China Life Insurance Co. Ltd. Class A · SSE:601628
China Life Insurance Co. Ltd. Class A — FY2015 Earnings Presentation
36 slides from China Life Insurance Co. Ltd. Class A's earnings presentation, Mar 24, 2016
Slide 1: 2015 Annual Results
2015 Annual Results March 24, 2016 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: 2015 Agenda
2015 Agenda 1 2 3 4 Overview Financials & Embedded Business Review & Investments Value Outlook
Slide 4: Overview
Overview YANG Mingsheng Chairman
Slide 5: Overview
Overview In 2015, the Company proactively adapted to the“New Normal”of China’s economic development, adhered to the principles of “prioritizing business value, strengthening sales force, optimizing business mix and achieving stable growth” and “innovation-driven development strategy”. Capitalizing o
Slide 6: Operational Environment under the “New Normal”
Operational Environment under the “New Normal” Opportunities Challenges Supply-side structural reforms foster a The full liberalization on insurance promising future for insurers in terms of pricing may intensify market products and services innovation. competition, bringing pressure on The Opinions
Slide 7: Financials & Investments
2 Financials & Investments YANG Zheng Vice President
Slide 8: Revenues
Revenues Net Premiums Earned Total Revenues RMB mn RMB mn 362,301 330,105 507,449 440,766 2014 2015 Investment Income & Realized/Unrealized Gains and Impairment Losses RMB mn Net fair value gains Realized Gains on through profit or Investment Income Financial Assets Impairment Losses loss 93,54897,5
Slide 9: Cost Control
Cost Control Underwriting and Policy Administrative Expenses Ratio Acquisition Cost Ratio 7.0% 5.8% 6.2% 5.4% 2014 2015 2014 2015 Notes：Underwriting and Policy Acquisition Costs Ratio = Underwriting and policy acquisition costs/total revenue Administrative expenses ratio = Administrative expenses/to
Slide 10: Profitability
Profitability Net Profit Attributable to Equity Holders of the Company Weighted Average ROE EPS RMB mn RMB yuan 12.83% 1.22 34,699 1.14 32,211 11.56% 2014 2015 2014 2015 2014 2015 - 10 -
Slide 11: Equity Holders’ Equity
Equity Holders’ Equity RMB mn 400,000 350,000 7,791 7,076 296 300,000 34,699 （11,491） 250,000 200,000 322,492 150,000 284,121 100,000 50,000 0 2014.12.31 Equity Net Profit Other Issuance of Other Other Equity Change Dividends Paid 2015.12.31 Equity Attributable to Attributable to Comprehensive Equit
Slide 12: Solvency Ratio
Solvency Ratio Implementation and Major Impacts of China Solvency Ratio (Solvency I) Risk Oriented Solvency System (C-ROSS) 400% 62.8% 9.7% C-ROSS, being effective on Jan.1, 350% 330.1% 2016, is conducive to the (14.3%) 294.5% (22.6%) enhancement of management level of 300% insurers. Due to our
Slide 13: Investment Assets & Portfolio
Investment Assets & Portfolio Investment Assets1 Asset Category 2015.12.31 2014.12.31 RMB mn Fixed-maturity investments 77.69% 85.90% 2,287,639 Term deposits 24.59% 32.85% 2,100,870 Bonds 43.55% 44.77% Insurance asset 2.95% 2.97% management products2 Other fixed-maturity 6.60% 5.31% investments3 Equ
Slide 14: Investment Yields
Investment Yields Gross Investment Comprehensive Net Investment Yield Yield Investment Yield 8.56% 6.24% 4.71% 7.23% 5.36% 4.30% 2014 2015 2014 2015 2014 2015 Notes: Net investment yield = (Investment income + Net income from investment properties-Business tax and extra charges for investment)/((Inv
Slide 15: Strategically Increased Stakes in China Guangfa Bank (CGB)
Strategically Increased Stakes in China Guangfa Bank (CGB) In February 2016, the Company entered into the Share Purchase Agreement with Citigroup and the Equity Transfer Agreement of IBM Credit, to acquire 23.686% of the issued share of CGB. Upon the closing of the transaction, the Company holds 43.
