2018 Interim Results. 24 August 2018 Hong Kong Beijing

Transcription

1 2018 Interim Results 24 August 2018 Hong Kong Beijing

2 Forward-looking Statement Certain statements contained in this presentation may be viewed as forward-looking statements as defined by Section 27A of U.S. Securities Act of 1933 and Section 21E of U.S. Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may mean that the actual performance, financial condition or results of operations of the Company could be materially different from any future performance, financial condition or results of operations implied by such forward-looking statements. Further information regarding these risks, uncertainties and other factors is included in the Company s Annual Report on Form 20-F for the fiscal year ended 31 December 2017 filed with the U.S. Securities and Exchange Commission, or SEC, on 25 April 2018; and in the Company s other filings with the SEC. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this presentation is as of the date of this presentation, and the Company undertakes no duty to update such information, except as required under applicable law. Unless otherwise indicated, the Chinese insurance market information set forth in this presentation is based on public information released by CBIRC. Note: The Company has prepared these consolidated financial statements in accordance with International Financial Reporting Standards ( IFRSs ), amendments to IFRSs and interpretations issued by the International Accounting Standards Board ( IASB ). 2

3 Management Team Hong Kong ZHAN Zhong LIN Dairen ZHAO Peng YANG Hong Marketing Director President Vice President Operations Director Beijing XIAO Jianyou Vice President LI Mingguang Vice President, Chief Actuary and Board Secretary XU Hengping Vice President XU Haifeng Vice President ZHAO Lijun Vice President RUAN Qi Vice President 3

4 Agenda 1 Overview 2 Business & Operations 3 Financials 4 Investments 5 Embedded Value

5 Overview LIN Dairen, President

6 Industry From Rapid Growth to High-quality Development Original Premiums in Life Insurance Industry Monthly Original Premiums in Life Insurance Industry in 1H2018 RMB bn RMB bn % 2, % % 30% 18% 25% 2, % 20% 9% 9% 17% 15% , % 1, % , , % 0% % % % -15% /6-20% 0 Jan Feb Mar Apr May Jun -30% Original Premiums Premiums Growth Monthly Original Premiums Monthly Original Premiums Growth 6

7 1H2018 Results Highlights Highlights Performance Indicators Figures (RMB bn) Growth Rates Gross Written Premiums % Premiums 1 First-year Regular Premiums % Renewal Premiums % Market Share Market Share of Gross Written Premiums % Optimized Premium Structure Percentage of First-year Regular Premiums in Long-term First-year Premiums Percentage of Renewal Premiums in Gross Written Premiums Embedded Value Embedded Value Net profit Net Profit Attributable to Equity Holders of the Company Total Assets Total Assets 3, Notes: 1. Premiums are calculated in accordance with the Accounting Standards for Business Enterprises Interpretation No Calculated according to the premium data of life insurance companies in 1H2018 released by CBIRC pps from end of % +33.1pps 65.2% +13.1pps +4.8% from end of % +5.0% from end of 2017

8 Future Development Outlook Growing Positive External Trends Tightened and stricter supervision helps maintain proper market order and optimize the development environment With the implementation of the Healthy China strategy, the industry refocused on the protection function of insurance and the society has increasingly recognized the importance of insurance Rapid aging population and implementation of Personal Tax-Deferred Commercial Pension Insurance High-quality Development Cumulative Strength and Enormous Potential of the Company Gradually Unleashed Adjustment of premium structure has effectively been completed, and renewal premiums have seen a sharp rise Awareness and ability of selling protection-oriented and other diversified products of the sales team is growing Overall driving force of our business, team, technology and integrated financials are gradually unleashed 8

9 Business & Operations LIN Dairen, President

10 Positive Momentum Continued amid High-Quality Development: Reform on Quality RMB bn Components of GWP over a Three-year Period Components of Long-term First-Year Premiums % % % 20% 15% 10% 55.9% 89.0% 44.1% 11.0% 1H2017 1H2018 Single Premiums First-year Regular Premiums Diversification of Business % 5% 87.1% 54.2% Single Premiums (excluding short-term insurance) Short-term Premiums First-year regular premiums Renewal Premiums Proportion of Single Premiums 0% % 1H2017 Participating 45.8% 1H2018 Traditional

11 Positive Momentum Continued amid High-Quality Development: Reform on Efficiency 1.65 million registered agents on China Life E- store, average monthly active users of 1.21 million Provided 5.38 million policy services per day Turnover on China Life e- Bao increased by 49.20% Digitalization Utilization rate of paperless application increased by 42pps Replacement rate of selfservice return visits increased by 16pps Service Enhancements Provided information changes and payment services 188,000 times daily The number of service applications for China Life e- Bao increased by 58.2% China Life e- Bao had million registered users Time required for individual claim settlement shortened by 2 days Provided a claim settlement service every 2.5 seconds 11

