The Company is a life insurance company established in Beijing, China on 30 June 2003 according to
the Company Law and 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 2016, the Company had approximately
246 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.
Definitions and Material Risk Alert
Company Profile
Financial Summary
Chairman’s Statement
Management Discussion and Analysis
Report of the Board of Directors
Report of the Supervisory Committee
Significant Events
Changes in Ordinary Shares and Shareholders Information
Directors, Supervisors, Senior Management and Employees
Corporate Governance
Internal Control and Risk Management
Honors and Awards
Independent Auditor’s Report
Consolidated Statement of Financial Position
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Embedded Value
China Life Insurance Company Limited Annual Report 2016
Contents
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227
1
China Life Insurance Company Limited Annual Report 2016
Definitions and Material Risk Alert
In this annual report, unless the context otherwise requires, the following expressions have the following meanings:
The Company1
China Life Insurance Company Limited and its subsidiaries
CLIC
AMC
China Life Insurance (Group) Company, the controlling shareholder of
the Company
China Life Asset Management Company Limited, a non-wholly owned
subsidiary of the Company
Pension Company
China Life Pension Company Limited, a non-wholly owned subsidiary of
the Company
AMP
CLWM
CLP&C
CLI
CIRC
CSRC
HKSE
SSE
Company Law
Insurance Law
Securities Law
China Life AMP Asset Management Company Limited, an indirect non-
wholly owned subsidiary of the Company
China Life Wealth Management Company Limited, an indirect non-
wholly owned subsidiary of the Company
China Life Property and Casualty Insurance Company Limited, a non-
wholly owned subsidiary of CLIC
China Life Investment Holding Company Limited, a wholly-owned
subsidiary of CLIC
China Insurance Regulatory Commission
China Securities Regulatory Commission
The Stock Exchange of Hong Kong Limited
Shanghai Stock Exchange
Company Law of the People’s Republic of China
Insurance Law of the People’s Republic of China
Securities Law of the People’s Republic of China
Articles of Association
Articles of Association of China Life Insurance Company Limited
China or PRC
For the purpose of this report, “China” or “PRC” refers to the People’s
Republic of China, excluding the Hong Kong Special Administrative
Region, Macau Special Administrative Region and Taiwan region
RMB
Renminbi Yuan
Material Risk Alert:
The Company has stated in this report the details of its existing risks including risks relating to macro trends, risks
relating to business and risks relating to investments. Please refer to the analysis of the risks which the Company may
face in its future development in the section headed “Management Discussion and Analysis”.
1
Except for “the Company” referred to in the Consolidated Financial Statements.
2
China Life Insurance Company Limited Annual Report 2016
Company Profile
Registered Name in Chinese:
中國人壽保險股份有限公司（簡稱「中國人壽」）
Registered Name in English:
China Life Insurance Company Limited (“China Life”)
Legal Representative: Yang Mingsheng
Board Secretary: Zheng Yong
Office Address: 16 Financial Street, Xicheng District, Beijing, P.R. China
Telephone: 86-10-63631241
Fax: 86-10-66575112
Email: ir@e-chinalife.com
Securities Representative: Li Yinghui
Office Address: 16 Financial Street, Xicheng District, Beijing, P.R. China
Telephone: 86-10-63631191
Fax: 86-10-66575112
Email: liyh@e-chinalife.com
* Ms. Li Yinghui, Securities Representative of the Company, is also the main contact person of the external
Company Secretary engaged by the Company
Registered Office Address:
16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Current Office Address:
16 Financial Street, Xicheng District, Beijing, P.R. China 100033
Telephone: 86-10-63633333
Fax: 86-10-66575722
Website: www.e-chinalife.com
Email: ir@e-chinalife.com
3
China Life Insurance Company Limited Annual Report 2016
Company Profile
Hong Kong Office:
Office Address: 16/F, Tower A, China Life Centre, One Harbour Gate,
18 Hung Luen Road, Hung Hom, Kowloon, Hong Kong
Telephone: 852-29192628
Fax: 852-29192638
Media for the Company’s A Share Disclosure:
China Securities Journal
Shanghai Securities News
Securities Times
CSRC’s Designated Website for the Company’s Annual Report Disclosure:
www.sse.com.cn
The Company’s H Share Disclosure Websites:
HKExnews website at www.hkexnews.hk
The Company’s website at www.e-chinalife.com
The Company’s Annual Reports may be obtained at:
12/F, China Life Plaza, 16 Financial Street, Xicheng District, Beijing, P.R. China
Stock Information:
Stock Type
Exchanges on which the
Stocks are Listed
Stock Short Name
Stock Code
A Share
Shanghai Stock Exchange
China Life
601628
H Share
The Stock Exchange of
Hong Kong Limited
China Life
2628
ADR
New York Stock
Exchange
–
LFC
H Share Registrar and Transfer Office:
Computershare Hong Kong Investor Services Limited
Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong
Depositary of ADR:
Deutsche Bank
60 Wall Street, New York, NY 10005
Domestic Legal Adviser:
King & Wood Mallesons
International Legal Advisers:
Latham & Watkins
Debevoise & Plimpton LLP
Auditors of the Company:
Domestic Auditor: Ernst & Young Hua Ming LLP
Address: Level 16, Ernst & Young Tower, Oriental Plaza, No.1 East Changan Avenue,
Dongcheng District, Beijing, P.R. China
Name of the Signing Auditors: Zhang Xiaodong, Wu Jun
International Auditor: Ernst & Young
Address: 22/F, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong
4
China Life Insurance Company Limited Annual Report 2016
Financial Summary
Under International Financial
Reporting Standards (IFRS)
RMB million
2016
2015
Change
2014
2013
2012
540,781
426,230
522,794
407,045
23,842
507,449
362,301
463,492
352,219
45,931
6.6%
17.6%
12.8%
15.6%
-48.1%
440,766
330,105
404,275
315,294
40,402
417,883
324,813
391,557
312,288
29,451
371,485
322,126
363,554
300,562
10,968
19,127
34,699
-44.9%
32,211
24,765
11,061
18,741
89,098
34,514
(18,811)
-45.7%
N/A
32,211
78,247
24,765
68,292
11,061
132,182
2,696,951
2,453,283
2,389,303
303,621
2,448,315
2,287,639
2,122,101
322,492
10.2%
7.2%
12.6%
-5.9%
2,246,567
2,100,870
1,959,236
284,121
1,972,941
1,848,681
1,750,356
220,331
1,898,916
1,790,838
1,675,815
221,085
0.66
10.74
1.22
11.41
-45.7%
-5.9%
1.14
10.05
0.88
7.80
3.15
(0.67)
N/A
2.77
2.42
0.39
7.82
4.68
6.16
88.59
4.56
11.56
86.68
6.39
decrease of 5.40
percentage points
increase of 1.91
percentage points
decrease of 1.83
percentage points
12.83
11.22
5.38
87.21
88.72
88.25
5.39
4.88
2.80
Major Financial Data1
For the year ended
Total revenues
Net premiums earned
Benefits, claims and expenses
Insurance benefits and claims expenses
Profit before income tax
Net profit attributable to equity holders
of the Company
Net profit attributable to ordinary share holders
of the Company
Net cash inflow/(outflow) from operating activities
As at 31 December
Total assets
Investment assets2
Total liabilities
Total equity holders’ equity
Per share (RMB)
Earnings per share (basic and diluted)3
Equity holders’ equity per share
Net cash inflow/(outflow) from operating
activities per share
Major financial ratio
Weighted average ROE (%)
Ratio of assets and liabilities4 (%)
Gross investment yield5 (%)
Notes:
1.
Net profit refers to net profit attributable to equity holders of the Company, while equity holders’ equity refers to equity
attributable to equity holders of the Company.
2.
Investment assets = Cash and cash equivalents + Securities at fair value through profit or loss + Available-for-sale securities +
3.
4.
5.
Held-to-maturity securities + Term deposits + Securities purchased under agreements to resell + Loans + Statutory deposits -
restricted + Investment properties
In calculating “Earnings per share (basic and diluted)”, the tail differences of the basic figures have been taken into account.
Ratio of assets and liabilities = Total liabilities/Total assets
Gross investment yield = (Net investment income + Net realised gains/(losses) on financial assets + Net fair value gains/(losses)
through profit or loss)/((Investment assets at the beginning of the period + Investment assets at the end of the period)/2). The
figures as at the end of the past years were adjusted on the same basis.
5
China Life Insurance Company Limited Annual Report 2016
Chairman’s Statement
Yang mingsheng, Chairman
2016 OvervIew: GrOwth, DeveLOpment anD BreakthrOuGh
The year 2016 marked the beginning of the “13th Five-Year Plan” and was also a year in which the Company achieved
fruitful results with pioneering spirit. Specifically, we achieved good results, emphasizing on the protection function
of insurance, adhering to the operating guideline of “prioritizing value, strengthening sales force, optimizing business
structure, achieving stable growth and safeguarding against risks”, and actively promoted supply-side reform. We
achieved an incredible result not only in the history of the Company but also in the history of the industry.
new records for business development. During the Reporting Period, the Company’s gross written premiums were
RMB430,498 million, an increase of 18.3% year-on-year, the highest growth since 2009, making the Company the first
and the sole insurance company with premiums exceeding RMB400,000 million in China. First-year regular premiums
were RMB93,945 million, an increase of 51.8% year-on-year, and first-year regular premiums with ten years or longer
payment duration were RMB51,378 million, an increase of 59.0% year-on-year, both indicators setting record highs.
Premiums from short-term insurance were RMB40,060 million, an increase of 23.7% year-on-year. Renewal premiums
were RMB223,502 million, exceeding RMB200,000 million for the first time, realizing an increase of 16.6% year-on-
year, and setting a record high since 2012.
Great breakthrough in business restructuring. The Company continued reducing its single premium business in the
bancassurance channel and focused on accelerating the growth of first-year regular premium business. First-year regular
premiums and first-year regular premiums with ten years or longer payment duration doubled over the past two years.
6
China Life Insurance Company Limited Annual Report 2016
Chairman’s Statement
The percentage of first-year regular premiums in long-term new policy premiums was 56.28%, an increase of 12.06
percentage points year-on-year. The first-year regular premiums surpassed single premiums for the first time since
the listing of the Company. Of these, the percentage of first-year regular premiums with ten years or longer payment
duration in first-year regular premiums was 54.69%, an increase of 2.49 percentage points year-on-year. Along with the
high growth of the businesses, the premium payment duration was also lengthened, resulting in the initial establishment
of a sustainable development model with first-year premiums driven by first-year regular premiums and gross written
premiums driven by renewal businesses. Meanwhile, the Company pushed forward the product diversification strategy,
promoted product innovation, put more efforts into developing protection type businesses, and continually optimized
the business structure. The value of one year’s sales was RMB49,311 million, an increase of 56.4% year-on-year, with
the value doubled over the past two years.
New enhancement in competitiveness. “No matter how long and difficult the road is, one can reach the destination
with steady walks.” Being market-oriented, centering around the development of individual insurance as the guideline
and pushing forward the three core strategies of developing individual business, focusing on large-and medium-sized
cities and reinforcing rural business development with concerted efforts, the Company was committed to improving
sustainable development capability and the competitiveness in key markets. With a leading market share in terms of
gross written premiums, the Company also took the lead in terms of first-year regular premiums and sales force in the
exclusive agent channel whose core role has been brought into full play. Competitive landscape in large- and medium-
sized cities has continued to improve and first-mover advantage in rural market has been further reinforced. As at the
end of the Reporting Period, the total number of sales force across all channels was 1.814 million, an increase of 57.1%
year-on-year. The number of productive agents grew significantly, and remarkable achievements have been made in the
size expansion and quality improvement of the sales force.
New progress in reform and innovation. Being customer-oriented and accelerating the construction of a “New
Generation of Integrated Business Processing System”, the Company started its business process reengineering,
constructed a new business mode and technological infrastructure, and launched two platforms of “China Life E-Store”
and “China Life E-Bao Mobile Customer Services System”, as well as more than twenty new applications, through which
customer experience and operational efficiency have been significantly improved, and as a result, the Company has taken
a solid step in the transformation to an Internet-based operation and management mode. In addition, the Company built
a motivating platform for innovation, and established four operation and management innovation pilot zones where
the atmosphere of reform and innovation was strong and the fruitful results generated by innovation were gradually
emerging.
New stride in comprehensive strength. As at the end of the Reporting Period, total assets of the Company amounted to
RMB2.70 trillion, an increase of 10.2% year-on-year, remaining at the first place in the industry, and investment assets
amounted to RMB2.45 trillion, an increase of 7.2% year-on-year. Core solvency ratio and comprehensive solvency ratio
of the Company reached 280.34% and 297.16%, respectively. The Company achieved an industry-leading score in the
“Solvency Aligned Risk Management Requirements and Assessment” (“SARMRA”) conducted by the CIRC. In order
to accommodate new situations of economic and financial development and meet comprehensive needs of customers,
the Company successfully increased its stakes in China Guangfa Bank Co., Ltd. (“CGB”), and a concerted action plan
between CGB and the Company was initiated, under which insurance products sold by CGB business outlets grew
rapidly and preliminary synergy effects from insurance-banking collaboration have been emerging.
RETROSPECTIvE REvIEW: SEIzING OPPORTUNITIES, STICKING TO THE INHERENT
RULES, AND HARMONIzING WITH THE STAKEHOLDERS
In 2016, at the 20th anniversary of the separated operation of life insurance business and the overall adoption of the
individual agent system, the Company has achieved outstanding results in leap-frog development of its business and a
historic breakthrough in business restructuring. What the Company has achieved in 2016 is the result of advancement
with great endeavor and accumulated hard work for many years. Extensive experience in Chinese insurance market tells
us that fulfilling the essence of the insurance industry requires persistence, and the new era of reform needs enthusiasm
and innovation.
7
China Life Insurance Company Limited Annual Report 2016
Chairman’s Statement
Seizing opportunities. “A flexible person with good knowledge can win, and a creative person with integrity can make
progress.” Reform and opening-up over three decades has brought profound changes to China’s economy and society,
and the consistent improvement of the market economy has laid an institutional foundation for the insurance industry.
In particular, since the issuance of the “Several Opinions of the State Council on Accelerating the Development of the
Modern Insurance Service” in 2014, developing the commercial insurance industry has become a national commitment.
Seizing the opportunities and adhering to the guideline of “development as the first priority”, the Company was
committed to continuous growth of the value of our business and the upgrade of insurance supply so as to meet the
increasing insurance demands of customers. Adapting to changes in the demographic structure, changes in the ways of
care for senior citizens, new requirements for social security, and healthcare system reforms, the Company implemented
the strategy of “Integrated Pension and Inclusive Healthcare Service”. Specifically, the Company undertook more than
250 supplementary major medical insurance projects, providing services for 420 million people; carried out innovative
smart pension services by establishing senior living communities in places such as Beijing, Suzhou, Tianjin, and Sanya;
and creating a healthcare and pension service sub-brand called “China Life Senior Living Homes”, forming a strategic
layout of the senior living communities featuring “Three Points in a Line and Evergreen in Four Seasons”; and the
Company sped up its presence in the healthcare and medicare industry and extended the healthcare industry chain.
Firmly following the anti-poverty strategy of the state, the Company advanced the mode of poverty alleviation by means
of insurance in Ningxia, Gansu and Chongqing and developed inclusive businesses such as micro-insurance to achieve
a unification between economic and social benefits. With the help of the national “Internet+” initiative, the Company
deeply integrated IT innovation results and life insurance business, advancing the construction of “High-tech China
Life” and firmly facilitating reform and innovation throughout the Company.
Sticking to the inherent rules. “For anything to succeed, it requires thorough consideration and then forceful
execution.” As a leader in the industry, the Company’s development echoed the path of life insurance industry in China
towards “an insurance superpower” in the world. Just as the leap-frog development of the Chinese insurance industry
has not always been smooth, China Life’s development is full of obstacles. In many years of our professional operation,
we learned by doing and did by learning, increasingly realizing the significance of “knowing the rules, following the
rules and practicing the rules”, which is the greatest advantage of an insurance operation. Adhering to the philosophy
of “prudent operation and credible service”, we controlled the cost of liabilities to a reasonable level and realized
an interactive linkage between assets and liabilities; sticking to the development plan of focusing on value, regular
premiums, individual insurance, sales force and urban areas and taking value as the guide, we coordinated the relations
among shareholders, employees, sales force and customers; we put great efforts into developing long- and medium-term
regular businesses and protection type products, optimizing business structure and reinforcing sustainable development;
we followed a route of business growth driven by development of sales force, including both its size expansion and
quality improvement, and continually expanded our business coverage and the rate of market penetration. While
persisting in our constant recurring rules, we realized “change is the only constant”, such that we took “innovation
driven” as the general strategy and have been actively building the Company to be an innovative enterprise. We need
to achieve accelerated growth while building a firm foundation, and look for opportunities and momentum while
embracing the changes.
Harmonizing with the stakeholders. “Victory is ensured when people pool their strength; success is secured when people
pour their talents together.” We valued customer interests, offered solutions based on customer needs, and cultivated
new customers while maintaining existing customers so that customer resources became the value engine for corporate
development. We listened to the opinions of investors, and communicated with investors in all respects, and in addition
to ensuring that shareholders shared in the growth of the Company, we also actively included opinions of investors into
the Board’s decision making process. Knowing the truth that “prosperity of a business is driven by people”, we listened
to employees and agents, improved the talent development system, advanced the China Life “entrepreneur” project,
and built platforms for employees’ and agents’ career development, thus steadily increasing the income of the sales force
and enhancing the organic driving force. Consciously contributing to the economy and society and actively engaging in
public welfare undertakings, we are an excellent corporate citizen. With the expectations of the Company’s stakeholders
being generally satisfied and stronger senses of achievement being fulfilled by employees and agents, the corporate
culture of “success for you, success by you” could be further promoted.
8
China Life Insurance Company Limited Annual Report 2016
Chairman’s Statement
2017 OUTLOOK: STABILITY, TRANSFORMATION AND DEvELOPMENT
“With a new year coming, spring is back on the earth”. The year 2017 is a year of deepening the supply-side structural
reform and also an important year to make China Life stronger and better. Based on a comprehensive analysis of
domestic and international situations, the global economy is expected to continue its slow growth, and instability and
uncertainty are significantly increasing. China is in a critical stage of overcoming obstacles, with its economy facing
downside pressure and challenges. Despite all these problems accompanying advancement and development, the
fundamental trend of a slower but stable performance with good momentum for economic growth in China remains
unchanged, and golden opportunities for the development of the insurance industry still exist. Especially, with more
stringent regulations and requirements set by the CIRC and the advancement of the industry’s transformation, more
opportunities arise for a value-oriented and prudent company like China Life.
Standing at a new starting point, we will stick to the general keynote of “making steady progress”, focusing on “stability”
of the Company’s strategies and operations, and seeking “progress” in transformation and innovation. The Company
will stick to the guideline of supply-side reform, strictly follow the right direction, and advance the three critical tasks
of accelerated growth, transformation and upgrade, and risk prevention and control to improve the level of supply.
We will accelerate our transformation to an operation and management mode which is customer-oriented, featured by
Internet and artificial intelligence, so as to substantially improve customer experience and make China Life the first
choice for customers. We will establish a professional and systematic sales channel management system, fully promote
the sales transformation, and further improve the quality and efficiency of development; adhere to the value-oriented
principle, serve the overall interests of the country, enhance our investment capabilities, and do our best to raise profit
while effectively preventing investment risks; strengthen the management of assets and liabilities, push forward the
diversification of products, increase our efforts in developing the protection type businesses, and gradually promote the
diversification of the Company’s profit sources. Meanwhile, we will thoroughly implement a cross-channel operation as
well as insurance-banking collaboration, promote the integration of resources in a deeper and more diverse direction,
and fully exploit the development potential. In the meantime, we will also implement the strategy of innovation driven
development with great efforts, deepen the market-oriented reform, take advantage of our strengths, and continually
enhance the Company’s development momentum.
The times offer China Life a historic opportunity to develop and prosper, and a noble mission to serve the society. We
will put ourselves in customers’ position, uphold virtues and improve ourselves day after day to achieve perfection.
By Order of the Board
Yang Mingsheng
Chairman
Beijing, China
23 March 2017
9
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
From left to right:
Mr. Zheng Yong, Mr. Zhao Lijun, Mr. Xu Haifeng, Mr. Lin Dairen, Mr. Xu Hengping, Mr. Li Mingguang,
Mr. Xiao Jianyou, Mr. Ruan Qi
I
BUSINESS OVERVIEW OF 2016
(I) Key Performance Indicators
Net premiums earned
Premiums from new policies
Including: First-year regular premiums
First-year regular premiums with ten years or longer
payment duration
Gross investment income
Net profit attributable to equity holders of the Company
Value of one year’s sales
Including: Exclusive individual agent channel
Group insurance channel
Bancassurance channel
2016
426,230
206,996
93,945
51,378
108,151
19,127
49,311
46,326
375
2,610
RMB million
2015
362,301
172,364
61,900
32,312
140,160
34,699
31,528
28,851
371
2,306
10
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
RMB million
As at
31 December 2016 31 December 2015
As at
652,057
2.46
90.20
85.90
560,277
2.16
90.00
85.50
Embedded value
Number of in-force policies (hundred million)
Policy Persistency Rate (14 months) (%) Note
Policy Persistency Rate (26 months) (%) Note
Note: The Persistency Rate for long-term individual life insurance policy is an important operating performance indicator
for life insurance companies. It measures the ratio of in-force policies in a pool of policies after a certain period
of time. It refers to the proportion of policies that are still effective during the designated month in the pool of
policies whose issue date was 14 or 26 months ago.
In 2016, facing the complex and changing economic environment and the challenges from the fierce market
competition, the Company adhered to the overall strategy of innovation-driven development, regarded
transformation and upgrading as the main focus, followed the business strategy of “prioritizing value,
strengthening sales force, optimizing business structure, achieving stable growth and safeguarding against
risks”, accelerated the development of its core businesses, and advanced the transformation of its sales model.
The Company worked cohesively as a whole to improve, explore and innovate, so as to achieve a great-leap-
forward development and a historic breakthrough of business restructuring, setting a great start for the “13th
Five-Year Plan”.
During the Reporting Period, the Company’s net premiums earned were RMB426,230 million, an increase
of 17.6% year-on-year, which made the Company the first and the sole insurance company in China with
premiums exceeding RMB400,000 million. The Company’s market share2 was approximately 19.9%,
remaining the first place in the industry.
Net premiums earned
(RMB million)
Year 2016
Year 2015
426,230
362,301
1
7
.
6
%
0
100,000
200,000
300,000
400,000
500,000
2
Calculated according to the premium data of life insurance companies in 2016 released by the CIRC.
11
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
Out of the premiums from new policies, first-year regular premiums amounted to RMB93,945 million, an
increase of 51.8% year-on-year, which surpassed the single premiums for the first time since the listing of
the Company. First-year regular premiums with ten years or longer payment duration reached RMB51,378
million, increased by 59.0% year-on-year. Both of them doubled over the past two years, with their growth
rates setting record highs since the listing of the Company. Renewal premiums reached RMB223,502
million, an increase of 16.6% year-on-year, which set a record high in the past five years. As at 31 December
2016, the number of in-force policies increased by 13.9% from the end of 2015. The Policy Persistency Rate
(14 months and 26 months) reached 90.20% and 85.90%, respectively; and the Surrender Rate3 was 3.54%,
a decrease of 2.01 percentage points from 2015.
First-year premiums from long-term policies
(RMB million)
Year 2016
72,991
Year 2015
78,076
93,945
51.8%
61,900
1
9
.
3
%
0
50,000
100,000
150,000
200,000
Single premiums
First-year regular premiums
First-year regular premiums & first-year regular
premiums with 10 years or longer payment duration
doubled over the past two years
(RMB million)
Year 2016
42,567
51,378
Year 2015
29,588
32,312
Year 2014
20,801
25,766
Year 2016
1
0
1
.
7
%
9
9
.
4
%
0
20,000
40,000
60,000
80,000
100,000
Year 2014
First-year regular premiums
with payment duration less
than 10 years
First-year regular premiums
with 10 years or longer
payment duration
First-year
regular
premiums
First-year
regular
premiums with
10 years or longer
payment duration
3
Surrender Rate = Surrender payment/(Liability of long-term insurance contracts at the beginning of the period + Premiums of
long-term insurance contracts)
12
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
The Company adhered to the value-oriented principle and actively promoted the development of long-term
regular businesses and protection type businesses. In 2016, the value of one year’s sales was RMB49,311
million, an increase of 56.4% year-on-year, setting a record high since the year 2005, with the value doubled
over the past two years. As at 31 December 2016, the embedded value of the Company was RMB652,057
million, an increase of 16.4% year-on-year.
Value of one year’s sales doubled over the past two years
(RMB million)
Year 2016
49,311
Year 2015
31,528
Year 2014
23,253
Year 2016
1
1
2
.
1
%
0
10,000
20,000
30,000
40,000
50,000
Year 2014
Affected by such factors as the downturn of interest rate and the fluctuations in the capital market, the
Company’s gross investment income in 2016 was RMB108,151 million, a 22.8% decrease year-on-year. Due
to the decrease in gross investment income and the update on the discount rate assumption for reserves of
traditional insurance contracts, during the Reporting Period, net profit attributable to equity holders of the
Company was RMB19,127 million, a 44.9% decrease year-on-year.
(II) Insurance Business
1. Gross written premiums categorized by business:
For the year ended 31 December
Life Insurance Business
First-year business
Single
First-year regular
Renewal business
Health Insurance Business
First-year business
Single
First-year regular
Renewal business
Accident Insurance Business
First-year business
Single
First-year regular
Renewal business
2016
361,905
160,590
72,973
87,617
201,315
54,010
32,141
25,852
6,289
21,869
14,583
14,265
14,226
39
318
RMB million
2015
308,169
134,449
78,068
56,381
173,720
42,041
24,435
18,993
5,442
17,606
13,761
13,480
13,403
77
281
Total
430,498
363,971
13
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
During the Reporting Period, gross written premiums from the life insurance business of the
Company amounted to RMB361,905 million, an increase of 17.4% year-on-year. Of these, the
first-year regular premiums were RMB87,617 million, an increase of 55.4% year-on-year. The
percentage of first-year regular premiums in first-year premiums was 54.56%. Renewal premiums
were RMB201,315 million, an increase of 15.9% year-on-year. The Company actively promoted
development of the health insurance business and the gross written premiums from which were
RMB54,010 million, an increase of 28.5% year-on-year. Gross written premiums from the accident
insurance business amounted to RMB14,583 million, an increase of 6.0% year-on-year.
2. Gross written premiums categorized by channel:
For the year ended 31 December
Exclusive Individual Agent Channel
First-year business of long-term insurance
Single
First-year regular
Renewal business
Short-term insurance business
Group Insurance Channel
First-year business of long-term insurance
Single
First-year regular
Renewal business
Short-term insurance business
Bancassurance Channel
First-year business of long-term insurance
Single
First-year regular
Renewal business
Short-term insurance business
Other Channels1
First-year business of long-term insurance
Single
First-year regular
Renewal business
Short-term insurance business
Total
Notes:
1.
2016
282,136
74,813
283
74,530
199,826
7,497
24,915
5,430
4,571
859
703
18,782
108,256
85,882
68,047
17,835
21,813
561
15,191
811
90
721
1,160
13,220
RMB million
2015
225,957
47,974
495
47,479
171,632
6,351
20,107
3,571
3,372
199
553
15,983
106,028
87,222
73,508
13,714
18,558
248
11,879
1,209
701
508
864
9,806
430,498
363,971
Other channels mainly include supplementary major medical insurance business, tele-sales, etc.
2.
