CHINA LIFE INSURANCE COMPANY LIMITED ANNOUNCES 2021 ANNUAL RESULTS (H SHARES)

Rhea-AI Summary

China Life Insurance Company Limited (LFC) reported a net profit of RMB50,921 million for the year ending December 31, 2021, a 1.3% increase year-on-year. Total assets rose to RMB4,891,085 million, up 15.0%, while the company maintained strong market presence with gross written premiums of RMB618,327 million, a 2.5% increase. However, new policy premiums decreased by 9.3% to RMB175,864 million amid challenging market conditions. The board has proposed a final dividend of RMB0.65 per share, subject to approval at the upcoming annual general meeting.

Positive

• Total assets increased to RMB4,891,085 million, up 15.0%.
• Net profit attributable to equity holders rose to RMB50,921 million, up 1.3%.
• Gross written premiums totaled RMB618,327 million, an increase of 2.5%.
• Proposed final dividend of RMB0.65 per share.

Negative

• New policy premiums decreased by 9.3% year-on-year.
• First-year regular premiums fell by 14.7%.
• Value of one year's sales declined by 23.3%.

HONG KONG, March 24, 2022 /PRNewswire/ -- China Life Insurance Company Limited (SSE: 601628, SEHK: 2628, NYSE: LFC) announces the audited consolidated results of the Company (China Life Insurance Company Limited and its subsidiaries) for the year ended 31 December 2021 (the "Reporting Period") prepared under the International Financial Reporting Standards today.

Highlights As at the end of the Reporting Period, the Company's total assets reached RMB4,891,085 million, an increase of 15.0% from the end of 2020. The Company's embedded value reached RMB1,203,008 million, an increase of 12.2%, maintaining the leading position in the industry. During the Reporting Period, the Company's total revenues were RMB824,930 million, an increase of 2.5% year on year; the Company's gross written premiums were RMB618,327 million, maintaining industry leadership position; the value of one year's sales of the Company was RMB44,780 million. As at the end of the Reporting Period, the Company's investment assets reached RMB4,716,401 million, an increase of 15.2% from the end of 2020. During the Reporting Period, the gross investment yield was 4.98%, the net investment yield was 4.38%. The comprehensive investment yield taking into account the current net fair value changes of available-for-sale securities recognized in other comprehensive income was 4.87%. During the Reporting Period, net profit attributable to equity holders of the Company was RMB50,921 million. The board of directors of the Company recommended the payment of a final dividend of RMB0.65 per share (inclusive of tax). The foregoing profit distribution plan is subject to the approval by the 2021 Annual General Meeting to be held on 29 June 2022 (Wednesday).

Review of Business Operations in 2021

In 2021, the worldwide COVID-19 pandemic continued to evolve, and the domestic economy was facing triple pressures of shrinking demands, supply disruption, and weakened expectations of growth amid a complicated and challenging international environment. Under the unprecedented pressures, such as the decelerated release of insurance demands and decline of sales force, the growth of life insurance industry further slowed down in terms of premiums. In addition, the insurance industry regulator continued to promote the return to its original role by the insurance sector, further improved system building, and bolstered regulations in the areas of insurance product management, sales channel development, market behaviors, operations and services as well as corporate governance, with an aim at the high-quality development of the industry.

During the Reporting Period, the Company adhered to the strategic core of "Three Major Transformations, Dual Centers and Dual Focuses, Asset-liability Interaction," and upheld the operational guideline of "prioritizing business value, strengthening sales force, achieving stable growth, upgrading technology, optimizing customer services and guarding against risks." By concentrating efforts and overcoming difficulties with strong resilience, the Company steadfastly promoted its high-quality development while proceeding with routine pandemic prevention and control, and achieved stable and sound business operations as a whole, with its market leading position further solidified. The quality and efficiency of its operations and services were significantly improved, digital transformation was sped up, and its comprehensive strengths were greatly enhanced.

