China Life Insurance Co. Ltd. Class A · SSE:601628
China Life Insurance Co. Ltd. Class A — Investor Presentation (May 2023)
32 slides from China Life Insurance Co. Ltd. Class A's investor presentation, May 8, 2023
Slide 1: Briefing on IFRS17 & IFRS9 Updates
Briefing on IFRS17 & IFRS9 Updates 9 May 2023 Beijing
Slide 2: Impacts of IFRS17 & IFRS9 overview
Net assets in financial report EV valuation Impacts of Net profits in financial report IFRS17 & KPI and operations IFRS9 on Solvency management Product strategies and asset-liability management 2
Slide 3: Agenda
1 China Life’s Implementation of IFRS17 & IFRS9 2 Changes in Assets, Liabilities and Net Assets 3 Changes in Profit or Loss 4 Impacts on Operations and Management 5 Appendix
Slide 4: China Life's Implementation of IFRS17 & IFRS9
China Life’s Implementation of IFRS17 & IFRS9
Slide 5: China Life's Implementation of IFRS17 & IFRS9
China Life’s Implementation of IFRS 17 & IFRS 9 As the largest life insurance company in China, China Life has the most extensive 01 product offerings and the largest amount of business data. Despite a shortage of references, the Company was among the first insurance companies that have successfully
Slide 6: China Life's Implementation of IFRS17 & IFRS9 (cont'd)
China Life’s Implementation of IFRS 17 & IFRS 9 (cont’d) 02. Automating the entire workflows Successfully constructed the new proprietary data foundation. Based on trillion-level data processing capabilities, achieved timely, accurate and automatic issuance of financial statements under the new acco
Slide 7: Changes in Assets, Liabilities and Net Assets
Changes in Assets, Liabilities and Net Assets
Slide 8: Key Changes of Assets Measurement under IFRS9
Key Changes of Assets Measurement under IFRS9 Classifications Old accounting New accounting for financial standards standards assets AC Changes in Debt HTM impairment Most debt instruments are now requirements measured at FVOCI The new impairment FVOCI requirements for AFS Book value is measured at
Slide 9: Key Changes of Liability Measurement under IFRS17
Key Changes of Liability Measurement under IFRS17 Old accounting New accounting Changes in liability discount rate standards standards Under the old accounting standards, traditional insurance was based on a 750-day moving average interest rate curve and participating insurance was based on expected
Slide 10: Changes in Net Assets under New Accounting Standards
Changes in Net Assets under New Accounting Standards Old standards IAS39) New standards IFRS9) Financial instruments accounting standard 2022 corresponding 2023 financial period Insurance contracts New standards IFRS17) New standards IFRS17) accounting standard Changes in net assets on December 31,
Slide 11: Changes in Future Net Assets under New Accounting Standards
Changes in Future Net Assets under New Accounting Standards The changes in net assets are comprehensively affected by multiple factors, such as capital market environment (e.g. equity market volatility, interest rate trends), business structure and asset allocation of the Company Examples of future
Slide 12: Changes in Profit or Loss
GtEx2 | Qo Changes in Profit or Loss
Slide 13: Income Statements Under New Accounting Standards
Income Statements Under New Accounting Standards New Accounting Standards change the presentation of the income statement and the distribution of profits New accounting standards Insurance revenue= Contractual service margin recognized+ Expected claims and expenses+ I. Operating income Amortization
Slide 14: Income Statements Under New Accounting Standards (cont'd)
Income Statements Under New Accounting Standards (cont’d) New Accounting Standards changes the presentation of the income statement and the distribution of profits New accounting standards Gross income = investment Interest income + Investment income + Gains or losses I. Operating income from change
Slide 15: Factors Affecting Net Profit under the New and Old Accounting Standards
Factors Affecting Net Profit under the New and Old Accounting Standards New Accounting Standards -Old Accounting New Accounting Standards—GMM VFA Standards Traditional insurance Participating insurance, universal life insurance, etc. Experience adjustments of insurance component Recognized in the P&
Slide 16: Analysis of Changes in Net Profits under New and Old Accounting Standards
Analysis of Changes in Net Profits under New and Old Accounting Standards Analysis of changes in net profit attributable to equity holders of the Company in Q1 2023 Under the new accounting standards, the net profit attributable to equity holders of the Company in Q1 2023 was RMB$27.3 billion, an in
Slide 17: Analysis of Net Profit Growth in Q1 2023 under New Accounting Standards