The Company’s channel premium breakdown was presented based on the separate groups of sales personnels
including exclusive individual agent team, group insurance sales representatives, bancassurance sales team
and other distribution channels.
14
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
Exclusive Individual Agent Channel. During the Reporting Period, by optimizing the business
structure and improving the quality as well as expanding the size of sales team, businesses of the
exclusive individual agent channel achieved a strong growth, remaining the leading position in the
market. The gross written premiums from the exclusive individual agent channel of the Company
amounted to RMB282,136 million, an increase of 24.9% year-on-year. First-year regular premiums
of individual insurance increased by 57.0% year-on-year, first-year regular premiums with ten years
or longer payment duration increased by 59.6% year-on-year, the percentages of first-year regular
premiums with five years or longer payment duration and first-year regular premiums with ten years
or longer payment duration in first-year regular premiums were 86.20% and 62.17%, respectively.
Renewal premiums from the exclusive individual agent channel increased by 16.4% year-on-year.
Through the implementation of structural transformation and the development strategy aiming at
improving the quality and expanding the size of sales force, the Company increased the qualified new
recruits, reinforced training for agent managers so as to further improve the productivity of its sales
team, consolidate the foundation for sales force development and further optimize its quality. As at the
end of the Reporting Period, the number of exclusive individual agents reached 1,495,000, a 52.7%
increase from the end of 2015, and the quarterly number of productive agents on average increased by
67.1% year-on-year.
First-year regular premiums from the exclusive individual agent channel
(RMB million)
Year 2016
28,193
Year 2015
18,447
29,032
46,337
59.6%
5
7
.
0
%
0
20,000
40,000
60,000
80,000
First-year regular premiums
with payment duration less
than 10 years
First-year regular premiums
with 10 years or longer
payment duration
Structure breakdown of first-year regular premiums from
the exclusive individual agent channel
13.80﹪
24.03﹪
Year
2016
62.17﹪
First-year regular premiums with
10 years or longer payment duration
First-year regular premiums with
payment duration from 5 to 9 years
First-year regular premiums with
payment duration less than 5 years
15
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
Group Insurance Channel. During the Reporting Period, the group insurance channel actively strengthened
the promotion of core businesses, continuously promoted the diversified business development, and the
overall business developed steadily. During the Reporting Period, the gross written premiums from the
group insurance channel of the Company amounted to RMB24,915 million, an increase of 23.9% year-
on-year. The short-term insurance premiums from the group insurance channel amounted to RMB18,782
million, an increase of 17.5% year-on-year. As the sales force in the group insurance channel expanded
rapidly, the number of direct sales representatives reached over 85,000 as at the end of the Reporting Period.
Gross written premiums from the group insurance channel
(RMB million)
Year 2016
18,782
6,133
Year 2015
15,983
4,124
0
5,000
10,000
15,000
20,000
25,000
Short-term insurance premiums
Long-term insurance premiums
Bancassurance Channel. During the Reporting Period, the bancassurance channel deepened the
restructuring, accelerated the development of regular premium businesses, continued to reduce single
premium business, and improved the business value to the Company. First-year regular premiums from
bancassurance channel were RMB17,835 million, an increase of 30.0% year-on-year. The percentage of
first-year regular premiums with five years or longer payment duration in first-year regular premiums was
52.17%. Single premiums were RMB68,047 million, a decrease of 7.4% year-on-year. Regular premium
businesses made by major banks and postal offices achieved a rapid growth since the Company promoted
sales via electronic bank sales channels, such as E-Banking, self-service terminals, mobile banks, etc. During
the Reporting Period, the number of sales representatives in the bancassurance channel reached 234,000.
Long-term premiums from the bancassurance channel
(RMB million)
Year 2016
Year 2015
68,047
7.4%
73,508
21,813
17,835
30.0%
18,558 13,714
0
20,000
40,000
60,000
80,000
100,000
120,000
Single premiums
Renewal premiums
First-year regular premiums
16
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
Other Channels. During the Reporting Period, gross written premiums from other channels were
RMB15,191 million, an increase of 27.9% year-on-year, among which the first-year regular premiums of
long-term insurance from tele-sales increased by over 40% year-on-year. The Company also actively carried
out online marketing activities, and both the premiums and the number of insurance policies from on-
line sales increased substantially as compared to the same period of last year. The Company also actively
and steadily promoted its supplementary major medical insurance business, and as at the end of 2016, had
undertaken accumulatively more than 250 supplementary major medical insurance projects serving 420
million people.
(III) Asset Management
In 2016, the global economy experienced a weak recovery, and the international financial market has
undergone a greater fluctuation. The downward pressure on the domestic economy has been eased and the
domestic economy was by and large stable. China’s A share market fluctuated within a narrow range after
plummeting at the beginning of the year. The bond market has experienced range-bound fluctuations,
and in the fourth quarter, bond yields increased significantly. In 2016, with further optimization of its
investment management system, the Company continually expanded the size of market-oriented third
party asset management, accelerated the development of its alternative investment platform, and steadily
pushed forward the diversified and decentralized investment arrangements. In terms of investment
strategies, following the rules for the insurance asset investments and adhering to the general principle
of matching assets and liabilities, the Company caught up with the market timing with respect to fixed
income investment allocation, increased allocation in assets with long duration, controlled risk exposure and
maintained its allocation in equity investment in the open market at a reasonable level. Aiming at making
long-term strategic investments in non-traditional assets, the Company continued to further global asset
allocations and actively engaged in projects such as health- and pension-related programs, infrastructure and
premium commercial properties both within China and abroad, so as to further diversify the sources for
investment portfolio income.
As at the end of the Reporting Period, the Company’s investment assets reached RMB2,453,283 million,
an increase of 7.2% from the end of 2015. Among the major types of investments, the percentage of bonds
was 45.63% as compared to 43.55% as at the end of 2015, the percentage of term deposits was 21.94% as
compared to 24.59% as at the end of 2015, the percentage of investment in stocks and funds (excluding
money market funds) was 10.05% as compared to 9.34% as at the end of 2015, and the percentage of
investment in financial products was 9.28% as compared to 7.44% as at the end of 2015.
17
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
1.
Investment Portfolios
As at the end of the Reporting Period, our investment assets categorized by investment object are set
out as below:
As at 31 December 2016
Percentage
Amount
RMB million
As at 31 December 20151
Percentage
Amount
1,920,125
538,325
1,119,388
143,201
119,211
421,383
140,166
119,973
84,338
76,906
1,191
110,584
78.27%
21.94%
45.63%
5.84%
4.86%
17.17%
5.71%
4.89%
3.44%
3.13%
0.05%
4.51%
1,777,180
562,622
996,236
117,887
100,435
411,623
111,516
169,485
52,475
78,147
1,237
97,599
77.69%
24.59%
43.55%
5.15%
4.40%
17.99%
4.87%
7.41%
2.29%
3.42%
0.05%
4.27%
2,453,283
100.00%
2,287,639
100.00%
Investment category
Fixed-maturity investments
Term deposits
Bonds
Financial product investments2
Other fixed-maturity investments3
Equity investments
Common stocks
Funds4
Financial product investments2
Other equity investments5
Investment properties
Cash and others6
Total
Notes:
1.
The figures as at the end of last year were adjusted on the same basis.
2.
Financial product investments include debt investment plans, equity investment plans, trust schemes, wealth
management products, project asset-backed plans, and specialized asset management plans, etc.
Other fixed-maturity investments include policy loans, and statutory deposits-restricted, etc.
Funds include equity funds, bond funds and money market funds, etc. In particular, the balances of money
market funds as at 31 December 2016 and 31 December 2015 were RMB13,609 million and RMB67,282
million, respectively.
Other equity investments include private equity funds, unlisted equities, and preference shares, etc.
Cash and others include cash, cash at banks, short-term bank deposits and securities purchased under
3.
4.
5.
6.
agreements to resell.
18
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
2.
Investment Income
For the year ended 31 December
Net investment income2
+Net realized gains on financial assets
+Net fair value gains/(losses) through profit or loss
Gross investment income3
+Net share of profit of associates and joint ventures
Gross investment income including net share of profit
of associates and joint ventures4
Net investment yield5
Gross investment yield6
Gross investment yield including net share of profit
of associates and joint ventures7
2016
RMB million
20151
109,207
6,038
(7,094)
108,151
5,855
114,006
4.61%
4.56%
4.65%
97,654
32,297
10,209
140,160
1,974
142,134
4.45%
6.39%
6.35%
Notes:
1.
The figures for the same period of last year were adjusted on the same basis.
2.
Net investment income include interest income from debt investments, interest income from deposits,
dividend and bonus from equity investments, interest income from loans, net income from investment
properties, etc.
3.
Gross investment income = Net investment income + Net realized gains/(losses) on financial assets + Net fair
value gains/(losses) through profit or loss
4.
Gross investment income including net share of profit of associates and joint ventures = Gross investment
income + Net share of profit of associates and joint ventures
5.
Net investment yield = Net investment income/((Investment assets at the beginning of the period +
Investment assets at the end of the period)/2)
6.
Gross investment yield = Gross investment income/((Investment assets at the beginning of the period +
Investment assets at the end of the period)/2)
7.
Gross investment yield including net share of profit of associates and joint ventures = (Gross investment
income + Net share of profit of associates and joint ventures)/((Investment assets at the beginning of the
period + Investments in associates and joint ventures at the beginning of the period + Investment assets at
the end of the period + Investments in associates and joint ventures at the end of the period)/2)
19
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
In 2016, the balances of investment in fixed income assets and equity assets increased from the end
of 2015. As the interest rate generally remained at a low level last year, the yields of the Company’s
new investment in fixed income assets decreased, dividend income from equity investment increased
as compared to last year and the overall interest income from investment portfolios achieved a
stable growth. As affected by the stock market, the spread income and the fair value gains/(losses)
through profit or loss decreased materially from last year, impairment losses increased, and the
gross investment income decreased as compared to last year. During the Reporting Period, the
net investment yield was 4.61%; the gross investment yield was 4.56%, and the gross investment
yield including net share of profit of associates and joint ventures was 4.65%. The comprehensive
investment yield taking into account the current net fair value changes of available-for-sale securities
recognized in other comprehensive income4 was 2.43%.
3. Major Investments
On 29 February 2016, the Company entered into a share purchase agreement with Citigroup
Inc. (“Citigroup”) and an equity transfer agreement with IBM Credit LLC (“IBM Credit”) and
Citigroup. Pursuant to such agreements, the Company purchased from Citigroup and IBM
Credit an aggregate of 3,648,276,645 shares of CGB at a price of RMB6.39 per share for a total
consideration of RMB23,312,487,761.55. Upon the closing of the transaction on 29 August 2016,
the Company held 6,728,756,097 shares of CGB, representing 43.686% of the issued share capital
of CGB, and became its single largest shareholder. CGB has a stronger differentiating competitive
edge in retail, small and micro businesses and other sectors and a well-developed infrastructure
construction, which enables it to have a sound foundation for accelerating its development in the
future. CGB is highly complementary with the Company in aspects such as asset size, customers and
business. After the Company becomes the single largest shareholder of CGB, both parties will have
opportunities to collaborate for integrated development in various aspects, including sales channels,
customer services and mid-office and back-office operations, which will optimize the operating
efficiency, enhance customer loyalty and the capability of integrated financial services, and thereby
increasing the comprehensive competitiveness and risk resistance ability. For details, please refer to
the announcement published by the Company on the website of the SSE on 1 March 2016 and the
announcement on the HKExnews website of the Hong Kong Exchanges and Clearing Limited on 29
February 2016.
During the Reporting Period, there was no other material equity investment or non-equity investment
of the Company that is subject to disclosure requirements.
4
Comprehensive investment yield = (Gross investment income + Current net fair value changes of available-for-sale securities
recognized in other comprehensive income)/((Investment assets at the beginning of the period + Investment assets at the end of
the period) /2)
20
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
(Iv) Operational Support and Customer Services
With adherence to the “customer-oriented” operating concept and implementing the product diversification
strategy with great efforts so as to meet multifarious demands of customers, the Company has been
continuously committed to improve the customer experience and to work on the upgrades and development
of our services. By the end of 2016, we had provided insurance services to over 500 million customers. In
order to provide more convenient and efficient services, the Company actively applied technologies such as
mobile Internet, big data and cloud computing. “E-Bao Mobile Customer Services System”, the Company’s
on-line service system, has a total number of binding users of 10.99 million, and the number of online
applications available on it has reached 49. Based on WeChat and other Internet channels, the Company
launched “E-Settlement”, a mobile-based claims settlement service. With this service, the customers are
able to remotely apply for claims settlement by themselves, which makes claims settlement service “available
on fingertips”. In line with the social security insurance, a pilot program of direct payment for claims was
introduced in various areas, which enabled customers to enjoy “five exemption” services (namely, exemption
from case reporting, application and counter services, etc.) at home. Moreover, the Company entered into an
agreement with the Institute of Medical Information, Chinese Academy of Medical Sciences, the National
Health and Family Planning Commission of the People’s Republic of China, to carry out offsite settlement
and reimbursement for medical services across provinces under the New Village Cooperative Medical
Scheme. As accredited by the CRM Committee of the China Federation of IT Promotion, the “95519” Call
Center received the award of “China’s Best Call Center of Year 2015-2016”. During the Reporting Period,
the Company promptly responded to 31 critical emergency incidents, including the tour bus accident in
Taiwan and the debris flow in Zhejiang Province, launched contingency plans immediately, simplified the
procedures and sped up the process of claims settlement, actively performing the responsibility as a member
of the insurance industry.
The Company continuously paid attention to the multifarious demands of customers, and strived to build
customer service ecosphere in order to improve customer experience. During the Reporting Period, the
Company held 12,579 activities in total, such as the 10th “Hand-in-Hand” series of customer service
activities, the 6th “Little Painters of China Life”, China Life “Run for 700”, “China Life Lectures from
Gurus” and the “Dream Project”, providing services for more than 7.67 million customers, which helped to
maintain a good interaction with customers. Meanwhile, the Company continuously increased the global
emergency services and VIP services in order to satisfy the multi-layer and personalized service requirements
of customers.
21
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
In 2016, the Company pushed forward in full swing the establishment of a new generation of the integrated
business processing system, a customer-based, responsive and safe and reliable system characterized by
the application of the Internet. The Company is committed to improving its management and operation
ability through process evolution. Starting from each aspect with respect to the operation and management
of the life insurance business, and focusing on the improvement of customer experience and development
of Internet services, the Company fully advanced the re-engineering and optimization of management
and operation processes, effectively promoted the transformation of the Company’s business services to a
more Internet-based service mode, and continuously enhanced the intensification and intelligent operation
capability of the Company.
(v) Internal Control and Risk Management
The Company continuously complied with Section 404 of the U.S. Sarbanes-Oxley Act. Meanwhile,
it implemented procedures for the compliance with standard systems of corporate internal control by
following the “Standard Regulations on Corporate Internal Control” and the “Implementation Guidelines
for Corporate Internal Control” jointly issued by five PRC ministries and commissions including the
Ministry of Finance, etc., and the “Basic Standards of Internal Control for Insurance Companies” issued
by the CIRC. Pursuant to the requirements of the CIRC with respect to the China Risk Oriented Solvency
System (C-ROSS), the Company pushed forward the establishment of a solvency risk management system,
reinforced the mechanism of formation, transmission and application of the risk preference system, and
implemented key risk monitoring and risk early-warning classification management, in order to enhance
the Company’s ability of solvency risk management. The Company received an industry-leading score in
the Solvency Aligned Risk Management Requirements and Assessment (“SARMRA”) conducted by the
CIRC in 2016. The Company consistently followed the requirements under anti-money laundering laws
and regulations, and performed legal responsibilities including client identity verification, documentation
of client identity information and transaction records, money laundering risk classification and report of
large sums and suspicious transaction data. Meanwhile, pursuant to external regulatory requirements, the
Company conducted special governance on illegal fund raising activities and carried out the review and
rectification in key risk areas, which improved the Company’s precaution capability in key risk areas.
In 2016, the Company actively utilized its internal audit and supervision function. In addition to
conducting regular audits such as economic responsibility auditing and audit on connected transactions, the
Company also conducted special audit projects based on a risk-oriented approach, focusing on audits on
the management of orphan policies, supplementary major medical insurance and solvency risk management
system. The Company further strengthened the rectification actions with respect to issues identified from
audits, so as to improve the Company’s audit rectification system and ensure that the Company operates in
compliance with legal requirements.
22
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
II ANALYSIS OF MAJOR ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS
(I) Analysis of Major Items of the Consolidated Statement of Comprehensive Income
1. Revenues
For the year ended 31 December
RMB million
2016
2015
Change Main Reasons for Change
Net premiums earned
Life insurance business
426,230
361,649
362,301
308,081
Health insurance business
50,590
40,855
17.6% –
17.4% Fast growth in the first-year regular
premiums and renewals
23.8% Catering to the demand of the
market, the Company took efforts
to develop health insurance business
Accident insurance business
13,991
13,365
4.7% Further optimization of business
structure and a decrease in certain
high claims settlement business
109,147
6,038
97,582
32,297
11.9% Please refer to the table below
-81.3% Substantial decrease in spread
Investment income*
Net realised gains on
financial assets
Net fair value gains/(losses)
through profit or loss
(7,094)
10,209
Other income
6,460
5,060
N/A
income of stocks and funds
influenced by the fluctuation of the
capital market
Substantial decrease in spread
income of stocks influenced by the
fluctuation of the capital market
27.7% An increase in commission fees
earned from CLP&C
23
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
*Investment Income
For the year ended 31 December
RMB million
2016
2015
Change Main Reasons for Change
Investment income from
securities at fair value
through profit or loss
6,210
1,708
263.6% An increase in interest income
resulting from the growing scale of
trading bonds, mainly including
commercial papers and corporate
bonds
Investment income from
37,243
27,476
35.5% An increase in dividend income
available-for-sale securities
Investment income from
24,854
24,541
held-to-maturity securities
Investment income from
27,851
32,285
bank deposits
Investment income from
12,018
11,115
loans
from available-for-sale equity
investment
1.3% An increase in the allocation of
bonds, but with a decline of the
rate of return for reinvestments and
newly added allocations under the
low interest rate environment
-13.7% A decrease in negotiated deposits,
and a decline of the rate of return
for newly added allocations under
the low interest rate environment
8.1% An increase in the investments of
other loans
Other investment income
971
457
112.5% An increase in the scale of securities
purchased under agreements to
resell
Total
109,147
97,582
11.9% –
24
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
2. Benefits, Claims and Expenses
For the year ended 31 December
RMB million
2016
2015
Change Main Reasons for Change
Insurance benefits and claims
expenses
Life insurance business
407,045
352,219
15.6% –
360,922
313,612
15.1% An increase in maturities payable
and annuity payment of life
insurance business
Health insurance business
40,513
34,398
17.8% An increase in the scale of health
insurance business
Accident insurance
5,610
4,209
33.3% Fluctuation in claims expenses of
business
Investment contract benefits
5,316
2,264
certain business
134.8% An increase in the scale of
investment contracts
Policyholder dividends
15,883
33,491
-52.6% A decrease in investment yield from
resulting from
participation in profits
Underwriting and policy
acquisition costs
participating accounts
52,022
35,569
46.3% An increase in underwriting costs
Finance costs
4,767
4,320
Administrative expenses
Other expenses
31,854
4,859
27,458
7,428
for first-year regular premium
business resulting from the growth
of the Company’s business and
the optimization of its business
structure
10.3% An increase in interest income from
securities sold under agreements to
repurchase
16.0% The growth of business
-34.6% Since 1 May 2016, the Company’s
income from financial and insurance
services is subject to the value-added
tax instead of the business tax
Statutory insurance fund
contribution
1,048
743
41.0% The growth of insurance business
25
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
3.
Profit before Income Tax
For the year ended 31 December
RMB million
2016
2015
Change Main Reasons for Change
Life insurance business
14,732
40,921
-64.0% A decrease in gross investment
income and the impact of the
update of discount rate assumption
of reserves of traditional insurance
contracts
Health insurance business
Accident insurance business
Other businesses
2,093
852
6,165
557
275.8% Improvement on health insurance
1,753
2,700
business structure
-51.4% An increase in claims expenses
128.3% Affected by an increase in net share
of profit of associates and joint
ventures
4.
Income Tax
During the Reporting Period, income tax of the Company was RMB4,257 million, a year-on-year
decrease of 60.4%. This was primarily due to the combined impact of the taxable income and deferred
tax.
5. Net Profit
During the Reporting Period, net profit attributable to equity holders of the Company was
RMB19,127 million, a year-on-year decrease of 44.9%. This was primarily due to the decrease in gross
investment income and the impact of the update of discount rate assumption of reserves of traditional
insurance contracts.
26
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
(II) Analysis of Major Items of the Consolidated Statement of Financial Position
1. Major Assets
As at 31
December
2016
As at 31
December
2015
Change Main Reasons for Change
RMB million
Investment assets
Term deposits
2,453,283
538,325
2,287,639
562,622
7.2% –
-4.3% A decrease in the scale of negotiated
Held-to-maturity securities
594,730
504,075
18.0% An increase in the allocation of
deposits
Available-for-sale securities
Securities at fair value
through profit or loss
766,423
209,124
770,516
137,990
-0.5% –
51.6% An increase in the scale of trading
bonds
bonds, mainly including commercial
papers and corporate bonds
102.5% The needs for liquidity management
Securities purchased under
43,538
21,503
agreements to resell
Cash and cash equivalents
Loans
67,046
226,573
76,096
207,267
-11.9% The needs for liquidity management
9.3% An increase in the investments of
Statutory deposits – restricted
Investment properties
6,333
1,191
6,333
1,237
policy loans and other loans
–
–
-3.7% The depreciation of investment
properties
Investments in associates and
119,766
47,175
153.9% New investments in associates and
joint ventures
joint ventures and an increase in
associates’ interests
27
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
2. Major Liabilities
As at 31
December
2016
As at 31
December
2015
Change Main Reasons for Change
RMB million
Insurance contracts*
1,847,986
1,715,985
7.7% The accumulation of insurance
liabilities from new insurance
business and renewal business
Investment contracts
195,706
84,106
132.7% An increase in the scale of certain
Securities sold under
agreements to repurchase
Policyholder dividends
payable
Annuity and other insurance
balances payable
Interest-bearing loans and
other borrowingsNote
Bonds payable
81,088
31,354
158.6% The needs for liquidity management
investment contract accounts
87,725
107,774
-18.6% A decrease in investment yield from
39,038
30,092
participating accounts
29.7% An increase in maturities payable
16,170
2,643
511.8% An increase in borrowings in foreign
37,998
67,994
-44.1% Redemption of certain subordinated
term debts
currency
Deferred tax liabilities
7,768
16,953
-54.2% Affected by a decrease in the fair
value of available-for-sale securities
Note: Interest-bearing loans and other borrowings include a five-year bank loan of GBP275 million with a
maturity date on 17 June 2019, a three-year bank loan of USD948 million with a maturity date on 27
September 2019, a three-year bank loan of USD940 million with a maturity date on 30 September 2019
and a six-month bank loan of EUR100 million with a maturity date on 9 June 2017. All of the above are
fixed rate loans.
* Insurance Contracts
Life Insurance
Health Insurance
Accident Insurance
RMB million
As at
31 December 2016 31 December 2015
As at
1,762,363
77,837
7,786
1,652,469
57,024
6,492
Total of Insurance Contracts
1,847,986
1,715,985
As at the date of the statement of financial position, the reserves of various insurance contracts of the
Company passed the liability adequacy test.
28
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
3.
Equity Holders’ Equity
As at the end of the Reporting Period, equity holders’ equity was RMB303,621 million, a 5.9%
decrease from the end of 2015. This was primarily due to the impact of profit distribution and total
comprehensive income during the Reporting Period.
(III) Analysis of Cash Flows
1.
Liquidity Sources
Our principal cash inflows come from insurance premiums, income from non-insurance contracts,
interest income, dividend and bonus, and proceeds from sales and maturity of financial assets. The
primary liquidity risks with respect to these cash inflows are the risk of surrender by contract holders
and policyholders, as well as the risks of default by debtors, interest rate fluctuations and other market
volatilities. We closely monitor and manage these risks.
Our cash and bank deposits can provide us with a source of liquidity to meet normal cash outflows. As
at the end of the Reporting Period, the balance of cash and cash equivalents was RMB67,046 million.
In addition, the vast majority of our term deposits in banks allow us to withdraw funds on deposit,
subject to a penalty interest charge. As at the end of the Reporting Period, the amount of term
deposits was RMB538,325 million.
Our investment portfolio also provides us with a source of liquidity to meet unexpected cash outflows.
We are also subject to market liquidity risk due to the large size of our investments in some of the
markets in which we invest. In some circumstances, some of our holdings of investment securities
may be large enough to have an influence on the market value. These factors may adversely affect our
ability to sell these investments or sell them at a fair price.
2.
Liquidity Uses
Our principal cash outflows primarily relate to the payables for the liabilities associated with our
various life insurance, annuity, accident insurance and health insurance products, operating expenses,
income taxes and dividends that may be declared and paid to our equity holders. Cash outflows arising
from our insurance activities primarily relate to benefit payments under these insurance products, as
well as payments for policy surrenders, withdrawals and policyholder loans.
We believe that our sources of liquidity are sufficient to meet our current cash requirements.
29
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
3. Consolidated Cash Flows
The Company has established a cash flow testing system, and conducts regular tests to monitor the
cash inflows and outflows under various scenarios and adjusts the asset portfolio accordingly to ensure
sufficient sources of liquidity.
For the year ended 31 December
RMB million
2016
2015
Change Main Reasons for Change
Net cash inflow/(outflow)
from operating activities
Net cash inflow/(outflow)
from investing activities
Net cash inflow/(outflow)
from financing activities
Foreign exchange gains/
(losses) on cash and cash
equivalents
Net increase/(decrease) in
cash and cash equivalents
89,098
(18,811)
N/A
(104,703)
67,047
6,270
(19,415)
N/A
N/A
An increase in the insurance income
and the growth in the scale of the
investment contract accounts
The needs for investment
management
The needs for liquidity management
285
241
18.3% –
(9,050)
29,062
N/A
–
III SOLvENCY RATIO
An insurance company shall have the capital commensurate with its risks and business scale. According to the
nature and capacity of loss absorption by capital, the capital of an insurance company is classified into the core
capital and the supplementary capital. The core solvency ratio is the ratio of core capital to minimum capital,
which reflects the adequacy of the core capital of an insurance company. The comprehensive solvency ratio is the
ratio of the sum of core capital and supplementary capital to minimum capital, which reflects the overall capital
adequacy of an insurance company. The following table shows our solvency ratios as at the end of the Reporting
Period:
Core capital
Actual capital
Minimum capital
Core solvency ratio
Comprehensive solvency ratio
RMB million
As at
31 December 2016 31 December 2015
(unaudited)
As at
639,396
677,768
228,080
280.34%
297.16%
633,779
702,076
195,553
324.10%
359.02%
Note: The China Risk Oriented Solvency System was formally implemented on 1 January 2016. This table is compiled
according to the rules of the system.
The decrease in the Company’s solvency ratio was mainly due to the impact of the higher minimum capital
requirement as a result of the growth of the Company’s insurance business.
30
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
Iv ANALYSIS OF CORE COMPETITIvENESS
The Company has the advantage of very strong brand recognition. It is the only life insurance company in China
with shares listed on the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the New York Stock
Exchange. It is also a core member of China Life Insurance (Group) Company which is one of the “Fortune
Global 500” and the “World’s 500 Most Influential Brands”. In 2016, the brand of China Life has been ranked as
one of the “World’s 500 Most Influential Brands” published by World Brand Lab for ten consecutive years. The
brand was also ranked as No. 4 on the “China’s 500 Most Valuable Brands” list, with brand value estimated at
RMB253,628 million, ranking No. 1 among the insurance industry.
