2017 Annual Results. 23 March 2018 Hong Kong Beijing

Transcription

1 2017 Annual Results 23 March 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 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 2016 filed with the U.S. Securities and Exchange Commission, or SEC, on 21 April 2017; 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 CIRC. 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 RUAN Qi Vice President* LIN Dairen President XIAO Jianyou Vice President YANG Hong Operations Director Beijing ZHAN Zhong Marketing Director LI Mingguang Vice President, Chief Actuary & Board Secretary *Appointment pending approval by China Insurance Regulatory Commission. XU Hengping Vice President 3 XU Haifeng Vice President ZHAO Lijun Vice President

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

5 Overview LIN Dairen, President

6 2017 Results Highlights Highlights Performance Indicators Figures (RMB bn) Growth Rates Gross written premiums % Premiums reached a new high 1 First-year regular premiums % Renewal premiums % Optimized premium structure Expanded & enhanced sales force Percentage of first-year regular premiums 64.0% 7.7pps Percentage of premiums with 10-year-or-longer payment duration 58.4% 3.7pps Percentage of renewal premiums 56.3% 4.4pps Total sales force 2.025mn 11.6% Individual agent force 1.578mn 5.6% Quarterly average productive agent force % Rapid business value growth Value of one year s sales % Significant net profit growth Net profit attributable to equity holders of the Company Note: 1. Premiums are calculated in accordance with the Accounting Standards for Business Enterprises Interpretation No Productive agent force data is not covered by this disclosure %

7 Strong Growth Momentum through Five Years of Reform and Transformation Value of One Year s Sales First-year Regular Premiums RMB bn Growth Rate 56% % % 2% 9% % 40% 20% 0% RMB bn Growth Rate % 40 33% 20% 16% -11% % 40% -20% FYRP with 10-year-or-longer Payment Duration Gross Written Premiums RMB bn Growth Rate 59% % 28% 22% 12% % 40% 20% 0% RMB bn Renewal Premiums Premiums from New Policy Gross Written Premiums Growth 18% 19% % % 1% % 10% 0% 7

8 Future Development Outlook From a macroeconomic perspective, China s economy switched from a phase of rapid growth to high-quality development, and maintained steady growth. In this new era, the demand for insurance protection and wealth management has grown rapidly. The introduction of a series of national policies relating to commercial pensions and health will provide strong impetus and ample room for the development of commercial insurance. From an industry perspective, regulators tightened regulation and guided the industry to return to its due role of protection. With accelerated transformation of market players in a more orderly market, the industry will focus more on the protection-oriented and long-term savings business, customer services and technology innovation. The market competition is becoming increasingly fierce and differentiated. The Company will uphold the keynote of achieving progress while ensuring stability, responding to demands for highquality development. It will enhance its supply and demand system, investment management system, innovation system, talent system and risk control system, and endeavor to transform from leading in scale to leading in quality. 8

9 Business & Operations LIN Dairen, President

10 Rapid Growth in Insurance Business Pro-actively controlled the volume of single premiums; first-year regular premiums and renewal premiums drove the rapid growth in gross written premiums Gross Written Premiums 430,498 40, , % +17.5% +28.9% 511,966 47, ,106 Long-term First-year Premiums 166, % 176,792 93, % 113,121 Renewal Premiums 223, % 288, % 166, ,792 72, % 63,671 Short-term Premiums Renewal Premiums Long-term First-year Premiums First-year Regular Premiums Single Premiums (excluding short-term insurance) 10

11 Premium Structure Further Optimized Business Structure of Long-term FYP First-year Regular Premiums 56.28% 63.99% +20.4% 113, % 36.01% 93,945 Single Premiums First-year Regular Premiums Business Structure of Long-term GWP 51, % 66, % 61.97% 23, % 25, % 38.03% Long-term FYP Renewal Premiums 19, % 21,900 Less than 5 years 5-9 years 10-year-or-longer 11

12 Strong Growth in Agent Channel Business Continued to Showcase Strengths of the Core Channel In 2017, guided by the value-oriented principle, the Agent Channel continued to record strong growth in regular premiums, with business structure being further optimized. Agent 个险渠道保费收入 Channel GWP Agent Channel FYRP +25.4% 353,668 74, % 90, ,136 82, % 100,082 46, % 58, , % 253,586 17, % 19, % 10,282 12,183 Renewal Premiums Premiums from New Policy Less than 5 years 5-9 years 10-year-or-longer 12

