China Life Insurance Co. Ltd. Class A · SSE:601628
China Life Insurance Co. Ltd. Class A — H1 2016 Earnings Presentation
34 slides from China Life Insurance Co. Ltd. Class A's earnings presentation, Aug 26, 2016
Slide 1: 2016 Interim Results
2016 Interim Results 26 August 2016 Hong Kong·Beijing
Slide 2: Forward-looking Statement
Forward-looking Statement Certain statements contained in this presentation may be viewed as “forward-looking statements” as defined by Section 27A of U.S. Securities Act and Section 21E of U.S. Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown ri
Slide 3: Agenda
Agenda 1 Business & Operations 2 Financials & Investments 3 Embedded Value
Slide 4: Business & Operations
Business & Operations LIN Dairen President
Slide 5: Business Overview
Business Overview In the first half of 2016, the Company adhered to the principles of “emphasizing value, strengthening sales force, optimizing business mix, achieving stable growth, and safeguarding against risks”, as well as accelerating reform and innovation to seize market opportunities. The Com
Slide 6: Major Operational Initiatives
Major Operational Initiatives Transforming Growth Model Accelerating growth of medium-to-long-term FYRP Controlling single premiums volume Expanding & enhancing sales force Redoubling efforts towards sales force recruitment Further standardizing and upgrading field offices Promoting manage
Slide 7: Premium Income
Premium Income Long-term First-year Premiums Gross Written Premiums RMB: mn 138,693 RMB: mn 108,703 70,107 68.3% 41,657 292,461 Growth 23,944 2.3% drivers of 234,298 67,046 68,586 GWP 17,582 changed 129,824 1H2015 1H2016 Single Premiums First-year Regular Premiums from FYP 108,013 Renewal Premiums t
Slide 8: Premiums Structure
Premiums Structure First-year Regular Premiums Long-term FYRP exceeded Single Premiums for the first time RMB: mn 70,107 33,988 41,657 38.3% 50.5% 19,479 61.7% 49.5% 20,551 16,211 15,568 5,967 1H2015 1H2016 1H2015 1H2016 Less than 5 years 5-9 years 10-year-or-longer Drivers of Premiums Structure Opt
Slide 9: Value of New Business by Channels
Value of New Business by Channels RMB: mn 30,000 28,021 1,900 6.78% 25,000 18,637 20,000 6.27% 1,169 15,000 25,927 50.2% 92.53% 10,000 17,264 92.63% 5,000 0 1H2015 1H2016 Agent Channel Bancassurance Channel Group Channel Note: Value of new business is after the cost of solvency margin -9-
Slide 10: Agent Channel
Agent Channel In the first half of 2016, backed by expanded and enhanced sales force and leveraging new technologies and means to establish the customer development and CRM platform, Agent Channel achieved rapid growth with optimized business structure. Agent Channel GWP Agent Channel FYRP RMB: mn R
Slide 11: Group Insurance and Bancassurance Channels
Group Insurance and Bancassurance Channels Short-term Business Structure of Group Channel GWP Group Channel RMB mn RMB mn 13,851 10,322 3,511 38% 47% 1,905 10,340 8,417 62% 53% 1H2015 1H2016 1H2015 1H2016 Short-term Business Long-term Business Short-term Health Short-term Accident Bancassurance Long
Slide 12: Rapid Growth of Sales Force across All Channels
Rapid Growth of Sales Force across All Channels Agent Channel Number of agent Bancassurance Channel reached 1.29 million, Sales force amounted to an increase of 174,000, an increase of 32.1% over the end 33% over the end of last of last year 12% year 84% Total sales force of 1.529 million Group
Slide 13: Surrender Rate and Persistency Rate
Surrender Rate and Persistency Rate Surrender Rate Persistency Rate 95% 89% 90% 3.98% 90% 85% 2.80% 87% 84% 80% 75% 70% 65% 60% 1H2015 1H2016 2015.6.30 2016.6.30 14 Month 26 Month Note：Surrender Rate = Surrender payment/(Liability of long-term insurance contracts at the beginning of the period + Pre
Slide 14: Opportunities and Challenges
Opportunities and Challenges Challenges Opportunities The moderate to rapid economic growth and the China’s L-shaped economic trajectory and low continuous economic structure optimization have laid a interest rates may increase the difficulty in good foundation for the insurance industry. managi
Slide 15: 2H 2016 Operational Strategy
2H 2016 Operational Strategy In the second half, the Company will actively respond to market challenges while maintaining its strategy focus and policy consistency, adhering to the principles of “prioritizing value, strengthening sales force, optimizing business mix, achieving stable growth and guar
Slide 16: Financials & Investments
Financials & Investments ZHAO Lijun Vice President
Slide 17: Revenues
Revenues Net Premiums Earned Total Revenues RMB mn RMB mn 284,242 337,737 331,317 229,360 1H2015 1H2016 Investment Income & Realized/Unrealized Gains and Impairment Losses RMB mn Net Fair Value Gains/ (Losses) Realized Gains on through Profit or Investment Income Financial Assets Impairment Losses L
Slide 18: Cost Control
