China Life Insurance Co. Ltd. Class A · SSE:601628
China Life Insurance Co. Ltd. Class A — FY2009 Earnings Presentation
41 slides from China Life Insurance Co. Ltd. Class A's earnings presentation, Apr 8, 2010
Slide 1: 2009 Annual Results
2009 Annual Results International Financial Reporting Standards April 8 , 2010
Slide 2: Forward-looking Statements
Forward-looking Statements Certain statements contained in this presentation may be viewed as “forward- looking statements” within the meaning of Section 21E of U.S. Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other
Slide 3: A Description of the Change of Accounting Policies
A Description of the Change of Accounting Policies Until and including its financial statements for the year ended December 31, 2008, the Company filed its financial statements prepared in accordance with HKFRS with Hong Kong Stock Exchange, and filed its financial statements prepared in accordance
Slide 4: Agenda
Agenda Section I 2009 Overview Section II Business Review Section III Financial Summary Section IV Investment Performance Section V Embedded Value Appendix Accounting Policy Changes Reconciliation -3-
Slide 5: Section I: 2009 Overview
Section I: 2009 Overview He EB) AW FF OR ie BR st Fat PRS China Life Insurance Company Limited
Slide 6: Outstanding Performance in a Complex Environment
Outstanding Performance in a Complex Environment Actively responded to the international financial crisis and 1 fierce domestic competition Built sustainable business growth Successfully restructured business mix 2 Significantly grew new business embedded value Effectively adjusted investment strate
Slide 7: 2009 Annual Results Highlights
2009 Annual Results Highlights RMB mn 2009 2008 (Restated) Change 2008 (HKFRS) Gross Written 275,970 265,656 +3.9% 121,601 Premiums Gross Investment Income 60,921 31,138 +95.6% 30,238 Net Profit Attributable to Shareholders 32,881 19,137 +71.8% 21,277 Investment Assets 1,172,145 937,403 +25.0% 937,4
Slide 8: Strengthened Risk Control
Strengthened Risk Control The third session of Board and Supervisor Committee were successfully elected and formed Risk Classification and Risk Warning Systems were implemented nationwide, improving overall risk management Six regional auditing centers established, conducted special auditing on exec
Slide 9: Proactive in Taking Social Responsibilities
Proactive in Taking Social Responsibilities Actively involved in establishing the multi-level social security system and contributing to rural development - Developed the New Rural Cooperative Medical Insurance System and Basic Medical Insurance for Urban Residents, covering 29.64 million participan
Slide 10: Strong Brand Recognition
Strong Brand Recognition “Fortune 500” for 7 consecutive years, 133rd in 2009, up by 26 places “Forbes Global 2000” for 6 consecutive years, 72nd in 2009, up by 82 places，and 6th among the shortlisted Chinese companies “Global Top 500 Most Valuable Brands” for 3 consecutive years, 278th in place “Th
Slide 11: Outlook: 2010
Outlook: 2010 Opportunities Recovery of domestic economy provides solid foundation for business development Promotion of projects for people’s well-being and improvement in social security systems offer great opportunities for insurance companies Increasing risk awareness and changes in financial ma
Slide 12: Section II: Business Review
Section Il: Business Review CG He AER eR I a PR China Life Insurance Company Limited
Slide 13: Life Insurance Industry Overview
Life Insurance Industry Overview Stable Premium Growth* Increasing Life Insurers RMB 100 mn 8,262 7,447 58 55 52 47.8% 5,038 28 24 26 4,132 21.9% 11.8% 10.9% 28 29 30 2006 2007 2008 2009 2007 2008 2009 Slower growth in gross written premiums Chinese insurers Foreign-invested insuers High base last y
Slide 14: Stable and Healthy Business Development
Stable and Healthy Business Development RMB mn Gross Written Premiums 275,970 3.9% First Year 39,711 12.2% Regular Premiums 10 years or longer Regular 19,741 45.6% Payment FYP Renewal Premiums 105,429 21.3% Accident Business 7,076 13.7% Premiums Note: All data are based on PRC GAAP (after the implem
