2017 Interim Results. 25 August 2017 Hong Kong Beijing

Transcription

1 2017 Interim Results 25 August 2017 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. 2

3 Management Team Hong Kong ZHAO Lijun Vice President YANG Mingsheng Chairman XU Hengping Vice President ZHAN Zhong Marketing Director Beijing RUAN Qi Chief Information Technology Officer LI Mingguang Vice President, Chief Actuary & Board Secretary LIN Dairen President XU Haifeng Vice President XIAO Jianyou Vice President 3

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

5 Overview YANG Mingsheng, Chairman

6 Results Highlights Highlights Performance Indicators Figures (RMB bn) Growth Rates Gross written premiums % Rapid insurance business growth Agent channel GWP % First-year regular premiums % Renewal premiums % Optimized premium structure Expanded & enhanced sales force Significant achievements through value-oriented strategy Percentage of first-year regular premiums 55.9% 5.3pps Percentage of renewal premiums 52.2% 7.8pps Total sales force mn +6.8% from end of 2016 Individual agent force mn +5.6% from end of 2016 Quarterly average productive agent force +39.4% from end of 2016 Value of half year s sales % Net profit attributable to equity holders of the Company % Note: Productive agent force data is not covered by this disclosure. 6

7 Future Development Outlook Favorable macro and demographic factors and new government strategies will open up new markets for pension and health insurance, and insurance funds investment. The new norms of stringent regulation, risk prevention and promotion of transformation will usher in a gear shifting for premium growth and accelerated business transformation. Competition will increasingly focus on risk prevention, sales force strengthening, technology-driven operations and customer experience. The Company will adapt to the new dynamics, adhere to the guideline of prioritizing business value, strengthening sales force, optimizing business mix, achieving stable growth and guarding against risks, and leverage its long-standing advantages to seize opportunities in the new round of market adjustment. 7

8 Financials ZHAO Lijun, Vice President

9 Steady Growth in Revenue Net Premiums Earned +18.3% 336, ,242 Investment Income and Realized/Unrealized Gains and Impairment Losses Investment Income Net Realized Spread Income on Financial Assets Impairment Losses Net Fair Value Gains through Profit or Loss 54,542 57,701 Total Revenues +17.3% 396, ,737 3,492 3, ,660-1,687-6,266 9

10 Continued Optimization of Costs Structure Underwriting and Policy Acquisition Costs Ratio Administrative Expenses Ratio Percentage of Administrative Expenses 29.95% 8.90% 9.29% 26.76% 3.80% 3.39% Notes: Underwriting and Policy Acquisition Costs Ratio = Underwriting and Policy Acquisition Costs/Total Revenues Administrative Expenses Ratio = Administrative Expenses/Total Revenues Percentage of Administrative Expenses = Administrative Expenses/(Administrative Expenses + Underwriting and Policy Acquisition Costs) 10

11 Year-on-Year Increase in Profits Change Net Profit Attributable to Equity Holders of the Company () 12,242 10, % Weighted Average ROE 4.01% 3.30% +0.71pp EPS (RMB: Yuan)

12 Assets and Liabilities Assets, Liabilities and Equity Holders Equity Reserves of Insurance Contracts 4,027 4, , ,595 1,847,986 1,975, , ,088 2,696,951 2,389,303 2,875,092 2,562,368 1,332,612 1,399, 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 12

13 Equity Holders Equity Equity Holders Equity 350, , ,621 12, (375) (6,978) 308, , , , ,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 Equity Attributable to Equity Holders of the Company 13

14 Sufficient Solvency Core Solvency Ratio Comprehensive Solvency Ratio % % % %

15 Investments ZHAO Lijun, Vice President

16 Investment Assets Allocation Investment Assets () December Amount Percentage Change (%) Amount Percentage Fixed-maturity Investments 2,028, % -0.11% 1,920, % Term Deposit 473, % -3.68% 538, % Bonds 1,149, % -1.35% 1,119, % Debt-type Financial Products 2 243, % 4.01% 131, % Other Fixed-maturity Investments 3 161, % 0.91% 130, % Equity Investments 496, % 1.96% 421, % Common Stocks 201, % 2.03% 140, % Funds 4 137, % 0.41% 119, % Bank Wealth Management Products 75, % -0.43% 81, % Other Equity Investments 5 82, % -0.05% 79, % Investment Properties 1, % 0.00% 1, % Cash and Others 6 69, % -1.85% 110, % Total 2,595, % 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, equity 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-restricted, bank wealth management products, 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 30 June 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 asset management plans, etc. 6. Cash and others include cash, cash at banks, short-term bank deposits and securities purchased under agreements to resell.