The Company has an extensive services and distribution network, with its business outlets and services
counters covering both urban and rural areas. It has 1,495,000 exclusive individual agents, 85,000 direct sales
representatives and 234,000 sales representatives at those bancassurance outlets, which forms a unique distribution
and services network in China and makes the Company become the life insurance service provider close to
customers. Making use of internationally leading information technology and expanding telephone, Internet, email
and other electronic service channels, the Company strives to meet customer demand for purchasing insurance
products through multiple channels.
The Company has an extensive customer base. As at 31 December 2016, the Company had approximately 246
million long-term individual and group life insurance policies, annuity contracts and long-term health insurance
policies in force.
The Company possesses great financial strength. As at 31 December 2016, the registered capital and the total
assets of the Company were RMB28,265 million and RMB2,696,951 million, respectively, which ranked No. 1
in China’s life insurance industry. As at the end of 2016, the total market capitalization of the Company was
USD91.6 billion, which ranked No. 3 among all listed insurance companies in the world.
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. As at 31 December 2016, the investment assets reached RMB2,453,283 million, an increase of 7.2%
from the end of 2015.
The Company has rich experience in life insurance management. The predecessor of China Life was the first
enterprise to underwrite life insurance business in China, and played the role of an explorer and pioneer in China’s
life insurance industry. During the long course of its development, the Company has accumulated a wealth of
experience in operation and management, has a stable, professional management team, and has become well versed
in the art of management in China’s life insurance market. The Company’s key management teams and personnel
comprise those who have in-depth knowledge and understanding of the life insurance market in China, including
members of the Company’s senior management, qualified underwriting personnel, actuaries and experienced
investment managers. During the Reporting Period, there was no movement of these personnel which might have
material impacts on the Company.
v
SALE OF MATERIAL ASSETS AND EQUITY
During the Reporting Period, there was no sale of material assets and equity of the Company.
31
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
vI BUSINESS OPERATIONS OF OUR MAIN SUBSIDIARIES AND AFFILIATES
Company Name
Major Business Scope
China Life Asset
Management Company
Limited
China Life Pension
Company Limited
China Life Property and
Casualty Insurance
Company Limited
China Guangfa Bank
Co., Ltd.
Management and utilization of proprietary funds;
acting as agent or trustee for asset management
business; consulting business relevant to the above
businesses; other asset management business
permitted by applicable PRC laws and regulations
Group pension insurance and annuity; individual
pension insurance and annuity; short-term health
insurance; accident insurance; reinsurance of the
above insurance businesses; business for the use of
insurance funds that are permitted by applicable
PRC laws and regulations; pension insurance asset
management product business; management of
funds in RMB or foreign currency as entrusted
by entrusting parties for the retirement benefit
purpose; other businesses permitted by the CIRC
Property loss insurance; liability insurance; credit
insurance and bond insurance; short-term health
insurance and accident insurance; reinsurance
of the above insurance businesses; business for
the use of insurance funds that are permitted
by applicable PRC laws and regulations; other
business permitted by the CIRC
The businesses approved by the China Banking
Regulatory Commission including commercial
banking businesses such as public and private
deposits, loans, payment and settlement, and
capital business
Registered
Capital
Shareholding Total Assets
Net Assets
Net Profit
RMB million
4,000
60%
8,284
7,548
991
3,697
3,070
143
3,400
70.74% is held
by the Company,
and 3.53% is
held by AMC
15,000
40%
72,773
19,823
1,157
15,402
43.686%
2,047,592
105,974
9,504
Note: For details, please refer to Note 8 and Note 33(e) in the Notes to the Consolidated Financial Statements in this annual
report.
vII STRUCTURED ENTITIES CONTROLLED BY THE COMPANY
Details of structured entities controlled by the Company is set out in Note 39(c) in the Notes to the Consolidated
Financial Statements in this annual report.
32
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
vIII FUTURE PROSPECT AND RISK ANALYSIS
In 2017, the Company will strengthen its in-depth analysis of macro-economic trends and complex risk factors to
maintain its continuous and healthy growth. The major risk factors which may have an impact on the Company’s
future development strategy and business objectives include:
(1) Macro-economic Risks
In 2017, given the rising “de-globalization” ideology and protectionism tendency, unclear policies for major
economies and their spillover effects as well as significantly increasing instabilities and uncertainties, the
global economy is expected to continue its slow growth. Overall, we estimate the domestic economy will
achieve a slower but stable performance with good momentum for growth, however, with a shaky ground to
stabilize our economy which is in a critical stage of overcoming obstacles, a lot of problems and difficulties
will arise during our economic development. Changes in international and domestic markets will be
transferred to the insurance industry through multiple channels such as the real economy, financial markets
and consumer demands, which will in turn affect the business development, asset management and solvency
in various aspects.
(2) Business Risks
Currently, China’s financial market is susceptible to high risks. Although systematic risks are generally
in control, risks such as non-performing assets risk, liquidity risk and bond default risk are cumulating.
Meanwhile, the potential long-term low interest rate environment will put more challenges on the
management of the Company’s assets and liabilities, and the Company will need to make more efforts to
prevent risks in relation to negative interest spread and mismatching of assets and liabilities. The CIRC
has greatly advocated the essential function of protection of the insurance industry, and has promulgated
regulatory policies with respect to adjusting and regulating the development of short- and medium-term
insurance business, asset management and others. Affected by these factors, the Company will have certain
pressures to maintain rapid business growth with growing uncertainties and complexities. Due to factors
such as investment income and the cost of liabilities, there may be higher possibility of fluctuation of
the Company’s profits. In addition, the operational and financial risks of associated enterprises and the
fluctuation in their profitability may undermine the expected returns on investment, which would have an
impact on the Company’s profitability.
(3) Investment Risks
In light of the complexity of the domestic and international economies, as well as the greater volatility of
the financial markets, the market risk related to investment portfolios and credit risk may increase; and if
the low interest rate environment continues for a long time, the Company will face more challenges on asset
allocation, and the risk of assets and liabilities mismatching will increase. Meanwhile, the Company may
develop new investment channels, utilize new investment vehicles or appoint new investment managers. All
of the above may affect the Company’s investment income and the book value of its assets, and thus result in
a greater fluctuation of the Company’s profits. Moreover, some of the Company’s assets are held in foreign
currencies, which may be subject to foreign exchange risks due to fluctuation in exchange rate.
33
China Life Insurance Company Limited Annual Report 2016
Management Discussion and Analysis
In 2017, the Company will maintain its strategic consistency and have a tactic flexibility, stick to the
guideline of supply-side reform, and strictly follow the protection coverage function of insurance.
Meanwhile, by following the operating guideline of “prioritizing value, strengthening sales force, optimizing
business structure, achieving stable growth and safeguarding against risks”, the Company will continually
facilitate the implementation of “Three Strategies” in relation to development of individual insurance
and markets in large- and medium-sized cities and rural areas, push forward the three critical tasks of
accelerated growth, transformation and upgrade and risk prevention and control, achieve all annual targets
for performance assessment in a wrap-around way by means of considerate planning, target execution and
hardwork, so as to relentlessly improve the Company’s core competitiveness and sustainable development
capability and strive to build a world-class life insurance company. Given the above mentioned risk factors,
the Company will firmly adhere to its established development strategies, and fine-tune its business
development objectives in accordance with changing situations to an appropriate extent, so as to efficiently
respond to challenges from market competitors and changes in the external environment.
It is expected that the Company will have sufficient capital to meet its insurance business expenditures and
new investment needs in general in 2017. At the same time, if there is any further capital demands, the
Company will make corresponding financing arrangements based on capital market conditions to further
implement its future business development strategies.
34
China Life Insurance Company Limited Annual Report 2016
Report of the Board of Directors
From left to right:
Mr. Tang Xin, Mr. Chang Tso Tung Stephen, Mr. Xu Haifeng, Mr. Xu Hengping, Mr. Lin Dairen,
Mr. Yang Mingsheng, Mr. Miao Jianmin, Mr. Wang Sidong, Mr. Liu Jiade, Mr. Robinson Drake Pike,
Ms. Leung Oi-Sie Elsie
Directors of the Company during the Reporting Period and up to the date of this report were as follows:
Executive Directors
Yang Mingsheng (Chairman)
Lin Dairen
Xu Hengping
Xu Haifeng
Non-executive Directors Miao Jianmin
Independent Directors
Zhang Xiangxian
Wang Sidong
Liu Jiade
Anthony Francis Neoh
Chang Tso Tung Stephen
Huang Yiping
Robinson Drake Pike
Tang Xin
Leung Oi-Sie Elsie
(resigned with effect from 3 August 2016 due to age reason)
(retired upon expiry of the term with effect from 20 July 2016)
(resigned with effect from 7 March 2016 pursuant to the
relevant policies)
(appointed as Director with effect from 7 March 2016)
(appointed as Director with effect from 20 July 2016)
35
China Life Insurance Company Limited Annual Report 2016
Report of the Board of Directors
1. PRINCIPAL BUSINESS
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, providing
products and services such as individual and group life insurance, accident and health insurance. 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.
2. BUSINESS REvIEW
(I) Overall operation of the Company during the Reporting Period
For details of the overall operation of the Company during the Reporting Period, the future development of
its business and the principal risks faced by it, please refer to the sections of “Management Discussion and
Analysis” and “Internal Control and Risk Management” in this annual report. These discussions form part of
the “Report of the Board of Directors”.
(II) Environmental policies and performance of the Company
The Company responded to the call from the PRC government for energy saving and emission reduction,
put into practice the concept of green development and actively promoted green operations and green
services. Through the enhancement of all employees’ awareness on energy saving, adoption of various energy
saving technologies and promotion of energy saving measures, etc., the Company greatly put forward any
work associated with energy saving and emission reduction. While maintaining its business development
pace, the Company reduced its energy consumption in the head office, the level of its paperless offices was
increasingly enhanced and the utilization rate of intelligent communication equipment was improved in an
efficient and effective manner, which as a result provided its customers with products and services that are
more user-friendly, environmental-friendly and high-quality.
Local branches of the Company reported and submitted to the head office the measuring data of water,
electricity, gas and heating supplies on a quarterly basis in strict compliance with the “Provisional Measures
for the Administration of Energy Saving and Emission Reduction”, so that the Company can better monitor
energy consumption data, and manage and control energy consumption in a reasonable manner.
By taking advantage of the new technological means of Internet platform, the Company launched electronic
documents, electronic insurance policies and office automation to effectively save the paper consumption
resulting from paper cheques, letters and insurance policies. The Company constantly improved its statistics
mechanism for the collection of environmental information, and regulated the utilization, repair and
retirement of measuring instruments and equipment for water, electricity, gas, heating and other supplies.
The Company established the Research & Development Center and Data Center to form a centralized
operational services system, which lowered carbon emissions while enhancing its efficiency. The Company
strengthened the management of office buildings of its head office, and established a management system
for energy saving to save energy, reduce wastages and optimize procedures, thus cutting down energy
consumption and carbon emissions in every aspect of operation.
36
China Life Insurance Company Limited Annual Report 2016
Report of the Board of Directors
(III) Compliance by the Company with the relevant laws and regulations that have a significant impact
The Company adhered to the principles of being trustworthy, assuming risks, emphasizing on services
and being legal compliant, and insisted on the business compliance concepts of “being compliant from
the top level, having responsibility for all to be compliant, and creating value from compliance”, strictly
observed and effectively implemented applicable laws and regulations and regulatory requirements, such as
the Insurance Law, the Company Law, the “Regulations for the Administration of Insurance Companies”,
seriously applied the “Notice on Comprehensively Launching a Pilot Project for the Levy of Value added
Tax in Place of Business Tax” published by the Ministry of Finance of the PRC, the “Notice on Matters
Relevant to Further Improving the Actuarial System for Personal Insurance”, the “Notice on Strengthening
the Supervision on Personal Insurance Products” and the “Notice on Issues concerning the Administrative
Licensing for Banking Sideline Insurance Agents” published by the CIRC. The Company vigorously
developed risk protection and long-term savings businesses, constantly improved the relevant rules and
mechanisms concerning product design, business operation and taxation management, and offered full
cooperation, support and protection for the three strategic missions of the Company – speedy development,
transformation and upgrade, and prevention and control of risks.
(IV) Relationship between the Company and its customers
While actively performing its obligations to insurance policies, the Company bears in mind the core mission
of an enterprise to provide high quality services to its customers. The Company regards customer satisfaction
and customer experience as the basic standards for assessing its services, and established a customer-
oriented business model in order to create value for its customers. As at the end of the Reporting Period,
the Company provided insurance services for more than 500 million customers. The result of customer
satisfaction increased by 1.14% year-on-year, and the result of customer loyalty remained stable.
With the customers’ demands in mind, the Company consistently broadened its value-added services and
continued to improve customer experience. In 2016, the Company further promoted the global VIP care
services, and constantly improved the services including the international travel and medical emergency
services, the PRC medical emergency services, 12-hour health consultation hotlines and the global VIP
benefit services, with a view to satisfying the multi-layer and personalized service requirements of its
customers. The Company organized the 10th “Hand-in-Hand” series of customer service activities, which
amounted to a total of 12,579 activities, serving approximately 7.67 million customers. Such activities
mainly included the following: by conducing the 10th China Life customer festival activities under the
theme of “Hand-in-hand with China Life for Better Health All Along” across China, the Company
constantly paid attention to the health of customers; by conducting a variety of outdoor running and hiking
activities, the Company was committed to establishing a platform of “enjoying healthy life through scientific
sports” for customers; by conducting the “China Life Lectures from Gurus” activity, the Company enhanced
the knowledge of its customers on healthy life, scientific sports and first aid; by organizing the 6th “Little
Painters of China Life” series of activities, the Company was consistently concerned about the growth
and education of teenagers and children; by organizing series of activities such as the “Dream Project”,
the Company assisted its customers in realizing their beautiful dreams. The Company also continuously
improved its services and deepened the customers’ understanding through a variety of customer activities,
thus maintaining good interaction with its customers.
37
China Life Insurance Company Limited Annual Report 2016
Report of the Board of Directors
The Company was committed to offering convenient and professional services to its customers by adopting
innovative form of customer services and actively applying technologies, such as mobile Internet, big data
and cloud computing, in a bid to enhance the service capacity of e-channel, call center and sales force and to
improve customer experience. In addition, the Company enhanced its protection of the rights and interests
of insurance customers by consistently improving a mechanism for protection of such rights and interests,
and intensified its supervisory function through assessment.
(V) Relationship between the Company and its employees
The Company created a harmonious labor relationship according to law and entered into employment
contracts with its employees in a timely manner. The Company strengthened the management of employees
in all aspects by establishing the following three mechanisms: an employee team management mechanism
with the characteristics of basic level orientation, combination of training and utilization of employees,
hierarchical responsibility and unified regulation; a performance management mechanism that is result-
oriented, adopts vertical assessment and horizontal ranking, and focuses on application; and a remuneration
distribution mechanism that is based on the principles of salary determined by position, remuneration
paid based on performance, emphasis on incentives and preference to the local level. The Company was
concerned about the overall development of employees, and actively facilitated the career development
of employees through various means, such as education and training, regular job rotation, local office
secondment, base platform exercises, and cultivation of professional leaders and talents. The Company
attached importance to humanistic concern by safeguarding the legitimate rights and interest of employees
in a practical manner, encouraging and guiding employees to arrange their casual leave and annual leave in a
scientific way, with an aim to achieving work-life balance.
The Company actively promoted the construction of a democratic management system with employee
representative meetings as its basic form to protect the democratic rights of employees and to facilitate the
joint development between employees and enterprise. Its head office and branches have fully established the
system of employee representative meetings, organized their respective employees to perform democratic
management and supervisory role according to law, and inspected and monitored the implementation of any
resolutions adopted by employee representative meetings, thus carrying out the supervisory and performing
functions of proposals in a serious manner and constantly improving democratic management. According to
the spirit of alleviating poverty proposed at the Central Poverty Alleviation and Development Conference,
the Company formulated a special plan for warm families for 2016-2018 so as to establish and improve a
multi-level assistance and support system for needy employees.
For details regarding the Company’s employees (including the number of employees, composition of
professionals, educational levels, remuneration policy and training program), please refer to the section
“Directors, Supervisors, Senior Management and Employees” in this annual report.
3.
FORMULATION AND IMPLEMENTATION OF PROFIT DISTRIBUTION POLICY
(I)
In accordance with Article 211 of the Articles of Association, the basic principles of the Company’s profit
distribution are as follows:
1.
The Company shall take the investment return for investors into full account and allocate the required
percentage of the Company’s realized distributable profits to shareholders as dividends each year;
38
China Life Insurance Company Limited Annual Report 2016
Report of the Board of Directors
2.
The Company shall maintain a sustainable and steady profit distribution policy and at the same time
take into consideration the Company’s long-term interest, general interest of all the shareholders and
the sustainable development of the Company;
3.
The Company shall give priority to cash dividends as its profit distribution manner.
(II)
In accordance with Article 212 of the Articles of Association, the Company’s profit distribution policy is as
follows:
1.
2.
3.
Profit distribution modes: The Company may distribute dividends in the form of cash or shares or a
combination of cash and shares. If practicable, the Company may distribute interim dividends. The
Company’s dividends shall not bear interest, save in the case where the Company fails to distribute the
dividends to the shareholders on the day when dividends were due to have been distributed.
Conditions for and percentage of distribution of cash dividends: If the Company makes profits in a
given year and the cumulative undistributed profit is positive, the Company shall distribute dividends
in the form of cash and the cumulative profits distributed in cash over the past three years by the
Company shall be no less than thirty percent (30%) of the average annual distributable profits.
Conditions for distribution of share dividends: If the Company’s operation is sound and the Board
of Directors is of the opinion that share dividends distribution is in the interest of all the Company’s
shareholders since the Company’s stock price does not match the Company’s share capital, the
Company may propose a share dividends distribution plan if the conditions for cash dividends listed
above are satisfied.
In addition, the Company’s profit distribution is required to comply with relevant regulatory requirements.
If the Company’s core solvency ratio or comprehensive solvency ratio does not meet the minimum
requirements, the CIRC may adopt regulatory measures against the Company due to its failure to meet the
minimum requirements, which may restrict the Company’s ability to distribute dividends to its shareholders.
(III) In accordance with Article 213 of the Articles of Association, the procedures of reviewing the Company’s
profit distribution proposal is as follows:
The Company’s profit distribution proposal shall be reviewed by the Board of Directors. The Board of
Directors shall have a sufficient discussion of the reasonableness of the profit distribution proposal. After
a special resolution regarding the proposal is reached and independent opinions have been given by the
Company’s Independent Directors, the proposal shall be submitted to the Company’s general meeting for
approval. In reviewing the profit distribution proposal, the Company shall provide Internet-based voting
mechanism to the shareholders. When deliberating on specific cash dividend proposal by the Company’s
general meeting, the Company shall make active communication with shareholders, especially small-
and medium-sized shareholders, through various channels. The Company shall also fully solicit opinions
and appeals from small- and medium-sized shareholders, and give timely reply to concerns of small- and
medium-sized shareholders.
39
China Life Insurance Company Limited Annual Report 2016
Report of the Board of Directors
(IV) Profit distribution plan and public reserves capitalization plan
1.
Profit distribution plan or public reserves capitalization plan for the year of 2016
In accordance with the profit distribution plan for the year 2016 approved by the Board on 23
March 2017, with the appropriation to its discretionary surplus reserve fund of RMB1,927 million
(10% of the net profit for 2016), the Company, based on 28,264,705,000 shares in issue, proposed
to distribute cash dividends amounting to RMB6,784 million to all shareholders of the Company at
RMB0.24 per share (inclusive of tax). The foregoing profit distribution plan is subject to the approval
by the 2016 Annual General Meeting to be held on 31 May 2017 (Wednesday). Dividends payable
to domestic shareholders are declared, valued and paid in RMB. Dividends payable to shareholders of
the Company’s foreign-listed shares are declared and valued in RMB and paid in the currency of the
jurisdiction in which the foreign-listed shares are listed (if the Company is listed in more than one
jurisdiction, dividends shall be paid in the currency of the Company’s principal jurisdiction of listing
as determined by the Board). The Company shall pay dividends to shareholders of foreign-listed shares
in conformity with the PRC regulations on foreign exchange control. If no such regulations are in
place, the applicable exchange rate is the average closing rate published by the People’s Bank of China
one week before the declaration of the distribution of dividends.
No public reserve capitalization is provided for in the profit distribution plan for the current financial
year.
The profit distribution policy of the Company complied with the Articles of Association and the
examination and approval procedures of the Company, clearly defined the dividend distribution
standards and percentage and the decision-making procedures and system. Small- and medium-sized
shareholders of the Company have sufficient opportunities to express their opinions and appeals, and
their legitimate rights have been well protected. The Independent Directors diligently considered the
profit distribution policy and expressed their independent opinion in this regard.
2.
The dividend distribution of the Company for the recent 3 years is as follows:
RMB million
Year in which
dividends were
distributed
Number of
bonus stocks per
ten shares (shares)
Amount of
dividends per
ten shares (RMB)
(including tax)
Transfer of
public reserve
into share
capital per ten
shares (shares)
Amount of
cash dividends
(including tax)
Net profit
attributable to
equity holders of
the Company in
the consolidated
statements for
the year in which
Percentage of
amount of
cash dividends
in net profit
attributable to
equity holders
of the Company
dividends were in the consolidated
statements
distributed
2016
2015
2014
–
–
–
2.4
4.2
4.0
–
–
–
6,784
11,871
11,306
19,127
34,699
32,211
35%
34%
35%
40
China Life Insurance Company Limited Annual Report 2016
Report of the Board of Directors
4. CHANGES IN ACCOUNTING ESTIMATES
The changes in accounting estimates of the Company during the Reporting Period are set out in Note 3 in the
Notes to the Consolidated Financial Statements in this annual report.
5. RESERvES
Details of the reserves of the Company are set out in Note 36 in the Notes to the Consolidated Financial
Statements in this annual report.
6. CHARITABLE DONATIONS
The total amount of charitable donations made by the Company during the Reporting Period was approximately
RMB142 million.
7. PROPERTY, PLANT AND EQUIPMENT
Details of the movement in property, plant and equipment of the Company are set out in Note 6 in the Notes to
the Consolidated Financial Statements in this annual report.
8.
9.
SHARE CAPITAL
Details of the movement in share capital of the Company are set out in Note 34 in the Notes to the Consolidated
Financial Statements in this annual report.
INFORMATION OF TAX DEDUCTION FOR HOLDERS OF LISTED SECURITIES
Shareholders are taxed and/or enjoy tax relief for the dividend income received from the Company in accordance
with the “Individual Income Tax Law of the People’s Republic of China”, the “Enterprise Income Tax Law of the
People’s Republic of China”, and relevant administrative rules, governmental regulations and guiding documents.
Please refer to the announcement published by the Company on the website of the SSE on 9 June 2016 for the
information on income tax in respect of the dividend distributed to A Share shareholders during the Reporting
Period, and the announcement published by the Company on the HKExnews website of the Hong Kong
Exchanges and Clearing Limited on 30 May 2016 for the information on income tax in respect of the dividend
distributed to H Share shareholders during the Reporting Period.
10. PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S SECURITIES
During the Reporting Period, the Company and its subsidiaries did not purchase, sell or redeem any of the
Company’s listed securities.
11. H SHARE STOCK APPRECIATION RIGHTS
No H Share Stock Appreciation Rights of the Company were granted or exercised in 2016. The Company will
deal with such rights and related matters in accordance with the PRC governmental policies.
12. DAY-TO-DAY OPERATIONS OF THE BOARD
Details of the Board meetings and the Board’s performance of its duties during the Reporting Period are set out in
the section headed “Corporate Governance” in this annual report.
41
China Life Insurance Company Limited Annual Report 2016
Report of the Board of Directors
13. DIRECTORS’ AND SUPERvISORS’ SERvICE CONTRACTS
None of the Directors or Supervisors has entered into any service contract with the Company and its subsidiaries
that are not terminable within one year or can only be terminated by the Company with payment of compensation
(other than statutory compensation).
14. INTERESTS OF DIRECTORS AND SUPERvISORS (AND THEIR CONNECTED
ENTITIES) IN MATERIAL TRANSACTIONS, ARRANGEMENTS OR CONTRACTS
None of the Directors or Supervisors (and their connected entities) is or was materially interested, directly
or indirectly, in any transaction, arrangement or contract of significance entered into by the Company or its
controlling shareholders or any of their respective subsidiaries at any time during the Reporting Period or subsisted
at the end of the Reporting Period.
15. DIRECTORS’ AND SUPERvISORS’ RIGHTS TO ACQUIRE SHARES
No arrangements to which the Company, any of its subsidiaries or holding companies, or any subsidiary of the
Company’s holding companies is a party, and whose objects are, or one of whose objects is, to enable Directors
or Supervisors (including their spouses and children under the age of 18) to acquire benefits by means of the
acquisition of shares in, or debentures of, the Company or any other body corporate, subsisted at any time during
the Reporting Period or at the end of the Reporting Period.
16. DISCLOSURE OF INTERESTS OF DIRECTORS, SUPERvISORS AND THE CHIEF
EXECUTIvE IN THE SHARES OF THE COMPANY
As at the end of the Reporting Period, none of the Directors, Supervisors and the chief executive of the Company
had any interests or short positions in the shares, underlying shares or debentures of the Company or its associated
corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws
of Hong Kong) (the “SFO”)) that were required to be recorded in the register of the Company required to be
kept pursuant to Section 352 of the SFO or which had to be notified to the Company and the HKSE pursuant
to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in
Appendix 10 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the
“Listing Rules”). In addition, the Board has created a code of conduct in relation to the sale and purchase of the
Company’s securities by Directors and Supervisors, which is no less stringent than the Model Code. Upon specific
inquiry by the Company, the Directors and Supervisors have confirmed observation of the Model Code and the
Company’s own code of conduct in the year of 2016.
17. PRE-EMPTIvE RIGHTS AND ARRANGEMENTS FOR SHARE OPTIONS
According to the Articles of Association and relevant PRC laws, there is no provision for any pre-emptive rights of
the shareholders of the Company. At present, the Company does not have any arrangement for share options.
18. MANAGEMENT CONTRACTS
No management or administration contracts for the whole or substantial part of any business of the Company
were entered into during the Reporting Period.
42
China Life Insurance Company Limited Annual Report 2016
Report of the Board of Directors
19. MATERIAL GUARANTEES
Independent Directors of the Company have rendered their independent opinions on the Company’s external
guarantees, and are of the view that:
(1)
during the Reporting Period, the Company did not provide any external guarantee;
(2)
the Company’s internal control system regarding external guarantees is in compliance with laws, regulations,
and the requirements under the “Notice in relation to the Standardization of Capital Flows between Listed
Companies and Related Parties and Issues in relation to External Guarantees Granted by Listed Companies”;
and
(3)
the Company has expressly provided in its Articles of Association the level of authority required for
approving external guarantees and the approval procedures.
20. RESPONSIBILITY STATEMENT OF DIRECTORS ON FINANCIAL REPORTS
The Directors are responsible for overseeing the preparation of the financial report for each financial period which
gives a true and fair view of the Company’s financial position, performance results and cash flows for that period.
To the best knowledge of the Directors, there was no material event or condition during the Reporting Period that
might have a material adverse effect on the continuing operation of the Company.
21. BOARD’S STATEMENT ON INTERNAL CONTROL
In accordance with the requirements of the “Standard Regulations on Corporate Internal Control”, the Board
conducted an assessment on internal control relating to the Company’s financial reporting functions, and
confirmed that its internal control was effective as at 31 December 2016.
22. MAJOR CUSTOMERS
In 2016, the gross written premiums received from the Company’s five largest customers accounted for less than
30% of the Company’s gross written premiums for the year. There is no related party of the Company among the
five largest customers.