During the Reporting Period, while the life insurance industry was under pressure and the growth of premiums continued to slow down, the Company prioritized business value and pushed forward transformation and upgrade, and maintained the industry leadership position in both business scale and value. In 2021, the Company's gross written premiums amounted to RMB618,327 million, an increase of 1.0% year on year, and renewal premiums reached RMB442,463 million, an increase of 5.8% year on year. As at the end of the Reporting Period, the embedded value of the Company reached RMB1,203,008 million, an increase of 12.2% from the end of 2020. Due to the impact of the pandemic and the slowdown in the release of demands for insurance consumption, premiums from new policies were RMB175,864 million, a decrease of 9.3% year on year. The first-year regular premiums were RMB98,410 million, a decrease of 14.7% year on year; in particular, first-year regular premiums with a payment duration of ten years or longer were RMB41,682 million, a decrease of 26.1% year on year. In 2021, the value of one year's sales of the Company was RMB44,780 million, a decrease of 23.3% year on year. The number of long-term in-force policies was 323 million, an increase of 1.9% from the end of 2020. The surrender rate was 1.20%, an increase of 0.11 percentage point year on year.

During the Reporting Period, in the face of a complex and changing market situation, the Company always maintained its strategic consistency, reinforced asset-liability management, firmly implemented its medium- to long-term strategic plan of asset allocation, and continuously optimized its allocation management by centering on the investment value creation chain. In 2021, the Company flexibly made tactical allocations in response to the market change, taking into account short-term income stability, prevention of key risks, and long-term opportunities. The gross investment income amounted to RMB214,057 million, an increase of 7.8% year on year, and the gross investment yield was 4.98%.

In 2021, the Company maintained stable and sound business operations and achieved satisfactory results in investment. It updated the discount rate assumptions for reserves of traditional insurance contracts based on market information as at the date of the statement of financial position. Taking the above factors into account, net profit attributable to equity holders of the Company was RMB50,921 million, an increase of 1.3% year on year.

Insurance Business

During the Reporting Period, gross written premiums from the life insurance business of the Company amounted to RMB481,311 million, rising by 0.1% year on year, gross written premiums from the health insurance business reached RMB120,609 million, rising by 4.8% year on year, and gross written premiums from accident insurance business were RMB16,407 million, a year-on-year decrease of 1.1%.

In 2021, facing persistent impacts of the COVID-19 pandemic and a challenging market environment, the industry faced unprecedented pressure for transformation. The Company continued to deepen the customer-centric sales deployment of "Yi Ti Duo Yuan", focusing on business restructuring and making breakthroughs, and stressing precise allocation of resources on the basis of standardized management. The individual agent business sector consistently prioritized business value and further promoted operation differentiation between sales teams. The diversified business sector achieved progress while maintaining stability and coordinated effectively with the individual agent business sector by concentrating on specialized operations, quality and efficiency enhancement, and transformation and innovation. As at the end of the Reporting Period, the number of total sales force of the Company was approximately 890,000.

Individual Agent Business Sector

The individual agent business sector pursued high-quality development, consistently deepened business restructuring, and achieved steady business development. During the Reporting Period, gross written premiums from the sector were RMB509,489 million, a decrease of 0.3% year on year. Renewal premiums amounted to RMB407,973 million, an increase of 4.3% year on year. First-year regular premiums were RMB82,254 million, a decrease of 17.4% year on year, of which first-year regular premiums with a payment duration of ten years or longer were RMB41,580 million, a decrease of 26.0% year on year. In 2021, the value of one year's sales of the sector was RMB42,945 million, a decrease of 25.5% year on year, and new business margin of one year's sales by annual premium equivalent was 42.2%, a decrease of 5.9 percentage points year on year.