17 Steady Growth in Investment Yields Net Investment Yield Gross Investment Yield Comprehensive Investment Yield 4.71% 4.71% 4.38% 4.62% 4.58% 1.53% 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)]/181}

18 Progress in Diversified Investments Diversified Products Increased fixed income investments amid interest rate rise and increased allocation to long-term bonds and debt-type financial products Maintained a reasonable position in public equities and emphasized allocation to Hong Kong equities More high quality private equity investment opportunities in the area of health & pensions, supply side reforms, infrastructure, SOE mixed ownership reform, etc. Diversified Management Appointed over 40 third-party professional investment managers in the domestic market and overseas Over 70 portfolios of diversified strategies Diversified Locations Global allocations showing effect, drawing upon investment allocation opportunities arising from the prosperity of the European and US markets Investments across 45 countries 18

19 Credit Risk Control Credit Bonds 1 Non-standard Assets Non-standard Assets Always uphold a prudent investment strategy to strictly safeguard against credit risks > 95% > 97% > 87% AAA credit rating Note: 1. Short-term financing bonds excluded AAA external rating with guarantees and other credit enhancements Over 95% of credit bonds had AAA credit rating, while more than 97% of non-standard assets had AAA external rating, among which over 87% were guaranteed by commercial banks, centralowned enterprises and major local SOEs, or offered other credit enhancements 19

20 Embedded Value LI Mingguang, Vice President, Chief Actuary and Board Secretary

21 Components of Embedded Value Components of Embedded Value (30 June 2017) 800, , , , ,919 (35,630) 400, , , , , ,000 0 Adjusted Net Worth Value of In-force Business (before cost of required capital) Cost of Required Capital Embedded Value 21

22 Value of Half Year s Sales and Embedded Value Value of Half Year s Sales by Channel +31.7% 36, ,966 28, , % Embedded Value +7.0% 652, , , % 338,288 25, % 33, , , % Agent Channel Bancassurance Channel Group Channel Note: Value of half year s sales is after cost of required capital Value of in-force Business (after cost of required capital) Adjusted Net Worth 22

23 New Business Margin of Half Year s Sales Agent channel Bancassurance Channel Group Channel +5.07pps +1.59pps pp 44.06% 4.02% 1.23% New Business Margin of Half Year s Sales (by FYP) 38.99% 2.43% 0.87% pps +4.73pps pp New Business Margin of Half Year s Sales 44.16% 10.06% 14.79% 0.94% 1.25% (by APE) 39.05% Notes: FYP (First Year Premium) is the first year written premium for new business in calculating value of half year's sales; APE (Annual Premium Equivalent) is calculated as the sum of 100 percent of first year regular premiums and 10 percent of single premiums. 23

24 Embedded Value Movement Analysis Embedded Value Movement During 24,559 36, (2,824) (824 ) (7,594) (178) (6,977) 1, , ,520 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 or Losses Shareholder Dividends and Capital Injection Others EV at 30 June

25 Business & Operations LIN Dairen, President

26 Fast Growth in Insurance Business The Company proactively controlled the volume of single premiums. Both first-year regular premiums and renewal premiums were the growth drivers for gross written premiums. Gross Written Premiums Long-term First-year Premiums 292,461 23, % +10.3% 345,967 26, % 138, ,061 70, % 77,711 68, % 61, , % 180,495 First-year Regular Premiums Single Premiums (excluding short-term insurance) Renewal Premiums +39.0% 138, % 139, , ,495 Long-term First-year Premiums Renewal Premiums Short-term Premiums 26

27 Premium Structure Continued to Optimize Business Structure of Long-term FYP First-year Regular Premiums 50.55% 55.88% +10.8% 77, % 44.12% 70,107 Single Premiums First-year Regular Premiums 33, % 37,042 Business Structure of Long-term GWP 48.35% 56.48% 20, % 22, % Long-term FYP 43.52% Renewal Premiums 15, % 18,002 Less than 5 years 5-9 years 10-year-or-longer 27

28 Enhanced Scale and Quality of Sales Force Agent Channel Number of agents reached million Sales force quality was further enhanced. Quarterly average productive agents grew 39.4% compared with the end of last year Bancassurance Channel Total sales force million Sales force reached 261,000 Monthly average active insurance planners grew 26.5% yearon-year Group Channel Sales force reached 92,000 Productive agents increased 49.9% compared with the end of last year Note: Productive agent and active agent data is not covered by this disclosure. 28

29 Rapid Growth in Agent Channel In 2017, the Agent Channel accelerated regular premiums business, promoted diversified product sales, and emphasized growth of protection-oriented business. Agent Channel GWP grew rapidly and its business structure remained solid , ,704 57,286 Agent Channel GWP +28.0% % +31.1% +10.2% 227,375 63, ,543 Agent Channel FYRP 57,286 30, % +8.0% 63,118 33, , % 159,561 16, % 18,309 Renewal Premiums Short-term Premiums First-year Regular Premiums Single Premiums 9, % 11,327 Less than 5 Years 5-9 Years 10-year-or-longer 29

