EFTA01125131.pdf

N,-,71,;?"717,r7 .rf rria?,Wix 7.4.44," 'CM ) 0( I 44 1117011e,if Afrgae 1, tlyk rpcbaw.nrAwAstitbrawrettr China Life Insurance Company Limited 2010 Annual Results March 23, 2011 EFTA01125131  MX , •Ymr,, -M 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 factors, which may cause the actual performance, financial condition or results of operations of the Company to 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 are included in the Company's Annual Report on Form 20-F for the fiscal year ended on December 31, 2009 filed with the U.S. Securities and Exchange Commission, or SEC, on April 29, 2010; 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. Vr- MatterME K'v• EFTA01125132 Section Business Review Section IV Investment Performance ::::ZESZVEKar% 2 EFTA01125133  n•:CaNOtrIM4st=tV'M? Section I: 2010 Highlights 06-4,0,wogq-e‘P.‘V,; -stft'M EFTA01125134 EFTA01125135  C....t.•••••••fterGrnaglAWO RMB mn 2009 Change Gross Written Premiums 318,229 275,970 +15.3% Gross Investment 60,921 Income Attributable to 33,626 32,881 E uit Holders Investment Assets 1,336,245 1,172,145 Equity Holders' 208,710 211,072 Equity Weighted Average ROE 17.13% -1.11 ppts isoeAccoasvaltsc, EV per Share 10.55 Yuan 10.09 Yuan +0.46 Yuan Note : Gross Investment Income (IFRS) = Investment Income + Net Realized Gains on Financier Assets + Net Fair Value Gains through Income - Business Tax and Extra Charges for Investment EFTA01125136 Further Enhanced Corporate Infrastructure, Co 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 support. Implemented nationwide centralized data management, providing integrated data support to both head office and branches, strengthened sales capabilities with trial launch of E-commerce sales support platform - %.# Upgraded customer service. Nation-wide implementation of customer service standards and further improvement of customer relationship management EFTA01125137 — ifignSilanagemerniidinfernal-Con ro Structure Board of Directors Compliance with SOX 404 from 2006 for five consecutive years -— - Audit Committee Risk Control Committee "2010 Internal Control Implementation Risk Management Manual completed with commitment Committee mechanism for internal control standards ,a3;261:1MISjgthi? Supervrtsiorn Dept Audit Dept. Risk precaution and screening rolled out by setting up risk identification, evaluation. and reporting system between headquarters and branches Internal Control & Risk Management Committee/ Internal Control & Compliance Dept. Credit rating classification for individual agents initiated Sub-branches Supervision Dept. / L&C Position EFTA01125138 Proactively Assuming Social Responsibilitie The largest life insurance sales force in China, creating a lot of job opportunities Proactive in assuming social responsibilities with due consideration to both social and Expanding the corporate interests New Rural Offering donations Cooperative for earthquake Medical Insurance relief and and sponsoring complementary earthquake medical insurance orphans 57-EMMIDE EFTA01125139  "Fortune 500" for 8 consecutive years, 118th in 2010, 8th among the FORTUNE named 54 Chinese enterprises en) Ot Yit ri3MA Wor14 fkiSISOMMT 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 FINANCIAL -111‘ffS "FT Global Top 500", 41st in place by market cap "Corporate Governance of the Year" and "100 Most Profitable FinanceAsia Companies" by FinanceAsia in 2010 aeh illtrilMIEN Enlisted three indices of Hang Seng Corporate Sustainability Index Series EFTA01125140  Opportunities 7 - / a 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, aging population , and control policies, posing challenges to our improvement of people's wellbeing in medium- business development, asset management to long-term and risk control ■ Improving regulatory regime creates favorable • Increasing competition exerts pressure for environment maintaining market leadership while optimizing • Improving investment environment and business mix diversified investment channels help insurers enhance their profitability • New bancassurance rules could generate uncertainties towards business development and regular premium growth in bancassurance EFTA01125141  1* Vj. Ali^4j‘ ..