12 Positive Momentum Continued amid High-Quality Development: Reform on Growth Engines Promoted the construction of digital field offices Promoted the construction of a collaborative customer service ecosystem to obtain, retain and expand the client base Technological Empowerment Client-driven Continued to expand intelligent application scenarios Deepened the application of a digital independent operation system Significantly enhanced efficacy of policy services Enhanced client relationship management and value-add services 12

13 Steady Growth in Insurance Business Gross Written Premiums First-year Regular Premiums Renewal Premiums +4.2% +5.1% +30.3% 345,967 26, % 360,482 33,506 77,711 37, % 81,712 22, , , , % 235,161 14,695 22, % 77, % 44,348 61,350 1H % 81,712 10,103 1H2018 Short-term Premiums Renewal Premiums First-year Regular Premiums Single Premiums (excluding short-term insurance) 18, % 1H2017 1H2018 Less than 5 years 5-9 years 10-year-or-longer 1H2017 1H

14 Agent Channel Agent Channel GWP Agent Channel FYRP Total Individual Agent Force +19.7% 272,233 63, % 61,442 Person mn % ,375 67, % 67,452 33, % 20,033 11, , % 204,781 18, % 29,706 11, % 1H2017 1H2018 1H2017 1H Renewal Premiums Premiums from New Policy Less than 5 years 5-9 year 10-year-or-longer 14

15 Bancassurance Channel Bancassurance GWP Bancassurance FYRP Bancassurance Channel Sales Force 39.7% +40.6% Person 10.9% 92,877 18,819 13, % 2,151 19, % 13,388 2,736 55,998 2, % 59, % 18,819 27,974 8,638 4,044 6, % % 13, , ,000 1H2017 1H2018 Short-term Premiums First-year Regular Premiums Reneal Premiums Single Premiums (excluding short-term insurance) 1H2017 1H2018 Less than 5 years 5-9 years 10-year-or-longer

16 Group Channel Group Channel GWP Group Channel Sales Force +2.0% Person 6.7% 14,689 14,986 2, % +19.1% 3, ,000 97,000 11, % 11,744 52, % 54,000 1H2017 Short-term Insurance 1H2018 Long-term Insurance High-performance Sales Force 16

17 Surrender Rate and Persistency Rate Surrender Rate Persistency Rate 4.30% 91.6% 14-month 92.3% 3.40% 26-month 85.8% 86.8% +0.90pp 1H2017 1H Note: Surrender Rate = Surrender payment/(liability of long-term insurance contracts at the beginning of the period + Premiums of long-term insurance contracts) Policy persistency rate = in-force policies within the review month that are commenced 14/26 months prior to the review month / policies that are commenced 14/26 months prior to the review month 17

18 Development Blueprint for 2H 2018 Enhance Investment Capability in Creating Value Enhance Technological Capability in Creating Value Enhance Business Capability in Creating Value Enhance Investment Capability in Creating Value Enhance Risk Control Capability in Creating Value 18

19 Financials ZHAO Lijun, Vice President

20 Revenues Net Premiums Earned Investment Income and Realized/Unrealized Gains and Impairment Losses +3.8% 336, ,985 Investment Income Net Realized Spread Losses on Financial Assets Impairment Losses Net Fair Value Gains through Profit or Loss 60,618 57,701 1H2017 1H2018 Total Revenues +1.4% 396, ,690 3,278-2,660-3,164-1,687-1,268-7,460 1H2017 1H2018 1H2017 1H

21 Costs Structure Underwriting and Policy Acquisition Costs Ratio 1 Administrative Expenses Ratio 2 Percentage of Administrative Expenses % 9.29% 8.89% 3.39% 3.72% 26.76% 1H2017 1H2018 1H2017 1H2018 1H2017 1H2018 Note: 1. Underwriting and Policy Acquisition Costs Ratio = Underwriting and Policy Acquisition Costs/Total Revenues 2. Administrative Expenses Ratio = Administrative Expenses/Total Revenues 3. Percentage of Administrative Expenses = Administrative Expenses/(Administrative Expenses + Underwriting and Policy Acquisition Costs) 21

22 Profit 1H2018 1H2017 Change Net Profit Attributable to Equity Holders of the Company () 16,423 12, % Weighted Average ROE 5.11% 4.01% +1.10pps Earnings Per Share (RMB: Yuan)

23 Assets and Liabilities Assets, Liabilities and Equity Holders Equity Reserves of Insurance Contracts 4,377 4, , ,008 2,025,133 2,153,494 2,897,591 2,572,281 3,043,178 2,715, , ,331 1,417,192 1,500, Equity Attributable to Non-controlling Interests Equity Attributable to Equity Holders of the Company Total Liabilities Total Assets Reasonable Estimates of Reserves & Risk Margin Residual Margin 23