23. SUFFICIENCY OF PUBLIC FLOAT
Based on the information publicly available to the Company and within the knowledge of the Directors as at the
Latest Practicable Date (23 March 2017), not less than 25% of the issued share capital of the Company (being the
minimum public float applicable to the shares of the Company) was held in public hands.
24. COMPLIANCE WITH THE CORPORATE GOvERNANCE CODE
The Company has applied the principles of the Corporate Governance Code (the “CG Code”) as set out in
Appendix 14 to the Listing Rules, and has complied with all code provisions of the CG Code during the Reporting
Period.
43
China Life Insurance Company Limited Annual Report 2016
Report of the Board of Directors
25. AUDITORS
Resolutions were passed at the First Extraordinary General Meeting 2015 and the 2015 Annual General Meeting
to engage Ernst & Young Hua Ming LLP and Ernst & Young as the PRC and international auditors of the
Company for the year 2016, respectively. Ernst & Young Hua Ming LLP and Ernst & Young have been serving as
the Company’s auditors for four consecutive years.
Due to its requirements for project management, Ernst & Young resigned as the auditor of the Company for US
Form 20-F, with effect from the conclusion of the First Extraordinary General Meeting 2016 of the Company.
Following the approval by the shareholders of the Company at the First Extraordinary General Meeting 2016,
the auditor of the Company responsible for auditing the US Form 20-F for the year 2016 has been changed from
Ernst & Young to Ernst & Young Hua Ming LLP, who shall hold office until the conclusion of the 2016 Annual
General Meeting of the Company. Ernst & Young remains as the Hong Kong auditor of the Company. Ernst &
Young has confirmed in writing that there is no matter relating to its resignation as the auditor of the Company
for US Form 20-F that needs to be brought to the attention of the shareholders of the Company. There is also no
disagreement between the Company and Ernst & Young.
Remuneration paid by the Company to the auditors is subject to approval at the shareholders’ general meeting,
pursuant to which the Board is authorized to determine the amount and make payment. Audit fees paid by the
Company to the auditors will not affect the independence of the auditors.
Remuneration paid by China Life Insurance Company Limited to the auditors in 2016 was as follows:
Service/Nature
Financial report audit fee
Internal control audit fee
Fees (RMB million)
44.54
11.14
At the 2016 Annual General Meeting to be held on 31 May 2017, the Board will propose a resolution to
re-appoint Ernst & Young Hua Ming LLP as the PRC auditor and the auditor for US Form 20-F of the Company
for the year 2017, and Ernst & Young as the Hong Kong auditor of the Company for the year 2017.
By Order of the Board
Yang Mingsheng
Chairman
Beijing, China
23 March 2017
44
Report of the Supervisory Committee
China Life Insurance Company Limited Annual Report 2016
From left to right:
Ms. Wang Cuifei, Ms. Xiong Junhong,
Mr. Miao Ping, Mr. Shi Xiangming,
Mr. Zhan Zhong
1. ACTIVITIES OF THE SUPERVISORY COMMITTEE
1.
2.
3.
Currently, the fifth session of the Supervisory Committee comprises Mr. Miao Ping, Mr. Shi Xiangming,
Ms. Xiong Junhong, Mr. Zhan Zhong and Ms. Wang Cuifei, with Mr. Miao Ping acting as the Chairman
of the Supervisory Committee. Of the members of the Supervisory Committee, Mr. Miao Ping, Mr. Shi
Xiangming and Ms. Xiong Junhong are Non Employee Representative Supervisors, and Mr. Zhan Zhong
and Ms. Wang Cuifei are Employee Representative Supervisors.
Attending meetings of the Supervisory Committee and diligently discharging their duties. Pursuant to the
regulatory requirements of the jurisdictions where the Company is listed, the Articles of Association and
the “Procedural Rules for Supervisory Committee Meetings” of the Company, and in accordance with the
work arrangement of the Supervisory Committee, the Supervisory Committee convened its regular meetings
in a timely manner, at which it considered and approved proposals in relation to the Company’s financial
reports, periodic reports, internal control, and risk management. In 2016, the fifth session of the Supervisory
Committee held 5 meetings, at which the Supervisors earnestly expressed their views, actively participated
in discussions and diligently discharged their duties, thereby providing valuable advice for the business
development of the Company.
Attending and participating in corporate governance meetings and actively exercising their supervisory
role. In 2016, the Supervisory Committee attended the 2015 Annual General Meeting and the First
Extraordinary General Meeting 2016 of the Company, and participated in the regular meetings of the
Board. All members of the Supervisory Committee participated in the meetings of the Nomination and
Remuneration Committee, the Risk Management Committee, and the Strategy and Investment Decision
Committee, respectively, in accordance with the work allocation among Supervisors determined by the
Supervisory Committee, with a focus on the meetings of the Audit Committee. By attending these meetings,
all Supervisors diligently discharged their duties, oversaw the procedures for convening meetings, carefully
listened to the matters considered at the meetings, and participated in discussions when necessary, thus
bringing positive effects on further enhancement of corporate governance.
45
China Life Insurance Company Limited Annual Report 2016
Report of the Supervisory Committee
4.
5.
6.
Strengthening training and constantly enhancing duty performance of the Supervisors. In 2016, Mr. Miao
Ping, the Chairman of the Supervisory Committee, attended the eighth special training course of 2016
for directors and supervisors of listed companies within the territory of Beijing as organized by the Listed
Companies Association of Beijing, which gave him the opportunity to learn and understand the businesses of
listed companies, such as the regulatory overview of listed companies within the territory of Beijing, merger,
acquisition and restructuring of enterprises during the reform of state-owned enterprises, merger, acquisition
and restructuring and corporate growth, overseas strategy of enterprises, overseas investment trend and
operation of the PRC enterprises, and the strategy of “One Belt One Road” and internationalization.
Mr. Zhan Zhong and Ms. Wang Cuifei attended the first special training course of 2016 for directors
and supervisors of listed companies within the territory of Beijing as organized by the Listed Companies
Association of Beijing, which gave them the opportunity to learn and understand courses on the regulatory
overview of listed companies within the territory of Beijing and the relevant issues and requirements, system
of regulatory laws and regulations of listed companies, as well as the information disclosure standards,
economic development trend, and innovative transformation of listed companies, etc.
Actively conducting research and investigation activities and training courses and performing their
supervisory function. From 29 November to 2 December 2016, Mr. Miao Ping, the Chairman of the
Supervisory Committee, carried out investigation and research with the members of the Supervisory
Committee on local branches of the Company in Guizhou Province and southeast Guizhou Province, as
well as a local sub-branch of the Company in Tianzhu County, listened to their business reports, held in-
depth conferences with their respective key management, conducted an on-site investigation and research on
intra-city counters of the customer service center of Guiyang branch, and the customer service center of each
of the southeast Guizhou branch and Tianzhu sub-branch, for the purpose of understanding the business
development and the risk prevention and control of the local branches. Through investigation and research,
all Supervisors comprehended the working situation of local branches in great depth and examined the
effectiveness of the implementation of decisions of the Board and the management, thus further enhancing
the legal compliance and risk prevention of the Company in a practical manner.
Participating the activity of the “Assessment and Selection of the Supervisory Committees of Listed
Companies with the Best Practice”. In order to strengthen the internal control compliance, audit supervision
and risk management of the Company and further enhance the supervisory capability and duty performance
effect of the Supervisory Committee, the Supervisory Committee of the Company participated in the
activity of the “Assessment and Selection of the Supervisory Committees of Listed Companies with the Best
Practice” jointly organized by the Listed Companies Association of the PRC, the Shanghai Stock Exchange
and the Shenzhen Stock Exchange, and was named as one of the “Top 20 Supervisory Committees of Listed
Companies with the Best Practice” and elected as an “Excellent Case for Supervisory Committees of Listed
Companies with the Best Practice”.
46
China Life Insurance Company Limited Annual Report 2016
Report of the Supervisory Committee
2.
INDEPENDENT OPINION OF THE SUPERvISORY COMMITTEE ON CERTAIN
MATTERS
During the Reporting Period, the Supervisory Committee of the Company performed its supervisory duties in a
diligent manner in accordance with the requirements of the Company Law, the Articles of Association and the
“Procedural Rules for Supervisory Committee Meetings”.
1.
2.
3.
4.
5.
The Company’s operational compliance with the law. During the Reporting Period, the Company’s
operations were in compliance with the law. The Company’s operations and decision-making procedures
were in compliance with the Company Law and the Articles of Association. All Directors and senior
management of the Company maintained strict principles of diligence and integrity and performed their
duties conscientiously. The Supervisory Committee is not aware of any of them having violated any law,
regulation, or any provision in the Articles of Association or harmed the interests of the Company in the
course of discharging their duties.
The authenticity of the financial report. The Company’s annual financial report truly and completely
reflected the Company’s financial position and operating results. Ernst & Young Hua Ming LLP and Ernst
& Young have performed audits on the financial statements for 2016 and have issued unqualified auditors’
reports in accordance with the China Standards on Auditing of PRC Certified Public Accountants and the
International Standards on Auditing, respectively.
Acquisition and sale of assets. During the Reporting Period, the prices for acquisition and sale of assets were
fair and reasonable. The Supervisory Committee is not aware of any insider trading, any acts harming the
interests of shareholders or incurring any loss to the Company’s assets.
Connected transactions. During the Reporting Period, the connected transactions of the Company were
on commercial terms. The Supervisory Committee is not aware of any acts harming the interests of the
Company.
Internal control system and self-evaluation report on internal control. During the Reporting Period, the
Company sought to improve its internal control system, and continued to improve the effectiveness of such
system. The Supervisory Committee of the Company reviewed the self-evaluation report on the Company’s
internal control systems and did not raise any objection against the self-evaluation report of the Board
regarding the Company’s internal control system.
By Order of the Supervisory Committee
Miao Ping
Chairman of the Supervisory Committee
Beijing, China
23 March 2017
47
China Life Insurance Company Limited Annual Report 2016
Significant Events
I. MATERIAL LITIGATIONS OR ARBITRATIONS
During the Reporting Period, the Company was not involved in any material litigation or arbitration.
II. MAJOR CONNECTED TRANSACTIONS
(I) Continuing Connected Transactions
During the Reporting Period, the following continuing connected transactions were carried out by the
Company pursuant to Rule 14A.76(2) of the Listing Rules, including the policy management agreement
between the Company and CLIC, the asset management agreement between the Company and AMC,
the insurance sales framework agreement between the Company and CLP&C, and the framework
agreements entered into by CLWM with the Company, CLIC, CLP&C, China Life Insurance (Overseas)
Company Limited (“CLO”) and CLI, respectively. These continuing connected transactions were subject
to the reporting, announcement and annual review requirements but were exempt from the independent
shareholders’ approval requirement under the Listing Rules. CLIC, the controlling shareholder of the
Company, holds 60% of the equity interest in CLP&C and 100% of the equity interest in each of CLO and
CLI. Therefore, each of CLIC, CLP&C, CLO and CLI constitutes a connected person of the Company.
AMC is held as to 60% and 40% by the Company and CLIC, respectively, and is therefore a connected
subsidiary of the Company. CLWM is a subsidiary of AMC, and is therefore a connected subsidiary of the
Company.
During the Reporting Period, the continuing connected transactions carried out by the Company that were
subject to the reporting, announcement, annual review and independent shareholders’ approval requirements
under Chapter 14A of the Listing Rules included the 2017-2019 framework agreements entered into
by AMP with the Company, Pension Company, CLIC and CLP&C, respectively. Such agreements and
the transactions thereunder have been approved by the First Extraordinary General Meeting 2016 of the
Company held on 27 December 2016. AMP is a non-wholly owned subsidiary of AMC and is therefore a
connected subsidiary of the Company.
In addition, the asset management agreement for alternative investments entered into between the Company
and CLI and the transactions thereunder were subject to the reporting, announcement and annual review
requirements but were exempt from the independent shareholders’ approval requirement under the Listing
Rules. However, such agreement was subject to the approval by the shareholders’ general meeting of the
Company under the SSE Listing Rules. Such agreement and the transactions thereunder have been approved
by the shareholders’ general meeting of the Company held on 29 December 2015.
During the Reporting Period, the Company also carried out certain continuing connected transactions,
including the asset management agreement between CLIC and AMC, which were exempt from the
reporting, announcement, annual review and independent shareholders’ approval requirements under
Chapter 14A of the Listing Rules.
The Company has complied with the disclosure requirements under Chapter 14A of the Listing Rules in
respect of the above continuing connected transactions. When conducting the above continuing connected
transactions during the Reporting Period, the Company has followed the pricing policies and guidelines
formulated at the time when such transactions were entered into.
48
China Life Insurance Company Limited Annual Report 2016
Significant Events
1. Policy Management Agreement
Since 30 September 2003, the Company and CLIC have from time to time entered into policy
management agreements. The renewed agreement between the parties expired on 31 December
2014. On 29 December 2014, the Company and CLIC entered into the 2015 policy management
agreement, with a term from 1 January 2015 to 31 December 2017. Pursuant to the agreement, the
Company agreed to provide policy administration services to CLIC relating to the non-transferred
policies. The Company acts as a service provider under the agreement and does not acquire any
rights or assume any obligations as an insurer under the non-transferred policies. For details as to
the method of calculation of the service fee, please refer to Note 33 in the Notes to the Consolidated
Financial Statements. The annual cap for each of the three years ending 31 December 2017 is
RMB1,037 million.
For the year ended 31 December 2016, the service fee paid by CLIC to the Company amounted to
RMB869 million.
2. Asset Management Agreements
(1) Asset Management Agreement between the Company and AMC
Since 30 November 2003, the Company and AMC have from time to time entered into asset
management agreements. The renewed agreement between the parties expired on 31 December
2015. On 29 December 2015, the Company and AMC entered into the 2016 asset management
agreement, with a term of three years from 1 January 2016 to 31 December 2018. Pursuant
to the agreement, AMC agreed to invest and manage assets entrusted to it by the Company,
on a discretionary basis, within the scope granted by the Company and in accordance with the
requirements of applicable laws and regulations, regulatory requirements and the investment
guidelines given by the Company. In consideration of AMC’s services in respect of investing and
managing various categories of assets entrusted to it by the Company under the agreement, the
Company agreed to pay AMC a service fee. For details as to the method of calculation of the
service fee, please refer to Note 33 in the Notes to the Consolidated Financial Statements. The
annual cap for each of the three years ending 31 December 2018 is RMB1,500 million.
For the year ended 31 December 2016, the Company paid AMC a service fee of RMB1,081
million.
(2) Asset Management Agreement between CLIC and AMC
Since 30 November 2003, CLIC and AMC have from time to time entered into asset
management agreements. The renewed agreement between the parties expired on 31 December
2015. On 30 December 2015, CLIC and AMC entered into the 2016 asset management
agreement, with an entrustment term from 1 January 2016 to 31 December 2018. Pursuant
to the agreement, AMC agreed to invest and manage assets entrusted to it by CLIC, on a
discretionary basis, subject to the investment guidelines and instructions given by CLIC. In
consideration of AMC’s services in respect of investing and managing assets entrusted to it by
CLIC under the agreement, CLIC agreed to pay AMC a service fee. For details as to the method
of calculation of the service fee, please refer to Note 33 in the Notes to the Consolidated
Financial Statements. The annual caps for the three years ending 31 December 2018 are
RMB320 million, RMB310 million and RMB300 million, respectively.
For the year ended 31 December 2016, CLIC paid AMC a service fee of RMB124 million.
49
China Life Insurance Company Limited Annual Report 2016
Significant Events
(3) Asset Management Agreement for Alternative Investments between the Company and CLI
Since 22 March 2013, the Company and CLI have from time to time entered into asset
management agreements for alternative investments. The renewed agreement between the
parties expired on 31 December 2015. On 3 February 2016, the Company and CLI entered
into the 2016 asset management agreement for alternative investments, with a term from 1
January 2016 to 30 June 2017. Pursuant to the agreement, CLI agreed to invest and manage
assets entrusted to it by the Company (including equity, real estate, related financial products
and securitization financial products), on a discretionary basis, within the scope of utilization
of insurance funds as specified by the CIRC and in accordance with the requirements of
applicable laws and regulations and the investment guidelines given by the Company, and the
Company agreed to pay CLI an investment management service fee and a performance incentive
fee. For details as to the method of calculation of the investment management service fee and
performance incentive fee, please refer to Note 33 in the Notes to the Consolidated Financial
Statements. During the term of the agreement, the investment management service fee and
performance incentive fee payable by the Company to CLI will not exceed RMB1,000 million
or its equivalent in foreign currency, in particular, the investment management service fee and
performance incentive fee for the year of 2016 will not exceed RMB590 million or its equivalent
in foreign currency, and the investment management service fee and performance incentive
fee for the first half of 2017 will not exceed RMB410 million or its equivalent in foreign
currency. The contractual amount of assets entrusted by the Company to CLI for investment
and management will not exceed RMB250,000 million or its equivalent in foreign currency
(including the contractual amount already entrusted prior to the execution of the agreement
and the contractual amount to be entrusted during the term of the agreement) as at the expiry
date of the agreement, in particular, the contractual amount as at 31 December 2016 will not
exceed RMB200,000 million or its equivalent in foreign currency, and the contractual amount
as at 30 June 2017 will not exceed RMB250,000 million or its equivalent in foreign currency;
the contractual amount to be entrusted during the term of the agreement will not exceed
RMB150,000 million or its equivalent in foreign currency (including the contractual amount
to be entrusted during the year of 2016 of no more than RMB100,000 million or its equivalent
in foreign currency, and the contractual amount to be entrusted during the first half of 2017
of no more than RMB50,000 million or its equivalent in foreign currency). The contractual
amount of the assets to be entrusted by the Company in its co-investments with CLIC and
CLP&C during the term of the agreement will not exceed RMB40,000 million or its equivalent
in foreign currency, in particular, the contractual amount of the co-investments to be entrusted
by the Company during the year of 2016 will not exceed RMB23,500 million or its equivalent
in foreign currency, and the contractual amount of the co-investments to be entrusted by the
Company during the first half of 2017 will not exceed RMB16,500 million or its equivalent in
foreign currency.
For the year ended 31 December 2016, the Company paid CLI investment management service
fee and performance incentive fee of RMB298 million. As at 31 December 2016, the contractual
amount of the assets entrusted by the Company to CLI for investment and management was
RMB148,574 million, among which, for the year ended 31 December 2016, the contractual
amount of the assets newly entrusted by the Company was RMB50,129 million, and the
contractual amount of the assets newly entrusted by the Company in its co-investment with
CLIC and CLP&C was RMB9,000 million.
50
China Life Insurance Company Limited Annual Report 2016
Significant Events
3.
Insurance Sales Framework Agreement
Since 18 November 2008, the Company and CLP&C have from time to time entered into insurance
sales framework agreements. The renewed agreement between the parties expired on 7 March 2015.
On 8 March 2015, the Company and CLP&C entered into the 2015 insurance sales framework
agreement, with a term of two years from 8 March 2015. The agreement will automatically be
extended for another year after its expiry unless terminated by either party by giving the other party
a written notice within 30 days prior to its expiry. Pursuant to the agreement, CLP&C entrusted the
Company to act as an agent to sell selected insurance products within the authorized regions, and
agreed to pay an agency service fee to the Company in consideration of the services provided. For
details as to the method of calculation of the agency service fee, please refer to Note 33 in the Notes
to the Consolidated Financial Statements. The original annual caps for the three years ending 31
December 2017 were RMB1,386 million, RMB1,738 million and RMB2,222 million, respectively.
With the approval given at the eighth meeting of the fifth session of the Board, the Company
revised the annual caps for the two years ending 31 December 2017 under the 2015 insurance sales
framework agreement to RMB3,000 million and RMB5,000 million, respectively.
For the year ended 31 December 2016, CLP&C paid the Company an agency service fee of
RMB2,337 million.
4. Framework Agreements with AMP
(1) Framework Agreement between the Company and AMP
The Company and AMP entered into the “Framework Agreement in relation to Subscription
and Redemption of Fund Products, Sale of Funds, Asset Management for Specific Clients
and Other Daily Transactions” on 30 May 2014. The agreement became effective upon
signing by the parties and expired on 31 December 2016. Pursuant to the agreement, the
Company and AMP would enter into certain daily transactions, including subscription and
redemption of fund products, sales agency services, asset management for specific clients and
other daily transactions permitted by laws and regulations. Pricing of the transactions under
the agreement was determined by the parties through arm’s length negotiations with reference
to the industry practices. For the three years ended 31 December 2016, the annual caps of the
subscription price and corresponding subscription fee for the subscription of fund products were
RMB30,000 million, RMB66,000 million and RMB72,600 million, respectively; the annual
caps of the redemption price and corresponding redemption fee for the redemption of fund
products were RMB30,000 million, RMB66,000 million and RMB72,600 million, respectively;
the annual caps of the sales commission fee and client maintenance fee payable by AMP were
RMB100 million, RMB300 million and RMB400 million, respectively; the annual caps of the
management fee payable by the Company for the asset management for specific clients were
RMB10 million, RMB20 million and RMB20 million, respectively; and the annual caps of the
fees for other daily transactions were RMB50 million, RMB100 million and RMB100 million,
respectively. As approved by the First Extraordinary General Meeting 2016 of the Company,
the 2017 – 2019 framework agreement was entered into between the Company and AMP on 30
December 2016 for a term of three years from 1 January 2017 to 31 December 2019. Pursuant
to the agreement, the Company and AMP will continue to conduct certain daily transactions,
including subscription and redemption of fund products, sales agency services, asset
management for specific clients and other daily transactions permitted by laws and regulations.
For the three years ending 31 December 2019, the annual caps of the subscription price and
51
China Life Insurance Company Limited Annual Report 2016
Significant Events
corresponding subscription fee for the subscription of fund products are RMB72,600 million;
the annual caps of the redemption price and corresponding redemption fee for the redemption
of fund products are RMB72,600 million; the annual caps of the sales commission fee and client
maintenance fee payable by AMP are RMB700 million, RMB800 million and RMB900 million,
respectively; the annual caps of the management fee and performance-based fee payable by the
Company for the asset management for specific clients are RMB300 million, RMB400 million
and RMB500 million, respectively; and the annual caps of the fees for other daily transactions
are RMB100 million.
For the year ended 31 December 2016, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB9,188.01 million, the redemption price
and corresponding redemption fee for the redemption of fund products was RMB4,338.51
million, the sales commission fee and client maintenance fee paid by AMP was RMB0 million,
the management fee paid by the Company for the asset management for specific clients was
RMB10.90 million, and the fees for other daily transactions were RMB4.15 million.
(2) Framework Agreement between Pension Company and AMP
Pension Company and AMP entered into the “Framework Agreement in relation to
Subscription and Redemption of Fund Products, Sale of Funds and Other Daily Transactions”
on 4 September 2014. The agreement became effective upon signing by the parties and expired
on 31 December 2016. Pursuant to the agreement, Pension Company and AMP would enter
into certain daily transactions, including subscription and redemption of fund products,
sales agency services and other daily transactions permitted by laws and regulations. Pricing
of the transactions under the agreement was determined by the parties through arm’s length
negotiations with reference to the industry practices. For the three years ended 31 December
2016, the annual caps of the subscription price and corresponding subscription fee for the
subscription of fund products were RMB5,000 million, RMB10,000 million and RMB10,000
million, respectively; the annual caps of the redemption price and corresponding redemption
fee for the redemption of fund products were RMB5,000 million, RMB10,000 million and
RMB10,000 million, respectively; the annual caps of the sales commission fee and client
maintenance fee payable by AMP were RMB50 million, RMB100 million and RMB100 million,
respectively; and the annual caps of the fees for other daily transactions were RMB50 million,
RMB100 million and RMB100 million, respectively. As approved by the First Extraordinary
General Meeting 2016 of the Company, the 2017-2019 framework agreement was entered into
between Pension Company and AMP on 23 December 2016 for a term of three years from 1
January 2017 to 31 December 2019. Pursuant to the agreement, Pension Company and AMP
will continue to conduct certain daily transactions, including subscription and redemption
of fund products, sales agency services, asset management for specific clients and other daily
transactions permitted by laws and regulations. For the three years ending 31 December 2019,
the annual caps of the subscription price and corresponding subscription fee for the subscription
of fund products are RMB10,000 million; the annual caps of the redemption price and
corresponding redemption fee for the redemption of fund products are RMB10,000 million;
the annual caps of the sales commission fee and client maintenance fee payable by AMP are
RMB100 million; the annual caps of the management fee and performance-based fee payable by
Pension Company for the asset management for specific clients are RMB100 million; and the
annual caps of the fees for other daily transactions are RMB100 million.
52
China Life Insurance Company Limited Annual Report 2016
Significant Events
For the year ended 31 December 2016, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB0 million, the redemption price and
corresponding redemption fee for the redemption of fund products was RMB0 million, the sales
commission fee and client maintenance fee paid by AMP was RMB0 million, and the fees for
other daily transactions were RMB0 million.
(3) Framework Agreement between CLIC and AMP
CLIC and AMP entered into the “Framework Agreement in relation to Subscription and
Redemption of Fund Products” on 30 May 2014. The agreement became effective upon
signing by the parties and expired on 31 December 2016. Pursuant to the agreement, CLIC
and AMP would enter into transactions in relation to the subscription and redemption of
fund products. Pricing of the transactions under the agreement was determined by the parties
through arm’s length negotiations with reference to the industry practices. For the three
years ended 31 December 2016, the annual caps of the subscription price and corresponding
subscription fee for the subscription of fund products were RMB5,000 million, RMB10,000
million and RMB10,000 million, respectively; and the annual caps of the redemption price
and corresponding redemption fee for the redemption of fund products were RMB5,000
million, RMB10,000 million and RMB10,000 million, respectively. As approved by the First
Extraordinary General Meeting 2016 of the Company, the 2017-2019 framework agreement
was entered into between CLIC and AMP on 16 December 2016 for a term of three years
from 1 January 2017 to 31 December 2019. Pursuant to the agreement, CLIC and AMP will
continue to conduct certain daily transactions, including subscription and redemption of fund
products, and asset management for specific clients. For the three years ending 31 December
2019, the annual caps of the subscription price and corresponding subscription fee for the
subscription of fund products are RMB10,000 million; the annual caps of the redemption
price and corresponding redemption fee for the redemption of fund products are RMB10,000
million; and the annual caps of the management fee and performance-based fee payable by
CLIC for the asset management for specific clients are RMB100 million.
For the year ended 31 December 2016, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB1,530.59 million, and the redemption price
and corresponding redemption fee for the redemption of fund products was RMB2,585.28
million.
(4) Framework Agreement between CLP&C and AMP
CLP&C and AMP entered into the “Cooperation Framework Agreement” on 6 June 2014. The
agreement became effective upon signing by the parties and expired on 31 December 2016.
Pursuant to the agreement, CLP&C and AMP would enter into certain daily transactions,
including subscription and redemption of fund products, sales agency services and other daily
transactions permitted by laws and regulations. Pricing of the transactions under the agreement
was determined by the parties through arm’s length negotiations with reference to the industry
practices. For the three years ended 31 December 2016, the annual caps of the subscription
price for the fund products were RMB5,000 million, RMB10,000 million and RMB10,000
million, respectively; the annual caps of the redemption price for the fund products were
RMB5,000 million, RMB10,000 million and RMB10,000 million, respectively; the annual
caps of the subscription fee for the fund products were RMB50 million, RMB100 million and
RMB100 million, respectively; the annual caps of the redemption fee for the fund products
53
China Life Insurance Company Limited Annual Report 2016
Significant Events
are RMB50 million, RMB100 million and RMB100 million, respectively; the annual caps of
the sales commission fee and client maintenance fee payable by AMP were RMB50 million,
RMB100 million and RMB100 million, respectively; and the annual caps of the fees for other
daily transactions were RMB50 million, RMB100 million and RMB100 million, respectively.
