China Life Insurance Co. Ltd. Class A · SSE:601628
China Life Insurance Co. Ltd. Class A — FY2010 Earnings Presentation
36 slides from China Life Insurance Co. Ltd. Class A's earnings presentation, Mar 23, 2011
Slide 1: 2010 Annual Results
2010 Annual Results March 23, 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 21E of U.S. Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other f
Slide 3: Agenda
Agenda Section I 2010 Highlights Section II Business Review Section III Financial Summary Section IV Investment Performance Section V Embedded Value 2
Slide 4: Section I: 2010 Highlights
CG Hh A eR AR a China Life Insurance Company Limited Section I: 2010 Highlights
Slide 5: Overall Performance
Overall Performance Steady and healthy business growth and effective business mix restructuring Stable investment income as a result of proactive investment strategy adjustment Further consolidation of corporate infrastructure and strengthened risk management 4
Slide 6: Results Highlights
Results Highlights RMB mn 2010 2009 Change Gross Written 318,229 275,970 +15.3% Premiums Gross Investment 64,151 60,921 +5.3% Income Net profit Attributable to 33,626 32,881 +2.3% Equity Holders Investment Assets 1,336,245 1,172,145 +14.0% Equity Holders‟ 208,710 211,072 -1.1% Equity Weighted Averag
Slide 7: Further Enhanced Corporate Infrastructure
Further Enhanced Corporate Infrastructure Continuous efforts for sales force buildup. To stay competitive and effectively manage our sales force, we modified and implemented fundamental policies for individual, group and bancassurance channels, and standardized management was fostered Stronger IT su
Slide 8: Effective Risk Control System
Effective Risk Control System Risk Management and Internal Control Strengthened Risk Management System Structure Board of Directors Compliance with SOX 404 from 2006 for five consecutive years Risk Control Audit Committee Committee Internal Control & “2010 Internal Control Implementation Senior Risk
Slide 9: Proactively Assuming Social Responsibilities
Proactively Assuming Social Responsibilities The largest life insurance sales Breakthrough in force in China, New Rural creating a lot of Pension Scheme job opportunities Proactive in assuming social responsibilities with due consideration to both social and Expanding the corporate interests Offerin
Slide 10: Strong Brand Recognition
Strong Brand Recognition “Fortune 500” for 8 consecutive years, 118th in 2010, 8th among the named 54 Chinese enterprises Enlisted in “Global Top 500 Most Valuable Brands” for 4 consecutive years, 5th among “China‟s 500 Most Valuable Brands” “Forbes Global 2000” for 7 consecutive years “FT Global To
Slide 11: 2011 Outlook
2011 Outlook Opportunities Challenges China’s insurance sector will benefit from To maintain economic growth while controlling continued economic growth, per capita income inflation creates uncertainties on increase, consumption mix upgrading, macroeconomic environment and macro- urbanization, a
Slide 12: Section II: Business Review
Section II: Business Review 11
Slide 13: Overview of Life Insurance Sector
Overview of Life Insurance Sector Life insurance premiums exhibit a high growth Bancassurance, as one of the key growth drivers, contributes over 50% of total premiums “No. 2 Interpretation of Accounting Standards for Business Enterprises”steers life insurers to adjust product mix. Premiums from par
Slide 14: Stable Business Growth
Stable Business Growth Gross Written Premiums Long Term First-year Premiums RMB mn RMB mn 175,277 318,229 156,476 275,970 2009 2010 2009 2010 First Year Regular Premiums Renewal Premiums RMB mn RMB mn 52,159 127,977 105,429 39,712 2009 2010 2009 2010 13
Slide 15: Effective Adjustments of Business Mix
Effective Adjustments of Business Mix First Year Regular Premiums in Long-term FYP First Year Regular Premiums Breakdown 10 Years or Longer, 34% Less than 5 Years, 38% 75% 70% 25% 30% 2009 2010 5-9 Years, First Year Regular Premiums Single Premiums 28% Renewal Premiums in GWP Accident Premiums in Sh
Slide 16: Steady Growth in Individual, Group and Short-term Business
Steady Growth in Individual, Group and Short-term Business Individual Business Group Business Short-term Business RMB mn RMB mn RMB mn 302,781 14,975 14,065 261,715 127,973 7,318 105,422 6,989 473 174,808 156,293 190 7,657 7,076 2009 2010 2009 2010 2009 2010 First-year Premiums Renewal Premiums Acci
Slide 17: Stable Policy Persistency Experience
Stable Policy Persistency Experience In 2010, our surrender rate remained at a low level of 2.31%, successfully warding off abnormal surrender risks Further Decrease in Surrender Rate Long-term Individual Policy Persistency Rate 96% 3.50% 3.30% 93.7% 94% 93.0% 92.5% 91.9% 3.00% 92% 2.54% 90% 2.50% 2
Slide 18: Optimizing Key Distribution Channels