Slide 15: Sustainable Growth in Individual & Short-term Business
Sustainable Growth in Individual & Short-term Business Accident & Short-term Individual Business Group Business Health Business RMB mn RMB mn RMB mn 6.7% 3.8% -44.1 14,065 13,186 252,130 261,715 340 6,989 6,964 190 7,076 6,222 2008 2009 2008 2009 2008 2009 Short term health Accident - 14 -
Slide 16: Effective Business Mix Restructuring
Effective Business Mix Restructuring First Year Regular Premiums in FYP Accident Premiums in Short-term Premiums 52.8% 49.7% 78.6% 74.6% 47.2% 50.3% 21.4% 25.4% 2008 Single Premiums 2009 2008 Short-term Health Business2009 First Year Regular Premiums Accident Busiess 10 Years or Longer Regular Payme
Slide 17: Strong Regular Premiums Growth in Individual Agent and Bancassurance Channels
Strong Regular Premiums Growth in Individual Agent and Bancassurance Channels First Year Regular Premiums Breakdown of Agent Channel Strong Regular Premiums Growth in Bancassuance Channel RMB mn 100% 90% 11,521 80% % 43% 8.4 70% 14 69% 60% 50% 15% 40% 4,638 30% 20% 42% 29% 10% 0% 2% 2008 2009 2008 2
Slide 18: Excellent Persistency Experience
Excellent Persistency Experience Further improved surrender risk monitoring and emergency management mechanism. Long-term individual policy persistency rate further improved, surrender expense dropped. Lower Surrender Rate Long-term Individual Policy Persistency Rate 4% 96% 93.7% 94% 92.5% 91.9% 3.3
Slide 19: Strong Sales Force in Key Distribution Channels
Strong Sales Force in Key Distribution Channels Approximately 777,000 agents, up by 61,000 from 2008 Agent Force Long-term regular premium productivity improved Increasing focus on key account clients and large-scale Direct Sales projects Focus on accident insurance and short term health insurance 4
Slide 20: Business Development Strategy in 2010
Business Development Strategy in 2010 Continue with business mix Strengthen sales force and build up restructuring while maintaining core competency solid business growth Stable Business Growth Enhance Promote educational Continued Mix Optimization competitiveness in urban and training programs mark
Slide 21: Section III: Financial Summary
Section III: Financial Summary
Slide 22: Sustainable Top-line Growth
Sustainable Top-line Growth Net Premiums Earned Total Revenues RMB mn RMB mn 3.7% 265,177 275,077 13.0% 339,290 300,385 2008 2009 Investment Income and Realized/Unrealized Gains RMB mn 44,946 38,890 21,244 -5,964 -7,194 1,449 2008 2009 2008 2009 Investment Income Net Realized Gains Net Fair Value Ga
Slide 23: Effective Cost Control
Effective Cost Control Commissions and Fees Ratio Administrative Expenses Ratio -1.3 p ps 5.5% 8.1% 5.5% 6.8% 2008 2009 2008 2009 Note：Commissions & Fees Ratio=Commissions& Fees/Total Revenues Administrative Expenses Ratio=Administrative Expense/ Total Revenues - 22 -
Slide 24: Significant Increase in Profitability
Significant Increase in Profitability Net Profit EPS Weighted Average ROE Attributable to Shareholders RMB mn RMB yuan 8 % s 0.4 82 pp B . 4 17.13% RM 1.16 71 6 .8 32,881 10.29% 0.68 19,137 2008 2009 2008 2009 2008 2009 - 23 -
Slide 25: Solid Financial Strength
Solid Financial Strength Total Assets Solvency Margin RMB mn Solvency Adequacy Ratio % 24.2 1,226,257 987,493 310.21% 303.59% 2008 2009 Shareholders’ Equity RMB mn 21.3% 211,072 173,947 2008 2009 2008 2009 - 24 -
Slide 26: Section IV: Investment Performance
Section IV: Investment Performance
Slide 27: Steady Increase in Investment Assets
Steady Increase in Investment Assets Investment assets increased steadily to over RMB1.1 trillion by end-2009 , 25% higher than the end-2008 RMB mn 1,172,145 = 17.4% R CAG 937,403 850,209 2007 2008 2009 Note: Investment assets ＝Held-to-maturity Securities +Available-for-sale Securities ＋Term Deposit
Slide 28: Asset Allocation Rebalancing
Asset Allocation Rebalancing Capital Market Overview Investment Portfolio In 2009, domestic economy stabilized and 2.6% 2.5% recovered with clear growth momentum, yet volatility remains a concern. 8.0% Volatile domestic bond market trended 15.3% downwards and the yield curve moved upwards sharply. A
