China Life Insurance Co. Ltd. Class A · SSE:601628
China Life Insurance Co. Ltd. Class A — FY2011 Earnings Presentation
33 slides from China Life Insurance Co. Ltd. Class A's earnings presentation, Mar 27, 2012
Slide 1: 2011 Annual Results
2011 Annual Results March 27, 2012 Hong Kong ● Beijing
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 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 u
Slide 3: Agenda
Agenda Section I Business Review & Development Strategy Section II Financial Summary & Embedded Value -3-
Slide 4: Section I: Business Review & Development Strategy
Section I: Business Review & Development Strategy
Slide 5: 2011 Operating Environment Analysis
2011 Operating Environment Analysis In 2011, China’s economy maintained a stable and relatively rapid pace of development, which provided the foundation for sustainable development of the insurance sector. The enhanced CIRC regulations on solvency and market conducts also created favorable environme
Slide 6: 2011 Business Development Overview
2011 Business Development Overview Achieved stable business development, maintained leading market position Further optimized business structure, enhanced sustainable development capability Individual agent channel attained steady growth, upgraded and unified “Exclusive Individual Agents Manag
Slide 7: Premium Income
Premium Income Gross Written Premiums First-year Premiums RMB mn RMB mn 14,975 15,802 52,159 163,523 190,252 48,104 123,118 99,617 154,729 127,977 2010 2011 2010 2011 Single Premiums First-year Regular Premiums Renewal Premiums First-year Premiums Short-term Insurance Premiums -7-
Slide 8: Business Structure
Business Structure First-year Regular Premiums in Long-term FYP First -year Regular Premiums Breakdown 34% 40% 70% 67% 28% 12% 48% 30% 33% 38% 2010 2011 2010 2011 First-year Regular Premiums Single Premiums Less than 5 Years 5-9 Years 10 Years or Longer Renewal Premiums in GWP Accident Premiums in S
Slide 9: Individual, Group and Short-term Business
Individual, Group and Short-term Business Individual Business Group Business Short-term Business RMB mn RMB mn RMB mn 302,781 302,012 7,036 7,318 473 438 8,766 7,657 2010 2011 2010 2011 2010 2011 Short-term Health Insurance Accident Insurance -9-
Slide 10: Surrender Rate and Persistency Rate
Surrender Rate and Persistency Rate Surrender Rate Long-term Individual Policy Persistency Rate 96.0% 93.7% 94.0% 93.0% 2.79% 92.5% 92.5% 92.0% 2.31% 90.0% 87.4% 87.6% 88.0% 86.9% 86.1% 86.0% 84.0% 82.0% 2010 2011 2008 2009 2010 2011 14 Months 26 Months Note :Surrender rate = Surrender amount during
Slide 11: Individual Agent Channel
Individual Agent Channel First-year Premiums Renewal Premiums RMB mn RMB mn 300 122,475 527 111,980 32,747 30,783 2010 2011 2010 2011 First-year Regular Premiums Single Premiums Business development: Individual agent channel maintained stable growth. First- year premiums grew 5.5% YoY, while first
Slide 12: Bancassurance Channel
Bancassurance Channel First-year Premiums Renewal Premiums RMB mn RMB mn 141,842 32,251 21,366 112,649 15,350 15,993 120,476 97,299 2010 2011 2010 2011 Single Premiums First-year Regular Premiums Business development: Impacted by wealth management products and changes to bancassurance regulations,
Slide 13: Direct Sales Channel
Direct Sales Channel Short-term Business Short-term Business Mix RMB mn 15,703 14,909 6,937 49% 44% 7,252 8,766 51% 56% 7,657 2010 2011 2010 2011 Accident Insurance Short-term Health Insurance Accident Insurance Short-term Health Insurance Business development: Short-term insurance premiums grew 5
Slide 14: Development of New Distribution Channel
Development of New Distribution Channel Accelerated development of new distribution channel, established Tele-marketing centers in 11 provinces Tele-marketing sales force expanded to 2,200 Tele-marketing premiums exceeded RMB 200 million in 2011 - 14 -
Slide 15: Alternative Investment Practices
Alternative Investment Practices Strengthened alternative investment capabilities and captured opportunities for stable long-term investment return The first insurer officially filed for record with CIRC Investment capability filing for private equity investment capability, laying the foundation f
Slide 16: 2012 Development Focuses
2012 Development Focuses Principles: maintaining stable growth, developing through innovation, guarding against risks and enhancing value Maintaining stable growth and enhancing value: Applying NBV oriented KPI and budget plan, growing medium and long-term payment duration business, maintaining st
Slide 17: Section II: Financial Summary & Embedded Value
Section II: Financial Summary & Embedded Value
Slide 18: Revenues
