 31 December 2016.
The fair value of investment properties of the Group as at 31 December 2016 amounted to RMB2,201 million
(as at 31 December 2015: RMB2,238 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.
GAGAG
165
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
(198)
(46)
(152)
1,435
As at 31 December 2015
Accumulated depreciation
As at 1 January 2015
Charge for the
year
As at 31 December 2015
Net book value
As at 1 January 2015
As at 1 January 2015
As at 31 December 2015
As at 1 January 2015
As at 31 December 2015
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
Buildings
RMB million
1,435
Fair value
108
1,878
As at 31 December 2015
(64)
(418)
(133)
(63)
(123)
(801)
As at 31 December 2015
24,253
6,616
1,387
7,565
1,308
41,129
Accumulated depreciation
As at 1 January 2015
Disposals
3,528
13
2,981
Transfers upon completion
22,777
6,676
1,392
6,333
1,246
38,424
(6,640)
1,486
(1,686)
172
(22)
Additions
54
352
128
6
16,783
(4,473)
(943)
As at 1 January 2015
(24)
Charge for the year
Disposals
As at 31 December 2015
(24)
(24)
Net book value
As at 1 January 2015
16,113
2,203
396
6,333
303
25,348
Impairment
(14,131)
(942)
(1,005)
(13,052)
Charge for the
year
(839)
(658)
(135)
(116)
(996)
(1,748)
33
126
117
669
As at 31 December 2015
(7,446)
(4,738)
Disposals
931
1,652,469
Securities sold under agreements to repurchase
RMB million
Total
Others Elimination
Accident
Health
Life
Revenues
For the year ended 31 December 2015
5
ended 31 December 2016
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
SEGMENT INFORMATION (continued)
25252
Gross written premiums
42,041
13,365
40,855
308,081
Net premiums earned
98,703
177,871
308,169
- Annuity
28,119
- Whole life
3,476
- Term life
363,971
13,761
- Endowment
159
2,389,303
169,151
(840)
(997)
1,081
(7,428)
Including: inter-segment expenses
(1,044)
(327)
(33)
1,081
Statutory insurance fund contribution
(546)
(103)
(94)
(743)
(4)
(6,345)
Other expenses
(27,458)
Total
Others
Unallocated
2,220,152
18,250
8,426
96,414
2,097,062
Segment liabilities
95,372
18,194
338
(3,811)
(3,136)
(2,218)
362,301
Investment income
93,819
2,983
Increase in insurance contract liabilities
(93,668)
(15,803)
(38)
(109,509)
Investment contract benefits
(21,009)
(2,076)
(2,264)
Policyholder dividends resulting from
participation in profits
(33,328)
(163)
(33,491)
(188)
(4,151)
(16,858)
adjustment expenses
444,096
45,204
13,860
5,370
(1,081)
507,449
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits
(219,944)
(1,737)
(20)
20
(221,701)
Accident and health claims and claim
Underwriting and policy acquisition costs
Segment benefits, claims and expenses
(24,921)
(3,813)
(3)
36
313
9,863
Net fair value gains/(losses) through profit or loss
32,297
10,209
(69)
992
31,259
Net realised gains/(losses) on financial assets
97,582
436
344
115
Other income
1,074
61
(1,307)
(35,569)
Finance costs
(4,054)
(129)
(15)
(122)
(4,320)
Administrative expenses
(18,293)
1,081
Including: inter-segment revenue
5,060
(1,081)
5,006
(5,528)
29,329
(403,175)
(12,107)
145
2,036
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
5
240
SEGMENT INFORMATION (continued)
As at 31 December 2015
Life
Health
Accident
RMB million
Others
Elimination
Assets
Total
263
Depreciation and amortisation
GAGAG
Total
For the year ended 31 December 2016
Elimination
Others
Accident
RMB million
1,388
Health
As at 31 December 2016
SEGMENT INFORMATION (continued)
5
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
Life
GAGAG
Financial assets (including
cash and cash equivalents)
Total
26,974
25,034
2,448,315
Liabilities
Insurance contracts
Others
(1,081)
6,492
1,715,985
Investment contracts
74,046
10,060
84,106
57,024
Property, plant and equipment
Unallocated
2,396,307
2,243,403
69,565
7,968
14,900
Others
7,904
4,917
475
47,175
2,335,836
60,471
Segment assets
2,251,307
74,482
8,443
62,075
Assets
Financial assets (including cash
and cash equivalents)
2,379,782
- Non-controlling interests
34,699
488
Other comprehensive income attributable
to equity holders of the Company
6,359
- Equity holders of the Company
202
492
7,076
3,563
73,277
Others
81,088
23
Attributable to
160
35,187
(4,644)
1,081
(463,492)
Share of profit of associates and joint ventures, net
1,974
1,974
Segment results
40,921
557
1,753
2,700
45,931
Income tax
(10,744)
Net profit
56
(44,647)
302
77,649
147,158
9,397
98,996
2,387,947
Segment assets
2,508,300
135,198
2,643,498
119,766
6,776
8,165
Others
27,392
8,906
92,220
491
Unallocated
Property, plant and equipment
Others
Securities sold under agreements to repurchase
195,706
11,933
183,773
Investment contracts
1,847,986
7,786
77,837
1,762,363
Insurance contracts
Liabilities
2,696,951
23,064
30,389
Total
3,081
8 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
393
Share of profit or loss
PRC
Hong Kong, PRC
PRC
Country of incorporation
Sanya Company
Joint venture
COFCO Futures
CLP&C
Sino-Ocean
CGB
Associates
Name
As at 31 December 2015, the major associates and joint venture of the Group are as follows:
PRC
43.86%
PRC
35.00%
PRC
40.00%
PRC
PRC
PRC
Percentage of equity interest held
RMB
RMB
RMB
RMB
RMB
RMB
As at 1 January
Change of the cost
Company
Futures
CLP&C
CGB Sino-Ocean
Pipeline
COFCO
The following table illustrates the financial information of the Group's major associates and joint venture as at 31
December 2016 and for the year ended 31 December 2016:
51.00%
35.00%
40.00%
29.998%
20.00%
51.00%
million
29.991%
43.686%
(iii) In December 2016, the Company contributed RMB20 billion in Pipeline Company, holding 43.86% of
its equity interest. According to the provisions of the investment agreement and the articles of Pipeline
Company, the Company can impose a significant influence over Pipeline Company's financial and operating
decisions through its Board of Directors, and therefore accounted for it as an associate. As at 31 December
2016, the Company had not yet completed the valuation of fair value for the identifiable net assets of
Pipeline Company, therefore the carrying value of investment in Pipeline Company was stated at its
investment cost.
(ii) The 2015 final dividend of HKD0.05 in cash per ordinary share was approved and declared in the Annual
General Meeting of Sino-Ocean on 12 May 2016. The Company received a cash dividend amounting
to RMB95 million. The 2016 interim dividend of HKD0.079 in cash per ordinary share was approved
and declared by the board of directors of Sino-Ocean on 18 August 2016. The Company received a cash
dividend amounting to RMB153 million.
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 investment agreements, the Company acquired 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 approximately RMB23.3 billion at RMB6.39 per share. The transaction
was settled on 29 August 2016, after which the Company holds 43.686% of CGB's equity interest. The
Company imposes a significant influence over CGB's financial and operating decisions through its Board
of Directors, and therefore CGB has been accounted for as an associate. The new investment cost of CGB
includes the capitalised direct cost of the transaction.
(i)
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
For the year ended 31 December 2016
GAGAG
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
8
166
(1,010)
119,766
(831)
(820)
5,855
47,175 68,387
99,068
Total
(iv) Others are mainly overseas enterprises invested by the Group. The Group invested in real estate, industrial
logistics assets and other industries through these overseas enterprises.
Hong Kong, PRC
167
China Life Insurance Company Limited Annual Report 2016
PRC
Percentage of equity interest held
Country of incorporation
Sanya Company
Joint venture
Pipeline Company
COFCO Futures
CLP&C
Sino-Ocean
CGB
Associates
Name
168
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
As at 31 December 2016, the major associates and joint venture of the Group are as follows:
8
ended 31 December 2016
year
For the
Notes to the Consolidated Financial Statements
25252
17,102
million
million
301
20,000
1,419
7,929
12,680
50,229
Net carrying value of the investments
(1,010)
Impairment
301
20,000
1,419
7,929
13,690
50,229
Gross carrying value of the investments
51.00%
43.86%
35.00%
Total revenues
40.00%
55,318
55,728
631
66
631
4,282
8,434
Total comprehensive income
(526)
(164)
(1,070)
Other comprehensive income
631
66
1,157
4,446
9,504
Net profit/(loss)
1
2,339
375
37,748
million
43.686% 29.991%
591
49,330
105,974
Total equity
208
5,014
8,710
52,950
101,935
1,941,618
Total liabilities
799
37,231
11,287
72,773
151,265
2,047,592
Total assets
million
million
19,823
Proportion of the Group's ownership
2,577
591
32,217
2,496
19,823
42,423
109,137
associates and joint ventures after adjustments
Total equity attributable to equity holders of the
ང་
(1,576)
3,163
Total adjustments (i)
591
32,217
2,496
19,823
43,999
105,974
of the associates and joint ventures
Total equity attributable to equity holders
32,217
(553)
Sanya
Company
2015
9,948
Equity Method
Others (iv)
43.86%
20,000
20,000
20,000
("Pipeline Company”) (iii) Equity Method
Co., Ltd.
China Gas Pipeline
Sinopec Sichuan to East
1,419 35.00%
246 9,698
22
1,339
Equity Method
("COFCO Futures")
Company Limited
COFCO Futures
40.00%
7,929
(211)
(135)
463
7,812
6,000
1,397
285
(266)
444
2,770 15,197
18,374
Subtotal
16,801
(171) (553)
(136)
18,068 2,464 15,197
Equity Method
Others (iv)
301 51.00%
(5)
306
306
Equity Method
("Sanya Company")
Investments Co., Ltd
China Life (Sanya) Health
Joint ventures
(1,010)
102,664
(278)
(649)
5,996
44,405 53,190
80,694
Subtotal
10,407
Equity Method
("CLP&C")
Company Limited
Casualty Insurance
Share of
Change
of the
December
Accounting
As at 31
Movement
The Group's investments in associates and joint ventures are unlisted except for Sino-Ocean Group Holding
Limited ("Sino-Ocean”), which is listed on the Stock Exchange of Hong Kong Limited. On 31 December
2016, the stock price of Sino-Ocean was HKD3.47 per share. As at 31 December 2015, 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 2016. 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 2016.
47,175
119,766
(1,010)
649
(831)
(604)
(820)
2,984
5,855
766
68,387
47,175
RMB million
RMB million
2016
(i)
As at 31 December
Provision of impairment (i)
Other equity movements
Declared dividends
Other Provision
(141)
profit Declared equity
As at 31 Percentage Accumulated
December
China Life Property &
12,680 29.991% (1,010)
(20)
(248)
551
12,397
11,245
Equity Method
Sino-Ocean (ii)
43.686%
50,229
(491)
4,675
23,492
22,553
32,162
Equity Method
CGB (i)
Associates
interest impairment
2016
or loss dividends movements impairment
cost
2015
Cost
Method
of equity amount of
of
(171)
44,390
36,887
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
9
FINANCIAL ASSETS (continued)
9.3 Term deposits
172
25252
Maturing:
After one year but within five
years
After five years but within ten years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
Within one year
171
During the year ended 31 December 2016, the Group's investment income from the above asset
management products was RMB6,820 million (2015: RMB6,455 million), and the related asset
management fee received by AMC (including its subsidiaries) for all asset management products it
issued was RMB236 million (2015: RMB224 million).
exposure.
As at 31
December 2016
December 2015
RMB million
RMB million
G2525
112,592
90,250
70,978
84,078
25,503
24,239
17,500
8,700
226,573
207,267
Other loans mainly consisted of different types of asset management products. As at 31 December
2016, asset management products of RMB37,679 million (as at 31 December 2015: RMB37,978
million) were owned by the Group, which are issued by China Life Asset Management Company
Limited ("AMC") (including its subsidiaries), a subsidiary of the Company. The total assets of those
products were RMB114,499 million (as at 31 December 2015: RMB172,983 million). Meanwhile,
the Group also owned asset management products of RMB77,999 million (as at 31 December 2015:
RMB75,936 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
RMB million
185,835
344,790
181,780
380,842
FINANCIAL ASSETS (continued)
9.5 Available-for-sale securities
Available-for-sale securities, at fair value
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Wealth management products
Others (i)
Subtotal
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
9
As at 31
Insurance companies in China are required to deposit an amount that equals 20% of their registered capital
with banks in compliance with regulations of the CIRC. These funds may not be used for any purpose other
than for paying off debts during liquidation proceedings.
6,333
7,700
538,325
562,622
As at December 31 2016, term deposits of RMB13.2 billion (2015: Nil) deposited in banks for an oversea
borrowings backed by domestic deposits business are restricted to use. In September 2016, CL Hotel
Investor, L.P. and Glorious Fortune Forever Limited, the subsidiaries of the Company, entered into a
loan agreement with the New York and Seoul branch of the Agricultural Bank of China, respectively.
The Company applied to the Beijing Xicheng branch of the Agricultural Bank of China for an overseas
borrowings backed by domestic deposits business with amounts of RMB6.5 billion and RMB6.7 billion,
respectively, for the above loans.
9.4 Statutory deposits - restricted
Contractual maturity schedule:
Within one year
After one year but within five years
Total
As at 31
December 2016
As at 31
December 2015
RMB million
RMB million
1,720
300
4,613
6,033
6,333
207,267
226,573
122,308
594,730
504,075
64,192
61,916
144
50
20
24
530,374
442,085
594,730
504,075
The estimated fair value of all held-to-maturity securities was RMB619,152 million as at 31 December 2016
(as at 31 December 2015: RMB550,844 million).
Unlisted debt securities include those traded on the Chinese interbank market.
Debt securities - Contractual maturity schedule
Maturing:
Within one year
152,135
After one year but within five
150,089
178,444
Subordinated bonds/debts
Total
Debt securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed in Singapore
Unlisted
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
97,196
79,438
169,001
126,097
146,405
21,653
years
After ten years
Within one year
After one year but within five
years
After five years but within ten years
After ten years
Total
(i)
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
92,442
84,959
134,131
Maturing:
After five years but within ten years
Total
Policy loans
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
30,615
2,000
71,661
86,198
231,608
167,450
260,846
248,427
594,730
504,075
9
FINANCIAL ASSETS (continued)
9.2 Loans
Other loans (i)
Corporate bonds
25,713
145,399
OTHER ASSETS
178
Prepaid to constructors
Land use rights
Automated policy loans
Disbursements
Due from related parties
Investments receivable
Tax refundable
Others
13
Total
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
1,783
1,246
123
Current
Non-current
Total
Current
Non-current
Total
The estimates and judgements to determine the fair value of financial assets are described in Note 3.2.
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 RMB76,299 million and that under Level 2 was RMB542,853 million as at 31 December 2016 (as at 31
December 2015: Level 1 RMB29,777 million and Level 2 RMB521,067 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 value of policy loans approximated its carrying amounts. The fair values of other loans and
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.
177
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
11
12
PREMIUMS RECEIVABLE
As at 31 December 2016, the carrying value of premiums receivable within one year was RMB13,346 million (as
at 31 December 2015: RMB11,899 million).
REINSURANCE ASSETS
Long-term insurance contracts ceded (Note 14)
Due from reinsurance companies
Ceded unearned premiums (Note 14)
Claims recoverable from reinsurers (Note 14)
37
125
87
103
1,023
927
772
911
4,242
69
936
3,148
1,810
22,013
23,642
15,665
17,274
6,348
6,368
22,013
23,642
1,718
(ii)
2,520
5,998
50
2,134
1,420
351
174
1,783
1,246
2,134
1,420
As at 31
December 2016
As at 31
December 2015
RMB million
RMB million
6,571
6,341
5,855
2,814
(i)
(2,643)
(16,170)
50,053
Others (i)
30,673
41,050
Subtotal
345,828
347,810
Available-for-sale securities, at cost
Equity securities
Others (i)
Total
(i)
20,837
20,807
766,423
770,516
GAGAG
81,854
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.
Wealth management products
27,880
188,337
206,767
16,708
19,298
11,321
15,429
4,722
399,758
401,899
Equity securities
Funds
105,290
163,366
Common stocks
100,131
74,629
Preferred stocks
18,712
146,310
173
749,709
(2,031)
(856)
(2,031)
(856)
Securities sold under agreements to repurchase
(81,088)
(31,354)
(81,088)
(31,354)
Bonds payable (iii)
(37,998)
(67,994)
(38,204)
(69,580)
Interest-bearing loans and borrowings
(16,170)
(2,643)
Financial liabilities at fair value through profit or loss
25252
(82,644)
(84,106)
Securities at fair value through profit or loss
209,124
137,990
209,124
137,990
Securities purchased under agreements to resell
43,538
21,503
43,538
21,503
Cash and cash equivalents
67,046
76,096
67,046
76,096
Investment contracts (iii)
(195,706)
(192,373)
54,718
bonds
Government bonds
Proportion of the Group's ownership
20.00%
29.998%
40.00%
35.00%
51.00%
Gross carrying value of the investments
600
22,553
7,812
1,397
306
Impairment
(1,010)
Net carrying value of the investments
22,553
13,407
2,452
19,531
41,470
Debt securities – Contractual maturity schedule
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
Maturing:
Within one year
After one year but within five
years
After five years but within ten years
After ten years
Total
33,261
Total adjustments (i)
239
Total equity attributable to equity
holders of the associates and joint
ventures after adjustments
97,540
12,397
7,812
1,397
306
(i)
Including adjustments for the difference of accounting policies, fair value and others.
169
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
9
170
43,006
209,124
137,990
Total
Debt securities
Listed in Mainland, PRC
19,512
8,852
Note 38.
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.
The Group had no contingent liabilities with the associates and joint ventures as at 31 December 2016 and 31
December 2015. The Group had a capital contribution commitment of RMB2,991 million with a joint venture
as at 31 December 2016 (31 December 2015: Nil). The amount has been included in the capital commitments in
2,171
Total revenues
54,735
31,226
46,829
390
Net profit
9,064
2,251
2,258
15
Other comprehensive income
1,028
(80)
379
(15)
Total comprehensive income
10,092
2,637
770,516
766,423
368,617
Others
Corporate bonds
Government agency bonds
Government bonds
Debt securities
9.6 Securities at fair value through profit or loss
FINANCIAL ASSETS (continued)
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
9
401,899
399,758
121,016
108,275
112,419
113,779
Subtotal
135,866
Equity securities
Common stocks
40,035
6,119
14,683
94,984
154,406
401
3,133
88,291
144,131
603
5,689
6,762
380
RMB million
As at 31
December 2015
December 2016
RMB million
As at 31
Subtotal
Funds
Listed overseas
144,443
China Life Insurance Company Limited Annual Report 2016
RMB million
37,163
42,022
266
362,595
359,611
399,758
401,899
91,011
85,658
25,034
8,391
232
172
250,388
274,396
366,665
As at 31
December 2015
32,598
December 2016
RMB million
Total
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
9
174
FINANCIAL ASSETS (continued)
9.5 Available-for-sale securities (continued)
Debt securities
Listed in Mainland, PRC
Listed in Singapore
Unlisted
Subtotal
Equity securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted
Subtotal
As at 31
Government agency
89
Unlisted
holders of the associates and
joint ventures
97,540
41,231
19,531
Current
44,722
Total equity attributable to equity
31,218
11,223
18,334
Total
55,945
49,552
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
Non-current
600
600
2,452
million
RMB
million
Total assets
1,836,587
148,185
65,634
8,598
600
Total liabilities
1,739,047
99,995
46,103
6,146
Total equity
97,540
48,190
19,531
For the year ended 31 December 2016
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
207,267
231,005
207,267
538,325
562,622
538,325
562,622
6,333
6,333
6,333
6,333
745,586
749,709
745,586
FINANCIAL ASSETS
9.1 Held-to-maturity securities
Debt securities
226,573
RMB
550,844
504,075
investment contracts:
GAGAG
Carrying value
As at 31
December 2016
As at 31
December 2015
Estimated fair value (i)
As at 31
December 2016
As at 31
December 2015
RMB million
RMB million
RMB million
RMB million
Held-to-maturity securities (ii)
Loans (iii)
Term deposits
Statutory deposits – restricted
Available-for-sale securities, at fair value
594,730
619,152
RMB
million
million
million
43,006
Total
209,124
137,990
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.
175
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
9
FINANCIAL ASSETS (continued)
9.7 Securities purchased under agreements to resell
176
Maturing:
Within 30 days
After 30 but within 90 days
54,718
Total
Subtotal
10,746
134,805
86,076
154,406
94,984
Subtotal
Equity securities
Listed in Mainland, PRC
GAGAG
37,614
32,427
Listed in Hong Kong, PRC
Listed overseas
74
70
6,284
6,099
Unlisted
4,410
56
9.8 Accrued investment income
December 2016
RMB million
Total
55,945
49,552
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
8
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
The following table illustrates the summarised financial information of the Group's major associates and joint
venture as at 31 December 2015 and for the year ended 31 December 2015:
GAGAG
COFCO
CGB Sino-Ocean
CLP&C
Futures
Sanya
Company
RMB
RMB
2,144
As at 31
2,540
15,703
As at 31
December 2015
RMB million
43,518
20
21,503
43,538
21,503
As at 31
December 2016
As at 31
December 2015
RMB million
RMB million
Bank deposits
Debt securities
35,763
31,705
17,642
Others
2,452
4,320
ended 31 December 2016
Total, net
7,857
10,367
- Unearned premiums
9,218
11,435
- Claims and claim adjustment expenses
Short-term insurance contracts
1,697,527
1,824,173
Long-term insurance contracts
Net
(1,383)
(2,011)
Total, ceded
(87)
(125)
1,847,986
1,715,985
G2525
Total,
gross
Recoverable from reinsurers
1,845,975
Long-term insurance contracts (Note 12)
(1,246)
Short-term insurance contracts
- Claims and claim adjustment expenses (Note 12)
(103)
(50)
- Unearned premiums (Note 12)
(1,783)
1,714,602
181
25252
5,181
9,268
7,316
Cash paid for claims settled
- Cash paid for current year
- Cash paid for prior year
claims
7,520
(16,364)
claims
(8,877)
(6,865)
Claims incurred
- Claims arising in current year
- Claims arising in prior years
(12,349)
7,944
2,135
RMB million
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
year
14
INSURANCE CONTRACTS (continued)
1,748
(c) Movements in liabilities of short-term insurance contracts
Notified claims
Incurred but not reported
Total as at 1 January – Gross
2016
2015
RMB million
The table below presents movements in claims and claim adjustment expense reserve:
Total as at 31 December - Gross
10,492
11,538
INSURANCE CONTRACTS (continued)
14
ended 31 December 2016
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
25252
179
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.
3.23%-5.32%
3.42%-5.78%
As at 31 December 2015
As at 31 December 2016
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:
4.45%-4.85%
4.80%-5.00%
As at 31 December 2015
50,295
53,688
14
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
INSURANCE CONTRACTS
(a) Process used to decide on assumptions (continued)
(a) Process used to decide on assumptions
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.
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
G2525
As at 31 December 2016
(i)
(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 (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. 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.
INSURANCE CONTRACTS (continued)
(a) Process used to decide on assumptions (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 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.
(b) Net liabilities of insurance contracts
Notes to the Consolidated Financial Statements
Gross
- Claims and claim adjustment expenses
- Unearned premiums
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
1,825,956
1,698,773
Long-term insurance contracts
Short-term insurance contracts
9,268
China Life Insurance Company Limited Annual Report 2016
180
Risk margin is considered in the Group's mortality and morbidity assumptions.
(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:
As at 31 December 2016
As at 31 December 2015
Individual Life
RMB Per Policy
37.00-45.00
37.00-45.00
14
Group Life
RMB Per Policy
% of Premium
0.85%-0.90%
0.85%-0.90%
15.00
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.
% of Premium
Maturity date
27,120
391
142,006
12
50,295
53,688
RMB million
RMB million
As at 31
December 2015
As at 31
December 2016
Total
- At fair value through profit or loss
At amortised cost
Investment contracts without DPF
Investment contracts with DPF at amortised cost
INVESTMENT CONTRACTS
15
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 morbidity rate as at the reporting date. Changes in assumptions other than
morbidity rates increased insurance contract liabilities by RMB7 million.
For the year ended 31 December 2016, the change in other assumptions was mainly caused by
the change in morbidity rate assumptions of certain products, which increased insurance contract
liabilities by RMB464 million. This change reflected the Group's most recent experience and future
expectations about the morbidity rates as at the reporting date. Changes in assumptions other than
morbidity rates increased insurance contract liabilities by RMB10 million.
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.
390,438
331,582
(353,048)
(300,990)
73,644
68,741
33,797
14,262
474
987
1,413
1,043
1,825,956
1,698,773
8,510
14
195,706
84,106
16 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
184
As at 1 January
15 INVESTMENT CONTRACTS (continued)
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
25252
4,767
The table below presents movements of investment contracts with DPF:
1,588,900
17
2015
GAGAG
183
1,164
1,106
(34)
(36)
2016
(2,543)
3,746
4,680
47,962
50,295
RMB million
RMB million
(2,357)
20,497
2015
RMB million
(i)
Increase
7,165
(65)
7,230
7,857
(87)
7,944
As at 1 January
Net
Ceded
Gross
Net
Ceded
Gross
RMB million
2015
2016
RMB million
669
11,538
9,268
Notified claims
2,085
1,748
10,492
Incurred but not reported
7,520
Total as at 31 December - Gross
11,538
9,268
182
The table below presents movements in unearned premium reserves:
9,453
(125)
10,367
7,944
INSURANCE CONTRACTS (continued)
14
(d) Movements in liabilities of long-term insurance contracts
The table below presents movements in the liabilities of long-term insurance contracts:
2016
RMB million
1,698,773
For the year ended 31 December 2016
As at 1 January
Premiums
Accretion of interest
Change in assumptions
- Change in discount rates
– Change in other assumptions (ii)
Other movements
As at 31 December
Release of liabilities (i)
(ii)
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
(87)
(87)
7,857
Release
(7,944)
87
(7,857)
7,857
(7,230)
(7,165)
As at 31 December
10,492
(125)
10,367
7,944
65
Interest rate
For the year ended 31 December 2016
As at 31
December 2015
Equity securities
Realised gains
Impairment
Subtotal
Total
Net realised gains on financial assets are from available-for-sale securities.
189
(143)
46
(4)
8,505
(2,513)
32,622
(321)
5,992
32,301
6,038
32,297
As at 31
December 2016
RMB million
2015
2016
ended 31 December
year
For the
NET FAIR VALUE GAINS/(LOSSES) THROUGH PROFIT OR LOSS
Subtotal
23
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
25252
187
ended 31 December 2016
Impairment
Realised gains
Debt securities
8,950
19,744
1,382
5,683
18,526
17,499
527
24,541
RMB million
2015
RMB million
For the year ended 31 December
2016
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
24,854
RMB million
326
32,285
GAGAG
2015
RMB million
RMB million
For the year ended 31 December
2016
NET REALISED GAINS ON FINANCIAL ASSETS
22
27,851
For the year ended 31 December 2016, the interest income included in investment income was RMB88,876
million (2015: RMB88,306 million). All interest income was accrued using the effective interest method.
109,147
89
368
971
11,115
12,018
97,582
RMB million
Debt securities
Equity securities
352,962
Total
109,509
(338)
109,847
21,009
(743)
(157)
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
221,701
(248)
221,949
Life insurance death and other benefits
For the year ended 31 December 2015
21,166
Total
352,219
INVESTMENT CONTRACT BENEFITS
106
181
784
3,430
3,126
1,460
2015
RMB million
25
RMB million
Total
Interest expenses for securities sold under agreements to repurchase
Interest expenses for interest-bearing loans and borrowings
Interest expenses for bonds payable
188
26 FINANCE COSTS
Benefits of investment contracts are mainly the interest credited to investment contracts.
For the year ended 31 December
2016
China Life Insurance Company Limited Annual Report 2016
407,045
408,499
10,209
(7,094)
(61)
(48)
180
191
Gross
9,324
766
(918)
24 INSURANCE BENEFITS AND CLAIMS EXPENSES
Total
Financial liabilities at fair value through profit or loss
Stock appreciation rights
(6,319)
(1,454)
Ceded
RMB million
126,619
(537)
127,156
27,269
(250)
27,519
Net
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
(667)
253,824
Life insurance death and other benefits
For the year ended 31 December 2016
RMB million
RMB million
253,157
Total
During the year ended 31 December 2016, the Group recognised an impairment charge of RMB1,615 million
(2015: RMB147 million) of available-for-sale funds, an impairment charge of RMB898 million (2015: RMB174
million) of available-for-sale common stocks, and an impairment charge of RMB143 million (2015: Nil) of
available-for-sale debt securities, for which the Group determined that objective evidence of impairment existed.
Loans
28,000
28,000
5 November 2012
5 November 2022
4.58%
10,000
10,000
Total
38,000
68,000
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
17
BONDS PAYABLE (continued)
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. On 26 October 2016, the Company exercised the option right to redeem the subordinated bonds issued on
26 October 2011, and redeemed all of the subordinated bonds registered on the record date of redemption, with
the amount of RMB30,000 million.
Subordinated bonds are measured at amortised cost as described in Note 2.14.
81,088
3,432
15,609
27,922
65,479
As at 31
December 2015
RMB million
4.70%
As at 31
December 2016
RMB million
Within 30 days
Maturing:
Total
Stock exchange market
Interbank market
18 SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Total
29 June 2022
29 June 2012
30,000
6,521
2.40%
30 September 2019
Guaranteed loans
6,579
2.30%
Guaranteed loans
27 September 2019
2,643
2,339
3.54%
17 June 2019
Guaranteed loans
RMB million
Guaranteed loans
31,354
Securities purchased under agreements to resell
Others
731
5.50%
26 October 2021
26 October 2011
As at 31
December 2015
RMB million
As at 31
December 2016
RMB million
Interest rate p.a.
1.50%
Maturity date
Par value
As at 31 December 2016, all bonds payable were subordinated bonds with a total carrying value of RMB37,998
million (as at 31 December 2015: RMB67,994 million) and the par value of RMB38,000 million (as at 31
December 2015: RMB68,000 million).
BONDS PAYABLE
2,643
16,170
Total
Issue date
GAGAG
9 June 2017
31,354
845
654
511
657
1,045
742
7,699
634
1,117
1,611
2,598
3,713
2,550
5,488
1,032
5,220
5,584
26,514
Bank deposits
81,088
- at fair value through profit or loss
- available-for-sale securities
Equity securities
- at fair value through profit or loss
36,836
- available-for-sale securities
Debt securities
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.
26,514
36,836
26,514
36,836
-held-to-maturity securities
7,234
21 INVESTMENT INCOME
8,006
Payable to third party holders of consolidated trust schemes
Salary and welfare payable
Interest payable to policyholders
OTHER LIABILITIES
19
For the year ended 31 December 2016
Brokerage and commission payable
Notes to the Consolidated Financial Statements
185
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
2016, the carrying value of securities deposited in the collateral pool was RMB81,280 million (as at 31 December
2015: RMB67,169 million). The collateral is restricted from trading during the period of the repurchase
transaction.
As at 31 December 2016, bonds with a carrying value of RMB76,207 million (as at 31 December 2015:
RMB28,802 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.
6,410
81,088
31,354
China Life Insurance Company Limited Annual Report 2016
Agent deposits
25252
Interest payable of debts
Payable to constructors
RMB million
December 2016
As at 31
RMB million
STATUTORY INSURANCE FUND
Total
As at 31
December 2015
20
Current
Non-current
Total
Stock appreciation rights (Note 31)
Others
Tax payable
186
62.17%
80,000
First-year regular premiums
with 10 years or longer
payment duration
Structure breakdown of first-year regular premiums from
First-year regular premiums with
10 years or longer payment duration
13.80%
agent channel
24.03%
60,000
the exclusive individual
Year
2016
0
with payment duration less
than 10 years
First-year regular premiums
20,000
29,032
46,337
59.6%
18,447
Year 2015
28,193
First-year regular premiums from the exclusive individual agent channel
First-year regular premiums with
payment duration from 5 to 9 years
Year 2016
(RMB million)
40,000
First-year regular premiums with
payment duration less than 5 years
6,133
15
Year 2016
Year 2015
Exclusive Individual Agent Channel. During the Reporting Period, by optimizing the business
structure and improving the quality as well as expanding the size of sales team, businesses of the
exclusive individual agent channel achieved a strong growth, remaining the leading position in the
market. The gross written premiums from the exclusive individual agent channel of the Company
amounted to RMB282,136 million, an increase of 24.9% year-on-year. First-year regular premiums
of individual insurance increased by 57.0% year-on-year, first-year regular premiums with ten years
or longer payment duration increased by 59.6% year-on-year, 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 86.20% and 62.17%, respectively.
Renewal premiums from the exclusive individual agent channel increased by 16.4% year-on-year.
Through the implementation of structural transformation and the development strategy aiming at
improving the quality and expanding the size of sales force, the Company increased the qualified new
recruits, reinforced training for agent managers so as to further improve the productivity of its sales
team, consolidate the foundation for sales force development and further optimize its quality. As at the
end of the Reporting Period, the number of exclusive individual agents reached 1,495,000, a 52.7%
increase from the end of 2015, and the quarterly number of productive agents on average increased by
67.1% year-on-year.
Long-term premiums from the bancassurance channel
(RMB million)
Bancassurance Channel. During the Reporting Period, the bancassurance channel deepened the
restructuring, accelerated the development of regular premium businesses, continued to reduce single
premium business, and improved the business value to the Company. First-year regular premiums from
bancassurance channel were RMB17,835 million, an increase of 30.0% year-on-year. The percentage of
first-year regular premiums with five years or longer payment duration in first-year regular premiums was
52.17%. Single premiums were RMB68,047 million, a decrease of 7.4% year-on-year. Regular premium
businesses made by major banks and postal offices achieved a rapid growth since the Company promoted
sales via electronic bank sales channels, such as E-Banking, self-service terminals, mobile banks, etc. During
the Reporting Period, the number of sales representatives in the bancassurance channel reached 234,000.
Short-term insurance premiums
Long-term insurance premiums
25,000
20,000
15,000
10,000
5,000
0
4,124
15,983
18,782
Year 2015
Year 2016
Gross written premiums from the group insurance channel
(RMB million)
Group Insurance Channel. During the Reporting Period, the group insurance channel actively strengthened
the promotion of core businesses, continuously promoted the diversified business development, and the
overall business developed steadily. During the Reporting Period, the gross written premiums from the
group insurance channel of the Company amounted to RMB24,915 million, an increase of 23.9% year-
on-year. The short-term insurance premiums from the group insurance channel amounted to RMB18,782
million, an increase of 17.5% year-on-year. As the sales force in the group insurance channel expanded
rapidly, the number of direct sales representatives reached over 85,000 as at the end of the Reporting Period.
16
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2016
25252
52525
57.0%
Management Discussion and Analysis
Renewal business
China Life Insurance Company Limited
21,813
13,714
17,835
First-year regular
73,508
68,047
Single
87,222
85,882
First-year business of long-term insurance
106,028
18,558
108,256
15,983
18,782
Short-term insurance business
553
703
Renewal business
199
859
First-year regular
3,372
68,047
Bancassurance Channel
Short-term insurance business
561
248
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.
Other channels mainly include supplementary major medical insurance business, tele-sales, etc.
363,971
430,498
2.
1.
Notes:
Total
9,806
13,220
Short-term insurance business
864
1,160
Renewal business
508
721
First-year regular
701
90
Single
1,209
First-year business of long-term insurance
11,879
15,191
Other Channels¹
Annual Report 2016
21,813
811
7.4%
3.42%
78,147
3.13%
76,906
Other equity investments
2.29%
52,475
3.44%
84,338
Financial product investments²
7.41%
169,485
4.89%
119,973
Funds
4.87%
111,516
5.71%
140,166
Common stocks
17.99%
411,623
17.17%
421,383
Equity investments
Investment properties
4.40%
1,191
1,237
4,571
Cash and others include cash, cash at banks, short-term bank deposits and securities purchased under
agreements to resell.
Other equity investments include private equity funds, unlisted equities, and preference shares, etc.
Funds include equity funds, bond funds and money market funds, etc. In particular, the balances of money
market funds as at 31 December 2016 and 31 December 2015 were RMB13,609 million and RMB67,282
million, respectively.
6.
5.
4.
Other fixed-maturity investments include policy loans, and statutory deposits-restricted, etc.
3.
Financial product investments include debt investment plans, equity investment plans, trust schemes, wealth
management products, project asset-backed plans, and specialized asset management plans, etc.
2.
The figures as at the end of last year were adjusted on the same basis.
1.
Notes:
100.00%
2,287,639
100.00%
2,453,283
Total
4.27%
97,599
4.51%
110,584
Cash and others
0.05%
0.05%
17,835
100,435
119,211
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2016
25252
52525
17
As at the end of the Reporting Period, the Company's investment assets reached RMB2,453,283 million,
an increase of 7.2% from the end of 2015. Among the major types of investments, the percentage of bonds
was 45.63% as compared to 43.55% as at the end of 2015, the percentage of term deposits was 21.94% as
compared to 24.59% as at the end of 2015, the percentage of investment in stocks and funds (excluding
money market funds) was 10.05% as compared to 9.34% as at the end of 2015, and the percentage of
investment in financial products was 9.28% as compared to 7.44% as at the end of 2015.
In 2016, the global economy experienced a weak recovery, and the international financial market has
undergone a greater fluctuation. The downward pressure on the domestic economy has been eased and the
domestic economy was by and large stable. China's A share market fluctuated within a narrow range after
plummeting at the beginning of the year. The bond market has experienced range-bound fluctuations,
and in the fourth quarter, bond yields increased significantly. In 2016, with further optimization of its
investment management system, the Company continually expanded the size of market-oriented third
party asset management, accelerated the development of its alternative investment platform, and steadily
pushed forward the diversified and decentralized investment arrangements. In terms of investment
strategies, following the rules for the insurance asset investments and adhering to the general principle
of matching assets and liabilities, the Company caught up with the market timing with respect to fixed
income investment allocation, increased allocation in assets with long duration, controlled risk exposure and
maintained its allocation in equity investment in the open market at a reasonable level. Aiming at making
long-term strategic investments in non-traditional assets, the Company continued to further global asset
allocations and actively engaged in projects such as health- and pension-related programs, infrastructure and
premium commercial properties both within China and abroad, so as to further diversify the sources for
investment portfolio income.
(III) Asset Management
Other Channels. During the Reporting Period, gross written premiums from other channels were
RMB15,191 million, an increase of 27.9% year-on-year, among which the first-year regular premiums of
long-term insurance from tele-sales increased by over 40% year-on-year. The Company also actively carried
out online marketing activities, and both the premiums and the number of insurance policies from on-
line sales increased substantially as compared to the same period of last year. The Company also actively
and steadily promoted its supplementary major medical insurance business, and as at the end of 2016, had
undertaken accumulatively more than 250 supplementary major medical insurance projects serving 420
million people.
Management Discussion and Analysis
Annual Report 2016
China Life Insurance Company Limited
First-year regular premiums
Renewal premiums
120,000
100,000
80,000
60,000
Single premiums
40,000
20,000
0
18,558 13,714
73,508
30.0%
18
4.86%
1.
As at the end of the Reporting Period, our investment assets categorized by investment object are set
out as below:
Other fixed-maturity investments³
5.15%
117,887
5.84%
143,201
Financial product investments²
43.55%
996,236
45.63%
1,119,388
Bonds
24.59%
562,622
21.94%
538,325
Term deposits
77.69%
1,777,180
78.27%
1,920,125
Fixed-maturity investments
Percentage
RMB million
As at 31 December 2015¹
Amount
As at 31 December 2016
Amount Percentage
Investment category
Investment Portfolios
Single
Management Discussion and Analysis
5,430
First-year premiums from long-term policies
(RMB million)
Out of the premiums from new policies, first-year regular premiums amounted to RMB93,945 million, an
increase of 51.8% year-on-year, which surpassed the single premiums for the first time since the listing of
the Company. First-year regular premiums with ten years or longer payment duration reached RMB51,378
million, increased by 59.0% year-on-year. Both of them doubled over the past two years, with their growth
rates setting record highs since the listing of the Company. Renewal premiums reached RMB223,502
million, an increase of 16.6% year-on-year, which set a record high in the past five years. As at 31 December
2016, the number of in-force policies increased by 13.9% from the end of 2015. The Policy Persistency Rate
(14 months and 26 months) reached 90.20% and 85.90%, respectively; and the Surrender Rate³ was 3.54%,
a decrease of 2.01 percentage points from 2015.
China Life Insurance Company Limited Annual Report 2016
25252
11
52525
17.6%
Calculated according to the premium data of life insurance companies in 2016 released by the CIRC.
500,000
400,000
300,000
200,000
100,000
Year 2016
0
426,230
Year 2015
Year 2016
Net premiums earned
(RMB million)
During the Reporting Period, the Company's net premiums earned were RMB426,230 million, an increase
of 17.6% year-on-year, which made the Company the first and the sole insurance company in China with
premiums exceeding RMB400,000 million. The Company's market share² was approximately 19.9%,
remaining the first place in the industry.
In 2016, facing the complex and changing economic environment and the challenges from the fierce market
competition, the Company adhered to the overall strategy of innovation-driven development, regarded
transformation and upgrading as the main focus, followed the business strategy of "prioritizing value,
strengthening sales force, optimizing business structure, achieving stable growth and safeguarding against
risks", accelerated the development of its core businesses, and advanced the transformation of its sales model.
The Company worked cohesively as a whole to improve, explore and innovate, so as to achieve a great-leap-
forward development and a historic breakthrough of business restructuring, setting a great start for the “13th
Five-Year Plan".
Note: 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.
85.50
85.90
90.00
90.20
560,277
2.16
652,057
2.46
362,301
Note
72,991
51.8%
40,000
20,000
51,378
25,766
32,312
0
20,801
Year 2014
29,588
Year 2015
42,567
Year 2016
(RMB million)
93,945
doubled over the past two years
First-year regular premiums
Single premiums
200,000
150,000
100,000
50,000
0
19.3%
3
12
61,900
78,076
Year 2015
First-year regular premiums & first-year regular
premiums with 10 years or longer payment duration
Number of in-force policies (hundred million)
Policy Persistency Rate (14 months) (%)
Policy Persistency Rate (26 months) (%) *
Note
Embedded value
172,364
206,996
Premiums from new policies
3,571
426,230
Net premiums earned
2015
2016
RMB million
(I) Key Performance Indicators
BUSINESS OVERVIEW OF 2016
I
Mr. Zheng Yong, Mr. Zhao Lijun, Mr. Xu Haifeng, Mr. Lin Dairen, Mr. Xu Hengping, Mr. Li Mingguang,
Mr. Xiao Jianyou, Mr. Ruan Qi
Including: First-year regular premiums
From left to right:
China Life Insurance Company Limited Annual Report 2016
25252
52525
9
Beijing, China
23 March 2017
Chairman
By Order of the Board
Yang Mingsheng
The times offer China Life a historic opportunity to develop and prosper, and a noble mission to serve the society. We
will
put ourselves in customers' position, uphold virtues and improve ourselves day after day to achieve perfection.
Standing at a new starting point, we will stick to the general keynote of “making steady progress", focusing on “stability”
of the Company's strategies and operations, and seeking “progress” in transformation and innovation. The Company
will stick to the guideline of supply-side reform, strictly follow the right direction, and advance the three critical tasks
of accelerated growth, transformation and upgrade, and risk prevention and control to improve the level of supply.
We will accelerate our transformation to an operation and management mode which is customer-oriented, featured by
Internet and artificial intelligence, so as to substantially improve customer experience and make China Life the first
choice for customers. We will establish a professional and systematic sales channel management system, fully promote
the sales transformation, and further improve the quality and efficiency of development; adhere to the value-oriented
principle, serve the overall interests of the country, enhance our investment capabilities, and do our best to raise profit
while effectively preventing investment risks; strengthen the management of assets and liabilities, push forward the
diversification of products, increase our efforts in developing the protection type businesses, and gradually promote the
diversification of the Company's profit sources. Meanwhile, we will thoroughly implement a cross-channel operation as
well as insurance-banking collaboration, promote the integration of resources in a deeper and more diverse direction,
and fully exploit the development potential. In the meantime, we will also implement the strategy of innovation driven
development with great efforts, deepen the market-oriented reform, take advantage of our strengths, and continually
enhance the Company's development momentum.
"With a new year coming, spring is back on the earth”. The year 2017 is a year of deepening the supply-side structural
reform and also an important year to make China Life stronger and better. Based on a comprehensive analysis of
domestic and international situations, the global economy is expected to continue its slow growth, and instability and
uncertainty are significantly increasing. China is in a critical stage of overcoming obstacles, with its economy facing
downside pressure and challenges. Despite all these problems accompanying advancement and development, the
fundamental trend of a slower but stable performance with good momentum for economic growth in China remains
unchanged, and golden opportunities for the development of the insurance industry still exist. Especially, with more
stringent regulations and requirements set by the CIRC and the advancement of the industry's transformation, more
opportunities arise for a value-oriented and prudent company like China Life.
2017 OUTLOOK: STABILITY, TRANSFORMATION AND DEVELOPMENT
Annual Report 2016
Chairman's Statement
China Life Insurance Company Limited
Management Discussion and Analysis
93,945
61,900
First-year regular premiums with ten years or longer
payment duration
31 December 2016 31 December 2015
As at
RMB million
As at
Management Discussion and Analysis
Annual Report 2016
China Life Insurance Company Limited
2
10
10
2,306
2,610
371
375
28,851
46,326
31,528
49,311
Bancassurance channel
Group insurance channel
Including: Exclusive individual agent channel
Value of one year's sales
34,699
19,127
Net profit attributable to equity holders of the Company
140,160
108,151
Gross investment income
32,312
51,378
60,000
80,000
362,301
First-year regular premiums
52525
13
363,971
430,498
Total
281
318
Renewal business
77
39
First-year regular
13,403
14,226
25252
Single
14,265
First-year business
13,761
14,583
Accident Insurance Business
17,606
21,869
Renewal business
5,442
6,289
First-year regular
18,993
25,852
13,480
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
14
100,000
First-year business of long-term insurance
20,107
24,915
Group Insurance Channel
6,351
7,497
Short-term insurance business
171,632
199,826
Renewal business
47,479
74,530
495
283
Single
47,974
74,813
First-year business of long-term insurance
225,957
282,136
Exclusive Individual Agent Channel
2015
2016
RMB million
For the year ended 31 December
Gross written premiums categorized by channel:
2.
During the Reporting Period, gross written premiums from the life insurance business of the
Company amounted to RMB361,905 million, an increase of 17.4% year-on-year. Of these, the
first-year regular premiums were RMB87,617 million, an increase of 55.4% year-on-year. The
percentage of first-year regular premiums in first-year premiums was 54.56%. Renewal premiums
were RMB201,315 million, an increase of 15.9% year-on-year. The Company actively promoted
development of the health insurance business and the gross written premiums from which were
RMB54,010 million, an increase of 28.5% year-on-year. Gross written premiums from the accident
insurance business amounted to RMB14,583 million, an increase of 6.0% year-on-year.
Single
24,435
First-year regular
First-year business
30,000
20,000
10,000
0
49,311
23,253
31,528
Year 2014
Year 2015
Year 2016
Value of one year's sales doubled over the past two years
(RMB million)
The Company adhered to the value-oriented principle and actively promoted the development of long-term
regular businesses and protection type businesses. In 2016, the value of one year's sales was RMB49,311
million, an increase of 56.4% year-on-year, setting a record high since the year 2005, with the value doubled
over the past two years. As at 31 December 2016, the embedded value of the Company was RMB652,057
million, an increase of 16.4% year-on-year.
Management Discussion and Analysis
Year 2016
Annual Report 2016
Surrender Rate = Surrender payment/(Liability of long-term insurance contracts at the beginning of the period + Premiums of
long-term insurance contracts)
payment duration
regular
premiums with
10 years or longer
First-year
premiums
First-year
Year 2014
99.4%
101.7%
Year 2016
First-year regular premiums
with 10 years or longer
payment duration
32,141
with payment duration less
than 10 years
China Life Insurance Company Limited
112.1%
regular
50,000 Year 2014
54,010
40,000
42,041
Health Insurance Business
173,720
201,315
56,381
87,617
First-year regular
78,068
72,973
Single
134,449
160,590
Renewal business
361,905
308,169
1.
Gross written premiums categorized by business:
year
ended 31 December
Affected by such factors as the downturn of interest rate and the fluctuations in the capital market, the
Company's gross investment income in 2016 was RMB108,151 million, a 22.8% decrease year-on-year. Due
to the decrease in gross investment income and the update on the discount rate assumption for reserves of
traditional insurance contracts, during the Reporting Period, net profit attributable to equity holders of the
Company was RMB19,127 million, a 44.9% decrease year-on-year.
For the
2016
2015
Life Insurance Business
First-year business
RMB million
(II) Insurance Business
50.00%
indirectly
74.27%
Management Company
HKD130
China Life Franklin Asset
and indirectly
HKD130
and indirectly
directly
directly
Pension Company
74.27%
RMB2,746
AMC
directly
directly
60.00%
RMB1,680
50.00%
indirectly
60.00%
RMB1,680
RMB2,746
Limited ("AMC HK")
indirectly
RMB800
100.00%
100.00%
As at 31 December 2016
Percentage
of holding
Golden Phoenix Tree Limited
indirectly
indirectly
100.00%
RMB200
100.00%
RMB200
CL Wealth
indirectly
85.03%
- RMB500
85.03%
RMB500
CL AMP
directly
directly
100.00%
RMB1,326
RMB 526
100.00%
Suzhou Pension Company
million
China Life Insurance Company Limited Annual Report 2016
Decrease
million
Notes to the Consolidated Financial Statements
(iii) For those subsidiaries which were not set up or invested in Mainland China, the legal definition of
registered capital is not applicable for them.
Registered capital of Franklin Shenzhen Company is USD2 million, and its paid-in capital is USD0.6
million as at 31 December 2016.
On 6 February 2016, Suzhou Pension Company completed its business registration modification
procedure, and the registered capital was changed to RMB1,060 million. In December 2016, the
Company completed a RMB526 million capital contribution to Suzhou Pension Company. After the
contribution, the paid-in capital of Suzhou Pension Company increased from RMB800 to RMB1,326
million. As at 31 December 2016, since the business registration modification procedure for the
registered capital of Suzhou Pension Company was still in progress, the registered capital remained
RMB1,060 million.
USD2
USD2
(ii)
(i)
("Franklin Shenzhen Company") (ii)
RMB1,730
For the year ended 31 December 2016
RMB1,730
Equity Investment Fund
China Life Franklin (Shenzhen)
China Life (Beijing) Health
Management Co., Limited
("CL Health")
194
RMB6,800
RMB6,800
("Rui Chong Company")
Investment Co., Limited
directly
Shanghai Rui Chong
Management Co., Limited
Amount
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Percentages of holding of related parties with control relationship and changes during the
Increase
million
Percentage
of holding
million
Amount
As at 31 December 2015
Subsidiaries
GAGAG
68.37%
RMB19,324
68.37%
(f)
RMB19,324
As at 31 December 2016
Amount Percentage
of holding
million
Decrease
million
Increase
million
Percentage
of holding
million
Amount
As at 31 December 2015
Shareholder
year
CLIC
directly
25252
100.00%
directly
100.00%
indirectly
CL Health (i)
RMB1,730
RMB1,730
100.00%
directly
Franklin Shenzhen Company (ii)
USD0.6
100.00%
USD0.6
indirectly
195
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2016
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(f)
Percentages of holding of related parties with control relationship and changes during the
year (continued)
100.00%
(i) New Aldgate Limited, Glorious Fortune Forever Limited, CL Hotel Investor, L.P., Golden Bamboo Limited,
Sunny Bamboo Limited, Fortune Bamboo Limited, Century Core Fund and CL Health are new subsidiaries set up
or invested by the Company in 2016.
directly
directly
RMB200
RMB6,199
100.00%
RMB6,199
100.00%
directly
directly
New Aldgate Limited (i)
100.00%
Glorious Fortune
100.00%
Forever Limited (i)
directly
.....100.0
100.00
%
directly
100.00%
CL Hotel Investor, L.P. (i)
Golden Bamboo Limited (i)
Sunny Bamboo Limited (i)
Fortune Bamboo Limited (i)
China Century Core
Fund Limited
("Century Core Fund") (i)
directly
100.00%
(ii) Franklin Shenzhen Company is a new subsidiary set up by AMC HK in 2016.
Transactions with significant related parties
The following table summarises significant transactions carried out by the Group with its significant related
parties:
ༀ ཤྲཱི མྲྀ ཎྜ མི ཁོ ཡ །
950
133
26
18
17
Agency fee received from CLP&C
(iii)(viii)
2,337
1,464
Claim and other payments received from CLP&C
Payment of an agency fee to CLP&C
2
4
Rental and a service fee received from CLP&C
43
49
Payment of rental, project fee and others expenses to CLRE
Rui Chong Company
indirectly
indirectly
100.00%
(iii)
49
Payment of insurance premium to CLP&C
36
196
Notes
For the year ended 31 December
2016
RMB million
2015
RMB million
Transactions with CLIC and its subsidiaries
Policy management fee received from CLIC
(i)(viii)
869
Asset management
fee received from CLIC
(ii.a)
124
Payment of dividends from the Company to CLIC
8,116
7,729
Distribution of profits from AMC to CLIC
143
Asset management
fee received from CL Overseas
(ii.b)
74
Asset management fee received from CLP&C
(ii.c)
King Phoenix Tree Limited
RMB200
198
RMB1,060
RMB588
RMB million
15,955
13,045
838
824
1,798
1,678
2,083
2,036
(582)
(812)
58
60
ΤΑΧΑΤΙΟΝ
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:
Current taxation - Enterprise income tax
Deferred taxation
Taxation charges
For the year ended 31 December
2016
RMB million
2015
2015
Foreign exchange losses/(gains)
Payment of an asset management fee to CLI
97
141
Payment to CLI for purchase of fixed assets
17
13
Asset management fee received from CLI
84
81
(iv)
Property leasing expenses charged by CLI
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
27 PROFIT BEFORE INCOME TAX
Profit before income tax is stated after charging/(crediting) the following:
For the year ended 31 December
2016
28
Employee salaries and welfare costs
Housing benefits
Contribution to the defined contribution pension plan
Depreciation and amortisation
Auditor's remuneration
(ii.d)(viii)
RMB million
5,200
1
(49)
(41)
108
(30)
4,257
10,744
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.
189
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2016
TAXATION (continued)
28
(c)
As at 31 December 2016 and 2015, 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)
190
58
RMB million
2,655
(3,324)
15,408
(943)
(4,664)
4,257
10,744
(b) The reconciliation between the Group's effective tax rate and the statutory tax rate of 25% in the PRC
(2015: 25%) is as follows:
G2525
Profit before income tax
Tax computed at the statutory tax rate
Non-taxable income (i)
Expenses not deductible for tax purposes (i)
Unused tax losses
Tax losses utilised from previous periods
Others
Income tax at the effective tax rate
(i)
For the
RMB million
year ended 31 December
2016
2015
RMB million
23,842
45,931
5,961
11,483
(6,080)
4,259
As at 1 January 2015
298
Property leasing income received from CLI
Payment of a business management service fee to
CL Ecommerce
443
entities to the Company
Distribution from the Group's consolidated structured
structured entities and the Company
Transactions between the Group's consolidated
500
526
(ix)
Investment in Suzhou Pension Company
Transactions between Suzhou Pension Company and the Company
14
14
(ii.f)
Payment of an investment management fee to AMC HK
Transactions between AMC HK and the Company
14
14
20
31
(vii)
24
187
34
Notes:
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.
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.
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.
(iv)
(iii)
C
(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 one year. 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. The agreement was
automatically renewed for one year on 19 September 2015. On 18 September 2016, the Company and AMC
HK renewed the agreement, which became effective from 19 September 2016 and expires on 31 December 2018.
Asset management fees charged to the Company by AMC HK are eliminated in the consolidated statement of
comprehensive income.
(ii.d) On 3 February 2016, the Company and CLI renewed a management agreement of alternative investment of
insurance funds, which is 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.
(ii.e) On 29 December 2015, the Company and AMC renewed a renewable agreement for the management of insurance
funds, effective from 1 January 2016 to 31 December 2018. In accordance with the agreement, the Company
entrusted AMC to manage and make investments for its insurance funds and paid AMC a fixed service fee and a
variable service fee. The fixed annual service fee was calculated and payable on a monthly basis, by multiplying
the average net value of the assets under management by the rate of 0.05%; the variable service fee was payable
annually, based on the results of performance evaluation, at 20% of the fixed service fee per annum. The service
fees were determined by the Company and AMC based on an analysis of the cost of service, market practice and the
size and composition of the asset pool to be managed. Asset management fees charged to the Company by AMC are
eliminated in the consolidated statement of comprehensive income.
(ii.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 is 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 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.
Notes (continued):
Transactions with significant related parties (continued)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
ended 31 December 2016
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
25252
197
(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 renewed for
one year. 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. As at the approval date of the consolidated financial statements, CL Overseas has reached a consensus
with AMC HK on the renewal and clauses of the agreement. The sign-off is still pending for the approval from
Hong Kong local supervision department. The original terms are effective until the new agreement is signed.
(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 and interests accrued
for from 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.
(i)
167
business from Pension Company
entrusted sales of annuity funds
38
80
422
248
corporate
Transactions between EAP and the Group
Contribution to EAP
Transactions between Sino-Ocean and the Group
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
Commission expenses charged by CGB
15
42
(v)
524
685
Interest on deposits received from CGB
Transactions between CGB and the Group
29
29
56
(vi)
38
38
34
Marketing fee income for promotion of annuity
60
337
Agency fee received from Pension Company for
Rental received from Pension Company
GAGAG
158
215
1,020
1,081
2015
RMB million
For the year ended 31 December
2016
RMB million
(ii.e)(viii)
Notes
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
(g) Transactions with significant related parties (continued)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
303
59
CL Wealth
(Charged)/credited to net profit
comprehensive income
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
Immediate and
ultimate holding
company
State-owned
Yang
Mingsheng
(b) Subsidiaries
Refer to Note 39(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.
GAGAG
(d) Other related parties
For the year ended 31 December 2016
China Life Insurance Company Limited Annual Report 2016
There is no difference between basic and diluted earnings per share. The basic and diluted earnings per share for
the year ended 31 December 2016 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 (2015: 28,264,705,000
ordinary shares).
191
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2016
31
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. 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 2016. As at 31 December 2016,
there were 55.01 million units outstanding and exercisable (as at 31 December 2015: 55.01 million units). As at
31 December 2016, the amount of intrinsic value for the vested stock appreciation rights was RMB641 million (as
at 31 December 2015: RMB832 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 3% and a risk-free interest rate ranging from 0.10% to 0.81%.
The Company recognised a gain of RMB191 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 2016
(2015: fair value gain of RMB180 million). RMB641 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 2016 (as at 31 December 2015: RMB832 million and RMB13 million), respectively. There was no
unrecognised compensation cost for the stock appreciation rights as at 31 December 2016 (as at 31 December
2015: Nil).
DIVIDENDS
Pursuant to the shareholders' approval at the Annual General Meeting on 30 May 2016, a final dividend of
RMB0.42 (inclusive of tax) per ordinary share totalling RMB11,871 million in respect of the year ended 31
December 2015 was declared and paid in 2016. The dividend has been recorded in the consolidated financial
statements for the year ended 31 December 2016.
A distribution of RMB386 million (inclusive of tax) to the holders of Core Tier 2 Capital Securities was approved
by management according to the authorization by the Board of Directors in 2016.
Pursuant to a resolution passed at the meeting of the Board of Directors on 23 March 2017, a final dividend of
RMB0.24 (inclusive of tax) per ordinary share totalling approximately RMB6,784 million for the year ended
31 December 2016 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 2016.
192
Notes to the Consolidated Financial Statements
30 EARNINGS PER SHARE
Significant related parties
China Life Real Estate Co., Limited ("CLRE")
Decrease
million
As at 31
December 2016
million
CLIC
RMB4,600
RMB4,600
AMC
RMB4,000
RMB4,000
China Life Pension Company
Limited ("Pension Company")
RMB3,400
RMB3,400
China Life (Suzhou) Pension
and Retirement Investment
Company Limited
("Suzhou Pension Company”) (i)
RMB300
RMB760
CL AMP
RMB588
Increase
million
Relationship with the Company
million
Name of related party
Under common control of CLIC
China Life Insurance (Overseas) Company Limited
Under common control of CLIC
("CL Overseas")
China Life Investment Holding Company
Under common control of CLIC
Limited ("CLI")
China Life Ecommerce Company Limited
("CL Ecommerce")
China Life Enterprise Annuity Fund (“EAP”)
Under common control of CLIC
A pension fund jointly set up by the Company and others
193
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2016
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(e) Registered capital of related parties with control relationship and changes during the year
As at 31
December 2015
(Charged)/credited to other
29 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 RMB14,014 million (2015: RMB32,638 million).
(7,768)
As at 31 December 2015
(1,451)
(16,686)
1,184
(16,953)
As at 1 January 2016
(1,451)
(16,686)
1,184
(16,953)
(Charged)/credited to net profit
(614)
1,126
431
943
(Charged)/credited to other
comprehensive income
- Available-for-sale securities
12,639
12,639
- Portion of fair value changes on
11
available-for-sale securities
3,192
3,192
Insurance
RMB million
Investments
RMB million
Others
RMB million
Total
RMB million
(i)
(ii)
(iii)
(8,316)
(12,095)
1,036
3,673
843
148
(19,375)
4,664
- Available-for-sale securities
- Portion of fair value changes on
available-for-sale securities
attributable to participating
policyholders
- Others
(5,445)
(5,445)
11
(16,953)
attributable to participating
policyholders
(4,343)
Deferred tax liabilities:
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
3,024
9,528
3,626
2,639
6,650
12,167
GAGAG
- deferred tax liabilities to be settled after 12 months
(13,037)
(26,850)
- deferred tax liabilities to be settled within 12 months
(1,381)
(2,270)
Subtotal
(14,418)
(29,120)
Net deferred tax liabilities
Subtotal
- Others
- deferred tax assets to be recovered within 12 months
Deferred tax assets:
(54)
(6,408)
(2,975)
1,615
(4,343)
(54)
(7,768)
As at 31 December 2016
(i)
(ii)
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.
(iii) The deferred tax arising from the others category is mainly related to the temporary differences of
employee salaries and welfare costs payable.
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
28
TAXATION (continued)
(c)
(continued)
Unrecognised deductible tax losses of the Group amounted to RMB807 million as at 31 December 2016
(as at 31 December 2015: RMB727 million). Unrecognised deductible temporary differences of the Group
amounted to RMB219 million as at 31 December 2016 (as at 31 December 2015: RMB186 million).
(d) The analysis of deferred tax assets and deferred tax liabilities is as follows:
- deferred tax assets to be recovered after 12 months
44
38
GAGAG
76,427
39(d)
Investments in associates and joint ventures
11,843
27,353
39(c)
Investments in subsidiaries
1,296
1,247
39(b)
Investment properties
26,421
29,722
39(a)
Property, plant and equipment
ASSETS
RMB million
10
སྨྲ།
258
253
13
463
27,810
524
Statement of financial position
As at 31 December 2016
As at 31
December 2016
Notes
RMB million
As at 31
December 2015
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS
Held-to-maturity securities
39(e)
594,054
39(j)
204,046
135,733
Securities purchased under agreements to resell
39(k)
43,100
Securities at fair value through profit or loss
21,461
39(1)
55,774
49,385
Premiums receivable
11
13,421
Accrued investment income
267
766,799
39(i)
503,489
Loans
39(f)
221,535
203,152
Term deposits
758,802
39(g)
560,807
Statutory deposits - restricted
39(h)
5,653
5,653
Available-for-sale securities
535,361
11,913
186
As at 31
December 2016
RMB million
As at 31
December 2016
RMB million
Others
Property, plant and equipment
Investments
Contracted, but not provided for
(b)
204
investments:
The Group had the following capital commitments relating to property development projects and
Capital commitments
(a)
COMMITMENTS
The Group involves in certain lawsuits arising from the ordinary course of businesses. In order to accurately
disclose the contingent liabilities for pending lawsuits, the Group analysed all pending lawsuits case by case at the
end of each reporting period. A provision will only be recognised if management determines, based on third-party
legal advice, that the Group has present obligations and the settlement of which is expected to result in an outflow
of the Group's resources embodying economic benefits, and the amount of such obligations could be reasonably
estimated. Otherwise, the Group will disclose the pending lawsuits as contingent liabilities. As at 31 December
2016 and 2015, 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.
440
Pending lawsuits
38
588
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.
203
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
As at 31
December 2015
RMB million
year
37
PROVISIONS AND CONTINGENCIES
The following is a summary of the significant contingent liabilities:
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
ended 31 December 2016
39,616
5,462
1
30,453
5,820
34
20
1,423
1,275
The operating lease payments charged to profit before income tax for the year ended 31 December 2016
were RMB994 million (2015: RMB857 million).
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
27
38
(c) Operating lease commitments - as lessor
The future minimum rentals receivable under non-cancellable operating leases are as follows:
Not later than one year
Later than one year but not later than five years
Later than five years
Total
COMMITMENTS (continued)
As at 31
December 2015
RMB million
721
534
Total
Operating lease commitments - as lessee
45,079
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
764
years
Total
36,307
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
632
Later than five years
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 2016, the Company appropriated 10% of net profit under CAS
which amounted to RMB1,927 million to the general reserve for future uncertain catastrophes, which cannot be used for
dividend distribution or conversion to share capital increment (2015: RMB3,438 million). In addition, pursuant to the
CAS, the Group appropriated RMB75 million to the general reserve of its subsidiaries attributable to the Company in the
consolidated financial statements (2015: RMB54 million).