Affected by sporadic outbreaks of the pandemic and the challenging market environment, the whole industry had difficulties in agent recruitment and retention, and the size of sales force consequently declined to a certain extent. The Company adhered to the sales force development strategy of improving quality with stabilised quantity, and made great efforts in enhancing its quality. As at the end of the Reporting Period, the number of agents of the sector was 820,000, including 519,000 agents from the general sales team and 301,000 agents from the upsales team. The monthly average productive agents decreased compared with the previous year, however, the number of high-performance agents was stable, and the foundation of sales force remained solid. Although the sector's development was under pressure, the Company adhered to the strategy of "productive agents-driven business" and made solid stride in business restructuring. The 4.0 version of the regular agent management system was fully promoted and implemented, and transformation of sales team was pushed forward aiming at becoming more specialized and professional.

Diversified Business Sector

Pushing forward "Dingxin Project" deployment in great depth, the diversified business sector concentrated on professional operation as well as quality and efficiency enhancement, and actively developed the bancassurance, group insurance, and health insurance businesses.

Bancassurance Channel   With equal emphasis on business scale and value, the bancassurance channel consistently pushed forward sound and healthy development. During the Reporting Period, gross written premiums from the channel amounted to RMB49,326 million, an increase of 19.6% year on year. First-year regular premiums were RMB16,110 million, an increase of 2.3% year on year; in particular, first-year regular premiums with a payment duration of five years or longer were RMB6,743 million, an increase of 35.3% year on year. Renewal premiums amounted to RMB32,792 million (a year-on-year increase of 30.6%), accounting for 66.48% of gross written premiums from the channel (a year-on-year increase of 5.59 percentage points). The bancassurance channel constantly enhanced the professional service support capability of the sales team, and the quality of which was steadily improved. As at the end of the Reporting Period, the number of the channel's account managers was 25,000, the quarterly average active managers remained stable, and the productivity per manager increased continuously.

Group Insurance Channel   The group insurance channel insisted on the coordination of business scale and profitability and achieved stable development in all business lines. During the Reporting Period, gross written premiums from the channel were RMB29,162 million, an increase of 1.0% year on year. Short-term insurance premiums from the channel were RMB25,694 million, an increase of 2.9% year on year. As at the end of the Reporting Period, the number of group insurance sales representatives was 45,000, among which the high-performance personnel increased by 13.0% from the end of 2020.

Other Channels   In 2021, gross written premiums from other channels were RMB30,350 million, a decrease of 2.4% year on year. The Company proactively participated in a variety of government-sponsored health insurance businesses. As at the end of the Reporting Period, the Company carried out over 200 supplementary major medical expenses insurance programs, covering 350 million people. It also undertook over 400 health care entrusted programs, providing services to more than 100 million people; 61 long-term care insurance programs in 17 provinces and cities, covering 23 million people; and 170 supplementary medical insurance programs in 22 provinces and cities, covering 91 million people. The Company also participated in the construction of a multi-level social security system and implemented 54 city-customized commercial medical insurance projects in 15 provinces and cities, covering more than 10 million people.

In addition, the Company greatly developed the online insurance business and provided customers with high-quality service experience through online-to-offline sales and online direct sales. In full compliance with the regulatory requirements of China Banking and Insurance Regulatory Commission (the "CBIRC") with respect to the online insurance business, the Company optimized its online organization and business system, featuring centralized operation and unified management, and offered a variety of products for different scenarios and customers. During the Reporting Period, the Company's online insurance business grew rapidly, which was mostly achieved through online-to-offline integration with sales channels of individual agents, bancassurance and group insurance. Total premiums under the CBIRC caliber were RMB34,969 million, reaching a record high once again. In the future, the Company will further strengthen the online-to-offline integration of its online insurance business, actively explore on the dedicated online life insurance business, and provide customers with more convenient online insurance services.