Revenues Net Premiums Earned Total Revenues RMB mn RMB mn 318,088 318,276 385,838 370,899 2010 2011 Net Investment Income & Realized/Unrealized Gains and Impairment Losses RMB mn 60,722 48,872 15,841 280 337 2010 2011 (11,208) Net Investment Income Net Realized Gains and Net Fair Value Gains and Imp
Slide 19: Cost Control
Cost Control Commissions and Fees Ratio Administrative Expenses Ratio 7.4% 7.1% 5.8% 5.3% 2010 2011 2010 2011 Notes: Commissions and fees ratio = Commission and fees / total revenue Administrative expenses ratio = Administrative expenses / total revenue - 19 -
Slide 20: Profitability
Profitability Net Profit Attributable Weighted Average ROE EPS to Shareholders RMB mn RMB yuan 33,626 1.19 16.02% 18,331 9.16% 0.65 2010 2011 2010 2011 2010 2011 - 20 -
Slide 21: Financial Position
Financial Position Total Assets Equity Holders’Equity RMB mn RMB mn 1,583,907 1,410,579 208,710 191,530 2010.12.31 2011.12.31 2010.12.31 2011.12.31 - 21 -
Slide 22: Investment Assets and Portfolio
Investment Assets and Portfolio Investment Assets Investment Portfolio RMB mn 3.20% 4.65% 1,494,969 3.58% 3.74% 14.66% 12.17% 1,336,245 33.05% 34.84% 45.51% 44.60% 2010.12.31 2011.12.31 2010.12.31 2011.12.31 Debt Securities Term Deposits Equities Cash & Cash Equivalents Others Note: Investment asset
Slide 23: Investment Yield
Investment Yield Net Investment Yield Gross Investment Yield 6.00% 6.00% 5.11% 5.00% 5.00% 4.28% 4.00% 3.83% 4.00% 3.51% 3.00% 3.00% 2.00% 2.00% 1.00% 1.00% 0.00% 0.00% 2010 2011 2010 2011 Note: Net investment yield = (Investment income – Business tax and extra charges for investment)/((Investment a
Slide 24: Solvency Margin
Solvency Margin Solvency Margin Affecting factors: capital market Solvency Adequacy Ratio fluctuation, payout of previous year dividends and business development 212% Capital replenishment: 170% 1. RMB30bn subordinated term debt issued in 2011. 2. Plan to issue up to RMB 38 billion subordinated term
Slide 25: Embedded Value Breakdown by Components
Embedded Value Breakdown by Components 2011.12.31 RMB mn 350,000 33,020 300,000 250,000 215,608 200,000 150,000 292,854 100,000 50,000 110,266 0 Adjusted Net Worth In-force Business Value Cost of Solvency Margin Embedded Value - 25 -
Slide 26: Growth of EV and Value of New Business
Growth of EV and Value of New Business Embedded Value* Value of One Year’Sales RMB mn RMB mn 298,099 292,854 19,839 20,199 153,444 182,588 144,655 110,266 2010.12.31 2011.12.31 2010 2011 In-force Business Value(After cost of solvency margin) Adjusted Net Worth *Note：Numbers may not be additive due t
Slide 27: Embedded Value Movement Analysis
Embedded Value Movement Analysis EV Movement from 2010 Year End to 2011 Year End RMB mn 20,199 27,781 ( 1,320) 298,099 292,854 ( 32,224) （584) 1,369 ( 8,615) (545) ( 11,306 ) EV at Beginning Expected Returns Value of One Operating Investment Methodology Market Value Exchange Gains Shareholder Others
Slide 28: Thank you!
Thank you! PEWS REAR China Life Insurance Company Limited
Slide 29: Appendix: Honors in 2011
Appendix: Honors in 2011 China Life Insurance (Group) Co. of which China Life Insurance Company Limited is the core member, has been selected as a“Fortune 500” company for nine consecutive years, ranking 113th in 2011 Listed in “Global Top 500 Most Valuable Brands” for five consecutive years, rankin
Slide 30: Appendix: Fulfilling Corporate Social Responsibilities
Appendix: Fulfilling Corporate Social Responsibilities Charity donation In 2011, China Life donated RMB 70.28 million in total Continued sponsorship for Wenchuan Earthquake orphans, new Sponsoring sponsorship for 459 Yushu Earthquake and Zhouqu mudslide orphans orphans, delivered subsidy fund to
Slide 31: Sensitivity Analysis– Investment Return and Discount Rate
Sensitivity Analysis– Investment Return and Discount Rate Value of In-force Business after Cost of Value of One Year’s Sales after Cost of Solvency Margin Solvency Margin RMB mn RMB mn 32,908 182,588 9,921 - 2,653 ( 9,230) 20,199 1,090 ( 32,453) ( 1,019) ( 2,622) Investment Risk Adjusted Base Case R
Slide 32: 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 One-year’s Sales Base Case Scenario 182,588 20,199 Claim Ratio for Short Term -285 285 -603 603 Insurance+/-10% Morbidity Ratio+/-10% -1,
Slide 33: Sensitivity Analysis Results –other assumptions
Sensitivity Analysis Results –other assumptions Sensitivity Analysis Results RMB mn Value of In-force Value of One-year’s Business after the cost of Sales after the cost of solvency margin solvency margin Base Case Scenario 182,588 20,199 Solvency Margin at 150% of 176,412 18,384 Statutory Minimum P
China Life Insurance Company — FY2011 Earnings Presentation on 6ix