As approved by the First Extraordinary General Meeting 2016 of the Company, the 2017-2019
framework agreement was entered into between CLP&C and AMP on 22 December 2016 for
a term of three years from 1 January 2017 to 31 December 2019. Pursuant to the agreement,
CLP&C and AMP will continue to conduct certain daily transactions, including subscription
and redemption of fund products, sales agency services, asset management for specific clients
and other daily transactions permitted by laws and regulations. For the three years ending 31
December 2019, the annual caps of the subscription price for the fund products are RMB10,000
million; the annual caps of the redemption price for the fund products are RMB10,000 million;
the annual caps of the subscription fee for the fund products are RMB100 million; the annual
caps of the redemption fee for the fund products are RMB100 million; the annual caps of the
sales commission fee and client maintenance fee payable by AMP are RMB100 million; the
annual caps of the management fee and performance-based fee payable by CLP&C for the asset
management for specific clients are RMB100 million; and the annual caps of the fees for other
daily transactions are RMB100 million.
For the year ended 31 December 2016, the subscription price for the fund products was
RMB100.00 million, the redemption price for the fund products was RMB0 million, the
subscription fee for the fund products was RMB0 million, the redemption fee for the fund
products was RMB0 million, the sales commission fee and client maintenance fee paid by AMP
was RMB0 million, and the fees for other daily transactions were RMB0 million.
5. Framework Agreements with CLWM
(1) Framework Agreement between the Company and CLWM
The Company and CLWM entered into the “Framework Agreement in relation to Asset
Management Services and Other Daily Transactions” on 30 December 2015. The agreement
became effective upon signing by the parties and will expire on 31 December 2017. Pursuant to
the agreement, the Company and CLWM will enter into certain daily transactions, including
asset management services, sale agency services for asset management products and other
daily transactions permitted by laws and regulations. Pricing of the transactions under the
agreement shall be determined by the parties through arm’s length negotiations with reference
to the industry practices. For the three years ending 31 December 2017, the annual caps of
the management fee payable by the Company for the asset management services are RMB55
million, RMB180 million and RMB240 million, respectively; the annual caps of fees in
connection with the sale agency services payable by CLWM, including the sales commission fee,
client maintenance fee, handling fee and intermediary fee are RMB25 million, RMB50 million
and RMB100 million, respectively; the annual caps of the fees for other daily transactions are
RMB25 million, RMB50 million and RMB100 million, respectively.
For the year ended 31 December 2016, the management fee paid by the Company for the asset
management services was RMB0.03 million; the fees in connection with the sale agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee
and intermediary fee were RMB0 million; the fees for other daily transactions were RMB0.14
million.
54
China Life Insurance Company Limited Annual Report 2016
Significant Events
(2) Framework Agreement between CLIC and CLWM
CLIC and CLWM entered into the “Framework Agreement in relation to Asset Management
Services” on 26 January 2016. The agreement became effective upon signing by the parties and
will expire on 31 December 2017. Pursuant to the agreement, CLIC will subscribe for the asset
management products, in respect of which CLWM acts as the manager, according to its needs
of asset allocation. Pricing of the transactions under the agreement shall be determined by the
parties through arm’s length negotiations with reference to the industry practices. For the three
years ending 31 December 2017, the annual caps of the management fee payable by CLIC
for the asset management services are RMB40 million, RMB70 million and RMB80 million,
respectively.
For the year ended 31 December 2016, the management fee paid by CLIC for the asset
management services was RMB0.48 million.
(3) Framework Agreement between CLP&C and CLWM
CLP&C and CLWM entered into the “Framework Agreement in relation to Asset Management
Services and Other Daily Transactions” on 9 March 2016. The agreement became effective
upon signing by the parties and will expire on 31 December 2017. Pursuant to the agreement,
CLP&C and CLWM will enter into certain daily transactions, including asset management
services, sale agency services for asset management products and other daily transactions
permitted by laws and regulations. Pricing of the transactions under the agreement shall be
determined by the parties through arm’s length negotiations with reference to the industry
practices. For the three years ending 31 December 2017, the annual caps of the management
fee payable by CLP&C for the asset management services are RMB5 million, RMB180 million
and RMB300 million, respectively; the annual caps of fees in connection with the sale agency
services payable by CLWM, including the sales commission fee, client maintenance fee,
handling fee and intermediary fee are RMB2 million, RMB150 million and RMB200 million,
respectively; the annual caps of the fees for other daily transactions are RMB5 million, RMB50
million and RMB50 million, respectively.
For the year ended 31 December 2016, the management fee paid by CLP&C for the asset
management services was RMB0 million; the fees in connection with the sale agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee
and intermediary fee were RMB0 million; the fees for other daily transactions were RMB0.01
million.
55
China Life Insurance Company Limited Annual Report 2016
Significant Events
(4) Framework Agreement between CLO and CLWM
CLO and CLWM entered into the “Framework Agreement in relation to Asset Management
Services and Other Daily Transactions” on 30 December 2015. The agreement became effective
upon signing by the parties and will expire on 31 December 2017. Pursuant to the agreement,
CLO and CLWM will enter into certain daily transactions, including asset management services,
sale agency services for asset management products and other daily transactions permitted
by laws and regulations. Pricing of the transactions under the agreement shall be determined
by the parties through arm’s length negotiations with reference to the industry practices. For
the three years ending 31 December 2017, the annual caps of the management fee payable
by CLO for the asset management services are RMB10 million, RMB30 million and RMB50
million, respectively; the annual caps of fees in connection with the sale agency services
payable by CLWM, including the sales commission fee, client maintenance fee, handling fee
and intermediary fee are RMB5 million, RMB5 million and RMB10 million, respectively;
the annual caps of the fees for other daily transactions are RMB5 million, RMB5 million and
RMB10 million, respectively.
For the year ended 31 December 2016, the management fee paid by CLO for the asset
management services was RMB0 million; the fees in connection with the sale agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee were RMB0 million; the fees for other daily transactions were RMB0 million.
(5) Framework Agreement between CLI and CLWM
CLI and CLWM entered into the “Framework Agreement in relation to Asset Management
Services and Other Daily Transactions” on 3 February 2016. The agreement became effective
upon signing by the parties and will expire on 31 December 2017. Pursuant to the agreement,
CLI and CLWM will enter into certain daily transactions, including asset management services,
sale agency services for asset management products and other daily transactions permitted by
laws and regulations. Pricing of the transactions under the agreement shall be determined by the
parties through arm’s length negotiations with reference to the industry practices. For the three
years ending 31 December 2017, the annual caps of the management fee payable by CLI for the
asset management services are RMB20 million (including the management fee in an amount of
RMB0.4 million paid by CLI to CLWM for the provision of asset management services prior to
the execution of the framework agreement), RMB30 million and RMB50 million, respectively;
the annual caps of fees in connection with the sale agency services payable by CLWM, including
the sales commission fee, client maintenance fee, handling fee and intermediary fee are RMB10
million, RMB40 million and RMB80 million, respectively; the annual caps of the fees for other
daily transactions are RMB10 million, RMB40 million and RMB80 million, respectively.
For the year ended 31 December 2016, the management fee paid by CLI for the asset
management services was RMB0.04 million; the fees in connection with the sale agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee were RMB0 million; the fees for other daily transactions were RMB0 million.
56
China Life Insurance Company Limited Annual Report 2016
Significant Events
Confirmation by auditor
The Board has received a comfort letter from the auditor of the Company with respect to the above
continuing connected transactions which were subject to the reporting, announcement and/or independent
shareholders’ approval requirements, and the letter stated that during the Reporting Period:
(1)
nothing has come to the auditors’ attention that causes them to believe that the disclosed continuing
connected transactions have not been approved by the Company’s Board of Directors;
(2)
(3)
(4)
for transactions involving the provision of goods or services by the Company, nothing has come to the
auditors’ attention that causes them to believe that the transactions were not, in all material respects,
in accordance with the pricing policies of the Company;
nothing has come to the auditors’ attention that causes them to believe that the transactions were
not entered into, in all material respects, in accordance with the relevant agreements governing such
transactions; and
nothing has come to the auditors’ attention that causes them to believe that the amounts of the
continuing connected transactions have exceeded the total amount of the annual caps set by the
Company.
Confirmation by Independent Directors
The Company’s Independent Directors have reviewed the above continuing connected transactions which
were subject to the reporting, announcement and/or independent shareholders’ approval requirements, and
confirmed that:
(1)
the transactions were entered into in the ordinary and usual course of business of the Company;
(2)
the transactions were conducted on normal commercial terms;
(3)
the transactions were entered into in accordance with the agreements governing those continuing
connected transactions, and the terms are fair and reasonable and in the interests of shareholders of the
Company as a whole; and
(4)
the amounts of the above transactions have not exceeded the relevant annual caps.
57
China Life Insurance Company Limited Annual Report 2016
Significant Events
(II) Other Major Connected Transactions
1. Formation of partnership
On 23 November 2016, the Company, CLIC, CLP&C and China Life Chengda (Shanghai)
Healthcare Equity Investment Management Company Limited (“CLCD”) entered into a partnership
agreement for the formation of the China Life Chengda (Shanghai) Healthcare Equity Investment
Center (Limited Partnership) (the “Partnership”). Pursuant to the partnership agreement, the total
capital contribution by all the partners of the Partnership shall be RMB12,010 million, of which
RMB10 million shall be contributed by CLCD as the general partner and managing partner, and
RMB9,000 million, RMB2,000 million and RMB1,000 million shall be contributed by each of the
Company, CLIC and CLP&C as a limited partner. The purpose of the Partnership is to achieve
capital appreciation through investment in enterprises or projects in healthcare and related industries.
The Partnership shall have a term of eight years. The Partnership shall distribute profits and share
losses pursuant to the provisions of the partnership agreement. On 23 November 2016, the Company
entered into a subscription agreement with CLCD (as the general partner) and China Life Equity
Investment Company Limited (“CLEI”, as the manager of the Partnership) to confirm the Company’s
capital contribution to the Partnership. As CLI (a wholly-owned subsidiary of CLIC) holds 100% of
the equity interest in CLEI, which in turn holds 100% of the equity interest in CLCD, each of CLEI
and CLCD is a connected person of the Company.
2.
Investment in trust scheme
On 6 December 2016, AMC, as the authorized agent on behalf of the Company and CLP&C (each as
the principal and beneficiary), entered into a trust contract with Chongqing International Trust Co.,
Ltd. (“Chongqing Trust”)(as the trustee) for the subscription of the trust units under the Chongqing
Trust – Collective Fund Trust Scheme for the PPP Project for Qingdao Metro Line 4 (the “Trust
Scheme”) established by Chongqing Trust. Pursuant to the trust contract, the total amount of the
trust funds under the Trust Scheme shall be RMB2,116 million. The Company and CLP&C shall
subscribe for 2,086 million and 30 million trust units under the Trust Scheme at a consideration of
RMB2,086 million and RMB30 million, respectively. The trust funds under the Trust Scheme will be
ultimately used for the investment in the PPP Project for Qingdao Metro Line 4. The trust benefits
to be distributed by Chongqing Trust to the beneficiaries are ultimately derived from the operating
income generated from the PPP Project for Qingdao Metro Line 4 and the special subsidies provided
by the Qingdao Municipal Government for the project every year.
The above transactions in relation to the formation of partnership and investment in trust scheme
were subject to the reporting and announcement requirements but were exempt from the independent
shareholders’ approval requirement pursuant to Rule 14A.76(2) of the Listing Rules. The Company
has complied with the disclosure requirements under Chapter 14A of the Listing Rules in respect of
such connected transactions.
(III) Statement on Claims, Debt Transactions and Guarantees etc. with Related Parties outside
the Course of its Business
During the Reporting Period, the Company was not involved in claims, debt transactions or guarantees with
related parties outside the course of its business.
58
China Life Insurance Company Limited Annual Report 2016
Significant Events
III. MATERIAL CONTRACTS AND THEIR PERFORMANCE
1. During the Reporting Period, the Company neither acted as trustee, contractor or lessee of other companies’
assets, nor entrusted, contracted or leased its assets to other companies, the profit or loss from which
accounted for 10% or more of the Company’s profits for the Reporting Period, nor were there any such
matters that occurred in previous periods but subsisted during the Reporting Period.
2.
3.
The Company neither gave external guarantees nor provided guarantees to its non-wholly owned subsidiaries
during the Reporting Period.
Entrusted cash asset investment during the Reporting Period or any investment occurred in previous periods
but subsisted during the Reporting Period: Investment is one of the principal businesses of the Company.
The Company has adopted the mode of entrusted investment for management of its investment assets,
and established a diversified framework of entrusted investment management with China Life’s internal
managers playing the key role and the external managers offering effective supports. The internal managers
include AMC and its subsidiaries, and CLI. The external managers comprise both domestic and overseas
managers, including fund companies, securities companies and other professional investment management
institutions. The Company selected different investment managers based on the purpose of allocation of
various types of investments, their risk features and the expertise of different managers, so as to establish
a great variety of investment portfolios and improve the efficiency of capital utilization. The Company
entered into entrusted investment management agreements with all managers and supervised the managers’
daily investment performance through the measures such as investment guidelines, asset entrustment and
performance appraisals. The Company also adopted risk control measures in respect of specific investments
based on the characteristics of different managers and investment products.
4.
Except as otherwise disclosed in this annual report, the Company had no other material contracts during the
Reporting Period.
Iv. U N D E R T A K I N G S O F T H E CO M P A N Y, SH A R E H O L D E R S, E F F E C T IvE
CONTROLLERS, ACQUIRERS, DIRECTORS, SUPERvISORS, SENIOR MANAGEMENT
OR OTHER RELATED PARTIES WHICH ARE EITHER GIvEN OR EFFECTIvE
DURING THE REPORTING PERIOD
Prior to the listing of the Company’s A Shares (30 November 2006), land use rights were injected by CLIC into
the Company during its reorganization. Out of these, four pieces of land (with a total area of 10,421.12 square
meters) had not had its formalities in relation to the change of ownership completed. Further, out of the properties
injected into the Company, there were six properties (with a gross floor area of 8,639.76 square meters) in respect
of which the formalities in relation to the change of ownership had not been completed. CLIC undertook to
complete the above-mentioned formalities within one year of the date of listing of the Company’s A Shares, and in
the event that such formalities could not be completed within such period, CLIC would bear any potential losses
to the Company due to the defective ownership.
CLIC strictly followed these commitments. As at the end of the Reporting Period, save for the two properties and
related land of the Company’s Shenzhen Branch, the ownership registration formalities of which had not been
completed due to historical reasons, all other formalities in relation to the change of land and property ownership
had been completed. The Shenzhen Branch of the Company continues to use such properties and land, and no
other parties have questioned or hindered the use of such properties and land by the Company.
59
China Life Insurance Company Limited Annual Report 2016
Significant Events
The Company’s Shenzhen Branch and the other co-owners of the properties have issued a letter to the governing
department of the original owner of the properties in respect of the confirmation of ownership of the properties,
requesting it to report the ownership issue to the State-owned Assets Supervision and Administration Commission
of the State Council (“SASAC”), and requesting the SASAC to confirm the respective shares of each co-owner in
the properties and to issue written documents in this regard to the department of land and resources of Shenzhen,
so as to assist the Company and the other co-owners to complete the formalities in relation to the division of
ownership of the properties.
Given that the change of ownership of the above two properties and related land use rights were directed by the
co-owners, and all formalities in relation to the change of ownership were proceeded slowly due to reasons such
as issues rooted in history and government approvals, CLIC the controlling shareholder of the Company, made
further commitment as follows: CLIC will assist the Company in completing, and urge the co-owners to complete,
the formalities in relation to the change of ownership in respect of the above two properties and related land use
rights as soon as possible. If the formalities cannot be completed due to the reasons of the co-owners, CLIC will
take any other legally practicable measures to resolve the issue and will bear any potential losses suffered by the
Company as a result of the defective ownership.
60
Changes in Ordinary Shares and Shareholders Information
China Life Insurance Company Limited Annual Report 2016
1. CHANGES IN SHARE CAPITAL
During the Reporting Period, there was no change in the total number of shares and the share capital of the
Company.
2.
ISSUE AND LISTING OF SECURITIES
As at the end of the Reporting Period, the Company had not issued any securities in the last three years. During
the Reporting Period, there was no change in the total number of shares and the share structure of the Company
due to bonus issues or placings, nor were there any internal employees’ shares.
3.
INFORMATION ON SHAREHOLDERS AND EFFECTIvE CONTROLLER
1. Total number of shareholders and their shareholdings
Total number of
ordinary share
shareholders as at
the end of the
Reporting Period
No. of A Share shareholders:
126,966
No. of H Share shareholders:
30,361
Total number of ordinary
share shareholders as at the
end of the month prior to
the disclosure of this annual
report
No. of A Share shareholders:
122,882
No. of H Share shareholders:
30,257
Particulars of top ten shareholders of the Company
Name of shareholder
Nature of shareholder
China Life Insurance (Group) Company
State-owned legal person
HKSCC Nominees Limited
Overseas legal person
China Securities Finance Corporation Limited
State-owned legal person
Central Huijin Asset Management Limited
State-owned legal person
Industrial and Commercial Bank of China Limited
– China Southern Flexible Allocation of
Consumption and Vitality of
Hybrid Securities Investment Fund
Other
Hong Kong Securities Clearing Company Limited
Overseas legal person
China International Television Corporation
State-owned legal person
Other
China Universal Asset Management Co., Ltd
– Industrial and Commercial Bank of
China Limited – China Universal
– Tianfu Bull No. 53 Asset Management Plan
New China Life Insurance Company Ltd.
– Participating – Group Participating
– 018L – FH001 Hu
Unit: Shares
Increase/decrease
during the
Reporting Period
Number of shares
subject to selling
restrictions
Number of shares
pledged or frozen
Number of
shares held as at
the end of the
Reporting Period
19,323,530,000
7,314,015,954
–
+3,725
572,311,916
+51,619,506
119,719,900
–
59,384,610
+25,016,894
27,290,235
18,452,300
15,015,845
+17,584,819
–
–
Percentage of
shareholding
68.37%
25.88%
2.02%
0.42%
0.21%
0.10%
0.07%
0.05%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
61
Domestic Non-State-
owned legal person
0.05%
13,538,001
+13,538,001
China National Nuclear Corporation
State-owned legal person
0.04%
12,400,000
-7,600,000
China Life Insurance Company Limited Annual Report 2016
Changes in Ordinary Shares and Shareholders Information
Details of shareholders
1.
HKSCC Nominees Limited is a company that holds shares on behalf of the clients of the Hong Kong stock brokers and other participants of the
CCASS system. The relevant regulations of the HKSE do not require such persons to declare whether their shareholdings are pledged or frozen.
Hence, HKSCC Nominees Limited is unable to calculate or provide the number of shares that are pledged or frozen.
2.
China International Television Corporation and China National Nuclear Corporation became the top 10 shareholders of the Company through
the strategic placement during the initial public offering of A Shares of the Company in December 2006. The trading restriction period of the
shares from the strategic placement was from 9 January 2007 to 9 January 2008.
3.
Industrial and Commercial Bank of China Limited-China Southern Flexible Allocation of Consumption and Vitality of Hybrid Securities
Investment Fund has Industrial and Commercial Bank of China Limited as its fund depositary. China Universal Asset Management Co.,
Ltd – Industrial and Commercial Bank of China Limited – China Universal – Tianfu Bull No.53 Asset Management Plan has Industrial and
Commercial Bank of China Limited as its asset trustee. Save as above, the Company was not aware of any connected relationship and concerted
parties as defined by the “Measures for the Administration of the Takeover of Listed Companies” among the top ten shareholders of the
Company.
2.
Information relating to the Controlling Shareholder and Effective Controller
The controlling shareholder of the Company is CLIC, and its relevant information is set out below:
Name of company
China Life Insurance (Group) Company
Legal representative
Yang Mingsheng
Date of incorporation
Major businesses
Shareholdings in other
subsidiaries and affiliates listed
in China or abroad during the
Reporting Period
21 July 2003 (CLIC was formerly known as China Life Insurance Company, a
company approved and formed by the State Council in January 1999. With the
approval of the CIRC in 2003, China Life Insurance Company was restructured as
CLIC)
Insurance services including receipt of premiums and payment of benefits in
respect of the in-force life, health, accident and other types of personal insurance
business, and the reinsurance business; holding or investing in domestic and
overseas insurance companies or other financial insurance institutions; funds
management business permitted by national laws and regulations or approved
by the State Council of PRC; other businesses approved by insurance regulatory
agencies.
As at 31 December 2016, CLIC held 1,785,098,644 shares (H Share) of Town
Health International Medical Group Limited, representing 23% of its total shares.
62
China Life Insurance Company Limited Annual Report 2016
Changes in Ordinary Shares and Shareholders Information
The effective controller of the Company is the Ministry of Finance of the People’s Republic of China. The
equity and controlling relationship between the Company and its effective controller is set out in below:
Ministry of Finance of the PRC
100%
China Life Insurance (Group) Company
68.37%
China Life Insurance Company Limited
During the Reporting Period, there was no change to the controlling shareholder and the effective controller
of the Company. As at the end of the Reporting Period, there was no other corporate shareholder holding
more than 10% of the shares in the Company.
4.
INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES
OF THE COMPANY HELD BY SUBSTANTIAL SHAREHOLDERS AND OTHER
PERSONS UNDER HONG KONG LAWS AND REGULATIONS
So far as is known to the Directors, Supervisors and the chief executive of the Company, as at 31 December 2016,
the following persons (other than the Directors, Supervisors and the chief executive of the Company) had interests
or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the
Company under the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance (Chapter
571 of the Laws of Hong Kong) (the “SFO”), or which were recorded in the register required to be kept by the
Company pursuant to Section 336 of the SFO, or as otherwise notified to the Company and HKSE:
Name of substantial shareholder
Capacity
Class of shares
Number of
shares held
Percentage of the
respective class
of shares
Percentage of the
total number of
shares in issue
Beneficial owner
A Shares
19,323,530,000 (L)
92.80%
68.37%
China Life Insurance (Group)
Company
JPMorgan Chase & Co. (Note 1)
BlackRock, Inc. (Note 2)
Interest in controlled corporation
H Shares
Beneficial owner, investment
manager, trustee and custodian
corporation/approved lending agent
H Shares
568,720,847 (L)
131,839,776 (S)
264,241,698 (P)
516,788,896(L)
1,066,000(S)
7.64%
1.77%
3.55%
6.94%
0.01%
2.01%
0.47%
0.93%
1.83%
0.00%
The letter “L” denotes a long position. The letter “S” denotes a short position. The letter “P” denotes interest in a lending pool.
63
China Life Insurance Company Limited Annual Report 2016
Changes in Ordinary Shares and Shareholders Information
(Note 1): JPMorgan Chase & Co. was interested in a total of 568,720,847 H shares in accordance with the provisions of
Part XV of the SFO. Of these shares, J.P. Morgan Securities LLC, JF Asset Management Limited, J.P. Morgan
Investment Management Inc., J.P. Morgan GT Corporation, J.P. Morgan Whitefriars Inc., J.P. Morgan Securities
plc, JPMorgan Chase Bank, N.A., J.P. Morgan Chase Bank Berhad, JPMorgan Asset Management (UK) Limited and
China International Fund Management Co Ltd were interested in 94,276,750 H shares, 1,744,000 H shares, 238,000
H shares, 500,000 H shares, 36,304,793 H shares, 169,712,429 H shares, 264,246,283 H shares, 800,592 H shares,
698,000 H shares and 200,000 H shares respectively. All of these entities are either controlled or indirectly controlled
subsidiaries of JPMorgan Chase & Co.
Included in the 568,720,847 H shares are 264,241,698 H shares (3.55%), which are held in the “lending pool”, as
defined under Section 5(4) of the Securities and Futures (Disclosure of Interests-Securities Borrowing and Lending)
Rules. Of these 568,720,847 H shares, 52,558,380 H shares were physically settled listed derivatives, 1,652,000 H
shares were cash settled listed derivatives, 237,826 H shares were physically settled unlisted derivatives and 28,128,300
H shares were cash settled unlisted derivatives.
JPMorgan Chase & Co. held a short position as defined under Part XV of the SFO in 131,839,776 H shares (1.77%).
Of these 131,839,776 H shares, 18,998,675 H shares were physically settled listed derivatives, 41,455,100 H shares
were cash settled listed derivatives, 8,447,345 H shares were physically settled unlisted derivatives and 33,686,156 H
shares were cash settled unlisted derivatives.
(Note 2): BlackRock, Inc. was interested in a total of 516,788,896 H shares in accordance with the provisions of Part XV of the
SFO. Of these shares, BlackRock Investment Management, LLC, BlackRock Financial Management, Inc., BlackRock
Institutional Trust Company, National Association, BlackRock Fund Advisors, BlackRock Advisors, LLC, BlackRock
Japan Co., Ltd., BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia)
Limited, BlackRock Asset Management North Asia Limited, BlackRock (Netherlands) B.V., BlackRock Advisors
(UK) Limited, BlackRock International Limited, BlackRock Asset Management Ireland Limited, BLACKROCK
(Luxembourg) S.A., BlackRock Investment Management (UK) Limited, BlackRock Asset Management Deutschland
AG, BlackRock Fund Managers Limited, BlackRock Life Limited, BlackRock (Singapore) Limited and BlackRock
Asset Management (Schweiz) AG were interested in 3,236,000 H shares, 2,609,000 H shares, 94,535,254 H shares,
168,530,000 H shares, 1,536,955 H shares, 9,184,502 H shares, 2,665,235 H shares, 3,855,000 H shares, 37,301,218
H shares, 1,562,000 H shares, 39,034,785 H shares, 3,427,700 H shares, 48,150,096 H shares, 65,373,505 H shares,
30,179,276 H shares, 539,000 H shares, 3,878,370 H shares, 591,000 H shares, 564,000 H shares and 36,000 H
shares respectively. All of these entities are either controlled or indirectly controlled subsidiaries of BlackRock, Inc. Of
these 516,788,896 H shares, 2,991,915 H shares were cash settled unlisted derivatives.
BlackRock, Inc. held by way of attribution a short position as defined under Part XV of the SFO in 1,066,000 H
shares (0.01%). Of these 1,066,000 H shares, 358,000 H shares were cash settled unlisted derivatives.
Save as disclosed above, the Directors, Supervisors and the chief executive of the Company are not aware that there
is any party who, as at 31 December 2016, had an interest or short position in the shares and underlying shares of
the Company which were recorded in the register required to be kept by the Company pursuant to Section 336 of
the SFO.
64
Directors, Supervisors, Senior Management and Employees
China Life Insurance Company Limited Annual Report 2016
I DIRECTORS, SUPERvISORS AND SENIOR MANAGEMENT
(I) Current Directors
Other benefits,
social insurance,
housing
provident fund
and enterprise
annuity fund
paid by the
Company
in RMB ten
thousands
Total
emoluments
received from
the Company
during the
Reporting
Period in RMB
ten thousands
(before tax)
Whether
received
emoluments
from
related
parties of the
Company
Number
of shares
held at the
beginning
of the year
Number of
shares held
at the end
of the year
Remuneration
paid/fee in
RMB ten
thousands
Reason for
changes
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
/
/
/
/
/
/
/
/
/
/
/
/
0
140.00
113.40
113.40
0
0
0
32.00
32.00
26.67
15.00
/
0
24.56
24.48
24.18
0
0
0
0
0
0
0
/
0
164.56
137.88
137.58
0
0
0
32.00
32.00
26.67
15.00
545.69
Yes
No
No
No
Yes
Yes
Yes
Yes
No
Yes
Yes
/
Name
Position
Gender
Age
Term
Male
61
Since 22 May 2012
Yang Mingsheng
Lin Dairen
Xu Hengping
Xu Haifeng
Miao Jianmin
Wang Sidong
Liu Jiade
Chairman of the Board,
Executive Director
Executive Director
Executive Director
Executive Director
Male
Male
Male
Non-executive Director Male
Non-executive Director Male
Non-executive Director Male
Chang Tso Tung Stephen Independent Director
Robinson Drake Pike
Independent Director
Tang Xin
Independent Director
Male
Male
Male
Leung Oi-Sie Elsie
Independent Director
Female
/
/
Total
Notes:
58
58
57
52
55
54
68
65
45
77
/
Since 27 October 2008
Since 11 July 2015
Since 11 July 2015
Since 27 October 2008
Since 24 July 2012
Since 11 July 2015
Since 20 October 2014
Since 11 July 2015
Since 7 March 2016
Since 20 July 2016
/
1.