13 Expanded Scale and Enhanced Quality of Agent Force Overall Strength Continued to Improve In 2017, the Company strengthened the day-to-day management of the Agent Channel and actively pushed forward the transformation of the sales management model. While the agent force expanded steadily, its quality was also enhanced significantly. mn Total Individual Agent Force +5.6% Quarterly Average Productive Agent Force +29.8% Quarterly Average Productive Upsales Force +53.0% 13

14 Bancassurance Channel Continued its Sound Development Value Contribution Rose Significantly The Channel deepened its business transformation. Both first year regular premiums and renewal premiums recorded rapid growth, with business structure being further optimized. Value of one year s sales increased by 150.4% year-on-year, and its contribution to the total value of one year s sales increased by 5.6 pps. Sales force totaled 339,000 people. Number of monthly average active insurance planners increased by 11.3% year-on-year. 108,256 17,835 21,813 Bancassurance GWP +4.8% +17.5% +46.2% 113,505 20,954 31,880 Bancassurance FYRP 17,835 4,197 5, % +46.3% +9.2% 20,954 6,139 5,575 68, % 59, % 8,531 9,240 Short-term Premiums First-year Regular Premiums Renewal Premiums Single Premiums (excluding short-term insurance) Less than 5 years 5-9 years 10-year-or-longer 14

15 Steady Growth in Group Channel Business Strong Operations Further Sustained Closely followed the national strategy to better people s livelihoods, continued to diversify its business, and witnessed the steady growth in the short-term insurance business. Sales force totaled 104,000 people, up by 21.4% year-on-year. Group Channel GWP Group Channel Sales Force Person +5.2% +21.4% 24,915 6,133 26,207 5, % 104,289 18, % 20,840 85,874 36,325 52,253 Short-term Insurance Long-term Insurance Total Sales Force High-performance Sales Force 15

16 Continued Growth in Short-term Insurance Business Social Impacts Gained Recognition Gross written premiums from short-term insurance grew steadily. It not only contributed to the Company s development but also served people s well-being, thus expanding the Company s social recognition. Gross written premiums of short-term insurance business (including one-year term life insurance) reached RMB billion, up by 15.8% year-on-year. The Company played an active role in policy-sponsored health insurance business. It undertook more than 260 supplementary major medical expenses insurance programs in 31 provincial-level branches, covering 420 million urban and rural residents. Gross written premiums reached RMB billion, up by 18.1% year-on-year. Short-term Commercial Insurance Policy-sponsored Health Insurance ,978 7, % +58.4% +26.1% 33,570 9, , % 15,556 20, % 22,910 Group Channel Agent Channel Bancassurance Channel Supplementary Major Medical Expenses Insurance 16

17 Surrender Rate and Persistency Rate Remained Stable Surrender Rate Persistency Rate +0.59pp 100% 3.54% 4.13% 95% 90% 90.2% 90.9% 85% 80% 85.9% 85.7% 75% 70% 65% 17 60% Months 26 Months 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

18 Built a Technology-driven China Life, Promoted Reform and Transformation Accelerated the development of a Technology-driven China Life, a client-oriented, internet- and AIbased, responsive and reliable model; completed the new generation of integrated business processing system, enabling the Company to transform and upgrade its operation and management. Established an advanced business structure Completed online deployment Advanced smart and centralised operations Supported transformation of sales model Launched smart services 18

19 Advancement in Customer Service, Client Satisfaction Hit Historic High Improved customer service capacity and fully launched digitalized and smart services. Improved client relationship management capacity; precision services showed fruitful results. Expanded the scope of services; client satisfaction hit historic high. China Life Health Platform Global VIP Services Client Activities 19

20 Embarking on a New Journey of High-quality Development in the New Era Value centric A client-oriented, big service-led and digitalized operational and management system Steady Growth Transform and upgrade sales management model Lead in large- and medium-sized cities Emphasize risk prevention Optimize business structure Build a Technologydriven China Life 20

21 Financials ZHAO Lijun, Vice President

22 Steady Growth in Revenues Net Premiums Earned +18.9% 506, ,230 Investment Income and Realized/Unrealized Gains and Impairment Losses Investment Income 109, ,727 Net Realized Spread Income on Financial Assets Impairment Losses Net Fair Value Gains through Profit or Loss Total Revenues +19.0% 540, ,355 8,694 2,799 6,183-2,656-2,757-7,094 22

23 Continued Optimization of Costs Structure Underwriting and Policy Acquisition Costs Ratio 1 Administrative Expenses Ratio 2 Percentage of Administrative Expenses % 10.07% 37.98% 35.69% 5.89% 5.59% 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) 23