Reinsurance assets
Cash and cash equivalents
fixtures
Buildings furniture and
Office
equipment
Cost
Property, plant and equipment
(a)
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
2,418,226
2,645,487
Total liabilities and equity
304,103
281,012
Total equity
106,375
Share capital
34
28,265
28,265
Other equity instruments
39(q)
Motor
vehicles
7,791
Reserves
39(r)
144,116
161,672
Retained earnings
100,840
7,791
Assets
under
Leasehold
construction improvements
631
177
4,754
13
5,606
Disposals
31
(104)
(140)
(473)
(26)
(1,173)
As at 31 December 2016
24,688
(430)
2,114,123
Additions
256
Total
RMB million
GAGAG
As at 1 January 2016
23,587
6,481
(8)
1,368
1,282
40,262
Transfers
upon completion
1,174
(1,438)
7,544
Other assets
2,364,475
Equity
Investment contracts
1,715,985
1,847,986
14
Insurance contracts
Liabilities
LIABILITIES AND EQUITY
As at 31
December 2015
RMB million
RMB million
Notes
As at 31
December 2016
As at 31 December 2016
Statement of financial position (continued)
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
ended 31 December 2016
year
For the
Total assets
12
2,134
1,420
39(m)
14,252
15
16,294
74,750
2,645,487
2,418,226
205
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
62,606
195,706
84,106
Policyholder dividends payable
30,556
23,182
Deferred tax liabilities
39(p)
7,543
16,883
39(0)
Current income tax liabilities
5,256
20
491
217
Statutory insurance fund
Total liabilities
1,141
206
Other liabilities
35,252
87,725
107,774
Bonds payable
17
37,998
67,994
32,266
Securities sold under agreements to repurchase
81,039
30,368
Annuity and other insurance balances payable
39,038
30,092
Premiums received in advance
39(n)
6,682
Approved at the Annual General Meeting in May 2016, the Company appropriated RMB3,438 million to the
discretionary reserve fund for the year ended 31 December 2015 based on net profit under CAS (2015: RMB3,160
million).
(c)
RMB million
As at 31 December 2016
No. of shares
34 SHARE CAPITAL
As at 31 December 2016, 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 2016, 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
The total compensation package for the Company's key management personnel for the year ended 31
December 2016 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 2015 has been approved by the relevant authorities. The total compensation of 2015 was RMB25 million,
including a deferred payment about RMB5 million.
Salaries and other benefits
(j)
GAGAG
25
18
RMB million
RMB million
2015
For the year ended 31 December
2016
Key management personnel compensation
ཏྲཾ ངྐེ བ སྦྲུལྱཱ ཋ ཛྱེ ས བྱྲེ ༔ ནྱ གྱྱི སྤྱི ཌ ཤ ༈
(1)
47
50
(17)
(6)
As at 31 December 2015
No. of shares
(604)
(8)
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(i)
(325)
RMB million
Registered, authorised, issued and fully paid
Ordinary shares of RMB1 each
28,264,705,000
All shares owned by CLIC are domestic listed shares.
As at 31 December 2016
No. of shares
RMB million
19,323,530,000
19,324
(i)
8,941,175,000
1,500,000,000
1,500
7,441,175,000
7,441
28,264,705,000
28,265
8,941
(40)
Total
Including: Domestic listed
28,265
28,264,705,000
28,265
201
25252
China Life Insurance Company Limited Annual Report 2016
Overseas listed (ii)
Notes to the Consolidated Financial Statements
year
ended 31 December 2016
34 SHARE CAPITAL (continued)
As at 31 December 2016, the Company's share capital was as follows:
Owned by CLIC (i)
Owned by other equity holders
For the
(ii) Overseas listed shares are traded on the Stock Exchange of Hong Kong Limited and the New York Stock Exchange.
(13)
5
200
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.
(h) Amounts due from/to significant related parties
In December 2016, the Company completed a RMB526 million capital contribution to Suzhou Pension Company.
Please refer to Note 33(e).
(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.
Notes (continued):
Transactions with significant related parties (continued)
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
ended 31 December 2016
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
25252
199
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 expires on 31 December 2017,
subject to an automatic one-year renewal if no objections were raised by either party upon expiry. There are
two types of commissions agreed upon in the agreement, which are commissions that occur in daily business
and occur according to the annual promotional plans. Provisions of the commissions for entrusting service of
enterprise annuity funds management remain the same as those in the previous agreement; the agency fee 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 agency fee 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 agency fee 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 income statement of the Group.
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
GAGAG
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Transactions with significant related parties (continued)
The resulting balance due from and to significant related parties of the Group
Notes (continued):
(vi)
(vii)
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 12 August 2016, the Company and CGB renewed the insurance
agency agreement to distribute insurance products. 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. The transactions between the Company and CGB before the effective date of
the renewed agreement complied with the previous agreement.
On 23 March 2016, the Company and CGB signed an 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 selling 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 sale of each category group 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 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 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. On 26 October 2016, the Company and CL Ecommerce
renewed the agreement, which was effective from 1 January 2016 and expired on 31 December 2016. The previous
agreement was terminated automatically when the renewed agreement came into effect. The agreement is subject to
an automatic one-year renewal if no objections are raised by both parties.
On 27 November 2014, the Company and Pension Company signed an 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 2014 and expired after one 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 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 of the agency fee of occupation annuity should be in line with those of enterprise
annuity funds. The charge rate of the agency fee of the group pension plan is in line with that of the investment
management fee of enterprise annuity funds. The agency fee of the personal pension plan is 30% of the daily
management fee of the personal pension plan annually.
(v)
Amount due from CLIC
Amount due to CLIC
Amount due from CL Overseas
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
529
47
332
Amount due to AMC HK
12
(206)
26,342
9,660
365
(17)
643
8
2
(66)
Amount due to AMC
Amount due from Pension Company
Amount due from CLP&C
Amount due to CLP&C
Amount due from CLI
Amount due to CLI
Amount due from CLRE
Amount due to CLRE
Amount due to Pension Company
Amount deposited with CGB
Amount due to CGB
Subordinated debts and corporate bonds of Sino-Ocean
Amount due from Sino-Ocean
Amount due from CL Ecommerce
Amount due to CL Ecommerce
The resulting balance due from and to subsidiaries of the Company
Amount due from CGB
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 RMB1,927 million for the year ended 31 December 2016 (2015:
RMB3,438 million).
35 OTHER EQUITY INSTRUMENTS
202
28,239
180
29,963
1,113
53,860
As at 31 December 2015
296
296
Others
10,090
3,492
3,160
3,438
Appropriation to reserves
7,076
3
364
(b)
(c)
As at 1 January 2015
53,860
817
23,254
24,787
(184)
21,627
21,747
(3)
145,919
Other comprehensive income for the year
6,709
24,801
25,239
163,381
As at 1 January 2016
Others
33
33
As at 31 December 2016
53,860
1,146
7,367
5,100
30,166
28,225
27,241
145,007
(a)
(b)
(738)
(a)
2,002
1,927
53,860
1,113
29,963
180
28,239
24,787
3,438
25,239
Other comprehensive income for the year
(24,863)
(918)
7
(25,774)
Appropriation to reserves
163,381
(a) Basic information
GAGAG
RMB million RMB million RMB million RMB million RMB million RMB million RMB million
295,830
322,492
303,621
As at 31
December 2015
RMB million
As at 31
December 2016
RMB million
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
Equity attributable to equity holders
(b)
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 year and every five years thereafter.
7,791
1,280
7,791
1,280
Total
As at 31
December 2015
Increase
Decrease
As at 31
December 2016
Quantity million
RMB million Quantity million
314,701
RMB million Quantity million
RMB million
Core Tier 2 Capital Securities
1,280
7,791
1,280
7,791
RMB million Quantity million
7,791
7,791
4,027
translating
Share
Other
premium
reserves
for-sale
securities
Statutory Discretionary
the equity
method
fund
reserve
fund
General
reserve
foreign
operations
Total
reserve
RMB million RMB million
under
Exchange
differences on
3,722
4,027
3,722
Refer to Note 32 for the information of distribution to other equity instruments holders of the Company
for the year ended 31 December 2016. As at 31 December 2016, there were no accumulated distributions
unpaid attributable to other equity instruments holders of the Company.
36
RESERVES
available-
China Life Insurance Company Limited Annual Report 2016
For the year ended 31 December 2016
Share of other
Unrealised comprehensive
gains/
(losses) from
income
of investees
Notes to the Consolidated Financial Statements
1,405
25252
1,525
7,544
1,282
40,262
Accumulated depreciation
As at 1 January 2015
(6,469)
(4,382)
1,368
(982)
(12,752)
Charge for the
year
(813)
(639)
(134)
(115)
(919)
(1,701)
6,481
As at 31 December 2015
166
(22)
Additions
51
341
128
2,955
23,587
8
Disposals
(64)
(393)
(133)
(63)
(114)
(767)
3,483
(1,680)
Disposals
126
Net book value
As at 1 January 2015
15,621
2,145
391
6,332
303
(24)
24,792
16,314
1,829
378
7,544
356
26,421
10,387
As at 31 December 2015
369
(24)
As at 31 December 2015
108
636
As at 31 December 2015
(7,249)
(4,652)
(990)
(926)
(24)
(13,817)
208
As at 1 January 2015
Charge for the
year
(24)
49
Disposals
Impairment
6
33
Transfers upon completion
22
620
(8,088)
(4,822)
(983)
(1,048)
(14,941)
136
Impairment
(24)
(24)
Charge for the
year
Disposals
As at 31 December 2016
(24)
As at 1 January 2016
(24)
426
Disposals
44,687
1,486
Accumulated depreciation
As at 1 January 2016
(7,249)
(4,652)
(990)
36
(926)
Charge for the
year
(875)
(596)
(129)
(144)
(1,744)
(13,817)
Net book value
As at 31 December 2016
As at 1 January 2016
ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment (continued)
Cost
Buildings
Office
equipment
furniture
and fixtures
Motor Assets under
Leasehold
vehicles
construction improvements
Total
RMB million
As at 1 January 2015
22,114
6,527
1,373
1,222
37,568
year
For the
6,332
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
16,314
1,829
378
7,544
356
26,421
16,576
As at 31 December 2016
422
10,387
477
29,722
207
25252
1,860
76.42% directly
Collective Fund Trust Scheme
Collective Fund Trust Scheme
Urbanization Developing Fund
Huarun Trust Guokai New
RMB1,975 million
Perpetual Debt Investment
No. 798 Collective Fund Trust
RMB2,000 million
90.00% directly
Shang Xin Huarong Capital
Scheme (the second batch)
Investment management
Investment management
RMB2,000 million
100.00% directly
Investment management
66.67% directly
As at 31 December
Investment management
Jiao Yin Guo Xin Wen Jian
76,427
27,810
China Life Insurance Company Limited Annual Report 2016
27,044
766
48,617
27,810
RMB million
RMB million
2015
2016
Investments in associates and joint ventures
As at 1 January
(d) Investments in associates and joint ventures
Collective Fund Trust Scheme
Indemnificatory Housing
Shang Xin Jing Neng Jin Tai
RMB1,500 million
Communications Construction
100.00% directly
100.00% indirectly
RMB3,000 million
(ii) The table below presents the basic information of the Company's major consolidated structured
entities as at 31 December 2016:
(c) Investments in subsidiaries (continued)
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
ended 31 December 2016
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
25252
211
Non-controlling interests in subsidiaries are not significant to the Company.
Investment
Health management
RMB1,730 million
USD2 million
PRC
Franklin Shenzhen Company
Notes to the Consolidated Financial Statements
Principal activities
Investment management
212
Percentage of shares held
66.67% directly
Investment management
RMB3,698 million
Investment management
RMB4,000 million
49.00% directly and
indirectly
80.24% directly
No. 1 Collective Fund
Trust Scheme
Kun Lun Trust ⚫ China
Investment Fund
CL AMP CSI 300 Index Securities
Fund Trust Scheme
Shang Xin Lv Di Collective
Investment management
RMB8,758 million
88.02% directly
Shang Xin - Ningbo Wu Lu Si Qiao
PPP Collective Fund Trust Scheme
Trust/investments received
Name
For the year ended 31 December 2016
Within 30 days
(e) Held-to-maturity securities
December 2016
RMB million
As at 31
December 2015
RMB million
35,633
31,612
17,613
15,642
As at 31
2,528
55,774
49,385
44,632
31,129
11,142
18,256
55,774
2,131
21,461
43,100
21,461
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(k) Securities purchased under agreements to sell
218
Maturing:
PRC
Total
(1) Accrued investment income
Bank deposits
Debt securities
Others
Total
Current
Non-current
Total
(m) Other assets
As at 31
December 2016
As at 31
December 2015
RMB million
RMB million
43,100
49,385
As at 31
December 2016
As at 31
1,124
Total
Current
Non-current
Total
14,252
16,294
8,484
10,394
5,768
5,900
14,252
16,294
Corporate bonds
Government agency bonds
Government bonds
Debt securities
2,251
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
Others
69
December 2015
RMB million
RMB million
Land use rights
Automated policy loans
Disbursements
5,671
5,809
2,814
2,520
1,718
1,023
Investments receivable
883
4,126
Due from related parties
846
756
Tax refundable
936
CL Health
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December
2016:
Not applicable
As at 31 December 2015
Transfer from property, plant and equipment
(49)
year
Charge for the
(168)
1,513
(217)
1,513
As at 1 January 2015
Accumulated depreciation
As at 31 December 2015
Transfer from property, plant and equipment
Additions
As at 1 January 2015
Cost
Buildings
RMB Million
Net book value
As at 1 January 2015
As at 31 December 2015
As at
As at
Unlisted investments at cost
Investments in subsidiaries
(c)
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
The fair value of investment properties of the Company as at 31 December 2016 amounted to RMB2,377
million (as at 31 December 2015: RMB2,415 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.
2,415
2,231
As at 31 December 2015
As at 1 January 2015
Fair value
1,296
1,345
210
(b) Investment properties (continued)
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
ended 31 December 2016
year
Charge for the
(217)
1,513
1,513
Buildings
RMB million
As at 1 January 2016
Accumulated depreciation
As at 31 December 2016
Transfer from property, plant and equipment
Additions
As at 1 January 2016
Cost
(b) Investment properties
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
For the year ended 31 December 2016
Notes to the Consolidated Financial Statements
(49)
31 December
Transfer from property, plant and equipment
(266)
year
For the
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 2016
25252
209
GAGAG
2,377
As at 31 December 2016
2,415
1,247
1,296
As at 1 January 2016
Fair value
As at 31 December 2016
As at 1 January 2016
Net book value
As at 31 December 2016
31 December
2016
2015
Hong Kong, PRC
Glorious Fortune
Forever Limited
CL Hotel Investor, L.P.
Golden Bamboo Limited
Sunny Bamboo Limited
Fortune Bamboo Limited
Century Core Fund
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
100.00% directly
Investment
Not applicable
USA
100.00% indirectly
The British
Cayman Islands
Investment
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
The British Virgin Islands
Investment
Not applicable
100.00% directly
Investment
Investment
Not applicable
Hong Kong, PRC
Pension Company
60.00% directly
PRC
AMC
Principal activities
Registered capital
equity interest held
and operation
Name
Percentage of
Place of
incorporation
GAGAG
ended 31 December 2016
11,843
27,353
RMB million
RMB million
PRC
100.00% directly
74.27% directly
Asset management
Pension and annuity
Golden Phoenix Tree Limited
Asset management
Investment in
retirement properties
Fund management
Financial service
RMB588 million
RMB200 million
100.00% indirectly
PRC
CL Wealth
85.03% indirectly
PRC
CL AMP
Not applicable
RMB1,060 million
100.00% directly
PRC
Suzhou Pension Company
50.00% indirectly
Hong Kong, PRC
AMC HK
and indirectly
RMB4,000 million
RMB3,400 million
year
399,810
Notes to the Consolidated Financial Statements
As at 31
December 2015
RMB million
182,871
179,965
344,790
380,842
7,700
535,361
As at 31
December 2016
RMB million
560,807
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(h) Statutory deposits - restricted
(i)
Contractual maturity schedule:
Within one year
As at 31 December 2016, the term deposits of RMB13.2 billion (2015: Nil) applying for an overseas
borrowings backed by domestic deposits business are restricted to use. Please refer to Note 9.3 for the
details.
203,152
221,535
8,700
129,093
118,193
221,535
As at 31
December 2016
RMB million
203,152
As at 31
December 2015
RMB million
109,979
90,102
69,753
80,311
24,303
24,039
17,500
After one year but within five years
Total
As at 31
December 2016
As at 31
December 2015
Corporate bonds
187,287
205,149
Subordinated bonds/debts
16,708
19,298
Wealth management products
11,000
Others (i)
11,683
4,706
Subtotal
394,186
399,810
Equity securities
Funds
104,432
25,258
145,399
84,959
146,310
21,198
RMB million
RMB million
1,600
300
4,053
5,353
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 CIRC. These funds may not be used for any
purpose other than for paying off debts during liquidation proceedings.
Available-for-sale securities
Available-for-sale securities, at fair value
Debt securities
Government bonds
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
GAGAG
Government agency bonds
162,563
92,442
RMB million
61,916
529,862
441,573
594,054
503,489
The estimated fair value of all held-to-maturity securities was RMB618,436 million as at 31 December 2016
(as at 31 December 2015: RMB550,199 million).
Unlisted debt securities include those traded on the Chinese interbank market.
64,192
Debt securities - Contractual maturity schedule
Within one year
After one year but within five
years
After five years but within ten years
After ten years
Total
As at 31
December 2016
RMB million
Maturing:
503,489
594,054
152,130
China Life Insurance Company Limited Annual Report 2016
Subordinated bonds/debts
Total
Debt securities
Listed in Mainland, PRC
Unlisted
Total
As at 31
December 2016
As at 31
December 2015
RMB million
RMB million
97,196
79,438
169,001
126,097
177,768
145,824
150,089
As at 31
December 2015
RMB million
30,614
2,000
Other loans
Total
Maturing:
Within one year
After one year but within five
years
After five years but within ten years
After ten years
Total
(g) Term deposits
Maturing:
Within one year
After one year but within five
years
After five years but within ten years
Total
As at 31
December 2016
Policy loans
As at 31
December 2015
RMB million
214
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
71,502
86,072
231,391
167,290
260,547
248,127
594,054
503,489
GAGAG
213
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2016
39
(f) Loans
For the
Common stocks
74,592
As at 31
December 2015
RMB million
RMB million
372
6,578
553
5,218
143,871
As at 31
December 2016
86,816
401
153,954
92,988
14,093
5,858
35,999
36,887
3,133
Subtotal
Common stocks
Funds
112,012
104,244
120,003
394,186
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(j)
Securities at fair value through profit or loss
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Others
Subtotal
Equity securities
50,092
42,745
204,046
135,733
74
70
6,284
6,099
Unlisted
10,395
4,149
Subtotal
50,092
42,745
Total
204,046
135,733
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.
217
25252
China Life Insurance Company Limited Annual Report 2016
Listed overseas
100,116
Listed in Hong Kong, PRC
33,339
Total
Debt securities
Listed in Mainland, PRC
19,486
8,194
Listed overseas
89
56
Unlisted
134,379
84,738
153,954
92,988
Subtotal
Equity securities
Listed in Mainland, PRC
GAGAG
32,427
135,733
113,161
32,062
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(i)
Available-for-sale securities (continued)
(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.
216
Debt securities
Listed in Mainland, PRC
Listed in Singapore
Unlisted
Subtotal
215
Equity securities
766,799
Total
Preferred stocks
27,880
18,712
Wealth management products
81,544
50,053
Others (i)
29,885
40,310
Subtotal
343,857
346,230
Available-for-sale securities, at cost
Equity securities
Others (i)
20,759
20,759
758,802
143,840
Listed in Mainland, PRC
Listed overseas
364,616
366,989
758,802
766,799
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.
Debt securities – Contractual maturity schedule
Maturing:
273,023
Within one year
After five years but within ten years
After ten years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
32,941
After one year but within five years
Listed in Hong Kong, PRC
248,594
232
Unlisted
Subtotal
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
36,691
172
41,549
357,495
357,995
394,186
399,810
90,756
85,403
25,034
8,391
266
ASSUMPTIONS
Economic assumptions: The calculations are based upon assumed corporate tax rate of 25% for all years. The investment
returns are assumed to be grading from 4.6% to 5% by 0.2% every year (remaining level thereafter). 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%.
Other operating assumptions such as mortality, morbidity, lapses and expenses are based on the Company's recent
operating experience and expected future outlook.
RMB thousand
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.
Yang Mingsheng
228
PREPARATION AND REVIEW
1,611
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.
GAGAG
Unrealised
gains/(losses)
from
Share available-for-sale
premium
RMB million
securities
RMB million
Statutory
reserve fund
RMB million
Discretionary
reserve fund
reserve
Total
RMB million
RMB million
RMB million
As at 1 January 2015
Other comprehensive
53,860
23,177
(r) Reserves
24,753
Refer to Note 32 for the information of distribution to other equity instruments holders of the Company
for the year ended 31 December 2016. As at 31 December 2016, there were no accumulated distributions
unpaid attributable to other equity instruments holders of the Company.
296,312
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(q)
Other equity instruments
Equity attributable to equity holders of the Company
As at 31
December 2016
As at 31
December 2015
RMB million
RMB million
281,012
304,103
Equity attributable to ordinary equity holders of the Company
Equity attributable to other equity instruments holders of the Company
273,221
7,791
7,791
(16,883)
21,627
145,006
Other comprehensive
income for the
year
(24,848)
(24,848)
Appropriation to reserves
1,927
3,438
1,927
7,292
As at 31 December 2016
53,860
4,959
30,118
28,225
26,954
144,116
(s) Provisions and contingencies
161,672
21,589
25,027
28,191
income for the year
Appropriation to reserves
6,630
6,630
3,438
3,160
3,438
10,036
As at 31 December 2015
53,860
29,807
28,191
24,787
25,027
161,672
As at 1 January 2016
53,860
29,807
24,787
The following is a summary of the significant contingent liabilities:
(7,543)
(28,683)
(5,401)
- Portion of fair value changes on
available-for-sale securities
attributable to participating
policyholders
3,192
3,192
As at 31 December 2015
(1,451)
(16,504)
1,072
(16,883)
As at 1 January 2016
(1,451)
(16,504)
1,072
(16,883)
(5,401)
(Charged)/credited to net profit
- Available-for-sale securities
(Charged)/credited to other
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
Deferred tax liabilities
(p)
(i) The movements in deferred tax assets and liabilities during the year are as follows:
220
Deferred tax assets/(liabilities)
As at 1 January 2015
(Charged)/credited to net profit
Insurance
RMB million
Investments
RMB million
Others
RMB million
Total
RMB million
(8,316)
3,673
(11,637)
534
930
142
3340
(19,023)
4,349
comprehensive income
Net deferred tax liabilities
(614)
463
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
2,758
9,247
3,561
2,553
6,319
11,800
Deferred tax liabilities:
- deferred tax liabilities to be settled after 12 months
- deferred tax liabilities to be settled within 12 months
(12,552)
(26,500)
(1,310)
(2,183)
Subtotal
(13,862)
Subtotal
1,208
- deferred tax assets to be recovered within 12 months
Deferred tax assets:
1,057
(Charged)/credited to other
comprehensive income
- Available-for-sale securities
12,626
12,626
- Portion of fair value changes on
available-for-sale securities
attributable to participating
policyholders
As at 31 December 2016
(4,343)
(6,408)
(2,670)
(4,343)
1,535
(7,543)
(ii) The analysis of deferred tax assets and deferred tax liabilities during the year is as follows:
- deferred tax assets to be recovered after 12 months
ended 31 December 2016
Pending lawsuits
December 2016
RMB million
1,378.8
Xu Haifeng
1,134.0
125.3
116.5
1,375.8
Liu Jiade
Robinson Drake Pike
320.0
Tang Xin (iv)
266.7
Leung Oi-Sie Elsie (v)
150.0
||| I
320.0
266.7
150.0
119.2
(i)
125.6
Xu Hengping
Lin Dairen
1,400.0
125.7
119.9
1,645.6
Miao Jianmin
Zhang Xiangxian (i)
Wang Sidong
Anthony Francis Neoh (ii)
150.0
150.0
Chang Tso Tung Stephen
320.0
320.0
Huang Yiping (iii)
53.3
53.3
1,134.0
RMB thousand
Zhang Xiangxian resigned as non-executive director on 3 August 2016.
Anthony Francis Neoh retired as independent director on 20 July 2016.
Pension
Deferred
payment
Actual paid
included in
Benefits
scheme
included
included
Name
salaries
bonuses
income salary income
in kind contributions
Total
in total
in total
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.
Deferred
payment
(ii)
Subtotal of
salary
Basic
(iii)
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.
(iv)
Tang Xin was appointed as independent director on 7 March 2016.
(v)
Leung Oi-Sie Elsie was appointed as independent director on 20 July 2016.
223
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2016
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
(a) Directors' and chief executive's emoluments (continued)
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the
ended 31 December 2015 are as follows:
year
Performance
related
As at 31
Total
Benefits in kind
Others
Total
Operating lease commitments - as lessee
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
40,804
4,248
1
31,314
4,851
34
45,053
36,199
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
As at 31
December 2016
Property, plant and equipment
As at 31
December 2015
Investments
(ii)
As at 31
December 2015
588
RMB million
440
221
25252
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the
year
ended 31 December 2016
39
222
STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(t) Commitments
(i) Capital commitments
Capital commitments of the Company relating to property development projects and investments:
Contracted, but not provided for
Pension scheme
contributions
RMB million
591
10
13
542
546
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION
year
The total compensation package for the directors, supervisors, chief executive and senior management for the
ended 31 December 2016 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 2016 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
ended 31 December 2016 are as follows:
year
Name
Yang Mingsheng
Remuneration
paid
261
RMB million
324
208
495
761
644
27
20
Total
(iii) Operating lease commitments - as lessor
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
1,159
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
272
year
General
Notes to the Consolidated Financial Statements
655.0
641.2
Shi Xiangming
834.0
317.4
1,151.4
57.6
155.9
317.4
937.9
634.7
303.2
Xia Zhihua
RMB thousand
in total
in total
Total
1,296.2
in kind contributions
245.6
1,638.3
969.7
969.7
53.8
161.0
754.9
395.9
359.0
Li Xuejun
912.7
912.7
54.3
163.9
694.5
335.5
359.0
Yang Cuilian
1,638.3
96.5
Xiong Junhong
income salary income
included
1,223.8
1,087.8
1,479.4
110.1
190.2
1,179.1
1,392.8
119.2
125.6
1,148.0
RMB thousand
Total
Pension scheme
contributions
Benefits in kind
paid
Remuneration
Zhan Zhong
Miao Ping
Shi Xiangming
Xiong Junhong
189.8
bonuses
114.7
191.4
included
Actual paid
payment
Pension
scheme
Benefits
included in
Deferred
Deferred
payment
Subtotal of
salary
Performance
related
Basic
salaries
Name
GAGAG
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December
2015 are as follows:
Wang Cuifei
1,380.7
101.5
1,528.3
Name
Miao Ping
572.7
The emoluments of the five highest paid individuals are the total emoluments paid to them during the year.
For the year ended 31 December 2016, 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 (2015: Nil).
RMB3,000,001 - RMB4,000,000
RMB4,000,001 - RMB4,500,000
5
5
2015
For the year ended 31 December
2016
Number of individuals
9,895
7,426
9,393
502
6,861
565
2015
RMB thousand
RMB thousand
For the year ended 31 December
2016
RMB2,000,001 - RMB3,000,000
RMB1,000,001 - RMB2,000,000
There was no arrangement under which a director, chief executive or supervisor waived or agreed to waive
any remuneration during the year.
_
China Life Insurance Company Limited
Embedded Value
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
Embedded Value
China Life Insurance Company Limited Annual Report 2016
25252
52525
227
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
Annual Report 2016
259.9
RMB0 RMB 1,000,000
Total
264.6
307.7
842.3
842.3
49.8
87.7
704.8
371.4
333.4
Zhan Zhong
666.2
286.4
952.6
51.6
68.4
286.4
832.6
572.3
The emoluments fell within the following bands:
88.7
708.8
Basic salaries, housing allowances, other allowances and benefits in kind
Pension scheme contributions
226
Details of the remuneration of the five highest paid individuals are as follows:
For the year ended 31 December 2016, the five individuals whose emoluments were the highest in the
Company include one director and four supervisors (2015: two directors and one supervisor).
(c) Five highest paid individuals
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
ended 31 December 2016
year
For the
Notes to the Consolidated Financial Statements
For the
25252
225
The supervisors received the compensation amounts disclosed above during their term of office in 2016 and
2015.
The compensation amounts disclosed above for these supervisors for the year ended 31 December 2015 were
restated based on the finalised amounts determined during 2016.
Wang Cuifei
708.8
47.8
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December
2016 are as follows:
China Life Insurance Company Limited Annual Report 2016
40 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR MANAGEMENT'S
REMUNERATION (continued)
RMB million
65,430
27,466
15,609
2,902
81,039
30,368
81,039
30,368
81,039
30,368
As at 31 December 2016, bonds with a carrying value of RMB76,157 million (as at 31 December 2015:
RMB28,185 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 2016, the carrying value of securities deposited in the collateral pool was RMB81,280
million (as at 31 December 2015: RMB66,027 million). The collateral is restricted from trading during the
period of the repurchase transaction.
(0)
Other liabilities
Interest payable to policyholders
Salary and welfare payable
RMB million
Brokerage and commission payable
As at 31
December 2015
Total
579.1
1,997.7
100.6
213.4
579.1
1,683.7
1,158.1
525.6
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(n) Securities sold under agreements to repurchase
Interbank market
Stock exchange market
Total
Maturing:
Within 30 days
As at 31
December 2016
1,418.6
Agent deposits
Interest payable of subordinated debts
654
845
620
484
7,720
5,488
30,556
23,182
30,556
23,182
GAGAG
30,556
23,182
219
25252
China Life Insurance Company Limited Annual Report 2016
(b) Supervisors' emoluments
1,045
Payable to constructors
742
1,024
Stock appreciation rights (Note 31)
Tax payable
Others
Total
Current
Non-current
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
8,006
6,466
4,561
3,713
2,598
Lin Dairen
1,117
634
Miao Jianmin
6,410
Wang Sidong
272.0
803.9
544.0
259.9
Xu Haifeng
664.1
286.4
950.5
49.7
68.2
286.4
832.6
572.7
259.9
Xu Hengping
320.0
320.0
63.8
320.0
51.9
272.0
For the year ended 31 December 2016
Zhang Xiangxian
Notes to the Consolidated Financial Statements
China Life Insurance Company Limited Annual Report 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.
The directors and chief executive received the compensation amounts disclosed above during their term of
office in 2016 and 2015.
The compensation amounts disclosed above for these directors and the chief executive for the
December 2015 were restated based on the finalised amounts determined during 2016.
224
ended 31
year
160.0
160.0
160.0
35.0
125.0
Liu Jiade
647.6
919.6
70.0
Robinson Drake Pike
Huang Yiping
250.0
Anthony Francis Neoh
495.8
190.9
686.7
32.7
99.0
190.9
50.0
381.8
Su Hengxuan
133.3
133.3
133.3
29.1
250.0
104.2
Bruce Douglas Moore
173.2
300.0
555.0
300.0
320.0
320.0
300.0
70.0
250.0
Chang Tso Tung Stephen
286.4
1,027.1
49.2
740.7
320.0
145.3
Miao Ping
286.4
832.6
259.9
572.7
В Expected Return on Embedded Value
Value of New Business in the Period
C
Operating Experience Variance
Investment Experience Variance
E
Methodology, Model and Assumption Changes
Embedded Value at Start of Year
F
D
AB
Embedded Value
RMB million
Analysis of Embedded Value Movement in 2016
Table 3
The following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period:
MOVEMENT ANALYSIS
China Life Insurance Company Limited Annual Report 2016
25252
52525
G
49,311
31,528
229
ITEM
Market Value and Other Adjustments
652,057
Exchange Gains or Losses
Reflects the difference between actual operating experience in 2016 (including mortality, morbidity, lapse, and
expenses etc.) and the assumptions.
D
2,306
Value of one year's sales in 2016.
C
230
Reflects expected impact of covered business, and the expected return on investments supporting the 2016 opening net
worth.
B
2) Items B through J are explained below:
Notes: 1) Numbers may not be additive due to rounding.
585
(12,257)
H
651
48,116
(31,029)
(1,792)
49,311
52,168
560,277
Embedded Value as at 31 December 2016 (sum A through J)
K
Other
J
Shareholder Dividend Distribution and Capital Injection
I
(13,973)
2,610
(29,787)
375
560,277
Embedded Value (A + D)
E
291,549
302,530
Value of In-Force Business after Cost of Required Capital (B + C)
D
(43,951)
Cost of Required Capital
C
335,500
332,317
Value of In-Force Business before Cost of Required Capital
B
268,729
349,528
Adjusted Net Worth
A
31 December
2015
2016
31 December
ITEM
RMB million
E
Components of Embedded Value and Value of One Year's Sales
F
371
G
53,952
28,851
46,326
2015
2016
31 December
31 December
RMB million
Note: Numbers may not be additive due to rounding.
Total
Bancassurance Channel
Group Insurance Channel
Exclusive Individual Agent Channel
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
Note: Numbers may not be additive due to rounding.
31,528
49,311
Value of One Year's Sales after Cost of Required Capital (F + G)
H
(4,155)
(4,641)
35,684
Value of One Year's Sales before Cost of Required Capital
Cost of Required Capital
Compares actual with expected investment returns during 2016.
52525
G
Embedded Value
China Life Insurance Company Limited Annual Report 2016
25252
231
Note: 2015 results are recalculated in accordance with the "CAA Standards of Actuarial Practice" and using the new assumptions
(including economic and operating assumptions).
31,912
269,939
355,613
Sales after Cost of
Required Capital
Value of One Year's
Value of In-Force
Business after Cost of
Required Capital
Adjusted Net Worth
Restatement of 2015 results
50,238
306,744
10% decrease in morbidity rates
12
48,385
298,350
10% increase in morbidity rates
11
50,251
303,441
10% decrease in lapse rates
10
WILLIS TOWERS WATSON'S REVIEW OPINION REPORT ON EMBEDDED VALUE
48,340
To The Directors of China Life Insurance Company Limited
China Life has engaged Willis 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.
Table 1
The cover photo of the printed version of this report was photographed by
Mr. Han Chunhai, an employee 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.
2
Wesley Cui
23 March 2017
Michael Freeman
232
For and on behalf of Willis Towers Watson
the EV Results have been prepared, in all material respects, in accordance with the methodology and assumptions
set out in the Embedded Value section.
the operating assumptions used by China Life have been set with appropriate regard to past, current and expected
future experience; and
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 in accordance with the "CAA Standards of Actuarial
Practice: Appraisal of Embedded Value" issued by the CAA;
•
Based on the scope of work above, we have concluded that:
Opinion
China Life.
In carrying out our review, we have relied on the accuracy of audited and unaudited data and information provided by
a review of the results of China Life's calculation of the EV Results.
a review of the economic and operating assumptions used to develop the embedded value and value of one year's
sales as at 31 December 2016;
a review of the methodology used to develop the embedded value and value of one year's sales as at 31 December
2016, in accordance with the “CAA Standards of Actuarial Practice: Appraisal of Embedded Value” issued by the
China Association of Actuaries (“CAA”) in November 2016;
of work covered:
scope
Our
Scope of work
China Life Insurance Company Limited (“China Life") has prepared embedded value results for the financial year ended
31 December 2016 ("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.
F
301,530
9
10% increase in expenses
5
Investment return -50bps
4
Investment return +50bps
3
Risk discount rate -50bps
2
Risk discount rate +50bps
1
Base case scenario
RMB million
Sensitivity Results
Table 4
Sensitivity testing was performed using a range of alternative assumptions. In each of the sensitivity tests, only the
assumption referred to was changed, with all other assumptions remaining unchanged. The results are summarized
below:
SENSITIVITY RESULTS
Annual Report 2016
Embedded Value
China Life Insurance Company Limited
Other miscellaneous items.
Reflects dividends distributed to shareholders.
I
Reflects the gains or losses due to changes in exchange rate.
H
Change in the market value adjustment from the beginning of year 2016 to 31 December 2016 and other related
adjustments.
Reflects the effect of change of appraisal methodology, model and assumption enhancements. The change of appraisal
methodology increased embedded value by RMB64,335 million. The enhancements of assumptions decreased
embedded value by RMB16,218 million.
6
10% increase in lapse rates
10% decrease in expenses
Value of One Year's
49,926
304,829
and 10% increase in mortality rate for annuity products
10% decrease in mortality rate for non-annuity products
8
48,696
300,225
and 10% decrease in mortality rate for annuity products
10% increase in mortality rate for non-annuity products
7
51,998
306,295
46,623
298,764
40,898
251,560
57,745
353,748
51,712
316,555
47,069
289,475
49,311
302,530
Sales after Cost of
Required Capital
Value of In-Force
Business after Cost of
Required Capital
The embedded value as at 31 December 2016 and the value of one year's sales for the 12 months to 31 December 2016,
the corresponding results as at 31 December 2015 are shown below:
652,057
Annual Report 2016
Embedded Value
China Life Insurance Company Limited
SUMMARY OF RESULTS
Other expenses
27,458
31,854
Administrative expenses
10.3%
4,320
4,767
Since 1 May 2016, the Company's
income from financial and insurance
services is subject to the value-added
tax instead of the business tax
The growth of insurance business
The growth of business
structure
4,859
the optimization of its business
of the Company's business and
An increase in underwriting costs
for first-year regular premium
business resulting from the growth
A decrease in investment yield from
participating accounts
investment contracts
An increase in the scale of
certain business
41.0%
An increase in interest income from
securities sold under agreements to
repurchase
7,428
Statutory insurance fund
contribution
Fluctuation in claims expenses of
Main Reasons for Change
RMB million
-64.0%
40,921
14,732
Life insurance business
Change
2015
2016
16.0%
-34.6%
year ended 31 December
Profit before Income Tax
3.
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2016
25252
52525
25
743
1,048
For the
insurance business
An increase in the scale of health
insurance business
40,513
Health insurance business
15.1%
313,612
360,922
Life insurance business
expenses
15.6%
352,219
34,398
Insurance benefits and claims 407,045
Change
2015
2016
RMB million
For the year ended 31 December
Benefits, Claims and Expenses
2.
Management Discussion and Analysis
Annual Report 2016
Main Reasons for Change
17.8%
Accident insurance
5,610
and annuity payment of life
An increase in maturities payable
Finance costs
acquisition costs
46.3%
35,569
52,022
Underwriting and policy
participation in profits
resulting from
-52.6%
33,491
15,883
Policyholder dividends
134.8%
2,264
5,316
Investment contract benefits
business
33.3%
4,209
A decrease in gross investment
income and the impact of the
update of discount rate assumption
of reserves of traditional insurance
contracts
An increase in claims expenses
China Life Insurance Company Limited
207,267
226,573
Loans
76,096
67,046
Cash and cash equivalents
agreements to resell
The needs for liquidity management
bonds, mainly including commercial
papers and corporate bonds
-11.9%
9.3%
An increase in the scale of trading
21,503
43,538
Securities purchased under
through profit or loss
51.6%
137,990
209,124
Securities at fair value
-0.5%
102.5%
770,516
The needs for liquidity management
Statutory deposits - restricted
Investment properties
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2016
25252
52525
27
27
associates' interests
joint ventures and an increase in
joint ventures
An increase in the investments of
policy loans and other loans
New investments in associates and
47,175
119,766
Investments in associates and
The depreciation of investment
properties
-3.7%
1,237
1,191
6,333
6,333
153.9%
766,423
Available-for-sale securities
An increase in the allocation of
bonds
26
26
During the Reporting Period, net profit attributable to equity holders of the Company was
RMB19,127 million, a year-on-year decrease of 44.9%. This was primarily due to the decrease in gross
investment income and the impact of the update of discount rate assumption of reserves of traditional
insurance contracts.
Net Profit
5.
Income Tax
4.
tax.
During the Reporting Period, income tax of the Company was RMB4,257 million, a year-on-year
decrease of 60.4%. This was primarily due to the combined impact of the taxable income and deferred
China Life Insurance Company Limited
ventures
1,753
2,700
6,165
Other businesses
852
Accident insurance business
275.8%
557
2,093
Health insurance business
Affected by an increase in net share
of profit of associates and joint
Annual Report 2016
Management Discussion and Analysis
(II) Analysis of Major Items of the Consolidated Statement of Financial Position
18.0%
504,075
594,730
Held-to-maturity securities
A decrease in the scale of negotiated
deposits
-4.3%
562,622
538,325
Term deposits
7.2%
2,287,639
2,453,283
Investment assets
2015
Main Reasons for Change
Change
As at 31
December
As at 31
December
2016
RMB million
Major Assets
1.
Improvement on health insurance
business structure
11.9%
97,582
109,147
6.35%
of associates and joint ventures
Notes:
1.
The figures for the same period of last year were adjusted on the same basis.
2.
3.
Net investment income include interest income from debt investments, interest income from deposits,
dividend and bonus from equity investments, interest income from loans, net income from investment
properties, etc.
Gross investment income = Net investment income + Net realized gains/(losses) on financial assets + Net fair
value gains/(losses) through profit or loss
4.65%
4.
5.
Net investment yield = Net investment income/((Investment assets at the beginning of the period
Investment assets at the end of the period)/2)
+
6.
7.
Gross investment yield = Gross investment income/((Investment assets at the beginning of the period - +
Investment assets at the end of the period)/2)
Fast growth in the first-year regular
17.4%
308,081
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
361,649
6.39%
4.45%
97,654
+Net realized gains on financial assets
6,038
32,297
+Net fair value gains/(losses) through profit or loss
(7,094)
10,209
Gross investment income³
108,151
4.56%
140,160
5,855
1,974
Gross investment income including net share of profit
of associates and joint ventures*
114,006
142,134
Net investment yield'
Gross investment yield
Gross investment yield including net share of profit
4.61%
+Net share of profit of associates and joint ventures
Life insurance business
17.6%
362,301
21
牵手国寿健康同行
The Company continuously paid attention to the multifarious demands of customers, and strived to build
customer service ecosphere in order to improve customer experience. During the Reporting Period, the
Company held 12,579 activities in total, such as the 10th "Hand-in-Hand” series of customer service
activities, the 6th "Little Painters of China Life", China Life "Run for 700", "China Life Lectures from
Gurus" and the "Dream Project”, providing services for more than 7.67 million customers, which helped to
maintain a good interaction with customers. Meanwhile, the Company continuously increased the global
emergency services and VIP services in order to satisfy the multi-layer and personalized service requirements
of customers.
With adherence to the “customer-oriented” operating concept and implementing the product diversification
strategy with great efforts so as to meet multifarious demands of customers, the Company has been
continuously committed to improve the customer experience and to work on the upgrades and development
of our services. By the end of 2016, we had provided insurance services to over 500 million customers. In
order to provide more convenient and efficient services, the Company actively applied technologies such as
mobile Internet, big data and cloud computing. “E-Bao Mobile Customer Services System", the Company's
on-line service system, has a total number of binding users of 10.99 million, and the number of online
applications available on it has reached 49. Based on WeChat and other Internet channels, the Company
launched "E-Settlement”, a mobile-based claims settlement service. With this service, the customers are
able to remotely apply for claims settlement by themselves, which makes claims settlement service "available
on fingertips”. In line with the social security insurance, a pilot program of direct payment for claims was
introduced in various areas, which enabled customers to enjoy “five exemption” services (namely, exemption
from case reporting, application and counter services, etc.) at home. Moreover, the Company entered into an
agreement with the Institute of Medical Information, Chinese Academy of Medical Sciences, the National
Health and Family Planning Commission of the People's Republic of China, to carry out offsite settlement
and reimbursement for medical services across provinces under the New Village Cooperative Medical
Scheme. As accredited by the CRM Committee of the China Federation of IT Promotion, the “95519” Call
Center received the award of “China's Best Call Center of Year 2015-2016”. During the Reporting Period,
the Company promptly responded to 31 critical emergency incidents, including the tour bus accident in
Taiwan and the debris flow in Zhejiang Province, launched contingency plans immediately, simplified the
procedures and sped up the process of claims settlement, actively performing the responsibility as a member
of the insurance industry.
(IV) Operational Support and Customer Services
Management Discussion and Analysis
Annual Report 2016
China Life Insurance Company Limited
Comprehensive investment yield = (Gross investment income + Current net fair value changes of available-for-sale securities
recognized in other comprehensive income)/((Investment assets at the beginning of the period + Investment assets at the end of
the period)/2)
52525
20
During the Reporting Period, there was no other material equity investment or non-equity investment
of the Company that is subject to disclosure requirements.
On 29 February 2016, the Company entered into a share purchase agreement with Citigroup
Inc. ("Citigroup") and an equity transfer agreement with IBM Credit LLC (“IBM Credit") and
Citigroup. Pursuant to such agreements, the Company purchased from Citigroup and IBM
Credit an aggregate of 3,648,276,645 shares of 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 on 29 August 2016,
the Company held 6,728,756,097 shares of CGB, representing 43.686% of the issued share capital
of CGB, and became its single largest shareholder. CGB has a stronger differentiating competitive
edge in retail, small and micro businesses and other sectors and a well-developed infrastructure
construction, which enables it to have a sound foundation for accelerating its development in the
future. CGB is highly complementary with the Company in aspects such as asset size, customers and
business. After the Company becomes the single largest shareholder of CGB, both parties will have
opportunities to collaborate for integrated development in various aspects, including sales channels,
customer services and mid-office and back-office operations, which will optimize the operating
efficiency, enhance customer loyalty and the capability of integrated financial services, and thereby
increasing the comprehensive competitiveness and risk resistance ability. For details, please refer to
the announcement published by the Company on the website of the SSE on 1 March 2016 and the
announcement on the HKExnews website of the Hong Kong Exchanges and Clearing Limited on 29
February 2016.
Major Investments
3.
In 2016, the balances of investment in fixed income assets and equity assets increased from the end
of 2015. As the interest rate generally remained at a low level last year, the yields of the Company's
new investment in fixed income assets decreased, dividend income from equity investment increased
as compared to last year and the overall interest income from investment portfolios achieved a
stable growth. As affected by the stock market, the spread income and the fair value gains/(losses)
through profit or loss decreased materially from last year, impairment losses increased, and the
gross investment income decreased as compared to last year. During the Reporting Period, the
net investment yield was 4.61%; the gross investment yield was 4.56%, and the gross investment
yield including net share of profit of associates and joint ventures was 4.65%. The comprehensive
investment yield taking into account the current net fair value changes of available-for-sale securities
recognized in other comprehensive income* was 2.43%.
Management Discussion and Analysis
China Life Insurance Company Limited Annual Report 2016
25252
52525
20
25252
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
426,230
Net premiums earned
Main Reasons for Change
Change
2015
2016
RMB million
For the year ended 31 December
1. Revenues
(I) Analysis of Major Items of the Consolidated Statement of Comprehensive Income
ANALYSIS OF MAJOR ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS
II
Management Discussion and Analysis
Annual Report 2016
China Life Insurance Company Limited
22
22
In 2016, the Company actively utilized its internal audit and supervision function. In addition to
conducting regular audits such as economic responsibility auditing and audit on connected transactions, the
Company also conducted special audit projects based on a risk-oriented approach, focusing on audits on
the management of orphan policies, supplementary major medical insurance and solvency risk management
system. The Company further strengthened the rectification actions with respect to issues identified from
audits, so as to improve the Company's audit rectification system and ensure that the Company operates in
compliance with legal requirements.
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 and commissions including the
Ministry of Finance, etc., and the "Basic Standards of Internal Control for Insurance Companies" issued
by the CIRC. Pursuant to the requirements of the CIRC with respect to 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 early-warning classification management, in order to enhance
the Company's ability of solvency risk management. The Company received an industry-leading score in
the Solvency Aligned Risk Management Requirements and Assessment ("SARMRA”) conducted by the
CIRC in 2016. 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.
(V) Internal Control and Risk Management
In 2016, the Company pushed forward in full swing the establishment of a new generation of the integrated
business processing system, a customer-based, responsive and safe and reliable system characterized by
the application of the Internet. The Company is committed to improving its management and operation
ability through process evolution. Starting from each aspect with respect to the operation and management
of the life insurance business, and focusing on the improvement of customer experience and development
of Internet services, the Company fully advanced the re-engineering and optimization of management
and operation processes, effectively promoted the transformation of the Company's business services to a
more Internet-based service mode, and continuously enhanced the intensification and intelligent operation
capability of the Company.
109,207
Net investment income²
2015¹
2016
available-for-sale securities
35.5%
27,476
37,243
Investment income from
24
24
through profit or loss
securities at fair value
resulting from the growing scale of
An increase in interest income
1,708
6,210
Investment income from
Main Reasons for Change
Change
2015
2016
RMB million
For the year ended 31 December
263.6%
trading bonds, mainly including
commercial papers and
bonds
corporate
Total
112.5%
457
971
Other investment income
8.1%
11,115
12,018
Investment income from
loans
-13.7%
32,285
27,851
Investment income from
bank deposits
held-to-maturity securities
1.3%
24,541
24,854
Investment income from
An increase in the scale of securities
purchased under agreements to
resell
An increase in the allocation of
bonds, but with a decline of the
rate of return for reinvestments and
newly added allocations under the
low interest rate environment
A decrease in negotiated deposits,
and a decline of the rate of return
for newly added allocations under
the low interest rate environment
An increase in the investments of
other loans
An increase in dividend income
from available-for-sale equity
investment
*Investment Income
28
Management Discussion and Analysis
25252
Investment income*
4.7%
13,365
13,991
Accident insurance business
Catering to the demand of the
23.8%
40,855
50,590
109,147
Health insurance business
2.
Investment Income
For the
year
ended 31 December
China Life Insurance Company Limited
Annual Report 2016
Management Discussion and Analysis
RMB million
premiums and renewals
97,582
Net realised gains on
6,038
52525
23
An increase in commission fees
earned from CLP&C
income of stocks influenced by the
fluctuation of the capital market
Substantial decrease in spread
influenced by the fluctuation of the
capital market
income of stocks and funds
to develop health insurance business
Further optimization of business
structure and a decrease in certain
high claims settlement business
Please refer to the table below
Substantial decrease in spread
market, the Company took efforts
27.7%
5,060
6,460
Other income
through profit or loss
N/A
10,209
(7,094)
Net fair value gains/(losses)
financial assets
11.9%
-81.3%
32,297
China Life Insurance Company Limited Annual Report 2016
2.
-51.4%
128.3%
RMB million
Affected by a decrease in the fair
-54.2%
16,953
7,768
Deferred tax liabilities
term debts
value of available-for-sale securities
Redemption of certain subordinated
67,994
37,998
Bonds payable
An increase in borrowings in foreign
currency
Note
other borrowings
-44.1%
Note: 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 USD948 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 six-month bank loan of EUR100 million with a maturity date on 9 June 2017. All of the above are
fixed rate loans.
* Insurance Contracts
Life Insurance
19
Major Liabilities
As at the date of the statement of financial position, the reserves of various insurance contracts of the
Company passed the liability adequacy test.
1,715,985
1,847,986
6,492
1,652,469
57,024
1,762,363
77,837
7,786
31 December 2016 31 December 2015
As at
As at
RMB million
Total of Insurance Contracts
Accident Insurance
Health Insurance
511.8%
2,643
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)/((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)
Interest-bearing loans and
Securities sold under
132.7%
84,106
195,706
Investment contracts
The accumulation of insurance
7.7%
1,715,985
1,847,986
Insurance contracts*
Change
December
2015
16,170
As at 31
As at 31
December
2016
81,088
31,354
Main Reasons for Change
agreements to repurchase
158.6%
An increase in maturities payable
29.7%
balances payable
39,038
Annuity and other insurance
A decrease in investment yield from
participating accounts
30,092
business and renewal business
liabilities from new insurance
payable
-18.6%
107,774
An increase in the scale of certain
investment contract accounts
The needs for liquidity management
87,725
Policyholder dividends
677,768
633,779
639,396
31 December 2016 31 December 2015
(unaudited)
As at
Comprehensive solvency ratio
Core solvency ratio
702,076
Minimum capital
RMB million
As at
228,080
The decrease in the Company's solvency ratio was mainly due to the impact of the higher minimum capital
requirement as a result of the growth of the Company's insurance business.
280.34%
324.10%
297.16%
359.02%
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.
China Life Insurance Company Limited
Annual Report 2016
Management Discussion and Analysis
IV
ANALYSIS OF CORE COMPETITIVENESS
The Company has the advantage of very strong brand recognition. It is the only life insurance company in China
with shares listed on the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the New York Stock
Exchange. It is also a core member of China Life Insurance (Group) Company which is one of the “Fortune
Global 500" and the "World's 500 Most Influential Brands". In 2016, the brand of China Life has been ranked as
one of the “World's 500 Most Influential Brands” published by World Brand Lab for ten consecutive years. The
brand was also ranked as No. 4 on the "China's 500 Most Valuable Brands" list, with brand value estimated at
RMB253,628 million, ranking No. 1 among the insurance industry.
Core capital
Actual capital
195,553
Period:
6,270
SOLVENCY RATIO
Net cash inflow/(outflow)
from operating activities
89,098
(18,811)
N/A
Net cash inflow/(outflow)
from investing activities
Net cash inflow/(outflow)
from financing activities
(104,703)
67,047
An increase in the insurance income
and the growth in the scale of the
investment contract accounts
The needs for investment
management
The Company has an extensive services and distribution network, with its business outlets and services
counters covering both urban and rural areas. It has 1,495,000 exclusive individual agents, 85,000 direct sales
representatives and 234,000 sales representatives at those bancassurance outlets, which forms a unique distribution
and services network in China and makes the Company become the life insurance service provider close to
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.
(19,415)
N/A
The needs for liquidity management
Foreign exchange gains/
285
241
18.3%
(losses) on cash and cash
equivalents
Net increase/(decrease) in
(9,050)
29,062
N/A
cash and cash equivalents
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
The Company has an extensive customer base. As at 31 December 2016, the Company had approximately 246
million long-term individual and group life insurance policies, annuity contracts and long-term health insurance
policies in force.
4,000
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. As at 31 December 2016, the investment assets reached RMB2,453,283 million, an increase of 7.2%
from the end of 2015.
3,400
70.74% is held 3,697
3,070
143
by the Company,
Management Discussion and Analysis
Annual Report 2016
China Life Insurance Company Limited
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.
VII STRUCTURED ENTITIES CONTROLLED BY THE COMPANY
report.
Note: For details, please refer to Note 8 and Note 33(e) in the Notes to the Consolidated Financial Statements in this annual
9,504
43.686% 2,047,592 105,974
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.
1,157
19,823
72,773
40%
15,000
held by AMC
and 3.53% is
3.
32
The Company possesses great financial strength. As at 31 December 2016, the registered capital and the total
assets of the Company were RMB28,265 million and RMB2,696,951 million, respectively, which ranked No. 1
in China's life insurance industry. As at the end of 2016, the total market capitalization of the Company was
USD91.6 billion, which ranked No. 3 among all listed insurance companies in the world.
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
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
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 teams 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. During the Reporting Period, there was no movement of these personnel which might have
material impacts on the Company.
V
SALE OF MATERIAL ASSETS AND EQUITY
During the Reporting Period, there was no sale of material assets and equity of the Company.
31
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China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
VI BUSINESS OPERATIONS OF OUR MAIN SUBSIDIARIES AND AFFILIATES
RMB million
Registered
Capital
Shareholding Total Assets
Net Assets
Net Profit
Main Reasons for Change
60%
8,284
7,548
991
Company Name
Major Business Scope
China Life Asset
Management Company
Limited
China Life Pension
Company Limited
China Life Property and
Casualty Insurance
Company Limited
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
Change
N/A
2016
Overall operation of the Company during the Reporting Period
2015
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.
Report of the Board of Directors
China Life Insurance Company Limited Annual Report 2016
36
36
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35
(appointed as Director with effect from 7 March 2016)
(appointed as Director with effect from 20 July 2016)
(resigned with effect from 7 March 2016 pursuant to the
relevant policies)
(retired upon expiry of the term with effect from 20 July 2016)
(resigned with effect from 3 August 2016 due to age reason)
Leung Oi-Sie Elsie
Tang Xin
Robinson Drake Pike
Anthony Francis Neoh
Chang Tso Tung Stephen
Huang Yiping
Zhang Xiangxian
Wang Sidong
Liu Jiade
Miao Jianmin
Xu Haifeng
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 of “Management Discussion and
Analysis” and “Internal Control and Risk Management” in this annual report. These discussions form
the "Report of the Board of Directors".
(II) Environmental policies and performance of the Company
part
of
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;
38
FORMULATION AND IMPLEMENTATION OF PROFIT DISTRIBUTION POLICY
(I) 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 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. According to
the spirit of alleviating poverty proposed at the Central Poverty Alleviation and Development Conference,
the Company formulated a special plan for warm families for 2016-2018 so as to establish and improve a
multi-level assistance and support system for needy employees.
The Company created a harmonious labor relationship according to law and entered into employment
contracts with its employees in a timely manner. The Company strengthened the management of employees
in all aspects by establishing the following three mechanisms: an employee team management mechanism
with the characteristics of basic level orientation, combination of training and utilization of employees,
hierarchical responsibility and unified regulation; a performance management mechanism that is result-
oriented, adopts vertical assessment and horizontal ranking, and focuses on application; and a remuneration
distribution mechanism that is based on the principles of salary determined by position, remuneration
paid based on performance, emphasis on incentives and preference to the local level. The Company was
concerned about the overall development of employees, and actively facilitated the career development
of employees through various means, such as education and training, regular job rotation, local office
secondment, base platform exercises, and cultivation of professional leaders and talents. The Company
attached importance to humanistic concern by safeguarding the legitimate rights and interest of employees
in a practical manner, encouraging and guiding employees to arrange their casual leave and annual leave in a
scientific way, with an aim to achieving 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 mobile Internet, big data
and cloud computing, in a bid to enhance the service capacity of e-channel, call center and sales force and to
improve 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.
3.
Report of the Board of Directors
China Life Insurance Company Limited Annual Report 2016
25252
Independent Directors
52525
With the customers' demands in mind, the Company consistently broadened its value-added services and
continued to improve customer experience. In 2016, the Company further promoted the global VIP care
services, and constantly improved the services including the international travel and medical emergency
services, the PRC medical emergency services, 12-hour health consultation hotlines and the global VIP
benefit services, with a view to satisfying the multi-layer and personalized service requirements of its
customers. The Company organized the 10th "Hand-in-Hand” series of customer service activities, which
amounted to a total of 12,579 activities, serving approximately 7.67 million customers. Such activities
mainly included the following: by conducing the 10th China Life customer festival activities under the
theme of “Hand-in-hand with China Life for Better Health All Along" across China, the Company
constantly paid attention to the health of customers; by conducting a variety of outdoor running and hiking
activities, the Company was committed to establishing a platform of “enjoying healthy life through scientific
sports" for customers; by conducting the “China Life Lectures from Gurus” activity, the Company enhanced
the knowledge of its customers on healthy life, scientific sports and first aid; by organizing the 6th “Little
Painters of China Life” series of activities, the Company was consistently concerned about the growth
and education of teenagers and children; by organizing series of activities such as the “Dream Project",
the Company assisted its customers in realizing their beautiful dreams. The Company also continuously
improved its services and deepened the customers' understanding through a variety of customer activities,
thus maintaining good interaction with its customers.
While actively performing its obligations to insurance policies, the Company bears in mind the core mission
of an enterprise to provide high quality services to its customers. The Company regards customer satisfaction
and customer experience as the basic standards for assessing its services, and established a customer-
oriented business model in order to create value for its customers. As at the end of the Reporting Period,
the Company provided insurance services for more than 500 million customers. The result of customer
satisfaction increased by 1.14% year-on-year, and the result of customer loyalty remained stable.
(IV) Relationship between the Company and its customers
The Company adhered to the principles of being trustworthy, assuming risks, emphasizing
and being legal compliant, and insisted on 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",
seriously applied the "Notice on Comprehensively Launching a Pilot Project for the Levy of Value added
Tax in Place of Business Tax” published by the Ministry of Finance of the PRC, the “Notice on Matters
Relevant to Further Improving the Actuarial System for Personal Insurance”, the “Notice on Strengthening
the Supervision on Personal Insurance Products" and the "Notice on Issues concerning the Administrative
Licensing for Banking Sideline Insurance Agents" published by the CIRC. The Company vigorously
developed risk protection and long-term savings businesses, constantly improved the relevant rules and
mechanisms concerning product design, business operation and taxation management, and offered full
cooperation, support and protection for the three strategic missions of the Company - speedy development,
transformation and upgrade, and prevention and control of risks.
on services
(III) Compliance by the Company with the relevant laws and regulations that have a significant impact
Report of the Board of Directors
Annual Report 2016
China Life Insurance Company Limited
By taking advantage of the new technological means of Internet platform, the Company launched electronic
documents, electronic insurance policies and office automation to effectively save the paper consumption
resulting from paper cheques, letters and insurance policies. The Company constantly improved its 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.
The Company established the Research & Development Center and Data Center to form a centralized
operational services system, which lowered carbon emissions while enhancing its efficiency. The Company
strengthened the management of office buildings of its head office, and established a management system
for energy saving to save energy, reduce wastages and optimize procedures, thus cutting down energy
consumption and carbon emissions in every aspect of operation.
Local branches of the Company reported and submitted to the head office the measuring data of water,
electricity, gas and heating supplies on a quarterly basis in strict compliance with the "Provisional Measures
for the Administration of Energy Saving and Emission Reduction", so that the Company can better monitor
energy consumption data, and manage and control energy consumption in a reasonable manner.
The Company responded to the call from the PRC government for energy saving and emission reduction,
put into practice the concept of green development and actively promoted green operations and green
services. Through the enhancement of all employees' awareness on energy saving, adoption of various energy
saving technologies and promotion of energy saving measures, etc., the Company greatly put forward any
work associated with energy saving and emission reduction. While maintaining its business development
pace, the Company reduced its energy consumption in the head office, the level of its paperless offices was
increasingly enhanced and the utilization rate of intelligent communication equipment was improved in an
efficient and effective manner, which as a result provided its customers with products and services that are
more user-friendly, environmental-friendly and high-quality.
37
Non-executive Directors
(I)
Lin Dairen
Management Discussion and Analysis
As at the end of the Reporting Period, equity holders' equity was RMB303,621 million, a 5.9%
decrease from the end of 2015. This was primarily due to the impact of profit distribution and total
comprehensive income during the Reporting Period.
(III) Analysis of Cash Flows
1.
Liquidity Sources
Our principal cash inflows come from insurance premiums, income from non-insurance contracts,
interest income, dividend and bonus, and proceeds from sales and maturity of financial 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.
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 RMB67,046 million.
In addition, the vast majority of our term deposits in 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 RMB538,325 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 adversely affect 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 policyholder loans.
We believe that our sources of liquidity are sufficient to meet our current cash requirements.
29
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30
30
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
III
3.
Consolidated Cash Flows
Xu Hengping
For the year ended 31 December
RMB million
Annual Report 2016
China Life Insurance Company Limited
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.
VIII FUTURE PROSPECT AND RISK ANALYSIS
Equity Holders' Equity
Yang Mingsheng (Chairman)
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. Wang Sidong, Mr. Liu Jiade, Mr. Robinson Drake Pike,
Ms. Leung Oi-Sie Elsie
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
Annual Report 2016
China Life Insurance Company Limited
34
34
It is expected that the Company will have sufficient capital to meet its insurance business expenditures and
new investment needs in general in 2017. At the same time, if there is any further capital demands, the
Company will make corresponding financing arrangements based on capital market conditions to further
implement its future business development strategies.
In 2017, the Company will maintain its strategic consistency and have a tactic flexibility, stick to the
guideline of supply-side reform, and strictly follow the protection coverage function of insurance.
Meanwhile, by following the operating guideline of “prioritizing value, strengthening sales force, optimizing
business structure, achieving stable growth and safeguarding against risks", the Company will continually
facilitate the implementation of “Three Strategies" in relation to development of individual insurance
and markets in large- and medium-sized cities and rural areas, push forward the three critical tasks of
accelerated growth, transformation and upgrade and risk prevention and control, achieve all annual targets
for performance assessment in a wrap-around way by means of considerate planning, target execution and
hardwork, so as to relentlessly improve the Company's core competitiveness and sustainable development
capability and strive to build a world-class life insurance company. Given the above mentioned risk factors,
the Company will firmly adhere to its established development strategies, and fine-tune its business
development objectives in accordance with changing situations to an appropriate extent, so as to efficiently
respond to challenges from market competitors and changes in the external environment.
Executive Directors
China Life Insurance Company Limited Annual Report 2016
(1) Macro-economic Risks
In 2017, 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:
In 2017, given the rising “de-globalization” ideology and protectionism tendency, unclear policies for major
economies and their spillover effects as well as significantly increasing instabilities and uncertainties, the
global economy is expected to continue its slow growth. Overall, we estimate the domestic economy will
achieve a slower but stable performance with good momentum for growth, however, with a shaky ground to
stabilize our economy which is in a critical stage of overcoming obstacles, a lot of problems and difficulties
will arise during our economic development. 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, asset management and solvency
in various aspects.
Management Discussion and Analysis
Currently, China's financial market is susceptible to high risks. Although systematic risks are generally
in control, risks such as non-performing assets risk, liquidity risk and bond default risk are cumulating.
Meanwhile, the potential long-term low interest rate environment will put more challenges on the
management of the Company's assets and liabilities, and the Company will need to make more efforts to
prevent risks in relation to negative interest spread and mismatching of assets and liabilities. The CIRC
has greatly advocated the essential function of protection of the insurance industry, and has promulgated
regulatory policies with respect to adjusting and regulating the development of short- and medium-term
insurance business, asset management and others. Affected by these factors, the Company will have certain
pressures to maintain rapid business growth with growing 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.
(2) Business Risks
In light of the complexity of the domestic and international economies, as well as the greater volatility of
the financial markets, the market risk related to investment portfolios and credit risk may increase; and if
the low interest rate environment continues for a long time, the Company will face more challenges on asset
allocation, and the risk of assets and liabilities mismatching will increase. Meanwhile, the Company may
develop new investment channels, utilize new investment vehicles or appoint new investment managers. All
of the above may 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 subject to foreign exchange risks due to fluctuation in exchange rate.