According to the “Procedural Rules for Board of Directors Meetings of China Life Insurance Company Limited”,
Directors serve for a term of three years and may be re-elected. However, Independent Directors may not serve for
more than six years.
2.
The positions of the Directors in this annual report reflect their positions as at the submission date of this annual
report. The emoluments are calculated based on their terms of office during the Reporting Period.
3.
According to the requirements of the relevant remuneration policies of the Company, the final amount of
emoluments of the Executive Directors is currently subject to review and approval. The result of the review will be
disclosed when the final amount is confirmed.
4.
Following the election at the First Extraordinary General Meeting 2015 and upon the approval from the CIRC,
Mr. Tang Xin was appointed as a Director with effect from 7 March 2016. Following the election at the 2015
Annual General Meeting and upon the approval from the CIRC, Ms. Leung Oi-Sie Elsie was appointed as a
Director with effect from 20 July 2016.
65
China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
(II) Current Supervisors
Other benefits,
social insurance,
housing
provident fund
and enterprise
annuity fund
paid by the
Company
in RMB ten
thousands
Total
emoluments
received from
the Company
during the
Reporting
Period in RMB
ten thousands
(before tax)
Whether
received
emoluments
from
related
parties of the
Company
Number
of shares
held at the
beginning of
the year
Number of
shares held
at the end of
the year
Remuneration
paid/fee in
RMB ten
thousands
Reason for
changes
Name
Position
Gender
Age
Term
Chairman of the
Supervisory Committee
Supervisor
Supervisor
Employee Representative
Supervisor
Employee Representative
Supervisor
Male
58
Since 11 July 2015
Male
Female
Male
57
48
48
Since 25 May 2009
Since 20 October 2014
Since 11 July 2015
Female
53
Since 11 July 2015
/
/
/
/
0
0
0
0
0
0
0
0
0
0
0
0
/
/
/
/
/
/
114.80
24.48
139.28
117.91
0
122.38
30.03
0
30.45
147.94
0
152.83
108.78
29.29
138.07
/
/
578.12
No
No
Yes
No
No
/
Miao Ping
Shi Xiangming
Xiong Junhong
Zhan Zhong
Wang Cuifei
Total
Notes:
1.
Pursuant to the Articles of Association, Supervisors serve for a term of three years and may be re-elected.
2.
The positions of the Supervisors in this annual report reflect their positions as at the submission date of this annual
report. The emoluments are calculated based on their terms of office during the Reporting Period.
3.
According to the requirements of the relevant remuneration policies of the Company, the final amount of
emoluments of the Chairman of the Supervisory Committee and the Supervisors is currently subject to review and
approval. The result of the review will be disclosed when the final amount is confirmed.
66
China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
(III) Current Senior Management
Other benefits,
social insurance,
housing
provident fund
and enterprise
annuity fund
paid by the
Company
in RMB ten
thousands
Total
emoluments
received from
the Company
during the
Reporting
Period in RMB
ten thousands
(before tax)
Whether
received
emoluments
from
related
parties of the
Company
Number
of share
held at the
beginning of
the year
Number of
share held at
the end of
the year
Remuneration
paid in RMB
ten thousands
Reason for
changes
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
/
/
/
/
/
/
/
/
/
140.00
113.40
113.40
113.40
56.70
107.33
105.00
24.50
24.56
24.48
24.18
24.64
12.22
24.75
32.47
8.60
164.56
137.88
137.58
138.04
68.92
132.08
137.47
33.10
No
No
No
No
No
No
No
No
/
/
949.63
/
Position
President
Vice President
Vice President
Vice President,
Chief Actuary
Vice President
Vice President
Board Secretary
Chief
Information
Technology
Officer
/
Gender
Age
Term
Male
Male
Male
Male
Male
Male
Male
Male
58
58
57
47
53
48
54
50
Since April 2014
Since November 2014
Since November 2014
As Vice President since
November 2014 and
Chief Actuary since
March 2012
Since July 2016
Since October 2016
Since June 2013
Since October 2016
/
/
/
Name
Lin Dairen
Xu Hengping
Xu Haifeng
Li Mingguang
Zhao Lijun
Xiao Jianyou
Zheng Yong
Ruan Qi
Total
Notes:
1.
2.
The positions of the members of the Senior Management in this annual report reflect their positions as at the
submission date of this annual report. The emoluments are calculated based on their terms of office during the
Reporting Period.
According to the requirements of the relevant remuneration policies of the Company, the final amount of
emoluments of the Senior Management is currently subject to review and approval. The result of the review will be
disclosed when the final amount is confirmed.
3. With the approval given at the seventh meeting of the fifth session of the Board of Directors of the Company
and the approval from the CIRC, Mr. Zhao Lijun was appointed as the Vice President of the Company with
effect from 20 July 2016. With the approval given at the ninth meeting of the fifth session of the Board of
Directors of the Company, Mr. Xiao Jianyou, the former Assistant President, was appointed as the Vice President
of the Company with effect from 27 October 2016, and Mr. Ruan Qi was appointed as the Chief Information
Technology Officer of the Company with effect from 27 October 2016.
67
China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
(Iv) Resignation and Retirement of Directors, Supervisors and Senior Management
Other
benefits, social
insurance,
housing
provident fund
and enterprise
annuity fund
paid by the
Company
in RMB ten
thousands
Total
emoluments
received from
the Company
during the
Reporting
Period in
RMB ten
thousands
(before tax)
Whether
received
emoluments
from related
parties of the
Company
Reason for changes
Number of
share held at
the beginning
of the year
Number of
share held at
the end of
the year
Remuneration
paid/fee in
RMB ten
thousands
Reason for
changes
0
0
0
0
0
0
0
0
0
0
0
0
/
/
/
/
/
/
0
15.00
5.33
0
0
0
0
Yes
Resigned due to age reason
15.00
Yes
Retired due to the expiration of session of the
Board
5.33
No
Resigned pursuant to the relevant policies
65.33
14.05
79.38
16.33
3.05
19.38
No
No
Resigned due to adjustment of work
arrangements
Resigned due to adjustment of work
arrangements
/
/
119.09
/
/
Name
Previous Position Gender
Age
Term
Zhang Xiangxian
Non-executive
Director
Male
61
Anthony Francis
Neoh
Huang Yiping
Independent
Director
Independent
Director
Male
70
Male
53
Yang Zheng
Vice President
Male
46
Huang Xiumei
Financial
Controller
Female
49
24 July 2012 –
3 August 2016
21 June 2010 –
20 July 2016
20 October 2014 –
7 March 2016
November 2014 –
August 2016
December 2014 –
February 2016
Total
/
/
/
/
68
China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
DIRECTORS
Mr. Yang Mingsheng, born in 1955, Chinese
Mr. Yang became an Executive Director and the Chairman of the Company in May 2012.
He has been the Chairman of China Life Insurance (Group) Company since March 2012, the
Chairman of China Life Property and Casualty Insurance Company Limited since March 2012,
the Chairman of China Life Insurance (Overseas) Company Limited since January 2013, the
Chairman of China Life Asset Management Company Limited since December 2013, and the
Chairman of China Guangfa Bank Co., Ltd. since September 2016. Mr. Yang has many years of
experience in financial industry. He acted as the Vice Chairman of China Insurance Regulatory
Commission from 2007 to 2012, and worked for Agricultural Bank of China from 1980 to
2007, where he held various positions such as the Vice President of Shenyang Branch, Head of
the Industrial Credit Department and President of Tianjin Branch. He was appointed as the
Vice President of Agricultural Bank of China in 1997 and was then promoted to the President of
Agricultural Bank of China in 2003. Mr. Yang, a Senior Economist, graduated from the Faculty
of Finance of Nankai University, majoring in Monetary Banking with a Master’s degree in
Economics.
Mr. Lin Dairen, born in 1958, Chinese
Mr. Lin became an Executive Director of the Company in October 2008, and was appointed as
the President of the Company by the Board in March 2014. He serves concurrently as a Non-
executive Director of China Life Property and Casualty Insurance Company Limited, China Life
Pension Company Limited and China Life Asset Management Company Limited. He served as
the Vice President of the Company from 2003 to March 2014, and an Executive Director and the
President of China Life Pension Company Limited from November 2006 to March 2014. Mr.
Lin graduated with a Bachelor’s degree in Medicine from Shandong Province Changwei Medical
Institute in 1982. Mr. Lin, a Senior Economist, has over 30 years of experience in the operation
of the life insurance business and insurance management, and was awarded special allowance
by the State Council. He is currently the Chairman of the China Life Foundation, the Vice
Chairman of the Insurance Institute of China and the Insurance Association of China, a Non-
executive Director of China Insurance Security Fund Co., Ltd., the Director of the Life Insurance
Committee of the Insurance Association of China and the Director of the Insurance Institutional
Investors Professional Committee of the Insurance Asset Management Association of China.
69
China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
Mr. Xu Hengping, born in 1958, Chinese
Mr. Xu became an Executive Director of the Company in July 2015. He has been the Vice
President of the Company since November 2014, the Chief Operating Officer of the Company
since August 2010, the General Manager of the Company’s Fujian Branch since April 2007, the
Deputy General Manager of the Company’s Fujian Branch since December 2002, an Assistant to
the General Manager of the Company’s Fujian Branch since September 1998, and the Director
of Personal Insurance Division of the Company’s Fujian Branch since July 1996. Mr. Xu once
served as the General Manager of the Sales Department and the General Manager of Longyan
Branch of Fuzhou Life Insurance Company Limited. Mr. Xu graduated from Hunan University,
majoring in Finance. Mr. Xu, a Senior Economist, has over 35 years of experience in operation of
the life insurance business and insurance management.
Mr. Xu Haifeng, born in 1959, Chinese
Mr. Xu became an Executive Director of the Company in July 2015. He has been the Vice
President of the Company since November 2014 and a Non-executive Director of China Life
Asset Management Company Limited since September 2015. He served as a Non-executive
Director of China Life Ecommerce Company Limited from January 2015 to January 2017. He
served as the Business Controller of the Company from February to November 2014, during
which he concurrently served as the General Manager of Hebei Branch of the Company. Mr. Xu
served as the General Manager of Beijing Branch and the General Manager of Hebei Branch of
the Company from 2006 to 2014. Prior to that, Mr. Xu served as the Deputy General Manager
and General Manager of Linyi Branch in Shandong Province and the General Manager of the
Business Management Department in Shandong Branch of the Company, the General Manager
of Jinan Branch and the Deputy General Manager of Beijing Branch of the Company. Mr. Xu
graduated from Linyi Foreign Language Normal University in 1982, from Shandong Provincial
Party School majoring in Economic Management in 1996, and obtained a Master’s degree in
Business Administration from Zhongnan University of Economics and Law in 2007. Mr. Xu, a
Senior Economist, has over 30 years of experience in the operation of life insurance business and
insurance management.
Mr. Miao Jianmin, born in 1965, Chinese
Mr. Miao became a Non-executive Director of the Company in October 2008. He is the Vice
Chairman and the President of China Life Insurance (Group) Company. He is concurrently the
Chairman of China Life Pension Company Limited, a Director of China Life Asset Management
Company Limited, a Director of China World Trade Center Co., Ltd., and an Executive Director
of China Finance 40 Forum. He was awarded special allowance by the State Council. In 2009,
he was named as a “State-level Candidate for the New Century Talents Project” and one of
the “60 People in China Insurance Industry in the 60-year History of New China”. Mr. Miao
graduated from the Central University of Finance and Economics with a Doctorate degree in
Economics. Before that, Mr. Miao graduated from the post-graduate division of the People’s Bank
of China with a Master’s degree in Monetary Banking, and the Central University of Finance and
Economics with a Bachelor’s degree in Insurance. Mr. Miao is a Senior Economist.
70
China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
Mr. Wang Sidong, born in 1961, Chinese
Mr. Wang became a Non-executive Director of the Company in July 2012. He has been the Vice
President of China Life Insurance (Group) Company, the Chairman of China Life Investment
Holding Company Limited, a Director of China Life Pension Company Limited, and a Director
of China Life Ecommerce Company Limited since June 2004. Mr. Wang worked for the Ministry
of Foreign Economic Relations and Trade, the Xinhua News Agency Hong Kong Branch, and the
Hong Kong Chinese Enterprises Association. He served as the Deputy Director of the General
Office of China Life Insurance Company, the Deputy General Manager of its Zhejiang Branch
and the Deputy Director of the Shares Reform Office of China Life from 2000. Mr. Wang was
the Director of the General Office of China Life Insurance (Group) Company in 2003. Mr.
Wang, a Senior Economist, graduated from Shandong University with a Bachelor’s degree in Arts,
majoring in Chinese Language and Literature.
Mr. Liu Jiade, born in 1963, Chinese
Mr. Liu became a Non-executive Director of the Company in July 2015. He is the Vice
Chairman and the President of China Guangfa Bank Co., Ltd. and concurrently serves as a
Supervisor of Sinopec Sales Company Limited and a member of the Accounting Informatization
Committee of the Ministry of Finance. Mr. Liu served as the Deputy Director and the Director
of the Trade and Finance Department of the Ministry of Finance, the Deputy County Magistrate
(as a titular position) of Guantao County People’s Government in Hebei Province, and the
Deputy Director of the Finance Department of the Ministry of Finance. Mr. Liu served as the
Vice President of the Company from August 2003 to March 2014, the Chairman of China Life
Pension Company Limited from March 2014 to December 2016 (in particular, he concurrently
served as the President of China Life Pension Company Limited from March 2014 to March
2015), and the Vice President of China Life Insurance (Group) Company from August 2014
to October 2016. Since 2003, he also concurrently served as a Director of China Life Asset
Management Company Limited, a Director of China Life Property and Casualty Insurance
Company Limited, and a Director of China Life Franklin Asset Management Company Limited.
Mr. Liu, a Senior Economist, graduated from the Central Finance College (now known as the
Central University of Finance and Economics) majoring in Finance with a Bachelor’s degree in
Economics.
71
China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
Mr. Chang Tso Tung Stephen, born in 1948, Chinese
Mr. Chang became an Independent Director of the Company in October 2014. He served as
the Vice Chairman of the Greater China Region of Ernst & Young, the Managing Partner for
professional services and the Chairman of auditing and consulting service of Ernst & Young
until his retirement in 2004. From 2007 to 2013, Mr. Chang was an Independent Non-executive
Director of China Pacific Insurance (Group) Co., Ltd. Mr. Chang is currently an Independent
Non-executive Director of China Cinda Asset Management Co., Ltd., Kerry Properties Limited
and Hua Hong Semiconductor Limited, all of which are listed on the HKSE. Mr. Chang has been
practicing as a certified public accountant in Hong Kong for around 30 years and has extensive
experience in accounting, auditing and financial management. Mr. Chang holds a Bachelor
of Science degree from the University of London, and is a fellow member of the Institute of
Chartered Accountants in England and Wales.
Mr. Robinson Drake Pike, born in 1951, American
Mr. Pike became an Independent Director of the Company in July 2015. Before his retirement
from Goldman Sachs in 2014, Mr. Pike served as the Managing Director of Goldman Sachs and
the Chief Representative of the Beijing Representative Office of Goldman Sachs International
Bank UK from August 2011 to May 2014, and the Managing Director of Goldman Sachs
and the senior advisor and project coordinator sent to the Industrial and Commercial Bank of
China by Goldman Sachs from January 2007 to August 2011. He was the Senior Vice President
of Lehman Brothers and the Deputy Head and the Head of Asia Credit Risk Management of
Lehman Brothers from July 2000 to December 2006. Mr. Pike currently sits on the four-member
Committee of Inspection of Peregrine Fixed Income Limited. He has over 30 years of experience
in the Asian financial industry with a focus on risk management and China’s banking industry.
He holds a Bachelor of Arts degree in Chinese Language and Literature from Yale University
and a Master of Public Affairs degree in development economics from Princeton University’s
Woodrow Wilson School.
72
China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
Mr. Tang Xin, born in 1971, Chinese
Mr. Tang became an Independent Director of the Company in March 2016. He is a professor of
the School of Law of Tsinghua University, the Deputy Head of the Commercial Law Research
Center of Tsinghua University, an associate editor of “Tsinghua Law Review”, a member of the
Listing Committee of the Shanghai Stock Exchange, the Chairman of the Independent Director
Committee of the Listed Companies Association of the PRC, and an Independent Director of
each of Harvest Fund Management Co., Ltd., GF Securities Co., Ltd. and Oriza Holdings Co.,
Ltd. Mr. Tang was elected as a member of the first and second sessions of the Merger, Acquisition
and Reorganization Review Committee of the China Securities Regulatory Commission from
2008 to 2010. He served as an Independent Director of China Spacesat Co., Ltd. from 2008
to 2014, an Independent Director of each of SDIC Power Holdings Co., Ltd. and Changjiang
Securities Company Limited from 2009 to 2013, and an Independent Director of Beijing Rural
Commercial Bank Co., Ltd. from 2009 to 2015. Mr. Tang graduated from Renmin University of
China with Bachelor’s, Master’s and Doctorate degrees in Law.
Ms. Leung Oi-Sie Elsie, born in 1939, Chinese
Ms. Leung Oi-Sie Elsie became an Independent Director of the Company in July 2016. She was
the first Secretary for Justice of Hong Kong, as well as a member of the Executive Council of
Hong Kong. She is currently the Deputy Director of the Hong Kong Basic Law Committee of the
Standing Committee of the National People’s Congress and a consultant of Iu, Lai & Li Solicitors
& Notaries. Ms. Leung served as a member of the Social Welfare Advisory Committee and
the Equal Opportunities Commission, an executive committee member and a council member
of the Hong Kong Federation of Women, the Chairperson and President of the International
Federation of Women Lawyers, and the Honorary President of the Nanhai Worldwide Friendship
Federation. She is a Justice of the Peace, a Notary Public and a China-Appointed Attesting
Officer. She has been awarded the “Grand Bauhinia Medal” and admitted as a solicitor by the
Law Societies of Hong Kong and England. Ms. Leung graduated from the University of Hong
Kong with a Master’s degree in Law, and is a fellow of the International Academy of Matrimonial
Lawyers. She has been an Independent Non-executive Director of United Company RUSAL
Plc since December 2009, an Independent Non-executive Director of China Resources Power
Holdings Company Limited since April 2010, and an Independent Non-executive Director of
Beijing Tong Ren Tang Chinese Medicine Company Limited since May 2013.
73
China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
SUPERVISORS
Mr. Miao Ping, born in 1958, Chinese
Mr. Miao became the Chairman of the Supervisory Committee of the Company in July 2015.
He served as an Executive Director of the Company from July 2014 to May 2015 and the Vice
President of the Company from December 2009 to May 2015. Mr. Miao served as the General
Manager of the Company’s Jiangsu Branch since September 2006, the General Manager of the
Company’s Jiangxi Branch since September 2004, and the Deputy General Manager of the
Company’s Jiangsu Branch since April 2002. Mr. Miao graduated from the Correspondence
College of Yangzhou University in 1996, majoring in Economics and Management. Mr. Miao, a
Senior Economist, has over 30 years of experience in the operation of life insurance business and
the management of insurance business.
Mr. Shi Xiangming, born in 1959, Chinese
Mr. Shi became a Supervisor of the Company in May 2009, and has been the General Manager
of the Supervisory Department of the Company since September 2008. Mr. Shi served as the
Deputy General Manager of the Human Resources Department and the Office Director of the
Company from September 2003 to September 2008. From March 2002 to August 2003, Mr. Shi
served as the Deputy General Manager of the Supervisory Department of China Life Insurance
Company. Mr. Shi graduated from the Chemistry School of the first branch college of Peking
University with a Bachelor of Science degree.
Ms. Xiong Junhong, born in 1968, Chinese
Ms. Xiong became a Supervisor of the Company in October 2014. She is a Senior Economist
with a PhD in Finance from Nankai University. From July 1993 to August 2003, Ms. Xiong
worked at the Banking Department and the Trust Department of China People’s Insurance Trust
and Investment Company, and the Assets Management Department of China Life Insurance
Company. Ms. Xiong has been the Director of the Assets Management Department of China
Life Insurance (Group) Company since September 2003, the Senior Manager of the Strategic
Planning Department of China Life Insurance (Group) Company since August 2006, an
Assistant to the General Manager of the Strategic Planning Department of China Life Insurance
(Group) Company since September 2008, an Assistant to the General Manager (equivalent to
the rank of departmental deputy general manager of China Life Insurance (Group) Company)
of the Company’s Hebei Branch since December 2010, and the Deputy General Manager of the
Strategic Planning Department of China Life Insurance (Group) Company since June 2013. Ms.
Xiong has many years of experience in strategic management and investment research, and has
extensive working experience in assets preservation, risk management, investment research and
strategic planning.
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China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
Mr. Zhan Zhong, born in 1968, Chinese
Mr. Zhan became a Supervisor of the Company in July 2015. He has been the General Manager
of the Individual Insurance Division of the Company (at the general manager level of provincial
branches) since July 2014. Mr. Zhan served as the General Manager of the Company’s Qinghai
Branch from January 2014 to June 2014. Mr. Zhan joined the Company in November 1994,
and has successively served as the General Manager of the Individual Insurance Division of
the Company’s Guangdong Branch, an Assistant to the General Manager of the Company’s
Guangdong Branch, the Deputy General Manager (responsible for daily operation) and the
General Manager of the Individual Insurance Division of the Company and the Deputy Secretary
of the Party Committee and the Deputy General Manager (responsible for daily operation) of the
Company’s Qinghai Branch. Mr. Zhan graduated from Kunming Institute of Technology with a
Bachelor’s degree in Computer and Automation.
Ms. Wang Cuifei, born in 1964, Chinese
Ms. Wang became a Supervisor of the Company in July 2015. She has been the General Manager
of the Customer Services Department of the Company since September 2014. Ms. Wang served
as the General Manager of the Sales Inspection Department of the Company from March 2009
to August 2014. She joined the Company in July 2001, and has served successively as the person-
in-charge (at the deputy director level) and the Manager of the Training Management Division
of the Brokerage Agency Department, the Deputy General Manager of the Bancassurance
Department and the General Manager of the Sales Inspection Department of the Company.
Ms. Wang graduated from the Party School of the Central Committee of CPC with a Bachelor’s
degree in Economic Management.
SENIOR MANAGEMENT
Mr. Lin Dairen, please see the section “Directors” for his profile.
Mr. Xu Hengping, please see the section “Directors” for his profile.
Mr. Xu Haifeng, please see the section “Directors” for his profile.
Mr. Li Mingguang, born in 1969, Chinese
Mr. Li became the Vice President of the Company in November 2014. He became the Chief
Actuary of the Company in March 2012. Mr. Li joined the Company in 1996 and subsequently
served as the Deputy Director, the Director, an Assistant to the General Manager of the Product
Development Department, the Responsible Actuary of the Company and the General Manager
of the Actuarial Department. He graduated from Shanghai Jiaotong University majoring
in Computer Science with a Bachelor’s degree in 1991, Central University of Finance and
Economics majoring in Monetary Banking (Actuarial Science) with a Master’s degree in 1996
and Tsinghua University with an EMBA in 2010, and also studied in University of Pennsylvania
in the United States in 2011. Mr. Li is a Fellow of the China Association of Actuaries (FCAA)
and a Fellow of the Institute and Faculty of Actuaries (FIA). He was the Chairman of the first
session of the China Actuarial Working Committee and the Secretary-general of both the first and
the second sessions of the China Association of Actuaries. He is currently an Executive Director
of the China Association of Actuaries and a Special Executive of the Board of Directors of the
Insurance Institute of China.
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China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
Mr. Zhao Lijun, born in 1963, Chinese
Mr. Zhao became the Vice President of the Company in July 2016. He served as the Chief
Financial Officer and the General Manager of the Finance Department of China Life Insurance
(Group) Company from May 2014 to April 2016. From 2012 to 2014, Mr. Zhao successively
served as the Deputy General Manager (responsible for daily operation) and the General Manager
of the Data Center of the Company. From 2010 to 2012, Mr. Zhao served as the General
Manager of the Legal and Compliance Department of the Company. From 2008 to 2010, Mr.
Zhao served as the Deputy General Manager of Shandong branch of the Company. From 2003
to 2008, Mr. Zhao successively served as an Assistant to the General Manager and the General
Manager of the Finance Department of the Company. Prior to that, he successively served as a
cadre in the Planning & Finance Department of the People’s Insurance Company of China, the
Director and Deputy Manager of the Planning & Finance Department of China Reinsurance
Corporation in Hong Kong, the Deputy Manager and Manager of the Planning & Finance
Department of China Insurance H.K. (Holdings) Company Limited, the Deputy Director, the
Director and an Assistant to the General Manager of the Planning & Finance Department of
China Life Insurance Company. Mr. Zhao graduated from the Accounting Department of Anhui
Finance & Trade College with a Bachelor’s degree in Accounting and Finance in 1987, and from
Tsinghua University with an EMBA in 2010. Mr. Zhao is a Senior Accountant.
Mr. Xiao Jianyou, born in 1968, Chinese
Mr. Xiao became the Vice President of the Company in October 2016. He has been an Assistant
to the President of the Company since July 2015, and a Non-executive Director of China Life
Property and Casualty Insurance Company Limited since September 2015. He served as the
General Manager of the Company’s Jiangsu Branch from January 2014, and the Deputy General
Manager (responsible for daily operation) of the Company’s Jiangsu Branch from April 2013 to
January 2014. From 2006 to 2013, he successively served as the Deputy General Manager, an
Assistant to the General Manager and the Marketing Director of Jiangsu Branch and the General
Manager and the Deputy General Manager of Taizhou Branch in Jiangsu Province. Before that,
Mr. Xiao held various other positions at the Company’s Jiangsu Branch, including the Deputy
Manager of the Marketing Department and Management Department, an Assistant to the
General Manager, the Deputy General Manager (responsible for daily operation) and the General
Manager of the Individual Insurance Department. Mr. Xiao, a Senior Economist, graduated from
Jiangxi Traditional Chinese Medicine College in 1991 with a Bachelor’s degree, and received
the double Bachelor’s degrees in Medicine and Law from Jiangxi Traditional Chinese Medicine
College and Nanjing University, respectively.
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China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
Mr. Zheng Yong, born in 1962, Chinese
Mr. Zheng became the Board Secretary of the Company in June 2013. He previously held
positions as the Department Head of the Ministry of Justice of the PRC, a practicing lawyer
of Beijing Longan Law Firm, China Legal Service Ltd. (Hong Kong) and Beijing DeHeng
Law Offices, the Deputy General Manager of the Department of Legal Affairs, the Company
Secretary, and the General Manager of the Legal and Compliance Department of the Company,
and an Executive Director and Vice President of China Guangfa Bank Co., Ltd. Mr. Zheng
received his LL.B. degree from Peking University, and LL.M. degrees from the China University
of Political Science and Law and University of Essex (UK). Mr. Zheng was a visiting researcher
at Harvard Law School and Harvard Kennedy School of Government in the United States from
August 1996 to October 1997. Mr. Zheng, a Senior Economist, currently serves as an arbitrator
of the China International Economics and Trade Arbitration Commission, and the Deputy
Chairman of the Chamber of Hong Kong Listed Companies.