• ": %.• 1,e "1 A-poricigra Nvizezvice AfeAMMTMtslaTigitagatgaMSMS>. 47 51 oke.S1* Fiat a fir a rie./reM C China Lee Insurance Company Unice Section II: Business Review #1, set4SnRAZOTA.,";;;-• EFTA01125142  Life insurance premiums exhibit a high growth J 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 participating products reached a historical high The growth of sales force slowed down due to the deceleration of labor force growth, and , lack of competitiveness of insurance agent compensation FAT EFTA01125143 • • erliWta lliall EFTA01125144  2010 Single Premiums 5-9 Years, 28% iiiirtrovrrimatinottetturnifiti EFTA01125145  ate" xr„z era re Steady Growth in Individual, Group and Short-term 8 'individual Business RMB mn RMB mn RMB mn 14.975 473 190 2009 2010 2009 20'0 2009 2010 la First-year Premiums w Renewal Premiums w Accident Insurance w Short-term Health Insurance Wit let EFTA01125146  4,31,,t6,141111.44tRIVAI Stable Policy Persistency Experience In 2010, our surrender rate remained at a low level of 2.31%, successfully warding off abnormal surrender risks b 96% 3.50% - 3.30% 93.7% 94% 92.50/0 93.0% 04* 3.00% -I 92% 2.54% 90% 2.50% - 2.31°/0 87.4% 87.6% 88% 86.4% 86.1% 86% 2.00% 84% 1.50% 82% 2008 2009 2010 2007 2008 2009 2010 -4.14 Months J 26 Months Note :Surrender rate = Surrender amount during the year / (reserves for long-term health insurance and life insurance liabilities at the beginning of the period + premiums from life Insurance and long-term health insurance during the year) 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 EFTA01125147 Optimizing Key Distribution Channels Direct Sales C.,/ Improving overall Fast growth of short G 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 total managers and business, and premiums reducing less participated in Co Account managers and productive agents government-sponsored financial advisors Agent force business. Direct sales increased by 4.8% YoY decreased to representatives to 44,000 706,000 in 2010 increased by 11.8% YoY to 14,000 2 7,11,11‘a EFTA01125148  C 41130"-MlIFErktIS-MN.16.-I: 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 reform, enhancing infrastructure. and operating in compliance with regulations, following Product Strategy: China Life's unique Distribution Strategy: Focus on traditional and development path Individual agents as the key participating products while channel while leveraging moderately developing unit- complementary strength linked, universal and other from group and new investment type bancassurance channels products te, is EFTA01125149  Maitt •"v0ar.APAVAEORITKOW.oraPaRka.-' ISHOWare.W.WittsvAtragaMit O 41 Maw* fkittlia*FilltnW era Lae Insurance Co:110aq Limited Section III: Financial Summary ..1:1-zeWN EFTA01125150  Total Revenues RMB rnn RIO mn 275.077 2009 2010 MB elm 48.872 2009 2010 2009 2010 Investment Income Net Reataect Gams on Fmanaal Assets • Net Fag Valve Gags through Income EFTA01125151  4102".1417A NtAkti4i PR.::: • 7 1% 55% 6 5.3% 2009 2010 2C09 2010 Notes: Commissions and fees rata = Commission and fees / total revenue Administrative expenses ratio = Administrative expenses / total revenue EFTA01125152 Continued Increase in Profitability Net FiroliiAttribittable to Equity Holders RMB mn RMB Yuan 33.42E 17.13% 32.881 1.19 1.16 7:4 C 2009 2010 2009 2010 /4979;$4, EFTA01125153 RAW mn Solvency Adequacy Ratio 304% 2009 2010 RUB mn 211O72 208,710 2009 2010 2010 EFTA01125154 Section IV: Investment Performance EFTA01125155 aro mn 1,336,245 1,172,145 2007 2008 2009 2010 Note: Investment assets =Cash and Cash Equivalents+ Securities at fair value through income+Avallable•tor-sale Securities Deposits +Securities Purchased under Agreements to Resell Loans + Statutory Deposits Held-to-maturity Securities +Term EFTA01125156  v4:).v 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 RPM mn 7.00% 6.00% 5.73% 64,151 60,92: 5.00% 31,138 4.00% 3.00% 2.00% 2008 2009 2010 2008 2009 2010 Gross Investment Yietd(IFRS) = (Investment Income + Net Realized Gains on Financial Assets + Net Fair Value Gains through Charges for InvesimentY((Initial Investment assets + End term Investment assets)/2) Income — Business Tax and Extra EFTA01125157  IIParairilatemitil* Bond Yield Curve 42 42 " 41 SS Proactively allocated to negotiated IS -IS deposits with floating rate and high-yield II credit bonds, continued to adjust Is : 1,W; dy•' investment portfolio and improved IA 07 f I., existing portfolio yield 03 090.4. 