33
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(3) Investment Risks
Participating the activity of the “Assessment and Selection of the Supervisory Committees of Listed
Companies with the Best Practice”. In order to strengthen the internal control compliance, audit supervision
and risk management of the Company and further enhance the supervisory capability and duty performance
effect of the Supervisory Committee, the Supervisory Committee of the Company participated in the
activity of the "Assessment and Selection of the Supervisory Committees of Listed Companies with the Best
Practice” jointly organized by the Listed Companies Association of the PRC, the Shanghai Stock Exchange
and the Shenzhen Stock Exchange, and was named as one of the "Top 20 Supervisory Committees of Listed
Companies with the Best Practice” and elected as an “Excellent Case for Supervisory Committees of Listed
Companies with the Best Practice".
46
China Life Insurance Company Limited
Annual Report 2016
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 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.
2.
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".
2.
Report of the Supervisory Committee
Actively conducting research and investigation activities and training courses and performing their
supervisory function. From 29 November to 2 December 2016, Mr. Miao Ping, the Chairman of the
Supervisory Committee, carried out investigation and research with the members of the Supervisory
Committee on local branches of the Company in Guizhou Province and southeast Guizhou Province, as
well as a local sub-branch of the Company in Tianzhu County, listened to their business reports, held in-
depth conferences with their respective key management, conducted an on-site investigation and research on
intra-city counters of the customer service center of Guiyang branch, and the customer service center of each
of the southeast Guizhou branch and Tianzhu sub-branch, for the purpose of understanding the business
development and the risk prevention and control of the local branches. 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.
China Life Insurance Company Limited Annual Report 2016
6.
5.
4.
Report of the Supervisory Committee
25252
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45
Attending and participating in corporate governance meetings and actively exercising their supervisory
role. In 2016, the Supervisory Committee attended the 2015 Annual General Meeting and the First
Extraordinary General Meeting 2016 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" 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 2016, the fifth session of the Supervisory
Committee held 5 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.
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.
Strengthening training and constantly enhancing duty performance of the Supervisors. In 2016, Mr. Miao
Ping, the Chairman of the Supervisory Committee, attended the eighth special training course of 2016
for directors and supervisors of listed companies within the territory of Beijing as organized by the Listed
Companies Association of Beijing, which gave him the opportunity to learn and understand the businesses of
listed companies, such as the regulatory overview of listed companies within the territory of Beijing, merger,
acquisition and restructuring of enterprises during the reform of state-owned enterprises, merger, acquisition
and restructuring and corporate growth, overseas strategy of enterprises, overseas investment trend and
operation of the PRC enterprises, and the strategy of “One Belt One Road” and internationalization.
Mr. Zhan Zhong and Ms. Wang Cuifei attended the first special training course of 2016 for directors
and supervisors of listed companies within the territory of Beijing as organized by the Listed Companies
Association of Beijing, which gave them the opportunity to learn and understand courses on the regulatory
overview of listed companies within the territory of Beijing and the relevant issues and requirements, system
of regulatory laws and regulations of listed companies, as well as the information disclosure standards,
economic development trend, and innovative transformation of listed companies, etc.
4.
China Life Insurance Company Limited Annual Report 2016
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 on the financial statements for 2016 and have issued unqualified auditors'
reports in accordance with the China Standards on Auditing of PRC Certified Public Accountants and the
International Standards on Auditing, respectively.
3.
48
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 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 entered into between the Company
and CLI and the transactions thereunder 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 the 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.
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 2017-2019 framework agreements entered into
by AMP with the Company, Pension Company, CLIC and CLP&C, respectively. Such agreements and
the transactions thereunder have been approved by the First Extraordinary General Meeting 2016 of the
Company held on 27 December 2016. AMP is a non-wholly owned subsidiary of AMC and is therefore a
connected subsidiary of the Company.
During the Reporting Period, the following continuing connected transactions were carried out by the
Company pursuant to Rule 14A.76(2) of the Listing Rules, including the policy management agreement
between the Company and CLIC, the asset management agreement between the Company and AMC,
the insurance sales framework agreement between the Company and CLP&C, and the framework
agreements entered into by CLWM with the Company, CLIC, CLP&C, China Life Insurance (Overseas)
Company Limited ("CLO") and CLI, respectively. These continuing connected transactions were subject
to the reporting, announcement and annual review requirements but were exempt from the independent
shareholders' approval requirement under the Listing Rules. CLIC, the controlling shareholder of the
Company, holds 60% of the equity interest in CLP&C and 100% of the equity interest in each of CLO and
CLI. Therefore, each of CLIC, CLP&C, CLO and CLI constitutes a connected person of the Company.
AMC is held as to 60% and 40% by the Company and CLIC, respectively, and is therefore a connected
subsidiary of the Company. CLWM is a subsidiary of AMC, and is therefore a connected subsidiary of the
Company.
(I) Continuing Connected Transactions
II. MAJOR CONNECTED TRANSACTIONS
During the Reporting Period, the Company was not involved in any material litigation or arbitration.
MATERIAL LITIGATIONS OR ARBITRATIONS
5.
I.
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47
23 March 2017
Beijing, China
Chairman of the Supervisory Committee
Miao Ping
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 system.
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.
Significant Events
2.
17. PRE-EMPTIVE RIGHTS AND ARRANGEMENTS FOR SHARE OPTIONS
Ms. Wang Cuifei, Ms. Xiong Junhong,
Mr. Miao Ping, Mr. Shi Xiangming,
Mr. Zhan Zhong
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.
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 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.
(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.
39
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25252
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.
China Life Insurance Company Limited Annual Report 2016
(IV) Profit distribution plan and public reserves capitalization plan
1.
Profit distribution plan or public reserves capitalization plan for the year of 2016
In accordance with the profit distribution plan for the year 2016 approved by the Board on 23
March 2017, with the appropriation to its discretionary surplus reserve fund of RMB1,927 million
(10% of the net profit for 2016), the Company, based on 28,264,705,000 shares in issue, proposed
to distribute cash dividends amounting to RMB6,784 million to all shareholders of the Company at
RMB0.24 per share (inclusive of tax). The foregoing profit distribution plan is subject to the approval
by the 2016 Annual General Meeting to be held on 31 May 2017 (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.
No public reserve capitalization is provided for in the profit distribution plan for the current financial
year.
40
40
2.
The profit distribution policy of the Company complied with the Articles of Association and the
examination and approval procedures of the Company, clearly defined the dividend distribution
standards and percentage and the decision-making procedures and 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.
Report of the Board of Directors
The dividend distribution of the Company for the recent 3 years is as follows:
3.
1.
None of the Directors or Supervisors has entered into any service contract with the Company and its subsidiaries
that are not terminable within one year or can only be terminated by the Company with payment of compensation
(other than statutory compensation).
13. DIRECTORS' AND SUPERVISORS' SERVICE CONTRACTS
Report of the Board of Directors
China Life Insurance Company Limited Annual Report 2016
25252
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41
Details of the Board meetings and the Board's performance of its duties during the Reporting Period are set out in
the section headed “Corporate Governance” in this annual report.
12. DAY-TO-DAY OPERATIONS OF THE BOARD
No H Share Stock Appreciation Rights of the Company were granted or exercised in 2016. The Company will
deal with such rights and related matters in accordance with the PRC governmental policies.
2.
11. H SHARE STOCK APPRECIATION RIGHTS
10. PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S SECURITIES
(II)
China Life Insurance Company Limited
Annual Report 2016
Report of the Board of Directors
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 212 of the Articles of Association, the Company's profit distribution policy is as
follows:
During the Reporting Period, the Company and its subsidiaries did not purchase, sell or redeem any of the
Company's listed securities.
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.
RMB million
Amount of
dividends per
ten shares (RMB)
(including tax)
2016
2015
2014
China Life Insurance Company Limited
Annual Report 2016
Report of the Board of Directors
4.
5.
6.
7.
dividends were
distributed
CHANGES IN ACCOUNTING ESTIMATES
RESERVES
Details of the reserves of the Company are set out in Note 36 in the Notes to the Consolidated Financial
Statements in this annual report.
CHARITABLE DONATIONS
The total amount of charitable donations made by the Company during the Reporting Period was approximately
RMB142 million.
PROPERTY, PLANT AND EQUIPMENT
Details of the movement in property, plant and equipment of the Company are set out in Note 6 in the Notes to
the Consolidated Financial Statements in this annual
report.
8.
SHARE CAPITAL
9.
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.
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.
Number of
bonus stocks
per
ten shares (shares)
Year in which
32,211
Transfer of
public reserve
into share
capital per ten
Amount of
cash dividends
shares (shares)
(including tax)
Net profit
attributable to
equity holders of
the Company in
the consolidated
statements for
the year in which
dividends were
distributed
Percentage of
amount of
cash dividends
in net profit
attributable to
equity holders
of the Company
in the consolidated
35%
statements
2.4
4.2
4.0
6,784
19,127
35%
11,871
34,699
34%
11,306
22
ACTIVITIES OF THE SUPERVISORY COMMITTEE
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
52525
43
Period.
The Company has applied the principles of the Corporate Governance Code (the “CG Code”) as set out in
Appendix 14 to the Listing Rules, and has complied with all code provisions of the CG Code during the Reporting
24. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
Based on the information publicly available to the Company and within the knowledge of the Directors as at the
Latest Practicable Date (23 March 2017), not less than 25% of the issued share capital of the Company (being the
minimum public float applicable to the shares of the Company) was held in public hands.
23. SUFFICIENCY OF PUBLIC FLOAT
In 2016, the gross written premiums received from the Company's five largest customers accounted for less than
30% of the Company's gross written premiums for the year. There is no related party of the Company among the
five largest customers.
22. MAJOR CUSTOMERS
In accordance with the requirements of the “Standard Regulations on Corporate Internal Control”, the Board
conducted an assessment on internal control relating to the Company's financial reporting functions, and
confirmed that its internal control was effective as at 31 December 2016.
25252
21. BOARD'S STATEMENT ON INTERNAL CONTROL
20. 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.
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 Related Parties and Issues in relation to External Guarantees Granted by Listed Companies";
and
guarantee;
(2)
(1) during the Reporting Period, the Company did not provide any external
Independent Directors of the Company have rendered their independent opinions on the Company's external
guarantees, and are of the view that:
19. MATERIAL GUARANTEES
Report of the Board of Directors
Annual Report 2016
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.
China Life Insurance Company Limited
China Life Insurance Company Limited Annual Report 2016
25. AUDITORS
From left to right:
Report of the Supervisory Committee
Annual Report 2016
China Life Insurance Company Limited
1.
1.
23 March 2017
Beijing, China
Chairman
By Order of the Board
Yang Mingsheng
Report of the Board of Directors
At the 2016 Annual General Meeting to be held on 31 May 2017, 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 2017, and Ernst & Young as the Hong Kong auditor of the Company for the year 2017.
44.54
44
Internal control audit fee
Financial report audit fee
Fees (RMB million)
Service/Nature
Remuneration paid by China Life Insurance Company Limited to the auditors in 2016 was as follows:
Remuneration paid by the Company to the auditors is subject to approval at the shareholders' general meeting,
pursuant to which the Board is authorized to determine the amount and make payment. Audit fees paid by the
Company to the auditors will not affect the independence of the auditors.
Due to its requirements for project management, Ernst & Young resigned as the auditor of the Company for US
Form 20-F, with effect from the conclusion of the First Extraordinary General Meeting 2016 of the Company.
Following the approval by the shareholders of the Company at the First Extraordinary General Meeting 2016,
the auditor of the Company responsible for auditing the US Form 20-F for the year 2016 has been changed from
Ernst & Young to Ernst & Young Hua Ming LLP, who shall hold office until the conclusion of the 2016 Annual
General Meeting of the Company. Ernst & Young remains as the Hong Kong auditor of the Company. Ernst &
Young has confirmed in writing that there is no matter relating to its resignation as the auditor of the Company
for US Form 20-F that needs to be brought to the attention of the shareholders of the Company. There is also no
disagreement between the Company and Ernst & Young.
Resolutions were passed at the First Extraordinary General Meeting 2015 and the 2015 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 2016, respectively. Ernst & Young Hua Ming LLP and Ernst & Young have been serving as
the Company's auditors for four consecutive years.
11.14
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.
42
18. MANAGEMENT CONTRACTS
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 2016.
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.
No management or administration contracts for the whole or substantial part of any business of the Company
were entered into during the Reporting Period.
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 9 June 2016 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 2016 for the information on income tax in respect of the dividend
distributed to H Share shareholders during the Reporting Period.
Investment in trust scheme
(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
Annual Report 2016
China Life Insurance Company Limited
For the year ended 31 December 2016, the management fee paid by CLI for the asset
management services was RMB0.04 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.
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.
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
(5) Framework Agreement between CLI and CLWM
For the year ended 31 December 2016, 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.
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
Significant Events
China Life Insurance Company Limited Annual Report 2016
56
56
(III) Statement on Claims, Debt Transactions and Guarantees etc. with Related Parties outside
the Course of its Business
During the Reporting Period, the Company was not involved in claims, debt transactions or guarantees with
related parties outside the course of its business.
(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.
On 23 November 2016, the Company, CLIC, CLP&C and China Life Chengda (Shanghai)
Healthcare Equity Investment Management Company Limited (“CLCD") entered into a partnership
agreement for the formation of the China Life Chengda (Shanghai) Healthcare Equity Investment
Center (Limited Partnership) (the “Partnership”). Pursuant to the partnership agreement, the total
capital contribution by all the partners of the Partnership shall be RMB12,010 million, of which
RMB10 million shall be contributed by CLCD as the general partner and managing partner, and
RMB9,000 million, RMB2,000 million and RMB1,000 million shall be contributed by each of the
Company, CLIC and CLP&C as a limited partner. The purpose of the Partnership is to achieve
capital appreciation through investment in enterprises or projects in healthcare and related industries.
The Partnership shall have a term of eight years. The Partnership shall distribute profits and share
losses pursuant to the provisions of the partnership agreement. On 23 November 2016, the Company
entered into a subscription agreement with CLCD (as the general partner) and China Life Equity
Investment Company Limited (“CLEI”, as the manager of the Partnership) to confirm the Company's
capital contribution to the Partnership. As CLI (a wholly-owned subsidiary of CLIC) holds 100% of
the equity interest in CLEI, which in turn holds 100% of the equity interest in CLCD, each of CLEI
and CLCD is a connected person of the Company.
Formation of partnership
2.
1.
(II) Other Major Connected Transactions
Significant Events
China Life Insurance Company Limited Annual Report 2016
58
58
On 6 December 2016, AMC, as the authorized agent on behalf of the Company and CLP&C (each as
the principal and beneficiary), entered into a trust contract with Chongqing International Trust Co.,
Ltd. (“Chongqing Trust”)(as the trustee) for the subscription of the trust units under the Chongqing
Trust Collective Fund Trust Scheme for the PPP Project for Qingdao Metro Line 4 (the "Trust
Scheme") established by Chongqing Trust. Pursuant to the trust contract, the total amount of the
trust funds under the Trust Scheme shall be RMB2,116 million. The Company and CLP&C shall
subscribe for 2,086 million and 30 million trust units under the Trust Scheme at a consideration of
RMB2,086 million and RMB30 million, respectively. The trust funds under the Trust Scheme will be
ultimately used for the investment in the PPP Project for Qingdao Metro Line 4. The trust benefits
to be distributed by Chongqing Trust to the beneficiaries are ultimately derived from the operating
income generated from the PPP Project for Qingdao Metro Line 4 and the special subsidies provided
by the Qingdao Municipal Government for the project every year.
25252
52
the amounts of the above transactions have not exceeded the relevant annual caps.
the transactions were entered into in accordance with the agreements governing those continuing
connected transactions, and the terms are fair and reasonable and in the interests of shareholders of the
Company as a whole; and
(4)
(3)
(2) the transactions were conducted on normal commercial terms;
(1) the transactions were entered into in the ordinary and usual course of business of the Company;
The Company's Independent Directors have reviewed the above continuing connected transactions which
were subject to the reporting, announcement and/or independent shareholders' approval requirements, and
confirmed that:
The above transactions in relation to the formation of partnership and investment in trust scheme
were subject to the reporting and announcement requirements but were 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 transactions.
57
Confirmation by Independent Directors
52525
52525
(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. The renewed agreement between the
parties expired on 31 December 2015. On 3 February 2016, the Company and CLI entered
into the 2016 asset management agreement for alternative investments, with a term from 1
January 2016 to 30 June 2017. 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 the CIRC 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 and a performance incentive
fee. For details as to the method of calculation of the investment management service fee and
performance incentive fee, please refer to Note 33 in the Notes to the Consolidated Financial
Statements. 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 2016, the Company paid CLI investment management service
fee and performance incentive fee of RMB298 million. As at 31 December 2016, the contractual
amount of the assets entrusted by the Company to CLI for investment and management was
RMB148,574 million, among which, for the year ended 31 December 2016, the contractual
amount of the assets newly entrusted by the Company was RMB50,129 million, and the
contractual amount of the assets newly entrusted by the Company in its co-investment with
CLIC and CLP&C was RMB9,000 million.
China Life Insurance Company Limited
Annual Report 2016
Significant Events
3.
4.
25252
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 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 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 ending 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 ending 31 December 2017 under the 2015 insurance sales
framework agreement to RMB3,000 million and RMB5,000 million, respectively.
For the year ended 31 December 2016, CLP&C paid the Company an agency service fee of
RMB2,337 million.
Framework Agreements with AMP
(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 became effective upon
signing by the parties and expired on 31 December 2016. Pursuant to the agreement, the
Company and AMP would 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 was determined by the parties through arm's length negotiations with reference
to the industry practices. For the three years ended 31 December 2016, the annual caps of the
subscription price and corresponding subscription fee for the subscription of fund products were
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 were 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 were
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 were
RMB10 million, RMB20 million and RMB20 million, respectively; and the annual of the
fees for other daily transactions were RMB50 million, RMB100 million and RMB100 million,
respectively. 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.
For the three years ending 31 December 2019, the annual caps of the subscription price and
caps
51
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Significant Events
25252
China Life Insurance Company Limited Annual Report 2016
50
2.
1.
Policy Management Agreement
China Life Insurance Company Limited
Annual Report 2016
Significant Events
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 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 2016, the service fee paid by CLIC to the Company amounted to
RMB869 million.
Asset Management Agreements
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.
For the year ended 31 December 2016, the Company paid AMC a service fee of RMB1,081
million.
(2) 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
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 2016, CLIC paid AMC a service fee of RMB124 million.
49
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China Life Insurance Company Limited Annual Report 2016
(1) Asset Management Agreement between the Company and AMC
corresponding subscription fee for the subscription of fund products are RMB72,600 million;
the annual caps of the redemption price and corresponding redemption fee for the redemption
of fund products are 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 caps of the fees for other daily transactions
are RMB100 million.
For the year ended 31 December 2016, 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 RMB0.01
million.
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.
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 expired on 31 December 2016. Pursuant to the agreement, CLIC
and AMP would enter into transactions in relation to the subscription and redemption of
fund products. 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 2016, the annual caps of the subscription price and corresponding
subscription fee for the subscription of fund products were 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 were RMB5,000
million, RMB10,000 million and RMB10,000 million, respectively. 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. 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 RMB10,000 million; the annual caps of the redemption
price and corresponding redemption fee for the redemption of fund products are RMB10,000
million; and the annual caps of the management fee and performance-based fee payable by
CLIC for the asset management for specific clients are RMB100 million.
(3) Framework Agreement between CLP&C and CLWM
For the year ended 31 December 2016, the management fee paid by CLIC for the asset
management services was RMB0.48 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
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.
(2) Framework Agreement between CLIC and CLWM
Significant Events
Annual Report 2016
China Life Insurance Company Limited
54
5.
55
ended 31 December 2016, the management fee paid by the Company for the asset
management services was RMB0.03 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 RMB0.14
million.
For the
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.
(1) Framework Agreement between the Company and CLWM
Framework Agreements with CLWM
For the year ended 31 December 2016, the subscription price for the fund products was
RMB100.00 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 RMB0 million, the sales commission fee and client maintenance fee paid by AMP
was RMB0 million, and the fees for other daily transactions were RMB0 million.
are RMB50 million, RMB100 million and RMB100 million, respectively; the annual caps of
the sales commission fee and client maintenance fee payable by AMP were RMB50 million,
RMB100 million and RMB100 million, respectively; and the annual caps of the fees for other
daily transactions were RMB50 million, RMB100 million and RMB100 million, respectively.
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. For the three years ending 31
December 2019, the annual caps of the subscription price for the fund products are RMB10,000
million; the annual caps of the redemption price for the fund products are RMB10,000 million;
the annual caps of the subscription fee for the fund products are RMB100 million; the annual
caps of the redemption fee for the fund products are RMB100 million; the annual caps of the
sales commission fee and client maintenance fee payable by AMP are RMB100 million; the
annual caps
of the management fee and performance-based fee payable by CLP&C for the asset
management for specific clients are RMB100 million; and the annual caps of the fees for other
daily transactions are RMB100 million.
Significant Events
For the year ended 31 December 2016, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB1,530.59 million, and the redemption price
and corresponding redemption fee for the redemption of fund products was RMB2,585.28
million.
(4) Framework Agreement between CLP&C and AMP
CLP&C and AMP entered into the “Cooperation Framework Agreement” on 6 June 2014. The
agreement became effective upon signing by the parties and expired on 31 December 2016.
Pursuant to the agreement, CLP&C and AMP would 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
was determined by the parties through arm's length negotiations with reference to the industry
practices. For the three years ended 31 December 2016, the annual caps of the subscription
price for the fund products were RMB5,000 million, RMB10,000 million and RMB10,000
million, respectively; the annual caps of the redemption price for the fund products were
RMB5,000 million, RMB10,000 million and RMB10,000 million, respectively; the annual
caps of the subscription fee for the fund products were RMB50 million, RMB100 million and
RMB100 million, respectively; the annual caps of the redemption fee for the fund products
53
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year
25252
China Life Insurance Company Limited Annual Report 2016
Significant Events
For the year ended 31 December 2016, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB9,188.01 million, the redemption price
and corresponding redemption fee for the redemption of fund products was RMB4,338.51
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
RMB10.90 million, and the fees for other daily transactions were RMB4.15 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 became effective upon signing by the parties and expired
on 31 December 2016. Pursuant to the agreement, Pension Company and AMP would 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 was determined by the parties through arm's length
negotiations with reference to the industry practices. For the three years ended 31 December
2016, the annual caps of the subscription price and corresponding subscription fee for the
subscription of fund products were 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 were 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 were RMB50 million, RMB100 million and RMB100 million,
respectively; and the annual caps of the fees for other daily transactions were RMB50 million,
RMB100 million and RMB100 million, respectively. 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. 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 RMB10,000 million; the annual caps of the redemption price and
corresponding redemption fee for the redemption of fund products are RMB10,000 million;
the annual caps of the sales commission fee and client maintenance fee payable by AMP are
RMB100 million; the annual caps of the management fee and performance-based fee payable by
Pension Company for the asset management for specific clients are RMB100 million; and the
annual caps of the fees for other daily transactions are RMB100 million.
Significant Events
52
52
China Life Insurance Company Limited
Annual Report 2016
For the year ended 31 December 2016, 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 were RMB0 million.
(3) Framework Agreement between CLIC and AMP
Employee Representative
Zhan Zhong
Yes
29.29
0
0
Male 48 Since 11 July 2015
0
2.
0
122.38
138.07
No
Total
1.
0
0
578.12
108.78
Pursuant to the Articles of Association, Supervisors serve for a term of three years and may be re-elected.
0
Employee Representative Female 53 Since 11 July 2015
Supervisor
Wang Cuifei
Supervisor
No
152.83
30.45
0
Notes:
3.
0
the end of
Reason for paid in RMB
in RMB ten
ten thousands
parties of the
Name
Position
Gender Age Term
the year
the year
beginning of
changes ten thousands
(before tax)
Company
Lin Dairen
President
Male 58
Since April 2014
140.00
24.56
164.56
No
thousands
related
from
Company Period in RMB
According to the requirements of the relevant remuneration policies of the Company, the final amount of
emoluments of the Chairman of the Supervisory Committee and the Supervisors is currently subject to review and
approval. The result of the review will be disclosed when the final amount is confirmed.
(III) Current Senior Management
China Life Insurance Company Limited
Annual Report 2016
Directors, Supervisors, Senior Management and Employees
Other benefits,
social insurance,
Total
housing emoluments
provident fund received from
Whether
and enterprise
the Company
received
Number
annuity fund
during the
emoluments
of share Number of
paid by the
held at the share held at
Remuneration
Reporting
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.
0
114.80
Female 48
Total
housing
emoluments
provident fund
received from
Whether
and enterprise
the Company
received
Number
annuity fund
emoluments
of shares Number of
Remuneration
paid by the
Reporting
from
social insurance,
held at the shares held
Other benefits,
Directors, Supervisors, Senior Management and Employees
0
0
545.69
Notes:
1.
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.
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 First Extraordinary General Meeting 2015 and upon the approval from the CIRC,
Mr. Tang Xin was appointed as a Director with effect from 7 March 2016. Following the election at the 2015
Annual General Meeting and upon the approval from the CIRC, Ms. Leung Oi-Sie Elsie was appointed as a
Director with effect from 20 July 2016.
65
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95
66
China Life Insurance Company Limited Annual Report 2016
(II) Current Supervisors
Since 20 October 2014
paid/fee in
related
24.48
139.28
No
Supervisory Committee
Shi Xiangming
Supervisor
Male
57
Since 25 May 2009
0
0
117.91
30.03
147.94
No
Xiong Junhong
Supervisor
0
Company Period in RMB
0
Male
beginning of at the end of
Reason for
RMB ten
in RMB ten ten thousands
parties of the
Name
Position
Gender Age Term
the year the year
Xu Hengping
Xu Haifeng
Li Mingguang
changes
thousands
thousands
(before tax)
Company
Miao Ping
Chairman of the
58 Since 11 July 2015
Vice President
107.33
0
share held at
paid/fee in
Company
RMB ten
from related
the beginning
the end of
Reason for
RMB ten
in RMB ten
thousands
parties of the
Name
Previous Position Gender Age Term
of the year
the year
changes
share held at
thousands
emoluments
paid by the
Directors, Supervisors, Senior Management and Employees
(IV) Resignation and Retirement of Directors, Supervisors and Senior Management
Other
benefits, social
insurance,
Total
emoluments
housing received from
provident fund
the Company
and enterprise
during the
Whether
annuity fund
Reporting
received
Number of Number of
Remuneration
Period in
thousands
(before tax)
Company Reason for changes
Yes Retired due to the expiration of session of the
Board
Huang Yiping
Independent
Male
53 20 October 2014-
0
0
5.33
0
5.33
No Resigned pursuant to the relevant policies
Director
7 March 2016
Yang Zheng
Vice President
Male
46 November 2014-
20 July 2016
15.00
0
15.00
Zhang Xiangxian
Non-executive Male
61 24 July 2012-
0
0
0
0
Yes Resigned due to age reason
China Life Insurance Company Limited Annual Report 2016
Director
Anthony Francis
Neoh
Independent
Director
Male
70
21 June 2010-
0
0
3 August 2016
Male 58 Since November 2014
69
25252
No
Chief Actuary
November 2014 and
Chief Actuary since
March 2012
Zhao Lijun
Xiao Jianyou
Vice President
Male 53 Since July 2016
0
0
56.70
12.22
68.92
Vice President
Male 48
Since October 2016
0
138.04
I
24.64
0
0
113.40
24.48
137.88
No
Vice President
Male
57 Since November 2014
0
0
113.40
24.18
137.58
No
Vice President,
Male 47 As Vice President since
0
113.40
24.75
132.08
웃음
Information
Technology
Officer
Total
0
0
I
949.63
Notes:
1.
2.
3.
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.
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 seventh meeting of the fifth session of the Board of Directors of the Company
and the approval from the CIRC, Mr. Zhao Lijun was appointed as the Vice President of the Company with
effect from 20 July 2016. With the approval given at the ninth meeting of the fifth session of the Board of
Directors of the Company, Mr. Xiao Jianyou, the former Assistant President, was appointed as the Vice President
of the Company with effect from 27 October 2016, and Mr. Ruan Qi was appointed as the Chief Information
Technology Officer of the Company with effect from 27 October 2016.
67
52525
No
33.10
8.60
24.50
No
No
Zheng Yong
Board Secretary
Male 54
Since June 2013
0
105.00
68
32.47
No
Ruan Qi
Chief
Male
50
Since October 2016
0
0
137.47
Yes
0
No
0.05%
Domestic Non-State-
owned legal person
- Participating - Group Participating
-018L-FH001 Hu
New China Life Insurance Company Ltd.
- Industrial and Commercial Bank of
China Limited - China Universal
-Tianfu Bull No. 53 Asset Management Plan
15,015,845
0.05%
Other
China Universal Asset Management Co., Ltd
18,452,300
0.07%
State-owned legal person
China International Television Corporation
+17,584,819
27,290,235
0.10%
Overseas legal person
13,538,001
Hong Kong Securities Clearing Company Limited
+13,538,001
State-owned legal person
Information relating to the Controlling Shareholder and Effective Controller
2.
Industrial and Commercial Bank of China Limited-China Southern Flexible Allocation of Consumption and Vitality of Hybrid Securities
Investment Fund has Industrial and Commercial Bank of China Limited as its 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.
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.
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.
1.
Details of shareholders
Changes in Ordinary Shares and Shareholders Information
China Life Insurance Company Limited Annual Report 2016
25252
52525
61
-7,600,000
12,400,000
0.04%
China National Nuclear Corporation
The controlling shareholder of the Company is CLIC, and its relevant information is set out below:
Hybrid Securities Investment Fund
+25,016,894
China Life Insurance (Group) Company
pledged or frozen
restrictions
Number of shares
subject to selling
during the
Reporting Period
Number of shares
Increase/decrease
Number of
shares held as at
the end of the
Reporting Period
Percentage of
shareholding
Nature of shareholder
Name of shareholder
Unit: Shares
Particulars of top ten shareholders of the Company
No. of H Share shareholders:
30,257
No. of H Share shareholders: end of the month prior to
the disclosure of this annual
report
Reporting Period
State-owned legal person
Consumption and Vitality of
68.37%
HKSCC Nominees Limited
59,384,610
0.21%
Other
-China Southern Flexible Allocation of
Industrial and Commercial Bank of China Limited
119,719,900
0.42%
State-owned legal person
+51,619,506
572,311,916
2.02%
State-owned legal person
China Securities Finance Corporation Limited
Central Huijin Asset Management Limited
+3,725
7,314,015,954
25.88%
Overseas legal person
19,323,530,000
Name of company
Legal representative
Date of incorporation
Changes in Ordinary Shares and Shareholders Information
China Life Insurance Company Limited Annual Report 2016
25252
52525
63
The letter "L" denotes a long position. The letter “S” denotes a short position. The letter “P” denotes interest in a lending pool.
0.00%
0.01%
1.83%
6.94%
516,788,896(L)
1,066,000(S)
H Shares
Interest in controlled corporation
BlackRock, Inc.
(Note 2)
0.93%
3.55%
(Note 1): JPMorgan Chase & Co. was interested in a total of 568,720,847 H shares in accordance with the provisions of
Part XV of the SFO. Of these shares, J.P. Morgan Securities LLC, JF Asset Management Limited, J.P. Morgan
Investment Management Inc., J.P. Morgan GT Corporation, J.P. Morgan Whitefriars Inc., J.P. Morgan Securities
plc, JPMorgan Chase Bank, N.A., J.P. Morgan Chase Bank Berhad, JPMorgan Asset Management (UK) Limited and
China International Fund Management Co Ltd were interested in 94,276,750 H shares, 1,744,000 H shares, 238,000
H shares, 500,000 H shares, 36,304,793 H shares, 169,712,429 H shares, 264,246,283 H shares, 800,592 H shares,
698,000 H shares and 200,000 H shares respectively. All of these entities are either controlled or indirectly controlled
subsidiaries of JPMorgan Chase & Co.
264,241,698 (P)
Included in the 568,720,847 H shares are 264,241,698 H shares (3.55%), 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 568,720,847 H shares, 52,558,380 H shares were physically settled listed derivatives, 1,652,000 H
shares were cash settled listed derivatives, 237,826 H shares were physically settled unlisted derivatives and 28,128,300
H shares were cash settled unlisted derivatives.
(Note 2): BlackRock, Inc. was interested in a total of 516,788,896 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 3,236,000 H shares, 2,609,000 H shares, 94,535,254 H shares,
168,530,000 H shares, 1,536,955 H shares, 9,184,502 H shares, 2,665,235 H shares, 3,855,000 H shares, 37,301,218
H shares, 1,562,000 H shares, 39,034,785 H shares, 3,427,700 H shares, 48,150,096 H shares, 65,373,505 H shares,
30,179,276 H shares, 539,000 H shares, 3,878,370 H shares, 591,000 H shares, 564,000 H shares and 36,000 H
shares respectively. All of these entities are either controlled or indirectly controlled subsidiaries of BlackRock, Inc. Of
these 516,788,896 H shares, 2,991,915 H shares were cash settled unlisted derivatives.
received from
provident fund
emoluments
housing
Total
social insurance,
Other benefits,
(I) Current Directors
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
2.
Directors, Supervisors, Senior Management and Employees
Annual Report 2016
China Life Insurance Company Limited
I
64
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 2016, had an interest or short position in the shares and underlying shares of
the Company which were recorded in the register required to be kept by the Company pursuant to Section 336 of
the SFO.
BlackRock, Inc. held by way of attribution a short position as defined under Part XV of the SFO in 1,066,000 H
shares (0.01%). Of these 1,066,000 H shares, 358,000 H shares were cash settled unlisted derivatives.
JPMorgan Chase & Co. held a short position as defined under Part XV of the SFO in 131,839,776 H shares (1.77%).
Of these 131,839,776 H shares, 18,998,675 H shares were physically settled listed derivatives, 41,455,100 H shares
were cash settled listed derivatives, 8,447,345 H shares were physically settled unlisted derivatives and 33,686,156 H
shares were cash settled unlisted derivatives.
0.47%
1.77%
131,839,776 (S)
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 in below:
Changes in Ordinary Shares and Shareholders Information
Annual Report 2016
China Life Insurance Company Limited
62
As at 31 December 2016, CLIC held 1,785,098,644 shares (H Share) of Town
Health International Medical Group Limited, representing 23% of its total 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
management business permitted by national laws and regulations or approved
by the State Council of PRC; other businesses approved by insurance regulatory
agencies.
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
in China or abroad during the
Reporting Period
subsidiaries and affiliates listed
Shareholdings in other
Major businesses
68.37%
4.
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.
2.01%
7.64%
568,720,847 (L)
H Shares
Beneficial owner, investment
manager, trustee and custodian
corporation/approved lending agent
(Note 1)
68.37%
92.80%
30,361
A Shares 19,323,530,000 (L)
Percentage of the
respective class
of shares
Number of
shares held
Class of shares
Capacity
Beneficial owner
China Life Insurance (Group)
Company
JPMorgan Chase & Co.
Name of substantial shareholder
So far as is known to the Directors, Supervisors and the chief executive of the Company, as at 31 December 2016,
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
Percentage of the
total number of
shares in issue
No. of A Share shareholders:
122,882
Total number of ordinary
share shareholders as at the
No. of A Share shareholders:
126,966
113.40
24.18
137.58
Miao Jianmin
Non-executive Director Male
52 Since 27 October 2008
0
0
0
0
Wang Sidong
Non-executive Director Male
55
Since 24 July 2012
0
0
0
Since 11 July 2015
Liu Jiade
57
Executive Director
0
0
140.00
24.56
164.56
No
Xu Hengping
Executive Director
Male
58
Since 11 July 2015
0
113.40
24.48
137.88
No
Xu Haifeng
Male
Non-executive Director Male
54
Since 11 July 2015
45 Since 7 March 2016
0
26.67
0
26.67
Female 77 Since 20 July 2016
0
0
15.00
0
15.00
2 3 3 3 2 3 3
No
Yes
Yes
Yes
Yes
Male
Independent Director
Independent Director
Leung Oi-Sie Elsie
Total
Tang Xin
0
Chang Tso Tung Stephen
Independent Director
Male
68
Since 20 October 2014
0
0
Since 27 October 2008
32.00
32.00
Robinson Drake Pike
Independent Director
Male 65 Since 11 July 2015
0
32.00
0
32.00
0
Yes
58
Executive Director
52525
59
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 as otherwise disclosed in this annual report, the Company had no other material contracts during the
Reporting Period.
Entrusted cash asset investment during the Reporting Period or any investment occurred in previous periods
but subsisted during the Reporting Period: Investment is one of the principal businesses of the Company.
The Company has adopted the mode of entrusted investment for management of its investment assets,
and established a diversified framework of entrusted investment management with China Life's internal
managers playing the key role and the external managers offering effective
The internal managers
supports.
include AMC and its subsidiaries, and CLI. The external managers comprise both domestic and overseas
managers, including fund companies, securities companies and other professional investment management
institutions. The Company selected different investment managers based on the purpose of allocation of
various types of investments, their risk features and the expertise of different managers, so as to establish
a great variety of investment portfolios and improve the efficiency of capital utilization. The Company
entered into entrusted investment management agreements with all managers and supervised the managers'
daily investment performance through the measures such as investment guidelines, asset entrustment and
performance appraisals. The Company also adopted risk control measures in respect of specific investments
based on the characteristics of different managers and investment products.
The Company neither gave external guarantees nor provided guarantees to its 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.
4.
3.
2.
1.
III. MATERIAL CONTRACTS AND THEIR PERFORMANCE
Significant Events
Annual Report 2016
China Life Insurance Company Limited
25252
the Company
China Life Insurance Company Limited Annual Report 2016
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.
Total number of
ordinary share
shareholders as at
the end of the
Total number of shareholders and their shareholdings
1.
3.
INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER
As at the end of the Reporting Period, the Company had not issued any securities in the last three years. During
the Reporting Period, there was no change in the total number of shares and the share structure of the Company
due to bonus issues or placings, nor were there any internal employees' shares.
ISSUE AND LISTING OF SECURITIES
During the Reporting Period, there was no change in the total number of shares and the share capital of the
Company.
CHANGES IN SHARE CAPITAL
2.
1.
Changes in Ordinary Shares and Shareholders Information
Annual Report 2016
China Life Insurance Company Limited
60
60
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
received
Number
annuity fund
changes
thousands
thousands
(before tax)
Company
Yang Mingsheng
Chairman of the Board, Male
61
Since 22 May 2012
0
0
0
0
0
Yes
Executive Director
Lin Dairen
of the year of the year
Gender Age Term
Position
Name
during the
emoluments
of shares Number of
Remuneration
paid by the
Reporting
from
held at the
Male
shares held
Company Period in RMB
related
beginning at the end
Reason for
RMB ten
in RMB ten
ten thousands
parties of the
paid/fee in
0
during the
14.05
Whether
65.33
☐ ☐
119.09
0
0
Total
arrangements
February 2016
No Resigned due to adjustment of work
and enterprise
19.38
3.05
16.33
0
Female 49 December 2014-
Financial
Controller
Huang Xiumei
August 2016
No Resigned due to adjustment of work
arrangements
79.38
73
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, and an Independent Non-executive Director of
Beijing Tong Ren Tang Chinese Medicine Company Limited since May 2013.
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 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.
Mr. Tang Xin, born in 1971, Chinese
Directors, Supervisors, Senior Management and Employees
Mr. Robinson Drake Pike, born in 1951, American
China Life Insurance Company Limited
72
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 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.
52525
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.
Annual Report 2016
25252
SUPERVISORS
Directors, Supervisors, Senior Management and Employees
ค
Q
Mr. Chang Tso Tung Stephen, born in 1948, Chinese
Mr. Miao Ping, born in 1958, Chinese
Mr. Miao became the Chairman of the Supervisory Committee of the Company in July 2015.
He served as an Executive Director of the Company from July 2014 to May 2015 and the Vice
President of the Company from December 2009 to May 2015. Mr. Miao served as the General
Manager of the Company's Jiangsu Branch since September 2006, the General Manager of the
Company's Jiangxi Branch since September 2004, and the Deputy General Manager of the
Company's Jiangsu Branch since April 2002. Mr. Miao graduated from the Correspondence
College of Yangzhou University in 1996, majoring in Economics and Management. Mr. Miao, a
Senior Economist, has over 30 years of experience in the operation of life insurance business and
the management of insurance business.
Mr. Shi Xiangming, born in 1959, Chinese
Mr. Shi became a Supervisor of the Company in May 2009, and has been the General Manager
of the Supervisory Department of the Company since September 2008. Mr. Shi served as 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 of Science degree.
Ms. Xiong Junhong, born in 1968, Chinese
Ms. Xiong became a Supervisor of the Company in October 2014. She is a Senior Economist
with a PhD in Finance from Nankai University. From July 1993 to August 2003, Ms. Xiong
worked at the Banking Department and the 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, investment research and
strategic planning.
74
China Life Insurance Company Limited
Annual Report 2016
China Life Insurance Company Limited Annual Report 2016
2
71
China Life Insurance Company Limited Annual Report 2016
Mr. Lin Dairen, born in 1958, Chinese
Mr. Lin became an Executive Director of the Company in October 2008, and was appointed as
the President of the Company by the Board in March 2014. He serves concurrently as a Non-
executive Director of China Life Property and Casualty Insurance Company Limited, China Life
Pension Company Limited and China Life Asset Management Company Limited. He served as
the Vice President of the Company from 2003 to March 2014, and an Executive Director and the
President of China Life Pension Company Limited from November 2006 to March 2014. Mr.
Lin graduated with a Bachelor's degree in Medicine from Shandong Province Changwei Medical
Institute in 1982. Mr. Lin, a Senior Economist, has over 30 years of experience in the operation
of the life insurance business and insurance management, and was awarded special allowance
by the State Council. He is currently the Chairman of the China Life Foundation, the Vice
Chairman of the Insurance Institute of China and the Insurance Association of China, a Non-
executive Director of China Insurance Security Fund Co., Ltd., the 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.
69
69
52525
25252
China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
2
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 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 the General Manager of Longyan
Branch of Fuzhou Life Insurance Company Limited. Mr. Xu graduated from Hunan University,
majoring in Finance. Mr. Xu, a Senior Economist, has over 35 years of experience in operation of
the life insurance business and insurance management.
Mr. Xu 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 Ecommerce 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.
Directors, Supervisors, Senior Management and Employees
Mr. Miao Jianmin, born in 1965, Chinese
70
0
China Life Insurance Company Limited
Annual Report 2016
Directors, Supervisors, Senior Management and Employees
9.
Mr. Wang Sidong, born in 1961, Chinese
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, a Director of China Life Pension Company Limited, and a Director
of China Life Ecommerce 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. Liu Jiade, born in 1963, Chinese
Mr. Liu became a Non-executive Director of the Company in July 2015. He is the Vice
Chairman and the President of China Guangfa Bank Co., Ltd. and concurrently serves as a
Supervisor of Sinopec Sales Company Limited and a member of the Accounting Informatization
Committee of the Ministry of Finance. Mr. Liu 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 August 2003 to March 2014, the Chairman of China Life
Pension Company Limited from March 2014 to December 2016 (in particular, he concurrently
served as the President of China Life Pension Company Limited from March 2014 to March
2015), and the Vice President of China Life Insurance (Group) Company from August 2014
to October 2016. Since 2003, he 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.
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.
Directors, Supervisors, Senior Management and Employees
52525
25252
Mr. Miao became a Non-executive Director of the Company in October 2008. He is the Vice
Chairman and the President of China Life Insurance (Group) Company. He is concurrently the
Chairman of China Life Pension Company Limited, 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 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 Monetary Banking, and the Central University of Finance and
Economics with a Bachelor's degree in Insurance. Mr. Miao is a Senior Economist.
a
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 (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.
Mr. Zhan Zhong, born in 1968, Chinese
25252
China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
II POSITIONS HELD BY CURRENT DIRECTORS, SUPERVISORS AND SENIOR
MANAGEMENT IN SHAREHOLDERS OF THE COMPANY
III
78
Name of shareholders
Miao Jianmin
Wang Sidong
Xiong Junhong
China Life Insurance (Group) Company
China Life Insurance (Group) Company
China Life Insurance (Group) Company
Position
Chairman
Term
Vice Chairman, President
Vice President
52525
Since March 2012
Since October 2013
Deputy General Manager
of Strategic Planning
Department
Since June 2004
Since June 2013
EMPLOYEES
(I) Employees
Number of employees of the Company
98,505
Number of employees of the Company's major subsidiaries
1,234
Employees in total
99,739
Retired employees of the Company and its major subsidiaries for which extra costs have to be incurred
7
As at the end of the Reporting Period, the composition of the employees of the Company and its major
subsidiaries is as follows:
China Life Insurance (Group) Company
77
HKSE.
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 (formerly known as Lee & Man Handbags
Holding Limited) and SCUD Group Limited, all of which are listed on the main board of the
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 (at the 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, an Assistant to the General Manager of the Company's
Guangdong Branch, the Deputy General Manager (responsible for daily operation) and the
General Manager of the Individual Insurance Division of the Company and the Deputy Secretary
of the Party Committee and the Deputy General Manager (responsible for daily operation) of the
Company's Qinghai Branch. Mr. Zhan graduated from Kunming Institute of Technology with a
Bachelor's degree in Computer and Automation.
Ms. Wang Cuifei, born in 1964, Chinese
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 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.
SENIOR MANAGEMENT
Mr. Lin Dairen, please see the section "Directors" for his profile.
Mr. Xu Hengping, please see the section “Directors” for his profile.
Mr. Xu Haifeng, please see the section “Directors” for his profile.
Mr. Li Mingguang, born in 1969, Chinese
Mr. Li became the Vice President of the Company in November 2014. He became the Chief
Actuary of the Company in March 2012. Mr. Li joined the Company in 1996 and subsequently
served as the Deputy Director, the Director, 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 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.
75
52525
25252
China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
3
Mr. Zhao Lijun, born in 1963, Chinese
Mr. Zhao became the Vice President of the Company in July 2016. He served as the Chief
Financial Officer and the General Manager of the Finance Department of China Life Insurance
(Group) Company from May 2014 to April 2016. From 2012 to 2014, Mr. Zhao successively
served as the Deputy General Manager (responsible for daily operation) and the General Manager
of the Data Center of the Company. From 2010 to 2012, Mr. Zhao served as the General
Manager of the Legal and Compliance Department of the Company. From 2008 to 2010, Mr.
Zhao served as the Deputy General Manager of Shandong branch of the Company. From 2003
to 2008, Mr. Zhao successively served as an Assistant to the General Manager and the General
Manager of the Finance Department of the Company. Prior to that, he successively served as a
cadre in the Planning & Finance Department of the People's Insurance Company of China, the
Director and Deputy Manager of the Planning & Finance Department of China Reinsurance
Corporation in Hong Kong, the Deputy Manager and Manager of the Planning & Finance
Department of China Insurance H.K. (Holdings) Company Limited, the Deputy Director, the
Director 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 Accounting and Finance in 1987, and from
Tsinghua University with an EMBA in 2010. Mr. Zhao is a Senior Accountant.
Mr. Xiao Jianyou, born in 1968, Chinese
Mr. Xiao became the Vice President of the Company in October 2016. He has been an Assistant
to the President of the Company since July 2015, and a Non-executive Director of China Life
Property and Casualty Insurance Company Limited since September 2015. He served as the
General Manager of the Company's Jiangsu Branch from January 2014, and the Deputy General
Manager (responsible for daily operation) of the Company's Jiangsu Branch from April 2013 to
January 2014. From 2006 to 2013, he successively served as the Deputy General Manager, an
Assistant to the General Manager and the Marketing Director of Jiangsu Branch and the General
Manager and the Deputy General Manager of Taizhou Branch in Jiangsu Province. Before that,
Mr. Xiao held various other positions at the Company's Jiangsu Branch, including the Deputy
Manager of the Marketing Department and Management Department, an Assistant to the
General Manager, the Deputy General Manager (responsible for daily operation) and the General
Manager of the Individual 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.
76
China Life Insurance Company Limited
Annual Report 2016
Directors, Supervisors, Senior Management and Employees
Mr. Zheng Yong, born in 1962, Chinese
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, a Senior Economist, currently serves as an arbitrator
of the China International Economics and Trade Arbitration Commission, and the Deputy
Chairman of the Chamber of Hong Kong Listed Companies.
Mr. Ruan Qi, born in 1966, Chinese
Mr. Ruan became the Chief Information Technology Officer of the Company in October
2016. He has been the General Manager (at the general manager level of 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 served as a
staff member of the Computer Department of Fujian Branch, the Deputy Head of the Technical
Division of the Computer Office, an Assistant to the Director, and the Deputy Director of the
Computer Office, and the Deputy Manager (responsible for daily operation) and the Manager of
the Information Technology Department of the Company from 1989 to 2004. He was a cadre
at Fujian Research Institute of Posts and Telecommunications from 1987 to 1989. Mr. Ruan, a
Senior Engineer, graduated from Beijing Institute of Posts and Telecommunications in August
1987 with a Bachelor's degree in Computer Science and Communications and from Xiamen
University with Executive Master of Business Administration (EMBA) in December 2007.
COMPANY SECRETARY
Mr. Heng Victor Ja Wei, born in 1977, British
e
Mr. Yang Mingsheng, born in 1955, Chinese
Name
Yang Mingsheng
4,647
China Life Insurance Company Limited
1.
Structure of Expertise
Class of Expertise
Management and administration
Sales and sales management
Finance and auditing
Insurance verification, claims processing and customer services
Other expertise and technicians
Others
Total
Number of Employees
21,868
36,091
5,225
28,420
3,488
Directors, Supervisors, Senior Management and Employees
DIRECTORS
Annual Report 2016
99,739
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 2016, 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.
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.
In 2016, 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
from 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.
84
China Life Insurance Company Limited
Annual Report 2016
Number of
meetings the
Director was
required to
attend during
In 2016, 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:
Meetings and attendance
1.
During 2016, the members of the Board attended special training courses of 2016 for directors and supervisors of listed
companies within the territory of Beijing as organized by the Listed Companies Association of Beijing, a training course
of 2016 for new directors, supervisors and senior management of insurance institutions as organized by the CIRC and
a training course on the qualifications of independent directors of listed companies as organized by the SSE. Pursuant
to the regulatory requirements, the Independent Directors of the Company passed the examination of the CIRC
regarding the approval of qualifications of independent directors and the examination of the SSE on the qualifications of
independent directors.
Corporate Governance
Corporate Governance
86
86
25252
52525
85
56
During 2016, the Board constantly monitored the system on risk management and internal control of the Company to
ensure that the financial, operational and compliance control of the Company and its subsidiaries operated effectively,
and the Company considered that such system was effective and sufficient. The Board also ensured that the Company
had injected sufficient resources in accounting, internal review and financial reporting.
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. Wang Sidong and Mr. Liu
Jiade, 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. Huang Yiping resigned from his position as a Director pursuant to the relevant policies, Mr. Zhang Xiangxian
resigned from his position as a Director due to age reason, and Mr. Anthony Francis Neoh retired from his position
as a Director due to the expiry of his term of office. 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 the “Procedural Rules for Board of Directors Meetings" with reference to
its actual operation.
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.
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.
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.
China Life Insurance Company Limited Annual Report 2016
BOARD
50%
China Life Insurance Company Limited Annual Report 2016
Zhang Xiangxian
rate
meetings Attendance
absent
Number of
Number of Number of Number of
meetings meetings meetings
physically attended by attended by
attended telephony proxies
Number of
shareholders'
general meetings
the Director was
required to attend
during the year
Type of Director
Name of Director
Attendance records of the resigned Directors at the shareholders' general meetings convened during the Reporting
Anthony Francis Neoh
Huang Yiping
Period:
1
0
0
0
Independent Director
Leung Oi-Sie Elsie
100%
0
0
0
Whether the
Director failed
Non-executive Director
Independent Director
Independent Director
0
25252
52525
83
88
0
0
0
0
0
1
0
0
0
0
1
1
0
1
0
0
100%
Corporate Governance
Number of Number of
meetings
physically
Note3
4
6
Non-executive Director
Wang Sidong
No
83%
0
1
0
0
Note 2
6
Non-executive Director
Miao Jianmin
No
100%
0
0
0
5
6
2
67%
Independent Director
Robinson Drake Pike
Tang Xin
No
100%
0
0
5
6
Independent Director
0
Chang Tso Tung Stephen
100%
0
0
1
5
6
Non-executive Director
Liu Jiade
No
No
6
Executive Director
Xu Haifeng
Executive Director
Yang Mingsheng
person
in
rate
absent
proxies
telephony
attended
6
year
Type of Director
Name of Director
meetings
meetings Attendance
to attend two
consecutive
Number of
meetings
attended by
attended by
meetings
the
5
Note 1
1
No
100%
0
0
0
6
6
Executive Director
Xu Hengping
No
100%
0
0
0
6
6
Executive Director
Lin Dairen
No
83%
0
Number of
2
Robinson Drake Pike
Independent Director
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 carried out the procedures relating to the resignation, retirement
and appointment of Directors in compliance with the regulatory requirements of its listed jurisdictions and the
provisions of its Articles of Association. Mr. Huang Yiping resigned from the Board pursuant to the relevant
policies, Mr. Zhang Xiangxian resigned from the Board due to age reason and Mr. Anthony Francis Neoh
retired from the Board due to the expiry of his term of office. Following the election at the First Extraordinary
General Meeting 2015 of the Company and upon the approval by the CIRC, the appointment of Mr. Tang Xin
as a Director of the Company became effective from 7 March 2016. Following the election at the 2015 Annual
General Meeting of the Company and upon the approval by the CIRC, the appointment of Ms. Leung Oi-Sie
Elsie as a Director of the Company became effective from 20 July 2016. The Company has complied with the
corporate governance system and has strictly carried out all governance procedures.
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 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 the "Procedural Rules for Board of Directors Meetings" with reference to its actual operation.
The Board and the Supervisory Committee of the Company have conducted extensive investigation and
research activities. Mr. Robinson Drake Pike and Mr. Tang Xin, both being Independent Directors, carried out
investigation and research on local branches of the Company in Gansu Province, Wuwei City, Zhangye City and
Lanzhou City for the purpose of inspecting the internal audit and business development of the local branches.
Mr. Miao Ping, the Chairman of the Supervisory Committee, and Mr. Shi Xiangming, Ms. Xiong Junhong and
Ms. Wang Cuifei, all being Supervisors, carried out investigation and research on local branches of the Company
in Guizhou Province and southeast Guizhou Province, as well as a local sub-branch of the Company in Tianzhu
County for the purpose of understanding the business development and internal supervision of the local branches.
Through the investigation and research, Directors and 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 enhancing the legal compliance and risk prevention of the Company in a practical manner.
81
52525
25252
China Life Insurance Company Limited Annual Report 2016
Corporate Governance
9.
The Company has actively organized Directors and Supervisors to attend various training courses. The members
of the Board and the Supervisory Committee attended special training courses for directors and supervisors of
listed companies as organized by the Listed Companies Association of Beijing. The Independent Directors of
the Company attended a training course for new directors, supervisors and senior management of insurance
institutions as organized by the CIRC and a training course on the qualifications of independent directors of listed
companies as organized by the SSE. They attended training courses for a total of 13 person-times.
SHAREHOLDERS' GENERAL MEETING
7.
6.
5.
4.
Supervisory
Committee
Audit Committee
Nomination and
Remuneration
Committee
Risk
Management
Committee
Strategy and
Investment
Decision Committee
Board Secretary
Board Secretariat/Company Secretary
(Corporate Governance Structure Chart)
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.
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.
Executive Director
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 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.
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 2016
Corporate Governance
3.
1.
1.
Shareholders' general meetings convened during the Reporting Period are as follows:
Session of the meeting
Number of
meetings Attendance
proxies
absent
rate
Yang Mingsheng
Lin Dairen
Executive Director
Executive Director
2
Number of Number of Number of
meetings meetings meetings
physically attended by attended by
attended telephony
1
0
Xu Hengping
100%
0
0
0
2
2
0
Board of Directors
Number of
shareholders'
general meetings
the Director was
required to attend
during the year
Name of Director
Date of the meeting
Index for websites on which
resolutions were published
Date of publication
of resolutions
2015 Annual General Meeting
30 May 2016
31 May 2016
First Extraordinary General
Meeting 2016
27 December 2016
Type of Director
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
Eleven proposals including: the “Proposal in relation to the Report of the Board of Directors of the Company for
the Year 2015", the "Proposal in relation to the Report of the Supervisory Committee of the Company for the
Year 2015", the "Proposal in relation to the Financial Report of the Company for the Year 2015", the "Proposal
in relation to the Profit Distribution Plan of the Company for the Year 2015”, the “Proposal in relation to the
Election of Ms. Leung Oi-Sie Elsie as an Independent Director of the Fifth Session of the Board of Directors
of the Company” and the “Proposal in relation to the Appointment of Auditors of the Company for the Year
2016", etc. 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 2015" and the “Report on
the Status of Connected Transactions and the Execution of Connected Transactions Management System of the
Company for the Year 2015" were received and reviewed at the 2015 Annual General Meeting held in Beijing on
30 May 2016.
82
China Life Insurance Company Limited
Annual Report 2016
Corporate Governance
2.
Five proposals including: the “Proposal in relation to the Outline of the ‘13th Five-Year' Development Plan of the
Company", the "Proposal in relation to the Change of the Auditor for US Form 20-F of the Company for the Year
2016", the "Proposal in relation to the Renewal of the 'Framework Agreement for Daily Connected Transactions'
by each of the Company and Pension Company with AMP”, the “Proposal in relation to the Renewal of the
'Framework Agreement for Daily Connected Transactions' by each of CLIC and CLP&C with AMP" and the
"Proposal in relation to the Renewal of the 'Framework Agreement for 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 2016 held in Beijing on 27 December 2016.
Attendance records of Directors at the shareholders' general meetings convened during the Reporting Period:
28 December 2016
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
Chang Tso Tung
Non-executive Director
Liu Jiade
50%
1
0
0
1
Independent Director
2
Wang Sidong
100%
0
0
0
2
2
Non-executive Director
Non-executive Director
Miao Jianmin
22
0
Tang Xin
50%
1
0
0
1
2
Independent Director
1
1
100%
0
0
0
2
50%
1
0
Stephen
2
100%
0
Directors, Supervisors, Senior Management and Employees
Number of Employees
3,733
54,731
33,448
2,640
5,187
99,739
Annual Report 2016
(II) Remuneration Policy for Employees
(III) Training Plans
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 2016, 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 "innovation-driven growth" 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), 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 2016.
79
52525
25252
80
China Life Insurance Company Limited Annual Report 2016
Corporate Governance
The Company has established a remuneration and incentive system with reference to employee's positions,
the Company's performance and market conditions.
0
China Life Insurance Company Limited
Others
0
2
2
Executive Director
Xu Haifeng
0
2
0
Total
0
2
2. Education Level
Education Level
6
Master or above
Bachelor
College Diploma
Secondary School
0
Note 4
0
1
No
100%
0
0
0
3
3
No
100%
0
0
Note
0
3
Independent Director
Independent Director
Non-executive Director
Zhang Xiangxian
Anthony Francis Neoh
Huang Yiping
in person
rate
absent
proxies
telephony
attended
3
the year
1
0
4
Pursuant to the Company Law and the Articles of Association, the Company has established a Supervisory Committee.
The Supervisory Committee performs the following duties in accordance with the Company Law, the Articles of
Association and the “Procedural Rules for Supervisory Committee Meetings": to examine the finances of the Company;
to monitor whether the Directors, President, Vice Presidents and other senior management officers of the Company
have acted in contravention of laws, regulations, the Articles of Association and resolutions of the shareholders' general
meetings when discharging their duties; to review the financial information of the Company such as financial reports,
results reports and profit distribution plans to be approved by the Board; to propose the convening of extraordinary
shareholders' general meetings, to propose resolutions at shareholders' general meetings and to perform any other duties
under the laws, regulations and regulatory rules of the Company's listed jurisdictions.
SUPERVISORY COMMITTEE
During the Reporting Period, Mr. Yang Mingsheng served as the Chairman of the Board of Directors of the Company.
The Chairman 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, 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 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.
CHAIRMAN AND PRESIDENT
During the Reporting Period, no Independent Director has raised any objection against the proposals and matters
considered by the Board of the Company.
From 18 to 23 August 2016, Mr. Robinson Drake Pike and Mr. Tang Xin, both being Independent Directors,
carried out investigation and research on local branches of the Company in Gansu Province, Wuwei City, Zhangye
City and Lanzhou City, listened to the work reports of local branches in Gansu Province, Wuwei City and
Zhangye City, held in-depth conferences with their respective key management, conducted an on-site investigation
and research on counters of the Liangzhou District business department of Wuwei local branch, counters of the
Ganzhou District business department of Zhangye local branch and the business premises of Lanzhou local branch
for the purpose of understanding the business development and risk control of the local branches. Through the
investigation and research, the Independent Directors comprehended the working situation of local branches in
great depth and examined the implementation of the Company's internal audit and business development.
In 2016, 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 discuss on matters including the
audit for the year 2015, 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. The Independent Directors of the
Company convened a special meeting with the person-in-charge of each of the Legal and Compliance Department
and the Risk Management Department to discuss the matters on legal compliance and risk management of the
Company.
88
Corporate Governance
China Life Insurance Company Limited Annual Report 2016
0
25252
87
88
All Independent Directors diligently fulfilled their responsibilities and faithfully performed their duties by
attending meetings of the Board and the specialized Board committees in 2016, examining and approving the
Company's business development, its financial management, the necessity of its connected transactions and
the fairness of the pricing of 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. At the
annual special meeting among the Chairman of the Board, 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, business
operation and management, risk management and control, directors' training and collaborative development with
bancassurance, etc. 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 2016, 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 2016, all Independent Directors of the Company possessed extensive experience in various fields, such as
macro-economics, finance and insurance, legal compliance, accounting and auditing. They satisfied the criteria
for Independent Directors under the regulatory rules of the Company's listed jurisdictions. The Independent
Directors of the Company performed their duties pursuant to the Articles of Association and the provisions and
requirements of the listing rules of the Company's listed jurisdictions.
Performance of duties by Independent Directors
Note: At the fifth meeting of the fifth session of the Board held on 29 February 2016, Mr. Huang Yiping gave
written authorization for Mr. Anthony Francis Neoh to act as his proxy to attend and vote at the meeting.
2.
No
0
0
1
52525
Type of Director
1
consecutive
meetings
2.
1.
Notes:
No
100%
0
0
0
3
3
Independent Director
3.
Leung Oi-Sie Elsie
80%
0
1
0
Note 5
4
5
Independent Director
83%
0
Name of Director
No
4.
No
At the ninth meeting of the fifth session of the Board held on 27 October 2016, Mr. Yang Mingsheng, the Chairman of
the Board, gave written authorization for Mr. Lin Dairen to act as his proxy to attend, vote and chair the meeting;
Attendance
5.
meetings
attended by
physically
attend during
Number of
meetings
meetings
meetings
required to
to attend two
attended by
Number of
Number of
At the ninth meeting of the fifth session of the Board held on 27 October 2016, Mr. Robinson Drake Pike gave written
authorization for Mr. Chang Tso Tung Stephen to act as his proxy to attend and vote at the meeting;
At the ninth meeting of the fifth session of the Board held on 27 October 2016, Mr. Miao Jianmin gave written
authorization for Mr. Wang Sidong to act as his proxy to attend and vote at the meeting;
At the sixth meeting of the fifth session of the Board held on 23 March 2016, Mr. Tang Xin gave written authorization
for Mr. Anthony Francis Neoh to act as his proxy to attend and vote at the meeting.
China Life Insurance Company Limited
At the sixth meeting of the fifth session of the Board held on 23 March 2016, Mr. Wang Sidong gave written
authorization for Miao Jianmin to act as his proxy to attend and vote at the meeting; at the tenth meeting of the fifth
session of the Board held on 20 December 2016, Mr. Wang Sidong gave written authorization for Mr. Miao Jianmin to
act as his proxy to attend and vote at the meeting;
Corporate Governance
In 2016, the attendance records of the resigned Directors at the Board Meetings are as follows:
Number of
meetings the
Director was
Whether the
Director failed
Number of
Annual Report 2016
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.
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.
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.