Mr. Ruan Qi, born in 1966, Chinese
Mr. Ruan became the Chief Information Technology Officer of the Company in October
2016. He has been the General Manager (at the general manager level of provincial branches)
of the Information Technology Department of the Company since March 2016. He served
as the General Manager of China Life Data Center and the General Manager (at the general
manager level of the provincial branches) of the Information Technology Department of the
Company from 2014 to 2016, and the Deputy General Manager and the General Manager of
the Information Technology Department of the Company from 2004 to 2014. He served as a
staff member of the Computer Department of Fujian Branch, the Deputy Head of the Technical
Division of the Computer Office, an Assistant to the Director, and the Deputy Director of the
Computer Office, and the Deputy Manager (responsible for daily operation) and the Manager of
the Information Technology Department of the Company from 1989 to 2004. He was a cadre
at Fujian Research Institute of Posts and Telecommunications from 1987 to 1989. Mr. Ruan, a
Senior Engineer, graduated from Beijing Institute of Posts and Telecommunications in August
1987 with a Bachelor’s degree in Computer Science and Communications and from Xiamen
University with Executive Master of Business Administration (EMBA) in December 2007.
COMPANY SECRETARY
Mr. Heng Victor Ja Wei, born in 1977, British
Mr. Heng is the managing partner of Morison Heng, Certified Public Accountants. Mr. Heng
holds a Master of Science degree of the Imperial College of Science, Technology and Medicine,
the University of London. Mr. Heng is a member of The Hong Kong Institute of Certified Public
Accountants and a fellow of The Association of Chartered Certified Accountants. Mr. Heng has
over 10 years of experience in accounting and auditing for private and public companies and
financial consultancy. Mr. Heng serves as an Independent Non-executive Director of China Fire
Safety Enterprise Group Limited, Lee & Man Chemical Company Limited, Matrix Holdings
Limited, Best Food Holding Company Limited (formerly known as Lee & Man Handbags
Holding Limited) and SCUD Group Limited, all of which are listed on the main board of the
HKSE.
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China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
II POSITIONS HELD BY CURRENT DIRECTORS, SUPERvISORS AND SENIOR
MANAGEMENT IN SHAREHOLDERS OF THE COMPANY
Name
Yang Mingsheng
Name of shareholders
China Life Insurance (Group) Company
Position
Chairman
Term
Since March 2012
Miao Jianmin
China Life Insurance (Group) Company
Vice Chairman, President
Since October 2013
Wang Sidong
China Life Insurance (Group) Company
Vice President
Xiong Junhong
China Life Insurance (Group) Company
Deputy General Manager
of Strategic Planning
Department
Since June 2004
Since June 2013
III EMPLOYEES
(I) Employees
Number of employees of the Company
Number of employees of the Company’s major subsidiaries
Employees in total
Retired employees of the Company and its major subsidiaries for which extra costs have to be incurred
98,505
1,234
99,739
7
As at the end of the Reporting Period, the composition of the employees of the Company and its major
subsidiaries is as follows:
1.
Structure of Expertise
Class of Expertise
Management and administration
Sales and sales management
Finance and auditing
Insurance verification, claims processing and customer services
Other expertise and technicians
Others
Total
Number of Employees
21,868
36,091
5,225
28,420
3,488
4,647
99,739
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China Life Insurance Company Limited Annual Report 2016
Directors, Supervisors, Senior Management and Employees
2.
Education Level
Education Level
Master or above
Bachelor
College Diploma
Secondary School
Others
Total
Number of Employees
3,733
54,731
33,448
2,640
5,187
99,739
(II) Remuneration Policy for Employees
The Company has established a remuneration and incentive system with reference to employee’s positions,
the Company’s performance and market conditions.
(III) Training Plans
Adhering to the philosophy of “people-oriented and both capability and integrity being equally important”,
the Company has been promoting the unity between the growth of the Company and its employees in a
harmonious way. In 2016, the Company implemented the work requirements of “close to the frontline,
close to the practice and adapt to the era” in great depth and pushed forward employees’ trainings to local
branches and frontline business management teams for further in-depth development under the direction
of its “innovation-driven growth” strategy. The Company also strengthened training supports for its key
personnel (including local management teams, sales management teams and key personnel in all professional
sectors), focused on personnel reserve and education of companies at all levels, thus facilitating the
transformation of training results into operating performance. The Company actively broadened its horizon
for trainings, enriched training methods, injected training resources and introduced advanced training
technologies, which constantly improved the training system for the entire career development of employees.
Through the implementation of a series of training programs with prominent themes and clear objectives,
the Company effectively promoted its relevant work in business development, team building, cultural
cultivation, service improvement, efficiency optimization and risk prevention in 2016.
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China Life Insurance Company Limited Annual Report 2016
Corporate Governance
OvERvIEW OF CORPORATE GOvERNANCE
The Company implements good corporate governance policies and strongly believes that through fostering sound
corporate governance, further enhancing its transparency and establishing effective system of accountability, the
Company can operate in a more systematic manner, make decisions in a more scientific way, and boost the confidence of
investors.
Shareholders’
General Meeting
Board of Directors
Supervisory
Committee
Audit Committee
Nomination and
Remuneration
Committee
Risk
Management
Committee
Strategy and
Investment
Decision Committee
(Corporate Governance Structure Chart)
Board Secretary
Board Secretariat/Company Secretary
With the establishment of a corporate governance system with reasonably designed structure, well-developed mechanism,
strict rules and regulations, as well as high efficiency in operation as its core objectives, the Company continues to
promote development of its corporate governance framework, strictly perform its obligation of information disclosure,
enhance its transparency and actively serve the interest of public investors so as to enhance its image and position in the
capital market.
1.
2.
The Company has set up a corporate governance structure with well-defined duties and responsibilities strictly
in accordance with relevant laws, regulations and regulatory requirements, including the Company Law and the
Securities Law of the PRC. The corporate governance structure of the Company generally meets the regulatory
requirements of its listed jurisdictions and the relevant provisions. The Company has carried out its corporate
governance procedures strictly in accordance with relevant laws, regulations and regulatory requirements,
including the Company Law and the Securities Law of the PRC, as well as the requirements of its Articles of
Association and procedural rules. Shareholders’ general meetings, Board meetings and Supervisory Committee
meetings of the Company have been functioning independently and coordinately.
In accordance with the regulatory requirements of its listed jurisdictions and the relevant provisions of its Articles
of Association, the Company has continuously improved the decision-making mechanism of the Board. The
Board is accountable to shareholders of the Company with respect to the assets and resources entrusted to it by the
shareholders, and performs its duties on corporate governance. All members of the Board have taken initiatives to
look into the Company’s affairs and have had a comprehensive understanding of the Company’s businesses. They
have devoted sufficient time in performing their duties as Directors with due care and in a diligent and efficient
manner. By setting up mechanisms including regular reporting of business development strategies and marketing
tactics, the management of the Company can periodically report the business operation, development strategies
and marketing tactics to the Board, which provides a basis for the Board’s decision-making.
80
China Life Insurance Company Limited Annual Report 2016
Corporate Governance
3.
4.
The Company has actively promoted the establishment of corporate governance, continuously improved its
corporate governance structure and enhanced its scientific decision-making ability. In order to improve the
decision-making efficiency of the specialized Board committees, the Board has established four specialized Board
committees, i.e. the Audit Committee, the Nomination and Remuneration Committee, the Risk Management
Committee, and the Strategy and Investment Decision Committee. These specialized Board committees conduct
studies on specific matters, hold meetings on both regular and ad-hoc basis, communicate with the management,
provide advice and recommendations for the Board’s consideration, and deal with matters entrusted or authorized
by the Board, for the purpose of improving the Board’s efficiency and intensifying the Board’s functions.
The Supervisory Committee of the Company has carried out its work and performed its duties in accordance
with the Articles of Association and the “Procedural Rules for Supervisory Committee Meetings”. Members
of the Supervisory Committee attended the shareholders’ general meetings and the Supervisory Committee
meetings, participated in the Board meetings and the meetings of the specialized Board committees based on
their work allocation, and conducted investigations on local branches to have an in-depth understanding of the
implementation of the decisions made by the Board, so as to diligently perform their role of supervision.
5. During the Reporting Period, the Company carried out the procedures relating to the resignation, retirement
and appointment of Directors in compliance with the regulatory requirements of its listed jurisdictions and the
provisions of its Articles of Association. Mr. Huang Yiping resigned from the Board pursuant to the relevant
policies, Mr. Zhang Xiangxian resigned from the Board due to age reason and Mr. Anthony Francis Neoh
retired from the Board due to the expiry of his term of office. Following the election at the First Extraordinary
General Meeting 2015 of the Company and upon the approval by the CIRC, the appointment of Mr. Tang Xin
as a Director of the Company became effective from 7 March 2016. Following the election at the 2015 Annual
General Meeting of the Company and upon the approval by the CIRC, the appointment of Ms. Leung Oi-Sie
Elsie as a Director of the Company became effective from 20 July 2016. The Company has complied with the
corporate governance system and has strictly carried out all governance procedures.
6.
7.
8.
The Company has made information disclosure in a timely, open and transparent manner pursuant to the
requirements of the listing rules of its listed jurisdictions. The Company has continuously improved its
management of investor relations and enhanced its communication with investors in both form and substance,
thus ensuring that all shareholders enjoy equal rights and have access to information about the Company in an
open, fair, true and accurate manner.
The Company has continued to optimize its system relevant to the corporate governance. In accordance with the
latest amendments to the Corporate Governance Code as contained in Appendix 14 to the Listing Rules of the
HKSE, as well as the requirements of the CIRC with respect to the risk assessment on C-ROSS, the Company
revised the “Procedural Rules for Board of Directors Meetings” with reference to its actual operation.
The Board and the Supervisory Committee of the Company have conducted extensive investigation and
research activities. Mr. Robinson Drake Pike and Mr. Tang Xin, both being Independent Directors, carried out
investigation and research on local branches of the Company in Gansu Province, Wuwei City, Zhangye City and
Lanzhou City for the purpose of inspecting the internal audit and business development of the local branches.
Mr. Miao Ping, the Chairman of the Supervisory Committee, and Mr. Shi Xiangming, Ms. Xiong Junhong and
Ms. Wang Cuifei, all being Supervisors, carried out investigation and research on local branches of the Company
in Guizhou Province and southeast Guizhou Province, as well as a local sub-branch of the Company in Tianzhu
County for the purpose of understanding the business development and internal supervision of the local branches.
Through the investigation and research, Directors and Supervisors comprehended the working situation of local
branches in great depth and examined the effectiveness of the implementation of decisions of the Board and the
management, thus enhancing the legal compliance and risk prevention of the Company in a practical manner.
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China Life Insurance Company Limited Annual Report 2016
Corporate Governance
9.
The Company has actively organized Directors and Supervisors to attend various training courses. The members
of the Board and the Supervisory Committee attended special training courses for directors and supervisors of
listed companies as organized by the Listed Companies Association of Beijing. The Independent Directors of
the Company attended a training course for new directors, supervisors and senior management of insurance
institutions as organized by the CIRC and a training course on the qualifications of independent directors of listed
companies as organized by the SSE. They attended training courses for a total of 13 person-times.
SHAREHOLDERS’ GENERAL MEETING
The shareholders’ general meeting, as an organ of the highest authority of the Company, exercises its duties and
functions in accordance with relevant laws. Its duties and powers include the election, appointment and removal of
Directors and Non Employee Representative Supervisors, review and approval of the reports of the Board and the
Supervisory Committee, review and approval of the annual budget and final accounts of the Company, and any other
matters required by the Articles of Association to be approved by way of resolution of the shareholders’ general meeting.
The Company ensures that all shareholders are equally treated so as to ensure that the rights of all shareholders are
protected, including the right of access to information in relation to, and the right to vote in respect of, major matters
of the Company. The Company has the ability to operate and manage its business autonomously, and is separate and
independent from its controlling shareholder in its business operations, personnel, assets and financial matters.
1.
Shareholders’ general meetings convened during the Reporting Period are as follows:
Session of the meeting
Date of the meeting
Index for websites on which
resolutions were published
Date of publication
of resolutions
2015 Annual General Meeting
30 May 2016
First Extraordinary General
Meeting 2016
27 December 2016
http://www.sse.com.cn
http://www.hkexnews.hk
http://www.e-chinalife.com
http://www.sse.com.cn
http://www.hkexnews.hk
http://www.e-chinalife.com
31 May 2016
28 December 2016
Eleven proposals including: the “Proposal in relation to the Report of the Board of Directors of the Company for
the Year 2015”, the “Proposal in relation to the Report of the Supervisory Committee of the Company for the
Year 2015”, the “Proposal in relation to the Financial Report of the Company for the Year 2015”, the “Proposal
in relation to the Profit Distribution Plan of the Company for the Year 2015”, the “Proposal in relation to the
Election of Ms. Leung Oi-Sie Elsie as an Independent Director of the Fifth Session of the Board of Directors
of the Company” and the “Proposal in relation to the Appointment of Auditors of the Company for the Year
2016”, etc. were considered and approved by a combination of on-site and online voting, and the “Duty Report
of the Independent Directors of the Board of Directors of the Company for the Year 2015” and the “Report on
the Status of Connected Transactions and the Execution of Connected Transactions Management System of the
Company for the Year 2015” were received and reviewed at the 2015 Annual General Meeting held in Beijing on
30 May 2016.
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China Life Insurance Company Limited Annual Report 2016
Corporate Governance
Five proposals including: the “Proposal in relation to the Outline of the ‘13th Five-Year’ Development Plan of the
Company”, the “Proposal in relation to the Change of the Auditor for US Form 20-F of the Company for the Year
2016”, the “Proposal in relation to the Renewal of the ‘Framework Agreement for Daily Connected Transactions’
by each of the Company and Pension Company with AMP”, the “Proposal in relation to the Renewal of the
‘Framework Agreement for Daily Connected Transactions’ by each of CLIC and CLP&C with AMP” and the
“Proposal in relation to the Renewal of the ‘Framework Agreement for Daily Connected Transactions’ between
the Company and China Guangfa Bank Co., Ltd.” were considered and approved by a combination of on-site and
online voting at the First Extraordinary General Meeting 2016 held in Beijing on 27 December 2016.
2.
Attendance records of Directors at the shareholders’ general meetings convened during the Reporting Period:
Number of
shareholders’
Name of Director
Type of Director
Yang Mingsheng
Lin Dairen
Xu Hengping
Xu Haifeng
Miao Jianmin
Wang Sidong
Liu Jiade
Chang Tso Tung
Stephen
Robinson Drake Pike
Tang Xin
Leung Oi-Sie Elsie
Executive Director
Executive Director
Executive Director
Executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Independent Director
Independent Director
Independent Director
Independent Director
general meetings Number of Number of Number of
the Director was
required to attend
during the year
meetings
meetings
physically attended by attended by
proxies
telephony
attended
meetings Number of
2
2
2
2
2
2
2
2
2
2
1
1
2
0
2
2
1
1
2
1
2
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
meetings Attendance
rate
absent
1
0
2
0
0
1
1
0
1
0
1
50%
100%
0
100%
100%
50%
50%
100%
50%
100%
0
Attendance records of the resigned Directors at the shareholders’ general meetings convened during the Reporting
Period:
Number of
shareholders’
Name of Director
Type of Director
general meetings Number of Number of Number of
the Director was
required to attend
during the year
meetings
meetings
physically attended by attended by
proxies
telephony
attended
meetings Number of
meetings Attendance
rate
absent
Zhang Xiangxian
Anthony Francis Neoh
Huang Yiping
Non-executive Director
Independent Director
Independent Director
1
1
0
0
1
0
0
0
0
0
0
0
1
0
0
0
100%
0
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China Life Insurance Company Limited Annual Report 2016
Corporate Governance
BOARD
The Board is the standing decision-making body of the Company and its main duties include: performing the function
of corporate governance of the Company, convening shareholders’ general meetings, implementing resolutions passed
at such meetings, improving the Company’s corporate governance policies, approving the Company’s development
strategies and operation plans, formulating and supervising the Company’s financial policies, annual budgets and
financial reports, providing an objective evaluation on the Company’s operating results in its financial reports and
other disclosure documents, dealing with senior management personnel matters, arranging for Directors and senior
management to attend various training courses, attaching importance to the enhancement of their professional quality,
reviewing the compliance policies of the Company, and assessing the internal control systems of the Company. The
day-to-day management and operation of the Company are delegated to the management. The responsibilities of Non-
executive Directors and Independent Directors include, without limitation, regularly attending meetings of the Board
and the specialized Board committees of which they are members, providing opinions at meetings of the Board and
the specialized Board committees, resolving any potential conflict of interest, serving on the Audit Committee, the
Nomination and Remuneration Committee and other specialized Board committees, and inspecting, supervising and
reporting on the performance of the Company. The Board is accountable to the shareholders of the Company and
reports to them.
Currently, the Board comprises eleven members, including four Executive Directors, three Non-executive Directors
and four Independent Directors. The number of Independent Directors complies with the minimum requirement of
three Independent Directors and the requirement that at least one-third of the Board be represented by Independent
Directors under the Listing Rules of the HKSE. All members of the Board have devoted sufficient time in dealing with
the affairs of the Board and attended the relevant training courses organized by external regulatory authorities and the
Company according to regulatory requirements. They have referred to regulatory documents on a regular basis so as to
keep themselves informed of the regulatory development in a timely manner. The Company has purchased director’s
liability insurances for its Directors, which provide protection to Directors for liabilities that might arise in the course of
their performance of duties according to law and facilitate Directors to fully perform their duties. So far as the Company
is aware, no financial, business, family or other material relationship exists among members of the Board, the Supervisory
Committee or the senior management, including between the Chairman of the Board, Mr. Yang Mingsheng, and the
President of the Company, Mr. Lin Dairen.
In 2016, Independent Directors of the Company possessed extensive experience in various fields, such as macro-
economics, finance and insurance, legal compliance, accounting and auditing. The Company also complies with the
requirement of the Listing Rules of the HKSE that at least one of its Independent Directors has appropriate professional
qualifications or accounting qualifications or related financial management expertise. As required under the Listing Rules
of the SSE and the HKSE, the Company has obtained a written confirmation from each of its Independent Directors in
respect of their independence, and the Company is of the opinion that all of the Independent Directors are independent
from the Company and strictly perform their duties as Independent Directors. Pursuant to the Articles of Association,
Directors shall be elected at the shareholders’ general meeting for a term of three years and may be re-elected on expiry
of the three-year term. However, Independent Directors may not serve for more than six years.
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China Life Insurance Company Limited Annual Report 2016
Corporate Governance
Meetings of the Board are held both on a regular and an ad-hoc basis. Regular meetings are convened at least four times
a year for the examination and approval of proposals, such as annual report, interim report, quarterly reports, related
financial reports, and major business operations of the year. Meetings are convened by the Chairman of the Board and
a notice is given to all Directors 14 days before such meetings. Agendas and related documents are sent to the Directors
at least three days prior to such meetings. In 2016, all notices, agendas and related documents in respect of such regular
Board meetings were sent in compliance with the above requirements. By fully reviewing all the relevant proposals, the
Board has confirmed that the information contained in its periodic reports and financial reports is true, accurate and
complete and contains no false representations, misleading statements or material omissions, and no event or situation
which would have material adverse impacts on the Company’s ongoing operation has been found.
Regular Board meetings are held mainly to review the quarterly, interim or annual reports of the Company and to deal
with other related matters. The practice of obtaining Board consent through the circulation of written resolutions does
not constitute a regular Board meeting. An ad-hoc Board meeting may be convened in urgent situations if requisitioned
by any of the following: shareholders representing over one-tenth of voting shares, Directors constituting more than one-
third of the total number of Directors, the Supervisory Committee, more than two Independent Directors, the Chairman
of the Board or the President of the Company. If the resolution to be considered at such ad-hoc Board meetings has
been circulated to all the Directors and more than half of the Directors having voting rights approve such resolution
by signing the resolution in writing, the ad-hoc Board meeting need not be physically convened and such resolution in
writing shall become an effective resolution.
If a Director is materially interested in a matter to be considered by the Board, the Director having such conflict of
interest shall have no voting right on the matter to be considered and shall not be counted in the quorum for the Board
meeting. All Directors shall have access to the advice and services of the Board Secretary and the Company Secretary.
Detailed minutes of Board meetings regarding matters considered by the Board and decisions reached, including any
concerns raised by Directors or dissenting views expressed, are kept by the Board Secretary. Minutes of Board meetings
are available upon reasonable notice for inspection and comment upon by Directors.
At present, the fifth session of the Board comprises the following members: Mr. Yang Mingsheng, Mr. Lin Dairen, Mr.
Xu Hengping and Mr. Xu Haifeng, all being Executive Directors, Mr. Miao Jianmin, Mr. Wang Sidong and Mr. Liu
Jiade, all being Non-executive Directors, and Mr. Chang Tso Tung Stephen, Mr. Robinson Drake Pike, Mr. Tang Xin
and Ms. Leung Oi-Sie Elsie, all being Independent Directors, with Mr. Yang Mingsheng as the Chairman of the Board.
Mr. Huang Yiping resigned from his position as a Director pursuant to the relevant policies, Mr. Zhang Xiangxian
resigned from his position as a Director due to age reason, and Mr. Anthony Francis Neoh retired from his position
as a Director due to the expiry of his term of office. The Company has continued to optimize its system relevant to
the corporate governance. In accordance with the latest amendments to the Corporate Governance Code as contained
in Appendix 14 to the Listing Rules of the HKSE, as well as the requirements of the CIRC with respect to the risk
assessment on C-ROSS, the Company revised the “Procedural Rules for Board of Directors Meetings” with reference to
its actual operation.
During 2016, the Board constantly monitored the system on risk management and internal control of the Company to
ensure that the financial, operational and compliance control of the Company and its subsidiaries operated effectively,
and the Company considered that such system was effective and sufficient. The Board also ensured that the Company
had injected sufficient resources in accounting, internal review and financial reporting.
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Corporate Governance
During 2016, the members of the Board attended special training courses of 2016 for directors and supervisors of listed
companies within the territory of Beijing as organized by the Listed Companies Association of Beijing, a training course
of 2016 for new directors, supervisors and senior management of insurance institutions as organized by the CIRC and
a training course on the qualifications of independent directors of listed companies as organized by the SSE. Pursuant
to the regulatory requirements, the Independent Directors of the Company passed the examination of the CIRC
regarding the approval of qualifications of independent directors and the examination of the SSE on the qualifications of
independent directors.
1. Meetings and attendance
In 2016, six regular Board meetings were held by the fifth session of the Board, all of which were physical
meetings. The attendance records of individual Directors are as follows:
Number of
meetings the
Director was Number of Number of Number of
required to
attend during
the year
meetings
attended by
telephony
meetings
physically
attended
attended by
proxies
meetings Number of
meetings
absent
Whether the
Director failed
to attend two
consecutive
meetings
in person
Attendance
rate
6
6
6
6
6
6
6
6
6
5
3
5
6
6
6
5
4
5
5
4
4
3
0
0
0
0
0
0
1
1
1
0
0
1 Note 1
0
0
0
1 Note 2
2 Note3
0
0
1 Note 4
1 Note 5
0
0
0
0
0
0
0
0
0
0
0
0
83%
100%
100%
100%
83%
67%
100%
100%
83%
80%
100%
No
No
No
No
No
No
No
No
No
No
No
Name of Director
Type of Director
Yang Mingsheng
Lin Dairen
Xu Hengping
Xu Haifeng
Miao Jianmin
Wang Sidong
Liu Jiade
Chang Tso Tung Stephen
Robinson Drake Pike
Tang Xin
Leung Oi-Sie Elsie
Executive Director
Executive Director
Executive Director
Executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Independent Director
Independent Director
Independent Director
Independent Director
Notes:
1.
At the ninth meeting of the fifth session of the Board held on 27 October 2016, Mr. Yang Mingsheng, the Chairman of
the Board, gave written authorization for Mr. Lin Dairen to act as his proxy to attend, vote and chair the meeting;
2.
At the ninth meeting of the fifth session of the Board held on 27 October 2016, Mr. Miao Jianmin gave written
authorization for Mr. Wang Sidong to act as his proxy to attend and vote at the meeting;
3.
At the sixth meeting of the fifth session of the Board held on 23 March 2016, Mr. Wang Sidong gave written
authorization for Miao Jianmin to act as his proxy to attend and vote at the meeting; at the tenth meeting of the fifth
session of the Board held on 20 December 2016, Mr. Wang Sidong gave written authorization for Mr. Miao Jianmin to
act as his proxy to attend and vote at the meeting;
4.
At the ninth meeting of the fifth session of the Board held on 27 October 2016, Mr. Robinson Drake Pike gave written
authorization for Mr. Chang Tso Tung Stephen to act as his proxy to attend and vote at the meeting;
5.
At the sixth meeting of the fifth session of the Board held on 23 March 2016, Mr. Tang Xin gave written authorization
for Mr. Anthony Francis Neoh to act as his proxy to attend and vote at the meeting.
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China Life Insurance Company Limited Annual Report 2016
Corporate Governance
In 2016, the attendance records of the resigned Directors at the Board Meetings are as follows:
Number of
meetings the
Director was
required to
attend during
the year
Number of
meetings
physically
attended
Number of
meetings
attended by
telephony
Number of
meetings
attended by
proxies
Number of
meetings
absent
Whether the
Director failed
to attend two
consecutive
meetings
in person
Attendance
rate
3
3
1
3
3
0
0
0
0
0
0
1 Note
0
0
0
100%
100%
0
No
No
No
Name of Director
Type of Director
Zhang Xiangxian
Anthony Francis Neoh
Huang Yiping
Non-executive Director
Independent Director
Independent Director
Note: At the fifth meeting of the fifth session of the Board held on 29 February 2016, Mr. Huang Yiping gave
written authorization for Mr. Anthony Francis Neoh to act as his proxy to attend and vote at the meeting.
2. Performance of duties by Independent Directors
In 2016, all Independent Directors of the Company possessed extensive experience in various fields, such as
macro-economics, finance and insurance, legal compliance, accounting and auditing. They satisfied the criteria
for Independent Directors under the regulatory rules of the Company’s listed jurisdictions. The Independent
Directors of the Company performed their duties pursuant to the Articles of Association and the provisions and
requirements of the listing rules of the Company’s listed jurisdictions.
All Independent Directors diligently fulfilled their responsibilities and faithfully performed their duties by
attending meetings of the Board and the specialized Board committees in 2016, examining and approving the
Company’s business development, its financial management, the necessity of its connected transactions and
the fairness of the pricing of the connected transactions, participating in the establishment of specialized Board
committees, providing professional and constructive advice in respect of major decisions of the Company, seriously
listening to the reports from relevant personnel, understanding the daily operation and any possible operational
risks of the Company in a timely manner, and expressing their opinions and exercising their functions and powers
at Board meetings, thus actively performing their duties as Independent Directors in an effective manner. At the
annual special meeting among the Chairman of the Board, Non-executive Directors and Independent Directors,
all Independent Directors made recommendations in various aspects, such as the development of the global capital
market, return on investment and balance of risks, and gave constructive advice on corporate governance, business
operation and management, risk management and control, directors’ training and collaborative development with
bancassurance, etc. The Board attached great importance to opinions and advice from Independent Directors,
actively strengthened its communication with them and adopted their advice after careful deliberation and
discussion. In 2016, the Company provided various materials to Independent Directors, which facilitated them to
comprehend information associated with the insurance industry. All Independent Directors obtained information
relating to the operation and management of the Company through various channels, which therefore formed the
basis of their scientific and prudent decisions.
