China Life Insurance Co. Ltd. Class A · SSE:601628
China Life Insurance Co. Ltd. Class A — H1 2011 Earnings Presentation
33 slides from China Life Insurance Co. Ltd. Class A's earnings presentation, Aug 24, 2011
Slide 1: 2011 Interim Results (for Analysts)
2011 Interim Results(for Analysts) August 24, 2011
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 1H 2011 Overview Section II Business Review Section III Financial Summary Section IV Investment Performance Section V Embedded Value -3-
Slide 4: Section I: 1H 2011 Overview
Section I: 1H 2011 Overview Co BAS te Pe ARs a PS China Life Insurance Company Limited
Slide 5: Overall Performance in 1H 2011
Overall Performance in 1H 2011 In 1H 2011, we adhered to the strategy of “transforming development pattern, accelerating development, deepening reform, strengthening the foundation, enhancing compliance", and carefully analyzed the life insurance market trends, grasped the market pace, and thus main
Slide 6: Section II: Business Review
Section Il: Business Review Co BAS te Pe ARs a PS China Life Insurance Company Limited
Slide 7: Overview of Life Insurance Sector
Overview of Life Insurance Sector Industry Growth Slowed Down Unstable Bancassurance Solvency Ratio Growth Decelerated Lower Proportion of Investment Par-business Return Increased Sales Force Development Slowed Down -7-
Slide 8: Premium Income
Premium Income Gross Written Premiums First-year Regular Premiums RMB: mn RMB: mn 183,614 195,490 31,975 28,863 2010.06.30 2011.06.30 2010.06.30 2011.06.30 Single Premiums* Renewal Premiums RMB: mn RMB: mn 74,902 84,387 70,795 72,038 2010.06.30 2011.06.30 2010.06.30 2011.06.30 *: Short-term accident
Slide 9: Business Structure
Business Structure First-year Regular Premiums in Long-term FYP First-year Regular Premiums Breakdown 27% 31% 72% 69% 14% 38% 55% 28% 31% 35% 2010.06.30 2011.06.30 2010.06.30 2011.06.30 First Year Regular Premiums Single Premiums Less than 5 years 5-9 years 10 years or longer Renewal Premiums in GWP
Slide 10: 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 186,858 175,520 8,333 7,811 3,539 3,649 283 299 4,794 4,162 2010.06.30 2011.06.30 2010.06.30 2011.06.30 2010.06.30 2011.06.30 Short-term Accident Short-term Health - 10 -
Slide 11: Surrender Rate & Persistency Rate
Surrender Rate & Persistency Rate Surrender Rate Long-term Individual Policy Persistency Rate 96.0% 1.47% 93.7% 94.0% 93.0% 1.30% 92.5% 92.5% 92.0% 90.0% 87.4% 87.6% 88.0% 87.0% 86.1% 86.0% 84.0% 82.0% 2008 2009 2010 2011.6.30 2010.06.30 2011.06.30 14 Months 26 Months Note: Surrender rate = Surrende
Slide 12: Individual Agent Channel
Individual Agent Channel Gross written premiums increased by 10%; first-year regular premiums increased by 22.4%; single premiums plunged 31% Further improved the quality and structure of sales force; reduced 93,500 under-performing agents; significantly enhanced productivity by 36.1% YoY Numb
Slide 13: Direct Sales Channel
Direct Sales Channel Short term business increased by 6.4% YoY, among which accident business became the main growth driver with 15.2% premiums growth Number of direct sales representatives: 14,900 (RMB：Million) 2011.6.30 2010.6.30 Change Short Term Business 8,272 7,772 6.4% Short-term Accident
Slide 14: Bancassurance Channel
Bancassurance Channel Proactively adapted to the requirement of the new bancassurance rule by improving communication with banks and strengthening service support. The gross written premiums realized positive growth Number of account managers and financial advisors: 44,000 (RMB：Million) 2011.6.3
Slide 15: Business Development Strategy for 2H 2011
Business Development Strategy for 2H 2011 Accelerate regular Keep focusing on payment business, traditional and enhance embedded value participating products，improve Business Product product mix and enrich Strategy Strategy product range Sales Force Development Strengthen sales force, enhance their
Slide 16: Section III: Financial Summary
Section III: Financial Summary
Slide 17: Revenues
Revenues Net Premiums Earned Total Revenues RMB mn RMB mn 183,589 194,849 227,466 215,391 2010.06.30 2011.06.30 Net Investment Income and Realized/Unrealized Gains RMB mn 30,309 24,715 6,266 601 405 (369) Net Investment Income Net Realized gains Net Fair Value 2010.06.30 2011.06.30 Gains/(Losses) 20