24 Equity Holders Equity Equity Attributable to Equity Holders of the Company 320,933 16,423 (2,251) (603) (11,494) 323,008 Equity Attributable to Equity Holders of the Company as at 31 December 2017 Net Profit Attributable to Equity Holders of the Company Other Comprehensive Income Attributable to Equity Holders of the Company Other Equity Movements Dividends Equity Attributable to Equity Holders of the Company as at 30 June

25 Solvency Position Core Solvency Ratio Comprehensive Solvency Ratio % % % %

26 Investments ZHAO Lijun, Vice President

27 Grasped Long-term Opportunities and Optimized Allocation Structure As the long-term fund provider in the capital market, China Life held a long-term, prudent and value-oriented investment philosophy Seized the opportunity of favorable interest rate, increased allocations to long-term fixed-income investment and accumulated long-term high-quality assets Positions in equity investments remained at a reasonable level. Upholding the idea of value-oriented investment, the Company increased allocation in targets with long-term value Prudently allocated in alternative investments and accumulated long-term high-yield assets; focused on identifying investment opportunities in undervalued, high-quality assets during the process of deleveraging 27

28 Investment Assets Allocation Investment Assets () 30 June December 2017 Amount Percentage Change (%) Amount Percentage Fixed-maturity Investments 2,220, % 1.12% 2,094, % Term Deposits 449, % -0.76% 449, % Bonds 1,280, % 1.37% 1,188, % Debt-type Financial Products 1 317, % 0.06% 301, % Other Fixed-maturity Investments 2 173, % 0.45% 154, % Equity Investments 416, % -0.42% 409, % Common Stocks 173, % -0.31% 173, % Funds 3 107, % 0.05% 101, % Bank Wealth Management Products 37, % -0.18% 40, % Other Equity Investments 4 98, % 0.02% 94, % Investment Properties 5, % 0.08% 3, % Cash and Others 5 67, % -0.78% 84, % Total 2,709, % 0.00% 2,591, % Notes: 1. Debt-type Financial Products include debt investment plans, equity investment plans, trust schemes, project asset-backed plans, credit asset-backed securities, specialized asset management plans, asset management products, etc. 2. Other Fixed-maturity Investments include policy loans, statutory deposits-restricted, bank wealth management products, and interbank certificates deposits, etc. 3. Funds include equity funds, bond funds and money market funds, etc. of these, the balances of money market funds as at 30 June 2018 and 31 December 2017 were RMB billion and RMB billion respectively. 4. Other Equity Investments include private equity funds, unlisted equities, preferred shares, equity investment plans and specialized equity asset management plans, etc. 5. Cash and others include cash, cash at banks, short-term bank deposits and securities purchased under agreements to resell. 28

29 Investment Yields Net Investment Yield Gross Investment Yield Comprehensive Investment Yield 4.71% 4.64% 4.62% 4.58% 3.70% 3.52% 1H2017 1H2018 1H2017 1H2018 1H2017 1H2018 Note: Net investment yield = {[(Net investment income - interest paid for securities sold under agreements to repurchase)/((investment assets at the beginning of the period - securities sold under agreements to repurchase at the beginning of the period + investment assets at the end of the period - securities sold under agreements to repurchase at the end of the period)/2)]/181} 365 Gross investment yield ={[(Gross investment income - interest paid for securities sold under agreements to repurchase) /((Investment assets at the beginning of the period - securities sold under agreements to repurchase at the beginning of the period - derivative financial liabilities at the beginning of the period + Investment assets at the end of the period - securities sold under agreements to repurchase at the end of the period derivative financial liabilities at the end of the period)/2 )]/181} 365 Comprehensive investment yield={[(gross investment yield - interest paid for securities sold under agreements to repurchase + current net fair value changes of available-for-sale securities recognized in other comprehensive income)/(( Investment assets at the beginning of the period - securities sold under agreements to repurchase at the beginning of the period - derivative financial liabilities at the beginning of the period + investment assets at the end of the period - securities sold under agreements to repurchase at the end of the period - derivative financial liabilities at the end of the period)/2)]/181}

30 Credit Risks Well-controlled Maintained a prudent debt-type assets investment strategy with well-controlled risks Non-standard Fixed-income Assets by Sector By the end of June 2018, over 96% of the Company s 18% credit bonds had AAA rating; over 95% of nonstandard assets had AAA external rating In 1H2018, newly added non-standard fixed-income investment exceeded RMB 37 billion, with a weighted average maturity of about 9 years. As of 30 June 2018, the Company has invested over RMB 300 billion in non-standard fixed-income assets, of which over 70% were invested in infrastructure, financial, 3% 5% 11% 2% 37% Infrastructure 基础设施 Finance 金融 Energy 能源 Transportation 交通 Real Estate 不动产 Power 电力 Municipal 市政 Others 其他 energy, transportation, electricity and municipal utility 12% 12% industries. No credit default events so far. 30

