China Life Insurance Co. Ltd. Class A · SSE:601628
China Life Insurance Co. Ltd. Class A — H1 2012 Earnings Presentation
41 slides from China Life Insurance Co. Ltd. Class A's earnings presentation, Aug 29, 2012
Slide 1: 2012 Interim Results
2012 Interim Results 29 August 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
Slide 3: Agenda
Agenda Section I 1H 2012 Overview Section II Business Review Section III Financial Summary Section IV Investment Performance Section V Embedded Value -3-
Slide 4: Section I: 1H 2012 Overview
EA & RS ARI a PR China Life Insurance Company Limited Section I: 1H 2012 Overview A & RPS AR a PRS China Life Insurance Company Limited
Slide 5: Operating Environment in 1H 2012
Operating Environment in 1H 2012 In reaction to economic slow-down and decreasing inflation rate, the government preemptively adjusted and fine-tuned monetary policy. PBoC lowered interest rates and RRR twice, and the capital market remained weak. The life insurance industry, which is closely linked
Slide 6: Business Development Overview in 1H 2012
Business Development Overview in 1H 2012 Faced with severe challenges, the Company adhered to the keynotes of “tackling difficulties, making steady progress and striving for expansion.” The Company promoted business development through product innovation and new technology application. While solidif
Slide 7: The Company's Development Focuses
The Company’s Development Focuses Continue to follow the keynotes of “tackling difficulties, making steady progress and striving for expansion”. Business strategy equally emphasizes scale and value to ensure market leadership. Product innovation Differentiating product strategies, nurturing produc
Slide 8: Section II: Business review
EA & RS ARI a PR China Life Insurance Company Limited Section II: Business review A & RPS AR a PRS China Life Insurance Company Limited
Slide 9: Life Insurance Sector in 1H 2012
Life Insurance Sector in 1H 2012 Overview of life insurance sector: Industry Gross Written Premiums The life insurance industry’s growth rate dropped RMB mn noticeably, due to complex macro-economic environment, sluggish capital market and impact 572,853 561,228 from wealth management products. Bu
Slide 10: Premium Income
Premium Income Gross Written Premiums Renewal Premiums RMB mn RMB mn 103,614 195,490 185,438 84,387 1H2011 1H2012 1H2011 1H2012 Long-term First-year Premiums First-year Regular Premiums RMB mn RMB mn 102,770 31,975 27,400 73,201 1H2011 1H2012 1H2011 1H2012 - 10 -
Slide 11: Business Structure
Business Structure Long-term Premiums Long-term FYP 41% 55% 69% 63% 59% 45% 31% 37% 1H2011 1H2012 1H2011 1H2012 Renewal Premiums Long-term FYP First-year Regular Premiums Single Premiums First-year Regular Premiums Short-term Premiums 31% 38% 39% 42% 14% 30% 55% 58% 61% 32% 1H2011 1H2012 1H2011 1H20
Slide 12: 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 186,858 8,623 176,499 8,333 3,398 3,539 299 316 5,225 4,794 1H2011 1H2012 1H2011 1H2012 1H2011 1H2012 Short-term Health Insurance Short-term Accident Insurance - 12 -
Slide 13: Surrender Rate and Persistency Rate
Surrender Rate and Persistency Rate Surrender Rate Long-term Individual Policy Persistency Rate 96% 93.7% 94% 93.0% 92.5% 92.5% 1.47% 1.38% 92% 90% 87.4% 87.6% 88% 86.9% 87.0% 86% 84% 82% 2009 2010 2011 1H2012 1H2011 1H2012 14 Months 26 Months Note :Surrender rate = Surrender amount during the year
Slide 14: Individual Agent Channel
Individual Agent Channel Long-term First-year Premiums Renewal Premiums RMB mn RMB mn 22,787 83,715 180 19,828 141 69,164 22,607 19,687 1H2011 1H2012 1H2011 1H2012 First-year Regular Premiums Single Premiums Business development: Business mix further optimized. Renewal premiums increased significant
Slide 15: Bancassurance Channel