Professional
and stable
core team
and innovation
empowerment
Leading
technologies
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 centralization 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
2
82
Prominent
principal
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 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
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
88
Report of Corporate Governance
Management and Employees
68
Directors, Supervisors, Senior
Annual Report 2021 | Prelude
65
business and
sound financial
strength
Honors and Awards
"Golden Dragon Award – 2021 Best Listed Insurance Company"
"2021 Fortune China 500 List”, ranking 8th
Changes in Ordinary Shares and
Shareholders Information
Securities Times
"Assessment and Selection
"Ark Prize for Golden Insurance Service in 2021"
"Ark Prize for Technological Progress of China's
Insurance Industry in 2021"
High-quality Development in 2021"
"Ark Prize for Insurance Company with
3
Annual Report 2021 | Prelude
"Assessment and Selection of the 3rd New Fortune Best Listed Company"
New Fortune
"New Fortune Best Listed Company"
"2021 Forbes Global 2000", ranking 49th
"Gold Medal List of Chinese Financial Institution"
"Assessment and Selection of the 11th China Securities 2021 'Golden Bauhinia' Awards"
Hong Kong Tai Kung Wen Wei Media Group,
the Listed Companies Association of Beijing,
Hong Kong Chinese Enterprises Association,
the Chinese Financial Association of Hong Kong,
the Chinese Securities Association of Hong Kong,
the Hong Kong Chartered Governance Institute and
Hong Kong Securities Professionals Association
"Listed Company with the Best Investment Value
for the 14th Five-Year Plan Period"
"Best Listed Company"
21st Century Business Herald
Institutional Investor
"2021 Best Life Insurance Company in Asia"
"Most Respected Enterprise in Asia (Insurance Industry)"
Fortune China
Forbes
Financial Times
61
Regulations, Penalties Imposed
52
56,818
Annuity and other insurance
agreements to repurchase
The needs for liquidity management
95.9%
122,249
239,446
Securities sold under
An increase in the scale of universal
insurance accounts
8.8%
288,212
313,594
Investment contracts
The accumulation of insurance liabilities
from new policies and renewals
New investments in associates and joint
ventures and an increase in the equity of
associates and joint ventures
15.0%
2,973,225
3,419,899
Insurance contracts
The needs for liquidity management
6.7%
7.7%
56,655
239,584
257,953
55,031
Report of the Board of Supervisors
49
Consolidated Statement of
Financial Position
52
42
Report of the Board of Directors
CORPORATE GOVERNANCE
Financial Statements
138
Notes to the Consolidated
06
Cash Flows
136
Consolidated Statement of
Changes in Equity
135
Consolidated Statement of
49
Performance of Environmental
and Social Responsibilities
Comprehensive Income
49
Restriction on Major Assets
133
Consolidated Statement of
and Rectification
131
of the Ark Prizes for China's Insurance Industry in 2021"
"Annual Insurance Protection Brand Top Award"
investment income
"Assessment and Selection of the 12th 'Golden Wealth Management""
618,754
Insurance benefits and claims
608,855
621,310
677,722
3.5%
758,239
784,763
Benefits, claims and expenses
506,910
580,801
532,023
1.1%
604,666
611,251
Net premiums earned
643,379
627,472
729,499
2.5%
805,049
824,930
560,278
6.5%
509,467
479,219
50,056
3.2%
An increase in maturities payable
balances payable
Interest-bearing loans and
50,921
holders of the Company
Net profit attributable to ordinary
share holders of the Company
Net cash inflow/(outflow) from
operating activities
32,249
11,382
58,281
1.3%
50,257
50,921
Net profit attributable to equity
41,667
13,907
59,788
-7.3%
54,476
50,495
Profit before income tax
expenses
466,043
Total revenues
2017
2018
2019
Gross
million
1,203,008
Embedded value
million
4,891,085
million
618,327
Total assets
Gross written premiums
Business Highlights
European Financial Management and
Marketing Association (EFMA) and Accenture
"Efma-Accenture Innovation in Insurance Awards"
Annual Report 2021 | Prelude
4
"Bronze Prize for Global Innovator"
"Assessment and Selection of the 2021 Evergreen Awards"
Caijing
"Social Responsibility Award of the Year"
The "19th Financial Annual Champion Awards"
Hexun.com
"Influential Insurance Company of the Year"
"Sustainable and Green Development Award"
China Securities Journal
"Assessment and Selection of Investment Golden Bull Awards for
China's Insurance Industry in 2021"
"Investment Golden Bull Award for Insurance Company"
60,440
Shanghai Securities News
214,057
Net profit attributable to
Change
2020
For the year ended
2021
Major Financial Data
Under International Financial Reporting Standards (IFRS)
RMB million
MAJOR FINANCIAL DATA AND INDICATORS FOR THE PAST FIVE YEARS¹
Financial Summary
5
LO
Annual Report 2021 | Prelude
262.41%
Comprehensive
solvency ratio
4.38%
Net investment yield
18,686
million
44,780
Value of one year's sales
million
50,921
equity holders of
the Company
million
Cash and cash equivalents
Investments in associates
and joint ventures
40
62.5%
Annual Report 2021 | Prelude
6
of 0.32
5.16
3.29
5.24
point
decrease
5.30
4.98
Gross investment yield 5 (%)
percentage
of 0.80
percentage
90.07
89.02
point
increase
89.25
90.05
Gearing ratio (%)
of 0.86
percentage
10.49
3.54
16.47
88.77
point
Notes:
1.
Term deposits
Main Reasons for Change
Change
31 December
2020
2021
of Financial Position
31 December
The needs for liquidity management
As at
As at
Major Items of the
RMB million
MAJOR ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS AND THE
REASONS FOR CHANGE
7
Annual Report 2021 | 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.
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
The financial data of previous years for this report have been restated due to a business combination under common control this year. For details, please
refer to Note 35 in the Notes to the Consolidated Financial Statements in this annual report.
5.
4.
3.
2.
decrease
11.83
10.97
Weighted average ROE (%)
1.7%
1.77
1.80
Earnings per share (basic and diluted)³
Per share (RMB)
3,254,460 2,897,656
3,104,065 2,753,176
2,931,146 2,572,308
318,393 320,967
15.0% 3,726,791
15.2% 3,573,199
16.0% 3,317,432
6.3% 403,779
4,891,085 4,252,466
4,716,401 4,095,491
4,404,427 3,795,529
478,585 450,056
Total equity holders' equity
Total liabilities
Investment assets²
Total assets
As at 31 December
200,990
147,551
286,028
-5.8%
304,019
286,448
31,869
10,998
57,887
1.7%
2.05
529,488
0.39
Equity holders' equity per share³
Major financial ratios
operating activities per share³
7.11
5.22
10.12
-5.8%
10.76
10.13
Net cash inflow/(outflow) from
per share³
11.08
10.99
14.01
6.3%
15.92
16.93
Ordinary share holders' equity
11.36
11.26
14.29
6.3%
15.92
16.93
1.13
Held-to-maturity securities
Consolidated Statement
545,678
1,189,369
Equity holders' equity
478,585
450,056
6.3%
Note:
8
Due to the combined impact of total
comprehensive income and profit
distribution during the Reporting Period
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, and a six-month bank loan of EUR127 million with a maturity date on 13 January 2022, which is automatically renewed upon maturity pursuant
to the terms of the agreement, and a six-month bank loan of EUR78 million with a maturity date on 5 January 2022, which is automatically renewed
upon maturity pursuant to the terms of the agreement. All the above are fixed rate bank 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.
Annual Report 2021 | Prelude
Definitions and Material Risk Alert
The change in fair value of financial
assets
Announcements
Index of Information Disclosure
1,533,753
Basic Information of the Company
116
OTHER INFORMATION
34
32
07
SIGNIFICANT EVENTS
05
119
-51.1%
15,286
7,481
7,947
Alleged Violation of Laws and
124
Independent Auditor's Report
48
Undertakings
Performance
124
FINANCIAL REPORT
48
Material Contracts and Their
08
40
Major Connected Transactions
Material Litigations or Arbitrations
40
40
123
19,556
-4.4%
The fluctuation of exchange rate
other borrowings Note
Deferred tax liabilities
EMBEDDED VALUE
04
116
33
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 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.
2021
Annual Report
點諧中國
Stock Code: 2628
China Life Insurance Company Limited
中国人寿保险股份有限公司
33
Securities purchased under
agreements to resell
An increase in the allocation of debt-type
assets in securities at fair value through
profit or loss
through profit or loss
28.0%
161,570
206,771
Securities at fair value
An increase in the allocation of bonds in
available-for-sale securities
17.6%
1,215,603
1,429,287
Available-for-sale securities
An increase in the allocation of
government bonds
-3.0%
29.0%
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 2021, the Company had
approximately 323 million long-term individual and
group life insurance policies, annuity contracts, and
long-term health insurance policies in force. We
also provide both individual and group accident and
short-term health insurance policies and services.
CONTENTS
12,915
PRELUDE
222
01
Technology Empowerment and
Operations and Services
Future Prospect
29
Analysis of Specific Items
19
Business Analysis
15
Review of Business Operations
in 2021
15
DISCUSSION AND ANALYSIS
MANAGEMENT
32
12
LETTER TO SHAREHOLDERS
02
3560
2
2
Financial Summary
Business Highlights
Honors and Awards
03
Core Competitiveness
9/10
1/10
Su Hengxuan
Li Mingguang
9/10
1/10
Non-executive Director
Executive Director
Executive Director
Yuan Changqing
Name of Director
attend
person/
Number of
meetings
required to
Type of Director
proxies/
Number of
meetings
required to
Number of
meetings
attended in attended by
Number of
meetings
During the Reporting Period, five regular Board meetings
and five ad-hoc Board meetings were held by the Board of
the Company, of which seven meetings were convened
by a combination of physical meeting and participation
through communication tools, and the remaining meetings
were convened by written resolutions with voting through
communication tools. Attendance records of the current
individual Directors are as follows:
Meetings and attendance
7/10
attend
3/10
0/3
Executive Director
24 March 2021
Meetings convened
The meetings convened are as follows:
94 Annual Report 2021 | Corporate Governance
3. Mr. Zhai Haitao served as a member of the Nomination and Remuneration Committee from October 2021 to February 2022.
2. All Directors who were unable to attend any meeting of specialized Board committees have authorized other Directors to attend and vote at the meeting
on their behalf.
14th meeting of the Nomination and
Remuneration Committee of
the sixth session of the Board
The number of meetings attended in person includes attending meetings by the Directors on-site and by telephone or video conference.
Notes:
0/2
2/2
Robinson Drake Pike
required to attend
required to attend
1.
27 April 2021
15th meeting of the Nomination and
Remuneration Committee of
the sixth session of the Board
27 October 2021
14
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.
Director, Mr. Li Mingguang, an Executive Director, Mr.
Wang Junhui 14, a Non-executive Director, and Mr. Tang
Xin 15, an Independent 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
successively resigned from their positions as members
of the Risk Management and Consumer Rights Protection
Committee.
The Company established its Risk Management
Committee on 30 June 2003. In December 2019, the
Board renamed 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.
Currently, the Risk Management and Consumer Rights
Protection Committee of the seventh session of the
Board comprises Ms. Leung Oi-Sie Elsie, an Independent
RISK MANAGEMENT AND CONSUMER RIGHTS
PROTECTION COMMITTEE
Carrying out the evaluation of the performance of duties
by Directors, Supervisors and senior management officers
of the Company and their performance appraisal. The
Nomination and Remuneration Committee reviewed
proposals on the results of evaluating the performance
of duties by Directors for the year 2020, the results of
performance appraisal of senior management officers
for the year 2020 and the performance target contract of
senior management for the year 2021, 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.
Annual Report 2021 | Corporate Governance 95
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.
members and composition (including taking into
account diversity factors, such as 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.
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
In 2021, 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.
Performance of duties by the Nomination and
Remuneration Committee
Three proposals, including the "Proposal in relation to the Nomination
of Mr. Liu Yuejin as an Assistant to the President of the Company" and
the "Proposal in relation to the Nomination of Ms. Zhang Di as the Chief
Investment Officer of the Company", were considered and approved.
Five proposals, including the "Proposal in relation to the Nomination of
Ms. Zhang Di as an Assistant to the President of the Company" and the
"Proposal in relation to the Nomination of Mr. Liu Fengji as the Person in
Charge of Audit of the Company", were considered and approved.
17 proposals, including the "Proposal in relation to the Remuneration of
Directors and Supervisors of the Company", the "Proposal in relation to the
Remuneration of Senior Management of the Company" and the nomination
of the candidates for Directors of the seventh session of the Board, were
considered and approved.
First meeting of the Nomination and
Remuneration Committee of
the seventh session of the Board
Number of meetings
Mr. Wang Junhui became a member of the Risk Management and Consumer Rights Protection Committee in February 2021.
Number of meetings
attended by proxies/
to attend
to attend
required
required
meetings
meetings
Tang Xin
proxies/
Number of
Number of
person/
Number of
Number of
meetings
attended in
Position
Name of member
During the Reporting Period, three meetings were held by the Nomination and Remuneration Committee of the Board of
the Company. Attendance records of individual members are as follows:
meetings
attended by
Independent Director, Chairman of the
Nomination and Remuneration Committee of
the seventh session of the Board
3/3
93
attended in person/
Number of meetings
Number of meetings
Attendance records of the resigned Director at meetings are as follows:
0/1
1/1
Nomination and Remuneration Committee of
the seventh session of the Board
Zhai Haitao
Independent Director, member of the
3/3
0/3
Nomination and Remuneration Committee of
the seventh session of the Board
Yuan Changqing
Non-executive Director, member of the
0/3
Name of member
Meetings and attendance
15
96
27 April 2021
Eighth meeting of the Risk Management
and Consumer Rights Protection
Committee of the sixth session of
the Board
24 March 2021
Meetings convened
The meetings convened are as follows:
97
Description
Annual Report 2021 | Corporate Governance
2.
1. The number of meetings attended in person includes attending meetings by the Directors on-site and by telephone or video conference.
Notes:
Liu Huimin
Yin Zhaojun
Number of meetings
required to attend
All Directors who were unable to attend any meeting of specialized Board committees have authorized other Directors to attend and vote at the meeting
on their behalf.
Seven proposals, including the "Proposal in relation to the New Business
Plan of the Company for the Years from 2021 to 2023" and the "Proposal in
relation to the 'Statement of the Company on Risk Preference for the Year
2021, were considered and approved.
Ninth meeting of the Risk Management The "Report on the Case Prevention of the Company for the Year 2020"
and Consumer Rights Protection
Committee of the sixth session of
the Board
Description
98 Annual Report 2021 | Corporate Governance
Reviewing the risk analysis on major matters concerning
the business operation and management of the Company.
In 2021, 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
strategic asset allocation plan for the years from 2022 to
2024, the risk compliance analysis on the asset allocation
plan for the year 2022 and the overseas investment plan
and investment authorization for the year 2022, 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).
In 2021, 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.
Performance of duties by the Risk Management
and Consumer Rights Protection Committee
Five proposals, including the "Proposal in relation to the Risk Compliance
Analysis on the Strategic Asset Allocation Plan of the Company for the
Years from 2022 to 2024" and the "Proposal in relation to the Work Report
on the Fraudulent Risk Management of the Company for the Year 2021",
were considered and approved, and the "Audit Report on the Solvency Risk
Management System of the Company for the Year 2021" was debriefed.
The "Proposal in relation to the 'Report on the Enterprise-wide Risk
Management of the Company for the Third Quarter of 2021'" was
considered and approved.
Four proposals, including the "Proposal in relation to the Amendments to
the 'Statement of the Company on Risk Preference for the Year 2021'"
and the "Proposal in relation to the 'Report on the Enterprise-wide Risk
Management of the Company for the Second Quarter of 2021'", were
considered and approved.
was debriefed.
Third meeting of the Risk Management
and Consumer Rights Protection
Committee of the seventh session of
the Board
15 December 2021
Second meeting of the Risk
Management and Consumer Rights
Protection Committee of the seventh
session of the Board
27 October 2021
First meeting of the Risk Management
and Consumer Rights Protection
Committee of the seventh session of
the Board
24 August 2021
required to attend
Mr. Tang Xin became a member of the Risk Management and Consumer Rights Protection Committee in July 2021.
Number of meetings
attended by proxies/
required
required
meetings
meetings
proxies/
Number of
person/
Number of
to attend
Position
meetings
attended by
Number of
Number of
meetings
attended in
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:
Meetings and attendance
Annual Report 2021 | Corporate Governance
Name of member
to attend
Leung Oi-Sie Elsie
Li Mingguang
attended in person/
Number of meetings
Number of meetings
Attendance records of the resigned Directors at meetings are as follows:
0/3
3/3
1/5
4/5
2/5
3/5
0/5
5/5
Independent Director, Chairperson of the Risk
Management and Consumer Rights Protection
Committee of the seventh session of the Board
Executive Director, member of the Risk
Management and Consumer Rights Protection
Committee of the seventh session of the Board
Non-executive Director, member of the Risk
Management and Consumer Rights Protection
Committee of the seventh session of the Board
Independent Director, member of the Risk
Management and Consumer Rights Protection
Committee of the seventh session of the Board
Tang Xin
Wang Junhui
Name of member
Huang Xiumei
Annual Report 2021 | Corporate Governance 93
13
Annual Report 2021 | Corporate Governance
All Independent Directors diligently fulfilled their
responsibilities and faithfully performed their duties by
attending meetings of the Board and the specialized
Board committees in 2021, 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 business, and
risk management. 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 2021, 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.
Performance of duties by Independent Directors
In 2021, 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.
2. All Directors who were unable to attend any meeting of the Board have
authorized other Directors to attend and vote at the meeting on their
behalf.
1. The number of meetings attended in person includes meetings
attended by the Directors on-site and by way of telephone or video
conference.
Notes:
89
110000
0/8
8/8
Independent Director
Robinson Drake Pike
0/5
5/5
Chang Tso Tung Stephen Independent Director
In 2021, Mr. Tang Xin, Ms. Leung Oi-Sie Elsie, Mr. Lam
Chi Kuen and Mr. Zhai Haitao, all being the Independent
Directors of the Company, carried out investigation and
research on the investment sector of the Company,
listened to the reports concerning the investment
management structure and investment system of the
Company, and discussed and communicated in respect
of the relevant issues. Through the investigation and
research, the Board further understood the development
and status of the Company's investment business in
great depth and examined the effectiveness of the
implementation of decisions of the Board.
During the Reporting Period, no Independent Director had
raised any objection against the proposals and matters
considered by the Board of the Company.
CHAIRMAN AND PRESIDENT
90
Mr. Zhai Haitao became the Chairman of the Audit Committee in October 2021 and a member of the Audit Committee in February 2022.
Mr. Lam Chi Kuen became a member of the Audit Committee in June 2021 and the Chairman of the Audit Committee in February 2022.
a Non-Executive Director of the Company, was elected at the sixth meeting of the seventh session of the Board of the Company on 13 January 2022 to
assume the role and duties of the Chairman of the Board.
Given that Mr. Wang Bin, a former Executive Director of the Company, was not able to perform his role and duties as a Director, Mr. Yuan Changqing,
12
11
10
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.
The Company established its Audit Committee on 30
June 2003. In 2021, the Audit Committee comprised only
Independent Directors. Currently, the Audit Committee
of the seventh session of the Board comprises Mr.
Lam Chi Kuen¹¹, Mr. Tang Xin and Mr. Zhai Haitao 12, all
being Independent Directors, with Mr. Lam Chi Kuen
acting as the Chairman. Due to consecutively serving
as Independent Directors for six years, Mr. Chang Tso
Tung Stephen and Mr. Robinson Drake Pike successively
resigned from their respective positions as a member and
the Chairman of the Audit Committee.
AUDIT COMMITTEE
The composition of the Board of Supervisors and the
profile of each Supervisor are set forth in the section
headed "Directors, Supervisors, Senior Management and
Employees" of this report, and the details of the duty
performance of the Board of Supervisors are set forth in
the section headed "Report of the Board of Supervisors".
BOARD OF SUPERVISORS
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.
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 10. During the Reporting Period
and up to the date of this report, 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
0/1
Annual Report 2021 | Corporate Governance
1/1
Liu Huimin
0/10
10/10
Independent Director
Leung Oi-Sie Elsie
0/10
10/10
Lam Chi Kuen
Independent Director
1/10
9/10
Non-executive Director
Wang Junhui
2/4
2/4
Tang Xin
Independent Director
5/5
Zhai Haitao
Non-executive Director
Yin Zhaojun
2/10
8/10
Executive Director
Wang Bin
attend
-
Number of Number of
meetings meetings
attended in attended by
person/ proxies/
Number of Number of
meetings meetings
required to required to
attend
Type of Director
Name of Director
Attendance records of the resigned Directors of the
Company at the Board meetings convened during the
Reporting Period are as follows:
0/5
0/2
2/2
Independent Director
Non-executive Director
Mr. Lam Chi Kuen became a member of the Nomination and Remuneration Committee in February 2022.
Meetings and attendance
Name of member
Second meeting of the Audit Committee
of the seventh session of the Board
27 October 2021
First meeting of the Audit Committee
of the seventh session of the Board
24 August 2021
19th meeting of the Audit Committee
of the sixth session of the Board
27 April 2021
15 December 2021
18th meeting of the Audit Committee
of the sixth session of the Board
Meetings convened
The meetings convened are as follows:
91
Annual Report 2021 | Corporate Governance
Note: The number of meetings attended in person includes attending meetings by the Directors on-site and by telephone or video conference.
0/3
24 March 2021
Third meeting of the Audit Committee
of the seventh session of the Board
Eleven proposals, including the "Proposal in relation to the Financial
Report of the Company for the Year 2020" and the "Proposal in relation to
the Remuneration of Auditors of the Company for the Year 2020", were
considered and approved, and the report of Ernst & Young Hua Ming LLP
on the audit for the year 2020 was debriefed.
Five proposals, including the "Proposal in relation to the Financial Report
of the Company for the First Quarter of 2021" and the "Proposal in relation
to the Appointment of Auditors of the Company for the Year 2021", were
considered and approved, and the report of Ernst & Young Hua Ming LLP
on the results of agreed-upon procedures for the first quarter of 2021
and the report of PriceWaterhouseCoopers Zhong Tian LLP on matters
associated with independence were debriefed.
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
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 seventh session of the Board comprises Mr. Tang
Xin, an Independent Director, Mr. Yuan Changqing, a
Non-executive Director, and Mr. Lam Chi Kuen 13, an
Independent Director, with Mr. Tang Xin acting as the
Chairman. Due to consecutively serving as an Independent
Director for six years, Mr. Robinson Drake Pike resigned
from his position as a member of the Nomination and
Remuneration Committee.
NOMINATION AND REMUNERATION COMMITTEE
Examining the internal audit functions of the Company. In
2021, the Audit Committee reviewed proposals including
the proposal on the 2020 internal audit work and the
proposal on the internal audit work report for the first half
of 2021, and discussed any matters of concerns through
communication in a timely and effective manner, 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
I was of the view that the internal audit function of the
Company was effective during the Reporting Period. In the
selection and appointment of external auditors, the Audit
Committee performed its duty of review in compliance
with laws and issued its review opinions.
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 the
"Standard Regulations on Corporate Internal Control"
and relevant requirements, as well as 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.
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.
92 Annual Report 2021 | Corporate Governance
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. Before issuing opinion on audit
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.
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
Performance of duties by the Audit Committee
In 2021, 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.
The "Prior Approval for the Scope of Additional Services of
PricewaterhouseCoopers" was considered and approved.
Three proposals, including the "Proposal in relation to the Financial Report
of the Company for the Third Quarter of 2021, were considered and
approved, and the report of PricewaterhouseCoopers Zhong Tian LLP on
the agreed-upon procedures for the Third Quarter of 2021 was debriefed.
Three proposals, including the "Proposal in relation to the Financial Report
of the Company for the First Half of 2021", were considered and approved,
and the report of PricewaterhouseCoopers Zhong Tian LLP on the interim
review for 2021 was debriefed.
3/3
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:
0/2
required to attend
2/2
to attend
required
meetings
Independent Director, Chairman of the Audit
Committee of the seventh session of the Board
Independent Director, member of the Audit
Committee of the seventh session of the Board
Independent Director, member of the Audit
Committee of the seventh session of the Board
Lam Chi Kuen
5/5
Tang Xin
proxies/
Number of
meetings
attended by
Number of
person/
Number of
Number of
meetings
attended in
Position
Zhai Haitao
3/3
Attendance records of the resigned Directors at meetings are as follows:
Name of member
required to attend
Number of meetings
Number of meetings
attended by proxies/
attended in person/
Number of meetings
Number of meetings
03
99
0/5
12
0/2
meetings
required
to attend
Robinson Drake Pike
Chang Tso Tung Stephen
2/2
Description
Ten proposals, including the "Proposal in relation to the Strategic Asset
Allocation Plan of the Company for the Years from 2022 to 2024" and the
"Proposal in relation to the Asset Allocation Plan of the Company for the
Year 2022", were considered and approved.
Companies" (Yin Bao Jian Fa [2019] No. 35) and the
"Guiding Opinions on Banking and Insurance Institutions
Strengthening the Building of Working Systems and
Mechanisms for Protection of Consumer Rights and
Interests" (Yin Bao Jian Fa [2019] No. 38).
0/5
Independent Director, member of the
Lam Chi Kuen
Connected Transactions Control Committee of
3/3
0/3
the seventh session of the Board
Independent Director, member of the
Zhai Haitao
Connected Transactions Control Committee of
the seventh session of the Board
2/2
18
Mr. Lam Chi Kuen became a member of the Connected Transactions Control Committee in June 2021.
19
Mr. Zhai Haitao became a member of the Connected Transactions Control Committee in October 2021.
102 Annual Report 2021 | Corporate Governance
Attendance records of the resigned Directors at meetings are as follows:
Name of member
Chang Tso Tung Stephen
96
5/5
Connected Transactions Control Committee of
the seventh session of the Board
Leung Oi-Sie Elsie
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:
Name of member
Position
Number of
meetings
attended in
person/
Number of
Number of
meetings
attended by
proxies/
Number of
Robinson Drake Pike
meetings
required
required
to attend
to attend
Tang Xin
Independent Director, Chairman of the
Connected Transactions Control Committee of
the seventh session of the Board
5/5
0/5
Independent Director, member of the
meetings
Meetings and attendance
Number of meetings
Number of meetings
Nine proposals, including the "Proposal in relation to the Renewal of the
'Policy Management Agreement' between the Company and China Life
Insurance (Group) Company" and the "Proposal in relation to the Renewal
of the Asset Management Agreement between the Company and China
Life Franklin Asset Management Company Limited", were considered and
approved.
Annual Report 2021 | Corporate Governance 103
Performance of duties by the Connected
Transactions Control Committee
In 2021, 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.
Determining connected parties of the Company. In 2021,
the Connected Transactions Control Committee reviewed
the "Report on Determining a List of Connected Parties
of the Company as of 31 December 2020" and the
"Report on Determining a List of Connected Parties of the
Company as of 30 June 2021", and reported to the Board
in respect thereof.
Approving connected transactions. In 2021, the
Connected Transactions Control Committee reviewed
connected transaction projects, such as the participation
by the Company in the capital increase of CGB, its
investment in Project Eyas, investment in China
Life Smart Healthcare Fund Project, renewal of the
"Policy Management Agreement" with CLIC, renewal
of the "Framework Agreement for Daily Connected
Transactions" with Pension Company, renewal of the
framework agreement for the connected transaction
regarding bonds distribution with AMC, renewal of the
framework agreement for connected transactions with
Sino-Ocean Group and other framework agreements for
daily connected transactions, and the execution of the
"Agreement for Entrusted Investment and Management
and Operating Services with respect to Alternative
Investments with Insurance Funds" with CLI, fully
discussed the necessity, feasibility and risks of the
projects and made recommendations to the Board in
respect thereof.
Reviewing the implementation of the system for
connected transactions management. In 2021, the
Connected Transactions Control Committee reviewed the
implementation of the Company's system for connected
transactions management and the report on connected
transactions, considered and approved the "Proposal in
relation to the 'Report on the Overall Status of Connected
Transactions of the Company for the Year 2020'", and
submitted the review opinions to the Board.
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 insurance
administrative and regulatory authorities of the PRC. The
Company currently possesses the "Insurance 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.
104 Annual Report 2021 | Corporate Governance
PERFORMANCE APPRAISAL AND INCENTIVES
FOR SENIOR MANAGEMENT
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.
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.
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" was considered
and approved.
Two proposals, including the "Proposal in relation to an Increase in
Revolving Investment for Project Qihang", were considered and approved.
Two proposals, including the "Proposal in relation to the Participation
by the Company in the Capital Increase of CGB", were considered and
approved.
Four proposals, including the "Proposal in relation to the Execution
of a Supplemental Agreement to the 'Agreement for the Entrusted
Management of Retained Assets' between the Company and China Life
Investment Management Company Limited" and the "Proposal in relation
to the 'Report on the Overall Status of Connected Transactions of the
Company for the Year 2020'", were considered and approved.
Number of meetings
attended by proxies/
Number of meetings
required to attend
required to attend
2/2
3/3
0/2
0/3
Note: The number of meetings attended in person includes attending meetings by the Directors on-site and by telephone or video conference.
The meetings convened are as follows:
Meetings convened
attended in person/
24 March 2021
26 May 2021
Ninth meeting of the Connected
Transactions Control Committee of
the sixth session of the Board
24 August 2021
First meeting of the Connected
Transactions Control Committee of
the seventh session of the Board
27 October 2021
Second meeting of the Connected
Transactions Control Committee of
the seventh session of the Board
15 December 2021
Third meeting of the Connected
Transactions Control Committee of
the seventh session of the Board
Description
Eighth meeting of the Connected
Transactions Control Committee of
the sixth session of the Board
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.
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.
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
Lam Chi Kuen
Su Hengxuan
Independent Director, Chairman of the Strategy
and Assets and Liabilities Management
Committee of the seventh session of the Board
Executive Director, member of the Strategy
and Assets and Liabilities Management
Committee of the seventh session of the Board
3/3
0/3
3/6
3/6
Leung Oi-Sie Elsie
Independent Director, member of the Strategy
and Assets and Liabilities Management
Committee of the seventh session of the Board
6/6
0/6
Wang Junhui
Non-executive Director, member of
the Strategy and Assets and Liabilities
Management Committee of the seventh
session of the Board
2/6
4/6
Huang Xiumei
Executive Director, member of the Strategy
and Assets and Liabilities Management
Committee of the seventh session of the Board
Attendance records of the resigned Director at meetings are as follows:
Name of member
to attend
required
required
to attend
meetings
Providing its opinions for the review of the proposals
on risk management to the Board. In 2021, 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 national and international regulatory requirements.
The Risk Management and Consumer Rights Protection
Committee provided its opinions for the review of 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 2020 and the work plan for the year 2021, the
report on case prevention for the year 2020, the statement
of the Company on risk preference for the year 2021, the
audit report on the solvency risk management system
of the Company for the year 2021, 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 2021, the Risk
Management and Consumer Rights Protection Committee
reviewed the report on the customer rights protection
of the Company for the year 2020 and the proposal for
customer rights protection of the Company for 2021, 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
seventh session of the Board comprises Mr. Zhai Haitao 16
and Ms. Leung Oi-Sie Elsie, all being the Independent
Directors, Mr. Su Hengxuan and Ms. Huang Xiumei¹7, all
being the Executive Directors, and Mr. Wang Junhui, a
Non-executive Director, with Mr. Zhai Haitao acting as the
Chairman. Due to consecutively serving as an Independent
Director for six year, Mr. Chang Tso Tung Stephen
resigned from his position as the Chairman of the Strategy
and Assets and Liabilities Management Committee.
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.
16
Mr. Zhai Haitao became the Chairman of the Strategy and Assets and Liabilities Management Committee in February 2022.
17
Ms. Huang Xiumei became a member of the Strategy and Assets and Liabilities Management Committee in July 2021.
Chang Tso Tung Stephen
Annual Report 2021 | Corporate Governance
Meetings and attendance
During the Reporting Period, six meetings were held by the Strategy and Assets and Liabilities Management Committee
of the Board of the Company. Attendance records of individual members are as follows:
Name of member
Position
Number of
meetings
attended in
person/
Number of
Number of
meetings
attended by
proxies/
Number of
meetings
99
was established under the Board of the Company.
Currently, the Connected Transactions Control Committee
of the seventh session of the Board comprises Mr. Tang
Xin, Ms. Leung Oi-Sie Elsie, Mr. Lam Chi Kuen 18 and Mr.
Zhai Haitao 19, all being the Independent Directors, with
Mr. Tang Xin acting as the Chairman. Due to consecutively
serving as Independent Directors for six years, Mr.
Chang Tso Tung Stephen and Mr. Robinson Drake Pike
successively resigned from their positions as members of
the Connected Transactions Control Committee.
1/3
Number of meetings
24 August 2021
First meeting of the Strategy and Assets
and Liabilities Management Committee
of the seventh session of the Board
27 October 2021
Second meeting of the Strategy and
Assets and Liabilities Management
Committee of the seventh session
of the Board
15 December 2021
Third meeting of the Strategy and
Assets and Liabilities Management
Committee of the seventh session
of the Board
Description
Four proposals, including the "Proposal in relation to the New Business
Plan of the Company for the Years from 2021 to 2023" and the "Proposal
in relation to the Final Assessment Report for the Outline of the '13th Five-
Year Development Plan' of the Company", were considered and approved.
Two proposals, including the "Proposal in relation to the General Mandate
for the Issue of H Shares of the Company", were considered and approved,
and the "Report on the Situation Relevant to the Assets and Liabilities
Management of the Company for 2020" was debriefed.
Two proposals, including the "Proposal in relation to the Participation
by the Company in the Capital Increase of CGB", were considered and
approved.
Two proposals, including the "Proposal in relation to the 'Statement of the
Company on Risk Preference for the Year 2021'", were considered and
approved.
The "Proposal in relation to the Implementation of Tasks and the
Performance Appraisal of the Company for 2020" was considered and
approved.
Performance of duties by the Strategy and Assets
and Liabilities Management Committee
In 2021, 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 2021, the Strategy and
Assets and Liabilities Management Committee 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, and submitted its
opinions to the Board in this regard.
Reviewing the systems of the Company concerning assets
and liabilities management. In 2021, the Strategy and
Assets and Liabilities Management Committee reviewed
and approved the proposals on the amendments to the
statement of the Company on risk preference for the year
2021 and the amendments to the rules on enterprise-
wide risk management of the Company, and submitted its
review opinions to the Board.
Annual Report 2021 | Corporate Governance 101
Discussing the Company's development plans and major
strategic projects. In 2021, the Strategy and Assets
and Liabilities Management Committee reviewed the
proposals on the final assessment report for the outline of
the "13th five-year development plan" of the Company,
its strategic asset allocation plan for the years from 2022
to 2024, asset allocation plan for the year 2022, the
Company's participation in the capital increase of CGB
and its investment in Project Eyas, and made significant
recommendations to the Board.
CONNECTED TRANSACTIONS CONTROL
COMMITTEE
17th meeting of the Strategy and Assets
and Liabilities Management Committee
of the sixth session of the Board
26 May 2021
16th meeting of the Strategy and Assets
and Liabilities Management Committee
of the sixth session of the Board
27 April 2021
Number of meetings
attended in person/
attended by proxies/
Number of meetings
Number of meetings
required to attend
required to attend
3/3
0/3
2/3
Notes:
The number of meetings attended in person includes attending meetings by the Directors on-site and by telephone or video conference.
2.
All Directors who were unable to attend any meeting of specialized Board committees have authorized other Directors to attend and vote at the meeting
on their behalf.
3. Mr. Lam Chi Kuen served as the Chairman of the Strategy and Assets and Liabilities Management Committee from July 2021 to February 2022.
100 Annual Report 2021 | Corporate Governance
The meetings convened are as follows:
Meetings convened
24 March 2021
15th meeting of the Strategy and Assets
and Liabilities Management Committee
of the sixth session of the Board
1.
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.
0/2
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.
108 Annual Report 2021 | Corporate Governance
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.
Pursuant to the requirements of the "Notice on the Proper
Preparation for Disclosure of 2021 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 2021 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 2021 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 2021. 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 2021.
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.
Annual Report 2021 | Corporate Governance 107
The "Measures for the Administration of Connected Transactions of Insurance Companies" (Yin Bao Jian Fa [2019] No. 35) was abolished on 1 March
2022, and the "Measures for the Administration of Connected Transactions of Banking and Insurance Institutions" (Order of the China Banking
and Insurance Regulatory Commission [2022] No. 1) was implemented. The relevant amendments to the Articles of Assocation are in line with the
requirements of the two aforesaid regulatory provisions.
20
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 (2021 Edition)" to strengthen the
implementation of internal control standards and internal
control assessments, and actively promoted the culture
and philosophy of internal control, thereby continuously
enhancing the internal control of the Company.
Internal Control
INTERNAL CONTROL AND RISK MANAGEMENT
The Company has consistently proceeded with tasks in
compliance with the regulatory requirements of relevant
regulatory authorities, such as the SSE, the HKSE, the U.S.
Securities and Exchange Commission (the "SEC") and
the New York Stock Exchange, with respect to corporate
internal control.
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.
Annual Report 2021 | Corporate Governance 105
In accordance with the relevant requirements of the
Company Law, the "Reply of the State Council on the
Adjustment of the Notice Period for General Meeting
and Other Matters Applicable to the Overseas Listed
Companies" (Guo Han [2019] No. 97), and the "Measures
for the Administration of Connected Transactions of
Insurance Companies" (Yin Bao Jian Fa [2019] No. 35) 20
and the "Guiding Opinions on Banking and Insurance
Institutions Strengthening the Building of Working
Systems and Mechanisms for Protection of Consumer
Rights and Interests" (Yin Bao Jian Fa [2019] No. 38)
issued by the CBIRC, the amendments to the Articles
of Association were put to vote and adopted by way
of special resolution at the First Extraordinary General
Meeting 2021 held on 16 December 2021. The major
amendments to the Articles of Association mainly
include: 1. revising the notice period for general meeting,
removing the requirements for shareholders who intend
to attend a general meeting to give written reply to the
Company and for minimum percentage of voting rights
and relevant procedures for convening general meetings,
and optimizing the provisions with respect to the change
of registration by the holders of H shares prior to the
date of a general meeting in accordance with Article 102
of the Company Law and the relevant requirements of
the "Reply of the State Council on the Adjustment of the
Notice Period for General Meeting and Other Matters
Applicable to the Overseas Listed Companies" (Guo
Han [2019] No. 97); and 2. revising the provisions of the
Articles of Association with respect to the specialized
committees of the Board, establishing a new Connected
Transactions Control Committee under the Board of
Directors of the Company, and adding the new provisions
with respect to the composition of the Connected
Transactions Control Committee; as well as changing
the name of the Risk Management Committee under
the Board of the Company to the Risk Management and
Consumer Rights Protection Committee, in accordance
with the relevant requirements of the "Measures for the
Administration of Connected Transactions of Insurance
CHANGES OF THE ARTICLES OF ASSOCIATION
106 Annual Report 2021 | Corporate Governance
In 2021, the Company won various awards, including
the "Precedent for the Best Practices of the Office of
the Board of Directors of Listed Company for 2021" by
the China Association for Public Companies, the "Best
Investor Activity" by the Investor Relations Magazine, the
"Most Progress in Investor Relations Award" by Hong
Kong Investor Relations Association, the "Interaction
of Medium and Small Investor Relations Award" and
the "Institutional Friendly Communication Award" by
www.p5W.net, and the "Best Communication with the
Capital Market Award" and the "Best Digital Investor
Relations Award" in the 5th Excellent IR in China. With
the outstanding achievements of its practice in investor
relations management, the Company was among the first
batch of companies to have been selected for inclusion
of its investor relations precedents into the case study
collection of the SSE for investor relations management.
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 and 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 2021, the
Company communicated with more than 5,200 investors
and analysts, including more than 2,600 investors
who attended results briefings online and offline. The
Company held over 170 online and offline meetings with
approximately 1,500 investors and analysts for the year,
and communicated with more than 1,100 institutional
investors by attending a total of 46 investors' meetings
held locally or internationally. It also communicated
with more than 90 investors in 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 click-through
rate of 35,000 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 took active actions to respond to any
uncertainties brought by the social, economic and financial
environments both internationally and domestically, and
developed investor relations in a proactive way with
its stringent attitude and innovative thinking. It kept
abreast with the development pace of technology era and
consistently made innovation in its communications with
In 2021, the Company further proceeded with the
construction of its information disclosure regulation
system, and continued to make amendments to improve
the regulations in connection with the information
disclosure affairs management and the registration
and management of persons who have knowledge of
inside information as required by the revised rules of
the CSRC and the SSE, which led to the successful and
efficient implementation of the basic regulation system
of information disclosure. For the disclosure by way of
provisional announcements, the Company fulfilled its
obligation of information disclosure in a timely manner
by publishing timely announcements with respect to the
progress of such matters as significant matters, major
investments and connected transactions in its listed
jurisdictions or on the media satisfying the conditions
prescribed by the CSRC, the official website of the
Company and the website of Insurance Association of
China. For the disclosure by way of periodic reports, the
Company constantly enhanced the quality of information
disclosure with its focus primarily on investor concerns,
and delivered corporate value to the market and investors
in an approachable, simple and clear, and graphically
illustrated manner. The Company also regularly organized
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 2021, the
Company was awarded Grade A in the assessment by the
SSE of information disclosure of listed companies for the
year of 2020-2021.
manner.
The Company has created 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 in the
three listing venues. In addition, investors may call the
investor relations hotline of the Company at 86-10-
63631329 or email to the investor relations email box
at ir@e-chinalife.com if they have any further inquiries.
The Company will respond to such enquiries in a timely
The Company has established a well-developed, effective
and practical information disclosure management
system in strict compliance with the regulatory laws and
regulations of its listed jurisdictions and the insurance
industry, internal rules and regulations as well as self-
regulatory requirements 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 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.
The amendments to the Articles of Association as
described above shall come into effect after the approval
from the CBIRC.
ir@e-chinalife.com
86-10-66575112
86-10-66575112
The Company's website at www.e-chinalife.com
liyh@e-chinalife.com
16 Financial Street, Xicheng District,
Beijing, P.R. China
86-10-63631191
* Ms. Li Yinghui, Securities Representative of
the Company, is also the main contact person
of the external Company Secretary engaged
by the Company
www.sse.com.cn
Media and Websites 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
The Company's Annual Report
may be obtained at
China Securities Journal (www.cs.com.cn)
Securities Times (www.stcn.com)
Securities Daily (www.zqrb.cn)
HKExnews website of Hong Kong Exchanges and
Clearing Limited at www.hkexnews.hk
Li Yinghui
INFORMATION DISCLOSURE AND PLACE FOR OBTAINING THE REPORT
Securities Representative
852-29192628
16 Financial Street, Xicheng District,
Beijing, P.R. China
86-10-63633333
86-10-63631329
95519
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
12/F, Tower A, China Life Plaza, 16 Financial Street, Xicheng District, Beijing,
P.R. China
116 Annual Report 2021 | Other Information
CONTACT INFORMATION
Name
Office Address
Telephone
Fax
Email
Board Secretary
Li Mingguang
86-10-63631329
STOCK INFORMATION
LFC
A Share
PricewaterhouseCoopers
Zhong Tian LLP
Address: 11/F,
PricewaterhouseCoopers
Center, 2 Link Suqare,
202 Hubin Road,
Huangpu District,
Shanghai, PRC
Name of the Signing Auditors:
Zhou Xing, Tu Yi
Address: Shops 1712-1716, 17th Floor,
Hopewell Centre, 183 Queen's Road East,
Wanchai, Hong Kong
Domestic Auditor
Address: 60 Wall Street, New York, NY 10005
International Auditor
PricewaterhouseCoopers
Address: 22/F, Prince's Building,
Central, Hong Kong
Name of the Certified Auditor:
Yip Siu Foon, Linda
118 Annual Report 2021 | Other Information
Debevoise & Plimpton LLP
King & Wood Mallesons
Latham & Watkins LLP
Deutsche Bank
Computershare Hong Kong
Investors Services Limited
H Share
ADR
Stock Short Name
Stock Code
China Life
601628
China Life
2628
New York Stock Exchange
100033
Annual Report 2021 | Other Information 117
OTHER RELEVANT INFORMATION
H Share Registrar and
Transfer Office
Depositary of ADR
Domestic Legal Adviser
International Legal Advisers
Auditors of the Company
Stock Type
16 Financial Street, Xicheng District, Beijing, P.R. China
Exchanges on which the
Stocks are Listed
Shanghai Stock Exchange
The Stock Exchange of
Hong Kong Limited
Yuan Changqing (assuming the roles and duties of the Chairman of the Board
The Company assessed and monitored insurance risks
through sensitivity analysis and other actuarial appraisal
techniques, 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.
In 2021, 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.
Annual Report 2021 | Corporate Governance
111
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, 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 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 2021:
(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) facilitating the establishment of systems
to improve risk monitoring and pre-warning functions
and simultaneously increasing the frequency and scope
of emergency exercises to acquire more experience in
emergency response.
rate.
Credit Risk
The credit risks that the Company is exposed to mainly
relate to investment deposits, bond investments, non-
standard financial product investments and reinsurance
arrangements, etc.
Credit Risk of Investment Business
To address the credit risks of investment business,
the Company developed and continuously improved
the 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 2021: (1) further improving the
centralized credit rating process and system functions
to enhance the credit risk management standard; (2)
optimizing 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.
112 Annual Report 2021 | Corporate Governance
Reinsurance Credit Risk
Reinsurance credit risk refers to the credit risk that may
possibly be faced by the Company in connection with
the obligations to be undertaken by reinsurers due to
their failure to perform reinsurance contracts. To address
the reinsurance credit risks, the Company adopted the
following measures: (1) properly setting self-retained
risk limits through an effective reinsurance management
system, and using reinsurance as an effective tool to
transfer risks to reinsurers with a high level of solvency;
(2) reviewing the relevant information of a reinsurer in
the reinsurance registration system in strict compliance
with the regulatory requirements prior to the execution
of a reinsurance contract to ensure that the reinsurer
in cooperation with the Company satisfies with the
regulatory requirements; and (3) conducting credit
assessment on reinsurers through internal rating to select
reinsurers that have higher credit standing to mitigate
credit risks.
Operational 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.
Operational risk refers to the risk of direct or indirect
losses arising from incomplete internal operational
processes, personnel, systems or external events.
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
The major risks of the Company in the course of operation
and management include insurance risk, market risk,
credit risk, operational risk, strategic risk, reputational risk,
liquidity risk, information safety risk and ESG risk.
and the legal representative of the Company)
The Company has formulated the "Measures for
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 2021, there has been no major error in
periodic report disclosures of the Company. In order to
cope with the latest regulatory requirements, enhance
the confidentiality of its inside information, and register
and submit information concerning persons who have
knowledge of inside information, the Company, after
taking into account the regulatory requirements, has
revised during the Reporting Period the "Measures for
the Administration of Registration of Persons Who Have
Knowledge of Inside Information of China Life Insurance
Company Limited". For the purpose of strengthening
the its emergency management for the information
disclosure of emergencies, the Company has, after
taking into account the regulatory requirements, revised
the "Measures for the Emergency Management for the
Information Disclosure of Emergencies of China Life
Insurance Company Limited" during the Reporting Period
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 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 2021, 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.
Annual Report 2021 | Corporate Governance 109
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 2021, 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, protection
of customers' rights and interests, compliance of
intermediary business, and 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, for the purpose of
enhancing the overall compliance management standard
of the Company and ensuring the achievement of its goal
of high-quality development.
Insurance Risk
Risk Management
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.
110 Annual Report 2021 | Corporate Governance
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, 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 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 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.
In 2021, the Company vigorously promoted the
informatization of risk management, actively applied.
the latest advanced technologies such as big data and
artificial intelligence, and further optimized and upgraded
the intelligent application of anti-money laundering in
greath depth, 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.
Risk Identification and Control
Risk Management System
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 and achieve the integration of operational risk
management and control with its business development.
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
Work in relation to Risk Management
Strategic Risk
OTHER
INFORMATION
BASIC INFORMATION OF THE COMPANY
Registered Name in Chinese
Registered Name in English
Legal Representative
Registered Office Address/
Current Office Address
Postal Code
Telephone
Investor Relations Hotline
Customer Service Hotline
Website
Email
Hong Kong Office Address
Telephone
中國人壽保險股份有限公司(簡稱「中國人壽」)
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 2021, 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 and the quality and efficiency of
risk management were further enhanced.
China Life Insurance Company Limited ("China Life")
Annual Report 2021 | Corporate Governance 115
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 effectiveness, 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.
Fax
manner.
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 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 2021, the soundness of the Company's
strategic risk management system and the effectiveness
of its implementation were maintained.
For 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.
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.
Annual Report 2021 | Corporate Governance 113
Reputational Risk
Reputational risk refers to the risk of negative comments
on the Company from stakeholders, the public and the
media as a result of the behaviours of the Company's
divisions at all levels, practitioners or external events,
thereby causing losses, damaging brand value, being
detrimental to the normal operation of the Company, and
even affecting market and social stability. Reputational risk
may exist in any aspect of the Company's operation and
management. The Company highly values its reputation
and has incorporated reputational risk management
into the corporate governance and comprehensive risk
management systems to prevent reputational risk.
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.
In 2021, the Company constantly made improvements
to its system for reputational risk management to
optimize relevant working mechanism and further
enhance the standard of reputational risk management.
For the improvement of system establishment, a sound
mechanism for the evaluation and responsibility attribution
of reputional risk was established to consolidate the main
management responsibilities, strengthen the governance
of reputational risk sources, and mitigate hidden
reputational risk in an active and effective manner. 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 any
reputational risk incdients and effectively protect brand
reputation. The Company also continued to offer training
courses and exercises on reputational risk management to
raise the risk awareness of all employees, which helped
cultivate a culture of reputational risk management.
Information Safety Risk
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 of the Company
reviews and confirms the assessment results, taking into
consideration the key issues as part of its formulation of
an overall strategy, and exercising its supervisory function
with respect to the management of such issues and
their performance. In 2021, the Company established an
ESG risk management system, through which five ESG
risks were identified as follows: information safety risk,
climate change risk, corruption risk, human resources
and customer relationship management risk, and talent
attraction and retention risk. The Company has devised
the management strategy against the above risks in order
to keep track with the risk development trend in a timely
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 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 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 of risks for the entire network
with the help from the enterprise general control center,
thus achieving 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 2021, there was
no circumstance where the Company's operation was
affected due to the breakdown of computers or security
breach.
114 Annual Report 2021 | Corporate Governance
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 to give insurance benefits as scheduled.
ESG Risk
In 2021, the Company paid great attention and actively
implemented the Data Security Law of the PRC for the
purpose of protecting the legitimate rights and interests
of customers. It optimized its data governance structure,
refined the responsibilities of divisions at all levels for data
management, and improved the related data management
regulations. The Company assessed the sophistication
of data management capability against the national
benchmarks, defined the targets to be protected for
data security and the key areas for protection, achieved
the classified security protection for the full life cycle
such as the collection, transmission and storage of data,
established a 3-dimensional data security protection
system based on classified protection, and consistently
strengthened the management and control of data
security, in order to ensure that the data was manageable
and controllable.
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 2021, and of its consolidated financial performance and its consolidated cash flows for the year
then ended in accordance with International Financial Reporting Standards ("IFRSS") and have been properly prepared in
compliance with the disclosure requirements of the Hong Kong Companies Ordinance.
the notes to the consolidated financial statements, which include significant accounting policies and other explanatory
information.
the consolidated statement of cash flows for the year then ended; and
Independence
•
What we have audited (continued)
OPINION (continued)
Our opinion
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.
Fair value of level 3 financial assets
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key audit matters identified in our audit are summarised as follows:
. Long-term insurance contract liabilities
•
Impairment tests for investments in associates and joint ventures
•
Annual Report 2021 | Financial Report 125
Independent Auditor's Report (continued)
KEY AUDIT MATTERS (continued)
Key Audit Matter
Refer to Notes 2.12 and 15 to the consolidated financial
statements.
Independent Auditor's Report (continued)
Long-term insurance contract liabilities
KEY AUDIT MATTERS
124 Annual Report 2021 | Financial Report
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
Environment, Social and Governance
*
China Life Wealth Management Company Limited, an indirect non-wholly
owned subsidiary of the Company
At 31 December 2021, the Group had long-term insurance
contract liabilities with the amount of RMB3,379.60 billion,
accounting for 76.73% of the Group's total liabilities.
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 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
Ministry of Finance of the People's Republic of China
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
Renminbi Yuan
the consolidated statement of changes in equity for the year then ended;
Material Risk Alert:
21 Except for "the Company" referred to in the Consolidated Financial Statements.
Annual Report 2021 | Other Information 123
FINANCIAL
REPORT
Independent Auditor's Report
pwc
To the Shareholders of China Life Insurance Company Limited
(incorporated in the People's Republic of China with limited liability)
OPINION
What we have audited
The consolidated financial statements of China Life Insurance Company Limited (the "Company") and its subsidiaries (the
"Group") which are set out on pages 131 to 252, which comprise:
*
the consolidated statement of financial position as at 31 December 2021;
the consolidated statement of comprehensive income for the year then ended;
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 and ESG 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.
The Group uses the discounted cash flow method to
estimate the reserve of long-term insurance contracts
which includes a reasonable estimate of liability, a risk
margin and a residual margin.
Fair value of level 3 financial assets
.
Comparing the significant assumptions used by the
Group in the impairment tests to the historical business
results of these investments and industry data to assess
the reasonableness of the assumptions used.
Based on the above procedures, we found that the
significant estimates and judgements involved in impairment
tests for investments in associates and joint ventures were
supportable by the evidence we gathered.
Annual Report 2021 | Financial Report 127
Independent Auditor's Report (continued)
KEY AUDIT MATTERS (continued)
Key Audit Matter
Refer to Note 4.4 to the consolidated financial
statements.
At 31 December 2021, the Group held level 3 financial
assets measured at fair value, with a carrying value of
RMB349.13 billion, accounting for 7.14% of the Group's
total assets.
These level 3 financial assets primarily include unlisted
equity securities and unlisted debt securities, which are
accounted for as available-for-sale securities at fair value
or securities at fair value through profit or loss. The fair
values of these financial assets are measured using
valuation techniques based on significant unobservable
inputs.
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.
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 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.
Testing the completeness and accuracy of the underlying
key data used by the Group in the cash flows projections;
With the assistance of our valuation experts, we performed
the following audit procedures:
Evaluating the appropriateness of the Group's valuation
techniques, significant assumptions by referring to
industry practices and valuation guidelines;
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;
Independently developing fair value estimates and
comparing them to the Group's valuation results on a
sample basis.
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.
OTHER INFORMATION
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.
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.
128 Annual Report 2021 | Financial Report
INDEX OF INFORMATION DISCLOSURE ANNOUNCEMENTS
China Life AMP Asset Management Company Limited, an indirect non-wholly
owned subsidiary of the Company
•
We have identified the Group's long-term insurance
contract liabilities as a key audit matter due to:
Comparing the discount rates used by the Group in the
impairment tests with the discount rates developed by
using the weighted average cost of capital model;
With the assistance of our valuation experts, we performed
the following audit procedures:
The complexity of the actuarial models to develop the
reserve of long-term insurance contracts;
Significant judgements involved in the actuarial
assumptions related to mortality rates, morbidity rates,
lapse rates, discount rates and expenses assumptions.
Changes in these assumptions could have significant
effects on long-term insurance contract liabilities.
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 long-term insurance contract liabilities
estimation processes, including controls over management's
review of the actuarial models, the actuarial assumptions,
the actuarial methodologies and the data inputs used.
With the assistance of our actuarial experts, we performed
the following audit procedures:
•
•
•
•
Comparing the methodologies, actuarial models and
actuarial assumptions used by the Group to recognised
actuarial practices;
Testing the completeness and accuracy of the underlying
insurance policy data used in the valuation on a sample
basis;
Assessing the reasonableness of the actuarial
assumptions by considering the Group's rationale for the
actuarial judgements applied along with comparison to
industry data and historical experience;
• Evaluating the appropriateness of the Group's
impairment methodology by referring to valuation
guidelines and industry practices;
Performing an independent actuarial modelling and
recalculation of the long-term insurance contract
liabilities on a sample basis and comparing our result to
the result from the Group's actuarial models;
Based on the above procedures, we found that the actuarial
models applied and key assumptions adopted to estimate
the reserve for long-term insurance contracts were
supportable by the evidence we gathered.
126 Annual Report 2021 | Financial Report
Independent Auditor's Report (continued)
KEY AUDIT MATTERS (continued)
Key Audit Matter
Impairment tests for investments in associates and joint
ventures
How our audit addressed the Key Audit Matter
Refer to Notes 3.3 and 9 to the consolidated financial
statements.
At 31 December 2021, the Group held investments in
associates and joint ventures, with a carrying value of
RMB257.95 billion, accounting for 5.27% of the Group's
total assets.
According to the impairment testing results performed
by the Group, no impairment loss was recognised
for the year ended 31 December 2021. The Group
had accumulatively recognised impairment provision
of RMB3.22 billion by the end of 2021 on these
investments.
We have identified the impairment tests for investments
in associates and joint ventures as a key audit matter due
to the significant estimates and judgements involved in
management's assessment including discount rates and
expected future cash flows.
We obtained an understanding, evaluated the design and
tested the operating effectiveness of internal controls over
the Group's impairment tests for these investments, including
controls over management's review of the impairment test
methodology and the significant assumptions used in the
valuation.
Performing analytical procedures over the movement of
long-term insurance contract liabilities considering the
appropriateness of changes in the actuarial assumptions
in the reporting period.
China Life Pension Company Limited, a non-wholly owned subsidiary of the
Company
1
2021/11/29
Announcement on Changes in Accounting Estimates
53
Announcement of Premium Income
2021/9/13
54
2021 Interim Report
2021/9/15
120 Annual Report 2021 | Other Information
Serial No.
Items
55
56
57
40
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-Registered Shareholders
Proposed Amendments to the Articles of Association, the Procedural Rules for
the Shareholders' General Meetings and the Procedural Rules for the Board of
Directors' Meetings and Notice of the First Extraordinary General Meeting 2021
Notice of the First Extraordinary General Meeting 2021
Date of disclosure
2021/9/15
2021/9/15
2021/9/28
58
2021/9/28
59
Form of Proxy of Holders of H Shares for use at the First Extraordinary General
Meeting 2021 of the Company to be held on Thursday, 16 December 2021
2021/9/28
60
61
22 22
2021/8/25
Reply Slip of Holders of H Shares
52
-
42
43
44
45
46
47
48
Announcement of Premium Income
Announcement - Election of Employee Representative Supervisor
Announcement of Premium Income
Notice of Board Meeting
Voluntary Announcement - Convening of 2021 Interim Results Briefing
Announcement of Unaudited Interim Results for the Six Months Ended
30 June 2021
2021/7/14
2021/8/2
2021/8/12
2021/8/16
2021/8/25
49
Announcement - Proposed Amendments to the Articles of Association
2021/8/25
50
Announcement on the Progress of Connected Transaction in relation to a Partnership
2021/8/25
51
Summary of Solvency Quarterly Report of Insurance Company (Second Quarter of 2021)
2021/8/25
62
Overseas Regulatory Announcement
China Life Insurance Company Limited -
2021/7/6
2021/9/28
2021/9/28
2021/10/28
72
Announcement of Premium Income
2021/11/12
73
Announcement on the Progress of Connected Transaction in relation to a Partnership
2021/11/19
74
Renewal of Continuing Connected Transactions and Supplemental Notice of the
First Extraordinary General Meeting 2021
2021/11/29
75
Supplemental Notice of the First Extraordinary General Meeting 2021
76
Supplemental Form of Proxy of Holders of H Shares for use at the First
Extraordinary General Meeting 2021 of the Company to be held on Thursday,
16 December 2021
2021/11/29
Annual Report 2021 | Other Information 121
Serial No.
Items
Date of disclosure
77
78
79
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-Registered Shareholders
Announcement of Premium Income
2021/11/29
2021/11/29
2021/12/13
Announcement
Resolutions Passed at the First Extraordinary General Meeting
80
Overseas Regulatory Announcement China Life Insurance Company Limited -
Announcement on Changes in Accounting Estimates
Notification Letter and Change Request Form to Registered Shareholders
71
Summary of Solvency Quarterly Report of Insurance Company (Third Quarter of 2021)
62
Notification Letter and Request Form to Non-Registered Shareholders
2021/9/28
63
Announcement of Premium Income
2021/10/15
64
Announcement - Approval of Qualification of Independent Director by the CBIRC
and Retirement of Independent Director
2021/10/18
65
Notice of Board Meeting
2021/10/18
99
66
Announcement - Approval of Qualification of Supervisors by the CBIRC and
Resignation of Supervisor
2021/10/19
62
67
2021 Third Quarter Report
2021/10/28
-
68
Announcement – Supplementary Information regarding Compensation of Directors,
Supervisors and Senior Management Members in 2020
2021/10/28
69
69
Announcement - Continuing Connected Transactions under the Agreement for
Entrusted Investment and Management and Operating Services with respect to
Alternative Investments with Insurance Funds
2021/10/28
70
2021/10/28
2021/12/16
Announcement on Qualification of Executive Director
Announcement - Resolutions Passed at the Annual General Meeting, Election
of Members of the Seventh Session of the Board of Directors and the Board of
Supervisors, Change of Auditors and Distribution of Final Dividend
Announcement of Premium Income
2021/3/12
12
13
23
Voluntary Announcement - Convening of 2020 Annual Results Briefing
Announcement of Results for the Year Ended 31 December 2020
2021/3/17
2021/3/25
14
China Life Insurance Company Limited 2020 Environmental, Social and Governance
& Social Responsibility Report
2021/3/25
17
567
15
16
Summary of Solvency Quarterly Report of Insurance Company (Fourth Quarter of 2020)
Announcement - Nomination of Directors
2021/3/25
2021/3/25
Announcement - Nomination of Non-employee Representative Supervisor
2021/3/25
18
Overseas Regulatory Announcement - China Life Insurance Company Limited -
Announcement on Changes in Accounting Estimates
2021/3/25
19
Announcement of Premium Income
2021/4/13
20
Notice of Board Meeting
2021/4/14
11
21
2021/3/11
10
2
3
Serial No.
Items
Announcement on the Progress of Connected Transaction in relation to the
Formation of the Partnership
Announcement of Premium Income
Announcement - Resignation of Non-executive Director
Date of disclosure
2021/1/5
2021/1/13
2021/1/18
4
5
Election of Language and Means of Receipt of Corporate Communication
Reply Form
2021/1/18
2021/1/18
6
Announcement - Forfeiture of Unclaimed Dividends
2021/2/5
7
Announcement - Resignation of Non-executive Director
2021/2/7
00
8
9
Announcement of Premium Income
2021/2/22
Announcement - Re-election of Employee Representative Supervisors
2021/2/25
Notice of Board Meeting
2021/6/30
Annual Report 2020
22
2021/4/28
32
Overseas Regulatory Announcement - China Life Insurance Company Limited -
Announcement on Changes in Accounting Estimates
2021/4/28
33
Announcement of Premium Income
2021/5/13
34
Appointment of Auditors for the Year 2021, General Mandate to Issue H Shares and
Supplemental Notice of Annual General Meeting
2021/5/25
35
Supplemental Notice of Annual General Meeting
2021/5/25
36
Supplemental Form of Proxy of Holders of H Shares for use at the Annual General
Meeting of the Company to be held on Wednesday, 30 June 2021
2021/5/25
37
38
39
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-Registered Shareholders
Announcement of Premium Income
2021/5/25
2021/5/25
2021/6/15
40
40
Announcement - Approval of Qualification of Independent Director by the CBIRC
and Resignation of Independent Director
2021/6/30
41
41
Announcement - Proposed Change of Auditors
2021/4/15
31
Summary of Solvency Quarterly Report of Insurance Company (First Quarter of 2021)
22
Reports of the Board of Directors & the Board of Supervisors for 2020, Financial
Report and Profit Distribution Plan for 2020, Remuneration of Directors &
Supervisors, Election of Directors, Election of Non-employee Representative
Supervisors, Renewal of Liability Insurance for Directors, Supervisors & Senior
Management, Continued Donations to China Life Foundation, Duty Report of
the Independent Directors for 2020, Report on the Overall Status of Connected
Transactions for 2020 & Notice of AGM
2021/4/15
23
23
Notice of Annual General Meeting
2021/4/15
2 22
24
Form of Proxy of Holders of H Shares for use at the Annual General Meeting of the
Company to be held on Wednesday, 30 June 2021
2021/4/15
25
Reply Slip of H Share Shareholders
2021/4/15
26
27
28
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-Registered Shareholders
Announcement - Estimated Profit Increase for the First Quarter of 2021
2021/4/15
2021/4/15
2021/4/21
Annual Report 2021 | Other Information 119
Serial No.
Items
Date of disclosure
29
2021 First Quarter Report
2021/4/28
30
2021/4/28
2021
2021/8/13
Announcement - Connected Transaction – Formation of Partnership
Pension Company
AMP
CLWM
CGB
CLP&C
CLI
China Life Capital
Ministry of Finance
CBIRC
HKSE
AMC
SSE
Insurance Law
Securities Law
Articles of Association
China or PRC
ESG
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
81
Company Law
CLIC
CSRC
In this report, unless the context otherwise requires, the following expressions have the following meanings:
2021/12/16
China Life, the Company21
82
Announcement - Renewal of Continuing Connected Transactions under the Policy
Management Agreement
2021/12/16
Announcement
-
83
_
Investment in Partnerships through
2021/12/16
Announcement
Connected Transactions
Equity Investment Plans
122 Annual Report 2021 | Other Information
Connected Transactions - Acquisition of Creditor's Rights on the
84
2021/12/16
Trust Loan through Asset-backed Plan
85
Supplemental Announcement
Formation of Partnerships
Connected Transactions in relation to the
2021/12/29
-
DEFINITIONS AND MATERIAL RISK ALERT
10,328
7,666
Including: share of profit of associates and joint ventures
10,328
29
Profit before income tax
28
Income tax
9
8,336
Net gains on investments of associates and joint ventures
(40,808)
(784,763)
Total benefits, claims and expenses
(12,270)
(15,467)
Other expenses
(1,229)
(1,253)
21
Statutory insurance fund contribution
(37,706)
22
(758,239)
50,495
Note
1,917
RMB million
Administrative expenses
2020
2021
Other comprehensive income
For the year ended 31 December 2021
Consolidated Statement of Comprehensive Income (continued)
Annual Report 2021 | Financial Report 133
The notes on pages 138 to 252 form an integral part of these consolidated financial statements.
RMB1.77
RMB1.80
54,476
31
1,116
1,491
- Non-controlling interests
50,257
50,921
- Equity holders of the Company
Attributable to:
51,373
52,412
Net profit
(3,103)
Basic and diluted earnings per share
(3,747)
BENEFITS, CLAIMS AND EXPENSES
Insurance benefits and claims expenses
Life insurance death and other benefits
27
Other income
21,900
4,943
24
Net fair value gains through profit or loss
14,583
20,344
23
Net realised gains on financial assets
154,497
178,387
22
Investment income
604,666
611,251
Net premiums earned
(1,546)
939
Net change in unearned premium reserves
606,212
(6,053)
(8,015)
610,312
Net written premiums
10,005
9,403
Total revenues
824,930
Finance costs
(84,361)
(65,744)
Underwriting and policy acquisition costs
(28,279)
(26,511)
Policyholder dividends resulting from participation in profits
(9,846)
(10,628)
26
Investment contract benefits
(5,598)
(414,797)
25
Increase in insurance contract liabilities
(52,395)
(55,030)
25
Accident and health claims and claim adjustment expenses
(113,609)
(121,354)
25
RMB million
805,049
(442,370)
(Restated
Note 35(f) (ii)
profit or loss in subsequent periods
profit or loss in subsequent periods:
RMB million RMB million RMB million
RMB million
RMB million RMB million
earnings
Reserves
Retained
Share
capital instruments
Other
equity
interests
Total
controlling
Non-
Attributable to equity holders of the Company
As at 31 December 2021
Total transactions with owners
Reserves to retained earnings (Note 37)
Others
Dividends to non-controlling interests
Appropriation to reserves (Note 37)
Dividends paid (Note 33)
Transactions with owners
Total comprehensive income
Other comprehensive income
Net profit
As at 1 January 2021
(Note 36)
(Note 37)
28,265
7,791
(8,538)
308
(1,055)
(7,791)
(174)
(174)
(20,834)
(20,834)
(16,025)
- 16,025
77,123
As at 31 December 2020
1,167
_____ _- 25,699
25,750
51
25,699
51,373
1,116
50,257
409,360
5,580
170,458
197,266
50,257
Total transactions with owners
Others
Dividends to non-controlling interests
Other comprehensive income that will not be reclassified to
profit or loss in subsequent periods:
612,265
Other comprehensive income that may be reclassified to
(8,482)
1,098
29
Income tax relating to components of other comprehensive income
(986)
(398)
Exchange differences on translating foreign operations
672
Share of other comprehensive income of associates and
1,260
Share of other comprehensive income of associates and
(3,959)
(1,793)
attributable to policyholders equity
Portion of fair value changes on available-for-sale securities
(14,386)
(21,722)
Amount transferred to net profit from other comprehensive income
52,547
17,065
Fair value gains on available-for-sale securities
joint ventures under the equity method
Other comprehensive income that may be reclassified to
joint ventures under the equity method
Total comprehensive income for the year, net of tax
Attributable to:
Dividends paid
Appropriation to reserves (Note 37)
Transactions with owners
Total comprehensive income
Other comprehensive income
As at 1 January 2020 (Restated Note 35(f) (ii)
Net profit
For the year ended 31 December 2021
Consolidated Statement of Changes in Equity
134 Annual Report 2021 | Financial Report
The notes on pages 138 to 252 form an integral part of these consolidated financial statements.