Slide 29: Significant Increase in Gross Investment Income
Significant Increase in Gross Investment Income Gross Investment Income Gross Investment Yield RMB mn 7% 5.78% 6% 6 % 5% 95. 60,921 4% 3.48% 3% 31,138 2% 1% 0% 2008 2009 2008 2009 Gross Investment Yield Note: Gross Investment Yield = (Investment Income + Net Realized Gains/(losses) on Financial As
Slide 30: Investment Outlook and Strategy in 2010
Investment Outlook and Strategy in 2010 Market Outlook Investment Strategy China’s macro economy in 2010 is Follow prudent and long-term expected to be positive in spite of investment philosophy, balance between continued structural contradictions and safety, yield and liquidity. Further instability
Slide 31: Section V: Embedded Value
Section V: Embedded Value CG He AER eR I a PR China Life Insurance Company Limited
Slide 32: EV Breakdown by Components
EV Breakdown by Components As at December 31, 2009 RMB mn 149,387 285,229 (24,106) 159,948 Adjusted Net Worth In-force Business Value Cost of Solvency Margin Embedded Value - 31 -
Slide 33: Strong EV Growth
Strong EV Growth Embedded Value Value of One Year’s Sales RMB mn RMB mn 18.80% 285,229 21% 17,713 27. 240,087 125,282 13,924 102,271 50% 22. 16.06% 159,948 137,816 12/31/2008 2008年12月31日 12/31/2009 2009年12月31日 1/1/2008- 1/1/2009- 12/31/2008 12/31/2009 In-force Business Value (after cost of solvency
Slide 34: EV Movement Analysis
EV Movement Analysis RMB mn 19,590 285,229 17,713 21,123 (1,155) (4,283) (28) 240,087 (6,500) (757) (560) EV at Expected Value of One Operating Investment Methodology Market Value Exchange Shareholder Others EV at Beginning of Returns Year’s Sales Experience Experience Model and Adjustments Gains or
Slide 35: Sensitivity Analysis – Investment Returns and Discount Rate
Sensitivity Analysis – Investment Returns and Discount Rate Value of In-force Business after Cost of Solvency Margin Value of One Year’s Sales after Cost of Solvency Margin RMB mn RMB mn 20,492 18,800 148,993 17,713 16,706 132,544 125,282 14,958 118,536 101,664 Investment Risk Base-Case Risk Investm
Slide 36: Sensitivity Analysis – Other Assumptions
Sensitivity Analysis – Other Assumptions Sensitivity Analysis Results RMB mn Value of In-force Business Value of One-year’s Sales after after the Cost of Solvency the Cost of Solvency Margin Margin Base Case Scenario 125,282 17,713 Cost Ratio +10% 123,264 16,211 Cost Ratio -10% 127,297 19,215 Mortal
Slide 37: Sensitivity Analysis – Other Assumptions
Sensitivity Analysis – Other Assumptions Sensitivity Analysis Results RMB mn Value of In-force Business Value of One Year’s Sales after after Cost of Solvency Cost of Solvency Margin Margin Claims Ratio for Short-term Insurance +10% 125,029 17,200 Claims Ratio for Short-term Insurance -10% 125,534 1
Slide 38: Thank You!
THANK YOU! CGC He AN SER ie AR I ae PR China Life Insurance Company Limited
Slide 39: Appendix I: Reconciliation statement between IFRS and HKFRS in 2008
Appendix I: Reconciliation statement between IFRS and HKFRS in 2008 Equity Net Profit 12/31/2008 1/1/2008 As of Dec. 31, 2008 RMB mn RMB mn RMB mn Under HKFRS 181,573 206,376 21,414 Adjustment: Property, plant and equipment 1,239 1,344 (105) Insurance contract (9,881) (8,498) (2,465) Tax implication
Slide 40: Appendix II: PRC GAAP Reconciliation Statement in 2008
Appendix II: PRC GAAP Reconciliation Statement in 2008 Balance Sheet January. 1, 2008 RMB mn Consolidated Asset Liabilities Shareholder’s Equity PRC GAAP (before the implementation of “No.2 Interpretation of Accounting Standards for Business Enterprises” ) 894,601 723,512 171,089 Insurance Business
Slide 41: Appendix II: PRC GAAP Reconciliation Statement in 2008
Appendix II: PRC GAAP Reconciliation Statement in 2008 Income Statement 1/1/2008-12/31/2008 RMB mn Consolidated net profit PRC GAAP (before the implementation of “No.2 Interpretation of Accounting Standards for Business Enterprises” ) 10,205 - Insurance Business 12,125 Impact of Tax (3,031) Investme
China Life Insurance Company — FY2009 Earnings Presentation on 6ix