Bancassurance Channel Long-term First-year Premiums Renewal Premiums RMB mn RMB mn 79,199 9,367 19,899 52,501 15,222 7,712 69,832 44,789 1H2011 1H2012 1H2011 1H2012 Single Premiums First-year Regular Premiums Business development: Affected by other wealth management products as well as bancassurance
Slide 16: Direct Sales Channel
Direct Sales Channel Short-term Business Short-term Business Mix RMB mn 8,272 8,543 3,318 42% 39% 3,478 4,794 5,225 58% 61% 1H2011 1H2012 1H2011 1H2012 Short-term Accident Insurance Short-term Health Insurance Short-term Accident Insurance Short-term Healh Insurance Business development：Short-term i
Slide 17: Development of New Distribution Channel
Development of New Distribution Channel Based on early pilots, the Company is proactively exploring and steadily promoting the development of new channels of tele-marketing and online sales. Tele-marketing channel has been maintaining its double- digit growth since establishment, in which 10 years a
Slide 18: Product Strategy and New Product Launch
Product Strategy and New Product Launch Product strategy: Customer-centered, market-oriented, and nurturing product brands to enhance competitiveness and to meet clients’ diversified insurance needs. 1H measures: Based on client demands and changes in the market, the Company launched “Fulu Xinzun
Slide 19: Strengthened Operational Support, Enhanced Service Capability
Strengthened Operational Support, Enhanced Service Capability Promoted “E-China Life", a mobile marketing system, which streamlined business processing, enhanced marketing efficiency, and improved sales force productivity. Fully applied telephone underwriting practice to improve customer experie
Slide 20: Business Strategy for 2H 2012
Business Strategy for 2H 2012 Continue to follow the keynotes of “tackling difficulties, making steady progress and striving for expansion”. Pursue the business strategy equally emphasizing scale and value. Vigorously develop regular payment business, especially mid to long-term regular payment bu
Slide 21: Section III: Financial Summary
Section III: Financial Summary
Slide 22: Revenues
Revenues Net Premiums Earned Total Revenues RMB mn RMB mn 194,849 184,739 227,466 208,600 1H2011 1H2012 Net Investment Income & Realized/Unrealized Gains and Impairment Losses RMB mn Net Realized Gains and Net Fair Value Gains through Investment Income Impairment on Financial Assets Profit or Loss 3
Slide 23: Cost Control
Cost Control Commissions and Fees Ratio Administrative Expenses Ratio 6.98% 6.75% 4.7% 4.0% 1H2011 1H2012 1H2011 1H2012 Notes: Commissions and fees ratio = Commission and fees / total revenue Administrative expenses ratio = Administrative expenses / total revenue - 23 -
Slide 24: Profitability
Profitability Net Profit Attributable Weighted Average ROE EPS to Shareholders RMB mn RMB yuan 12,964 0.46 9,635 6.22% 0.34 4.71% 1H2011 1H2012 1H2011 1H2012 1H2011 1H2012 - 24 -
Slide 25: Financial Position
Financial Position Total Assets Equity Holders’Equity RMB mn RMB mn 1,769,234 1,583,907 213,473 191,530 2011.12.31 2012.6.30 2011.12.31 2012.6.30 - 25 -
Slide 26: Solvency Margin
Solvency Margin Solvency Margin Solvency Adequacy Ratio The Company successfully made the first issuance of RMB 28 230.56% billion subordinated term debt in June, 2012 and effectively improved the solvency ratio. 170.12% The Company will continue to strengthen solvency and capital management to prov
Slide 27: Section IV: Investment Performance
Section IV: Investment Performance
Slide 28: Investment Assets and Portfolio
Investment Assets and Portfolio Investment Assets Investment Portfolio RMB mn 4.65% 4.66% 1,661,690 3.74% 5.32% 12.17% 10.01% 1,494,969 34.84% 37.65% 44.60% 42.36% 2011.12.31 2012.6.30 Debt Securities Term Deposits 2011.12.31 2012.6.30 Equities Cash & Cash Equivalents Others Note: Investment assets