1,167
Other comprehensive income for the year, net of tax
1,505
46,358
77,123
47,863
25,750
(4,549)
344
(59)
25,406
(4,490)
- Non-controlling interests
· Equity holders of the Company
75,956
618,327
•
Less: premiums ceded to reinsurers
122,510
Interest-bearing loans and borrowings
17
18,686
19,556
Lease liabilities
2,182
2,664
Bonds payable
18
34,994
34,992
Financial liabilities at fair value through profit or loss
3,416
(7,791)
3,732
Securities sold under agreements to repurchase
19
239,446
122,249
Annuity and other insurance balances payable
56,818
55,031
124,949
Policyholder dividends payable
288,212
313,594
87
56,655
4,252,466
The notes on pages 138 to 252 form an integral part of these consolidated financial statements.
Annual Report 2021 | Financial Report 131
Consolidated Statement of Financial Position
As at 31 December 2021
(continued)
31 December
2021
As at
31 December
As at
Premiums received in advance
2020
RMB million
RMB million
(Restated
Note 35(f) (ii))
LIABILITIES AND EQUITY
Liabilities
Insurance contracts
Investment contracts
15
3,419,899
2,973,225
16
Notes
60,440
4,891,085
48,699
Other liabilities
237,935
201,265
183,856
478,585
450,056
8,073
6,881
486,658
4,891,085
456,937
4,252,466
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 24 March 2022.
Yuan Changqing
Director
Su Hengxuan
Director
The notes on pages 138 to 252 form an integral part of these consolidated financial statements.
132 Annual Report 2021 | Financial Report
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
2021
2020
249,055
28,265
28,265
36
Deferred tax liabilities
Current income tax liabilities
Statutory insurance fund
Total liabilities
Equity
20
29
22
133,676
104,476
7,481
53,021
15,286
191
21
339
384
4,404,427
3,795,529
Share capital
Reserves
Retained earnings
37
38
248
121
29
29,040
The engagement partner on the audit resulting in this independent auditor's report is Yip Siu Foon, Linda.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong,
24 March 2022
130 Annual Report 2021 | Financial Report
ASSETS
Consolidated Statement of Financial Position
As at 31 December 2021
As at
As at
31 December
31 December
2021
Notes
RMB million
2020
RMB million
(Restated
Note 35(f)(ii))
Property, plant and equipment
Right-of-use assets
6 9
54,398
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
Gross written premiums
REVENUES
(Restated
Note 35(f) (ii)
RMB million
RMB million
Notes
Independent Auditor's Report (continued)
RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH
GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS
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 IFRSS 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.
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.
52,747
Those charged with governance are responsible for overseeing the Group's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
We report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or
accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
•
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.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
Annual Report 2021 | Financial Report 129
Independent Auditor's Report (continued)
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.
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.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS
7
2,518
3,076
206,771
6,333
1,215,603
161,570
Securities purchased under agreements to resell
10.7
12,915
7,947
Accrued investment income
10.8
51,097
45,200
Premiums receivable
10.6
12
20,730
Reinsurance assets
13
6,630
6,095
Other assets
Deferred tax assets
Cash and cash equivalents
Total assets
14
39,559
20,361
550
Securities at fair value through profit or loss
10.5
Investment properties
8
13,374
14,217
Investments in associates and joint ventures
9
257,953
239,584
Held-to-maturity securities
10.1
1,533,753
1,429,287
1,189,369
10.2
666,087
658,535
Term deposits
10.3
529,488
545,678
Statutory deposits - restricted
10.4
6,333
Available-for-sale securities
Loans
14,970
Interest paid
134
For the year ended 31 December 2021
2021
2020
RMB million
RMB million
(Restated
Note 35(f)(ii))
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in securities sold under agreements to repurchase, net
117,211
4,912
(8,194)
Consolidated Statement of Cash Flows (continued)
(3,779)
(6,505)
Dividends paid to equity holders of the Company
(18,089)
(20,834)
Dividends paid to non-controlling interests
Cash received from borrowings
Payment of lease liabilities
(372)
(161)
6,822
(1,517)
Repayment of borrowings
136 Annual Report 2021 | Financial Report
The notes on pages 138 to 252 form an integral part of these consolidated financial statements.
(292,799)
(409,676)
(338,306)
Property, plant and equipment
(5,475)
(7,469)
Investments in associates and joint ventures
(7,072)
(14,942)
Decrease/(Increase) in term deposits, net
17,748
(10,947)
Increase in securities purchased under agreements to resell, net
(2,804)
(3,850)
Interest received
142,311
126,848
Dividends received
32,177
29,590
Increase in policy loans, net
(35,479)
(25,858)
Net cash inflow/(outflow) from investing activities
(393,731)
(1,478)
Cash paid for redemption of other equity instruments
(9,060)
Capital injected into subsidiaries by non-controlling interests
119
The notes on pages 138 to 252 form an integral part of these consolidated financial statements.
Annual Report 2021 | Financial Report 137
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
1 ORGANISATION 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 24
March 2022.
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.
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2021
Standards/Amendments
IFRS 9, IAS 39, IFRS 7, IFRS 4
(36,859)
Content
Interest Rate Benchmark Reform - Phase 2
Covid-19-Related Rent Concessions beyond
30 June 2021
Effective for
annual periods
beginning on or after
1 January 2021
1 April 2021
138 Annual Report 2021 | Financial Report
184
(593,917)
56,536
Short-term bank deposits
22,850
22,846
Cash received related to other financing activities
1,069
Cash paid related to other financing activities
(750)
(1,592)
Net cash inflow/(outflow) from financing activities
111,139
(7,760)
Foreign exchange gains/(losses) on cash and cash equivalents
(71)
(144)
Net increase in cash and cash equivalents
3,785
3,316
Cash and cash equivalents
Beginning of the year
End of the year
56,655
53,339
60,440
56,655
Analysis of balances of cash and cash equivalents
Cash at banks and in hand
60,256
(745,973)
and IFRS 16 Amendments
Amendments to IFRS 16
559
305
46
351
15,728
(33,512)
(313)
(18,097)
28,265
249,055
201,265
8,073
486,658
The notes on pages 138 to 252 form an integral part of these consolidated financial statements.
Annual Report 2021 | Financial Report 135
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
2021
RMB million
2020
RMB million
(Restated
Note 35(f) (ii)
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax
Adjustments for:
Investment income
(45)
Net realised and unrealised gains on financial assets
45
(359)
57
2,175
(29,546)
28,265
237,935
183,856
456,937
28,265
237,935
183,856
6,881
456,937
50,921
1,491
52,412
(4,608)
14
(4,594)
(4,608)
50,921
1,505
47,818
15,378
(15,378)
(18,089)
(18,089)
(359)
Insurance contracts
6,881
50,495
Interest received – securities at fair value through profit or loss
Dividends received – securities at fair value through profit or loss
3,753
4,120
826
775
Net cash inflow/(outflow) from operating activities
286,448
304,019
CASH FLOWS FROM INVESTING ACTIVITIES
Disposals and maturities:
Disposals of debt investments
37,708
36,774
Maturities of debt investments
Disposals of equity investments
Disposals of property, plant and equipment
Disposals of subsidiaries
Purchases:
Debt investments
Equity investments and subsidiaries
196,596
341
385,308
308,406
Depreciation and amortisation
-
(3,263)
198,640
Income tax paid
(5,862)
(178,387)
(25,287)
(36,483)
445,472
419,866
5,287
5,162
Foreign exchange losses/(gains)
(645)
(119)
Net gains on investments of associates and joint ventures
(154,497)
54,476
(10,328)
47,129
Receivables and payables
3,004
(1,478)
40,598
(21,954)
(44,527)
Increase in securities at fair value through profit or loss, net
Changes in operating assets and liabilities:
(7,666)
Financial liabilities at fair value through profit or loss
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;
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 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:
A contractual service margin represents the unearned profitability of the insurance contracts and is recognised in profit
or loss over the coverage period;
Effective for
annual periods
IFRS 17 - Insurance Contracts
The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
No mandatory effective
date yet determined but
available for adoption
1 January 2023
1 January 2023
1 January 2022
1 January 2022
1 January 2022
1 January 2022
The effect of changes in discount rates will be reported in either profit or loss or OCI, determined by an accounting
policy choice;
beginning on or after
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.
1 January 2023
Except for IFRS 17, there are no other new accounting standards, amendments or IFRIC interpretations that are not yet
effective but would be expected to have a significant impact on the financial position and performance of the Group.
Annual Report 2021 | Financial Report 141
142 Annual Report 2021 | Financial Report
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;
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 2021. 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 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. In December 2021,
the IASB issued the amendment to IFRS 17, which permit entities that first apply IFRS 17 and IFRS 9 at the same time to
present comparative information about a financial asset as if the classification and measurement requirements of IFRS 9
had been applied to that financial asset before. The Group is currently assessing the impact of the implementation of the
standard.
Extensive disclosures to provide information on the recognised amounts from insurance contracts and the nature and
extent of risks arising from these contracts.
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;
IFRS 17 Insurance Contracts (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 2021 (continued)
2.1 Basis of preparation (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
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;
Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture
Changes to contractual cash flows. When changing the basis for determining contractual cash flows for financial
assets and liabilities (including lease liabilities), the reliefs have the effect that the changes that are required by an
interest rate benchmark reform (that is, are necessary as a direct consequence of IBOR reform and are economically
equivalent) will not result in an immediate gain or loss in the income statement.
Classification of Liabilities as Current or Non-current
Insurance Contracts
IFRS 16 Amendment - Covid-19-Related Rent Concessions beyond 30 June 2021
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.
In March 2021, the IASB has extended by one year the application period of the practical expedient in IFRS 16 Leases to
help lessees accounting for covid-19-related rent concessions.
The Group has adopted the amendment on 1 April 2021. 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.
Annual Report 2021 | Financial Report 139
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.2 New accounting standards and amendments that are effective for the financial year ended 31
December 2021 but temporary exemption is applied by the Group
Standards/Amendments
IFRS 9
Content
Financial Instruments
Effective for
annual periods
beginning on or after
1 January 2018
IFRS 9 Financial Instruments
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 consolidated financial statements. The Group has 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. Refer to Note 34 for more details.
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. The Group analysed the contractual cash flow
characteristics of financial assets as at 31 December 2021 and made relevant disclosures in Note 34.
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.
Notes to the Consolidated Financial Statements (continued)
Impairment
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 2021. 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.
Deferred Tax related to Assets and Liabilities arising from
a Single Transaction
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.
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 key reliefs
provided by the Phase 2 amendments are as follows:
Onerous Contracts - Cost of Fulfilling a Contract
Annual Improvements to IFRS Standards 2018-2020
Cycle
Proceeds before intended use
Update Reference to the Conceptual Framework
Property, Plant and Equipment:
Content
IFRS 10 and IAS 28
Amendments
Amendment to IAS 12
Amendments to IAS 1
IFRS 17
Amendments to IAS 37
Annual improvements
Standards/Amendments
Amendments to IFRS 3
Amendments to IAS 16
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 2021
2.1 Basis of preparation (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
140 Annual Report 2021 | 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.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for the
financial year beginning on 1 January 2021 (continued)
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Amendments Interest Rate Benchmark Reform
Phase 2
Hedge accounting. The hedge accounting reliefs will allow most IAS 39 or IFRS 9 hedge relationships that are directly
affected by IBOR reform to continue. However, additional ineffectiveness might need to be recorded.
For the year ended 31 December 2021
Buildings
2.2 Consolidation (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.
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.
Subsequent measurement
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, 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
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
146 Annual Report 2021 | Financial Report
The gain or loss on disposal of an item of property, plant and equipment is the difference between the net sales proceeds
and the carrying amount of the relevant asset, and is recognised in net profit.
Property, plant and equipment are reviewed for impairment losses whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised in net profit for the amount by which
the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset's net selling price and
value in use.
Impairment and gains or losses on disposals
Assets under construction mainly represent buildings under construction, which are stated at cost less any impairment
losses and are not depreciated, except for those acquired prior to 30 June 2003, which are stated at deemed cost less
any accumulated impairment losses. Cost comprises the direct costs of construction and capitalised borrowing costs on
related borrowed funds during the period of construction. Assets under construction are reclassified to the appropriate
category of property, plant and equipment, investment properties or other assets when completed and ready for use.
The residual values, depreciation method and useful lives are reviewed periodically to ensure that the method and
period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and
equipment.
Over the shorter of the remaining term
of the lease and the useful lives
Estimated useful lives
15 to 35 years
3 to 11 years
4 to 8 years
Leasehold improvements
Motor vehicles
Office equipment, furniture and fixtures
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.
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:
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.
Annual Report 2021 | Financial Report 147
Hedge accounting
148 Annual Report 2021 | 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.
(i) Securities at fair value through profit or loss
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
2.9 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.
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 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.
2.8 Investment properties
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.
As a lessor
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 reduced or
exempted 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 liablity.
COVID-19-Related Rent Concessions
As a lessee (continued)
2.7 Leases (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
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.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Depreciation
Property, plant and equipment, are stated at historical costs less accumulated depreciation and any accumulated
impairment losses, except for those acquired prior to 30 June 2003, which are stated at deemed cost less accumulated
depreciation and any accumulated impairment losses.
The 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.
2.2 Consolidation (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 143
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.
reclassifies the Group's share of components previously recognised in OCI to profit or loss or retained earnings, as
appropriate, as 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:
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.
Transactions with non-controlling interests
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.
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.
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.
2.6 Property, plant and equipment
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 145
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
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.
2.3 Associates and joint ventures (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
144 Annual Report 2021 | Financial Report
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
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.
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 believes 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.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
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.
154 Annual Report 2021 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
2.19 Other equity instruments
2.20 Revenue recognition
Turnover of the Group represents the total revenues which include the following:
Premiums
Premiums from long-term insurance contracts are recognised as revenue when due from the policyholders.
Premiums from the sale of short duration accident and health insurance products are recorded when written and are
accreted to earnings on a pro-rata basis over the term of the related policy coverage.
Policy fee income
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.
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.
2.21 Finance costs
Pension 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).
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 dividends 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.
2.13 Financial liabilities at fair value through profit or loss
2.17 Employee benefits
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.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Annual Report 2021 | Financial Report 153
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.
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.
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.
The impact of the various assumptions and their changes are described in Note 15.
Annual Report 2021 | Financial Report 157
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3.2 Financial instruments
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 considers a wide range of factors in the impairment assessment as described in Note 2.9.c.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. When the fair values of financial assets and liabilities recorded in the
consolidated statement of financial position cannot be measured based on quoted prices in active markets, their fair value
is measured using valuation techniques which require a degree of judgements. The methods and assumptions used by
the Group in measuring the fair value of financial instruments are as follows:
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.
•
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.
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.
fair values of other loans are obtained from valuation techniques.
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.
3.3 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.
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.
158 Annual Report 2021 | Financial Report
debt securities: fair values are generally based upon current bid prices. Where current bid prices are not readily
available, fair values are estimated using either prices observed in recent transactions, values obtained from current
bid prices of comparable investments or valuation techniques when the market is not active.
2.22 Current and deferred income taxation
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 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.
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.
Annual Report 2021 | Financial Report 155
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
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.
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.
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.
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.
156 Annual Report 2021 | Financial Report
Notes to the Consolidated Financial Statements (continued)
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
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.
2.12.2.c Reinsurance contracts held
2.18 Share capital
2.12.2.b Liability adequacy test
•
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;
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.
a breach of contract, such as a default or delinquency in payments;
2.10 Fair value measurement
•
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.
150 Annual Report 2021 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
significant financial difficulty of the issuer or debtor;
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 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:
For the year ended 31 December 2021
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.9 Financial assets (continued)
2.9.a Classification (continued)
(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.
•
2.9.b Recognition and measurement
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.
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 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.
Annual Report 2021 | Financial Report 149
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.9 Financial assets (continued)
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.
2.10 Fair value measurement (continued)
Loans are carried at amortised cost, net of allowance for impairment.
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 41(c) based on the lowest level input that is
significant to the fair value measurement as a whole.
(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; 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.
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.
(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 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) 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
•
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.
152 Annual Report 2021 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.12 Insurance contracts and investment contracts (continued)
2.12.2 Insurance contracts (continued)
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.
(ii) Long-term insurance contracts (continued)
2.12.2.a Recognition and measurement (continued)
non-insurance components
2.12 Insurance contracts and investment contracts (continued)
For assets and liabilities that are measured at fair value on a recurring basis, the Group determines whether transfers
have occurred between each level in the hierarchy by re-assessing categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each reporting period.
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
2.12.2.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.
2.12.1 Classification
Reserves for claims and claim adjustment expenses consist of the reserves for reported and unreported claims and
reserves for claims expenses with respect to insured events. In developing these reserves, the Group considers the
nature and distribution of the risks, claims cost development, and experiences in deriving the reasonable estimated
amount and the applicable margins. The methods used for reported and unreported claims include the case-by-case
estimation method, average cost per claim method, chain ladder method, etc. The Group calculates the reserves for
claims expenses based on the reasonable estimates of the future payments for claims expenses.
(ii) Long-term insurance contracts
Long-term insurance contracts include whole life insurance, term life insurance, endowment insurance and annuity
policies with significant life contingency risk. Premiums are recognised as revenue when due from policyholders.
The Group uses the discounted cash flow method to estimate the reserve of long-term insurance contracts. The reserve
of long-term insurance contracts consists of a reasonable estimate of liability, a risk margin and a residual margin. The
long-term insurance contract liabilities are calculated using various assumptions, including assumptions on mortality rates,
morbidity rates, lapse rates, discount rates, and expense assumptions, and based on the following principles:
Annual Report 2021 | Financial Report 151
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
The unearned premium reserve represents the portion of the premiums written net of certain acquisition costs relating to
the unexpired terms of coverage.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2 years later
1 year later
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 RMB740 million (as at 31 December 2020: RMB733 million) lower or higher, respectively.
Year end
RMB Million
Total
2021
2018
2019
2017
Estimated claims expenses
33,926
Short-term insurance contracts (accident year)
The following table indicates the claim development for short-term insurance contracts without taking into account the
impacts of ceded business:
2020
40,601
41,945
52,589
Estimated accumulated
claims expenses
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.
4 years later
3 years later
34,328
49,727
34,328
34,328
52,057
51,051
42,785
34,845
56,938
50,972
Sensitivity analysis of short-term insurance contracts
(b) Xin Xiang Jin Sheng Annuity (A 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 15 years. This product is applicable to healthy
policyholders between 28-day-old and 65-year-old. From the effective date to the contractual date starting to claim of Xin
Xiang Jin Sheng Annuity (A Version) after the fifth policy years or sixth policy years, if the policyholders live to the annual
corresponding effective date, the annuity payment shall be paid at 50% 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. From the first effective date after the seventh policy years
to the expiration period, 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).
4.1 Insurance risk (continued)
Annual Report 2021 | Financial Report 161
(c) 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. There are 12 age ranges for policyholders to choose to receive care money, which are: thirty, thirty-five, forty, forty-
five, fifty, fifty-five, sixty, sixty-five, seventy, seventy-five, eighty, and eighty-five years 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.
(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).
4.1.2 Concentration of insurance risks (continued)
4.1 Insurance risk (continued)
4 RISK MANAGEMENT (continued)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
160 Annual Report 2021 | Financial Report
100.00%
2,936,533
100.00%
3,379,603
34,328
Notes to the Consolidated Financial Statements (continued)
4.1.3 Sensitivity analysis (continued)
For the year ended 31 December 2021
4.1 Insurance risk (continued)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
162 Annual Report 2021 | Financial Report
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 RMB130,439 million or RMB152,136 million (as at 31 December
2020: RMB114,536 million or RMB131,732 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 RMB399 million or RMB472 million higher or lower, respectively (as at 31
December 2020: RMB707 million or RMB646 million lower or higher).
4 RISK MANAGEMENT (continued)
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 RMB39,459 million or RMB40,963 million (as at 31
December 2020: RMB34,590 million or RMB35,955 million) lower or higher, respectively.
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.
(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.
(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 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.
4.1.2 Concentration of insurance risks (continued)
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.
41,945
168 Annual Report 2021 | Financial Report
Accumulated claims expenses paid
55,862
(33,580)
22,282
51,260
(48,406)
2,854
50,315
(49,629)
686
Unpaid claims expenses
(41,442)
(34,045)
232,924
(207,102)
Accumulated claims expenses paid
34,045
claims expenses
Estimated accumulated
4 years later
3 years later
34,045
41,442
41,442
25,822
Notes to the Consolidated Financial Statements (continued)
Total
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
Annual Report 2021 | Financial Report 163
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.
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'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 2021
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.
50,972
34,045
41,442
1 year later
Year end
2017
Estimated claims expenses
The following table indicates the claim development for short-term insurance contracts taking into account the impacts of
ceded business:
41,945
2 years later
26,234
56,938
(34,301)
22,637
52,057
(49,157)
2,900
(50,275)
697
Unpaid claims expenses
(41,945)
(34,328)
236,240
(210,006)
50,315
Short-term insurance contracts (accident year)
2019
34,045
51,260
50,414
42,280
34,560
55,862
2018
51,994
40,157
33,700
RMB Million
Total
2021
2020
49,175
80.53%
4.50%
79.43%
7.96%
Xin Xiang Jin Sheng Annuity (A Version) (b)
34,094
6.28%
34,828
6.50%
Xin Fu Ying Jia Annuity (c)
23,114
4.26%
24,116
As at 31 December 2021, 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 RMB830 million (as at 31 December 2020: RMB627 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 RMB18,831 million
(as at 31 December 2020: RMB13,906 million) lower or higher, as a result of a decrease or increase in the fair value of
available-for-sale securities.
Kang Ning Whole Life (d)
15,430
2.84%
17,553
3.27%
Hong Ying Participating Endowment (e)
100.00%
536,150
100.00%
542,974
Total
77.74%
42,657
416,859
429,419
Others (f)
0.03%
137
0.01%
66
79.09%
7.52%
40,851
(Celebration Version) (a)
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.
Annual Report 2021 | Financial Report 159
Risk management is carried out by the Company's Risk Management Committee under policies approved by the
Company's Board of Directors.
The Group issues certain structured entities (e.g. funds and asset management 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 2021, 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 41(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
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
4 RISK MANAGEMENT
Insurance benefits of long-term
Notes to the Consolidated Financial Statements (continued)
4 RISK MANAGEMENT (continued)
Xin Xiang Zhi Zun Annuity
Premiums of long-term insurance contracts
%
RMB million
%
RMB million
For the year ended 31 December 2021
Product name
2021
For the year ended 31 December
The table below presents the Group's major products of long-term insurance contracts:
Insurance operations of the Group are mainly 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)
2020
insurance contracts
564,943 (3,781,475)
Xin Xiang Zhi Zun Annuity
64,055
3.01%
101,608
Xin Xiang Jin Sheng Annuity (A Version) (b)
1.05%
30,885
2.18%
2.17%
(Celebration Version) (a)
Xin Xiang Zhi Zun Annuity
Liabilities of long-term insurance contracts
%
As at 31 December 2020
RMB million
%
73,283
As at 31 December 2021
RMB million
Xin Fu Ying Jia Annuity (c)
4.15%
2,684,791
Others (f)
0.83%
24,398
0.43%
14,479
140,196
Hong Ying Participating Endowment (e)
338,286
10.81%
365,246
Kang Ning Whole Life (d)
3.89%
114,111
11.52%
2,364,798
100.00%
100.00%
1,823
2.16%
1,826
Xin Fu Ying Jia Annuity (c)
0.07%
58
2.17%
0.17%
Xin Xiang Jin Sheng Annuity (A Version) (b)
0.03%
21
0.08%
67
(Celebration Version) (a)
145
83,854
Kang Ning Whole Life (d)
6.70%
84,418
Total
78.09%
65,484
78.67%
66,412
5,653
Others (f)
11,393
12.22%
10,315
Hong Ying Participating Endowment (e)
6.05%
5,075
13.59%
164 Annual Report 2021 | Financial Report
4.2.1 Market risk (continued)
For the year ended 31 December 2021
than
1 year
Contractual and expected cash flows
(undiscounted)
Later than Later than
1 year but 3 years but
not later
than
not later
Later
than
than
3 years
5 years
5 years
RMB Million
Financial assets
Contractual cash inflows
Equity securities
529,488
Term deposits
137,705
110,345
508,864 3,029,545
461,413
138,241
maturity
376,766
Loans
231,604
2,470,354
Debt securities
699,457
699,457
666,087
Without
Carrying
value
As at 31 December 2021
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)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
Credit risk exposure
Notes to the Consolidated Financial Statements (continued)
As at 31 December 2021, 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 RMB640 million
(as at 31 December 2020: RMB339 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 RMB8,440 million (as at 31 December 2020: RMB11,593 million) lower or higher,
respectively, as a result of foreign exchange of the available-for-sale equity securities at fair value. The actual exchange
gains in 2021 were RMB645 million (2020: exchange gains in RMB119 million).
19,556
19,556
5,172
2,444
5,172
166 Annual Report 2021 | Financial Report
144,271
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
2021 and 2020.
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.
Not later
The following tables set forth the contractual and expected undiscounted cash flows for 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 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.
4.2.3 Liquidity risk
4.2 Financial risk (continued)
Collateral and other credit enhancements
4 RISK MANAGEMENT (continued)
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 167
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 2021 and 2020.
As at 31 December 2021, 99.5% (as at 31 December 2020: 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 2021 and 2020.
The Group's debt securities investment mainly includes government bonds, government agency bonds, corporate bonds
and subordinated bonds, and most of the debt securities are guaranteed by either the Chinese government or Chinese
government controlled financial institutions. As at 31 December 2021, 100.0% (as at 31 December 2020: 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 2021, 100.0% (as at 31 December 2020: 100.0%) 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.
Credit quality
For the year ended 31 December 2021
372,571
Statutory deposits - restricted
6,333
other borrowings
Interest-bearing loans and
(56,818)
56,818
balances payable
Annuity and other insurance
18,686
(3,416)
through profit or loss
Financial liabilities at fair value
(239,679)
-
239,446
to repurchase
3,416
Securities sold under agreements
Bonds payable
Lease liabilities
676,936 1,025,643
(108,269) (6,948,725)
(29)
(203)
(1,067)
46,426
(37,996)
34,994
(17,122)
(3,416)
696,041
427,497
Net cash inflow/(outflow)
4,089,035
Subtotal
2,182
(2,552)
(332)
(1,093)
(220,233)
2,444
Contractual cash outflows
(202,368) (5,990,882)
94,302
20,361
Premiums receivable
1,964
49,133
51,097
Accrued investment income
20,361
346
12,915
agreements to resell
Securities purchased under
53,822
181
4,682
1,936
12,658
(957,814)
Cash and cash equivalents
60,440
86,132
16,479
111,912
(31,671)
313,594
3,419,899
Investment contracts
Insurance contracts
60,440
Expected cash outflows
673,212 3,167,250
979,217
897,169
699,457
4,516,532
Subtotal
Financial and insurance liabilities
11,940
4 RISK MANAGEMENT (continued)
11,940
- Available-for-sale securities
4,696
4,696
- Securities at fair value through
profit or loss
206
Term deposits
7,785
-
Cash and cash equivalents
1,920
198
289
Total
31,795
76,789
698
other borrowings
Interest-bearing loans and
Financial liabilities
111,773
2,466
3
1,292
7,785
61
Total
18
991
56
1,500
296
1,292
- Loans
131
- Available-for-sale securities
Equity securities
Financial assets
As at 31 December 2021
The following table summarises primary financial assets and financial liabilities denominated in currencies other than RMB
as at 31 December 2021 and 2020, 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 borrowings denominated in currencies other
than the functional currency, such as US dollar, HK dollar, GB pound and EUR, etc.
US dollar HK dollar
(iii) Currency 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.
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.
(ii) Price risk
4.2.1 Market risk (continued)
4.2 Financial risk (continued)
4 RISK MANAGEMENT (continued)
As at 31 December 2021, 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 RMB6,371 million (as at 31 December 2020:
RMB6,596 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 RMB49,804
million (as at 31 December 2020: RMB45,939 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.
11,668
GB pound
Others
131
- Held-to-maturity securities
Debt securities
8,424
927
1,433
EUR
391
4,776
- Securities at fair value through
profit or loss
86,683
75,694
10,989
Total
897
Total
11
2,366
7,990
Term deposits
339
10
11,668
21
7,990
297
3,615
3,615
- Securities at fair value through
- Available-for-sale securities
1,445
1,445
profit or loss
220
Cash and cash equivalents
1,297
other borrowings
Interest-bearing loans and
Financial liabilities
141,166
864
1,370
598
729
28,228
Total
2,400
7
140
358
109,975
220
11
Debt securities
4,652
2,366
4,652
18,686
- Held-to-maturity securities
- Loans
Annual Report 2021 | Financial Report 165
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
4 RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
(iii) Currency risk (continued)
As at 31 December 2020
US dollar
HK dollar
GB pound
18,686
Others
EUR
6,953
847
350
185
4,352
- Securities at fair value through
profit or loss
1,219
108,493
9,711
- Available-for-sale securities
Equity securities
Financial assets
118,204
Total
approach
Net asset value
method
Discounted cash
flow method
31 December 2021: 36,556
31 December 2020: 36,697
31 December 2021: 116,245
31 December 2020: 84,212
The fair value is inversely related to the
discounts for lack of marketability
between fair value and
unobservable inputs
of marketability
Discounts for lack 31 December 2021: 11%-30%
31 December 2020: 12%-35%
companies
N/A
Comparable
Relationships
N/A
31 December 2021: 2.69% -9.93%
31 December 2020: 3.80%-6.07%
Discount rate
Debt
securities
31 December 2021: 160,499
31 December 2020: 143,905
Discounted cash
flow method
Discount rate
31 December 2021: 3.21%-9.78%
31 December 2020: 3.88% -9.82%
The fair value is inversely related to
discount rate
The fair value is inversely related to
discount rate
178 Annual Report 2021 | Financial Report
31 December 2021:28,245
31 December 2020: 28,162
N/A
Equity
securities
221
inputs
Investment income
15,770
15,770
39,817
Debt investment schemes managed by
Investment income
affiliated entities
62,702
Note 1
Trust schemes managed by third parties
Investment income
and service fee
Investment income
1,296 Investment income
1,296
1,994
Trust schemes managed by affiliated entities
62,702
Debt investment schemes managed by
third parties
Note 1
51,172
Size
amount
Carrying
Unconsolidated structured entities
Investment income
and service fee
Investment income
107,372
107,372
Note 1
Others managed by third parties Note 2
14,150
14,150
28,368
Others managed by affiliated entities Note 2
and service fee
Investment income
51,172
97,988
of assets
97,988
Funds managed by third parties
The Group did not guarantee or provide any financing support for the structured entities that the Group had interest in or
sponsored.
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'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.
4.3 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.
Annual Report 2021 | Financial Report 171
(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;
(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 CBIRC evaluates the comprehensive
solvency of insurance companies and supervises insurance companies by classifying them into four categories:
269%
262%
260%
254%
(ii) Category B: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational risk and
liquidity risk are low;
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
4 RISK MANAGEMENT (continued)
Interest held by
the Group
Maximum
exposure
RMB million
9,860
9,860
168,466
Funds managed by affiliated entities
RMB million
RMB million
As at 31 December 2021
of assets
Size
Carrying
amount
Unconsolidated structured entities
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:
(i) The unconsolidated structured entities that the Group has interest in
4.3 Disclosures about interest in unconsolidated structured entities (continued)
Note 1
396,749
As at 31 December 2020
RMB million
4.4 Fair value hierarchy
(ii) The unconsolidated structured entities that the Group has sponsored but does not have interest in
As at 31 December 2021, the size of the unconsolidated structured entities that the Group sponsored but had no
interest was RMB633,503 million (as at 31 December 2020: RMB686,989 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 2021, the management service fee from these structured entities was RMB1,995
million (2020: RMB2,092 million), which was recorded as other income. The Group did not transfer assets to these
structured entities.
4.3 Disclosures about interest in unconsolidated structured entities (continued)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
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.
172 Annual Report 2021 | Financial Report
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.
Investment income
and service fee
Investment income
75,551
75,551
Note 1
Others managed by third parties Note 2
Note 2: Others included wealth management products, special asset management schemes, and asset-backed plans, etc.
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 2021, assets classified as Level 1 accounted for approximately 29.82% 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 Group 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.
Significant
observable
in active
markets
Quoted prices
Fair value measurement using
Available-for-sale securities
- Equity securities
Funds
Assets measured at fair value
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 2021:
For the accounting policies regarding the determination of fair values of financial assets and liabilities, see Note 3.2.
At 31 December 2021, assets classified as Level 3 accounted for approximately 21.61% 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.
4.4 Fair value hierarchy (continued)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 173
As at 31 December 2021, assets classified as Level 2 accounted for approximately 48.57% 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.
12,681
RMB million
12,681
Others managed by affiliated entities Note 2
1,298
2,096
Trust schemes managed by affiliated entities
and service fee
Investment income
99,649
99,649
1,298
Note 1
Investment income
Interest held by
the Group
Maximum
exposure
RMB million
8,232
8,232
158,182
Funds managed by affiliated entities
Funds managed by third parties
Investment income
Trust schemes managed by third parties
Note 1
third parties
and service fee
Investment income
27,747
27,747
Note 1
Debt investment schemes managed by
affiliated entities
Investment income
9,172
9,172
18,275
Debt investment schemes managed by
Investment income
63,229
63,229
290,937
402,341
1,031,947
1,066,939
1,055,768
agreements to resell
Securities purchased under
720
6,098
297
6,333
7,947
Statutory deposits - restricted
197,867
329,191
75,364
545,678
Term deposits
129,813
2,260,215
173,729
1,753
7,947
Accrued investment income
45,200
616,777 2,435,697
905,028
577,976
700,748
3,907,620
Subtotal
56,655
56,655
Cash and cash equivalents
20,730
20,730
Premiums receivable
438
565
44,197
219,840
Financial and insurance liabilities
235,901
Loans
1 year but 3 years but
not later not later
Later than
Later than
than
Not later
Contractual and expected cash flows
(undiscounted)
than
Without
maturity
As at 31 December 2020
4.2.3 Liquidity risk (continued)
4.2 Financial risk (continued)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Carrying
value
Later
than
than
287,939
349,334
136,885
1,865,794
Debt securities
700,748
700,748
Equity securities
Contractual cash inflows
Financial assets
RMB Million
5 years
5 years
3 years
1 year
658,535
Expected cash outflows
Insurance contracts
Investment contracts
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 37, 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 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
(undiscounted) 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 RMB68,289 million and RMB242,540 million,
respectively for the year ended 31 December 2021 (2020: RMB64,445 million and RMB220,973 million, respectively),
payable within one year.
The liquidity analysis above does not include policyholder dividends payable of RMB124,949 million as at 31 December
2021 (as at 31 December 2020: RMB122,510 million). As at 31 December 2021, declared dividends of RMB86,506
million (as at 31 December 2020: RMB82,154 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.
4.2.3 Liquidity risk (continued)
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.
4.2 Financial risk (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 169
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.
540,179 (3,981,528)
(6,417,225)
4 RISK MANAGEMENT (continued)
170 Annual Report 2021 | Financial Report
Notes to the Consolidated Financial Statements (continued)
4 RISK MANAGEMENT (continued)
As at
31 December
2020
RMB million
1,020,756
RMB million
2021
31 December
As at
Comprehensive solvency ratio
Core solvency ratio
Minimum capital
Actual capital
Core capital
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):
4.2.4 Capital management (continued)
4.2 Financial risk (continued)
For the year ended 31 December 2021
(41)
(331)
(76,598)
128,789
1,033,817
(1,250)
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
(93,971) (5,618,867)
68,882 (798,317)
190,123 151,280
(29,149) (13,861)
288,212
2,973,225
55,031
Significant
unobservable
(55,031)
other borrowings
(36,498)
(2,996)
(14,680)
(4,384)
(2,044)
(328)
(1,273)
(19,951)
558,025
(3,732)
697,016
407,959
Net cash inflow/(outflow)
3,499,661
Subtotal
2,664
Lease liabilities
34,992
Bonds payable
19,556
Interest-bearing loans and
Total
Level 1
inputs
Level 2
16,835
48,858
524
48,334
104
16,731
| | |
41
- Debt securities
Common stocks
Funds
- Equity securities
Securities at fair value through profit or loss
144,721
143,905
Others
262
Government bonds
336
Total
2,752
2,752
Others
86,803
9
83,837
2,957
Corporate bonds
4,422
3,450
972
Government agency bonds
1,638
1,302
816
495,927
Others
75,551
13,013
13,013
Wealth management products
Others
53,778
53,778
Preferred stocks
11,038
301,249
278,255
Common stocks
97,476
97,476
Funds
- Equity securities
22,994
41,401
96,232
148,671
6,244
Subordinated bonds
136,025
133,617
2,408
Corporate bonds
169,013
143,716
25,297
Government agency bonds
49,256
43,418
5,838
Government bonds
Debt securities
81,795
Available-for-sale securities
566,716
1,356,567
(884)
Maturity
(6,276)
(307)
7,780
7,127
(5,969)
(884)
Disposals or exercises
other comprehensive income
Total gains/(losses) recorded in
(128)
(121)
(7)
Total gains/(losses) recorded in
profit or loss
653
Closing balance
143,905
150,010
techniques
Fair value
Significant
unobservable
Valuation
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 2021 and 31 December 2020:
4.4 Fair value hierarchy (continued)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 177
As at 31 December 2021 and 2020, 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 2021 and 2020, 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 on a recurring basis, during the year ended 31 December 2021,
RMB16,499 million (2020: RMB12,084 million) debt securities were transferred from Level 1 to Level 2 within the fair
value hierarchy, whereas RMB31,764 million (2020: RMB9,825 million) debt securities were transferred from Level 2 to
Level 1. RMB4,196 million equity securities were transferred from Level 1 to Level 2 (2020: no equity securities were
transferred from Level 1 to Level 2), whereas RMB5,520 million equity securities were transferred from Level 2 to Level
1 (2020: no material equity securities were transferred from Level 2 to Level 1).
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.
293,924
58,439
293,924
234,993
16
Notes to the Consolidated Financial Statements (continued)
176 Annual Report 2021 | Financial Report
(3,742)
(10)
(3,732)
(3,742)
For the year ended 31 December 2021
Total
profit or loss
Investment contracts at fair value through
(3,732)
profit or loss
Financial liabilities at fair value through
Liabilities measured at fair value
(10)
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:
128,899
19,953
105,650
38,486
Opening balance
Purchases
RMB million
RMB million
RMB million
RMB million
RMB million
Debt
securities
Equity
securities
Total
Derivative
financial
assets
Securities
at fair value
through
profit or loss
Debt
securities
Available-for-sale securities
428
Range
Assets measured at fair value
RMB million
43,476
222
17,572
Others
Common stocks
Funds
2,173
Equity securities
161,054
160,499
555
Others
111,029
94,149
Securities at fair value through profit or loss
5
266
17,794
5,643
83,734
43,150
784,845
481,807
Total
100
Others
6,646
2,346
Government agency bonds
Corporate bonds
1,393
1,240
153
Government bonds
- Debt securities
271
45,649
16,880
7,989
Subordinated bonds
198,442
52,127
52,127
Preferred stocks
256,441
23,094
233,347
Wealth management products
Common stocks
94,895
RMB million
RMB million
RMB million
RMB million
inputs
Level 3
94,895
5,005
5,005
Others
4,705
Corporate bonds
259,753
228,289
31,464
Government agency bonds
58,561
49,353
9,208
Government bonds
Debt securities
206,996
136,456
49,530
21,010
203,147
RMB million
45
349,127
188,583
160,499
(14,894)
(14,894)
(2,876)
1,861
45
(2,212)
(2,876)
36
36
71,076
293,924
9
150,010
43,661
4,073
349,127
Annual Report 2021 | Financial Report 175
Notes to the Consolidated Financial Statements (continued)
RMB million
RMB million
inputs
Level 3
inputs
Level 2
Level 1
Total
Significant
unobservable
Significant
observable
in active
markets
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 2020:
4.4 Fair value hierarchy (continued)
4 RISK MANAGEMENT (continued)
For the year ended 31 December 2021
27,415
90,425
143,905
RMB million
Notes to the Consolidated Financial Statements (continued)
174 Annual Report 2021 | Financial Report
(3,425)
(9)
(3,416)
(3,425)
Total
(9)
profit or loss
Investment contracts at fair value through
(3,416)
profit or loss
Financial liabilities at fair value through
Liabilities measured at fair value
43,250
1,615,779
For the year ended 31 December 2021
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 2021:
RMB million
Debt
securities
Equity
securities
Total
Securities
at fair value
through
profit or loss
RMB million
Available-for-sale securities
Debt
securities
RMB million
Closing balance
Disposals or exercises
comprehensive income
Total gains/(losses) recorded in other
Transfer into Level 3
Purchases
Opening balance
Maturity
188 Annual Report 2021 | Financial Report
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.
Depreciation and amortisation
Investment contract benefits
217,288
repurchase
Securities sold under agreements to
313,594
17,490
296,104
Investment contracts
3,419,899
10,069
228,899
3,180,931
Insurance contracts
Liabilities
4,891,085
55,916
54,398
Total
14,536
672
6,950
239,446
Annual Report 2021 | Financial Report 181
4,404,427
316,360
Total
Others
Unallocated
4,088,067
29,052
Others
11,120
3,781,694
Segment liabilities
115,128
22,102
379
5,276
87,371
Others
266,201
Notes to the Consolidated Financial Statements (continued)
Property, plant and equipment
481,777
Segment assets
Others
Financial assets
Assets
5 SEGMENT INFORMATION (continued)
Notes to the Consolidated Financial Statements (continued)
180 Annual Report 2021 | Financial Report
5,287
641
368
1,359
2,919
Depreciation and amortisation
(4,563)
1,097
(16)
(354)
Unallocated
Life
Health
For the year ended 31 December 2021
12,237
275,662
4,011,095
284,459
257,953
569
4,496,312
223,824
4,780,771
11,668
9,893
4,001,202
RMB million
Total
Elimination
Others
Accident
As at 31 December 2021
259,618
16,044
(5,290)
For the year ended 31 December 2021
For the year ended 31 December 2020
805,049
(2,448)
17,468
16,539
120,393
653,097
Segment revenues
(2,448)
2,448
Including: inter-segment revenue
9,403
(2,448)
10,492
75
1,284
Other income
21,900
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits
(108,862)
Policyholder dividends resulting from
(9,846)
(352)
(9,494)
Investment contract benefits
(414,797)
(220)
(32,445)
2,967
(382,132)
(52,395)
(7,408)
(44,987)
claim adjustment expenses
Accident and health claims and
(113,609)
(33)
(4,714)
Increase in insurance contract liabilities
5 SEGMENT INFORMATION (continued)
58
17,727
- Endowment
- Whole life
2,674
- Term life
612,265
16,583
115,089
480,593
Gross written premiums
Revenues
RMB million
Total
Elimination
Others
Accident
Health
Life
- Annuity
73,747
109,275
294,897
Net fair value gains through profit or loss
14,583
139
44
877
13,523
Net realised gains on financial assets
154,497
1,148
3,870
9,202
140,963
Investment income
604,666
15,975
109,091
479,600
Net premiums earned
462
attributable to equity holders of
the Company
1,491
50,921
2,795
Net fair value gains through profit or loss
20,344
262
58
1,256
18,768
Net realised gains on financial assets
178,387
611,251
6,856
496
10,831
160,204
Investment income
16,488
114,549
187
9
1,952
4,943
(114,657)
(6,656)
(41)
(121,354)
Accident and health claims and
claim adjustment expenses
(48,076)
(6,954)
480,214
(55,030)
(413,206)
(28,956)
(208)
(3,134)
11,826
85
1,228
Other income
Increase in insurance contract liabilities
Life insurance death and other benefits
Net premiums earned
- Annuity
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 179
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.
5.3 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.
5.2 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 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)
The Group operates in four operating segments:
5.1 Operating segments
5 SEGMENT INFORMATION
For the year ended 31 December 2021
5 SEGMENT INFORMATION (continued)
For the year ended 31 December 2021
Life
97,791
- Endowment
69,923
- Whole life
2,501
- Term life
618,327
16,407
311,096
120,609
Gross written premiums
Revenues
Total
Elimination
RMB million
Others
Accident
Health
481,311
Insurance benefits and claims expenses
Benefits, claims and expenses
824,930
(784,763)
3,134
(13,781)
(15,369)
(118,309)
(640,438)
Segment benefits, claims and expenses
3,134
(9)
(196)
(2,929)
Including: inter-segment expenses
(15,467)
3,134
(8,063)
(270)
(1,307)
Net gains on investments of
associates and joint ventures
10,328
10,328
Other comprehensive income
- Non-controlling interests
- Equity holders of the Company
Attributable to
52,412
Net profit
1,917
Income tax
(8,961)
50,495
1,682
8,599
22,771
Segment results
10,328
10,328
and joint ventures
Including: share of profit of associates
17,443
Other expenses
(1,253)
(99)
(144)
(26,367)
participation in profits
Policyholder dividends resulting from
(10,628)
(405)
(10,223)
(442,370)
(26,511)
461
3,134
(3,134)
Segment revenues
663,209
126,908
17,051
20,896
(3,134)
Including: inter-segment revenue
participation in profits
Underwriting and policy acquisition costs
(21,021)
(367)
(787)
Statutory insurance fund contribution
(40,808)
(3,452)
(2,948)
(11,069)
(23,339)
(38,290)
Administrative expenses
(668)
(14)
(308)
(4,608)
Finance costs
(65,744)
(1,598)
(4,835)
(5,598)
For the year ended 31 December 2021
(28,129)
(28,279)
Net book value
(25)
(1)
(24)
As at 31 December 2021
Disposals
Charge for the year
(25)
(1)
(24)
As at 1 January 2021
Impairment
(23,056)
(1,670)
(996)
(5,777)
(14,613)
As at 1 January 2021
37,319
2,658
461
fixtures
Buildings
Office
equipment,
furniture and
Cost
For the year ended 31 December 2021
6 PROPERTY, PLANT AND EQUIPMENT (continued)
Notes to the Consolidated Financial Statements (continued)
184 Annual Report 2021 | Financial Report
As at 31 December 2021
54,398
6,789
315
2,574
43,958
As at 31 December 2021
52,747
977
11,332
762
Motor Assets under
vehicles
1,279
44
As at 31 December 2021
(1,506)
(548)
(46)
(456)
(456)
Disposals
(209)
(209)
Transfers into investment properties
5,403
3,267
5
716
1,415
Additions
(211)
58,595
8,351
1,311
6,790
434
271
Disposals
(3,105)
(379)
(149)
(778)
(1,799)
530
Charge for the year
(1,821)
(891)
(5,433)
(13,085)
As at 1 January 2021
Accumulated depreciation
77,479
2,432
(21,230)
182
Leasehold
Total
(1,821)
(891)
(5,433)
(13,085)
As at 31 December 2020
1,360
137
139
776
308
Disposals
(2,873)
(377)
(189)
(725)
(1,582)
Charge for the year
(21,230)
Impairment
As at 1 January 2020
(24)
2,658
37,319
51,758
1,038
14,377
523
2,884
32,936
(19,717)
(25)
EE
As at 31 December 2020
As at 1 January 2020
Net book value
As at 31 December 2020
Disposals
Charge for the year
(25)
(24)
construction improvements
(1,581)
(5,484)
626
222
Additions
(121)
322
(6,456)
3
6,010
Transfers upon completion
71,500
2,619
14,378
1,364
8,368
44,771
As at 1 January 2020
RMB million
131
5,509
6,488
Transfers into investment properties
(11,811)
As at 1 January 2020
Accumulated depreciation
74,002
2,798
11,333
1,352
8,091
(841)
50,428
(1,767)
(143)
(143)
(906)
(575)
Disposals
(2,098)
(2,098)
As at 31 December 2020
(7,601)
7,208
Transfers upon completion
Attributable to
51,373
(3,103)
54,476
14,220
572
11,611
28,073
8,336
8,336
Net profit
Income tax
Segment results
and joint ventures
7,666
7,666
(758,239)
- Equity holders of the Company
- Non-controlling interests
Other comprehensive income
50,257
Financial assets
Assets
5 SEGMENT INFORMATION (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
182 Annual Report 2021 | Financial Report
- 5,162
607
2,448
351
3,086
25,699
402
78
1,534
23,685
attributable to equity holders of
the Company
1,116
1,118
Others
(10,914)
(108,782)
(3,020)
(2,649)
(8,677)
(23,360)
Administrative expenses
(3,747)
(759)
(7)
(183)
(2,798)
Finance costs
(84,361)
(2,284)
(5,315)
(15,921)
(60,841)
Underwriting and policy acquisition costs
(37,706)
Statutory insurance fund contribution
(833)
(302)
(625,024)
Including: share of profit of associates
Net gains on investments of associates and
joint ventures
Segment benefits, claims and expenses
2,448
(8)
(148)
(2,292)
(15,967)
Including: inter-segment expenses
2,448
(4,851)
(241)
(1,051)
(8,575)
Other expenses
(1,229)
(94)
(12,270)
Segment assets
Unallocated
Property, plant and equipment
Total
297,504
Others
Unallocated
3,498,025
28,953
10,824
225,025
3,233,223
Segment liabilities
114,339
23,288
370
6,013
84,668
Others
122,249
3,795,529
Annual Report 2021 | Financial Report 183
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
74,002
2,798
11,333
1,352
8,091
50,428
As at 1 January 2021
RMB million
5,665
Total
vehicles
fixtures
Buildings
Leasehold
Motor Assets under
Office
equipment,
furniture and
Cost
6 PROPERTY, PLANT AND EQUIPMENT
construction improvements
358
7,070
109,156
265,274
239,584
675
14,939
10,076
3,887,819
117,276
10,964
3,547,096
222,559
RMB million
Total
Elimination
Others
Accident
As at 31 December 2020
Health
Life
3,537,020
(150)
237,498
356,860
repurchase
Securities sold under agreements to
288,212
16,455
271,757
Investment contracts
2,973,225
10,096
11,639
195,487
Insurance contracts
Liabilities
Total
Others
4,252,466
46,626
52,747
4,153,093
2,767,642
Notes to the Consolidated Financial Statements (continued)
10,005
As at 31 December 2020
Additions
4,688
2
4,686
As at 1 January 2020
RMB million
Total
Others
Buildings
Cost
2,518
1
2,517
3,076
1
3,075
(2,854)
(1)
913
1,157
1
1,158
Deductions
330
1
329
Deductions
(1,518)
(1)
(1,517)
Charge for the year
(1,168)
(1,411)
(1)
As at 1 January 2020
Accumulated depreciation
5,432
2
5,430
As at 31 December 2020
(414)
(1)
(413)
(1,167)
As at 31 December 2020
(1)
(1)
1
972
Additions
5,432
2
5,430
As at 1 January 2021
RMB million
Total
Others
Buildings
Cost
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.
7 LEASES
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 185
As at 31 December 2021, the net book value of buildings above which were in process to obtain title certificates was
RMB9,605 million (as at 31 December 2020: RMB6, 159 million).
52,747
973
Deductions
(1,032)
(1)
33-3
(2,853)
912
(1,410)
As at 31 December 2021
As at 1 January 2021
Net book value
As at 31 December 2021
As at 1 January 2021
(2,356)
Impairment
Charge for the year
Deductions
(2,355)
As at 1 January 2021
Accumulated depreciation
5,372
2
5,370
As at 31 December 2021
(1,033)
As at 31 December 2021
(2,355)
(1)
(2,356)
Additions
As at 1 January 2020
Cost
8 INVESTMENT PROPERTIES (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 187
16,626
17,285
13,374
14,217
(1,597)
(429)
(1,168)
14,971
(414)
15,385
As at 31 December 2021
As at 1 January 2021
As at 31 December 2020
Accumulated depreciation
As at 1 January 2020
Additions
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 2021, the net book value of investment properties which were in process to obtain title certificates
was RMB981 million (as at 31 December 2020: RMB1,044 million).
The fair value of investment properties of the Group as at 31 December 2021 amounted to RMB16,626 million (as at
31 December 2020: RMB17,285 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 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.
14,870
14,217
12,141
(1,168)
(411)
Fair value
(757)
2,487
12,898
Buildings
RMB million
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
15,385
As at 31 December 2021
As at 1 January 2021
Net book value
Expense relating to leases of low-value assets
(except for short-term lease liabilities)
Depreciation charge of right-of-use assets
Expense relating to short-term leases
Interest on lease liabilities
(b) The amounts recognised in profit or loss in relation to leases are as follows:
7 LEASES (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
186 Annual Report 2021 | Financial Report
The Group's right-of-use assets include the above assets and land use rights disclosed in Note 14.
Total
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 2021 (2020: same).
1
1
3,519
3,075
As at 31 December 2020
As at 1 January 2020
Net book value
As at 31 December 2020
As at 1 January 2020
Impairment
3,520
3,076
977
8 INVESTMENT PROPERTIES
As at
As at 31 December 2021
Accumulated depreciation
As at 1 January 2021
Additions
As at 31 December 2021
As at 1 January 2021
Additions
Cost
RMB million
Buildings
1,893
1,840
As at
2
1,518
260
332
113
96
1,411
RMB million
RMB million
2020
31 December
31 December
2021
1
11,332
(a) Right-of-use assets
17,285
49.4%
3,747
5,598
Finance costs
acquisition costs
A decrease in regular premiums of new policies
-22.1%
65,744
Underwriting and policy
participation in profits
A decrease in investment income from the
participating accounts
resulting from
-6.3%
28,279
26,511
Policyholder dividends
accounts
benefits
An increase in the scale of universal insurance
7.9%
9,846
10,628
Investment contract
An increase in the change of insurance contract
liabilities
claims expenses
An increase in interest paid for securities sold
under agreements to repurchase
Administrative expenses
40,808
37,706
Looking back at 2021, the domestic economy was
facing several challenges, such as a complicated
and severe international environment and sporadic
outbreaks of the pandemic, and development of the
insurance industry saw great pressure with the release
of demands for insurance consumption slowing down,
and the industry still in the throes of transformation
and upgrade. China Life, being people-centered,
actively responded to major challenges by focusing
on its principal businesses, made arduous efforts in
coordinating pandemic prevention and control as well
as operation management, and achieved prominent
progress in a variety of fields, such as serving the
overall national development, business performance,
transformation and innovation and risk control, etc.,
which further enhanced the Company's comprehensive
strengths. In the evaluation of operations of insurance
companies by the Insurance Association of China, the
During the Reporting Period, the Company's gross
written premiums amounted to RMB618,327 million,
and the embedded value reached RMB1,203,008
million, maintaining the leading position in the industry
in both business scale and value. Our total assets were
RMB4,891,085 million, increasing by 15.0% from the
end of 2020. Net profit attributable to equity holders
of the Company was RMB50,921 million, an increase
of 1.3% year on year. As at the end of the Reporting
Period, the core solvency ratio and the comprehensive
solvency ratio were 253.70% and 262.41%,
respectively, which remained at a high level. The Board
has proposed to distribute an annual cash dividend of
RMB0.65 per share (inclusive of tax), and such proposal
will be submitted to the 2021 Annual General Meeting
for review and discussion.
year 2021 marked a starting point for China to build
a new development landscape. Being committed to
the new development concept at a new development
stage, the Company fully implemented the national
strategy and deployment, and made its contributions
to the new development landscape. With stability
as the top priority, we worked hard and overcame
many difficulties to push forward the high-quality
development of the Company, achieving steady
progress and setting up a good start for the 14th Five-
Year Plan period.
The
Dear Shareholders,
Letter to Shareholders
Being committed to the new development concept
at a new development stage, the Company fully
implemented the national strategy and deployment,
and made its contributions to the new development
landscape. With stability as the top priority, we
worked hard and overcame many difficulties to
push forward the high-quality development of the
Company, achieving steady progress and setting
up a good start for the 14th Five-Year Plan period.
HIGH-QUALITY
DEVELOPMENT
PURSUING THE
$
9
Annual Report 2021 | Prelude
6.5%
Due to the stable and sound business
operations of the Company, satisfactory
results in investment, and updated discount
rate assumptions for reserves of traditional
insurance contracts based on market
information as at the date of the statement of
financial position
Company
equity holders of the
1.3%
50,257
50,921
Net profit attributable to
N/A
3,103
(1,917)
Income tax
Due to the expiration of policies on temporary
expenses deduction
8.2%
Due to the combined impact of income tax
payable and deferred income tax
Company was awarded Grade A for six consecutive
years. In 2021, the Company ranked 49th and 8th in
the Forbes Global 2000 and the Fortune China 500,
respectively, and received many honors, such as "Best
Listed Company and Listed Company with the Best
Investment Value for the 14th Five-Year Plan Period"
from the 11th China Securities 2021 "Golden Bauhinia”
Awards and "Most Respected Enterprise in Asia
(insurance industry)" from the Institutional Investor.
580,801
Insurance benefits and
Great efforts made by the Company in the
development of health insurance business
RMB million
Investment income
business
Accident insurance
5.0%
109,091
114,549
Health insurance business
0.1%
479,600
480,214
Life insurance business
1.1%
604,666
611,251
Net premiums earned
Main Reasons for Change
Change
2020
2021
of Comprehensive Income
Consolidated Statement
Major Items of the
For the year ended 31 December
16,488
15,975
3.2%
178,387
An increase in the income of management
service fees by subsidiaries
6.4%
9,403
10,005
An increase in the profits of certain associates
Due to the market value fluctuation of
securities at fair value through profit or loss and
investment operations
An increase in spread income of stocks in
available-for-sale securities
Other income
ventures
of associates and joint
34.7%
7,666
618,754
10,328
-77.4%
21,900
4,943
Net fair value gains through
profit or loss
financial assets
39.5%
14,583
20,344
Net realised gains on
An increase in interest income from debt-type
investments
15.5%
154,497
Net gains on investments
We proactively leveraged advantages of our
principal businesses to serve the overall national
development. We firmly took the responsibility of
serving the overall interests of national development,
and acted as a main force in implementing the national
strategies of Healthy China program and proactively
responding to population aging. We actively participated
in the construction of a multi-level social security
system. The supplementary major medical expenses
insurance programs covered over 350 million people,
the long-term care insurance programs covered 23
million people, the city-customized commercial medical
insurance programs covered over 10 million people,
and the pilot programs for the exclusive commercial
pension insurance were carried out in an orderly
manner. By sticking to the role of the financial industry
in serving the real economy, the Company focused on
major national strategies and continuously improved the
quality and efficiency of its services. Our investments
in the real economy in aggregate have exceeded
RMB2.7 trillion, with new investments during the
Reporting Period amounting to nearly RMB770 billion.
Investments in serving the national strategy for regional
developments have exceeded RMB1.4 trillion in total.
Our green investments have accumulatively exceeded
RMB300 billion, aiming at facilitating the green
development strategy of "peak carbon emissions and
carbon neutrality". With the establishment of a green
investment standard system, AMC, the Company's
non-wholly owned subsidiary, has launched the first
ESG bond index and ESG equity index in the domestic
insurance asset management industry. We fully
advanced rural revitalization strategy, optimizing the
rural revitalization-related insurance product supply and
consistently supporting the development of key regions
in need of assistance in China.
84,361
We demonstrated strong resilience and consistently
maintained industry leadership in both business
scale and value. In 2021, the insurance industry
developed under multiple challenges. Prioritizing
business value creation, the Company's gross written
premiums reached a new high after exceeding RMB600
billion in 2020, and the embedded value increased by
12.2% after exceeding RMB1 trillion, both maintaining
its leading position in the industry. Due to the overall
transformation of the industry, the value of one year's
sales of the Company decreased from the high base
to RMB44,780 million, and the decline was within a
reasonable range, which was a hard-won result. The
Company consistently optimized the investment fund
allocation towards major assets categories and the
assets and liabilities were well coordinated. During
the Reporting Period, the Company achieved a gross
investment income of RMB214,057 million, an increase
of 7.8% year on year, and realised a gross investment
yield of 4.98%.
Gross written premiums breakdown
In 2021, the Company maintained stable and sound
business operations and achieved satisfactory results in
investment. It updated the discount rate assumptions
for reserves of traditional insurance contracts based on
market information as at the date of the statement of
financial position. Taking the above factors into account,
net profit attributable to equity holders of the Company
was RMB50,921 million, an increase of 1.3% year on year.
During the Reporting Period, in the face of a complex
and changing market situation, the Company always
maintained its strategic consistency, reinforced asset-
liability management, firmly implemented its medium-
to long-term strategic plan of asset allocation, and
continuously optimized its allocation management
by centering on the investment value creation chain.
In 2021, the Company flexibly made tactical allocations
in response to the market change, taking into account
short-term income stability, prevention of key risks, and
long-term opportunities. The gross investment income
amounted to RMB214,057 million, an increase of 7.8%
year on year, and the gross investment yield was 4.98%.
During the Reporting Period, while the life insurance
industry was under pressure and the growth of
premiums continued to slow down, the Company
prioritized business value and pushed forward
transformation and upgrade, and maintained the
industry leadership position in both business scale and
value. In 2021, the Company's gross written premiums
amounted to RMB618,327 million, an increase of 1.0%
year on year, and renewal premiums reached RMB442,463
million, an increase of 5.8% year on year. As at the end
of the Reporting Period, the embedded value of the
Company reached RMB1,203,008 million, an increase of
12.2% from the end of 2020. Due to the impact of the
pandemic and the slowdown in the release of demands
for insurance consumption, premiums from new policies
were RMB175,864 million, a decrease of 9.3% year on
year. The first-year regular premiums were RMB98,410
million, a decrease of 14.7% year on year; in particular,
first-year regular premiums with a payment duration of
ten years or longer were RMB41,682 million, a decrease
of 26.1% year on year. In 2021, the value of one year's
sales of the Company was RMB44,780 million, a decrease
of 23.3% year on year. The number of long-term in-force
policies was 323 million, an increase of 1.9% from the end
of 2020. The surrender rate was 1.20%, an increase of
0.11 percentage point year on year.
17
Annual Report 2021 | Management Discussion and Analysis
Surrender Rate = Surrender payment/(Liability of long-term insurance contracts at the beginning of the period + Premiums of long-term insurance
contracts)
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:
1,072,140
3.17
1,203,008
3.23
Number of long-term in-force policies (hundred million)
Embedded value
2020
2021
31 December
31 December
As at
As at
1.09
1.20
82.40
81.10
(RMB million)
85.70
First-year
regular
insurance
1,072,140 ▼
12.2%
As at 31 December 2020
18 Annual Report 2021 | Management Discussion and Analysis
1,203,008 ▼
As at 31 December 2021
Embedded value (RMB million)
58,373 ▼
44,780 ▼
2020
2021
Value of one year's sales (RMB million)
Renewal premiums
418,326
2020
12 Annual Report 2021 | Letter to Shareholders
regular
First-year
76,116
premiums
Short-term Single
insurance premiums
2,402
Renewal premiums
442,463
2021
premiums
98,410
premiums 2,101
75,353
premiums
Short-term Single
80.50
premiums
115,421
42,945
2021
RMB million
Key Performance Indicators of 2021
16 Annual Report 2021 | Management Discussion and Analysis
optimized human resource management. The efficiency
of technology empowerment continued to improve.
The management system based on tech products
was comprehensively implemented to facilitate the
integration of technology and business operations, and
digital transformation was pushed forward continuously.
China Life "Internet of Things" fully covered all business
units and sales outlets across China, and technology
empowerment demonstrated significant effectiveness.
The upgrading of operation model achieved
remarkable results. Key breakthroughs were made for
the operation model of "multiple accesses at the front-
end, intelligent centralization at the headquarters and
comprehensive sharing for operations", and the service
efficiency and experience, operation control foundation
and operational risk control capability were significantly
enhanced.
The Company pushed forward the "Dingxin Project"
in greater depth and made breakthroughs in several
aspects. The optimization of business modes achieved
remarkable results. As the customer-centric sales
deployment of "Yi Ti Duo Yuan" was further deepened,
the individual agent business sector consistently
prioritized business value and made great efforts in
improving the quality of its sales force. The diversified
business sector further optimized its business modes,
which saw improved capability of business value creation.
The achievements of market-oriented reforms were
continuously consolidated. The market-oriented
investment management system was further advanced,
the classification management system of branches
was continuously improved, and intensified efforts
were made in promoting the assessment, incentive and
restraint mechanisms for managers in key cities with
Ms. Zhang Di, Mr. Zhao Guodong, Mr. Zhan Zhong, Ms. Huang Xiumei, Mr. Su Hengxuan, Mr. Li Mingguang, Mr. Ruan Qi, Ms. Yang Hong, Mr. Liu Yuejin
From left to right:
Annual Report 2021 | Management Discussion and Analysis 15
During the Reporting Period, the Company adhered to
the strategic core of "Three Major Transformations, Dual
Centers and Dual Focuses, Asset-liability Interaction,"
and upheld the operational guideline of "prioritizing
business value, strengthening sales force, achieving
stable growth, upgrading technology, optimizing customer
services and guarding against risks." By concentrating
efforts and overcoming difficulties with strong resilience,
the Company steadfastly promoted its high-quality
development while proceeding with routine pandemic
prevention and control, and achieved stable and sound
business operations as whole, with its market leading
position further solidified. The quality and efficiency of
its operations and services were significantly improved,
digital transformation was sped up, and its comprehensive
strengths were greatly enhanced.