31 Embedded Value LI Mingguang, Vice President, Chief Actuary & Board Secretary

32 Components of Embedded Value Components of Embedded Value (30 June 2018) (41,345) 428, , ,635 Adjusted Net Worth Value of In-force Business (before cost of required capital) Cost of Required Capital Embedded Value Note: Numbers may not be additive due to rounding. 32

33 Embedded Value and Value of Half Year s Sales Embedded Value Value of Half Year s Sales Value of Half Year s Sales by Channel +4.8% 23.7% 734, ,225 36, (0.7%) 363, % 387,591 28,166 3,887 (13.8%) +3.0% 370, ,635 24,077 (85.5%) Value of In-force Business (after cost of required capital) Adjusted Net Worth Agent Channel Bancassurance Channel Group Channel Note: Numbers may not be additive due to rounding. Note: Value of half year s sales is after cost of required capital 33

34 Embedded Value Movement Analysis Embedded Value Movement During 1H ,668 28,166 1,929 6, ,256 (18,223) (1,418) (11,494) 734, ,225 EV at the beginning Expected Returns Value of Half Year's Sales Operating Experience Variance Investment Experience Variance Methodology and Model Changes Market Value and Other Adjustments Exchange Gains of Losses Shareholder Dividends and Capital Injection Others EV at 30 June 2018 Note: Numbers may not be additive due to rounding. 34

35 Q&A

36 Appendix

37 Honors and Awards in 1H2018 China Life Insurance (Group) Company, with China Life Insurance Company Limited as a core subsidiary, has made it onto the Fortune Global 500 list for 16 consecutive years, ranking the 42 nd in 2018 China Life ranked 5 th in China s Top 500 Most Valuable Brands 2018 (15 th ) with its brand value amounting to RMB billion, helping it to sustain its leading position in the insurance industry Listed on the Forbes Global 2000 for 15 consecutive years, ranking 35 th in 2018 Awarded 2018 High Quality Development Insurance Company Ark Prize at the Ark Prize for China Insurance Industry selection organized by Securities Times 37

38 Corporate Social Responsibilities China Life s corporate culture and social responsibility concept: Success for you, Success by you Leverage the Company s business, network and management advantages to develop insurance products that benefit the general public Actively participate in public welfare programs to show love and care and make sure we contribute towards society Through the application of technology and innovation, reduce energy consumption and carbon emissions of the Company s operations Implemented major supplementary medical expenses and long-term care insurance as well as basic medical insurance administration entrusted by local governments, covering over 400 million, 8 million and 90 million people, respectively During the reporting period, donated RMB million through China Life Foundation to continue to help orphans from Wenchuan, Ludian and Yushu earthquakes, as well as Zhouqu mudslide, and provide long-term, sustained life support and emotional care. In addition, the Company donated over RMB 9 million to support the public welfare, including maternity care, helping the disabled and voluntary teaching Based on the Company s energy consumption characteristics, with full-process electronic offices, technological innovation and the use of new environmentally friendly materials, effectively reduced energy consumption and carbon emissions from operations 38

39 Sensitivity Analysis Investment Return and Risk Discount Rate Value of In-force Business (after cost of required capital) Value of Half Year s Sales (after cost of required capital) 4,651 67, ,591 18,434 28,166 1,558 (1,444) (17,164) (4,632) (66,824) Investment Return -50bps Risk Discount Rate +50bps Base Case Risk Discount Rate -50bps Investment Return +50bps Investment Return -50bps Risk Discount Rate +50bps Base Case Risk Discount Rate -50bps Investment Rate +50bps 39

40 Sensitivity Analysis Operational Assumptions Sensitivity Analysis Results Value of In-force Business (after cost of required capital) Base 387,591 Morbidity Rates +/-10% -5,001 5,038 Lapse Rates +/-10% Mortality Rates for Non- Annuity Products +/-10% Mortality Rates for Annuity Products -/+10% -2,730 2,726 Expenses +/-10% -5,243 5,239-6,000-4,000-2, ,000 4,000 6,000 40

41 Sensitivity Analysis Operational Assumptions (cont d) Sensitivity Analysis Results Value of Half Year s Sales (after cost of required capital) Base 28,166 Morbidity Rates +/-10% Lapse Rates +/-10% Mortality Rates for Non- Annuity Products +/-10% Mortality Rates for Annuity Products -/+10% Expenses +/-10% -1,525 1,520-2,000-1,500-1, ,000 1,500 2,000 41