Slide 29: Investment Yields
Investment Yields Net Investment Yield Gross Investment Yield 6.00% 6% 5.00% 5% 4.50% 4.36% 4.48% 4% 4.00% 3.00% 2.83% 3% 2% 2.00% 1% 1.00% 0% 0.00% 1H2011 1H2012 1H2011 1H2012 Note: Net investment yield = {[(Investment income-Business tax and extra charges for investment)/((Investment assets at the
Slide 30: New Investment Channels
New Investment Channels Unlisted Proactively researched and tracked financial equity projects equity and shortlisted potential investment projects. Private equity Accumulated investments in PE funds lead the insurance industry; carried out due diligence for selected projects. funds Infrastructur
Slide 31: Investment Outlook and Investment Strategy
Investment Outlook and Investment Strategy Investment Environment Investment Strategy Fixed Income: negotiated deposit demand will remain weak and Asset allocation: adjust the portfolio, control bond market trend depends on portfolio risk and optimize the structure economic, inflation and furthe
Slide 32: Section V: Embedded Value
EA & RS ARI a PR China Life Insurance Company Limited Section V: Embedded Value A & RPS AR a PRS China Life Insurance Company Limited
Slide 33: Embedded Value Breakdown by Components
Embedded Value Breakdown by Components 2012.6.30 RMB mn 400,000 350,000 (34,598) 300,000 250,000 232,639 200,000 334,326 150,000 100,000 136,286 50,000 0 Adjusted Net Worth In-force Business Value Cost of Solvency Margin Embedded Value *Note：Numbers may not be additive due to rounding. - 33 -
Slide 34: Growth of EV and Value of New Business
Growth of EV and Value of New Business Embedded Value Value of 1H 2012 Sales RMB mn RMB mn 334,326 292,854 12,494 12,186 198,041 182,588 136,286 110,266 2011.12.31 2012.6.30 1H2011 1H2012 In-force Business Value(After cost of solvency margin) Adjusted Net Worth *Note：Numbers may not be additive due
Slide 35: Embedded Value Movement Analysis
Embedded Value Movement Analysis EV movement from 2011 year end to 30, June 2012 RMB mn 7,131 46 334,326 12,298 328 861 14,178 12,494 638 ( 6,501 ) 292,854 EV at Expected Value of 1H Operating Investment Methodology Market Value Exchange Gains Shareholder Others EV at June 30, Beginning of Returns S
Slide 36: Thank you!
Thank you! PEWS REAR China Life Insurance Company Limited
Slide 37: Appendix: Honors in 2012
Appendix：Honors in 2012 China Life Insurance Company Limited , the core member of China Life Insurance (Group) Co. , has been selected as a “Fortune 500” company for 10 consecutive years, ranking 129th in 2012. The brand of China Life continues to rank 5th on the list of “China’s 500 Most Valuable B
Slide 38: Appendix: Fulfilling Corporate Social Responsibilities
Appendix: Fulfilling Corporate Social Responsibilities Continued sponsorship for Wenchuan Earthquake, Yushu Sponsoring Earthquake and Zhouqu mudslide orphans, provided assistance orphans fund of RMB 600 per month to each orphan, and held the “Fourth China Life Summer Camp”. Funding for Donated R
Slide 39: Sensitivity Analysis Results - Investment Return and Discount Rate
Sensitivity Analysis Results –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 34,062 10,497 198,041 ( 9,771) 1,541 ( 33,529) 12,494 638 ( 596) ( 1,525) Investment Risk Adjusted Base Ca
Slide 40: Sensitivity Analysis Results - Operational and other Assumptions
Sensitivity Analysis Results -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 Case Scenario 198,041 12,494 Claim Ratio for Short Term -314 314 -310 310 Insurance+/-10% Morbidity Ratio
Slide 41: 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 Case Scenario 198,041 12,494 Solvency Margin at 150% of Statutory Minimum 190,733 11,528 P
China Life Insurance Company — H1 2012 Earnings Presentation on 6ix