In 2021, the worldwide COVID-19 pandemic continued
to evolve, and the domestic economy was facing triple
pressures of shrinking demands, supply disruption, and
weakened expectations of growth amid a complicated
and challenging international environment. Under the
unprecedented pressures, such as the decelerated
release of insurance demands and decline of sales force,
the growth of life insurance industry further slowed
down in terms of premiums. In addition, the insurance
industry regulator continued to promote the return to its
original role by the insurance sector, further improved
system building, and bolstered regulations in the areas
of insurance product management, sales channel
development, market behaviors, operations and services
as well as corporate governance, with an aim at the high-
quality development of the industry.
REVIEW OF BUSINESS OPERATIONS
IN 2021
and Analysis
Management
Discussion
14 Annual Report 2021 | Letter to Shareholders
24 March 2022
China Life Insurance Company Limited
"To see a thousand miles afar, we should ascend
a higher mountain". China Life and its predecessor
are the participants, who witnessed and promoted
the commencement, development and progress of
China's insurance industry, and grow together with
the industry. Standing at a new starting point, we will
strengthen our judgement on the current situation
and future trend, and properly analyze challenges and
opportunities. With the focus on serving the national
development and the goal of "Protecting People's Good
Life", we will seize strategic development opportunities
and carry out various tasks in a down-to-earth manner.
By sticking to the original role of insurance, we will
consistently deepen the supply-side reforms and
improve our capacity of insurance service supply with
steady progress. Besides, we will lead the high-quality
development of the industry with our own high-quality
development, aiming to building a world-class life
insurance company and rewarding the shareholders and
people from all walks of life with satisfactory operating
performances.
2022 is an important year for fully building a
modern socialist country and marching towards
the second Centenary Goal. At present, China's
economic development faces triple pressures of
shrinking demands, supply disruption, and weakened
expectations of growth, which are also seen in the
life insurance industry to some extent. Despite
complicated situations, we firmly believe that the long-
term positive fundamentals of China's life insurance
industry remain unchanged. From the perspective of
macro environment, China's economy will maintain
the sound development momentum in the long-term,
and the overall social situation will remain stable. As
the financial reform and opening up is accelerated
in all aspects, high-quality development has become
the key for the life insurance industry to achieve new
progresses. With the in-depth development of the
insurance supply, China will remain as one of the largest
incremental markets of life insurance around the world.
From the perspective of public demands, as awareness
of insurance increases and consumption demands are
upgraded, the demands for risk management, wealth
management and health management will continue
to expand, and the life insurance industry will open
up a broader development space. The life insurance
industry is still at an important stage full of strategic
opportunities, and the long-term development situation
remains promising.
Annual Report 2021 | Letter to Shareholders 13
As a company listed in three listing venues, China
Life committed to the best practices of corporate
governance, and a sound and effective corporate
governance structure has played an important role
in promoting the steady operation and development
of the Company. During the Reporting Period, we
successfully completed the election of and formed
the seventh session of the Board of Directors and
the Board of Supervisors, further improving the
governance structure and effectiveness. China Life
will continue to push forward the construction of
a corporate governance system well aligned with
the characteristics of Chinese state-owned financial
enterprises and put into more efforts to promote the
high-quality development of the Company.
We coordinated development and security and
consistently strengthened our risk management
and control. We upheld a systematic concept to
strengthen asset-liability management, adhered to
robust and prudent operations and firmly held on to the
bottom line of no systematic financial risks. By strictly
implementing the regulatory requirements, optimizing
the enterprise-wide risk management system and
improving the risk management mechanism, we
consistently strengthened our risk control measures
and risk management capability. In the integrated risk
rating for insurance industry conducted by CBIRC, the
Company has received the rating of Class A for 15
consecutive quarters.
We enhanced technology-driven development and
the digital transformation was further advanced.
In the digital era, we constantly strengthened the
driving and supporting role of technology innovation,
accelerated the digital transformation under the
principle of "Collective Wisdom, Agility, and Iteration",
enhanced the technology-empowered value creation
and proceeded with creating a digital insurance
ecosystem to facilitate the construction of Digital China
Life. We comprehensively upgraded the technological
architecture, reinforced the integration of technology
and business operations, and pushed forward the
whole process of operation and management to be
more digitalized and intelligent. Our technological
adaptability was greatly improved with technology
empowerment becoming increasingly prominent. Our
capacity of data governance and security management
was also firmly enhanced.
We focused on enhancing the growth drivers
through continuously deepening reforms and
innovation. We maintained strategic consistency and
implemented the "Dingxin Project" in greater depth,
laying a solid foundation for the steady development of
the Company at a new stage. As the sales deployment
of "Yi Ti Duo Yuan" was further deepened, we
actively explored on the sales system reform and
firmly promoted the transformation of the largest sales
force in the industry to become more professional
and specialized. The number of our high-performance
agents was stable, and the foundation of our sales.
force remained solid. The market-oriented incentive,
assessment and restraint mechanism was further
promoted, and the Company's investment center
witnessed prominent results in its market-oriented
reforms. Being customer-centric, we proceeded with
the reform in insurance product supply to improve
the multi-dimensional and multi-level product system.
We strengthened service innovation and centralized
operations, and continuously improved our customer
experience with "convenient, quality and caring"
services, with the proportion of highly satisfied
customers remained at a high level. The Company
constantly implemented the strategy of "Inclusive
Healthcare" and "Integrated Aged-care" to expand new
development space for long-term deployment.
57,669
2020
Gross written premiums
Board of Directors of
612,265
Including: Individual agent business sector
618,327
58,373
44,780
Policy Persistency Rate (26 months)¹ (%)
Surrender Rate² (%)
Value of one year's sales
50,257
50,921
Net profit attributable to equity holders of the Company
198,596
214,057
Gross investment income
Policy Persistency Rate (14 months)1 (%)
442,463
418,326
193,939
Including: First-year regular premiums
Premiums from new policies
115,421
98,410
41,682
56,398
Renewal premiums
First-year regular premiums with a payment duration of
ten years or longer
175,864
11,899
4,237
86,179
10,151
1,692
21,438
22,644
5,546
82,549
74,905
68,645
6,846
5,583
331,665
Net carrying value of the investments
352
897
Total revenues
(3,217)
66.67%
4,237
5,649
Net profit/(loss)
Proportion of the Group's ownership
43.686%
29.59%
40.00%
35.00%
43.86%
Impairment
10.29%
Gross carrying value of the investments
86,179
15,116
10,151
1,692
21,438
22,644
5,546
75.00%
17,476
For the year ended 31 December 2021
621
475
Annual Report 2021 | Financial Report 191
Notes to the Consolidated Financial Statements (continued)
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 2020 and for the year ended 31 December 2020:
CGB
Sino-Ocean
CLP&C
447
COFCO
Futures
China
Unicom
Joy City
MCL
RMB million
RMB million
RMB million
RMB million
8,319
Pipeline
Company
5,091
445
14,389
281
3,081
14,416
333
28
Other comprehensive income
2,416
(35)
348
(766)
(27)
15
Total comprehensive income
19,892
5,056
(145)
273
3,081
(8)
10.29%
PRC
3,277
602
22,433
21,801
Equity Method
("China Unicom") (iii)
Communications Limited
China United Network
43.86%
21,438
35
(608)
109
35
1,335
20,676
(369)
(22)
22,644 10.29%
Others (iv)
203,018
697
(3,181)
11,737
5,610
188,155
153,562
20,000
Subtotal
(130)
(1,042)
3,022
5,610
41,555
48,001
Equity Method
49,015
Equity Method
("Pipeline Company")
Pipeline Co., Ltd.
Equity Method
("CLP&C")
Insurance Company Limited
China Life Property and Casualty
(3,217)
29.59%
11,899
6,000
296
86,179
1,048
(662)
26
(271)
589
11,285
43.686%
(3,217)
10,620
(214)
Sinopec Sichuan to East China Gas
35.00%
1,692
(3)
(15)
1T
90
272
98
1,339
Equity Method
("COFCO Futures")
COFCO Futures Company Limited
40.00%
10,151
(527)
1,612
11,245
Joint ventures
Fund L.P. ("Joy City")
CGB
Associates
Name
As at 31 December 2021, the major associates and joint ventures of the Group are as follows:
(v) There is no significant restriction for the Group to dispose of its other associates and joint ventures.
(iv) The Group invested in real estate, industrial logistics assets and other industries through these enterprises.
On 31 December 2021, the stock price of China Unicom was RMB3.93 per share.
(iii) The 2020 final dividend of RMB0.0669 in cash per ordinary share was approved and declared in the Annual General
Meeting of China Unicom on 11 May 2021. The Company received a cash dividend of RMB213 million. The 2021 interim
dividend of RMB0.0488 in cash per ordinary share was approved and declared in the Annual General Meeting of China
Unicom on 23 September 2021. The Company received a cash dividend equivalent to RMB156 million.
Sino-Ocean, the Group's associate is listed in Hong Kong. On 31 December 2021, the stock price of Sino-Ocean was
HKD1.82 per share. As at 31 December 2020, the cumulative impairment loss of RMB3,217 million for the investment
in Sino-Ocean had been recognised by the Group. The Group performed an impairment test to this investment valued
using the discounted future cash flow method on 31 December 2021 and no further impairment loss should be made. The
impairment test 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 2020: 10% for properties under development and
investment properties).
(ii) The 2020 final dividend of HKD0.09 in cash per ordinary share was approved and declared in the Annual General
Meeting of Sino-Ocean on 21 May 2021. The Company received a cash dividend equivalent to RMB168 million. The 2021
interim dividend of HKD0.055 in cash per ordinary share was approved and declared by the Board of Directors of Sino-
Ocean on 19 August 2021. The Company received a cash dividend equivalent to RMB103 million.
(i) The 2020 final dividend of RMB0.077 in cash per ordinary share was approved and declared in the Annual General
Meeting of CGB on 30 June 2021. The Company received a cash dividend of RMB662 million.
9 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 189
Sino-Ocean
CLP&C
COFCO Futures
Pipeline Company
43.86%
PRC
35.00%
PRC
40.00%
PRC
29.59%
(3,217)
Hong Kong, PRC
PRC
Percentage of
equity interest held
Place of incorporation
190 Annual Report 2021 | Financial Report
MCL
Joint ventures
Joy City
China Unicom
43.686%
257,953
1,121
(4,480)
75.00%
4,237
505
(1,004)
4,736
7,656
Equity Method
Others (iv)
Mapleleaf Century Limited ("MCL")
5,546
10
(354)
111
5,779
6,281
Equity Method
66.67%
Joy City Commercial Property
Equity Method
5,790
10,328
11,400
239,584
216,075
Total
54,935
424
48,576 40,914
(1,299)
5,790
62,513 51,429
Subtotal
45,152
(91)
(945)
(516)
(1,409)
Equity Method
("Sino-Ocean") (ii)
Sino-Ocean Group Holding Limited
RMB million RMB million
13,812
RMB million RMB million
RMB million
Total assets
3,359,985
281,252
120,178
25,153
37,099
593,284
RMB million RMB million RMB million
10,258
24,195
Total liabilities
3,125,484
MCL
Joy City
China
Unicom
Pipeline
Company
40.00%
PRC
35.00%
PRC
43.86%
PRC
10.29%
204,805
The British Cayman Islands
66.67%
75.00%
The following table illustrates the financial information of the Group's major associates and joint ventures as at 31
December 2021 and for the year ended 31 December 2021:
CGB
Sino-Ocean
CLP&C
COFCO
Futures
The British Virgin Islands
94,756
21,868
1,476
149,217
10,026
11,160
Total adjustments (i)
464
(7,257)
405
35,623
16,509
(5,511)
Total equity attributable to equity holders of
the associates and joint ventures
after adjustments
189,974
47,817
25,422
(1,707)
PRC
RMB million
25,422
257,074
232
13,035
Total equity
234,501
76,447
25,422
3,277
3,285
336,210
10,026
11,160
Total equity attributable to equity holders of
the associates and joint ventures
189,510
55,074
35,623
29.59%
Hong Kong, PRC
43.686%
2020
Cost
Declared
profit
Change of
31 December
Accounting
method
the cost
Share of
Movement
239,584
257,953
(707)
228
1,121
(5,253)
As at
(4,480)
or loss
Other
equity Provision 31 December
movements of impairment 2021
109
5,819
79,974
45,176
Equity Method
("CGB") (i)
China Guangfa Bank Co., Ltd.
dividends
Associates
RMB Million
impairment
interest
amount of
of equity
Percentage Accumulated
As at
RMB Million
36,028
8,336
222,983
13,997
9 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
As at 31 December 2020, the major associates and joint ventures of the Group are as follows:
Name
Associates
CGB
Sino-Ocean
CLP&C
COFCO Futures
For the year ended 31 December 2021
Pipeline Company
Joint ventures
Joy City
MCL
Place of incorporation
Percentage of
equity interest held
PRC
China Unicom
10,328
Notes to the Consolidated Financial Statements (continued)
The British Virgin Islands
11,400
RMB million
RMB million
239,584
2020
2021
As at 31 December
Impairment
75.00%
Other equity movements
Share of profit or loss
As at 1 January
Change of the cost
9 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
The British Cayman Islands
66.67%
Declared dividends
165,726
4,675
RMB million
658,535
666,087
(2,443)
(3,819)
660,978
669,906
As at
27,606
114,885
106,319
287,196
182,493
231,291
348,940
32,154
RMB million
As at
31 December
Notes to the Consolidated Financial Statements (continued)
194 Annual Report 2021 | Financial Report
As at 31 December 2021, the Group's term deposits of RMB2,641 million (as at 31 December 2020: RMB750 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.
545,678
529,488
1,740
31 December
480,848
63,090
135,301
RMB million
RMB million
2020
2021
394,187
RMB million
2020
2021
31 December
As at
RMB million
Total
After five years but within ten years
After one year but within five years
31 December
Within one year
10.3 Term deposits
(i) As at 31 December 2021, maturities of policy loans were within 6 months (as at 31 December 2020: same).
Net value
Impairment
Total
After one year but within five years
After five years but within ten years
After ten years
Maturing:
2021
2020
RMB million
31 December
31 December
As at
As at
658,535
666,087
(2,443)
(3,819)
660,978
669,906
460,248
433,697
200,730
236,209
RMB million
For the year ended 31 December 2021
10 FINANCIAL ASSETS (continued)
10.4 Statutory deposits - restricted
Contractual maturity schedule:
14,502
10,620
1,612
20,676
22,433
5,779
79,974
4,736
(3,217)
Net carrying value of the investments
79,974
11,285
10,620
1,612
Impairment
Gross carrying value of the investments
75.00%
66.67%
175,771
45,745
26,551
3,048
34,292
164,690
8,669
6,314
Proportion of the Group's ownership
43.686%
29.59%
40.00%
35.00%
43.86%
10.29%
20,676
Within one year
22,433
4,736
6,333
4,613
1,720
RMB million
RMB million
2020
6,333
2021
31 December
As at
As at
Total
After one year but within five years
Within one year
31 December
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
Total revenues
80,525
61,271
77,990
2,193
5,259
306,490
360
853
Net profit/(loss)
Corporate bonds
Government agency bonds
Government bonds
Debt securities
Available-for-sale securities, at fair value
5,779
after adjustments
Maturing:
Impairment
349,370
RMB million
RMB million
2020
2021
31 December
265,198
31 December
As at
(i) Unlisted debt securities include those traded on the Chinese interbank market.
Total
Unlisted (i)
Listed overseas
Listed in Hong Kong, PRC
As at
Listed in Mainland, PRC
911,451
209,627
1,189,369
973,480
1,287,488
1,533,753
70
44
148
617,515
87
246,134
1,189,369
1,533,753
104,668
63,305
201,988
215,671
Debt securities
Total
Subordinated bonds
Total comprehensive income
650
(25)
(1,706)
1,991
630
11,868
(1,944)
185
339
12,525
2,823
208
1,730
Other comprehensive income
5,305
3,721
203
Corporate bonds
Government agency bonds
Government bonds
Debt securities
10.1 Held-to-maturity securities
10 FINANCIAL ASSETS
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
192 Annual Report 2021 | Financial Report
The Group had no contingent liabilities with the associates and joint ventures as at 31 December 2021 and 31 December
2020. The Group had a capital contribution commitment of RMB20,730 million with associates and joint ventures as at 31
December 2021 (as at 31 December 2020: RMB25,364 million). The capital contribution commitment amount has been
included in the capital commitments in Note 40.
(i) Including adjustments for the difference of accounting policies, fair value and others.
835
314
10,819
2,823
As at 31 December 2021, no accumulated impairment loss for the investment of held-to-maturity securities has been
recognised by the Group (2020: RMB20 million).
Debt securities - fair value hierarchy
As at 31 December 2021
Level 1
Level 2
Total
2020
31 December
31 December
2021
RMB million
As at
As at
Total
RMB million
After ten years
After one year but within five years
Within one year
Maturing:
Debt securities - Contractual maturity schedule
1,225,540
1,099,926
After five years but within ten years
55,370
25,520
147,786
Total
Other loans
Policy loans (i)
10.2 Loans
10 FINANCIAL ASSETS (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 193
1,189,369
1,533,753
811,252
1,167,118
206,134
163,479
146,463
125,614
Net value
1,638,271
150,452
238,636
37,134
382,413
314,113
68,300
Subordinated bonds
275,770
Corporate bonds
Government bonds
RMB million
Total
As at 31 December 2020
Level 1
Level 2
RMB million RMB million
RMB million
RMB million RMB million
Government agency bonds
74,241
895,343
969,584
Total
108,694
96,362
12,332
66,481
66,481
209,873
205,440
4,433
219,793
211,882
7,911
631,203
559,488
71,715
1,487,819
the associates and joint ventures
As at
(4,540)
Listed in Mainland, PRC
Equity securities
95,615
143,057
Subtotal
62,948
Listed in Hong Kong, PRC
112,827
262
273
Listed overseas
72
23
Listed in Hong Kong, PRC
Unlisted
32,333
45,817
736
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.
161,570
206,771
Total
65,955
63,714
51,629
10,033
4,213
4,849
Subtotal
Unlisted
Listed overseas
80
12,312
29,934
Listed in Mainland, PRC
Debt securities
1,638
1,393
Subtotal
Others
Common stocks
Funds
7,989
Equity securities
Others
Corporate bonds
Government agency bonds
Government bonds
Debt securities
RMB million
Subtotal
4,422
90,425
86,803
161,570
206,771
Total
65,955
63,714
262
271
48,858
45,649
16,835
17,794
95,615
143,057
2,752
43,250
Annual Report 2021 | Financial Report 197
RMB million
Notes to the Consolidated Financial Statements (continued)
10 FINANCIAL ASSETS (continued)
13,342
Total equity
218,150
69,722
26,551
3,055
85
45,200
1,003
2,066
44,197
49,031
45,200
51,097
51,097
6,176
251,001
17,512
RMB million
Total assets
3,027,972
263,528
106,930
20,567
1,068
34,933
10,306
24,196
Total liabilities
Total equity attributable to equity holders of
193,806
80,379
582,475
6,462
26,454
31,900
As at
198 Annual Report 2021 | Financial Report
Total
Non-current
Current
Total
As at
Others
10.8 Accrued investment income
Total
Above 30 days
Within 30 days
Maturing:
10.7 Securities purchased under agreements to resell
Bank deposits
Debt securities
31 December
2021
31 December
2020
12,570
12,735
RMB million
RMB million
2020
31 December
As at
As at
31 December
2021
7,947
12,915
1,019
7,947
11,896
RMB million
RMB million
For the year ended 31 December 2021
2020
2,809,822
31 December
2021
144,721
161,054
81,795
111,029
136,025
203,147
793,544
169,013
49,256
58,561
RMB million
RMB million
31 December
2020
2021
259,753
31 December
580,810
97,476
(i) Other available-for-sale securities mainly include unlisted equity investments, private equity funds, trust schemes and perpetual bonds.
1,215,603
20,606
20,279
1,429,287
614,187
615,464
94,895
148,671
13,013
5,005
53,778
52,127
301,249
256,441
206,996
As at
As at
Total
173,159
52,273
26,551
3,048
33,865
147,709
the associates and joint ventures
10,221
2,612
(6,528)
427
16,981
31 December
(1,552)
Total adjustments (i)
Total equity attributable to equity holders of
10,854
10,221
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
33,865
331,474
Annual Report 2021 | Financial Report 195
Notes to the Consolidated Financial Statements (continued)
10,854
10 FINANCIAL ASSETS (continued)
2021
31 December
As at
As at
196 Annual Report 2021 | Financial Report
Total
31 December
2020
After ten years
After one year but within five years
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 quotations, wealth management products and private equity funds.
1,215,603
After five years but within ten years
RMB million
RMB million
36,597
As at
For the year ended 31 December 2021
As at
10.6 Securities at fair value through profit or loss
10 FINANCIAL ASSETS (continued)
Notes to the Consolidated Financial Statements (continued)
580,810
793,544
147,344
258,479
271,394
318,992
125,202
179,476
36,870
1,429,287
634,793
For the year ended 31 December 2021
325,768
31 December
As at
As at
Total
Subtotal
Unlisted
31 December
Listed overseas
10.5 Available-for-sale securities (continued)
Listed in Mainland, PRC
Equity securities
Unlisted
635,743
Listed in Mainland, PRC
Listed in Hong Kong, PRC
2021
Subtotal
RMB million
321,866
278
2020
28
108,493
75,694
200,254
238,155
Debt securities
793,544
538,656
707,399
580,810
42,154
RMB million
86,145
2,366
2,444
3.30%
5,483
27 September 2024
3.08%
USD LIBOR+1.00% (ii)
6,184
6,329
18,686
19,556
(i)
5,611
Credit loans
3.10%
2,383
883
794
EURLIBOR+3.00% (i)
626
1,015
1.50%
563
1.80%
25 June 2024
16 September 2024
8 September 2023
9 March 2022
13 January 2022
3.00% when EURIBOR is negative.
5 January 2022
2,648
913
2021
RMB million
35,000
Annual Report 2021 | Financial Report 205
As at
31 December
Total
Credit loans
Guaranteed loans
Guaranteed loans
Guaranteed loans
After 90 days
More than 30 days within 90 days
Within 30 days
Maturing:
Total
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
(ii) 1.00% when USD LIBOR is negative.
35,000
RMB million
As at
31 December
2020
4.28%
22 March 2029
22 March 2019
Total
Interest rate p.a.
Maturity date
Issue date
31 December
As at
As at 31 December 2021, all bonds payable were the bonds for capital replenishment (the "Bond") with a total carrying
value of RMB34,994 million (as at 31 December 2020: RMB34,992 million), and the fair value of RMB35,898 million (as
at 31 December 2020: RMB35,602 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:
18 BONDS PAYABLE
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
35,000
Total
64,950
Credit loans
2021
31 December
31 December
As at
As at
17 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
The table below presents movements of investment contracts with DPF:
Total
2020
At fair value through profit or loss
- At amortised cost
Investment contracts without DPF
Investment contracts with DPF at amortised cost
16 INVESTMENT CONTRACTS
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
204 Annual Report 2021 | Financial Report
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.
(ii) For the year ended 31 December 2021, the change in other assumptions was mainly caused by the change in morbidity rate assumptions of certain
products, which increased insurance contract liabilities by RMB5,897 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 RMB1,677 million.
(i) 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.
2,936,533
(211)
As at
1,022
3,379,603
-
Credit loans
RMB million
68,544
245,041
RMB million
RMB million
2020
2021
Interest rate
Maturity date
31 December
As at
As at
31 December
64,950
68,544
1,340
1,436
(39)
RMB million
(41)
(2,711)
5,000
4,910
61,657
64,950
RMB million
RMB million
2020
2021
288,212
313,594
10
9
223,252
(3,008)
31 December
22 INVESTMENT INCOME
2020
25,860
31,948
32,970
350
25,949
798
912
24,185
27,806
3,482
4,079
22,695
29,491
44,757
56,830
RMB million
772
RMB million
2021
For the year ended 31 December
Total
Securities purchased under agreements to resell
Loans
Bank deposits
at fair value through profit or loss
- available-for-sale securities
Equity securities
- at fair value through profit or loss
- available-for-sale securities
-held-to-maturity securities
Debt securities
For the year ended 31 December 2021
2020
Notes to the Consolidated Financial Statements (continued)
178,387
For the year ended 31 December 2021, the interest income included in investment income was RMB149,669 million
(2020: RMB129,514 million). Interest income was mainly accrued using the effective interest method.
3,472
208 Annual Report 2021 | Financial Report
(ii) During the year ended 31 December 2021, the Group recognised an impairment charge of RMB8 million on available-for-sale funds (2020: RMB111
million); an impairment charge of RMB21,354 million on available-for-sale stock securities (2020: RMB11,732 million); no impairment charge on
available-for-sale other equity securities (2020: RMB74 million); an impairment reversal of RMB17 million on available-for-sale debt securities (2020:
RMB16 million); an impairment charge of RMB1,376 million on loans (2020: an impairment reversal of RMB275 million) and no impairment charge of
held-to-maturity securities (2020: RMB3 million), for which the Group determined that objective evidence of impairment existed.
14,583
20,344
13,008
21,505
(11,917)
(21,362)
24,925
42,867
1,575
(1,161)
1,287
288
154,497
(1,359)
(i) Realised gains were generated mainly from available-for-sale securities.
Total
Subtotal
Realised gains (i)
Impairment (ii)
Equity securities
Subtotal
Realised gains (i)
Impairment (ii)
Debt securities
RMB million
RMB million
2020
2021
For the year ended 31 December
23 NET REALISED GAINS ON FINANCIAL ASSETS
198
2021
RMB million
Annual Report 2021 | Financial Report 207
21 STATUTORY INSURANCE FUND
Non-current
Current
Total
Others
Stock appreciation rights (Note 32)
Tax payable
Interest payable of debt instruments
Agency deposits
Payable to constructors
Brokerage and commission payable
Salary and welfare payable
Interest payable to policyholders
Payable to the third-party holders of consolidated structured entities
20 OTHER LIABILITIES
Total
For the year ended 31 December 2021
206 Annual Report 2021 | Financial Report
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 2021, the carrying value of
securities deposited in the collateral pool was RMB298,043 million (as at 31 December 2020: RMB256,062 million). The
collateral is restricted from trading during the period of the repurchase transaction.
As at 31 December 2021, bonds with a carrying value of RMB199,211 million (as at 31 December 2020: RMB113,454
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.
122,249
239,446
122,101
140
8
237,371
2,075
122,249
239,446
24,275
58,325
97,974
181,121
RMB million
Notes to the Consolidated Financial Statements (continued)
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.
As at
31 December
31 December
104,476
133,676
104,476
133,676
104,476
133,676
20,201
23,222
493
291
889
717
1,320
1,528
As at
1,811
2,594
2,497
7,057
5,352
11,318
12,874
16,139
17,866
42,654
67,862
RMB million
RMB million
2020
2021
1,467
7,574
As at
30,701
4,228
1,867
1,720
6,095
6,630
209
412
523
6,630
823
485
4,228
RMB million
RMB million
4,910
31 December
2020
31 December
2021
As at
Total
1,135
6,095
As at
As at
187
101
728
717
2,257
3,353
3,522
3,673
5,866
5,327
8,056
8,011
1,559
9,493
RMB million
RMB million
2020
31 December
31 December
2021
Non-current
8,884
Current
Others
(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)
(19,556)
(18,686)
(19,556)
(18,686)
12 PREMIUMS RECEIVABLE
Interest-bearing loans and borrowings
(35,898)
(34,992)
(34,994)
Bonds payable
(122,249)
(239,446)
(122,249)
(239,446)
(35,602)
As at 31 December 2021, the carrying value of premiums receivable within one year was RMB19,935 million (as at 31
December 2020: RMB20,458 million).
Annual Report 2021 Financial Report
199
Prepayments to constructors
Due from related parties
Tax prepaid
Automated policy loans
Disbursements
Land use rights (i)
Investments receivable and prepaid
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)
13 REINSURANCE ASSETS
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Total
to repurchase
6,865
29,040
- 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
- Unearned premiums (Note 13)
Long-term insurance contracts
(b) Net liabilities of insurance contracts
15 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
202 Annual Report 2021 | Financial Report
(v) The Group applies 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 adopts 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.
(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%
Gross
Total, ceded
Net
Long-term insurance contracts
35,071
14,701
14,062
21,991
26,234
2,936,533
3,379,603
RMB million
31 December
2020
RMB million
2021
31 December
As at
As at
The table below presents movements in claims and claim adjustment expense reserve:
(c) Movements in liabilities of short-term insurance contracts
Total, net
- Unearned premiums
- Claims and claim adjustment expenses
Short-term insurance contracts
25.00
39,559
0.90%
0.85% 0.90%
0.85% 0.90%
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:
4.85%
4.85%
Discount rate assumptions
As at 31 December 2021
As at 31 December 2020
In developing the discount 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:
(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.
(a) Process used to decide on assumptions
15 INSURANCE CONTRACTS
As at 31 December 2021
As at 31 December 2020
For the year ended 31 December 2021
200 Annual Report 2021 | 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.
29,040
39,559
9,323
8,846
19,717
30,713
Notes to the Consolidated Financial Statements (continued)
Discount rate assumptions
2.88% 4.80%
3.09% 4.80%
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.
45.00
45.00
% of Premium
RMB Per Policy
% of Premium
RMB Per Policy
Group Life
Individual Life
As at 31 December 2020
As at 31 December 2021
(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:
(a) Process used to decide on assumptions (continued)
15 INSURANCE CONTRACTS (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 201
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 (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.
(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.
25.00
Securities sold under agreements
4,910
(3,416)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
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
As at 31 December
Annual Report 2021 | Financial Report 203
2021
RMB million
RMB million
Gross
Ceded
Net
Gross
Ceded
Net
2020
21,991
26,234
Total as at 31 December - Gross
18,404
(34,301)
(32,804)
(17,783)
(16,682)
56,938
52,589
- Claims arising in prior years
(611)
484
Total as at 31 December - Gross
26,234
21,991
Notified claims
4,197
4,319
Incurred but not reported
22,037
17,672
14,701
(523)
14,178
13,001
Premiums
Release of liabilities (i)
Accretion of interest
Change in assumptions
- Change in discount rates
- Change in other assumptions (ii)
Other movements
As at 31 December
2021
2020
RMB million
RMB million
2,936,533
2,521,331
542,974
(287,705)
536,150
(288,959)
148,504
129,679
As at 1 January
21,991
The table below presents movements in the liabilities of long-term insurance contracts:
14,178
(369)
12,632
14,062
(823)
13,239
14,701
(523)
14,178
(14,701)
523
(14,178)
(13,001)
369
(12,632)
14,062
(823)
13,239
(3,732)
(523)
(d) Movements in liabilities of long-term insurance contracts
15,623
14,701
2,781
529,488
545,667
529,488
667,545
686,005
1,225,540
1,638,271
1,189,369
658,535
545,667
666,087
Securities at fair value through profit or loss
Available-for-sale securities, at fair value
Statutory deposits - restricted
Term deposits
Held-to-maturity securities (ii)
Loans (iii)
RMB million
2020
31 December
1,533,753
6,333
1,409,008
206,771
(3,732)
17,672
(3,416)
profit or loss
Financial liabilities at fair value through
7,947
56,655
(276,521)
60,440
(299,727)
56,655
(288,212)
(313,594)
Investment contracts (iii)
60,440
Cash and cash equivalents
12,915
12,915
to resell
Securities purchased under agreements
6,333
1,194,997
161,570
6,333
1,409,008
206,771
6,333
1,194,997
161,570
As at
As at
31 December
2021
RMB million
7,947
RMB million
2,932,305
25,822
13,239
21,782
14,178
3,413,754
2,968,265
Notified claims
Incurred but not reported
Total as at 1 January – Gross
Cash paid for claims settled
- Cash paid for current year claims
Claims incurred
- Claims arising in current year
2021
2020
RMB million
4,319
RMB million
RMB million
3,374,693
(4,960)
· Cash paid for prior year claims
(523)
2021
(6,145)
31 December
2020
31 December
As at
As at
Carrying value
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 2021
Estimated fair value (i)
3,419,899
2,973,225
(4,910)
(4,228)
(412)
Notes to the Consolidated Financial Statements (continued)
(209)
(823)
7,391
Principal business
Location of
registration
Beijing, China
CLIC
Name
(a) Related parties with control relationship
35 SIGNIFICANT RELATED PARTY TRANSACTIONS
(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.
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.
4,970
(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.
Information of the parent company is as follows:
Relationship
with the Company
Immediate and
ultimate holding
company
Annual Report 2021 | Financial Report 217
State-owned
Legal
representative
Bai Tao
(the change of
registration with
the department in
charge of industrial
and commercial
administration is in
progress)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(b) Subsidiaries
4,966
4
Refer to Note 41(d) for the basic and related information of subsidiaries.
(c) Associates and joint ventures
Nature of
ownership
24
Domestic
RMB Million
45
Refer to Note 9 for the basic and related information of associates and joint ventures.
75
112
13
24
4,846
3,873
2,439,186
1,937,416
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
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:
Overseas
7,367
Total
Total
As at 31 December 2021
Carrying
amount (iii)
Fair value
RMB Million
RMB Million
9,631
7,274
9,631
7,274
As at 31 December 2020
Carrying
amount (iii)
Fair value
RMB Million
Domestic
Overseas
(d) Other related parties
("Rui Chong Company")
China Life Real Estate Co., Limited ("CLRE")
CL AMP
RMB1,288
CL Wealth
RMB200
Shanghai Rui Chong Investment Co., Limited
RMB6,800
China Life (Beijing) Health Management
RMB1,530
Co., Limited ("CL Health")
China Life Franklin (Shenzhen) Equity
USD2
RMB1,288
700
RMB200
RMB6,100
RMB1,530
USD2
Investment Fund Management Co., Limited
("Franklin Shenzhen Company")
Xi'an Shengyi Jingsheng Real Estate Co., Ltd.
RMB1,131
("Shengyi Jingsheng")
Dalian Hope Building Company Ltd.
RMB484
RMB1,131
RMB484
("Hope Building")
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.
218 Annual Report 2021 | Financial Report
13
("Suzhou Pension Company")
Retirement Investment Company Limited
RMB2,181
190
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")
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
(e) Registered capital of related parties with control relationship and changes during the year
As at
31 December
As at
31 December
Name of related party
2020
Increase
Significant related parties
Decrease
million
million
CLIC
RMB4,600
2021
million
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
million
3,654
– Financial assets with contractual terms that do not give rise to SPPI
Total
25
2021
2020
RMB million
RMB million
4,824
(6,741)
6,588
(3,485)
(1,917)
3,103
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
29 TAXATION (continued)
(b) The reconciliation between the Group's effective tax rate and the statutory tax rate of 25% in the PRC (2020: same)
is as follows:
Profit before income tax
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)
Unused tax losses
Others
For the year ended 31 December
Income tax at the effective tax rate
210 Annual Report 2021 | Financial Report
Deferred taxation
2021
RMB million
2020
RMB million
20,928
19,534
1,412
1,318
3,273
2,455
5,287
5,162
(645)
(119)
53
63
29 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:
Current taxation - Enterprise income tax
Total tax charges
Remuneration in respect of audit services provided by auditors
For the year ended 31 December
2020
31 December
As at
31 December
2020
RMB million
2021
RMB million
22,354
(29,714)
121
(7,481)
17,174
(32,373)
87
(15,286)
Annual Report 2021 Financial Report 211
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
29 TAXATION (continued)
(c) As at 31 December 2021 and 31 December 2020, the amounts of deferred tax assets and liabilities are as follows:
(continued)
As at 31 December 2021 and 31 December 2020, 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 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
As at
2021
Net deferred tax assets
Net deferred tax liabilities
(c) As at 31 December 2021 and 31 December 2020, the amounts of deferred tax assets and liabilities are as follows:
RMB million
RMB million
50,495
54,476
12,624
13,619
(412)
(464)
(14,425)
(10,787)
276
202
27
498
(7)
35
(1,917)
3,103
(i) 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.
Deferred tax assets
Deferred tax liabilities
Foreign exchange gains
Depreciation and amortisation
Contribution to the defined contribution pension plan
25 INSURANCE BENEFITS AND CLAIMS EXPENSES
Gross
RMB million
Ceded
RMB million
Net
RMB million
For the year ended 31 December 2021
Life insurance death and other benefits
125,998
(4,644)
121,354
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
56,327
(1,297)
55,030
443,053
(683)
442,370
Total
21,900
625,378
4,943
(648)
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
24 NET FAIR VALUE GAINS THROUGH PROFIT OR LOSS
For the year ended 31 December
2021
2020
RMB million
RMB million
Debt securities
Equity securities
Stock appreciation rights
Financial liabilities at fair value through profit or loss
Derivative financial instruments
Total
1,069
3,470
(583)
22,997
202
255
202
(121)
(6,624)
618,754
For the year ended 31 December 2020
For the year ended 31 December
2021
2020
RMB million
RMB million
3,523
1,565
1,500
1,503
479
566
96
5,598
113
3,747
28 PROFIT BEFORE INCOME TAX
Profit before income tax is stated after charging/(crediting) the following:
For the year ended 31 December
Employee salaries and welfare costs
Housing benefits
Total
Interest expenses for interest-bearing loans and borrowings
Interest on lease liabilities
Interest expenses for securities sold under agreements to repurchase
Interest expenses for bonds payable
27 FINANCE COSTS
Life insurance death and other benefits
117,129
(3,520)
113,609
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
53,073
(678)
52,395
415,186
to participating policyholders
(389)
Total
585,388
(4,587)
580,801
26 INVESTMENT CONTRACT BENEFITS
Benefits of investment contracts are mainly the interest credited to investment contracts.
Annual Report 2021 | Financial Report 209
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
414,797
4,331
-
As at 31 December 2020
- Financial assets with contractual terms that do not give rise to SPPI
Total
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 to SPPI
-
2021
RMB million
206,771
2020
RMB million
161,570
2,559,014
958,340
3,724,125
1,978,361
929,597
3,069,528
Fair value changes
for the year ended 31 December
2021
2020
RMB million
- 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")
RMB million
Other financial assets
Held for trading financial assets
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 2021 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 (2020: same).
Annual Report 2021 | Financial Report 213
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
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.
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 14% to 30%, an expected dividend yield of no higher
than 6.05% and a risk-free interest rate ranging from -0.01% to 0.25%.
The Company recognised a gain of RMB202 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 2021 (2020:
fair value gain of RMB255 million). RMB278 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 2021 (as at 31
December 2020: RMB480 million and RMB13 million), respectively. There was no unrecognised compensation cost for
the stock appreciation rights as at 31 December 2021 (as at 31 December 2020: nil).
33 DIVIDENDS
Pursuant to the shareholders' approval at the Annual General Meeting on 30 June 2021, a final dividend of RMB0.64
(inclusive of tax) per ordinary share totalling RMB18,089 million in respect of the year ended 31 December 2020 was
declared and paid in 2021. The dividend has been recorded in the consolidated financial statements for the year ended 31
December 2021.
Pursuant to a resolution passed at the meeting of the Board of Directors on 24 March 2022, a final dividend of RMB0.65
(inclusive of tax) per ordinary share totalling approximately RMB18,372 million for the year ended 31 December 2021 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 2021.
214 Annual Report 2021 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
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 major financial
assets (i) under IFRS 9:
For the year ended 31 December
Financial assets that are managed and whose performance are evaluated on
a fair value basis
31 EARNINGS PER SHARE
4,541
92,219
Not rated
Subtotal
Total
216 Annual Report 2021 | Financial Report
Carrying amount (iii)
As at
As at
31 December
2021
RMB Million
31 December
2020
RMB Million
832,127
1,592,582
6,551
80
3,000
2,434,340
719,142
1,207,034
4,197
170
3,000
1,933,543
427
BBB+
BBB-
22,414
A-
A+
(11,064)
14,959
55,151
111,719
66,501
(i)
Only including securities at fair value through profit or loss, loans (excluding policy loans), available-for-sale securities and held-to-maturity securities.
Annual Report 2021 | Financial Report 215
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
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:
Domestic
Rating not required (iv)
AAA
AA+
AA
AA-
Subtotal
Overseas
A
Net profit attributable to equity holders of the Company is recognised in the financial statements of the Company to the
extent of RMB42,865 million (2020: RMB44,594 million).
30 NET PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
(15,199)
3,485
990
(9,446)
(9,446)
990
(26)
(26)
4,334
(22,386)
2,853
(15,199)
4,334
(22,386)
2,853
(15,199)
2,862
3,534
345
6,741
(10,202)
448
2,914
(61)
1,787
As at 1 January 2021
(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 2021
Insurance
Investments
RMB million
RMB million
Others
RMB million
Total
RMB million
(i)
(ii)
(iii)
1,557
(14,673)
1,759
7,644
677
(27)
(18,202)
31 December
31 December
2021
2020
RMB million
RMB million
14,695
10,882
7,659
6,292
22,354
17,174
(26,850)
(28,107)
(2,864)
(4,266)
(29,714)
(32,373)
(7,360)
As at
As at
Net deferred tax liabilities
- deferred tax liabilities to be settled within 12 months
Subtotal
3,198
677
448
(27)
(7,360)
(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.
- Others
Unrecognised deductible tax losses of the Group amounted to RMB3, 173 million as at 31 December 2021 (as at 31
December 2020: RMB3,300 million). Unrecognised deductible temporary differences of the Group amounted to RMB1
million as at 31 December 2021 (as at 31 December 2020: RMB1 million).
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
29 TAXATION (continued)
(d) The analysis of net deferred tax assets and deferred tax liabilities is as follows:
Deferred tax assets:
- deferred tax assets to be recovered after 12 months
- deferred tax assets to be recovered within 12 months
Subtotal
Deferred tax liabilities:
- deferred tax liabilities to be settled after 12 months
212 Annual Report 2021 | Financial Report
As at 31 December 2021, there were 55.01 million units outstanding and exercisable (as at 31 December 2020: same). As
at 31 December 2021, the amount of intrinsic value for the vested stock appreciation rights was RMB278 million (as at 31
December 2020: RMB480 million).
The resulting balances due from and to significant related parties of the Group
Amount due from CLIC
550
Payment of asset management fee to CLI
CLI
41
52
(ii.c)
54
78
271
214
2,289
1,634
(iii) (vii)
125
156
564
Payment of real estate purchase to CLI
Property leasing expenses charged by CLI
554
(ii.d) (vii)
651
For the year ended 31 December
73
79
(ii.b)
Asset management fee received from CL Overseas
CL Overseas
106
112
(vi)
Payment of a operation management service fee to CLHI
CLHI
71
52
135
103
588
14,253
12,663
(ii.a)
CL Xing Wan, CL Hangzhou Hotel, CL Jiayuan were newly included in the consolidated financial statements of the Group for the year ended
31 December 2021.
(i)
indirectly
99.99%
RMB300
300
indirectly
99.99%
- RMB65
65
directly
90.81%
indirectly
99.98%
RMB3,865
(ii) For the year ended 31 December 2021, the Company injected capital of RMB500 million to CL Sales, a wholly owned subsidiary of CLIC, and acquired
90.81% of the shareholders' equity. Both parties are under common control by CLIC which is not transitory before and after the combination. Therefore,
this is a business combination under common control. The financial statements of the Group were restated based on the financial statements as at 31
December 2021 obtained from the merged party on the date of combination.
Annual Report 2021 | Financial Report 221
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
(i) (vii)
RMB million
RMB million
Notes
2020
2021
For the year ended 31 December
Transactions with associates and joint ventures
Rental and a service fee received from CLP&C
Asset management fee received from CLP&C
Agency fee received from CLP&C
CLP&C
Distribution of dividends from the Company and AMC to CLIC
Policy management fee received from CLIC
Asset management fee received from CLIC
CLIC
Transactions with CLIC and its subsidiaries
(g) Transactions with significant related parties
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
Dividends from CLP&C (Note 9)
3,865
2021
RMB million
Dividends from the other subsidiaries
Dividends from Pension Company
Dividends from AMC
Dividends from subsidiaries
(ii.e) (vii)
(ii.f)
Payment of an asset management fee to AMC HK
Payment of an asset management fee to AMC
Payment of an asset management fee
RMB million
RMB million
Notes
2020
2021
For the year ended 31 December
2020
RMB million
1,140
Agency fee received
2021
RMB million
1,357
Agency fee received from Pension Company for entrusted sales of
Rental received
40
57
10
70
(v)
301
738
127
220
432
2,089
18
15
2,742
Capital increase in subsidiaries
Rental received from Pension Company
annuity funds and other businesses
Notes
For the year ended 31 December
Transactions between other subsidiaries and the Company
190
(iv)
662
2,938
3,268
Interest of corporate bonds received from Sino-Ocean
Dividends from Sino-Ocean (Note 9)
Sino-Ocean
Insurance premium received from CGB
Rental fee received from CGB
Commission expenses charged by CGB
Dividends from CGB (Note 9)
Interest on deposits received from CGB
CGB
2020
RMB million
189
145
124
88
Contribution to EAP
Transaction between EAP and the Group
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Transactions with significant related parties (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
222 Annual Report 2021 | Financial Report
4,254
Notes
3,333
and the Group
Transaction between other associates and joint ventures
26
17
178
271
3
Dividends from other associates and joint ventures (Note 9)
70
99.99%
directly
As at 31 December 2021
Percentage
of holding
99.98%
RMB1,680
Ningbo Meishan Bonded Port Area Bai
Wansheng")
directly
directly
(Limited Partnership) ("Shanghai
99.98%
12 - RMB4,024
99.98%
RMB4,012
Shanghai Wansheng Industry Partnership
Partnership) ("Yuan Shu Yuan Pin")
directly
directly
-- RMB1,680
Management Partnership (Limited
99.98%
directly
99.98%
- RMB548
15
99.98%
RMB533
Wuhu Yuanxiang Tianfu Investment
indirectly
indirectly
100.00%
RMB484
100.00%
RMB484
Hope Building
Partnership) ("Bai Ning")
directly
Ning Investment Partnership (Limited
99.98%
RMB571
99.98%
indirectly
indirectly
100.00%
100.00%
New Capital Wisdom Limited
directly
directly
89.997%
Amount
million
RMB2,835
89.997%
million
Decrease
Increase
million
million
RMB2,835
Guo Yang Guo Sheng
New Fortune Wisdom Limited
100.00%
100.00%
indirectly
RMB571
directly
directly
99.98%
RMB571
99.98%
RMB571
Management Partnership (Limited
Shanghai Yuan Shu Yuan Jiu Investment
Management Partnership (Limited
Partnership) ("Yuan Shu Yuan Jiu")
Shanghai Yuan Shu Yuan Pin Investment
indirectly
100.00%
-- USD452
100.00%
USD452
Wisdom Forever Limited Partnership
indirectly
indirectly
directly
directly
Partnership) ("Yuanxiang Tianfu")
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 2021
Notes to the Consolidated Financial Statements (continued)
220 Annual Report 2021 | Financial Report
("CL Pension Industry")
directly
directly
Investment Fund (Limited Partnership)
99.90%
RMB504
495
99.90%
RMB9
China Life Qihang Phase I (Tianjin) Equity
Investment Fund Partnership (Limited
Partnership) ("CL Qihang Fund I")
China Life Xing Wan (Tianjin) Enterprise
Management Partnership (Limited
Partnership) ("CL Xing Wan")(i)
Beijing China Life Pension Industry
China Life Insurance Sales Company Limited
China Life (Hangzhou) Hotel Company
Amount
million
RMB6,065
6,064
99.99%
RMB1
million
million
Decrease
Increase
Percentage
of holding
Amount
million
As at 31 December 2020
("CL Jiayuan")(i)
Management Company Limited
China Life Jiayuan (Xiamen) Health
Limited ("CL Hangzhou Hotel")(i)
("CL Sales")(ii)
Partnership) ("CL Guang De")
directly
directly
CBRE Global Investors U.S. Investments I,
indirectly
100.00%
RMB1,063
Shengyi Jingsheng
Partnership) ("Yuanxiang Tianyi")
directly
directly
Management Partnership (Limited
99.98%
- RMB548
15
99.98%
RMB533
Wuhu Yuanxiang Tianyi Investment
RMB3,660
99.99%
35
30
Investment Fund Partnership (Limited
99.95%
RMB616
321
99.95%
RMB295
China Life Guangde(Tianjin) Equity
directly
directly
LLC ("CG Investments")
99.99%
RMB4,111
451
indirectly
100.00%
RMB1,093
directly
68
Capital contribution to China Life Qihang Fund I
Capital contribution to CL Pension Industry
General
Statutory Discretionary
loss under the
for-sale
securities
reserves
Other
Share
premium
to profit or
on translating
to profit or
comprehensive
income non-
reclassifiable
Other
Exchange
differences
reclassifiable
foreign
from
available-
loss under the
reserve fund
28,594
1,148
53,905
As at 1 January 2020
(c)
(b)
(a)
RMB million RMB million
RMB million RMB million RMB million RMB million RMB million
RMB million RMB million RMB million
Total
equity method
operations
reserve
reserve fund
equity method
income
(losses)
gains/ comprehensive
28,265
28,265 28,264,705,000
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 2021, 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
No. of shares
RMB million
As at 31 December 2021
No. of shares
RMB million
19,323,530,000
Other
Unrealised
37 RESERVES
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 227
(ii) Overseas listed shares are traded on the Stock Exchange of Hong Kong Limited and the New York Stock Exchange.
756
28,265
7,441
7,441,175,000
1,500
1,500,000,000
8,941
8,941,175,000
19,324
28,264,705,000
As at 31 December 2020
40,516
37,888
to retained earnings
Others
Other comprehensive income
15,378
5,273
5,009
5,096
Appropriation to reserves
(4,608)
(104)
(388)
1,233
(5,349)
for the year
Other comprehensive income
237,935
45
182
45
53,905
228 Annual Report 2021 | 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 2021, the Company appropriated 10% of net profit under CAS which amounted to RMB5,096 million to the general reserve
for future uncertain catastrophes, which cannot be used for dividend distribution or conversion to share capital increment (2020: RMB5,009 million).
In addition, pursuant to the CAS, the Group appropriated RMB177 million to the general reserve of its subsidiaries attributable to the Company in the
consolidated financial statements (2020: RMB150 million).
(b) Approved at the Annual General Meeting in 30 June 2021, the Company appropriated RMB5,009 million to the discretionary reserve fund for the year
ended 31 December 2020 based on net profit under CAS (2020: RMB5,857 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 RMB5,096 million for the year ended 31 December 2021 (2020: RMB5,009 million).
249,055
123
(1,377)
48,320
45,511
50,621
2,635
48,919
305
305
398
As at 31 December 2021
(989)
43,047
40,502
16,025
5,159
5,857
5,009
Appropriation to reserves
25,699
344
(965)
646
25,674
for the year
Other comprehensive income
197,266
(162)
(24)
Others
(1,055)
(1,055)
As at 31 December 2020
45,525
1,402
54,268
93
53,905
As at 1 January 2021
237,935
34,645
182
43,047
40,502
45,525
1,402
54,268
93
53,905
(989)
As at 31 December 2021
No. of shares
36 SHARE CAPITAL
As at 31 December 2021, 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 2021, 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.
CLP&C and CL Sales signed the Strategic Cooperation Agreement on 22 July 2019. According to the agreement, CL Sales, as an agent of insurance
products, provides intermediary services for CLP&C. The two parties determine the specific commissions and the standard of sales management fee
through fair negotiation, based on the local market price and the paid- in premium which exclude value-added tax and deducte the premium from batch
reduction. This agreement is valid for three years, from 22 July 2019 to 21 July 2022.
On 31 January 2018, the Company and CLP&C signed an insurance agency framework 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 20 February 2021, CLP&C and the Company
renewed the agreement, effective for two years, from 8 March 2021 to 7 March 2023.
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)
Notes (continued):
(g) Transactions with significant related parties (continued)
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
224 Annual Report 2021 | Financial Report
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 10 February 2021, 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 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 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. 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. On 1 January 2021, the agreement was automatically renewed
for one year. 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.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.
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 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
Amount due from CL Overseas
RMB million
RMB million
As at
31 December
2020
2021
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 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 225
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 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.
(ii.c)
(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 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.
15
Capital contribution to Yuanxiang Tianfu
205
190
Capital contribution to Suzhou Pension Company
95
190
Capital contribution to CL Hotel Investors, L.P.
285
321
451
495
6,064
Capital contribution to CL Guang De
Capital contribution to CG Investments
Capital contribution to Yuanxiang Tianyi
15
Capital contribution to Shanghai Wansheng
12
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.
(i)
Notes:
(g) Transactions with significant related parties (continued)
35 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
342
Annual Report 2021 | Financial Report 223
15,947
700
Distribution of profits from the consolidated structured entities
to the Company
Transactions between the consolidated structured entities
and the Company
Capital reduction from Rui Chong
Capital reduction of subsidiaries
12
14,429
348
59
43
Amount due from Rui Chong Company
(43)
(114)
Amount due to Pension Company
39
46
Amount due from Pension Company
(8)
Amount due to AMC HK
(1,293)
(717)
Amount due to AMC
The resulting balances due from and to subsidiaries of the Company
(17)
(15)
604
114
Note:
Board of directors of the Company approved and announced on 26 May 2021 to subscribe 918,578,836 shares of Guangfa Bank's additional stock issue at
RMB8.7364 per share, amounted to RMB8,025 million. As at 31 December 2021, the Company has finished the capital injection to Guangfa Bank and was
awaiting the final regulatory approval. Therefore the capital contribution was recorded as other account receivable.
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 2021
Notes to the Consolidated Financial Statements (continued)
226 Annual Report 2021 | Financial Report
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.
Amount due to CL Ecommerce
28
RMB million
RMB million
2020
2021
For the year ended 31 December
Salaries and other benefits
(i) Key management personnel compensation
15
Percentage
of holding
12
Amount due from CL Ecommerce
Amount due to CLHI
2
2
Amount due from CLRE
(447)
(445)
32
51
(22)
(17)
Amount due to CLI
Amount due from CLI
Amount due to CLP&C
251
258
(40)
(38)
Amount deposited with CGB
69,148
7
7
Amount due from Sino-Ocean
361
356
Corporate bonds of Sino-Ocean
(51)
3
(80)
1,240
9,138
Amount due from CGB Note
603
8,384
Wealth management products and other financial instruments of CGB
71,419
Amount due to CGB
Amount
Percentage
of holding
As at 31 December 2020
190
100.00%
RMB1,991
Suzhou Pension Company
indirectly
indirectly
Company Limited ("AMC HK")
RMB2,181
50.00%
50.00%
HKD130
China Life Franklin Asset Management
indirectly
indirectly
directly and
directly and
HKD130
100.00%
directly
directly
100.00%
100.00%
Golden Phoenix Tree Limited
indirectly
indirectly
100.00%
RMB200
100.00%
RMB200
CL Wealth
indirectly
indirectly
85.03%
RMB1,095
85.03%
RMB1,095
CL AMP
74.27%
directly
RMB2,746
RMB2,746
million
million
Decrease
Increase
Percentage
Percentage
of holding
Amount
million
RMB19,324
As at 31 December 2021
As at 31 December 2020
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 2021
Notes to the Consolidated Financial Statements (continued)
As at 31 December 2021
CLIC
68.37%
Amount
million
RMB19,324
of holding
directly
directly
60.00%
million
RMB1,680
60.00%
RMB1,680
Pension Company
AMC
As at 31 December 2021
Percentage
of holding
Amount
Decrease
million
million
million
Amount of holding
As at 31 December 2020
Percentage
Subsidiaries
68.37%
74.27%
directly
Increase
100.00%
indirectly
100.00%
USD1,125
100.00%
USD1,125
China Century Core Fund Limited
directly
indirectly
directly
RMB2,435
100.00%
RMB2,435
Fortune Bamboo Limited
directly
directly
100.00%
100.00%
CL Health
RMB1,530
100.00%
Subsidiaries
King Phoenix Tree Limited
(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 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 219
indirectly
indirectly
100.00%
USD2
100.00%
USD2
directly
directly
100.00%
RMB1,530
RMB1,876
100.00%
Franklin Shenzhen Company
Sunny Bamboo Limited
directly
directly
RMB1,167
100.00%
RMB1,167
New Aldgate Limited
directly
directly
100.00%
- 700 RMB6,100
100.00%
RMB6,800
Rui Chong Company
indirectly
indirectly
100.00%
RMB1,876
Glorious Fortune Forever Limited
100.00%
100.00%
directly
directly
directly
100.00%
RMB1,993
100.00%
RMB1,993
100.00%
directly
directly
Golden Bamboo Limited
RMB285
190
100.00%
RMB95
directly
100.00%
CL Hotel Investor, L.P.
40 COMMITMENTS
Total
Property, plant and equipment
Investments
The Group had the following capital commitments relating to property development projects and investments:
Contracted, but not provided for
(a) Capital commitments
Pending lawsuits
The Group involves in certain lawsuits arising from the ordinary course of business. In order to accurately disclose the
contingent liabilities for pending lawsuits, the Group 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 2021 and 2020, 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.
As at
As at
96,298
31 December
2021
2020
RMB million
RMB million
94,770
78,954
1,528
3,063
403
82,017
(b) Operating lease commitments
31 December
506
2,182
RMB million
96
As lessor, the future minimum rentals receivable under non-cancellable operating leases are as follows:
5,500
5,598
Others
(147)
354
207
At 31 December 2021
18,686
34,994
239,446
RMB million
67,862
363,529
Annual Report 2021 | Financial Report 229
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
39 PROVISIONS AND CONTINGENCIES
The following is a summary of the significant contingent liabilities:
As at
As at
31 December
31 December
2021
2020
359
Not later than one year
2,239
Later than five years
ASSETS
Property, plant and equipment
41(a)
51,116
50,159
Right-of-use assets
41(b)
2,823
Investment properties
41(c)
6,191
6,162
RMB million
Investments in subsidiaries
170,387
88,951
Investments in associates and joint ventures
41(e)
162,984
157,401
Held-to-maturity securities
41(f)
1,531,640
1,188,509
Loans
2
41(d)
Later than one year but not later than five years
RMB million
2020
Total
230 Annual Report 2021 | Financial Report
As at
As at
31 December
31 December
2021
2020
RMB million
RMB million
781
1,296
Notes
768
1,526
193
2,219
2,487
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS
Statement of financial position
As at 31 December 2021
As at
31 December
As at
31 December
2021
142
Interest expense
financing
1,086
Bonds
payable
Lease
liabilities
sold under
agreements to
repurchase
holders of
consolidated
payable
related to
structured
41(g)
entities
activities
Total
RMB million
RMB million
RMB million
RMB million
RMB million
RMB million
RMB million
At 1 January 2020
20,045
34,990
3,091
118,088
21,400
1,327
bearing
loans and
borrowings
Securities
Interest-
interest
2,746
10,568
1,330
7,773
48,281
As at 31 December 2020
(1,761)
(143)
(142)
(901)
(575)
Disposals
198,941
(2,098)
Transfers into investment properties
6,317
5,459
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
38 NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
Changes in liabilities arising from financing activities
Other liability-
Other
payable to
liability-
the third-party
(2,098)
Changes from financing
cash flows
317
1,320
223,435
At 1 January 2021
19,556
34,992
2,664
122,249
42,654
1,320
223,435
Changes from financing
cash flows
42,654
(1,517)
25,208
(6,461)
134,441
Foreign exchange movement
(870)
(870)
Changes arising from losing
control of consolidated
structured entities
(368)
(368)
New leases
117,211
1,086
122,249
34,992
(1,618)
4,912
21,254
(3,639)
21,226
Foreign exchange movement
(806)
(806)
Changes arising from losing
control of consolidated
structured entities
(751)
2,664
(751)
1,156
1,156
Interest expense
2
113
3,632
3,747
Others
(78)
(78)
At 31 December 2020
19,556
New leases
646,998
Statutory insurance fund
Term deposits
6,351
2,372
73,363
Accumulated depreciation
As at 1 January 2021
(12,614)
(5,248)
(874)
(1,778)
(20,514)
Charge for the year
(1,705)
(740)
(148)
(372)
(2,965)
Disposals
264
420
43
530
1,257
As at 31 December 2021
(14,055)
(5,568)
131
1,287
8,008
55,345
7,773
1,330
10,568
2,746
70,698
Transfers upon completion
6,757
(7,148)
174
(217)
Additions
607
(979)
675
3,140
4,424
Transfers into investment properties
(209)
(209)
Disposals
(300)
(440)
(45)
(548)
(1,333)
As at 31 December 2021
2
(1,620)
(22,222)
Impairment
Buildings
Office
equipment
furniture and
fixtures
Assets
Motor
vehicles
under
construction
Leasehold
improvements
Total
RMB million
As at 1 January 2020
42,699
8,092
Cost
1,341
2,571
68,361
Transfers upon completion
6,010
2
(6,451)
318
(121)
Additions
147
580
70,698
13,658
48,281
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment (continued)
Notes to the Consolidated Financial Statements (continued)
As at 1 January 2021
(24)
(1)
(25)
Charge for the year
Disposals
As at 31 December 2021
(24)
(1)
(25)
Net book value
As at 1 January 2021
For the year ended 31 December 2021
35,643
456
10,567
968
50,159
As at 31 December 2021
41,266
2,440
308
6,350
752
51,116
232 Annual Report 2021 | Financial Report
2,525
638,849
As at 1 January 2021
Total
Other assets
41(n)
33,821
24,479
Cash and cash equivalents
53,593
50,692
Total assets
4,726,351
4,127,416
LIABILITIES AND EQUITY
Liabilities
Insurance contracts
Investment contracts
15
16
56
3,419,899
2,973,225
Policyholder dividends payable
313,594
124,949
288,212
122,510
Lease liabilities
1,889
6,095
6,630
13
Reinsurance assets
41(h)
491,332
521,886
Statutory deposits - restricted
41(i)
5,653
5,653
Available-for-sale securities
41(j)
1,370,035
Securities at fair value through profit or loss
41(k)
2,416
120,191
Securities purchased under agreements to resell
41(1)
3,463
5,888
Accrued investment income
41(m)
49,717
44,582
Premiums receivable
12
20,361
20,730
1,187,153
127,404
Bonds payable
18
34,994
28,265
41(r)
243,076
234,071
Retained earnings
Total equity
Total liabilities and equity
153,265
143,577
424,606
405,913
4,726,351
28,265
4,127,416
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment
Cost
Office
equipment
furniture and
Assets
Buildings
fixtures
Motor
vehicles
under
Leasehold
construction improvements
Annual Report 2021 | Financial Report 231
RMB million
36
4,301,745
34,992
Securities sold under agreements to repurchase
41(p)
232,496
116,584
Annuity and other insurance balances payable
56,818
55,031
Premiums received in advance
48,699
53,021
Other liabilities
3,721,503
41(q)
59,219
Deferred tax liabilities
41(0)
6,581
15,909
21
339
384
Total liabilities
Equity
Share capital
Reserves
61,487
Accumulated depreciation
60.00% directly
(11,411)
90.81%directly
99.99% directly
99.99% indirectly
RMB544 million
RMB65 million
RMB1,500 million
Insurance Agent
Hotel Management
Health Consultation
(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.
Annual Report 2021 | Financial Report 237
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
41 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 2021:
Name
CL Asset - Yuanliu No.1 Insurance Asset
Management Product
-
Percentage
of shares held
Trust/
investments
received
Principal
activities
58.69% directly RMB75,716 million Investment management
CL Investment China Eastern Airlines Group Equity 100.00% directly
China Life
-
China Hua Neng Debt-to-Equity Swap
Shan Guo Tou Jing Tou Corporate Trust Loan
Collective Funds Trust Scheme
PRC
CL Jiayuan (i)
PRC
CL Hangzhou Hotel (i)
99.99% directly
Not applicable
Investment
CL Guang De (ii)
PRC
99.95% directly
Not applicable
Investment
CL Pension Industry (ii)
PRC
99.90% directly
Not applicable
Jiao Yin Guo Xin China Aluminium Co., Ltd.
Supply-side Reform Collective Fund
Investment
PRC
99.99% directly
Percentage of
equity interest held
Not applicable
Investment
CL Xing Wan (ii)
PRC
99.98% indirectly
Not applicable
Investment
CL Sales (i)
PRC
China Life Qihang Fund I (ii)
Trust Scheme
Jian Xin Trust - CL Guo Xin Collective Fund
Trust Scheme
Guang Da Hui Ying No. 8 Collective Fund
Bai Rui Heng Yi No.817 Collective Fund Trust
Scheme (Zhong Guo Guo Xin)
Shang Xin Ningbo Wu Lu Si Qiao PPP
-
Collective Fund Trust Scheme
88.02% directly
RMB8,758 million Investment management
Kun Lun Trust China Metallurgical No.1
86.25% directly
RMB8,000 million
Investment management
Collective Fund
Jiang Su Trust •Xin Bao Sheng No.144 (Jing Tou)
CL Hua Neng International Development of
Infrastructure Debt Investment Scheme
China Eastern Airlines Equity Instrument
Investment Collective Fund Trust Scheme
84.00% directly
88.61% directly
Investment management
Investment management
CL - Dian Tou Clean Energy Equity Investment
Scheme (series I)
89.47% directly
RMB7,600 million
Investment management
Zhong Xin Jin Cheng •Tianjin Port Group
99.98% directly
RMB6,000 million
Investment management
Loans Collective Fund Trust Scheme
CL An Bao An Ji Half-year Debt Collective
Fund Scheme
89.15% directly
RMB6,166 million Investment management
RMB8,000 million
RMB7,900 million
USA
Collective Funds
RMB9,000 million
RMB9,000 million
Jiao Yin Guo Xin CL Shanxi Coal Mining
Debt-to-Equity Collective Funds Trust Scheme
Chongqing Trust Fund Guo Rong No.4
Collective Fund
•
Jiao Yin Guo Xin Jing Tou Corporate
RMB11,000 million
Investment management
100.00% directly
100.00% directly
RMB10,000 million
RMB10,000 million
Investment management
Investment management
99.99% directly RMB10,000 million Investment management
Investment management
Investment management
99.99% directly RMB10,000 million Investment management
RMB10,000 million
RMB10,000 million
Investment management
Investment management
75.00% directly RMB10,000 million Investment management
and indirectly
85.00% directly
RMB9,996 million Investment management
91.95% directly
RMB9,982 million Investment management
-
China Life Yanzhou Coal Mining Debt Investment
Zhong Hang Trust Fund Tian Qi [2020] No.372
100.00% directly
99.99% directly
89.00% directly
90.00% directly
and indirectly
CL Investment-COSCO Marine Debt
CG Investments
RMB1,131 million
Not applicable
Investment
CL Hotel Investor, L.P.