30 Optimized Business Structure of Bancassurance Channel The Bancassurace Channel deepened its transformation, proactively controlled single premiums, accelerated mid-to-long term FYRP development and further optimized its business structure. Bancassurance GWP Bancassurance FYRP % 89,922 92,877 11, % 13,388 12, % 19, ,851 2,517 3, % +17.9% +11.5% 13,388 2,968 4,044 65, % 59,667 5, % 6,376 Short-term Premiums Renewal Premiums First-Year Regular Premiums Single Premiums Less than 5 years 5-9 Years 10-year-or-longer 30

31 Steady Development of Group Channel The Group Channel continued to push forward its diversified development, emphasized business profitability and realized rapid growth in its short-term insurance business. Group Channel GWP Short-term Insurance of Group Channel +6.1% +15.7% 13,851 3,511 14,689 2,723 10,340 11,966 4,875 6,796 10,340 11,966 5,465 5,170 Short-term Insurance Long-term Insurance Short-term Health Insurance Short-term Accident Insurance 31

32 Surrender Rate and Persistency Rate Remained Stable Surrender Rate Persistency Rate +0.60pp 95% 90% 90.0% 91.6% 3.40% 85% 80% 87.0% 85.8% 2.80% 75% 70% 65% 60% 55% 50% 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 32

33 Built a Technology-driven China Life and Promoted Reform and Transformation Significant progress was made in the establishment of a new generation integrated business processing system, and the Company s two mobile internet platforms, China Life E-Bao and China Life E-Store, were upgraded and promoted. More than 100 applications related to marketing, services, operations and management have been launched so far, creating a strong momentum for the Company s sales transformation and improvement of services and operations China Life E-Bao / China Life E-Store Functions of the Applications Improve Operations and Services New policyholders followed up via WeChat accounted for 47% of the total Transform Sales Improve Services All branches realized mobile claim settlement For Clients For Sales Force Enhance Operations Strengthen Management Over 50% of policyholder services were realized online, including policy loan, transfer authorization and contact information update, etc. 33

34 Business Blueprint for 2H2017 Endeavor to Accelerate Growth Place development as the first priority, speed up growth of protection-oriented business Broaden customer base, promote integrated sales across channels Expand and Enhance the Sales Force Expand the size and improve the quality of our sales force, execute a differentiated team development strategy Focus on the growth of productive agents to strengthen our sales force s hard power Continue to Enhance Transformation Continuously optimize business mix, promote customer-oriented sales, and diversify product offering Build a professional and market-based investment management system, better serve the real economy, and deliver reasonable and stable investment returns Transform & Upgrade Promote the New Generation System Promote the New Generation Integrated Business Processing System to support sales, services and operations transformation Reshape the traditional business model and organizational structure Guard against Risks in a Strategic Manner Improve the internal control system, operate in compliance with laws and regulations Guard against risks and ensure healthy development of the Company 34

35 Q&A

36 Appendix

37 Honors and Awards in 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 Accorded with the 2017 Golden Bee CSR China Honor Roll Leading Enterprises Award at the 12th Golden Bee CSR International Forum 37

38 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 insurance projects and social healthcare scheme administration nationwide, covering 420 million people Donated RMB million through the China Life Foundation to related organizations, mainly to support targeted poverty alleviation projects and provide special donations for families who have lost their only children and impoverished women who suffer from breast cancer or cervical cancer Sponsored orphans from Wenchuan earthquake and Yushu earthquake, and the Zhouqu mudslide with RMB 2.33 million donations during the first half of 2017, held the 8th China Life Summer Camp, and provided longterm consistent subsidies and emotional care for disaster-stricken orphans 38

39 Sensitivity Analysis Restatement of Result Sensitivity Analysis Value of Half Year s Sales (after cost of required capital) Restatement of 1H 2016 result 28,335 Note: result is recalculated in accordance with the " CAA Standards of Actuarial Practice: Appraisal of Embedded Value" and using the same assumptions as at current valuation date. 39

40 Sensitivity Analysis Investment Return and Risk Discount Rate Value of In-force Business (after cost of required capital) 58,440 Value of Half Year s Sales (after cost of required capital) 338,288 15,935 6,348 (14,833) (58,164) 36,895 1,865 (1,730) (6,333) 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. 40

41 Sensitivity Analysis Operational Assumptions Sensitivity Analysis Results Value of In-force Business (after cost of required capital) Base 338,288 Morbidity Rates +/-10% -4,698 4,739 Lapse Rates +/-10% Mortality Rates for Non- Annuity Products +/-10% Mortality Rates for Annuity Products -/+10% -2,357 2,353 Expenses +/-10% -4,291 4,292 Note: Numbers may not be additive due to rounding. -6,000-4,000-2, ,000 4,000 6,000 41

42 Sensitivity Analysis Operational Assumptions (cont d) Sensitivity Analysis Results Value of Half Year s Sales (after cost of required capital) Base 36,895 Morbidity Rates +/-10% Lapse Rates +/-10% Mortality Rates for Non-Annuity Products +/-10% Mortality Rates for Annuity Products -/+10% Expenses +/-10% -2,071 2,071-2,500-2,000-1,500-1, ,000 1,500 2,000 2,500 Note: Numbers may not be additive due to rounding. 42