24 Significant Increase in Profit Change Net Profit Attributable to Equity Holders of the Company () 32,253 19, % Weighted Average ROE 10.49% 6.16% +4.33pps Earnings Per Share (RMB: Yuan) Dividends Per Share (RMB: Yuan) 0.40 Note Note: Subject to the approval by the 2017 Annual General Meeting. 24

25 Assets and Liabilities Assets, Liabilities and Equity Holders Equity Reserves of Insurance Contracts 303,621 4, ,933 4,377 1,847,986 2,025,133 2,696,951 2,389,303 2,897,591 2,572, , ,941 1,332,612 1,417, Equity Attributable to Non-controlling Interests Equity Attributable to Equity Holders of the Company Total Liabilities Total Assets Residual Margin Reasonable Estimates of Reserves & Risk Margin 25

26 Equity Holders Equity Equity Holders Equity 400, , , ,621 32, (7,912) (7,164) 320, , , , ,000 50, Equity Attributable to Equity Holders of the Company Net Profit Attributable to Equity Holders of the Company Other Comprehensive Income Other Equity Movements Dividends 2017 Equity Attributable to Equity Holders of the Company 26

27 Strong Solvency Position Core Solvency Ratio Comprehensive Solvency Ratio % % % %

28 Investments ZHAO Lijun, Vice President

29 Investment Assets Allocation Investment Assets () 31 December December Amount Percentage Change (%) Amount Percentage Fixed-maturity Investments 2,094, % 2.54% 1,920, % Term Deposit 449, % -4.60% 538, % Bonds 1,188, % 0.23% 1,119, % Debt-type Financial Products 2 301, % 6.27% 131, % Other Fixed-maturity Investments 3 154, % 0.64% 130, % Equity Investments 409, % -1.37% 421, % Common Stocks 173, % 0.98% 140, % Funds 4 101, % -0.98% 119, % Bank Wealth Management Products 40, % -1.78% 81, % Other Equity Investments 5 94, % 0.41% 79, % Investment Properties 3, % 0.07% 1, % Cash and Others 6 84, % -1.24% 110, % Total 2,591, % 0.00% 2,453, % Note: 1. The figures as at the end of last year were adjusted on the same basis. 2. Debt-type Financial Products include debt investment plans, trust schemes, project asset-backed plans, credit asset-backed securities, specialized asset management plans, asset management products, etc. 3. Other fixed-maturity investments include policy loans, statutory deposits, fixed-maturity bank wealth management products, and interbank deposits, etc. 4. Funds include equity funds, bond funds and money market funds, etc. of these, the balances of monetary market funds as at 31 December 2017 and 31 December 2016 were RMB billion and RMB billion respectively. 5. Other equity investments include private equity funds, unlisted equities, preferred shares, equity investment plans and specialized equity asset management plans, etc. 6. Cash and others include cash, cash at banks, short-term bank deposits and securities purchased under agreements to resell. 29

30 Significant Increase in Investment Yields Net Investment Yield Gross Investment Yield Comprehensive Investment Yield 4.66% 4.91% 4.61% 5.16% 4.55% 2.43% Note: Net investment yield = (Net investment income interest expenses 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) Gross investment yield = (Gross investment income - interest expenses 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) Comprehensive Investment Yield =(Gross investment income - interest expenses for securities sold under agreements to repurchase + net change in fair value of available-for-sale securities recorded in other comprehensive income)/((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) 30

31 Enhanced Scale and Quality in Non-standard Investments Maintained a prudent non-standard assets investment strategy with well-controlled risks Non-standard Assets by Sector Seized the asset allocation opportunities presented by high interest rates, with the new allocations towards fixed-income assets amounting to over RMB 440 billion. Mainly increased investments in fixed-income non-standard assets; established investment positions in industry leaders benefiting from the supply-side reform; and strengthened investments in infrastructure. Newly added investments totaled over RMB 200 billion for the whole year, with a weighted average maturity of approximately seven years. Over 95% of non-standard assets had an AAA external rating. Of which, over 70% were invested in infrastructure, finance, energy, transportation, electricity and municipal utility industries. 13% 4% 6% 11% 13% 14% 21% 18% 基础设施 Infrastructure 金融 Finance 能源 Energy 交通 Transportation 不动产 Real Estate 电力 Power 市政 Municipal 其他行业 Others 31

32 Synergy from Investments in Associated Company Expanding synergy between China Life and China Guangfa Bank Achieved RMB billion investment income and 13.02% investment yield from investment in CGB on the equity accounting basis. CGB helped provide comprehensive and all-round financial products and services to our clients. CGB-China Life bancassurance business achieved 42% increase in premiums of new policies, and 100% increase in first-year regular premiums Issued over 1 million China Life CGB debit cards and credit cards. 32