Integrated Financial Sector

Being customer-centric, the Company fully leveraged the resource advantages of the fellow members of China Life Insurance (Group) Company and actively engaged in the construction of a "Life Insurance plus" integrated financial ecosystem, turning the integrated financial advantages into a driving force for the high-quality development of the Company. In 2021, due to the impact of the comprehensive reform on auto insurance and the slower growth of this sector, premiums from China Life Property and Casualty Insurance Company Limited ("CLP&C") cross-sold by the Company were RMB21,107 million, with the number of insurance policies increased by 18.0% year on year. Additional first-year receipts of enterprise annuity funds and pension security products of China Life Pension Company Limited cross-sold by the Company were RMB28,197 million. The Company entrusted China Guangfa Bank Co. Ltd. ("CGB") to sell its bancassurance products, with the first-year regular premiums recording a relatively stable growth. The number of new debit cards and credit cards jointly issued by the Company and CGB reached 1,224,000. Meanwhile, in order to satisfy the diverse needs of its customers, the Company worked with CGB and CLP&C to carry out various operation activities to provide customers with a series of quality financial and insurance service solutions.

By integrating online and offline as well as internal and external healthcare resources, the Company improved its health management and service capabilities and actively participated in the Healthy China program. China Life Inclusive Healthcare Service Platform continued to diversify its services while upgrading its system functions. As at the end of the Reporting Period, more than a hundred types of services were available on the platform, and the size of the accumulated registered users of the platform led the industry with an increase of over 35% from the end of 2020. The Company continued to formulate the China Life aged care system and deployed towards high-quality resources in the aged care industry such as rehabilitation, medical care, hospital, health care big data, and health industrial parks through the China Life Integrated Aged Care Fund. In 2021, the China Life Integrated Aged Care Fund reserved a batch of pension and retirement projects that could meet the diversified and multi-level demands of customers in strategic regions such as Beijing-Tianjin-Hebei, the Yangtze River Economic Belt, and the Guangdong-Hong Kong-Macao Greater Bay Area.

Insurance Products

Adhering to the customer-centric product development concept and the original role of insurance, the Company fully implemented major national strategies including Healthy China program, proactively responding to population aging and rural revitalization, accelerated insurance product innovation and advanced the supply-side reform of insurance products to create a diversified product system.

By closely integrating the Healthy China program with its own business development, the Company consistently optimized and upgraded its health insurance products and strengthened the innovative research and development of illness insurance products and medical insurance products, etc., in terms of the insured customer group, scope of cover, and protection functions, so as to offer diversified health protections. The Company actively served the national strategy of responding to population aging and deepened its research in insurance coverage and benefits. By leveraging the advantages of the long-term risk protection of insurance products and the long-term application of insurance fund, the Company launched the exclusive commercial pension insurance and special annuity insurance products for the elderly customers. It also developed exclusive insurance products to facilitate rural revitalization strategy, proactively playing its role in protecting people's well-being.

In 2021, the Company newly developed and upgraded a total of 160 products, including 12 life insurance products, 138 health insurance products, two accident insurance products, and eight annuity insurance products. Out of these products, 144 were protection-oriented insurance products, and 16 were long-term savings insurance products.

Investment Business

In 2021, domestic bond yields fluctuated within a tight range, which rose at first and then fell down, and the interest rate pivot trended downwards on the whole. The A-share market was volatile, with significant sector divergence. The Company always adhered to its strategic consistency, prioritized asset-liability management in using insurance funds, firmly implementing its medium- to long-term strategic plan of asset allocation, and making flexible tactical allocations in response to the market change. Firstly, the Company seized the opportunity of a relatively high interest rate in the first half of 2021 and increased allocation to assets with long durations such as government bonds to further narrow the duration gap. Secondly, the Company prudently controlled equity risk exposures in open market to reduce portfolio volatility and secure the investment gains. Thirdly, the Company strengthened the innovation in alternative investment models, and positioned for sectors with prime prospects to establish a diversified investment portfolio.

As at the end of the Reporting Period, the Company's investment assets reached RMB4,716,401 million, an increase of 15.2% from the end of 2020. Among the major types of investments, the percentage of investment in bonds rose to 48.20% from 41.97% as at the end of 2020, the percentage of term deposits changed to 11.23% from 13.32% as at the end of 2020, the percentage of investment in debt-type financial products changed to 9.41% from 11.08% as at the end of 2020, and the percentage of investment in stocks and funds (excluding money market funds) changed to 8.75% from 11.31% as at the end of 2020.