Cost Control Underwriting and Policy Administrative Expenses Ratio Acquisition Cost Ratio 3.8% 8.9% 3.5% 5.9% 1H2015 1H2016 1H2015 1H2016 Notes: Underwriting and Policy Acquisition Cost Ratio = Underwriting and policy acquisition costs/total revenue Administrative Expenses Ratio = Administrative exp
Slide 19: Profitability
Profitability 1H2016 1H2015 Change Net Profit Attributable to Equity Holders of the Company （RMB mn） 10,395 31,489 -67.0% Weighted Average ROE 3.30% 10.45% -7.15pps EPS （RMB yuan） 0.36 1.11 -0.75 - 19 -
Slide 20: Equity Holders' Equity
Equity Holders’ Equity RMB mn 350,000 10,395 4 300,000 (17,883) (12,060) 250,000 200,000 322,492 150,000 302,948 100,000 50,000 0 2015 Equity Attributable Net Profit Attributable to Other Comprehensive Other Equity Change Dividends 2016 1H Equity to Equity Holders of the Equity Holders of the Income
Slide 21: Solvency Ratio
Solvency Ratio As at 30 June 2016 340% 329.09% 320% 300% 298.32% 280% 260% 240% 220% 200% Core solvency ratio Comprehensive solvency ratio - 21 -
Slide 22: Investment Assets and Portfolio
Investment Assets and Portfolio 1 Fixed-maturity Investments 1,842,917 76.65% -1.04pps 1,777,180 77.69% Term deposits 505,503 21.03% -3.56pps 562,622 24.59% Bonds 1,097,899 45.67% 2.12pps 996,236 43.55% Financial product 127,727 5.31% 0.16pps 117,887 5.15% investments2 Other fixed-maturity 111,788 4
Slide 23: Investment Yields
Investment Yields Comprehensive Net Investment Yield Gross Investment Yield Investment Yield 9.34% 10.84% 4.65% 4.68% 4.36% 1.55% 1H2015 1H2016 1H2015 1H2016 1H2015 1H2016 Note: Net investment income include interest income from debt investments, interest income from deposits, dividend and bonus fro
Slide 24: Stringent Credit Risk Control
Stringent Credit Risk Control The Company consistently upholds a prudent investment strategy to strictly safeguard against credit Non-standard Non-standard Credit Bond1 risks. Assets Assets As at the end of June 2016, over 94% of the Company’s credit bonds had a AAA credit rating. More than >94%
Slide 25: Embedded Value
Embedded Value LI Mingguang Vice President
Slide 26: Embedded Value Breakdown by Components
Embedded Value Breakdown by Components As at 30 June 2016 RMB mn 700,000 600,000 (49,808) 500,000 370,425 400,000 300,000 583,756 200,000 263,138 100,000 0 Adjusted Net Worth In-force Business Value Cost of Solvency Margin Embedded Value - 26 -
Slide 27: Growth of Embedded Value and Value of New Business
Growth of Embedded Value and Value of New Business Embedded Value VNB in 1H2016 RMB mn RMB mn 28,021 583,756 560,277 18,637 291,549 320,618 268,729 263,138 2015.12.31 2016.6.30 1H2015 1H2016 In-force Business Value (After cost of solvency margin) Note: The value of new business is after cost of solv
Slide 28: Embedded Value Movement Analysis
Embedded Value Movement Analysis EV movement of 1H 2016 RMB mn 28,021 2,818 24,464 504 172 1,183 (21,011) (612) (12,060) 560,277 583,756 EVat the ExpectedReturns Value of 1H 2016 Operating Investment Methodologyand MarketValue, Exchange Gains Shareholder Others EVat 30 June beginning New Business Ex
Slide 29: China Life Appendix
E CHINA LIFE PEA
Slide 30: Appendix: Honors and Awards in 2016
Appendix: Honors and Awards in 2016 China Life Insurance (Group) Company, with China Life Insurance Company Limited as a core subsidiary, has made the list of Fortune Global 500 for 14 consecutive years, ranking the 54th in 2016. China Life ranked 4th in “China’s Top 500 Most Valuable Brands 2016 (1
Slide 31: Success for you, Success by you
Fulfilling Social Responsibilities China Life’s corporate culture and social responsibility concept: “ Success for you, Success by you” Integrates social Leverages the Company’s advantages Participates in public responsibilities into in business, extensive welfare programs in a customer services net
Slide 32: Sensitivity Analysis – Investment Return and Discount Rate
Sensitivity Analysis – Investment Return and Discount Rate Value of In-force Business after Cost of Value of Half Year’s Sales after Cost of Solvency Margin Solvency Margin RMB mn RMB mn 53,250 15,849 320,618 - (14,782) 6,014 (52,967) 28,021 1,368 (1,273) (5,991) Investment Risk Adjusted Base Case R
Slide 33: Sensitivity Analysis-Operational and other Assumptions
Sensitivity Analysis-Operational and other Assumptions Sensitivity Analysis Results (after the cost of solvency margin) RMB mn Value of In-force Business Value of Half Year’s Sales Base 320,618 28,021 Cost Ratio+/-10% -3,111 3,111 -1,731 1,731 Mortality Ratio for Non- Annuity Products +/-10%, -1,943
Slide 34: Sensitivity Analysis Results – other Assumptions
Sensitivity Analysis Results – other Assumptions Sensitivity Analysis Results RMB mn Value of In-force Value of Half Year’s Business after the cost of Sales after the cost of solvency margin solvency margin Base 320,618 28,021 Solvency Margin at 150% of 296,079 25,933 Statutory Minimum Taxable incom
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