Slide 16: Embedded Value
Embedded Value LI Mingguang Vice President
Slide 17: Embedded Value Breakdown by Components
Embedded Value Breakdown by Components 2015.12.31 RMB mn 700,000 600,000 43,951 500,000 335,500 400,000 300,000 560,277 200,000 268,729 100,000 0 Adjusted Net Worth In-force Business Value Cost of Solvency Margin Embedded Value Note：Numbers may not be additive due to rounding. - 17 -
Slide 18: Growth of Embedded Value and Value of New Business
Growth of Embedded Value and Value of New Business Embedded Value Value of 2015 New Business RMB mn RMB mn 560,277 31,528 454,906 23,253 291,549 260,670 11.8% 268,729 194,236 38.4% 2014.12.31 2015.12.31 2014 2015 In-force Business Value(After cost of solvency margin) Adjusted Net Worth Note：Numbers
Slide 19: Embedded Value Movement Analysis
Embedded Value Movement Analysis EV movement from 2014 year end to December 31, 2015 RMB mn 14,199 745 20,591 31,528 2,685 (3,699) (34) 44,956 (5,602) 560,277 454,906 EV at the Expected Value of 2015 Operating Investment Methodology, Market Exchange Gains Shareholder Others EV at begining of Returns
Slide 20: Business Review & Outlook
Business Review & Outlook LIN Dairen President
Slide 21: Overview of Life Insurance Industry in 2015
Overview of Life Insurance Industry in 2015 Premium Income* Highlights RMB mn 1,585,913 With a strong growth momentum across the industry, small- and medium-sized insurers became the growth engine. 1,269,035 More diversified entities entered into the sector, competitive strategies of insurers became
Slide 22: Premium Income
Premium Income Gross Written Premiums Renewal Premiums RMB mn RMB mn 363,971 188,090 191,607 331,010 2014 2015 2014 2015 Long-term First-year Premiums First-year Regular Premiums 139,976 RMB mn RMB mn 61,900 116,587 61,900 46,567 46,567 32.9% 70,020 11.5% 78,076 2014 2015 2014 Single Premiums 2015 F
Slide 23: Business Structure
Business Structure Long-term Premiums Long-term FYP 38% 42% 60% 56% 62% 58% 40% 44% 2014 2015 2014 2015 Renewal Premiums Long-term FYP First-year Regular Premiums Single Premiums First-year Regular Premiums Short-term Premiums 55% 52% 55% 59% 29% 31% 45% 41% 15% 17% 2014 2015 2014 2015 Less than 5 y
Slide 24: Value of New Business by Channels
Value of New Business by Channels RMB mn 31,528 30,000 2,306 25,000 23,253 1,048 20,000 15,000 28,851 21,740 32.7% 10,000 5,000 0 2014 Agent Channel 2015 Bancassurance Channel Group Channel Note: Value of new business in 2015 is after the cost of solvency margin. - 24 -
Slide 25: Premiums Breakdown
Premiums Breakdown RMB mn 2015 2014 Change By Business Line Life Insurance 308,169 285,619 7.9% Health Insurance 42,041 33,192 26.7% Accident Insurance 13,761 12,199 12.8% By Product Category Traditional Products 214,487 160,162 33.9% Participating Products 149,484 170,848 -12.5% - 25 -
Slide 26: Surrender Rate and Persistency Rate
Surrender Rate and Persistency Rate Surrender Rate Persistency Rate 95% 5.46% 5.55% 89.0% 90.0% 90% 85% 86.0% 85.5% 80% 75% 70% 65% 60% 2014 2015 2014.12.31 2015.12.31 14 months 26 months Note：Surrender Rate = Surrender payment/(Liability of long-term insurance contracts at the beginning of the peri
Slide 27: Agent Channel
Agent Channel The agent channel saw a high FYRP rise and improved business mix due to a strong agent force expansion, more effective customer access and development platform, and stronger team buildup enforcement. The sales force continued to expand its size and improve its quality, and a breakt
Slide 28: Bancassurance Channel
Bancassurance Channel The bancassurance channel continued to solidify its dominant position in FYP and FYRP and further optimized the channel’s business mix. The size of the sales force expanded rapidly, with the number totaling 131,000, up by 84.5% year-on-year. Bancassurance Long-term GWP Banc
Slide 29: Group Insurance Channel
Group Insurance Channel Following the guidelines of “focusing on profitability, accelerating development, optimizing management, and expanding the sales force”, the channel leveraged the opportunities created by “Opinions of the State Council on Promoting the Development of the Modern Insurance Se
Slide 30: 2016 Business Development Strategy
2016 Business Development Strategy Overall Development Objective The Company will stick to the guideline of innovation-driven development strategy and transformation and upgrading, follow the operational principles of “prioritizing value, strengthening sales force, optimizing business mix, achieving
Slide 31: Q&A
Q&A
Slide 32: Appendix: Awards in 2015
Appendix: Awards in 2015 China Life Insurance (Group), with China Life Insurance Company Limited as the core subsidiary, was listed among “The Fortune Global 500” for thirteen consecutive years, ranking 94th in 2015. Continued to rank 5th on the list of 2015 “Top 500 Most Valuable Chinese Brands” by
Slide 33: Corporate Social Responsibilities
Corporate Social Responsibilities The Company participated in various charitable initiatives. During the period under review, the Company donated over RMB 36 million to relevant organizations through the China Life Foundation. Donated over RMB 36 million through the China Life Foundation mainly to
Slide 34: 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 46,730 14,481 291,549 - 5,746 (13,506) 1,694 31,528 (46,472) (1,575) (5,740) Investment Risk Adjusted Base Case Risk
Slide 35: 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 291,549 31,528 Cost Ratio+/-10% -2,905 2,905 -2,157 2,157 Mortality Ratio for Non- Annuity Products +/-10%, -1,829
Slide 36: Sensitivity Analysis Results – Other Scenarios
Sensitivity Analysis Results – Other Scenarios 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 291,549 31,528 Solvency Margin at 150% of Statutory Minimum 269,973 29,388 Taxable income b
China Life Insurance Company — FY2015 Earnings Presentation on 6ix