09 *SIO 19463, 094431 094031 041.11 104-a O** 10040 114041 141021 1ON3I 14S* Mn. 44.1Caw 142.2 Cove.* kW Yea CoinI sty Cows"MS VIM 0.44 %Inn inisbok 12:401206 0022 'Test 7 town, b 44I CUNT 7,41% InYbangt log 11•11“en. 7Youti Cows led US Cuss 10 Von Mots* Mal Yd.Gat Wenn Followed up policies and liquidity 50424221 Equity changes, seized market timing and Investment structured opportunities, strategically SSE Composite Index improved investment allocation ..0.0u:la n,.•> . . . EPS ices.ot-o.iitatsif3) I Expanded investment channels, invested in 4 floating rate debt plans including Alternative "Pudong Development", avoided interest hike risk; participated in GDB secondary Investment issuance, built up real estate and PE investment capabilities and actively sought potential investment targets Soutre.tomberg & 146nd EFTA01125158  December 31, 2010 December 31, 2009 Change (ppts) Fixed-income 45.51% 49.68% -4.17 Securities eiii*4.00fte :ai”fist4:**SW/040 Asiefive.kg,d(,?, Term".Deposits 33.05% 29.43% +3.62 g.;0 9#1 4 3 Equities Cash & Cash Equivalents EFTA01125159  ,?1,..• N."! ' . tr ,‘,a,M35.2elaTatibff.evaaleIN.2631 . O 42 %Ftwatt$3..urgeltra China Lie Insurance Company UrnIte0 Section V: Embedded Value Jut EFTA01125160 RMB inn 350,000 300,000 250,000 200,000 150,000 100,000 50,000 Adjusted Net Worth In-force Business Value Cost of Solvency Margin Embedded Value EFTA01125161  Growth of EV and Value of One-Year's Sales Rile rnn Rhea mn 2009 2010 Adjusted Net Worth alln-ferce Business Value(After cost of solvency margin) 'Note: Numbers may not be additive due to rounding. sit7faiMIN EFTA01125162 Embedded Value Movement Analysis RMB mn 350.000 413 iebiA . (3) (9,297) 300.000 (1.937) (391) 109 (19,785) 250.000 200,000 150,000 EV at Expected Value of One Operating Investment Methodology Market Value Exchange Shareholder Others EV at Beginning of Returns Year's Sales Experience Experience Model and Adjustments Gains or Dividends 2010 December Variance Variance Assumptions Losses 31, 2010 Changes MEI EFTA01125163 Sensitivity Analysis — Investment Return and Discount Rate kr tiorttnadtiftefikpinliCtaglid RMB inn RMB mn 182.023 22,667 la7. 12P, 20,959 19,839 153,444 18.794 145,375 125.022 Investment Risk Adjusted Base Case Risk Adjusted Investment Investment Risk Adjusted Base Case Risk Adjusted Investment Yield Discount Discount Yield Yield Discount Discount Yield -10% rate=11.5% Rate= +10% -10% rate=11.5% Rate=10.5% +10% 10.5% EFTA01125164 Sensitivity Analysis — Operational And Othe n 4.1-4.171ENtrarirS011-4-C3 Assumptions RIABmn Value of in-force business after Value of one-year's sales after the cost of solvenc .mar! in the cost of solvenc mar • in !Base case scenario 153.444 19,839 !Cost ratio +10% 151,002 18,014 Cost ratio -10% 155,882 21,664 !Mortality ratio for non-annuity products + 10%. Mortality ratio for annuity products -10% Itl ortality ratio for non-annuity products - 10%, Mortality 151,791 19,757 155.118 19,920 ratio for annuity products + 10% !Surrender ratio + 10% 152.080 19,756 'Surrender ratio - 10% 154,857 19,916 'Morbidity Ratio +10% 151,609 19,756 "Morbidity Ratio -10% 155,294 19,922 Claim ratio for short-term insurance + 10% 153,162 19,249 [Cairn ratio for short-term insurance - 10% 153.725 20,429 Solvency Margin at 150% of Statutory Minimum 139,372 17,865 Projected taxable income is based on the accounting profit calculated in accordance with Provisions on 148,722 19,990 Accounting Treatment of Insurance Contracts" EV assumptions applied in 2009 153,452 19,809 EFTA01125165  C OCA.M111 Thank you! EFTA01125166