Optimizing Key Distribution Channels Agent Force Direct Sales Bancassurance Improving overall Fast growth of short Regular premiums agent force quality term business, steady grew by 82% YoY, by enhancing the development of accounting for a higher build-up of agent corporate annuity percentage in tot
Slide 19: 2011 Business Development Strategies
2011 Business Development Strategies Business Strategy: Market Strategy: Continue to focus on regular Strengthen market payment business and leadership and further increase business value improve competitiveness in urban markets Transforming business model, accelerating business growth, deepening re
Slide 20: Section III: Financial Summary
Section III: Financial Summary 19
Slide 21: Steady Top-line Growth
Steady Top-line Growth Net Premiums Earned Total Revenues RMB mn RMB mn 318,088 275,077 385,838 339,290 2009 2010 Investment Income and Realized / Unrealized Gains RMB mn 48,872 38,890 21,244 15,841 1,449 280 2009 2010 2009 2010 Investment Income Net Realized Gains on Financial Assets Net Fair Value
Slide 22: Effective Cost Control
Effective Cost Control Commissions and Fees Ratio Administrative Expenses Ratio 7.1% 5.5% 6.8% 5.3% 2009 2010 2009 2010 Notes: Commissions and fees ratio = Commission and fees / total revenue Administrative expenses ratio = Administrative expenses / total revenue 21
Slide 23: Continued Increase in Profitability
Continued Increase in Profitability Net Profit Attributable to Equity Holders Weighted Average ROE EPS RMB mn RMB Yuan 33,626 17.13% 32,881 1.19 16.02% 1.16 2009 2010 2009 2010 2009 2010 22
Slide 24: Solid Financial Strength
Solid Financial Strength Total Assets Solvency Margin RMB mn Solvency Adequacy Ratio 1,410,579 1,226,257 304% 2009 2010 212% Equity Holders’ Equity RMB mn 211,072 208,710 2009 2010 2009 2010 23
Slide 25: Section IV: Investment Performance
Section IV: Investment Performance 24
Slide 26: Increased Investment Assets
Increased Investment Assets Total Investment Assets RMB mn 1,336,245 1,172,145 937,403 850,209 2007 2008 2009 2010 Note: Investment assets ＝Cash and Cash Equivalents+ Securities at fair value through income+Available-for-sale Securities ＋Held-to-maturity Securities +Term Deposits +Securities Purchas
Slide 27: Stable Investment Income
Stable Investment Income In 2010, in spite of „U-shaped‟ volatility of the equity market with 14.31% decline of SSE Composite Index, we have achieved a stable investment performance Gross Investment Income Gross Investment Yield RMB mn 7.00% 6.00% 5.78% 64,151 60,921 5.11% 5.00% 31,138 4.00% 3.48% 3
Slide 28: Proactively Capturing Investment Opportunities
Proactively Capturing Investment Opportunities Bond Yield Curve Investment Strategies 4.9 4.9 4.2 4.2 3.5 3.5 Proactively allocated to negotiated 2.8 2.8 Fixed deposits with floating rate and high-yield 2.1 2.1 Income credit bonds, continued to adjust Investment investment portfolio and improved 1.4
Slide 29: Enhanced Asset Allocation
Enhanced Asset Allocation December 31, 2010 December 31, 2009 Change (ppts) Fixed-income 45.51% 49.68% -4.17 Securities Term Deposits 33.05% 29.43% +3.62 Equities 14.66% 15.31% -0.65 Cash & Cash 3.58% 3.09% +0.49 Equivalents Others 3.20% 2.49% +0.71 28
Slide 30: Section V: Embedded Value
CG Hh A eR AR a China Life Insurance Company Limited Section V: Embedded Value
Slide 31: EV Breakdown by Components
EV Breakdown by Components 2010 China Life Embedded Value Breakdown RMB mn 350,000 (29,564) 300,000 250,000 183,008 200,000 150,000 298,099 100,000 144,655 50,000 0 Adjusted Net Worth In-force Business Value Cost of Solvency Margin Embedded Value 30
Slide 32: Growth of EV and Value of One-Year's Sales
Growth of EV and Value of One-Year‟s Sales Embedded Value Value of One Year‟s Sales RMB mn RMB mn 298,099 19,839 285,229* 17,713 125,282 153,444 159,948 144,655 2009 2010 2009 2010 Adjusted Net Worth In-force Business Value(After cost of solvency margin) *Note：Numbers may not be additive due to roun
Slide 33: Embedded Value Movement Analysis
Embedded Value Movement Analysis EV Movement from 2009 Year End to 2010 Year End RMB mn 350,000 413 19,839 (3) (9,297) (1,937) ( 391) 109 300,000 23,922 (19,785) 250,000 200,000 150,000 285,229 298,099 100,000 50,000 0 EV at Expected Value of One Operating Investment Methodology Market Value Exchang
Slide 34: 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 182,023 22,667 20,959 162,126 19,839 153,444 18,794 145,375 17,040 125,022 Investment Risk Adjusted Base Case Risk
Slide 35: Sensitivity Analysis – Operational And Other Assumptions
Sensitivity Analysis – Operational And Other Assumptions Sensitivity Analysis Results RMB mn Value of in-force business after Value of one-year‟s sales after the cost of solvency margin the cost of solvency margin Base case scenario 153,444 19,839 Cost ratio +10% 151,002 18,014 Cost ratio -10% 155,8
Slide 36: Thank you!
—————— ll i ‘Ghra ule nevance Cowoany United | Thank you!
China Life Insurance Company — FY2010 Earnings Presentation on 6ix