Golden Bamboo Limited
Sunny Bamboo Limited
Fortune Bamboo Limited
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
USA
100.00% directly
Not applicable
Investment
The British Virgin Islands
100.00% directly
Not applicable
Investment
The British Virgin Islands
The British Virgin Islands
The British Cayman Islands
100.00% directly
Not applicable
Investment
100.00% directly
Not applicable
Investment
PRC
PRC
100.00% directly
Hong Kong, PRC
Glorious Fortune Forever Limited
Investment
PRC
74.27% directly
Registered capital
RMB4,000 million
RMB3,400 million
Principal activities
Asset management
Pension and annuity
and indirectly
Hong Kong, PRC
50.00% indirectly
PRC
100.00% directly
Not applicable
RMB2,181 million
PRC
PRC
100.00% indirectly
100.00% directly
100.00% indirectly
85.03% indirectly
100.00% indirectly
100.00% directly
PRC
100.00% indirectly
100.00% directly
RMB1,288 million
RMB200 million
Not applicable
Not applicable
RMB6,100 million
Asset management
Investment in
retirement properties
Fund management
Financial service
Investment
Investment
Investment
Hong Kong, PRC
100.00% directly
Not applicable
Hong Kong, PRC
The British Jersey Island
Not applicable
RMB1,530 million
Investment
Health management
99.98% directly
Not applicable
Investment
PRC
99.98% directly
Not applicable
Investment
PRC
100.00% indirectly
RMB484 million
Investment
PRC
PRC
99.98% directly
Investment
PRC
99.98% directly
Not applicable
Investment
PRC
99.98% directly
Not applicable
Investment
Shengyi Jingsheng (i)
PRC
100.00% indirectly
Not applicable
Investment
Investment
99.98% directly
USD2 million
Investment
PRC
89.997% directly
Not applicable
Investment
The British Virgin Islands
100.00% indirectly
Not applicable
Investment
Wisdom Forever Limited Partnership
The British Virgin Islands
The British Cayman Islands
Not applicable
100.00% indirectly
Investment
100.00% indirectly
Not applicable
Investment
Bai Ning (ii)
Yuan Shu Yuan Pin (ii)
Yuan Shu Yuan Jiu (ii)
Hope Building (i)
Shanghai Wansheng (ii)
Yuanxiang Tianfu (ii)
Yuanxiang Tianyi (ii)
PRC
Not applicable
As at 1 January 2020
and indirectly
71.67% directly
Investment management
909
1
908
(1,309)
(1,309)
(2,238)
(2,238)
4,877
(1,020)
836
5,061
1
4,877
(1,019)
836
5,060
As at 1 January 2021
Net book value
As at 31 December 2021
As at 1 January 2021
Impairment
As at 31 December 2021
As at 1 January 2021
Charge for the year
Deductions
Accumulated depreciation
As at 31 December 2021
(2,639)
1
(2,638)
2,822
As at 31 December 2020
As at 1 January 2020
Net book value
As at 31 December 2020
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
Deductions
Deductions
As at 1 January 2020
Cost
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Right-of-use assets (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
234 Annual Report 2021 | Financial Report
2,239
1
2,238
As at 31 December 2021
2,823
1
Additions
Additions
As at 1 January 2021
Cost
(24)
As at 1 January 2020
Impairment
(20,514)
(1,778)
(874)
(5,248)
PRC
(12,614)
As at 31 December 2020
1,354
137
(25)
138
308
Disposals
(2,762)
(372)
(189)
(690)
(1,511)
Charge for the year
(19,106)
(1,543)
(823)
(5,329)
771
Buildings
Charge for the year
As at 31 December 2020
RMB million
Total
Others
Buildings
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Right-of-use assets
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 233
50,159
968
10,567
456
Disposals
2,525
As at 31 December 2020
49,230
1,028
13,657
518
2,763
31,264
As at 1 January 2020
Net book value
(25)
(1)
(24)
35,643
RMB6,000 million
Others
RMB million
2021
RMB million
31 December
As at
As at
236 Annual Report 2021 | Financial Report
Unlisted investments at cost
(d) Investments in subsidiaries
The fair value of investment properties of the Company as at 31 December 2021 amounted to RMB8,190 million (as at 31
December 2020: RMB7,878 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.
7,878
5,462
6,162
3,914
(634)
(161)
(473)
6,796
2,409
4,387
Buildings
RMB million
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
31 December
2020
RMB million
170,387
88,951
Investment Scheme
Guang Da Hui Ying No. 11 Collective Fund
72.41% directly
RMB5,800 million
Investment management
Trust Scheme
China Life
Tianjin Metro Infrastructure Debt
Investment Scheme
93.91% directly
RMB5,750 million
Investment management
238 Annual Report 2021 | Financial Report
As at 31 December 2020
Place of incorporation
and operation
King Phoenix Tree Limited
Golden Phoenix Tree Limited
CL Wealth (i)
CL AMP (i)
Suzhou Pension Company (i)
AMC HK
Pension Company (i)
Name
AMC (i)
(i) The table below presents the basic information of the Company's subsidiaries as at 31 December 2021:
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(d) Investments in subsidiaries (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Rui Chong Company (i)
New Aldgate Limited
Additions
As at 1 January 2020
Accumulated depreciation
As at 1 January 2021
Cost
(c) Investment properties
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 2021 (2020: same).
2,823
1
3,272
1
3,271
2,822
(2,238)
(2,238)
391
Additions
391
(1,176)
(1,176)
(1,453)
5,061
1
5,060
(490)
(490)
1,103
1,103
4,448
1
4,447
(1,453)
Total
As at 31 December 2021
As at 1 January 2021
As at 31 December 2020
As at 1 January 2020
Additions
Cost
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(c) Investment properties (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Annual Report 2021 | Financial Report 235
8,190
7,878
6,191
6,162
(823)
Accumulated depreciation
(189)
7,014
218
6,796
Buildings
RMB million
As at 31 December 2021
As at 1 January 2021
Fair value
As at 31 December 2021
As at 1 January 2021
Net book value
As at 31 December 2021
Additions
(634)
RMB5,001 million Investment management
The following is a summary of the significant contingent liabilities:
For the year ended 31 December 2021
(9,422)
990
990
4,334
(22,789)
2,546
(15,909)
4,334
(22,789)
2,546
(15,909)
2,862
4,261
344
7,467
1,413
1,413
- Portion of fair value changes on available-for-
sale securities attributable to participating
policyholders
As at 31 December 2021
(9,422)
3,413
(84)
(10,890)
(Charged)/Credited to other comprehensive income
- Available-for-sale securities
- Portion of fair value changes on available-for-
sale securities attributable to participating
policyholders
As at 31 December 2020
As at 1 January 2021
(Charged)/Credited to net profit
(Charged)/Credited to other comprehensive income
448
7,644
- Available-for-sale securities
Investments
RMB million
RMB million
Others
RMB million
Total
RMB million
1,557
1,787
(15,077)
1,710
2,630
Insurance
(Charged)/Credited to net profit
(17,115)
(ii) The analysis of deferred tax assets and deferred tax liabilities during the year is as follows:
Subtotal
(27,771)
(31,966)
Net deferred tax liabilities
(6,581)
(15,909)
Annual Report 2021 | Financial Report 245
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
41 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
(4,045)
(2,630)
- deferred tax liabilities to be settled within 12 months
(27,921)
448
(6,581)
As at
As at
31 December
2021
RMB million
31 December
2020
RMB million
Deferred tax assets:
2,890
- deferred tax assets to be recovered after 12 months
Deferred tax liabilities:
13,832
10,051
7,358
6,006
21,190
16,057
- deferred tax liabilities to be settled after 12 months
(25,141)
- deferred tax assets to be recovered within 12 months
Subtotal
As at 1 January 2020
(i) The movements in deferred tax assets and liabilities during the year are as follows:
Deferred tax assets/(liabilities)
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(o) Deferred tax
Total
Current
Non-current
Total
244 Annual Report 2021 | Financial Report
As at
31 December
As at
31 December
2021
2020
RMB million
RMB million
3,463
5,888
3,463
5,888
As at
31 December
2021
RMB million
As at
31 December
Others
Due from related parties
Tax prepaid
Automated policy loans
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.
Annual Report 2021 | Financial Report 243
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
41 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
2020
Bank deposits
Others
Total
Current
Non-current
Total
(n) Other assets
Investments receivable and prepaid
Land use rights
Disbursements
Debt securities
RMB million
12,124
12,298
5,324
5,349
3,673
3,522
2,686
2,257
590
714
4,940
7,509
3,574
24,479
26,222
16,907
7,599
7,572
33,821
24,479
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
33,821
31 December
7,479
9,129
30,761
26,093
6,832
6,191
49,717
44,582
47,674
43,602
2,043
1,554
980
44,582
As at
As at
31 December
31 December
2021
2020
RMB million
RMB million
49,717
127,404
As at
31 December
2020
5,009
5,096
15,201
Others
As at 31 December 2021
(500)
53,360
(112)
(612)
(1,381)
47,604
50,573
45,511
47,409
243,076
(s) Provisions and contingencies
Pending lawsuits
As at
31 December
2021
As at
31 December
5,096
Appropriation to reserves
(5,584)
(5,584)
(1,269)
(1,269)
As at 31 December 2020
53,860
(1,269)
53,188
45,477
40,502
42,313
RMB million
234,071
53,860
(1,269)
53,188
45,477
40,502
42,313
234,071
Other comprehensive income
for the year
As at 1 January 2021
Others
2020
RMB million
403
Later than one year but not later than five years
Later than five years
Total
248 Annual Report 2021 | Financial Report
As at
As at
31 December
2021
31 December
2020
RMB million
RMB million
548
553
833
953
142
162
1,523
1,668
Not later than one year
As lessor, the future minimum rentals receivable under non-cancellable operating leases are as follows:
(ii) Operating lease commitments
97,637
Annual Report 2021 | Financial Report 247
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(t) 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
506
Total
31 December
As at
31 December
2021
RMB million
2020
RMB million
112,194
1,485
94,586
3,051
113,679
As at
15,875
5,009
5,857
16,139
11,500
10,060
Brokerage and commission payable
5,351
7,051
Payable to constructors
2,324
2,410
Agency deposits
1,467
1,811
Interest payable of debt instruments
1,271
1,249
Tax payable
434
634
Stock appreciation rights (Note 32)
17,866
Salary and welfare payable
Interest payable to policyholders
RMB million
RMB million
RMB million
176,924
95,901
55,572
20,683
232,496
116,584
230,421
2,075
291
116,436
232,496
116,584
As at 31 December 2021, bonds with a carrying value of RMB194,593 million (as at 31 December 2020: RMB111,233
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 2021, the carrying
value of securities deposited in the collateral pool was RMB292,323 million (as at 31 December 2020: RMB250,407
million). The collateral is restricted from trading during the period of the repurchase transaction.
(q) Other liabilities
As at
31 December
As at
31 December
2021
RMB million
2020
140
8
493
Others
20,983
reserve
RMB million
RMB million
RMB million
RMB million
RMB million
RMB million
Total
RMB million
As at 1 January 2020
reserve fund
53,860
40,468
34,645
37,304
194,168
Other comprehensive income
for the year
25,297
Appropriation to reserves
5,009
27,891
2021
General
Statutory
reserve fund
19,372
Total
61,487
59,219
Current
Non-current
61,487
59,219
Total
Discretionary
246 Annual Report 2021 | Financial Report
59,219
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(r) Reserves
Share
premium
Unrealised gains/
(losses) from
Other available-for-sale
reserves
securities
61,487
120,191
Notes to the Consolidated Financial Statements (continued)
44,032
157,401
154,501
2,900
157,401
5,583
162,984
RMB million
RMB million
2020
2021
Unlisted debt securities include those traded on the Chinese interbank market.
Total
Unlisted
Listed in Mainland, PRC
Debt securities
Total
Subordinated bonds
Government agency bonds
Corporate bonds
Government bonds
Debt securities
(f) Held-to-maturity securities
As at 31 December
As at
As at
31 December
31 December
363,931
459,822
1,188,509
1,531,640
973,052
215,457
245,879
1,285,761
1,188,509
1,531,640
Investments in associates and joint ventures
104,668
201,343
209,068
617,515
910,151
264,983
349,116
RMB million
2020
2021
RMB million
63,305
60,324
As at 1 January
RMB5,000 million Investment management
521,886
As at 31 December 2021, the Company's term deposits of RMB750 million (as at 31 December 2020: RMB750 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
Contractual maturity schedule:
Within one year
After one year but within five years
Total
As at
31 December
2021
As at
31 December
2020
RMB million
RMB million
1,600
4,053
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 compliance with regulations of the CBIRC. These funds may not be used for any purpose other than for paying off debts
during liquidation proceedings.
491,332
1,740
Annual Report 2021 | Financial Report 239
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(d) Investments in subsidiaries (continued)
90.00% directly
Collective Fund Trust Scheme
Wu Kuang Trust - Xing Fu No.137
Investment Scheme (series II)
RMB5,000 million Investment management
100.00% directly
CL Investment - COSCO Marine Debt
Construction No. 1 Collective Fund Trust Scheme
99.99% directly
(e) Investments in associates and joint ventures
53,166
RMB5,486 million Investment management
Principal
activities
received
Trust/
investments
Percentage
of shares held
96.36% directly
•
Bai Rui Fu Cheng No.424 Collective Fund
Trust Scheme (Wu Han Metro)
Name
(ii) The table below presents the basic information of the Company's major consolidated structured entities as at 31
December 2021: (continued)
Kun Lun Trust Tianjin Urban Communications
127,401
2020
RMB million
RMB million
As at
31 December
2021
As at
31 December
2020
RMB million
RMB million
55,016
25,267
147,684
146,287
163,348
205,928
1,165,592
811,027
1,531,640
1,188,509
As at
As at
31 December
2021
240 Annual Report 2021 | Financial Report
Net value
Impairment
Total
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(f) Held-to-maturity securities (continued)
As at 31 December 2021, no accumulated impairment loss for the investment of held-to-maturity securities has been
recognised by the Company (as at 31 December 2020: same).
Debt securities - Contractual maturity schedule
Maturing:
Within one year
After one year but within five years
After five years but within ten years
31 December
After ten years
(g) Loans
Policy loans
Other loans
Total
Impairment
Net value
Maturing:
Within one year
After one year but within five years
After five years but within ten years
After ten years
Total
2020
RMB million
RMB million
31,699
27,256
650,817
641,292
(3,819)
(2,443)
646,998
638,849
Notes to the Consolidated Financial Statements (continued)
103,666
For the year ended 31 December 2021
Maturing:
Within one year
After one year but within five years
After five years but within ten years
Total
As at
31 December
As at
31 December
2021
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(h) Term deposits
Annual Report 2021 | Financial Report 241
101,456
168,954
236,209
200,730
414,608
440,562
650,817
641,292
(3,819)
(2,443)
646,998
279,286
638,849
31 December
2021
RMB million
As at
31 December
2020
RMB million
348,708
231,084
As at
Notes to the Consolidated Financial Statements (continued)
The estimated fair value of all held-to-maturity securities was RMB1,636,030 million as at 31 December 2021 (as at 31
December 2020: RMB1,224,617 million).
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(j) Available-for-sale securities
313,421
277,607
278
28
108,493
75,694
199,859
237,305
565,102
779,401
523,636
693,870
41,466
85,531
RMB million
RMB million
2020
2021
31 December
590,634
622,051
1,370,035
1,187,153
Equity securities
Subtotal
Others
Corporate bonds
Government agency bonds
Government bonds
Debt securities
(k) Securities at fair value through profit or loss
Total
31 December
After ten years
After one year but within five years
Within one year
Maturing:
Debt securities - Contractual maturity schedule
41 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(j) Available-for-sale securities (continued)
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
242 Annual Report 2021 | 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.
After five years but within ten years
Funds
As at
Total
93,312
565,102
779,401
130,734
149,151
81,795
111,029
134,513
201,911
168,912
258,864
49,148
58,446
RMB million
RMB million
2020
As at
31 December
2021
For the year ended 31 December 2021
96,308
256,291
301,106
52,127
Subtotal
Listed overseas
Listed in Hong Kong, PRC
Listed in Mainland, PRC
Equity securities
Subtotal
Unlisted
Listed in Mainland, PRC
Debt securities
As at
Other available-for-sale securities mainly include unlisted equity investments, private equity funds and perpetual bonds.
20,559
1,187,153
20,279
1,370,035
601,492
570,355
137,287
163,620
13,013
5,005
53,778
(i)
Common stocks
Unlisted
Subtotal
4,849
64
56
39,540
28,118
74,238
76,159
47,889
52,676
26,132
217
231
23,252
127,404
120,191
53,166
44,032
262
266
43,133
4,213
9,349
31 December
As at
Available-for-sale securities, at fair value
Others
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds
Others (i)
Subtotal
31,537
Equity securities
Common stocks
Preferred stocks
Wealth management products
Others (i)
Subtotal
Available-for-sale securities, at cost
Equity securities
Others (i)
Total
Funds
9,771
11,009
74,238
35,510
RMB million
RMB million
2020
2021
As at
31 December
31 December
As at
Subtotal
Unlisted
Listed overseas
Listed in Hong Kong, PRC
Listed in Mainland, PRC
Equity securities
Subtotal
Unlisted
Listed overseas
Listed in Mainland, PRC
12,229
Debt securities
Total
36,802
174,433
Total
124,578
76,159
1,485
7,143
68,569
62,009
2,715
1,469
1,156
RMB million
2020
5,851
As at
As at
31 December
2021
RMB million
313,145
565,102
779,401
137,665
256,313
31 December
266,057
bonuses
Basic
related
scheme
in salary
Benefits
salaries
Pension
of salary
included
42 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION (continued)
Performance
payment
Deferred
Name
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the year ended 31
December 2020 are as follows:
(a) Directors' and chief executive's emoluments (continued)
Annual Report 2021 | Financial Report 249
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
income
Subtotal
income
Yin Zhaojun (ii)
Total
250.0
(vii) Wang Bin did not receive remuneration from the Company and resigned as chairman and executive director in February 2022.
(viii) The above remuneration was calculated based on the relevant employment period during the reporting period.
Chang Tso Tung Stephen (iv)
Wang Junhui (ii)
Liu Huimin (ii)
Yuan Changqing (ii)
Zhao Peng (iii)
1,980.2
751.8
2,732.0
in kind contributions
86.1
751.8
2,506.0
1,253.0
1,253.0
Li Mingguang
Su Hengxuan (i)
RMB thousand
included
in total
Actual paid
Deferred
payment
included
in total
139.9
(vi) Chang Tso Tung Stephen resigned as independent director in October 2020 and continued to perform as independent director until June 2021; Robinson
Drake Pike resigned as independent director in June 2021 and continued to perform as independent director until October 2021.
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the year ended 31
December 2021 are as follows:
(iv) Yin Zhaojun, Liu Huimin resigned as non-executive director in January 2021 and February 2021.
98.0
49.7
70.5
626.5
Huang Xiumei (iii)
160.0
1,253.0
Li Mingguang
Su Hengxuan (i)
RMB thousand
Total
1,511.0
746.7
Pension scheme
contributions
paid
Benefits
Remuneration
Name
(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 2021 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 2021 consolidated financial statements. The final compensation will be disclosed in a separate announcement
when determined.
42 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION
For the year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
70.0
in kind
Yuan Changqing (ii)
Yin Zhaojun (iv)
Liu Huimin (iv)
(iii) Huang Xiumei was appointed as executive director in July 2021.
(ii) Yuan Changqing, Wang Donghui and other non-executive directors did not receive remuneration from the Company.
300.0
160.0
360.0
370.0
70.0
210.0
300.0
160.0
360.0
370.0
70.0
210.0
Su Hengxuan did not receive remuneration from the Company.
(i)
Robinson Drake Pike (vi)
Chang Tso Tung Stephen (vi)
Leung Oi-Sie Elsie
Tang Xin
Zhai Haitao (v)
Lam Chi Kuen (v)
Wang Junhui (ii)
(v) Lam Chi Kuen, Zhai Haitao were appointed as independent director in June 2021 and October 2021.
320.0
300.0
250.0
1,458.5
206.9
115.6
1,781.0
1,781.0
Luo Zhaohui (i)
Song Ping (ii)
42.1
74.7
116.8
29.9
20.2
8.5
Robinson Drake Pike
29.9
115.6
(i)
Luo Zhaohui resigned as shareholder representative supervisor in July 2020 and did not receive remuneration from the Company.
(ii) Song Ping resigned as employee representative supervisor in January 2020.
(iii) The above remuneration was calculated based on the relevant employment period during the reporting period.
940.1
518.4
Wang Xiaoqing
1,888.4
859.2
139.4
86.1
3,089.5
859.2
2,230.3
Han Bing
505.5
1,481.7
The compensation amounts disclosed above for these supervisors for the year ended 31 December 2020 were restated
based on the finalised amounts determined during 2021.
207.3
1,818.7
1,818.7
Cao Qingyang
593.6
959.3
1,552.9
207.9
127.6
1,888.4
129.7
2,864.0
The supervisors received the compensation amounts disclosed above during their term of office in 2021 and 2020.
Notes to the Consolidated Financial Statements (continued)
There was no arrangement under which a director, chief executive or supervisor waived or agreed to waive any
remuneration during the year.
252 Annual Report 2021 | Financial Report
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.
TM
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
E-mail
: 86-10-63633333
: www.e-chinalife.com
ir@e-chinalife.com
FSC
www.fsc.org
MIX
Paper from
responsible sources
FSC™ C019970
The emoluments of the five highest paid individuals are the total emoluments paid to them during the year.
For the year ended 31 December 2021, 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 (2020: nil).
132 I
2020
For the year ended 31 December 2021
42 DIRECTORS', SUPERVISORS', CHIEF EXECUTIVE'S AND SENIOR
MANAGEMENT'S REMUNERATION (continued)
(c) Five highest paid individuals
For the year ended 31 December 2021, the five individuals whose emoluments were the highest in the Company include
one director and one supervisor (2020: 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
Annual Report 2021 | Financial Report 251
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
RMB thousand
6,985.3
490.2
7,475.5
RMB thousand
13,940.1
430.5
14,370.6
Number of individuals
For the year ended 31 December
2021
5
2021
1,432.0
145.5
Jia Yuzeng
The directors and chief executive received the compensation amounts disclosed above during their term of office in 2021
and 2020.
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.
250 Annual Report 2021 | Financial Report
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2021
42 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 2021 are as
follows:
Name
Jia Yuzeng
Han Bing (i)
Cao Qingyang
Wang Xiaoqing
Lai Jun (ii)
Niu Kailong (ii)
Remuneration
paid
Benefits Pension scheme
in kind contributions
Total
The compensation amounts disclosed above for these directors and the chief executive for the year ended 31 December
2020 were restated based on the finalised amounts determined during 2021.
(vi) The above remuneration was calculated based on the relevant employment period during the reporting period.
(v) Wang Bin did not receive remuneration from the Company and resigned as chairman and executive director in February 2022.
(iv) Chang Tso Tung Stephen resigned as independent director on 19 October 2020. He continued to perform as independent director until 28 June 2021,
when the qualification of new independent director was approved by CBIRC.
70.0
320.0
Tang Xin
250.0
70.0
1,432.0
Leung Oi-Sie Elsie
250.0
50.0
RMB thousand
320.0
320.0
320.0
320.0
320.0
300.0
300.0
(i) Su Hengxuan did not receive remuneration from the Company.
(ii) Yuan Changqing, Wang Donghui and other non-executive directors did not receive remuneration from the Company.
(iii) Zhao Peng was appointed as executive director from February to April 2020. He did not receive remuneration from the Company.
320.0
1,253.0
320.0
98.0
Basic
Performance
related
Subtotal
included
of salary
in salary
Benefits
Pension
scheme
Name
payment
salaries
income
income
in kind contributions
Total
Deferred
payment
included
in total
Actual paid
included
in total
RMB thousand
139.5
bonuses
Deferred
976.2
250.6
1,490.5
49.0
58.5
358.1
690.0
114.8
944.4
601.4
113.4
139.6
842.3
127.5
(ii) Lai Jun and Niu Kailong were appointed as employee representative supervisor and shareholder representative supervisor in October 2021. Niu Kailong
did not receive remuneration from the Company.
Han Bing resigned as shareholder representative supervisor in October 2021.
(i)
(iii) The above remuneration was calculated based on the relevant employment period during the reporting period.
21.2
19.7
112.9
153.8
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December 2020 are as
follows:
(50)
Net fair value gains through profit or loss
14,583
20,344
8,336
10,328
1,841
1,216
2021
24,983
28,718
127,673
148,453
162,783
188,770
198,596
214,057
55
4,943
Notes:
Disposal gains and impairment losses of associates and joint ventures
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)
2
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, and the
financing entities were primarily large central-owned
enterprises and state-owned enterprises. As at the end of
the Reporting Period, over 97% of the credit bonds and
over 99% of the debt-type financial products held by the
Company were rated AAA by external rating institutions.
In general, the asset quality of the Company's credit
investment products was in good condition, and the credit
risks were well controlled.
Credit risk management
In 2021, the Company's net investment income was
RMB188,770 million, rising by 16.0% year on year, an
increase of RMB25,987 million from 2020. Since the
Company consistently increased its allocation to bonds
with long durations in recent years, and the income
from investments in associates and joint ventures also
increased, the net investment yield was 4.38% for 2021,
up by 4 basis points from 2020. The gross investment
income of the Company reached RMB214,057 million,
rising by 7.8% year on year, an increase of RMB15,461
million from 2020. Gross investment yield was 4.98%,
down by 32 basis points from 2020. Affected by the
fluctuation in the equity market, the comprehensive
investment yield² taking into account the current net fair
value changes of available-for-sale securities recognized
in other comprehensive income was 4.87%, down by 146
basis points from 2020.
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.
Net realised gains on financial assets
5.30%
4.98%
Gross investment yield²
4.34%
4.38%
Net investment yield¹
(670)
21,900
Share of profit of associates and joint ventures
Annual Report 2021 | Management Discussion and Analysis
Net income from fixed-maturity investments
Net income from equity investments
100.00%
4,716,401
Total
5.85%
239,584
5.47%
257,953
4,095,491
Investments in associates and joint ventures
64,602
1.56%
73,355
Cash and others5
0.35%
14,217
0.28%
1.58%
100.00%
1. Debt-type financial products include debt investment schemes, trust schemes, project asset-backed plans, credit asset-backed securities, specialized
asset management plans, and asset management products, etc.
2.
Net investment income
Gross investment income
2020
2021
RMB million
For the year ended 31 December
Investment income
27
from 13.32% as at the end of 2020, the percentage
of investment in debt-type financial products changed
to 9.41% from 11.08% as at the end of 2020, and the
percentage of investment in stocks and funds (excluding
money market funds) changed to 8.75% from 11.31% as
at the end of 2020.
As at the end of the Reporting Period, the Company's
investment assets reached RMB4,716,401 million, an
increase of 15.2% from the end of 2020. Among the
major types of investments, the percentage of investment
in bonds rose to 48.20% from 41.97% as at the end of
2020, the percentage of term deposits changed to 11.23%
Cash and others include cash, cash at banks, short-term deposits, and securities purchased under agreements to resell, etc.
Other equity investments include private equity funds, unlisted equities, preference shares, equity investment plans and bank wealth management
products, etc.
5.
4.
Funds include equity funds, bond funds and money market funds, etc. In particular, the balances of money market funds as at 31 December 2021 and
31 December 2020 were RMB1,961 million and RMB1,206 million, respectively.
3.
Other fixed-maturity investments include policy loans, statutory deposits-restricted, and interbank certificates of deposits, etc.
Net income from investment properties
Investment income from cash and others
Notes:
26 Annual Report 2021 | Management Discussion and Analysis
Investment properties
2
8
26
180
76
83
Short-term insurance business
30,246
Total
618,327
30,838
612,265
Notes:
1. Premiums of individual agent business sector included premiums acquired by the general sales team and the upsales team.
2. Premiums of other channels mainly included premiums of government-sponsored health insurance business and online sales, etc.
Insurance Business
Analysis of insurance business
In 2021, facing persistent impacts of the COVID-19
pandemic and a challenging market environment, the
industry faced unprecedented pressure for transformation.
The Company continued to deepen the customer-centric
sales deployment of "Yi Ti Duo Yuan", focusing on
business restructuring and making breakthroughs, and
stressing precise allocation of resources on the basis of
standardized management. The individual agent business
sector consistently prioritized business value and further
promoted operation differentiation between sales teams.
The diversified business sector achieved progress while
maintaining stability and coordinated effectively with
the individual agent business sector by concentrating
on specialized operations, quality and efficiency
enhancement, and transformation and innovation. As at
the end of the Reporting Period, the number of total sales
force of the Company was approximately 890,000.
Individual Agent Business Sector
The individual agent business sector pursued high-
quality development, consistently deepened business
restructuring, and achieved steady business development.
During the Reporting Period, gross written premiums
from the sector were RMB509,489 million, a decrease
of 0.3% year on year. Renewal premiums amounted to
RMB407,973 million, an increase of 4.3% year on year.
20 Annual Report 2021 | Management Discussion and Analysis
First-year regular premiums were RMB82,254 million,
a decrease of 17.4% year on year, of which first-year
regular premiums with a payment duration of ten years
or longer were RMB41,580 million, a decrease of 26.0%
year on year. In 2021, the value of one year's sales of the
sector was RMB42,945 million, a decrease of 25.5% year
on year, and new business margin of one year's sales by
annual premium equivalent was 42.2%, a decrease of 5.9
percentage points year on year.
Affected by sporadic outbreaks of the pandemic and the
challenging market environment, the whole industry had
difficulties in agent recruitment and retention, and the size
of sales force consequently declined to a certain extent.
The Company adhered to the sales force development
strategy of improving quality with stabilised quantity,
and made great efforts in enhancing its quality. As at the
end of the Reporting Period, the number of agents of the
sector was 820,000, including 519,000 agents from the
general sales team and 301,000 agents from the upsales
team. The monthly average productive agents decreased
compared with the previous year, however, the number of
high-performance agents was stable, and the foundation
of sales force remained solid. Although the sector's
development was under pressure, the Company adhered
to the strategy of "productive agents-driven business"
and made solid stride in business restructuring. The 4.0
version of the regular agent management system was
fully promoted and implemented, and transformation of
sales team was pushed forward aiming at becoming more
specialized and professional.
188
Diversified Business Sector
28
31,109
374
Group Insurance Channel
29,162
First-year business of long-term insurance
1,846
28,872
2,040
First-year regular
44
110
Single
1,802
1,930
Renewal business
1,622
1,862
Short-term insurance business
25,694
24,970
Other Channels²
First-year regular
Single
Renewal business
30,350
First-year business of long-term insurance
Pushing forward "Dingxin Project" deployment in great
depth, the diversified business sector concentrated on
specialized operation as well as quality and efficiency
enhancement, and actively developed the bancassurance,
group insurance, and health insurance businesses.
Bancassurance Channel With equal emphasis on
business scale and value, the bancassurance channel
consistently pushed forward sound and healthy
development. During the Reporting Period, gross written
premiums from the channel amounted to RMB49,326
million, an increase of 19.6% year on year. First-year
regular premiums were RMB16,110 million, an increase
of 2.3% year on year; in particular, first-year regular
premiums with a payment duration of five years or longer
were RMB6,743 million, an increase of 35.3% year
on year. Renewal premiums amounted to RMB32,792
million (a year-on-year increase of 30.6%), accounting
for 66.48% of gross written premiums from the channel
(a year-on-year increase of 5.59 percentage points).
The bancassurance channel constantly enhanced the
professional service support capability of the sales team,
and the quality of which was steadily improved. As at the
end of the Reporting Period, the number of the channel's
account managers was 25,000, the quarterly average
active managers remained stable, and the productivity per
manager increased continuously.
Gross written premiums of
bancassurance channel (RMB million)
28 Annual Report 2021 | Management Discussion and Analysis
45,000
High-performance
personnel increased by
↑13.0%
from the
% end of 2020
25,694 ▼ 29,162 ▼
2.9%
24,970 ▼ 28,872 ▼
Other Channels In 2021, gross written premiums from
other channels were RMB30,350 million, a decrease of
2.4% year on year. The Company proactively participated
in a variety of government-sponsored health insurance
businesses. As at the end of the Reporting Period, the
Company carried out over 200 supplementary major
medical expenses insurance programs, covering more
than 350 million people. It also undertook over 400 health
care entrusted programs, providing services to more than
100 million people; 61 long-term care insurance programs
in 17 provinces and cities, covering 23 million people;
and 170 supplementary medical insurance programs
in 22 provinces and cities, covering 91 million people.
The Company also participated in the construction of a
multi-level social security system and implemented 54
city-customized commercial medical insurance projects
in 15 provinces and cities, covering more than 10 million
people.
In addition, the Company greatly developed the online
insurance business and provided customers with high-
quality service experience through online-to-offline
sales and online direct sales. In full compliance with the
regulatory requirements of the CBIRC with respect to
the online insurance business, the Company optimized
its online organization and business system, featuring
centralized operation and unified management, and
offered a variety of products for different scenarios and
customers. During the Reporting Period, the Company's
online insurance business grew rapidly, which was mostly
achieved through online-to-offline integration with sales
channels of individual agents, bancassurance and group
insurance. Total premiums¹ under the CBIRC caliber were
RMB34,969 million, reaching a record high once again. In
the future, the Company will further strengthen the online-
to-offline integration of its online insurance business,
actively explore on the dedicated online life insurance
business, and provide customers with more convenient
online insurance services.
1
Including premiums from online insurance business acquired by different sales channels of the Company.
22 Annual Report 2021 | Management Discussion and Analysis
Integrated Financial Sector
Being customer-centric, the Company fully leveraged
the resource advantages of the fellow members of
CLIC and actively engaged in the construction of a "Life
Insurance plus" integrated financial ecosystem, turning
the integrated financial advantages into a driving force for
the high-quality development of the Company. In 2021,
due to the impact of the comprehensive reform on auto
insurance and the slower growth of this sector, premiums
from CLP&C cross-sold by the Company were RMB21,107
million, with the number of insurance policies increased
by 18.0% year on year. Additional first-year receipts of
enterprise annuity funds and pension security products of
AMP cross-sold by the Company were RMB28,197 million.
The Company entrusted CGB to sell its bancassurance
products, with the first-year regular premiums recording
a relatively stable growth. The number of new debit cards
and credit cards jointly issued by the Company and CGB
reached 1,224,000. Meanwhile, in order to satisfy the
diverse needs of its customers, the Company worked with
CGB and CLP&C to carry out various operation activities
to provide customers with a series of quality financial and
insurance service solutions.
By integrating online and offline as well as internal and
external healthcare resources, the Company improved
its health management and service capabilities and
actively participated in the Healthy China program. China
Life Inclusive Healthcare Service Platform continued
to diversify its services while upgrading its system
functions. As at the end of the Reporting Period, more
than a hundred types of services were available on the
platform, and the size of the accumulated registered users
of the platform led the industry with an increase of over
35% from the end of 2020. The Company continued to
formulate the China Life aged care system and deployed
towards high-quality resources in the aged care industry
such as rehabilitation, medical care, hospital, health care
big data, and health industrial parks through the China
Life Integrated Aged Care Fund. In 2021, the China Life
Integrated Aged Care Fund reserved a batch of pension
and retirement projects that could meet the diversified
and multi-level demands of customers in strategic regions
such as Beijing-Tianjin-Hebei, the Yangtze River Economic
Belt, and the Guangdong-Hong Kong-Macao Greater Bay
Area.
Analysis of insurance products
Adhering to the customer-centric product development
concept and the original role of insurance, the Company
fully implemented major national strategies including
Healthy China program, proactively responding to
population aging and rural revitalization, accelerated
insurance product innovation and advanced the supply-
side reform of insurance products to create a diversified
product system.
By closely integrating the Healthy China program with its
own business development, the Company consistently
optimized and upgraded its health insurance products and
strengthened the innovative research and development
of illness insurance products and medical insurance
products, etc., in terms of the insured customer group,
scope of cover, and protection functions, so as to offer
diversified health protections. The Company actively
served the national strategy of responding to population
aging and deepened its research in insurance coverage
and benefits. By leveraging the advantages of the long-
term risk protection of insurance products and the long-
term application of insurance fund, the Company launched
the exclusive commercial pension insurance and special
annuity insurance products for the elderly customers. It
also developed exclusive insurance products to facilitate
rural revitalization strategy, proactively playing its role in
protecting people's well-being.
In 2021, the Company newly developed and upgraded a
total of 160 products, including 12 life insurance products,
138 health insurance products, two accident insurance
products, and eight annuity insurance products. Out of
these products, 144 were protection-oriented insurance
products, and 16 were long-term savings insurance
products.
Annual Report 2021 | Management Discussion and Analysis
23
Short-term insurance premiums
2020
2021
Gross written premiums of
group insurance channel (RMB million)
Gross written premiums of
individual agent business sector
(RMB million)
▼ 82,254
2021
2020
▼ 99,555
First-year regular premiums
Agents of individual agent
business sector
820,000
509,489 ▼
511,044 ▼
411
16,110 ▼
49,326 ▼
19.6%
15,748 ▼
41,240 ▼
2020
First-year regular premiums
Account managers of
bancassurance channel
25,000
Annual Report 2021 | Management Discussion and Analysis
21
Group Insurance Channel The group insurance
channel insisted on the coordination of business scale
and profitability and achieved stable development in
all business lines. During the Reporting Period, gross
written premiums from the channel were RMB29,162
million, an increase of 1.0% year on year. Short-term
insurance premiums from the channel were RMB25,694
million, an increase of 2.9% year on year. As at the
end of the Reporting Period, the number of direct sales
representatives was 45,000, among which the high-
performance personnel increased by 13.0% from the end
of 2020.
2021
Short-term insurance business
25,109
32,792
106,001
-20.0%
2,062
2,204
-6.4%
394,429
372,388
5.9%
120,609
115,089
4.8%
73,120
69,722
4.9%
13,579
9,408
44.3%
59,541
60,314
-1.3%
47,489
45,367
4.7%
84,820
-19.7%
108,205
86,882
Total
Renewal business
Single
First-year regular
First-year business
Accident Insurance Business
Renewal business
Single
First-year regular
First-year business
Health Insurance Business
16,407
Renewal business
First-year regular
First-year business
Life Insurance Business
For the year ended 31 December
Gross written premiums categorized by business
Figures of Gross Written Premiums
BUSINESS ANALYSIS
Change
481,311
480,593
0.1%
Single
Top five insurance products in terms of gross written premiums
16,583
15,862
99,555
Single
260
283
Renewal business
407,973
391,272
Short-term insurance business
19,002
19,934
Bancassurance Channel
49,326
41,240
First-year business of long-term insurance
16,123
15,757
First-year regular
16,110
15,748
Single
13
9
Renewal business
82,254
First-year regular
99,838
82,514
16,012
-0.9%
11
12
-8.3%
15,851
545
618,327
16,000
-0.9%
571
612,265
-4.6%
1.0%
-1.1%
Note: Single premiums in the above table include premiums from short-term insurance business.
reached RMB120,609 million, rising by 4.8% year on year.
Gross written premiums from accident insurance business
were RMB16,407 million, a year-on-year decrease
of 1.1%.
Annual Report 2021 | Management Discussion and Analysis 19
Gross written premiums categorized by channel
For the year ended 31 December
RMB million
2021
2020
Individual Agent Business Sector¹
509,489
511,044
First-year business of long-term insurance
During the Reporting Period, gross written premiums from
the life insurance business of the Company amounted to
RMB481,311 million, rising by 0.1% year on year. Gross
written premiums from the health insurance business
13,374
For the year ended 31 December
China Life Xin Xiang Zhi Zun Annuity
Administrative expenses
Other expenses
Statutory insurance fund contribution
RMB million
2021
2020
Change
65,744
84,361
-22.1%
5,598
3,747
49.4%
40,808
37,706
8.2%
15,467
12,270
1,253
1,229
26.1%
2.0%
During the Reporting Period, underwriting and policy
acquisition costs declined by 22.1% year on year due to a
decrease in regular premiums from new policies. Finance
costs rose by 49.4% year on year due to an increase
in interest paid for securities sold under agreements to
repurchase. Administrative expenses rose by 8.2% year
on year due to the expiration of policies on temporary
expenses deduction.
Investment Business
Finance costs
In 2021, domestic bond yields fluctuated within a tight
range, which rose at first and then fell down, and the
interest rate pivot trended downwards on the whole.
The A-share market was volatile, with significant sector
Underwriting and policy acquisition costs
Analysis of underwriting and policy acquisition costs and other expenses
Policyholder dividends resulting from participation in profits
During the Reporting Period, insurance benefits and
claims expenses rose by 6.5% year on year due to an
increase in the change of insurance contract liabilities. In
particular, due to steady growth of life insurance business,
insurance benefits and claims expenses of life insurance
business rose by 7.5% year on year. Insurance benefits
and claims expenses of health insurance business rose
by 1.9% year on year, and insurance benefits and claims
2021
618,754
2020
580,801
6.5%
527,863
490,994
7.5%
83,688
82,146
1.9%
7,203
7,661
-6.0%
10,628
26,511
9,846
7.9%
28,279
-6.3%
expenses of accident insurance business declined by
6.0% year on year. Investment contract benefits rose
by 7.9% year on year due to an increase in the scale of
the universal insurance accounts. Policyholder dividends
resulting from participation in profits declined by 6.3%
year on year due to a decrease in investment income from
the participating accounts.
Annual Report 2021 | Management Discussion and Analysis
25
For the year ended 31 December
divergence. The Company always adhered to its strategic
consistency, prioritized asset-liability management in
using insurance funds, firmly implementing its medium-
to long-term strategic plan of asset allocation, and making
flexible tactical allocations in response to the market
change. Firstly, the Company seized the opportunity of
a relatively high interest rate in the first half of 2021 and
increased allocation to assets with long durations such
as government bonds to further narrow the duration gap.
Secondly, the Company prudently controlled equity risk
exposures in open market to reduce portfolio volatility.
and secure the investment gains. Thirdly, the Company
strengthened the innovation in alternative investment
models, and positioned for sectors with prime prospects
to establish a diversified investment portfolio.
Investment portfolios
As at the end of the Reporting Period, the Company's investment assets categorized by investment object are set out as
below:
9.02%
358,382
8.75%
Equity financial assets
699,457
14.83%
700,748
17.10%
Common stocks
302,090
6.41%
350,107
8.55%
Funds³
112,689
2.39%
114,311
2.79%
Other equity investments4
284,678
6.03%
236,330
5.76%
425,565
Other fixed-maturity investments²
11.08%
453,641
RMB million
Investment category
Fixed-maturity financial assets
Term deposits
Amount
As at 31 December 2021
Percentage
As at 31 December 2020
Amount
Percentage
3,672,262
77.86%
3,076,340
Investment contract benefits
75.12%
11.23%
545,678
13.32%
Bonds
2,273,425
48.20%
1,718,639
41.97%
Debt-type financial products¹
443,784
9.41%
529,488
Accident insurance business
Health insurance business
Life insurance business
34,094
Insurance (Type A)
(國壽鑫享金生年金保險(A款))2
China Life Critical Illness Group
Health Insurance for Rural and
Urban Citizens (Type A)
(國壽城鄉居民大病團體醫療保險(A型))
China Life Xin Fu Ying Jia Annuity Insurance
(國壽鑫福贏家年金保險)2
23,114
Mainly through the channel of
exclusive individual agents
1,231
Notes:
1.
2.
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 Xiang Jin Sheng Annuity Insurance (Type A) and China Life Xin Fu Ying Jia Annuity Insurance have been replaced by their upgraded
products and are no longer on sale, and premiums from insurance business were recorded as renewal premiums.
Top three insurance products in terms of net increase in investment contracts
For the year ended 31 December
RMB million
Net increase
in investment
Insurance product
China Life Xin Xiang Jin Sheng Annuity
(國壽鑫耀東方年金保險)
Annuity Insurance
China Life Xin Yao Dong Fang
Insurance (Celebration Version)
(國壽鑫享至尊年金保險(慶典版))
RMB million
Gross written
premiums
40,851
Standard
premiums
from new
policies¹
Major sales channel
Surrender
payment
China Life Xin Account Endowment Insurance (universal insurance)
75
834
39,573
11,908
Mainly through the channel of
exclusive individual agents
293
Mainly through the channel of
586
exclusive individual agents
25,112
25,112
Through other channels
Mainly through the channel of
exclusive individual agents
Insurance product
(exclusive version)
Major sales channel
RMB million
2021
2020
Change
3,180,931
2,767,642
14.9%
228,899
10,069
3,419,899
195,487
17.1%
10,096
-0.3%
2,973,225
15.0%
835,400
837,293
-0.2%
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.
As at the end of the Reporting Period, the reserves of
insurance contracts of the Company were RMB3,419,899
million, 15.0% up from RMB2,973,225 million as at
the end of 2020, primarily due to the accumulation of
Analysis of claims and policyholder benefits
For the year ended 31 December
insurance liabilities from new policies and renewals. As
at the date of the statement of financial position, the
reserves of various insurance contracts of the Company
passed the liability adequacy test.
RMB million
Change
Insurance benefits and claims expenses
31 December
As at
31 December
As at
12,580
Mainly through the channel of exclusive individual
agents
Surrender
payment
156
(國壽鑫賬戶兩全保險(萬能型)(尊享版))
China Life Xin Account Endowment Insurance (universal insurance)
7,858
(diamond version)
Mainly through the channel of exclusive individual
agents
419
(國壽鑫賬戶兩全保險(萬能型)(鑽石版))
China Life Xin Zun Bao Whole Life Insurance (universal insurance)
contracts
3,718
Mainly through the channel of exclusive individual
agents
20
20
(國壽鑫尊寶終身壽險(萬能型)(慶典版))
24 Annual Report 2021 | Management Discussion and Analysis
Insurance contracts
Life insurance
Health insurance
Accident insurance
Total of insurance contracts
Including: Residual margin Note
(celebration version)
Direct sales representatives
2020
RMB million
2020
535,107
10% decrease in expenses
6.
41,566
522,276
10% increase in expenses
5.
36,362
427,018
53,202
630,761
47,042
554,272
42,688
504,849
44,780
528,691
47,995
7.
10% increase in mortality rate for non-annuity products
and 10% decrease in mortality rate for annuity products
525,259
527,279
13. Using 2020 EV appraisal assumptions
46,853
537,058
12. 10% decrease in morbidity rates
42,717
520,500
11. 10% increase in morbidity rates
4. Investment return -50bps
45,661
10. 10% decrease in lapse rates
43,925
528,559
45,594
532,101
8. 10% decrease in mortality rate for non-annuity products
and 10% increase in mortality rate for annuity products
10% increase in lapse rates
9.
43,970
528,752
Investment return +50bps
Risk discount rate -50bps
1. Risk discount rate +50bps
D
Value of one year's sales for the 12 months ended 31 December 2021.
C
B Reflects expected impact of covered business, and the expected return on investments supporting the 2021 opening net worth.
Items B through J are explained below:
2.
Notes: 1. Numbers may not be additive due to rounding.
1,203,008
(2,471)
(18,089)
(173)
38,575
(7,614)
(2,711)
(6,392)
44,780
84,962
Reflects the difference between actual operating experience in 2021 (including mortality, morbidity, lapse, and expenses etc.) and the
assumptions.
E
Compares actual with expected investment returns during 2021.
F
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:
44,273
SENSITIVITY RESULTS
Annual Report 2021 | Embedded Value
Other miscellaneous items.
Reflects dividends distributed to shareholders during 2021.
J
H Reflects the gains or losses due to changes in exchange rate.
G Change in the market value adjustment from the beginning of year 2021 to 31 December 2021 and other adjustments.
|
Reflects the effects of appraisal methodology and model enhancement, and assumption changes.
37
14. Allowing for diversification in calculation of VIF
574,225
38 Annual Report 2021 | Embedded Value
1,682
17,443
572
194.1%
14,220
22.7%
During the Reporting Period, profit before income tax
from the life insurance business decreased by 18.9%
year on year. The change in investment yield, and the
change in accrued cost of reserve as a result of business
accumulation, etc., contributed to the above result
comprehensively. Profit before income tax from the health
insurance business decreased by 25.9% year on year due
to an increase in claims expenses of certain insurance
businesses. Profit before income tax from the accident
insurance business increased by 194.1% due to business
quality improvement. Profit before income tax from other
businesses increased by 22.7%, primarily due to an
increase in the profits of certain associates.
Analysis of Cash Flows
Liquidity sources
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.
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 RMB60,440 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 RMB529,488 million.
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.
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.
Annual Report 2021 | Management Discussion and Analysis 29
Consolidated cash flows
The Company established a cash flow testing system, and conducted regular tests to monitor the cash inflows and
outflows under various scenarios and adjusted the asset portfolio accordingly to ensure sufficient sources of liquidity.
-25.9%
11,611
8,599
-18.9%
31 December
The Company insisted on a 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 managing the credit risks through early
ANALYSIS OF SPECIFIC ITEMS
Profit before Income Tax
For the year ended 31 December
identification, early warning, and early disposal. Under a
market environment where credit default events occurred
frequently, no credit default event occurred for the
Company in 2021.
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.
For the year ended 31 December
RMB million
Change
Life insurance business
Health insurance business
Accident insurance business
Other businesses
2021
2020
50,495
54,476
-7.3%
22,771
28,073
Profit before income tax
1,072,140
RMB million
2020
(144)
-50.7%
cash and cash equivalents
Net increase in cash and
cash quivalents
3,785
3,316
14.1%
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
As at
RMB million
As at
(71)
Foreign exchange gains/(losses) on
The needs for liquidity
management
financing activities
Change
Main Reasons for Change
Net cash inflow/(outflow) from
operating activities
286,448
304,019
-5.8%
The change of allocation in
Net cash inflow/(outflow) from
2021
(393,731)
34.5%
investing activities
securities at fair value through profit
or loss
The needs for investment
management
Net cash inflow/(outflow) from
111,139
(7,760)
N/A
(292,799)
RMB million
As at the end of the Reporting Period, the Company's
comprehensive solvency ratio decreased by 6.51
percentage points from the end of 2020, primarily due
to the continuous growth of insurance business and
investment assets, dividends payment, and a decline of
discount rate in solvency reserve.
Others
Annual Report 2021 | Management Discussion and Analysis
Details of structured entities controlled by the Company is set out in the Note 41(d) 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 41(d) in the Notes to the Consolidated Financial Statements in this annual report.
17,476
234,501
3,359,985
43.686%
19,687
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
31
621
10
TECHNOLOGY EMPOWERMENT AND
OPERATIONS AND SERVICES
The internal and external environment has become more
complex, challenging and uncertain since unprecedented
global changes and the impact of the global pandemic
continue to evolve. China's economy is facing triple
pressures of shrinking demands, supply disruption, and
weakened expectations of growth, which also bring
challenges to the steady development of the insurance
industry. As the impact of the COVID-19 pandemic still
exists, various regions and cities have taken more stringent
prevention and control measures, which have restricted
the on-site marketing and training activities and will thus
greatly affect business development and agent recruitment
and management. Since the traditional sales force-driven
business development mode has encountered difficulties,
market players are actively seeking transformation by
making unremitting efforts in adjusting business structure
and improving the quality of the sales force, and the
industry will be still under pressure in the short term.
The Company will take a variety of measures to actively
respond to such risks and challenges. It will adhere to the
principle of making progress while maintaining stability,
continue to push forward reform and transformation, and
strive to improve the quality of its business operation
and management. As to the capital market, with market
interest rate trending downwards and the volatility in
the equity market increasing, credit default events occur
frequently and the investment income of insurance funds
will be likely subject to higher fluctuation in the short
term. The Company will continue to prioritize asset-
liability management, deepen its research on specialized
investment, further optimize its asset allocation mix
and flexibly adjust its investment strategies to respond
to market changes. Furthermore, the Company will
continuously focus on and enhance the analysis of the
related complex risk factors and make great stride in
pursuing its high-quality development.
Potential Risks
In 2022, the Company will uphold the guideline of making
progress while maintaining stability and adhere to the
original function of insurance, constantly deepen the
supply-side reforms, give full play to the protection role
of insurance, and continue to pursue the high-quality
development of the Company by enhancing its capability of
value creation, digital operations, innovation of insurance
products and services as well as risk prevention and control.
Development Strategies and Business Plans of
the Company
Industry Landscape and Development Trends
Overall, the life insurance industry in China is still at
an important stage full of strategic opportunities with
the high-quality development as its key development
theme. At present and in the near future, China's
economy remains resilient, and the long-term positive
economic fundamentals featuring ample development
potential and room to maneuver will remain unchanged.
With the promotion of common prosperity, the size of
China's middle class will continue to grow, meaning
more effective demands for the life insurance market.
The consistent promotion of the Healthy China program
and the national strategy of proactively responding
to population aging will also provide broader space
for the development of the industry. With market
players speeding up their reform and transformation,
the foundation for the high-quality development of the
industry will be further consolidated. Meanwhile, the
industry has witnessed continuous breakthroughs in
technological innovations with the accelerated digital
transformation of the industry. Technologies such as
cloud computing, big data, artificial intelligence, and the
"Internet of Things" has greatly empowered various
aspects of the value chain, such as sales service,
operation management, and risk prevention and control,
etc. With domestic insurance industry consistently
promoting its opening up, it will see more diversified
industry players, and the market sophistication will be
improved further.
FUTURE PROSPECT
Customer experience was further improved. Claims
settlement services provided by the Company were
efficient and warm. In 2021, "Direct Claims Payment"
provided claims payments to over six million customers.
"Claims Settlement for Critical Illness within One Day"
benefited 170,000 customer-times, with payment amount
up by 32.3% year on year. Door-to-door services were
provided to more than 117,000 customers difficult to
reaching the counters. Scenario-based services benefited
various groups of customers. The Company also led the
industry to launch the senior-friendly version of China
Life App, and introduced several senior-oriented services,
such as the "sit and wait" service over the counters. The
Company carried out a variety of value-added services
continuously, such as "Immunity Enhancement Program",
"Little Painters of China Life" and "Customer Festival",
etc., all themed on "health, parent-child education and
enjoying life".
32 Annual Report 2021 | Management Discussion and Analysis
China Life Asset
Intelligent service capacity was significantly
enhanced. The Company upgraded and promoted its
intelligent business models so that the service efficiency
for new policies of long-term individual insurance was
improved by 37.2% year on year, and the intelligent
approval rates of underwriting, policy administration and
claims settlement reached 93.4%, 99.1% and 73.1%,
respectively. Application scenarios of Internet-based
intelligent customer services were expanded, and services
provided by intelligent robots reached over 75 million
times. As the digital services were fully implemented,
percentage of non-manual customer services in the
contact center reached 88.9%.
In 2021, being customer-centric, the Company adhered
to the operational objectives of "efficiency first,
technology-driven, value increase and first-class customer
experience", accelerated the transformation of operations
and services to be more Internet-based and intelligent,
and continued to provide customers with high-quality and
"convenient, quality and caring" services. As a result,
its customer experience continued to be improved and
customer appraisal remained at a high level.
Operations and Services
Interactive traffic, constantly amplifying the digital
ecological effects. The online socialized collaboration
system, which seamlessly connected with mobile phones,
desktops, large screens and various digital applications,
comprehensively improved the communication and
interaction experience of the customers, salespersons,
and employees of the Company. The Company enriched
its digital insurance ecosystem continuously, releasing
3,256 standardized services in total on its digital platform,
a year-on-year increase of 92%, launched nearly 1,000
ecological applications, and carried out nearly 400,000
services and activities with different cooperative
institutions.
Intelligence upgrading, further enhancing technology
empowerment. China Life "Internet of Things" covered
all business units and scales outlets of the Company
across China and technology services were accessible
to the frontline. It fulfilled centralized management and
control of 240,000 electronic appliances in 12 categories
throughout the Company with the establishment of
an online Digital Twin, and its service efficiency was
improved by 70% compared with 2020. The "China
Life 'Internet of Things' Edge Computing, Intelligent
Perception and Digital Presentation" won the 2021
FinTech and Digital Transformation Innovation award. The
Company also comprehensively developed its intelligent
services, with its intelligent robots serving in various
business fields, such as sales, services, operations,
finance, risk control, and among others. Its big data-
empowered scenarios were increased by 84% compared
with 2020 and the daily average intelligent services.
reached more than 5 million person-times.
Agile delivery, significantly enhancing the response
to changes by technology. The Company widely
implemented the tech products-based management
system, and facilitated the comprehensive circulation
of technology-based operations with a digital operation
mechanism featuring full data and full chain tracing. More
updated functions and services were launched at a high
frequency, and technology products were iterated and
optimized more than 40 times on a daily basis to quickly
respond to market changes, offering more accurate and
efficient services to customers.
Technological innovation, leading to the upgrade of
technology architecture as a whole. With the support
of the strong computing power of China Life Hybrid Cloud
and the openness and compatibility of the digital platform,
the Company fulfilled the upgrade to a distributed
architecture for all core systems, from computing,
storage, database and middleware to application software.
Its technology-supporting capacity realised a leap-forward
development with the data processing capacity improved
by 10 times and the elastic capacity scaling time of
computing resources reduced to minute level.
In 2021, the Company accelerated technological
innovation, strengthened digital-driven operations,
deepened technology-empowered value creation,
continued to build a digital insurance ecosystem, and
promoted the integration of technologies with business
operations. The leading and supporting role of its
technological innovation was continuously enhanced.
Technology Empowerment
Online services were growing rapidly. The Company
upgraded various online service points of contact, with the
registered users of China Life Insurance APP reaching 112
million, a year-on-year increase of 21%, and the monthly
average active users increasing by 18.1% year on year.
The online processing rate of policy administration and
claims settlement for individual insurance rose to 88.3%
and 98.7%, respectively. More than 780 million electronic
notification messages were sent, services provided by
Online Customer Service Agent increased by nine folds
year on year, and the average waiting time for customers
over the counter was shortened significantly year on year.
The Company believes that it will have sufficient capital
to meet its insurance business expenditures and new
general investment needs in 2022. 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.
25,422
40%
Company Name
Major Subsidiaries and Associates of the Company
30 Annual Report 2021 | Management Discussion and Analysis
During the Reporting Period, there was no sale of material
assets and equity of the Company.
Sale of Material Assets and Equity
31 December
2021
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.
268.92%
262.41%
260.10%
253.70%
396,749
402,341
1,055,768
1,020,756
1,031,947
K Embedded Value as at 31 December 2021 (sum A through J)
Major Business Scope
RMB million
Registered
Capital
Shareholding
18,800
AMC
is held by
and 3.53%
the Company,
1,158
5,889
8,305
120,178
70.74%
is held by
2,760
14,324
16,658
60%
4,000
Net Profit
Net Assets
Total Assets
3,400
Annual Report 2021 | Management Discussion and Analysis 33
1,066,939
BACKGROUND
E Embedded Value (A + D)
F Value of One Year's Sales before Cost of Required Capital
G Cost of Required Capital
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
Note: Numbers may not be additive due to rounding.
RMB million
31 December
31 December
2021
2020
D Value of In-Force Business after Cost of Required Capital (B + C)
674,317
593,137
565,797
(64,446)
(62,244)
528,691
503,553
1,203,008
1,072,140
50,474
64,354
568,587
B Value of In-Force Business before Cost of Required Capital
C Cost of Required Capital
A Adjusted Net Worth
ITEM
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.
It is important to note that actuarial standards with respect
to the calculation of embedded value are still evolving.
There is still no universal standard which defines the
form, calculation methodology or presentation format of
the embedded value of an insurance company. Hence,
differences in definition, methodology, assumptions,
accounting basis and disclosures may cause inconsistency
when comparing the results of different companies.
Also, the calculation of embedded value and value of one
year's sales involves substantial technical complexity
and estimates can vary materially as key assumptions
are changed. Therefore, special care is advised when
interpreting embedded value results.
The values shown below do not consider the future
financial impact of transactions between the Company and
CLIC, CLI, AMC, Pension Company, CLP&C, and etc.
34 Annual Report 2021 | 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:
Net assets, defined as assets less corresponding policy
liabilities and other liabilities valued; and
Net-of-tax adjustments for relevant differences
between the market value and the book value of
assets, together with relevant net-of-tax adjustments
to certain liabilities.
The market value of assets can fluctuate significantly
over time due to the impact of the prevailing market
environment. Hence the adjusted net worth can fluctuate
significantly between valuation dates.
The "value of in-force business" and the "value of one
year's sales" are defined here as the discounted value of
the projected stream of future shareholders' interest in
distributable earnings for existing in-force business at the
valuation date and for one year's sales in the 12 months
immediately preceding the valuation date.
The value of in-force business and the value of one
year's sales have been determined using a traditional
deterministic discounted cash flow methodology. This
methodology makes implicit allowance for the cost of
investment guarantees and policyholder options, asset/
liability mismatch risk, credit risk, the risk of operating
experience's fluctuation and the economic cost of capital
through the use of a risk-adjusted discount rate.
PREPARATION AND REVIEW
The embedded value and the value of one year's sales
were prepared by China Life Insurance Company Limited
in accordance with the "CAA Standards of Actuarial
Practice: Appraisal of Embedded Value" issued by the
China Association of Actuaries ("CAA") in November
2016. Deloitte Consulting performed a review of China
Life's embedded value. The review statement from
Deloitte Consulting is contained in the "Independent
Actuaries Review Opinion Report on Embedded Value of
China Life Insurance Company Limited" section.
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.
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 10% per annum.
Other operating assumptions such as mortality, morbidity,
lapses and expenses are based on the Company's recent
operating experience and expected future outlook.
Annual Report 2021 | Embedded Value
35
SUMMARY OF RESULTS
The embedded value as at 31 December 2021, the value of one year's sales for the 12 months ended 31 December 2021,
and the corresponding results as at 31 December 2020 are shown below:
Components of Embedded Value and Value of One Year's Sales
(5,693)
(5,981)
ASSUMPTIONS
58,373
EMBEDDED VALUE
44,780
Shareholder Dividend Distribution and Capital Changes
H Exchange Gains or Losses
|
F Methodology, Model and Assumption Changes
E Investment Experience Variance
D Operating Experience Variance
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 2021
The following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period:
MOVEMENT ANALYSIS
G Market Value and Other Adjustments
Note: 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.
42,945
57,669
36 Annual Report 2021 | Embedded Value
The new business margin of one year's sales of individual agent business sector for the 12 months ended 31 December
2021 is shown below:
New Business Margin of One Year's Sales of Individual Agent Business Sector
By First Year Premium
By Annual Premium Equivalent
J
31 December
2021
2020
48.1%
41.6%
42.2%
47.9%
31 December
(including the amount for the subscription
of the related financial products: 100,000)
31 December 2021
2,266
1,982
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
(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
Amount of Assets Newly
Entrusted for Investment and
Management during the Period
(including the Amount
for Subscription of the Related
Financial Products)
(RMB million or its
equivalent in foreign currency)
200,000
31 December 2020
For the year ended
For the year ended
31 December 2019
For the three years ended 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:
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
service fee, floating management fee, performance-based
bonus and real estate operation management service 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 service 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.
Asset Management Agreement for Alternative
Investments between the Company and CLI
For the year ended 31 December 2021, CLIC paid AMC a
service fee of RMB156.45 million.
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
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
Annual Report 2021 | Significant Events
For the year ended
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 and expired on 31 December 2021.
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
2,000
Annual Report 2021 | Significant Events
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
from the expiration thereof to 7 March 2024. 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 ending 31 December 2023 are RMB3,500
million, RMB3,830 million and RMB4,240 million,
respectively.
Insurance Sales Framework Agreement
For the year ended 31 December 2021, 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 RMB136.31 million.
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.
Cooperation Framework Agreement for Investment
Management with Insurance Funds between the
Company and China Life Capital
43
Annual Report 2021 | Significant Events
CLI for investment and management was RMB23,326.50
million. For the year ended 31 December 2021, 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
RMB23,326.50 million.
For the year ended 31 December 2021, 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 RMB587.63 million, and the contractual
amount of assets newly entrusted by the Company to
42
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
2,000
Fees for the Investment and
Management Services and
the Entrusted Operation Fee
(RMB million or its
equivalent in foreign currency)
65,000
65,000
65,000
Contractual Amount of
Assets Newly Entrusted for
Investment and Management
during the Period
(RMB million or its
equivalent in foreign currency)
For the year ending 31 December 2022
For the year ending 31 December 2023
For the year ending 31 December 2024
For the three years ending 31 December 2024, 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 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 as follows:
service fee and performance award in respect of the
investment and management services provided by CLI to
the Company. For the entrusted operation, CLI will 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 will pay CLI the entrusted
operating fee in this regard. Such agreement took effect
from 1 January 2022, with a term of two years ending on
31 December 2023. 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.
As approved by the 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 on
27 December 2021. Pursuant to the agreement, the
Company will 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 covers
the equity/real estate direct investments, equity/real
estate funds, non-standard financial products and quasi-
securitization 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-securitization financial products
entrusted for investment under the new projects. CLI will
continue to 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 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
2,000
For the year ended 31 December 2021, the Company paid
AMC a service fee of RMB2,741.56 million.
MATERIAL LITIGATIONS OR
ARBITRATIONS
Asset Management Agreement between the Company
and AMC
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").
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 2021, 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 embedded value and value of one
year's sales as at 31 December 2021; and
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
2020 to 31 December 2021, and the sensitivity results
of value of in-force business and value of one year's
sales.
Basis of Opinion, Reliance and Limitation
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.
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.