Slide 18: Cost Control
Cost Control Commissions and Fees Ratio Administrative Expenses Ratio 6.5% 6.7% 3.9% 4.0% 2010.06.30 2011.06.30 2010.06.30 2011.06.30 Note：Commissions & Fees Ratio=Commissions& Fees/Total Revenues Administrative Expenses Ratio=Administrative Expenses/ Total Revenues - 18 -
Slide 19: Profitability
Profitability Net Profit Attributable Weighted Average ROE EPS to Shareholders RMB mn RMB Yuan 18,034 0.64 8.53% 12,964 0.46 6.22% 2010.06.30 2011.06.30 2010.06.30 2011.06.30 2010.06.30 2011.06.30 - 19 -
Slide 20: Financial Position
Financial Position Total Assets Equity Holders’ Equity RMB mn RMB mn 1,546,891 1,410,579 208,710 197,051 2010.12.31 2011.06.30 2010.12.31 2011.06.30 - 20 -
Slide 21: Solvency Margin
Solvency Margin Solvency Margin Affecting factors: capital market Solvency Adequacy Ratio fluctuation, payout of previous year dividends and business development Capital Replenishment: The Board of Directors has passed a resolution to replenish capital and improve solvency ratio by issuing subordina
Slide 22: Section IV: Investment Performance
Section IV: Investment Performance
Slide 23: Investment Assets and Yield
Investment Assets and Yield Investment Assets Gross Investment Yield RMB mn （Annualized） 1,454,453 6.00% 1,336,245 5.06% 1,172,145 5.00% 4.50% 937,043 4.00% 3.00% 2.00% 1.00% 0.00% 2008 2009 2010 2011.6.30 2010.06.30 2011.06.30 Note: Investment assets ＝Cash and Cash Equivalents+ Securities at fair v
Slide 24: Investment Operation
Investment Operation Government Bond Yield Curve Investment Performance Despite capital market fluctuation in 1H, the company generated growth in investment income, among which interest income increased significantly and performance of affiliates improved dramatically. Fixed income investment: pro
Slide 25: Investment Portfolio
Investment Portfolio 2011.6.30 2010.12.31 Change（ppt） Debt 43.22% 45.51% -2.29 Securities Term 34.32% 33.05% 1.27 Deposits Equities 13.38% 14.66% -1.28 Cash & Cash 5.47% 3.58% 1.89 Equivalents Others 3.61% 3.20% 0.41 - 25 -
Slide 26: Investment Capability
Investment Capability The first insurance company to complete the filing for record with CIRC for private equity investment capability Facilitate capacity • Officially filed for record building with CIRC for private May, 2011 equity and real estate investment capability The first insurance compa
Slide 27: Section V: Embedded Value
Section V: Embedded Value Co BAS te Pe ARs a PS China Life Insurance Company Limited
Slide 28: EV Breakdown by Components
EV Breakdown by Components 2011.6.30 RMB mn 350,000 31,688 300,000 250,000 202,352 200,000 150,000 296,493 100,000 125,829 50,000 0 Adjusted Net Worth In-force Business Value Cost of Solvency Margin Embedded Value - 28 -
Slide 29: Growth of EV and Value of New Business
Growth of EV and Value of New Business Embedded Value Value of 1H Sales RMB mn RMB mn 298,099* 296,493 12,186 11,548 153,444 170,664 144,655 125,829 2010.12.31 2011.6.30 2010.1-6 2011.1-6 In-force Business Value（After Cost of Solvency Margin） Adjusted Net Worth *Note：Numbers may not be additive due
Slide 30: Embedded Value Movement Analysis
Embedded Value Movement Analysis EV movement from 2010 year end to end of 1H 2011 RMB mn 12,186 4,751 13,687 352 298,099 ( 14,025) 296,493 (6,279) (282) ( 11,306) (690) EV at Expected Value of 1H Operating Investment Methodology Market Value Exchange Gains Shareholder Others EV at June 30, Beginning
Slide 31: Sensitivity Analysis – Investment Return and Discount Rate
Sensitivity Analysis – Investment Return 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 23,560 202,182 21,652 20,506 179,993 19,437 170,664 17,586 161,987 139,589 Investment Risk Adjusted Base Case Risk
Slide 32: Sensitivity Analysis – Operational and Other Assumptions
Sensitivity Analysis – Operational and Other Assumptions Sensitivity Analysis Results RMB mn Value of in-force business after the cost of Value of one-year’s sales after the cost solvency margin of solvency margin Base case scenario 170,664 20,506 Cost ratio +10% 168,137 18,665 Cost ratio -10% 173,1
Slide 33: Thank You!
Thank You! PEWS REAR China Life Insurance Company Limited
China Life Insurance Company — H1 2011 Earnings Presentation on 6ix