Analysis of Net Profit Growth in Q1 2023 under New Accounting Standards Net profit attributable to equity holders of the Gross investment income Company Under IFRS 9, more equity investment RMB bn RMB bn assets are measured at FVTPL. The +78% investment income has significantly increased amid the bu
Slide 18: Changes in Future Profit under New Accounting Standards
Changes in Future Profit under New Accounting Standards The changes in profit or loss are comprehensively affected by multiple factors, such as capital market environment (e.g. equity market volatility, interest rate trends), business structure and asset allocation of the Company Based on the accoun
Slide 19: Impacts on Operations and Management
Impacts on Operations and Management
Slide 20: No Material Impact on Solvency Measurement
Measurement basis: Considering the risk profile of asset and liability, measure with the unified method, model and parameters stipulated by C-ROSS II Minimum capital of C-ROSS II Actual capital of C-ROSS II Measurement basis: Admitted assets and liabilities will be adjusted on the basis of financial
Slide 21: EV Valuation Logic is not Affected
2. EV Valuation Logic is not Affected Embedded Value is based on long-term insights and the present value of the future distributable earnings for shareholders, with some key factors taken into consideration The changes in accounting standards may have some impact on the earnings and timing for its
Slide 22: EV Valuation Logic is not Affected (cont'd)
2. EV Valuation Logic is not Affected (cont’d) The value of new business is still the most important indicator to reflect the contribution of total earnings by new business (in particular long-term business) for shareholders Difference between long-term new business CSM and the value of new business
Slide 23: No Material Impact on KPI and Operations
3. No Material Impact on KPI and Operations The company will adhere to high-quality development, with the value of new business as the core KPI The company takes the results under accounting standards as an important reference for operation and management, and will continue to carry out daily monito
Slide 24: No Material Impact on Product Strategies
4. No Material Impact on Product Strategies Within the boundary of laws and regulation Market requirement, the product strategies of Demand insurance companies should be based on meeting the diversified needs of customers and combining with the company’s business Provide diversified and Meet the div
Slide 25: No Impact on the Essence of Asset-Liability Management
5. No Impact on the Essence of Asset-Liability Management Essence of life insurance company’s Asset-Liability Management From a long-term cross-cycle management perspective, we make decisions coordinating asset side and liability side, under a series of passive constraints to actively achieve long-t
Slide 26: Multiple Considerations on Dividend Payout
6. Multiple Considerations on Dividend Payout The Company attaches great importance to dividend payout. Going forward, we will continue to track and analyze all indicators including the profits under new and old accounting standards and determine future dividends level by taking into consideration o
Slide 27: Impacts of IFRS17 & IFRS9 – Remarks
Impacts of IFRS17 & IFRS9 – Remarks Changes in financial results are No material impact on KPI and affected by multiple factors operations With the implementation of No material impact on product No material impact on solvency strategies measurement IFRS17 & IFRS9 EV valuation logic is not No impact
Slide 28: Q&A
GtEx2 | Qo Q&A
Slide 29: Appendix
GtEx2 | Qo Appendix
Slide 30: Comparisons between GMM and VFA under New Accounting Standards
Appendix Comparisons between General Measurement Model (GMM) and Variable Fee Approach (VFA) under New Accounting Standards GMM VFA Meet the following 3 requirements: Clearly identified assets from businesses Selection of A substantial share of the fair value changes on the assets Long-term insuranc
Slide 31: Other Comprehensive Income (OCI) Option under New Accounting Standards
Appendix Other Comprehensive Income (OCI) Option under New Accounting Standards Applicable Accounting Options and Key Non-exercise of OCI Option Exercise of OCI Option Models Considerations Insurance finance income or expenses(IFIE) are calculated based on the locked-in Insurance finance income or e
Slide 32: Glossary
Appendix Glossar y Page Full Name Abbreviation 8 Held-to-maturity securities HTM 8 Available for sale securities AFS 8 Loans and receivables LR 8 Fair value through profit or loss FVTPL 8 Amortized cost AC 8 Fair value through other comprehensive income FVOCI 9 Contractual service margin CSM 9 Gener
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