In 2021, the Company's net investment income was RMB188,770 million, rising by 16.0% year on year, an increase of RMB25,987 million from 2020. Since the Company consistently increased its allocation to bonds with long durations in recent years, and the income from investments in associates and joint ventures also increased, the net investment yield was 4.38% for 2021, up by 4 basis points from 2020. The gross investment income of the Company reached RMB214,057 million, rising by 7.8% year on year, an increase of RMB15,461 million from 2020. Gross investment yield was 4.98%, down by 32 basis points from 2020. Affected by the fluctuation in the equity market, the comprehensive investment yield taking into account the current net fair value changes of available-for-sale securities recognized in other comprehensive income was 4.87%, down by 146 basis points from 2020.

2022 Outlook

For the year 2022, by sticking to the original role of insurance, we will consistently deepen the supply-side reforms and improve our capacity of insurance service supply with steady progress. Besides, we will lead the high-quality development of the industry with our own high-quality development, aiming to building a world-class life insurance company and rewarding the shareholders and people from all walks of life with satisfactory operating performances.

About China Life Insurance Company Limited

China Life Insurance Company Limited is a life insurance company established in Beijing, China on 30 June 2003 according to the "Company Law of the People's Republic of China" and the "Insurance Law of the People's Republic of China". The Company was successfully listed on the New York Stock Exchange, the Hong Kong Stock Exchange and the Shanghai Stock Exchange on 17 and 18 December 2003, and 9 January 2007, respectively. The Company's registered capital is RMB28,264,705,000.

The Company is a leading life insurance company in China and possesses an extensive distribution network comprising exclusive agents, direct sales representatives, and dedicated and non-dedicated agencies. The Company is one of the largest institutional investors in China, and becomes one of the largest insurance asset management companies in China through its controlling shareholding in China Life Asset Management Company Limited. The Company also has controlling shareholding in China Life Pension Company Limited.

Our products and services include individual life insurance, group life insurance, and accident and health insurance. The Company is a leading provider of individual and group life insurance, annuity products and accident and health insurance in China. As at 31 December 2021, the Company had approximately 323 million long-term individual and group life insurance policies, annuity contracts, and long-term health insurance policies in force. We also provide both individual and group accident and short-term health insurance policies and services.

The 2021 consolidated financial statements of the Company prepared in accordance with the International Financial Reporting Standards have been audited by PricewaterhouseCoopers based on the International Standards on Auditing and PricewaterhouseCoopers has issued standard unqualified opinions on the 2021 consolidated financial statements.

Forward-looking statements

Certain statements contained in this press release may be viewed as "forward-looking statements" as defined by Section 27A of the U.S. Securities Act of 1933 and Section 21E of the 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 2020 filed with the U.S. Securities and Exchange Commission, or SEC, on 29 April 2021; and in the Company's other filings with the SEC. You should not place undue reliance on these forward-looking statements. Unless otherwise stated, all information provided in this press release is as of the date of this press release, 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 press release is based on public information released by China Banking and Insurance Regulatory Commission.

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SOURCE China Life

FAQ

What were the total assets of China Life Insurance Company Limited as of December 31, 2021?

The total assets reached RMB4,891,085 million as of December 31, 2021.

What was the net profit for China Life Insurance Company Limited in 2021?

The net profit attributable to equity holders was RMB50,921 million, a 1.3% increase from the previous year.

What is the proposed dividend per share for China Life Insurance Company Limited for 2021?

The proposed final dividend is RMB0.65 per share, subject to approval at the annual general meeting.

What was the gross written premium for China Life Insurance Company Limited in 2021?

The gross written premiums amounted to RMB618,327 million, increasing by 2.5% year-on-year.

How much did new policy premiums decrease in 2021 for China Life Insurance Company Limited?

New policy premiums decreased by 9.3% year-on-year.