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

34 Components of Embedded Value 900, ,000 Components of Embedded Value (31 December 2017) 700,000 (35,050) 600, , , , , , , , ,000 0 Adjusted Net Worth Value of In-force Business (before cost of required capital) Cost of Required Capital Embedded Value 34

35 Embedded Value and Value of One Year s Sales Embedded Value +12.6% Value of One Year s Sales +21.9% Value of One Year s Sales by Channel 652, ,172 60, (0.7%) 302, % 363,673 49,311 6,536 (10.9%) 53,170 (88.4%) 349, , % Value of In-force Business (after cost of required capital) Adjusted Net Worth Note: Value of one year s sales is after cost of required capital. Agent Channel Bancassurance Channel Group Channel 35

36 Embedded Value Movement Analysis Embedded Value Movement of , ,472 (4,280) (5,926) (11,549) (459) (7,164) (1,625) 652, ,172 EV at the beginning Expected Returns Value of One Year's Sales Operating Experience Variance Investment Experience Variance Methodology, Model and Assumption Changes Market Value and Other Adjustments Exchange Gains Shareholder or Losses Dividends and Capital Injection Others EV at 31 December

37 Q&A

38 Appendix

39 Honors and Awards in 2017 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 15 consecutive years, ranking the 51st in 2017 China Life ranked 4th in China s Top 500 Most Valuable Brands 2017 (14th) 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 14 consecutive years, ranking 52nd in 2017 China Life and Chairman Yang Mingsheng received the Best Investment Value Award for Listed Companies and the Most Influential Leader of Listed Companies respectively of the 2017 China Securities Golden Bauhinia Awards organized by Ta Kung Wen Wei Media Group Awarded the Hong Kong Corporate Governance Excellence Award 2017 in the Category for Hang Seng Index Constituent Companies 39

40 Corporate Social Responsibilities China Life s corporate culture and social responsibility concept: Success for you, Success by you Integrate social responsibilities into customer services and continue to improve service quality and customer experience Leverage the Company s business, network and management advantages to develop insurance products beneficial to general public Participate in public welfare programs in a professional and systematical manner to show love and care and make sure we contribute towards society Implemented supplementary major medical expenses insurance programs and administration for basic social healthcare programs entrusted by local governments, covering 420 million and 97 million people, respectively Donated RMB million through the China Life Foundation to related organizations in 2017, mainly to support targeted poverty alleviation projects and provide special donations for families who have lost their only child Sponsored orphans from Wenchuan earthquake, Yushu earthquake, Zhouqu mudslide and the Ludian earthquake with RMB 2.33 million donations in 2017, held the 9th China Life Summer Camp, and provided long-term consistent subsidies and emotional care for disaster-stricken orphans 40

41 Sensitivity Analysis Using 2016 EV Appraisal Assumptions Sensitivity Analysis Using 2016 embedded value appraisal assumptions Value of In-force Business (after cost of required capital) Value of One Year s Sales (after cost of required capital) 357,052 60,114 41

42 Sensitivity Analysis Investment Return and Risk Discount Rate Value of In-force Business (after cost of required capital) 61,781 Value of One Year s Sales (after cost of required capital) (15,788) 363,673 16,949 60,117 2,848 8,573 (61,487) (8,559) (2,647) 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 Return +50bps Note: Numbers may not be additive due to rounding. 42

43 Sensitivity Analysis Operational Assumptions Sensitivity Analysis Results Value of In-force Business (after cost of required capital) Base 363,673 Morbidity Rates +/-10% -4,737 4,775 Lapse Rates +/-10% Mortality Rates for Non- Annuity Products +/-10% Mortality Rates for Annuity Products -/+10% -2,560 2,555 Expenses +/-10% -4,789 4,788-6,000-4,000-2, ,000 4,000 6,000 Note: Numbers may not be additive due to rounding. 43

44 Sensitivity Analysis Operational Assumptions (cont d) Sensitivity Analysis Results Value of One Year s Sales (after cost of required capital) Base 60,117 Morbidity Rates +/-10% -1,120 1,118 Lapse Rates +/-10% Mortality Rates for Non- Annuity Products +/-10% Mortality Rates for Annuity Products -/+10% Expenses +/-10% -3,239 3,239-4,000-3,000-2,000-1, ,000 2,000 3,000 4,000 Note: Numbers may not be additive due to rounding. 44