For the year ended 31 December 2021, CLP&C paid the
Company an agency service fee of RMB1,541.99 million.
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.
Opinion
Based on the scope of work above, we have concluded
that:
•
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;
The economic assumptions used by China Life have
taken into account the current investment market
conditions and the investment strategy of China Life;
China Life Insurance Company Limited ("China Life").
has prepared embedded value results as at 31 December
2021 ("EV Results"). The disclosure of these EV Results,
together with a description of the methodology and
assumptions that have been used, are shown in the
Embedded Value section.
The 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 RMB 5,000 million,
respectively.
INDEPENDENT ACTUARIES REVIEW
OPINION REPORT ON EMBEDDED
VALUE OF CHINA LIFE INSURANCE
COMPANY LIMITED
• The embedded value results are consistent with its
methodology and assumptions used. The overall result
is reasonable.
Asset Management Agreements
For the year ended 31 December 2021, the service fee
paid by CLIC to the Company amounted to RMB553.66
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 accepted CLIC's
entrustment to provide policy administration services
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 in respect of the service.
fee paid by CLIC to the Company for the year ended 31
December 2021 was RMB599 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 continue to accept CLIC's
entrustment to provide policy administration services
relating to the non-transferred policies. The annual cap
in respect of the service fee to be paid by CLIC to the
Company for each of the three years ending 31 December
2024 is RMB491 million.
Policy Management Agreement
The Company has complied with the disclosure requirements
under Chapter 14A of the Listing Rules in respect of the
above continuing connected transactions. When conducting
the above continuing connected transactions during the
Reporting Period, the Company has followed the pricing
policies and guidelines formulated at the time when such
transactions were entered into.
During the Reporting Period, the Company also carried
out certain continuing connected transactions, including
the policy management agreement between the Company
and CLIC, and the asset management agreement
between CLIC and AMC, which were exempt from the
reporting, announcement, annual review and independent
shareholders' approval requirements under Chapter 14A of
the Listing Rules.
Annual Report 2021 | Significant Events
40
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. CLIC holds
100% of the equity interest in CLI. Therefore, CLI is a
connected person of the Company. AMP is a subsidiary
of AMC, and is therefore a connected subsidiary of the
Company.
CLP&C and 100% of the equity interest in China Life
Capital. Therefore, each of CLIC, CLP&C 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. 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 asset management agreement between
the Company and AMC, the insurance sales framework
agreement between the Company and CLP&C, 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
MAJOR CONNECTED TRANSACTIONS
Continuing Connected Transactions
During the Reporting Period, the Company was not
involved in any material litigation or arbitration.
SIGNIFICANT
EVENTS
39
Annual Report 2021 | Embedded Value
24 March 2022
Deloitte Consulting (Shanghai) Co., Ltd.
Eric Lu
Yu Jiang
For and on behalf of
The operating assumptions used by China Life have
taken into account the past experience and the
expectation of future experience; and
Framework Agreements with AMP
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:
For the year ended 31 December 2021, the subscription
price and corresponding subscription fee for the
subscription of fund products were RMB8,909.41 million,
the redemption price and corresponding redemption fee
for the redemption of fund products were RMB4,067.58
million, the sales commission fee and client maintenance
fee paid by AMP were RMB1.39 million, the management
fee (including the performance-based fee) paid by the
Company for the asset management for specific clients
was RMB65.84 million, and the fees for other daily
transactions were RMB1.28 million.
Investment in Partnerships through Equity
Investment Plans
As approved at the fifth meeting of the seventh session
of the Board of Directors, the Company and CLI entered
into an entrustment contract on 11 January 2022,
pursuant to which the Company will contribute no more
than RMB1,500,000,000 to CLI - Xinyuan No. 1 Equity
Investment Plan ("Xinyuan EIP") established by CLI. All
funds under Xinyuan EIP will be used for the subscription
of limited partnership interest in Beijing Xinyuan No. 1
Equity Investment Fund Partnership (Limited Partnership)
("Xinyuan Partnership"). CLI will, on behalf of Xinyuan
EIP and as a limited partner, enter into a partnership
agreement with Guangzhou Jinhong Asset Management
Co., Ltd. ("Guangzhou Jinhong") and National Energy
(Beijing) Private Equity Fund Management Co., Ltd.
(each as a general partner), and Beijing Guoneng
Green and Low-Carbon Development Investment Fund
(Limited Partnership) and China Longyuan Power Group
Corporation Limited (each as a limited partner). The total
capital contribution by all partners of Xinyuan Partnership
shall be RMB3,002,000,000. China Life Jinshi Asset
Management Company Limited ("China Life Jinshi") will
serve as the manager of Xinyuan Partnership. Xinyuan
Partnership will primarily invest in green and low-carbon
investment targets (such as wind power, photovoltaic
power, energy storage and other clean energy projects).
As approved at the fifth meeting of the seventh session
of the Board of Directors, the Company and CLP&C
intend to contribute no more than RMB2,400,000,000
and RMB600,000,000, respectively, to CLI - Xindian No.
1 Equity Investment Plan ("Xindian EIP") established by
CLI and enter into an entrustment contract with CLI by 31
December 2022 for such purpose. All funds under Xindian
EIP will be used for the subscription of limited partnership
interest in Beijing Xindian No. 1 Equity Investment Fund
Partnership (Limited Partnership)("Xindian Partnership").
CLI will, on behalf of Xindian EIP and as a limited partner,
enter into a partnership agreement with Guangzhou
Jinhong (as the general partner) and China Huadian
Corporation Ltd. (as a limited partner). The total capital
contribution by all partners of Xindian Partnership shall
be RMB6,001,000,000. China Life Jinshi will serve as the
manager of Xindian Partnership. Xindian Partnership will
primarily invest in equity interests of unlisted enterprises
in the clean energy sectors such as wind power,
photovoltaic power and energy storage.
Acquisition of Creditor's Rights on Trust Loan
through Asset-backed Plan
As approved at the fifth meeting of the seventh session of
the Board of Directors, the Company signed a subscription
letter on 27 December 2021 for the subscription of "China
Life Chengxin No. 1 Asset-backed Plan" ("Asset-back
Plan") with an amount of RMB1,999,845,375. The Asset-
back Plan was established by AMC as the manager/trustee
of the plan, and the proceeds from the Asset-backed Plan
will be used for the acquisition from Chongqing Trust
of the creditor's rights on the trust units in Phase II of
"Chongqing Trust - XCMG Assembled Funds Trust Plan".
The trust plan, with a total size of RMB2,000,000,000 and
an interest rate of 4.75% per annum, was established
on 13 May 2020 and will expire on 13 May 2025. As at
27 December 2021, the sum of the outstanding principal
under such trust plan and its accrued and undistributed
interests amounted to RMB1,999,845,375.
Each of CLP&C, CLCD, CLEI, CLI, Guangzhou Jinhong,
China Life Jinshi and Chongqing Trust 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
requirement 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.
Annual Report 2021 | Significant Events
47
MATERIAL CONTRACTS AND THEIR
PERFORMANCE
During the Reporting Period, the Company neither acted
as trustee, contractor or lessee of other companies'
assets, nor entrusted, contracted or leased its assets to
other companies, the profit or loss from which accounted
for 10% or more of the Company's profits for the
Reporting Period, nor were there any such matters that
occurred in previous periods but subsisted during the
Reporting Period.
The Company neither gave external guarantees nor
provided guarantees to its holding subsidiaries during the
Reporting Period.
Entrusted investment management during the Reporting
Period or any 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, 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 insurance fund 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 report, the Company
had no other material contracts during the Reporting
Period.
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.
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.
48
Annual Report 2021 | Significant Events
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.
46
As approved at the fifth meeting of the seventh session
of the Board of Directors, the Company, CLP&C and
Wuxi Fengrun Investment Co., Ltd. (each as a limited
partner) entered into a partnership agreement with China
Life Chengda (Shanghai) Healthcare Equity Investment
Management Company Limited ("CLCD", as the general
partner) and Chengda Fengzhi (Shanghai) Corporate
Management Center (Limited Partnership) (as the special
limited partner) on 31 December 2021 for the formation
of China Life Chengda (Wuxi) Equity Investment Center
(Limited Partnership)(the "Partnership"). The total capital
contribution by all partners of the Partnership shall be
RMB10,000,000,000, of which RMB7,500,000,000
shall be contributed by the Company. China Life Equity
Investment Company Limited ("CLEI") will serve as the
manager of the Partnership. The Partnership will have
a term of eight years, and will primarily make direct
or indirect investment in private equity projects in the
medical health and technological innovation sectors.
Annual Report 2021 | Significant Events
4. the amounts of the above transactions have not
exceeded the relevant annual caps.
44 Annual Report 2021 | Significant Events
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.
For the year ended 31 December 2021, the subscription
price and corresponding subscription fee for the
subscription of fund products were RMB0 million, the
redemption price and corresponding redemption fee for
the redemption of fund products were RMB101.40 million,
and the management fee (including the performance-
based fee) paid by CLIC for the private asset management
was RMB26.37 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
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.
For the year ended 31 December 2021, 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 RMB15.75 million,
and the fees for other daily transactions were RMB0.13
million.
Framework Agreement between CLI and AMP
Other Major Connected Transaction
Formation of China Life Chengda (Wuxi) Equity
Investment Center (Limited Partnership)
Annual Report 2021 | Significant Events
45
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.
Framework Agreement between the Company
and Chongqing Trust
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
For the year ended 31 December 2021, the subscription
price and corresponding subscription fee for the
subscription of fund products were RMB2,832.27 million,
the redemption price and corresponding redemption fee
for the redemption of fund products were RMB3,466.89
million, the management fee (including the performance-
based fee) paid by CLI and its subsidiaries for the asset
management for specific clients was RMB0 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 RMB3.50
million.
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:
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.
Confirmation by Independent Directors
2. the transactions were conducted on normal
commercial terms;
Confirmation by Auditor
For the year ended 31 December 2021, the total amount
of subscription and redemption of the trust products was
RMB2,266.63 million, the trustee's remuneration was
RMB16.47 million, and the fees for other daily transactions
were RMB0 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.
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;
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.
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. 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.
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;
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;
In accordance with Article 218 of the Articles of
Association, the Company's profit distribution
policy is as follows:
3. The Company shall give priority to cash dividends as its
profit distribution manner.
1. 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;
3
FORMULATION AND IMPLEMENTATION OF
PROFIT DISTRIBUTION POLICY
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 policies and performance of the
Company
With its commitment to "ensuring a healthy and friendly
environment for the accomplishment of 'carbon neutrality'
objective", the Company practiced the concepts of
responsible investment and green operations on a
voluntarily basis and took active actions in responding
to climate change, thus firmly pursuing the high-quality
development with green and low carbon approach.
The Company kicked off green investment to serve the
development of green finance. In 2021, the Company
incorporated ESG assessment into its decision-making
process for investment in alternative investment projects
and was proactively engaged in the implementation of
high-quality projects with both ecological benefits and
potential investment returns, thus recording an additional
green investment of over RMB50 billion and a cumulative
green investment of over RMB300 billion for the year.
AMC, the major platform of the Company for investment,
further deepened its cooperation and communication
with UNPRI and other international organizations and
formulated the "Basic Guiding Rules of China Life Asset
Management Company Limited for ESG/Green Investment
(for Trial Implementation)" for the purpose of further
developing its ESG investment management system.
Annual Report 2021 | Corporate Governance
53
The Company consistently promoted the paperless
application for new insurance policies and facilitated
the utilization of electronic insurance policies, thereby
reducing carbon emissions incurred during the process
of application for new insurance policies. In 2021, the
paperless insurance application rate of long-term individual
insurance reached 99.9%, which saved approximately
1,343 tons of paper during the process of the application
of new policies. The intelligent online operation system
was also established to save approximately 2,214 tons
of paper in every aspect of its business operations.
With the acceleration of technological innovation, the
Company effectively supported the demands for remote
working from a daily average number of over 90,000
users, offering a brand new experience of "working on
the same platform, communicating without boundary and
being interactive in multi-screen" for its employees and
sales agents. Besides, more than 280,000 meetings were
convened via the webcast and over 320 million online
messages were sent out on a real-time basis for the year.
In 2021, the Company developed a system for addressing
climate change, paid attention to and studied the impacts
of climate change on its sustainable development, fully
identified opportunities and challenges arising therefrom
in three aspects, namely products, operations and
investments, and devised any plans to address such
change, so as to enhance its own resilience in defending
against climate risk.
Compliance by the Company with the relevant
laws and regulations that have a significant
impact
The Company adhered to the code of conduct of "being
trustworthy, assuming risks, emphasizing on services.
and being legal compliant" 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 "Personal
Information Protection Law", the "Regulations on
Preventing and Dealing with Illegal Fund-raising",
In accordance with Article 217 of the Articles
of Association, the basic principles of the
Company's profit distribution are as follows:
the "Provisions on the Administration of Insurance
Companies", the "Provisions of the China Banking and
Insurance 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 "Standards for the Corporate Governance of Banking
and Insurance Institutions", the "Provisions on the
Administration of Solvency of Insurance Companies",
the "Regulatory Rules for the Solvency of Insurance
Companies", the "Provisions on the Administration
of Reinsurance Business", the "Measures for the
Administration of Licenses of Banking and Insurance
Institutions", the "Measures for Oversight of Online
Insurance Business", the "Notice of the General Office of
the China Banking and Insurance Regulatory Commission
on Further Regulating Matters Related to the Online
Personal Insurance Business of Insurance Institutions",
the “Notice of the General Office of the China Banking
and Insurance Regulatory Commission on Regulating
Issues Related to Short-term Health Insurance Business",
the "Measures for the Supervision and Administration
of Accident Insurance Business", the "Measures for the
Regulatory Evaluation of Consumers' Rights and Interests
Protection of Banking and Insurance Institutions" 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, solvency management,
reinsurance 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.
On 30 December 2021, the CBIRC issued the "Regulatory Rules for the Solvency of Insurance Companies (II)", which were implemented on 1 January
2022. The former "Regulatory Rules for the Solvency of Insurance Companies" were abolished simultaneously.
54 Annual Report 2021 | Corporate Governance
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.
The Company attached great importance to the protection
of consumers' rights and interests, improved the top-level
design for facilitating the establishment of systems and
mechanism, and developed a multi-dimensional mechanism
for protection of consumers' rights and interests covering
product and service review, internal assessment,
information disclosure, complaint management, promotion
and education of financial knowledge and emergency
response, etc., which integrated the protection of
consumers' rights and interests into every aspect of
corporate governance and business operation and
management. In 2021, the Company carried out over
40,000 educational and promotion activities in connection
with the protection of consumers' rights and interests, with
the cumulative number of participants reaching 150 million.
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 Two of the ESG Report 2021 separately
disclosed by the Company.
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 team management mechanism with the
characteristics of focus on basic level, combination
of training and working of employees, hierarchical
responsibility and unified regulation; 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 local level, and was 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 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
2021, the Company held four extraordinary employee
representative meetings, during which the "Report on
the Candidates for Employee Representative Supervisors
of the Seventh Session of the Board of Supervisors", the
"Provisional Measures of China Life Insurance Company
Limited for the Responsibility Attribution of Directors,
Supervisors and Senior Management", the "Enterprise
Annuity Plan of China Life Insurance (Group) Company",
the "Implementing Rules for the Enterprise Annuity Plan
of China Life Insurance Company Limited", the "Report
on the Candidates for Additional Employee Representative
Supervisors of the Seventh Session of the Board of
Supervisors", the "Measures for the Administration of
Remuneration of Senior Management of Branches of
China Life Insurance Company Limited", the "Measures
for the Administration of Remuneration of Employees of
Branches of China Life Insurance Company Limited" and
the "Measures for the Administration of Fringe Benefits of
Branches of China Life Insurance Company Limited" 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.
Annual Report 2021 | Corporate Governance 55
For information such as the environmental policies and
performance of the Company during the Reporting Period,
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 ESG Report 2021
separately disclosed by the Company on the website of
the SSE (www.sse.com.cn) and the HKExnews website
of the Hong Kong Exchanges and Clearing Limited
(www.hkexnews.hk).
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 small- and medium-sized shareholders, and
I give timely reply to concerns of small- and medium-sized
shareholders.
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. 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 made 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.
In accordance with the profit distribution plan for the
year 2021 approved by the Board on 24 March 2022,
with the appropriation to its discretionary surplus reserve
fund of RMB5,096 million (10% of the net profit for
2021), the Company, based on 28,264,705,000 shares in
issue, proposed to distribute cash dividends amounting
to approximately RMB18,372 million (representing
36% of the net profit attributable to equity holders of
the Company in the consolidated statements) to all
shareholders of the Company at RMB0.65 per share
(inclusive of tax). The foregoing profit distribution plan
is subject to the approval by the 2021 Annual General
Meeting. 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
PURCHASE, SALE OR REDEMPTION OF THE
COMPANY'S 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 9 July 2021 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 30 June 2021 for the information on
income tax in respect of the dividend distributed to H Share
shareholders during the Reporting Period.
HOLDERS OF LISTED SECURITIES
INFORMATION OF TAX DEDUCTION FOR
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.
SHARE CAPITAL
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
RMB218.88 million.
CHARITABLE DONATIONS
Details of the reserves of the Company are set out in Note
37 in the Notes to the Consolidated Financial Statements
in this annual report.
RESERVES
The changes in accounting estimates of the Company
during the Reporting Period are set out in Note 3 in the
Notes to the Consolidated Financial Statements in this
annual report.
CHANGES IN ACCOUNTING ESTIMATES
The profit distribution policy of the Company complied
with the Articles of Association and the examination and
approval procedures of the Company, clearly defined
the dividend distribution standards and percentage and
the decision-making procedures and system. Small-
and medium-sized shareholders of the Company have
sufficient opportunities to express their opinions
and appeals, and their legitimate rights have been
well protected. The Independent Directors diligently
considered the profit distribution policy and expressed
their independent opinions in this regard.
No public reserve capitalization is provided for in the profit
distribution plan for the year.
Mr. Lam Chi Kuen, Mr. Tang Xin, Ms. Huang Xiumei, Mr. Li Mingguang, Mr. Yuan Changqing, Mr. Su Hengxuan, Mr. Wang Junhui, Ms. Leung Oi-Sie Elsie,
Mr. Zhai Haitao
During the Reporting Period, the Company and its
subsidiaries did not purchase, sell or redeem any of the
Company's listed securities.
H SHARE STOCK APPRECIATION RIGHTS
No H Share stock appreciation rights of the Company were
granted or exercised in 2021. The Company will deal with
such rights and related matters in accordance with the
PRC national 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.
56 Annual Report 2021 | Corporate Governance
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.
58 Annual Report 2021 | Corporate Governance
PENSION PLAN
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
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 2021.
DISCLOSURE OF INTERESTS OF DIRECTORS,
SUPERVISORS AND THE CHIEF EXECUTIVE IN
THE SHARES OF THE COMPANY
Profit distribution plan and public reserves
capitalization plan for the year 2021
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.
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
57
Annual Report 2021 | Corporate Governance
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
I can only be terminated by the Company with payment of
compensation (other than statutory compensation).
DIRECTORS' AND SUPERVISORS' SERVICE
CONTRACTS
DIRECTORS' AND SUPERVISORS' RIGHTS TO
ACQUIRE SHARES
From left to right:
PRINCIPAL BUSINESS
The Board of the Company received a resignation letter from Mr. Tang Xin, an Independent Director of the Company, on 6 March 2022. As Mr. Tang Xin
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 regulatory requirements. Since the resignation of Mr. Tang Xin 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, Mr. Tang Xin will continue to perform his duties as an
Independent Director until the qualification of a new Independent Director is approved by the CBIRC.
EXECUTIVE
DIRECTORS
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
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 constantly promotes the
development of corporate governance and commits
to the best practices of corporate governance, so
as to further improve governance structure and
effectiveness.
GOVERNANCE
PRACTICING THE
BEST CORPORATE
Su Hengxuan
Li Mingguang
Huang Xiumei
Annual Report 2021 | Significant Events 49
PERFORMANCE OF ENVIRONMENTAL
AND SOCIAL RESPONSIBILITIES
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
After the Reporting Period, as at the date of disclosure
of this report, based on the information disclosed on 8
January 2022 on the website of the Central Commission
for Discipline Inspection and the National Supervisory
Commission, Mr. Wang Bin, the former Secretary of the
Party Committee and the former Chairman of the Board
of Directors of CLIC, is currently under the disciplinary
review and investigation by the Central Commission
for Discipline Inspection and the National Supervisory
Commission for suspected serious violation of disciplines
and laws. Mr. Wang Bin is also the former Chairman of the
Board and the former Executive Director of the Company.
Given that Mr. Wang Bin was not able to perform his
role and duties as the Chairman of the Board during the
period of review and investigation, Mr. Yuan Changqing,
a Non-Executive Director of the Company, was elected at
the sixth meeting of the seventh session of the Board of
Directors of the Company to assume the roles and duties
of the Chairman of the Board and the legal representative
of the Company during the period commencing from the
date of passing of the Board resolution and ending on the
effective date of the appointment of a new Chairman of
the Board. The Board received a resignation letter from
Mr. Wang Bin on 23 February 2022. As Mr. Wang Bin was
not able to perform his role and duties as a Director, he
had resigned from his positions as the Chairman of the
Board and an Executive Director of the Company. The
resignation took effect on the same day. Please refer to
the announcements published by the Company on the
website of the HKSE on 9 January 2022, 13 January 2022
and 23 February 2022, respectively.
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
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.
52 Annual Report 2021 | Corporate Governance
For the performance by the Company of its social
responsibility during the Reporting Period, please
refer to the full text of the "2021 Environment, Social
and Governance (ESG) Report" ("ESG Report 2021")
separately disclosed by the Company on the website
of the SSE (www.sse.com.cn) and the HKExnews
website of the Hong Kong Exchanges and Clearing
Limited (www.hkexnews.hk). The specific information
on environment is set out in Part Two of the ESG Report
2021, and the specific information on the consolidation of
achievements in poverty alleviation and rural revitalization
undertakings, etc. is set out in Part One of the ESG Report
2021.
(appointed on 1 July 2021)
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
not 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 supervison 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.
Yuan Changqing
Wang Junhui
Liu Huimin
NON-EXECUTIVE
DIRECTORS
(retired on 28 June 2021 due to the expiration of his term of office)
(retired on 13 October 2021 due to the expiration of his term of office)
(appointed on 14 October 2021)
(appointed on 29 June 2021)
Chang Tso Tung Stephen
Robinson Drake Pike
Zhai Haitao
Lam Chi Kuen
1. The Board of the Company received a resignation letter from Mr. Wang Bin on 23 February 2022. As Mr. Wang Bin was not able to perform his role and
duties as a Director, he had resigned from his positions as the Chairman of the Board and an Executive Director of the Company.
Notes:
Yin Zhaojun
Leung Oi-Sie Elsie
(resigned on 7 February 2021 due to the adjustment of
work arrangements)
2.
INDEPENDENT
DIRECTORS
Tang Xin
(resigned on 15 January 2021 due to the adjustment of
work arrangements)
China International Television Corporation
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
Notes:
65
Annual Report 2021 | Corporate Governance
China Life Insurance (Group) Company
9,530,133
0.03%
Li Zhuo
10,000,000
0.04%
State-owned legal person
2.
+9,530,033
Domestic natural person
Major businesses
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.
+1,780,228
Ministry of Finance
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:
As at 31 December 2021, CLIC held 1,785,098,644 H shares of Town Health
International Medical Group Limited, representing 23.72% of its total 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 insurance regulatory agency.
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.)
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.
Bai Tao (the change of registration with the department in charge of industrial and
commercial administration is in progress)
Shareholdings in other
subsidiaries and affiliates
listed in China or abroad
during the Reporting Period
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
China Life Insurance (Group) Company
14,177,504
+8,685,066
Other
Percentage of
shareholding
Number of shares
held as at the
end of the
Reporting Period
Increase/decrease
during the
Reporting Period
Number of shares
Number of shares
subject to selling
pledged or frozen
State-owned legal person
0.41%
117,165,585
-2,554,315
Hong Kong Securities Clearing Company Limited
Overseas legal person
0.20%
57,106,771
of the PRC
Guosen Securities Co., Ltd.
Industrial and Commercial Bank of China Limited
- SSE 50 Exchange Traded Index Securities
Investment Fund
- Tianfu Bull No. 53 Asset Management Plan
of China Limited China Universal
restrictions
15,015,845
0.05%
0.05%
Other
China Universal Asset Management Co., Ltd
+18,520,041
22,334,683
0.08%
Other
- Founder Fubon CSI Insurance Theme
Index Security Investment Fund
- Industrial and Commercial Bank
90%
China Life Insurance (Group)
Company
China Life Insurance
(Group) Company
Gender Date of Birth
Term
Salary/
Remuneration
paid in RMB
ten thousands
Other benefits,
social insurance,
housing
provident
fund and
enterprise
annuity
Total
emoluments
received from
the Company
Whether
during
the Reporting
received
emolument
from connected
parties of
fund paid by
Period in RMB
the Company
ten thousands
the Company
in RMB
since 20 December 2018,
February 1963
Male
Executive Director
President
Su Hengxuan
State-owned legal person
Position
Appointed as an Executive Director
September 1961 Since 11 February 2018
Male
Non-executive Director
Yuan Changqing
ten thousands
(before tax)
Yes
Name
DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
CURRENT DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
67
Percentage of
Percentage of
the respective
class of shares
Number of
shares held
Class of
shares
Capacity
Name of substantial
shareholder
the total number
of shares in issue
the Company under the provisions of Divisions 2 and 3 of
Part XV of the SFO, or which were recorded in the register
required to be kept by the Company pursuant to Section
336 of the SFO, or as otherwise notified to the Company
and the HKSE:
INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY
HELD BY SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS UNDER HONG KONG LAWS AND
REGULATIONS
66 Annual Report 2021 | Corporate Governance
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
68.37%
So far as is known to the Directors, Supervisors and
the chief executive of the Company, as at 31 December
2021, 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
National Council for Social
Security Fund
Nature of shareholder
A Shares
Annual Report 2021 | 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 2021, 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.
The letter "L" denotes a long position. The letter "S" denotes a short position.
(Note): BlackRock, Inc. was interested in a total of 461,251,819 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 4,749,000 H shares, 7,569,000 H shares,
120,413,588 H shares, 157,902,000 H shares, 921,000 H shares, 26,902,045 H shares, 861,000 H shares, 4,736,000 H shares, 16,378,329 H
shares, 16,450,130 H shares, 713,000 H shares, 61,780,448 H shares, 814,000 H shares, 14,928,733 H shares, 426,000 H shares, 14,187,720 H
shares, 2,962,021 H shares, 2,710,000 H shares, 32,000 H shares and 5,815,805 H shares, respectively. All of these entities are either controlled
or indirectly controlled subsidiaries of BlackRock, Inc. Of these 461,251,819 H shares, 159,000 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 652,000 H shares (0.01%). Of these 652,000 H
shares, 551,000 H shares were cash settled unlisted derivatives.
0.00%
0.01%
1.63%
Beneficial owner
6.20%
H Shares
Interest in controlled
corporation
BlackRock, Inc. (Note)
68.37%
92.80%
19,323,530,000 (L)
461,251,819 (L)
652,000 (S)
Name of shareholder
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.
No. of H Share shareholders:
25,326
The Company had engaged Ernst & Young Hua Ming LLP
and Ernst & Young for eight consecutive years, being the
maximum consecutive tenure of service permitted under
the "Administrative Measures for the Appointment of
Accounting Firms by State-owned Financial Enterprises"
(《國有金融企業選聘會計師事務所管理辦法》)(Caijin [2020]
No. 6) issued by the Ministry of Finance, and the Company
was therefore required to change the auditors. Ernst &
Young Hua Ming LLP, the PRC auditor and the auditor
for the Form 20-F of the Company for the year 2020, and
Ernst & Young, the Hong Kong auditor of the Company for
the year 2020, had retired as the auditors of the Company
upon conclusion of the 2020 Annual General Meeting. The
Company had communicated with the accounting firms
originally engaged by it in connection with the change of
accounting firms, and such accounting firms did not raise
any objection against the change.
The Company is taking active actions to proceed with
the selection and appointment of its auditors for the
year 2022, and investors are advised to pay attention to
the announcements made by the Company in its listed
jurisdictions for the further development in this regard.
Service/Nature
RMB million
Fees
Audit, review and agreed-upon
procedures fee
46.51
Including: Internal control audit fee
8.50
Non-audit services fee (tax services
and consultation services)
Total
1.13
47.64
60 Annual Report 2021 | Corporate Governance
By Order of the Board
Yuan Changqing
Non-executive Director
24 March 2022
Attendance records of the resigned Supervisor at the
meetings of the Board of Supervisors are as follows:
During the Reporting Period, six meetings were held by
the Board of Supervisors of the Company. Attendance
records of individual Supervisors are as follows:
MEETINGS AND ATTENDANCE
Currently, the seventh session of the Board of Supervisors
of the Company comprises Mr. Jia Yuzeng, Mr. Niu
Kailong, Mr. Cao Qingyang, Ms. Wang Xiaoqing and
Mr. Lai Jun5, with Mr. Jia Yuzeng acting as the Chairman
of the Board of Supervisors. Mr. Jia Yuzeng and Mr. Niu
Kailong are Non-employee Representative Supervisors,
whereas Mr. Cao Qingyang, Ms. Wang Xiaoqing and
Mr. Lai Jun are Employee Representative Supervisors. In
October 2021, Mr. Han Bing 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.
61
Remuneration paid by the Company to PricewaterhouseCoopers
Zhong Tian LLP and PricewaterhouseCoopers in 2021 was
as follows:
Annual Report 2021 | Corporate Governance
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.
Mr. Lai Jun, Mr. Cao Qingyang, Mr. Jia Yuzeng, Mr. Niu Kailong, Ms. Wang Xiaoqing
From left to right:
REPORT OF THE BOARD OF SUPERVISORS
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
in compliance with law, financial reports, connected
transactions and internal control, etc. during the Reporting
Period.
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.
Following the consideration and approval by the
shareholders at the 2020 Annual General Meeting of the
Company, PricewaterhouseCoopers Zhong Tian LLP has
been appointed as the PRC auditor and the auditor for
the Form 20-F of the Company for the year 2021, and
PricewaterhouseCoopers has been appointed as the Hong
Kong auditor of the Company for the year 2021, who
will hold office until the conclusion of the 2021 Annual
General Meeting. In 2021, PricewaterhouseCoopers
Zhong Tian LLP and PricewaterhouseCoopers served as
the Company's auditors for the first year.
AUDITORS
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.
PRE-EMPTIVE RIGHTS AND ARRANGEMENTS
FOR SHARE OPTIONS
HKSCC Nominees Limited
Overseas legal person
25.93%
No management or administration contracts for the whole
or substantial part of any business of the Company were
entered into during the Reporting Period.
7,327,931,503
China Securities Finance Corporation Limited
State-owned legal person
2.51%
708,240,246
-15,697,388
Yes
+596,257
Number of
MATERIAL GUARANTEES
1. during the Reporting Period, the Company did not
provide any external guarantee;
59
Annual Report 2021 | 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.
COMPLIANCE WITH THE CORPORATE
GOVERNANCE CODE
Based on the information publicly available to the
Company and within the knowledge of the Directors as at
the Latest Practicable Date (24 March 2022), 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
Independent Directors of the Company have rendered
their independent opinions on the Company's external
guarantees, and are of the view that:
In 2021, 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.
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 2021.
BOARD'S STATEMENT ON INTERNAL CONTROL
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 on-going operations 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 the requirements of
relevant laws and regulations; and
MAJOR CUSTOMERS
Unit: Shares
Number of
Name of Supervisor
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.
Organizing the evaluations of the performance
of duties by Directors and Supervisors. Firstly, an
evaluation of the performance of duties by Directors
was commenced in accordance with the "Measures
for the Evaluation of the Performance of Duties by
Directors and Supervisors of the Company". Secondly, an
evaluation of the performance of duties by Supervisors
was organized and commenced in accordance with the
"Measures for the Evaluation of the Performance of
Duties by Directors and Supervisors of the Company".
After the final evaluation by the Board of 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 2021.
Actively conducting research and investigation
activities, examining and understanding the business
operations of the Company. In November 2021,
the members of the Board of Supervisors conducted
investigation and research activities on the investment
sector of the Company, listened to reports concerning
the investment management structure and investment
system of the Company, and had discussion and
communication among themselves with respect to the
relevant issues. Through the investigation and research,
the Board of Supervisors comprehended the risk
prevention and control mechanism for the investment
business of the Company in great depth, and further
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.
Attending training courses and constantly enhancing
performance of duties by the Supervisors. In 2021,
all members of the Board of Supervisors attended the
training programs on anti-money laundering and a training
course on the "Standards for the Corporate Governance
of Banking and Insurance Institutions" offered by The
Insurance Association of China. Mr. Jia Yuzeng, the
Chairman of the Board of Supervisors, attended a special
training course for directors and supervisors of listed
companies within Beijing as organized by the Listed
Companies Association of Beijing (the "LCAB") and the
"Special Training Course for the Supervisory Committee
of Listed Companies" offered by the China Association
for Public Companies. Mr. Niu Kailong, Mr. Cao Qingyang
and Ms. Wang Xiaoqing, being the Supervisors, attended
a special training course for directors and supervisors of
listed companies within Beijing as organized by the LCAB,
respectively.
6
As Mr. Wang Bin, a former Executive Director of the Company, was unable to perform his duties as a Director nor participate in a Director self-
assessment in the evaluation of the performance of duties by Directors for 2021, he was excluded from the scope of such evaluation.
Annual Report 2021 | Corporate Governance
63
INDEPENDENT OPINION OF THE BOARD OF
SUPERVISORS ON CERTAIN MATTERS
During the Reporting Period, the Board of Supervisors
of the Company performed its supervisory duties in a
diligent manner in accordance with the requirements
of the Company Law, the Articles of Association and
the "Procedural Rules for the Board of Supervisors
Meetings". The Board of Supervisors had no objection in
respect of the matters under its supervision during the
Reporting Period.
The Company's operations in compliance with law.
During the Reporting Period, the Company's operations
were in compliance with the law. The Company's
operations and decision-making procedures were in
compliance with the Company Law and the Articles of
Association. All Directors and senior management of the
Company 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.
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 2021 in accordance with the China Standards
on Auditing of PRC Certified Public Accountants and the
International Standards on Auditing, respectively.
Acquisition and sale of assets. During the Reporting
Period, the prices for acquisition and sale of assets by
the Company were fair and reasonable. The Board of
Supervisors is not aware of any insider trading, any acts
harming the interests of shareholders or incurring any loss
to the Company's assets.
Connected transactions. During the Reporting Period,
the connected transactions of the Company were on
commercial terms. The Board of Supervisors is not aware
of any acts harming the interests of the Company.
Internal control system and self-evaluation report
on internal control. During the Reporting Period, the
Company sought to improve its internal control system,
and consistently enhanced 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
No. of A Share shareholders:
147,078
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:
25,415
No. of A Share shareholders:
151,802
Total number of ordinary
share shareholders as at
the end of the Reporting
Period
Attending and participating in corporate governance
meetings and actively exercising their supervisory
role. In 2021, the Board of Supervisors attended the 2020
Annual General Meeting of the Company and the First
Extraordinary General Meeting 2021, 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 proactively pushing forward the further
enhancement of corporate governance.
INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER
Total number of shareholders and their shareholdings
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
Central Huijin Asset Management Limited
64 Annual Report 2021 | Corporate Governance
24 March 2022
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.
Annual Report 2021 | Corporate Governance
62
As elected by the sixth extraordinary meeting of the third session of the employee representative meeting of the Company and upon approval by the
CBIRC, the appointment of Mr. Lai Jun as a Superviors became effective on 14 October 2021.
Name of Supervisor
of meetings
in person/number by proxies/number
Number of
meetings attended
meetings attended
Number of
required to attend
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
2021, the Board of Supervisors held six 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.
Note: The number of meetings attended in person includes meetings
attended by the Supervisors on-site and by way of telephone or
video conference.
0/4
of meetings
required to attend
of meetings
required to attend
4/4
Han Bing
4
meetings attended meetings attended
in person/number by proxies/number
of meetings
required to attend
Niu Kailong
As elected by the 2020 Annual General Meeting of the Company and upon approval by the CBIRC, the appointment of Mr. Niu Kailong as a Supervisor
became effective on 14 October 2021.
0/2
0/6
ន ន
2/2
6/6
Jia Yuzeng
Wang Xiaoqing
Lai Jun
6/6
Cao Qingyang
0/2
2/2
0/6
6/6
0/6
President since April 2019
4.09
Executive Director
Female October 1965
Employee Representative
Supervisor
Wang Xiaoqing
Supervisor
No
94.44
25.44
69.00
Since 12 July 2019
May 1963
Male
Cao Qingyang
Employee Representative
69
Representative Supervisor
Yes
September 1974 Since 14 October 2021
Male
Niu Kailong
Non-employee
Supervisors
No
149.05
23.75
125.30
Since 11 July 2018
June 1962
Male
Jia Yuzeng
Since 27 December 2019
60.14
24.09
84.23
Appointed as an Executive Director
68.37%
68 Annual Report 2021 | Corporate Governance
No
149.05
23.75
125.30
Since July 2019
April 1968
Male
Vice President
No
149.05
23.75
Chairman of the Board of
125.30
July 1966
Male
Vice President
Ruan Qi
Zhan Zhong
No
15.38
11.29
Since 14 October 2021
May 1964
Male
Employee Representative
Supervisor
Lai Jun
No
20
Since April 2018
Yes
19,323,530,000
0
July 1971
Male
Non-executive Director
Wang Junhui
Charge of Finance since May 2020
Person in Charge of Finance
Vice President and Person in
No
149.26
23.96
125.30
June 1967
Vice President
Huang Xiumei
since 1 July 2021,
Executive Director
Appointed as an Executive Director
No
151.10
25.80
125.30
since 16 August 2019,
Vice President since November 2014,
Chief Actuary since March 2012,
Board Secretary since June 2017
Board Secretary
Chief Actuary
July 1969
Male
Li Mingguang
Vice President
7.00
Since 16 August 2019
Yes
Female
Independent Director
Since 14 October 2021
Tang Xin
7.00
January 1969
Male
Independent Director
Zhai Haitao
No
21.00
0
Since 29 June 2021
April 1953
Male
Independent Director
Lam Chi Kuen
21.00
36.00
Male
No
Since 7 March 2016
37.00
0
37.00
No
September 1971
Independent Director
Female April 1939
Since 20 July 2016
36.00
0
Leung Oi-Sie Elsie
7.
8.
On 30 June 2021, the 2020 Annual General Meeting was convened by the Company for the election of the seventh session of the Board.
Given that Mr. Wang Bin, a former Executive Director of the Company, was unable to perform his role and duties as a Director, Mr. Yuan Changqing,
a Non-executive Director of the Company, was elected at the sixth meeting of the seventh session of the Board of Directors of the Company on 13
January 2022 to assume the role and duties of the Chairman of the Board.
On 30 June 2021, the 2020 Annual General Meeting was convened by the Company for the election of the seventh session of the Board of Supervisors,
and the first meeting of the seventh session of the Board of Supervisors was convened on the same day for the election of Mr. Jia Yuzeng as the
Chairman of the seventh session of the Board of Supervisors of the Company.
Ms. Huang Xiumei was elected as an Executive Director of the seventh session of the Board of the Company at the 2020 Annual General Meeting of
the Company. Pursuant to the "Provisions on the Administration of the Qualifications for the Directors, Supervisors and Senior Managers of Insurance
Companies", the appointment of Ms. Huang Xiumei as an Executive Director of the seventh session of the Board of the Company became effective on
1 July 2021.
The Board of the Company received a resignation letter from Mr. Tang Xin, an Independent Director of the Company, on 6 March 2022. As Mr. Tang Xin
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 regulatory requirements. Since the resignation of Mr. Tang Xin 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, Mr. Tang Xin will continue to perform his duties as an
Independent Director until the qualification of a new Independent Director is approved by the CBIRC.
As elected by the 2020 Annual General Meeting of the Company and upon approval by the CBIRC, Mr. Zhai Haitao served as an Independent Director of
the Company from 14 October 2021.
As elected by the 2020 Annual General Meeting of the Company and upon approval by the CBIRC, Mr. Niu Kailong served as a Non-employee
Representative Supervisor of the Company from 14 October 2021.
As elected by the sixth extraordinary meeting of the third session of the employee representative meeting of the Company and upon approval by the
CBIRC, Mr. Lai Jun served as an Employee Representative Supervisor of the Company from 14 October 2021.
As considered by the thirty-fifth meeting of the sixth session of the Board of the Company and upon approval by the CBIRC, Mr. Liu Yuejin served as an
Assistant to the President of the Company from June 2021.
6.
As elected by the 2019 Annual General Meeting of the Company and upon approval by the CBIRC, Mr. Lam Chi Kuen served as an Independent Director
of the Company from 29 June 2021.
5.
93.01
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.
3.
None of the current Directors, Supervisors and senior management of the Company held any shares of the Company during the Reporting Period.
2. According to the "Procedural Rules for the Board Meetings of China Life Insurance Company Limited", Directors of the Company serve for a term of
three years and may be re-elected. However, Independent Directors may not serve for more than six years. According to the Articles of Association,
Supervisors of the Company serve for a term of three years and may be re-elected.
1.
Notes:
1,417.48
258.41
1,159.07
Total
No
Since December 2021
No
24.67
As considered and approved by the thirty-fifth meeting of the sixth session of the Board and the fourth meeting of the seventh session of the Board of
the Company and upon approval by the CBIRC, Ms. Zhang Di served as an Assistant to the President of the Company from December 2021 and the Chief
Investment Officer from January 2022.
4. 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 are subject to review and approval. The result of the review will be disclosed when the final
amount is confirmed.
As considered and approved by the fourth meeting of the seventh session of the Board of the Company, Mr. Liu Fengji served as a temporary Person
in Charge of Audit of the Company from October 2021. Upon approval by the CBIRC, he became the Person in Charge of Audit of the Company from
December 2021.
November 1958
RESIGNATION AND RETIREMENT OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
31 July 2017
- 23 February 2022
68.34
Male
3 December 2018
Chairman of the Board
Executive Director
Wang Bin
Reason for changes
the Company
parties of
from connected
during
ten thousands
the Company
Period in RMB
paid by
the Reporting
Other benefits,
social insurance,
Salary
Remuneration
Name
housing
provident fund
and enterprise
Total
emolument
received from
Annual Report 2021 | Corporate Governance 69
Whether
received
emolument
Previous Position
Gender Date of Birth
Term
paid in RMB
ten thousands
annuity fund
the Company
Since July 2018
Male
Male
Male
February 1967
Female
Vice President
Yang Hong
ten thousands
(before tax)
in RMB
the Company
ten thousands
the Company
Period in RMB
fund paid by
parties of
from connected
received
emolument
the Reporting
enterprise
annuity
Name
Position
Gender Date of Birth
Term
Salary/
Remuneration
paid in RMB
ten thousands
Other benefits,
Since July 2019
social insurance,
housing
provident
emoluments
received from
the Company
Whether
during
fund and
Total
October 1969
October 1969
125.30
149.09
Compliance Officer
Person in Charge of Audit
Liu Fengji
Xu Chongmiao
since January 2022
Chief Investment Officer
No
Female January 1968
President since December 2021,
Assistant to the President
Chief Investment Officer
Zhang Di
Appointed as an Assistant to the
No
No
No
2 2 2
44.02
11.52
Zhao Guodong
Assistant to the President
Liu Huimin
November 1967
Since October 2019
65.00
23.79
23.80
Liu Yuejin
Assistant to the President
Male
April 1967
Since June 2021
32.50
88.80
Non-executive Director Male
role and duties as
-7 February 2021
Mr. Lam Chi Kuen, born in 1953, Chinese
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 served as an Independent Non-executive Director of United Company
RUSAL Plc from December 2009 to June 2021. She has been 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
73
Annual Report 2021 | Corporate Governance
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 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 the China Association for Public Companies,
a member of the Legislative Affair Committee of the Asset Management Association of
China 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 doctoral degrees in law.
Mr. Tang Xin, born in 1971, 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 AMP Asset Management Company Limited since
December 2016 and a Director of China United Network Communications Group Co.,
Ltd. since March 2021. From 2004 to 2016, he successively 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 successively 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 from 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
Annual Report 2021 | Corporate Governance
72
Ms. Huang became an Executive Director of the Company in July 2021. She has been
the Vice President and the Person in Charge of Finance of the Company since May
2020. Ms. Huang has been a Director of China Life Asset Management Company
Limited since June 2021, a Director of Sino-Ocean Group Holding Limited since March
2021, and a Director of China Life Franklin Asset Management Company Limited since
February 2021. From 2018 to 2021, she served as a Director of China Life Pension
Company Limited. 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.
Ms. Huang Xiumei, born in 1967, 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 the Vice Chairman of the China Association of Actuaries.
Mr. Li receives a special government allowance from the State Council.
Mr. Lam became an Independent Director of the Company in June 2021. He is currently
an Independent Non-executive Director of China Cinda Asset Management Co., Ltd.
and an Independent Non-executive Director of 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. 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, 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 successively 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. Yuan became a Non-executive Director of the Company in February 2018. He
has been performing duties as the acting Chairman of the Board of Directors of the
Company since January 2022, and is the Deputy Secretary to the Party Committee,
Vice Chairman and President of China Life Insurance (Group) Company (the controlling
shareholder of the Company). Mr. Yuan served as the Deputy Secretary to the Party
Committee and the Chairman of the Supervisory 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 successively served as the Vice President, President and Secretary
to the Party Committee of Xinjiang Branch, the President and Secretary to the Party
Committee of Henan Branch, and the Director of the Organization Department of the
Party Committee and the General Manager of the Human Resources Department of the
head office of Industrial and Commercial Bank of China Limited. During the period from
1981 to 1995, he held various professional and management positions in branch offices
of the People's Bank of China and Industrial and Commercial Bank of China. Mr. Yuan, a
senior economist, graduated from the University of Hong Kong, majoring in international
business administration with a master's degree in business administration.
Mr. Yuan Changqing, born in 1961, Chinese
DIRECTORS
PERSONAL PROFILE OF CURRENT DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND
COMPANY SECRETARY
70 Annual Report 2021 | Corporate Governance
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 is currently subject to review and approval. The result of the review will be disclosed when the final
amount is confirmed.
The emoluments are calculated based on the terms of office of the resigned and retired Directors, Supervisors and senior management during the
Reporting Period.
4.
3.
2. 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.
None of the resigned or retired Directors, Supervisors and senior management of the Company held any shares of the Company during the Reporting
Period.
1.
Annual Report 2021 | Corporate Governance 71
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.
74
Annual Report 2021 | Corporate Governance
78
Mr. Liu became an Assistant to the President of the Company in June 2021. He is the
General Manager of Guangdong Branch of the Company. Mr. Liu joined the Company in
1996, and successively served as an Assistant to the General Manager and the Deputy
General Manager of the Company's Guizhou Branch and the Deputy General Manager
of Shanxi Branch, the Person in Charge, the Deputy General Manager (responsible for
daily operations) and the General Manager of Guizhou Branch, and the General Manager
of Chongqing Branch from 2010 to 2020. Prior to joining the Company, he worked at the
Department of Finance of Shanxi Province. Mr. Liu graduated from Shanxi Institute of
Finance and Economics, majoring in planning and statistics with a bachelor's degree in
economics.
Mr. Liu Yuejin, born in 1967, Chinese
Mr. Zhao became an Assistant to the President of the Company in October 2019. He
has been the General Manager of the Company's Jiangsu Branch since 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 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 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 successively
served as the General Manager of the Operation Service Center and the Operation
Director of the Company from 2018 to 2019. 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
Process and Operation 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
77
Annual Report 2021 | Corporate Governance
Mr. Zhan became the Vice President of the Company in July 2019. He was an Employee
Representative Supervisor of the Company from July 2015 to August 2017. Mr. Zhan
successively served as the General Manager (at the general manager level of the
provisional branches) of the Individual Insurance Sales Department and the Marketing
Director of the Company from 2014 to 2019. He 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 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 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. Su Hengxuan, please see the section "Directors" for his personal profile.
Mr. Li Mingguang, please see the section "Directors" for his personal profile.
Ms. Huang Xiumei, please see the section "Directors" for her personal profile.
SENIOR MANAGEMENT
Annual Report 2021 | Corporate Governance
Annual Report 2021 | 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 successively 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 division 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 division level),
supervisor, inspector (at the deputy bureau 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. Niu Kailong, born in 1974, Chinese
Mr. Niu became a Supervisor of the Company in October 2021. He is the General
Manager of the Strategic Planning Department/Office of the Board of Directors (in
preparation) of China Life Insurance (Group) Company and the President of China
Life Institute of Finance. Mr. Niu successively worked at PICC Property and Casualty
Company Limited, the People's Insurance Company (Group) of China Limited and
PICC Reinsurance Company Limited. He served as the Deputy General Manager of the
Strategic Planning Department of the People's Insurance Company (Group) of China
Limited from April 2017, 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 October 2017, the
person in charge of the Strategy and Investment Management Department of China
Life Healthcare Investment Company Limited from July 2020, and the Deputy General
Manager (responsible for daily operations) of the Strategic Planning Department of
China Life Insurance (Group) Company from August 2020. Mr. Niu graduated from
Nankai University with a doctoral degree in finance. He is an associate researcher (social
science) and senior economist.
Notes:
Annual Report 2021 | Corporate Governance 75
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.
Ms. Wang Xiaoqing, born in 1965, Chinese
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 Integrated 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.
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 to 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 the Central Party
School of the Chinese Communist Party, majoring in economics and management. He is
a senior economist.
76
Mr. Cao Qingyang, born in 1963, Chinese
June 1965
| |
16.82
a Director
Resigned due to the
failure to perform his
Yes
- 13 October 2021
Pike
30.00
0
30.00
October 1951
Male
Independent Director
11 July 2015
Robinson Drake
- 28 June 2021
Resigned due to the
16.00
16.00
November 1948
Male
Independent Director
20 October 2014
Chang Tso Tung
Stephen
(before tax)
ten thousands
in RMB
- 15 January 2021
July 1965
Non-executive Director Male
Yin Zhaojun
31 July 2017
0
Yes adjustment of work
arrangements
Resigned due to the
Yes adjustment of work
arrangements
85.49
I
1
arrangements
- October 2021
Resigned due to the
No adjustment of work
20.50
6.07
14.43
March 1963
Male
December 2020
Person in Charge of
Audit
Yang Chuanyong
Supervisor
-18 October 2021
35.81
Retired due to the
No expiration of term of
office
Retired due to the
No expiration of term of
office
Resigned due to the
No adjustment of work
arrangements
102.31
Non-employee
Han Bing
Representative
Male
November 1971
25.06
10.75
12 July 2019
Total
required
88
Shareholders'
General
Meeting
Board of
Directors
Board of
Supervisors
Nomination and
Remuneration
Committee
Risk Management
and Consumer Rights
Protection Committee
Strategy and Assets and
Liabilities Management
Committee
Audit
Committee
Connected
Transactions
(Corporate Governance Structure Chart)
Including branches at the provincial or prefecture level, sub-branches, sales offices and sales & services offices.
82
Annual Report 2021 | Corporate Governance
Board Secretary
Company Secretary
Board of Directors' Office/
Investor Relations
Department
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.
Control Committee
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 meetings, Board meetings
and Board of Supervisors meetings of the Company have
been functioning independently and coordinately.
7
The Company implements good corporate governance
policies and firmly believes that through fostering sound
corporate governance, further enhancing its transparency
and establishing an effective system of accountability,
the Company and its major
25
subsidiaries for which
extra costs have to be incurred
Annual Report 2021 | Corporate Governance
81
the Company can operate in a more systematic manner,
make decisions in a more scientific way, and boost the
confidence of investors.
Remuneration Policy for Employees
Training Plans
In 2021, the Company prioritized morals and also
emphasized on capabilities, pursued the problem-
based approach for offering targeted training courses
for employees, adopted a classified and hierarchical
management system to cover all employees, and focused
on reforms and innovation for joint development and
sharing. The Company integrated real situations into its
education and training and put stringent management into
practice, concentrated on the development of a quality
system that covers source cultivation, follow-up cultivation
and whole-process cultivation, continued to further develop
the systems for training courses and training management,
stepped up its efforts to build a team of part-time lecturers,
pushed forward the integration of talents selection,
cultivation, utilization and retention, and consistently
enhanced the suitability and effectiveness of education and
training plans for employees, with a view to facilitating the
business development of the Company and the healthy
team development of cadre employees.
Branches
As at 31 December 2021, the Company had approximately
19,000 branches.
REPORT OF CORPORATE GOVERNANCE
OVERVIEW OF CORPORATE GOVERNANCE
The Company has established a remuneration and incentive
system with reference to employee's positions, the
Company's performance and market conditions.
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 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 senior management,
provide advice and recommendations for the Board's
consideration, and deal with matters entrusted or
authorized by the Board, for the purposes of improving the
Board's efficiency and intensifying the Board's functions.
Date of publication of
resolutions
30 June 2021
16 December 2021
Twenty-four proposals, including the "Proposal in relation
to the Report of the Board of Directors of the Company
for the Year 2020", the "Proposal in relation to the Report
of the Board of Supervisors of the Company for the Year
2020", the "Proposal in relation to the Financial Report of
the Company for the Year 2020", the "Proposal in relation
to the Profit Distribution Plan of the Company for the Year
2020", the "Proposal in relation to the Remuneration of
Directors and Supervisors of the Company", the proposal
in relation to the election of Executive Directors, Non-
executive Directors and Independent Directors of the
seventh session of the Board of the Company and the
proposal in relation to the election of Non-employee
Representative Supervisors of the seventh session of the
Board of Supervisors of 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
2020" and the "Report on the Overall Status of Connected
Transactions of the Company for the Year 2020" were
debriefed and reviewed at the 2020 Annual General
Meeting held in Beijing on 30 June 2021.
Four proposals, including the amendments to the Articles
of Association, amendments to the "Procedural Rules for
the Shareholders' General Meetings" and the execution of
an agreement for connected transactions with CLI, were
considered and approved by a combination of on-site and
online voting at the First Extraordinary General Meeting
2021 held in Beijing on 16 December 2021.
www.sse.com.cn
www.hkexnews.hk
www.e-chinalife.com
84 Annual Report 2021 | Corporate Governance
Number of
Number of
meetings
attended
in person
shareholders'
general
Name of Director
Type of Director
Attendance records of the current Directors at the
shareholders' general meetings convened during the
Reporting Period:
www.e-chinalife.com
www.sse.com.cn
www.hkexnews.hk
Index for websites on which
resolutions were published
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 formulated
the "Measures for the Evaluation of the Performance of
Duties by Directors and Supervisors" and the "Provisional
Measures for the Administration of Undertakings of
Substantial Shareholders" to further strengthen the
evaluation and management of the performance of duties
by Directors and Supervisors and the administration of
undertakings of substantial shareholders.
The Company has made information disclosure in a
timely, open and transparent manner pursuant to the
requirements of the listing rules of its listed jurisdictions.
The Company has continuously improved its management
of investor relations and enriched its communication with
investors in both form and substance, thus ensuring that
all shareholders enjoy equal rights and have access to
information about the Company in an open, fair, true and
accurate manner.
The Company has intensified its management of
subsidiaries on an ongoing basis. The Board considered
and approved the "Proposal in relation to the Nomination
of the Candidates for Directors of the Fifth Session of
the Board of Directors of China Life Asset Management
Company Limited", the "Proposal in relation to the
Nominiation of the Candidates for Directors of China Life
Pension Company Limited" and the "Proposal in relation
to the Provision of Shareholders' Letters of Undertaking to
Banking and Insurance Institutions".
Annual Report 2021 | Corporate Governance 83
-
During the Reporting Period, the Company won the
Tianma Award- "Best Board of Directors" for the first
time in the 12th China Listed Company Investor Relations
assessment and selection hosted by Securities Times.
It was also awarded Grade A in the assessment by the
SSE of information disclosure of listed companies for the
year 2020-2021, the "Most Respected Enterprise in Asia
(Insurance Industry)" by Institutional Investor, the "Best
Listed Company" by New Fortune Magazine, the "Best
Investor Activity" by Investor Relations Magazine, the
"Best Listed Company" and the "Listed Company with
the Best Investment Value for the 14th Five-Year Plan
Period" in the 11th China Securities 2021 Golden Bauhinia
Awards, as well as the "Most Progress in Investor
Relations Award" by Hong Kong Investor Relations
Association.
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 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
2020 Annual General Meeting
30 June 2021
First Extraordinary General Meeting 2021 16 December 2021
Resigned and retired employees of
103,262
Employees in total
the Company's major subsidiaries
Su Hengxuan
China Life Insurance (Group) Company Vice President
Wang Junhui
Niu Kailong
China Life Insurance (Group) Company Chief Investment Officer
China Life Insurance (Group) Company General Manager of the Strategic
Planning Department/Office of
the Board of Directors
Yuan Changqing
(in preparation) and President of
China Life Institute of Finance
Since August 2016
Since March 2021
80 Annual Report 2021 | Corporate Governance
REMUNERATION OF DIRECTORS, SUPERVISORS
AND SENIOR MANAGEMENT
Decision-making procedures for the remuneration of
Directors, Supervisors and senior management: the
remuneration of Directors and Supervisors are approved
by shareholders at general meetings, whereas the
remuneration of senior management is approved by the
Board of Directors.
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.
Since December 2017
Since May 2017
Term
China Life Insurance (Group) Company Vice Chairman, President
Ms. Zhang Di, born in 1968, Chinese
Ms. Zhang became an Assistant to the President of the Company in December 2021.
She has been the Chief Investment Officer of the Company since January 2022.
Ms. Zhang joined the Company in 2001, and successively served as an Assistant to
the General Manager, the Deputy General Manager, the Deputy General Manager
(responsible for daily operations), and the General Manager of the Investment
Management Department and the General Manager of the Investment Management
Center of the Company from 2010. Prior to joining the Company, she worked at
companies including Beijing Zhongbaoxin Real Estate Development Company Limited
and PICC Trust and Investment Company, etc. Ms. Zhang graduated from Northern
Jiaotong University, majoring in transportation management and engineering with a
bachelor's degree in engineering.
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.
Mr. Liu Fengji, born in 1969, Chinese
Mr. Liu became the Person in Charge of Audit of the Company in December 2021.
He served as a temporary Person in Charge of Audit of the Company from October to
December 2021, and is the General Manager of the Audit Department of the Company.
Mr. Liu joined the Company in 1992, and successively served as an Assistant to the
General Manager of the Company's Tianjin Branch, the Deputy General Manager of
Ningxia Hui Autonomous Region Branch, the Person in Charge, the Deputy General
Manager (responsible for daily operations) and the General Manager of Qinghai Branch,
and the General Manager of Tianjin Branch from 2011 to 2021. Mr. Liu graduated from
Tianjin Institute of Finance and Economics in 1992, majoring in finance (insurance
direction) with a bachelor's degree in economics, and from Nankai University in 2013,
majoring in business administration for senior management with a master's degree in
business administration.
Annual Report 2021 | Corporate Governance
79
COMPANY SECRETARY
Mr. Heng Victor Ja Wei, born in 1977, British
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, all of which are listed on the main board of the HKSE.
POSITIONS HELD BY CURRENT DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT IN
SHAREHOLDERS OF THE COMPANY
Name
Name of shareholders
Position
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 RMB15.1979 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
2021 has not yet been determined.
meetings
EMPLOYEES AND BRANCHES
Employees
Structure of Expertise
5,889
68,671
24,715
Secondary School
1,455
Unit: Persons
Number of
Employees
Others
Number of employees of the Company
101,459
Total
103,262
Number of employees of
1,803
2,532
Unit: Persons
Master and above
Bachelor
Education Level
Class of Expertise
Management and administration
Sales and sales management
Finance and auditing
Unit: Persons
Number of
Employees
19,275
46,555
4,696
Insurance verification, claim processing
and customer services
23,829
Other expertise and technicians
Others
5,134
3,773
103,262
Total
Education Level
As at the end of the Reporting Period, the composition of
the employees of the Company and its major subsidiaries
is as follows:
Annual Report 2021 | Corporate Governance
to attend
Yuan Changqing
the sixth session of the Board
Date of the meeting Resolutions adopted at the meeting
22 January 2021
33rd meeting of
25 February 2021
the sixth session of the Board
32nd meeting of
34th meeting of
the sixth session of the Board
35th meeting of
28 April 2021
the sixth session of the Board
36th meeting of
26 May 2021
25 March 2021
the sixth session of the Board
Session of the meeting
86 Annual Report 2021 | Corporate Governance
2 persons
4 persons
Directors by location:
Directors by gender:
Male
7 persons
Board meetings convened during the Reporting Period are as follows:
Female
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 2021, 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 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.
Mainland China
Hong Kong, China
6 persons
3 persons
2 persons
First meeting of
30 June 2021
the seventh session of the Board
15 proposals, including the "Proposal in relation to
the Third Quarter Report of the Company for 2021",
were considered and approved.
23 proposals, including the "Proposal in relation to
the Asset Strategic Allocation Plan of the Company for
the Years from 2022 to 2024", were considered and
approved.
Note: For details of the above Board resolutions, please refer to the announcements regarding the Board resolutions as published by the Company on the
website of the SSE (www.sse.com.cn).
Annual Report 2021 | Corporate Governance
87
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.
12 proposals, including the "Proposal in relation to
the Financial Report of the Company for the First Half of
2021", were considered and approved.
Currently, the seventh session of the Board comprises the
following members: Mr. Su Hengxuan, Mr. Li Mingguang
and Ms. Huang Xiumei, all being Executive Directors, Mr.
Yuan Changqing and Mr. Wang Junhui, all being Non-
executive Directors, and Mr. Tang Xin8, Ms. Leung Oi-
Sie Elsie, Mr. Lam Chi Kuen and Mr. Zhai Haitao, all being
Independent Directors, with Mr. Yuan Changqing, a Non-
executive Director of the Company, performing duties as
the acting Chairman of the Board. Due to the adjustment
of work arrangements, Mr. Yin Zhaojun and Mr. Liu Huimin
successively resigned from their positions as Directors.
Due to consecutively serving as Independent Directors for
six years, Mr. Chang Tso Tung Stephen and Mr. Robinson
Drake Pike successively resigned from their positions as
Directors. Due to the failure to perform his duties as a
Director, Mr. Wang Bin resigned from his positions as the
Chairman of the Board and an Executive Director of the
Company.
the Corporate Governance of Banking and Insurance
Institutions" offered by the Insurance Association of
China. Mr. Li Mingguang, an Executive Director of
the Company, attended a special training course for
directors and supervisors of listed companies within
Beijing as organized by the LCAB. Ms. Huang Xiumei, an
Executive Director of the Company, attended a special
training course on financial risk prevention and control
of companies and a special training course for directors
and supervisors of listed companies within Beijing, as
organized by LCAB. Mr. Wang Junhui, a Non-Executive
Director of the Company, attended a special training
course for directors and supervisors of listed companies
within Beijing as organized by LCAB. Ms. Leung Oi-
Sie Elsie and Mr. Lam Chi Kuen, all being Independent
Directors of the Company, attended a follow-up training
course for independent directors of listed companies as
organized by the SSE.
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
Evaluation of the Performance of Duties by Directors
and Supervisors of Banking and Insurance Institutions
(for Trial Implementation)" 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 "Measures for the
Evaluation of the Performance of Duties by Directors and
Supervisors of the Company" released by 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 2021.
8
9
The Board of the Company received a resignation letter from Mr. Tang Xin, an Independent Director of the Company, on 6 March 2022. As Mr. Tang Xin
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 regulatory requirements. Since the resignation of Mr. Tang Xin 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, Mr. Tang Xin will continue to perform his duties as an
Independent Director until the qualification of a new Independent Director is approved by the CBIRC.
As Mr. Wang Bin, a former Executive Director of the Company, was unable to perform his duties as a Director nor participate in a Director self-
assessment in the evaluation of the performance of duties by Directors for 2021, he was excluded from the scope of such evaluation.
In 2021, all members of the Board 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 "Standards for
Five proposals, including the "Proposal in relation to
the Composition of Specialized Committees of
the Seventh Session of the Board of Directors of
the Company", were considered and approved.
The "Proposal in relation to the Solvency Report of
the Company for the Second Quarter of 2021" was
considered and approved.
Four proposals, including the "Proposal in relation to
the Participation by the Company in the Capital Increase
of CGB", were considered and approved.
Ten proposals, including the "Proposal in relation to the
'First Quarter Report of the Company for 2021'", were
considered and approved.
Second meeting of
22 July 2021
the seventh session of the Board
Third meeting of
25 August 2021
the seventh session of the Board
Fourth meeting of
28 October 2021
the seventh session of the Board
Fifth meeting of
16 December 2021
the seventh session of the Board
The "Proposal in relation to the Solvency Report of the
Company for the Fourth Quarter of 2020" was considered
and approved.
Three proposals, including the "Proposal in relation to
the 'Product Tracing Report of the Company for 2020"",
were considered and approved.
42 proposals, including the "Proposal in relation to
the Financial Report of the Company for the Year 2020",
were considered and approved.
3 persons
Executive
Director
Non-executive Independent
Director
Director
Directors by type:
Tang Xin
Independent Director
2
2
Leung Oi-Sie Elsie
Independent Director
1
2
Lam Chi Kuen
Independent Director
2
2
Zhai Haitao
Independent Director
2
2
Non-executive Director
Wang Junhui
Non-executive Director
2
0
Su Hengxuan
Executive Director
2
2
Li Mingguang
Executive Director
2
2
Huang Xiumei
Executive Director
1
0
1
for the year
1
Number of
meetings
attended
in
person
0
0
0
Independent Director
1
Chang Tso Tung Stephen Independent Director
Robinson Drake Pike
0
BOARD
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 of the Company 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 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.
Annual Report 2021 | Corporate Governance
85
In 2021, 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.
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 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:
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
Non-executive Director
Liu Huimin
0
Number of
shareholders'
general
Name of Director
Type of Director
meetings
required
to attend
for the year
Wang Bin
Executive Director
2
1
Yin Zhaojun
Non-executive Director
0
Attendance records of the resigned Directors at the
shareholders' general meetings convened during the
Reporting Period:
College Diploma