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Corporate Governance
In 2016, the Independent Directors of the Company and the representatives from the external auditors (Ernst &
Young Hua Ming LLP and Ernst & Young) convened two special meetings to discuss on matters including the
audit for the year 2015, the annual financial reports, and the impact of the implementation of the C-ROSS on the
Company, and also discussed the work relating to the audit of the Company. The Independent Directors of the
Company convened a special meeting with the person-in-charge of each of the Legal and Compliance Department
and the Risk Management Department to discuss the matters on legal compliance and risk management of the
Company.
From 18 to 23 August 2016, Mr. Robinson Drake Pike and Mr. Tang Xin, both being Independent Directors,
carried out investigation and research on local branches of the Company in Gansu Province, Wuwei City, Zhangye
City and Lanzhou City, listened to the work reports of local branches in Gansu Province, Wuwei City and
Zhangye City, held in-depth conferences with their respective key management, conducted an on-site investigation
and research on counters of the Liangzhou District business department of Wuwei local branch, counters of the
Ganzhou District business department of Zhangye local branch and the business premises of Lanzhou local branch
for the purpose of understanding the business development and risk control of the local branches. Through the
investigation and research, the Independent Directors comprehended the working situation of local branches in
great depth and examined the implementation of the Company’s internal audit and business development.
During the Reporting Period, no Independent Director has raised any objection against the proposals and matters
considered by the Board of the Company.
CHAIRMAN AND PRESIDENT
During the Reporting Period, Mr. Yang Mingsheng served as the Chairman of the Board of Directors of the Company.
The Chairman of the Board is the legal representative of the Company, primarily responsible for convening and
presiding over Board meetings, ensuring the implementation of Board resolutions, attending annual general meetings
and arranging attendance by Chairmen of Board committees to answer questions raised by shareholders, signing
securities issued by the Company and other important documents, providing leadership for the Board to ensure that the
Board works effectively and performs its responsibilities, encouraging all Directors to make a full and active contribution
to the Board’s affairs, promoting a culture of openness and debate, convening special meetings with Non-executive
Directors and Independent Directors, and exercising other rights conferred on him by the Board. The Chairman of the
Board is accountable to and reports to the Board. Mr. Lin Dairen was the President of the Company. The President
is responsible for the day-to-day operations of the Company, including implementing strategies, policies, operation
plans and investment schemes approved by the Board, formulating the Company’s internal management structure and
fundamental management policies, drawing up basic rules and regulations of the Company, submitting to the Board
requests for appointment or removal of senior management officers and exercising other rights granted to him under
the Articles of Association and by the Board. The President is fully accountable to the Board for the operations of the
Company.
SUPERvISORY COMMITTEE
Pursuant to the Company Law and the Articles of Association, the Company has established a Supervisory Committee.
The Supervisory Committee performs the following duties in accordance with the Company Law, the Articles of
Association and the “Procedural Rules for Supervisory Committee Meetings”: to examine the finances of the Company;
to monitor whether the Directors, President, Vice Presidents and other senior management officers of the Company
have acted in contravention of laws, regulations, the Articles of Association and resolutions of the shareholders’ general
meetings when discharging their duties; to review the financial information of the Company such as financial reports,
results reports and profit distribution plans to be approved by the Board; to propose the convening of extraordinary
shareholders’ general meetings, to propose resolutions at shareholders’ general meetings and to perform any other duties
under the laws, regulations and regulatory rules of the Company’s listed jurisdictions.
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Corporate Governance
The Supervisory Committee consists of Non Employee Representative Supervisors, such as shareholder representatives,
and Employee Representative Supervisors, of which the Employee Representative Supervisors shall not be less than one-
third of the Supervisory Committee. Non Employee Representative Supervisors, such as shareholder representatives, shall
be elected and removed by a shareholders’ general meeting while Employee Representative Supervisors shall be elected
and removed by employees of the Company in a democratic manner.
The Supervisory Committee is accountable to the shareholders and reports its work to the shareholders’ general meeting
according to relevant laws. It is also responsible for appraising the Company’s operations, financial reports, connected
transactions and internal control, etc. during the Reporting Period.
Meetings of the Supervisory Committee are convened by the Chairman of the Supervisory Committee. According to
the Articles of Association, the Company formulated the “Procedural Rules for Supervisory Committee Meetings” and
established protocols for Supervisory Committee meetings. Supervisory Committee meetings are categorized as regular or
ad-hoc meetings in accordance with the degree of pre-planning involved. There are at least three regular meetings each
year, mainly to adopt and review financial reports and periodic reports, and examine the financial condition and internal
control of the Company. Ad-hoc meetings are convened when necessary.
The fifth session of the Supervisory Committee of the Company comprises Mr. Miao Ping, Mr. Shi Xiangming and Ms.
Xiong Junhong, all being Non Employee Representative Supervisors, and Mr. Zhan Zhong and Ms. Wang Cuifei, both
being Employee Representative Supervisors, with Mr. Miao Ping acting as the Chairman of the Supervisory Committee.
1. Meetings and attendance
In 2016, five meetings were held by the fifth session of the Supervisory Committee. Attendance records of
individual Supervisors are as follows:
Name of Supervisor
Number of meetings attended
Attendance rate
Miao Ping
Shi Xiangming
Xiong Junhong
Zhan Zhong
Wang Cuifei
4/5 Note
5/5
5/5
5/5
5/5
80%
100%
100%
100%
100%
Note: At the sixth meeting of the fifth session of the Supervisory Committee held on 28 April 2016, Mr. Miao Ping gave written
authorization for Mr. Shi Xiangming to act as his proxy to attend, vote and chair the meeting.
2. The Supervisory Committee had no objection in respect of any matters under its supervision
during the Reporting Period.
3. Activities of the Supervisory Committee during the Reporting Period
For the activities carried out by the Supervisory Committee during the Reporting Period, please refer to the
“Report of the Supervisory Committee” in this annual report.
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Corporate Governance
AUDIT COMMITTEE
The Company established its Audit Committee on 30 June 2003. In 2016, the Audit Committee comprised only
Independent Directors of the Company. At present, the Audit Committee of the fifth session of the Board comprises
the Independent Directors, Mr. Robinson Drake Pike, Mr. Chang Tso Tung Stephen and Mr. Tang Xin, with Mr.
Robinson Drake Pike acting as the Chairman. Mr. Huang Yiping resigned from his position as a member of the Audit
Committee of the fifth session of the Board of the Company pursuant to the relevant policies.
All members of the Audit Committee have extensive experience in financial matters. The principal duties of the Audit
Committee are to review and supervise the preparation of the Company’s financial reports, assess the effectiveness
of the Company’s internal control system, supervise the Company’s internal audit system and its implementation,
and recommend the engagement or replacement of external auditors. The Audit Committee is also responsible for
communications between the internal and external auditors and the establishment of the internal reporting mechanism
of the Company.
1. Meetings and attendance
In 2016, five regular meetings were held by the Audit Committee of the fifth session of the Board. Attendance
records of individual members are as follows:
Name of member
Position
Number of meetings attended
Attendance rate
Robinson Drake Pike
Chang Tso Tung Stephen
Tang Xin
Independent Director, Chairman of the Audit
Committee of the fifth session of the Board
Independent Director, member of the Audit
Committee of the fifth session of the Board
Independent Director, member of the Audit
Committee of the fifth session of the Board
4/5 Note
5/5
5/5
80%
100%
100%
Note: At the eighth meeting of the Audit Committee of the fifth session of the Board held on 27 October 2016, Mr. Robinson
Drake Pike gave written authorization for Mr. Chang Tso Tung Stephen to act as his proxy to attend, vote and chair the
meeting.
In 2016, attendance records of the resigned Director at the Audit Committee meetings are as follows:
Name of member
Position
Number of meetings attended
Attendance rate
Huang Yiping
Independent Director, member of the Audit
Committee of the fifth session of the Board
0/1 Note
0
Note: At the fourth meeting of the Audit Committee of the fifth session of the Board held on 29 February 2016, Mr. Huang
Yiping gave written authorization for Mr. Chang Tso Tung Stephen to act as his proxy to attend and vote at the meeting.
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China Life Insurance Company Limited Annual Report 2016
Corporate Governance
2. Performance of duties by the Audit Committee
In 2016, the Audit Committee performed its relevant duties and functions in strict compliance with the
“Procedural Rules for Audit Committee Meetings”. All members of the Audit Committee attended meetings in
a timely manner for the purpose of reviewing the proposals in relation to the audit of the Company, its financial
reports, connected transactions, internal control and legal compliance. During meetings of the Audit Committee,
all members actively participated in discussions and gave guiding opinions on any proposals considered and
discussed at the meetings.
(1) Reviewing and approving financial reports. The Audit Committee, according to its duties, reviewed and
approved annual, interim and quarterly financial reports of the Company. The Audit Committee was of
the view that the financial reports of the Company reflected the overall situation of the Company in a true,
accurate and complete manner, and gave its written opinion in this regard. By reviewing and monitoring
the completeness of financial reports, annual report and accounts, interim report and quarterly report of the
Company, and examining significant matters such as financial statements and reports, the Audit Committee
guaranteed the accuracy and completeness of the financial information disclosed by the Company and the
consistency of its financial reports. Prior to the audit conducted by the accounting firm and the review of
the annual report, the Audit Committee communicated the relevant situations with the auditors and listened
to the report in connection with the arrangement of the audit. After a preliminary opinion on audit was
issued by the accounting firm, the Audit Committee commenced in-depth communications with it so as to
understand whether there were any issues arisen during the audit.
(2) Reviewing connected transactions. In 2016, the Audit Committee reviewed the “Proposal in relation to
the Renewal of the ‘Framework Agreement for Daily Connected Transactions’ by each of the Company
and Pension Company with AMP”, the “Proposal in relation to the Renewal of the ‘Framework Agreement
for Daily Connected Transactions’ by each of China Life Insurance (Group) Company and CLP&C with
AMP” and the “Proposal in relation to the Renewal of the ‘Framework Agreement for Daily Connected
Transactions’ between the Company and China Guangfa Bank Co., Ltd.”, and submitted them to the Board
and shareholders’ general meeting for approval; and listened to the report on the list of connected persons of
the Company on a regular basis. The Audit Committee reviewed the audit report on connected transactions
for conscientiously implementation of laws and regulations with respect to connected transactions. The
Company entered into written agreements in respect of all new connected transactions, the formalities
of which were fully completed. The contents of the agreements were in compliance with law, and their
approval and disclosure procedures were in compliance with the regulatory requirements. Hence, the
Company better performed its obligations as a listed company pursuant to the regulatory requirements of its
listed jurisdictions.
(3) Reviewing the change of the auditor for US Form 20-F of the Company for the year 2016. In 2016, the
“Proposal in relation to the Change of the Auditor for US Form 20-F of the Company for the Year 2016”
was considered and approved at the eighth meeting of the Audit Committee of the fifth session of the Board
of Directors and then submitted to the Board and shareholders’ general meeting for approval.
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(4) Assessing the work of and strengthening communications with external auditors. Besides regular meetings,
the Audit Committee convened communication meetings in advance with the relevant departments of the
Company and external auditors for several times so as to discuss the annual audit plan of the Company,
determine the service scope of the annual audit and to listen to the report given by the auditors with
respect to the results of the audit on and review of periodic financial reports of the Company. Through
communications, the Audit Committee enhanced the effectiveness of the internal control of the Company
and further supervised the performance of duties by the external auditors in a diligent and responsible way.
(5) Assessing the effectiveness of internal control and monitoring the operation of the Company to be in
compliance with law. The Audit Committee provided guidance to the Company on the management of
internal control, devised the working plan for internal control assessment, reviewed the work report on
assessment of internal control, and inspected the rectification of problems identified in the internal control
pursuant to Section 404 of the U.S. Sarbanes-Oxley Act. The Audit Committee earnestly performed its
duties and responsibilities and monitored the Company to carry out its work in compliance with laws
and regulations pursuant to the relevant requirements of the CIRC, the SSE and the HKSE. As required
by its duties and responsibilities, the Audit Committee reviewed the annual and half-year compliance
reports of the Company to ensure that its work was conducted strictly according to the relevant regulatory
requirements in a reasonable and efficient manner.
(6) Examining the internal audit functions of the Company. The Audit Committee reviewed proposals
including the “Proposal on the 2015 Internal Audit Summary and the 2016 Internal Audit Work Plan
and Budget of the Costs of the Company” and the “Proposal on the Internal Audit Summary for the First
Half of 2016 and the Internal Audit Work Plan for the Second Half of 2016”, in order to facilitate the
communication between the Company’s internal audit department and the independent auditors, and
confirmed that the Company’s internal audit function was effective.
(7) Conducting investigation and research of local branches. From 18 to 23 August 2016, Mr. Robinson Drake
Pike, the Chairman of the Audit Committee, and Mr. Tang Xin, a member of the Audit Committee, carried
out investigation and research on local branches of the Company in Gansu Province, Wuwei City, Zhangye
City and Lanzhou City, and examined the implementation of internal audit of Gansu local branch.
NOMINATION AND REMUNERATION COMMITTEE
The Company established the Management Training and Remuneration Committee on 30 June 2003. On 16
March 2006, the Board resolved to change the name of the Management Training and Remuneration Committee to
the Nomination and Remuneration Committee, with a majority of Independent Directors on the committee. The
Nomination and Remuneration Committee is mainly responsible for reviewing the structure of the Board, its number of
members and composition and drawing up plans for the appointment, succession and appraisal criteria of Directors and
senior management. The committee is also responsible for formulating training and remuneration policies for the senior
management of the Company.
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China Life Insurance Company Limited Annual Report 2016
Corporate Governance
At present, the Nomination and Remuneration Committee of the fifth session of the Board comprises Mr. Chang Tso
Tung Stephen and Mr. Robinson Drake Pike, the Independent Directors, and Mr. Miao Jianmin, a Non-executive
Director, with Mr. Chang Tso Tung Stephen acting as the Chairman. The Nomination and Remuneration Committee,
as an advisor to the Board on the nomination of Directors, shall first discuss and agree on the list of candidates to
be nominated as new Directors, following which such candidates are recommended to the Board. The Board shall
then determine whether such candidates’ appointments should be proposed for approval at the shareholders’ general
meeting. The major criteria considered by the Nomination and Remuneration Committee and the Board are educational
background, management and research experience in the insurance industry, and the candidates’ commitment to the
Company. As to the nomination of Independent Directors, the Nomination and Remuneration Committee will give
special consideration to the independence of the relevant candidates.
The Nomination and Remuneration Committee determines, with delegated responsibility, the remuneration packages of
all Executive Directors and senior management officers. The fixed salary of the Executive Directors and other members
of senior management are determined in accordance with market levels and their respective positions, and the amount
of their performance-related bonuses is determined according to the results of performance appraisals. Directors’ fees
and the volume of share appreciation rights to be granted are determined with reference to market levels and the actual
circumstances of the Company.
1. Meetings and attendance
In 2016, five regular meetings were held by the Nomination and Remuneration Committee of the fifth session of
the Board. Attendance records of individual members are as follows:
Name of member
Position
Number of meetings attended
Attendance rate
Chang Tso Tung Stephen
Robinson Drake Pike
Miao Jianmin
Independent Director, Chairman of the
Nomination and Remuneration Committee
of the fifth session of the Board
Independent Director, member of the
Nomination and Remuneration Committee
of the fifth session of the Board
Non-executive Director, member of the
Nomination and Remuneration Committee
of the fifth session of the Board
5/5
5/5
5/5
100%
100%
100%
2. Performance of duties by the Nomination and Remuneration Committee
In 2016, the Nomination and Remuneration Committee reviewed the proposal on the remuneration of Directors,
Supervisors and senior management, candidates for Directors, nomination of senior management officers, business
objectives and appraisal results. Pursuant to the requirements of the procedural rules for meetings, the Nomination
and Remuneration Committee reviewed the report on the duty performance of the Audit Committee and the
Nomination and Remuneration Committee. During meetings of the Nomination and Remuneration Committee,
all members actively participated in discussions and gave professional opinions on the proposals considered and
discussed at the meetings.
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(1) Proposed appointment of Directors and senior management officers of the Company. In accordance with the
“Procedural Rules for Nomination and Remuneration Committee Meetings” and the Board diversity policy,
the Nomination and Remuneration Committee carefully reviewed the structure of the Board, its number
of members and composition (taking into account diversity factors, including gender, age, cultural and
educational background, skills, knowledge and experience), fully reviewed the professional qualifications and
industrial background of Mr. Liu Huimin and Mr. Yin Zhaojun, both being the candidates for Directors,
and the independence of Ms. Leung Oi-Sie Elsie, a candidate for Independent Director, and submitted
the opinions in relation thereto to the Board, conducted a careful assessment on the qualifications, skills,
knowledge and experience of candidates for senior management officers so as to ensure that the candidates
met the requirements set by the Company. The Nomination and Remuneration Committee also issued a
review opinion to the Board and agreed to submit such proposals to the Board for approval.
(2) Proposed remuneration policy of Directors, Supervisors and senior management officers of the Company.
The Nomination and Remuneration Committee took into account various factors such as business
development management, strategic investment decisions, and corporate governance management and
control, carefully examined and determined the specific remuneration packages of all Executive Directors
and senior management officers, approved the terms of service contracts between the Company and each
of the Executive Directors, Non-executive Directors and Independent Directors and pushed forward the
signing of service contracts between the Company and all Directors, defined the rights, obligations and
remunerations of Directors, and seriously appraised the performance of Directors in the discharge of
their duties. According to the requirements of the CIRC, the Nomination and Remuneration Committee
reviewed and approved the report for the management of the Company’s annual remuneration, conducted
a self-assessment on the remuneration management system of the Company and agreed to submit such
proposal to the Board for approval.
(3) Carrying out the performance appraisal of senior management officers. The Nomination and Remuneration
Committee reviewed the “Proposal on the Results of Performance Appraisal of Senior Management
Officers for 2015 and the Performance Target Contract for 2016”, and the “Proposal on the Amendment
to the Performance Target Contract for 2016 of Certain Senior Management Officers”, and made
recommendations to the Board in respect of matters such as the determination of performance target,
performance appraisal procedures and results.
(4) Revising the system on performance appraisal and remuneration management of Directors, Supervisors
and senior management officers. In 2016, the Nomination and Remuneration Committee reviewed
and approved the “Proposal in relation to the Amendment to the System on Performance Appraisal and
Remuneration Management of Directors, Supervisors and Senior Management Officers” for the purposes
of further standardizing the performance appraisal and remuneration management of Directors, Supervisors
and senior management officers, establishing a well-developed incentive and restraint mechanism and
facilitating the standardized operation and healthy development of the Company, and revised the
“Provisional Measures on the Performance Appraisal of Directors, Supervisors and Senior Management
Officers” and the “Provisional Measures on the Remuneration Management of Directors, Supervisors and
Senior Management Officers” in accordance with the relevant policies and requirements and based on the
actual situation of the Company.
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RISK MANAGEMENT COMMITTEE
The Company established its Risk Management Committee on 30 June 2003. The Risk Management Committee is
mainly responsible for formulating the Company’s system of risk control benchmarks, discussing with the management
and assisting them in establishing well-developed risk management and internal control system, examining and reviewing
the Company’s risk preference and risk tolerance, formulating the Company’s risk management policy, reviewing the
assessment reports in relation to the Company’s risk management and internal control, studying major investigation
findings on risk management and internal control matters as delegated by the Board or on its own initiative and the
management’s response to these findings, and dealing with major risk emergency events or crisis events or major
disagreement in risk management.
At present, the Risk Management Committee of the fifth session of the Board comprises Ms. Leung Oi-Sie Elsie, an
Independent Director, Mr. Liu Jiade, a Non-executive Director, and Mr. Xu Hengping, an Executive Director, with
Ms. Leung Oi-Sie Elsie acting as the Chairperson. Mr. Anthony Francis Neoh retired from his position as the Chairman
of the Risk Management Committee of the fifth session of the Board due to the expiry of his term of office. Mr. Zhang
Xiangxian resigned from his position as a member of the Risk Management Committee of the fifth session of the Board
due to age reason.
1. Meetings and attendance
In 2016, three regular meetings were held by the Risk Management Committee of the fifth session of the Board.
Attendance records of individual members are as follows:
Name of member
Position
Number of meetings attended
Attendance rate
Leung Oi-Sie Elsie
Liu Jiade
Xu Hengping
Independent Director, Chairperson of the
Risk Management Committee of the
fifth session of the Board
Non-executive Director, member of the
Risk Management Committee of the
fifth session of the Board
Executive Director, member of the
Risk Management Committee of the
fifth session of the Board
1/1
3/3
3/3
100%
100%
100%
In 2016, attendance records of the resigned Directors at the Risk Management Committee meetings are as follows:
Name of member
Position
Number of meetings attended
Attendance rate
Anthony Francis Neoh
Zhang Xiangxian
Independent Director, Chairman of the
Risk Management Committee of the
fifth session of the Board
Non-executive Director, member of the
Risk Management Committee of the
fifth session of the Board
2/2
2/2
100%
100%
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Corporate Governance
2. Performance of duties by the Risk Management Committee
In 2016, the Risk Management Committee performed its duties and functions in strict compliance with the
“Procedural Rules for Risk Management Committee Meetings”. All members performed their obligations in a
responsible manner, and gave guiding opinions on proposals in relation to the internal control system of the
Company, risk management and construction in compliance with law.
(1) Reviewing the risks on major matters concerning the business operation and management of the Company.
In 2016, the Risk Management Committee reviewed the risk analysis on major matters concerning the
business operation and management of the Company, and reviewed and approved the “Proposal in relation
to the Financial Budget of the Company for the Year 2017” and the “Proposal in relation to the Risk
Analysis on the Investment Plan of the Company for the Year 2017” in accordance with the regulatory
requirements of the CIRC on C-ROSS.
(2) Attending meetings of the Risk Management Committee of the Board and providing guidance on the
risk management of the Company. In 2016, all members of the Risk Management Committee diligently
performed their duties, attended all meetings in a timely manner, and reviewed the proposals on risk
management and internal control of the Company. During meetings of the Risk Management Committee,
all members actively participated in discussions and gave guiding opinions on any proposals considered and
discussed at the meetings.
(3) Providing its opinions for the review of the proposals on risk management to the Board. In 2016, the Risk
Management Committee closely monitored and controlled and effectively prevented internal and external
risks of the Company, assisted the Board in establishing a well-developed internal control system of the
Company, formulated an operational risk management policy of the Company, and reviewed the assessment
reports on business risk and internal control of the Company according to the regulatory requirements in the
PRC and overseas. The Risk Management Committee provided its opinions for the review of the proposals
on risk management such as the work summary on anti-money laundering for the year 2015 and the work
plan for the year 2016, the risk appetite statement of the Company for the year 2016, and the audit report
on the solvency risk management system of the Company for the year 2016, which offered professional
support to the Board’s decision-making in a scientific manner.
(4) Convening special meetings by the Chairman of the Risk Management Committee. On 26 October 2016,
Ms. Leung Oi-Sie Elsie, the Chairperson of the Risk Management Committee, convened special meetings
with the person-in-charge of each of the Legal and Compliance Department and the Risk Management
Department, discussing matters on legal compliance and risk management of the Company.
STRATEGY AND INvESTMENT DECISION COMMITTEE
The Company established the Strategy Committee on 30 June 2003. In October 2010, the proposal to establish the
Strategy and Investment Decision Committee on the basis of the Strategy Committee was reviewed and approved at the
ninth meeting of the third session of the Board. The Strategy and Investment Decision Committee is mainly responsible
for the drawing-up of long-term development strategies and significant investment or financing plans of the Company,
proposing significant projects of capital operation and assets management, and conducting studies and making
recommendations on other important matters affecting the development of the Company.
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Corporate Governance
At present, the Strategy and Investment Decision Committee of the fifth session of the Board comprises Mr. Tang Xin
and Ms. Leung Oi-Sie Elsie, the Independent Directors, Mr. Wang Sidong, a Non-executive Director, Mr. Lin Dairen
and Mr. Xu Haifeng, the Executive Directors, with Mr. Tang Xin acting as the Chairman. Mr. Huang Yiping resigned
from his position as the Chairman of the Strategy and Investment Decision Committee of the fifth session of the Board
of the Company pursuant to the relevant policies, and Mr. Anthony Francis Neoh retired from his position as a member
of the Strategy and Investment Decision Committee of the fifth session of the Board due to the expiry of his term of
office.
1. Meetings and attendance
In 2016, six regular meetings were held by the Strategy and Investment Decision Committee of the fifth session of
the Board. Attendance records of individual members are as follows:
Name of member
Position
Number of meetings attended
Attendance rate
Tang Xin
Lin Dairen
Wang Sidong
Xu Haifeng
Leung Oi-Sie Elsie
Independent Director, Chairman of the
Strategy and Investment Decision Committee
of the fifth session of the Board
Executive Director, member of the Strategy
and Investment Decision Committee
of the fifth session of the Board
Non-executive Director, member of the
Strategy and Investment Decision Committee
of the fifth session of the Board
Executive Director, member of the Strategy
and Investment Decision Committee of the
fifth session of the Board
Independent Director, member of the Strategy
and Investment Decision Committee of the
fifth session of the Board
5/5
6/6
100%
100%
5/6 Note
83%
6/6
3/3
100%
100%
Note: At the ninth meeting of the Strategy and Investment Decision Committee of the fifth session of the Board held on 20
December 2016, Mr. Wang Sidong gave written authorization for Mr. Lin Dairen to act as his proxy to attend and vote at
the meeting.
In 2016, attendance records of the resigned Directors at the Strategy and Investment Decision Committee
meetings are as follows:
Name of member
Position
Number of meetings attended
Attendance rate
Huang Yiping
Anthony Francis Neoh
Independent Director, Chairman of the Strategy
and Investment Decision Committee of the
fifth session of the Board
Independent Director, member of the Strategy
and Investment Decision Committee of the
fifth session of the Board
0/1 Note
0
2/2
100%
Note: At the fourth meeting of the Strategy and Investment Decision Committee of the fifth session of the Board held on 29
February 2016, Mr. Huang Yiping gave written authorization for Mr. Anthony Francis Neoh to act as his proxy to attend,
vote and chair the meeting.
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China Life Insurance Company Limited Annual Report 2016
Corporate Governance
2. Performance of duties by the Strategy and Investment Decision Committee
In 2016, all members of the Strategy and Investment Decision Committee attended meetings in a timely manner,
reviewed the proposals on the application of the Company’s insurance capital, annual investments, major
strategic projects and related annual reports. Members of the Strategy and Investment Committee diligently
performed their duties. During meetings of the Strategy and Investment Decision Committee, all members
actively participated in discussions and gave professional advices on any proposals considered and discussed at the
meetings.
(1) Discussing major strategic projects of the Company. In 2016, the Strategy and Investment Decision
Committee reviewed major strategic projects of the Company, such as the acquisition by the Company of
the shares of CGB from Citigroup and IBM Credit, the investment by the Company in China Life Chengda
(Shanghai) Healthcare Equity Investment Center and the investment by the Company in Chongqing Trust –
Collective Fund Trust Scheme for the PPP Project for Qingdao Metro Line 4, fully discussed the necessity,
feasibility and risks of the project proposals and made recommendations to the Board.
(2) Reviewing annual investment plans and entrusted investments of the Company. In 2016, the Strategy and
Investment Decision Committee carefully reviewed the proposals on investment plans and authorization
of investments, fully reviewed the proposals such as the “Proposal in relation to the Investment Plan of
the Company for the Year 2017”, the “Proposal in relation to the Authorization of Investment in Non
Self-use Real Estate of the Company for the Year 2017”, the “Proposal in relation to the Investment Plan
and the Authorization of Investment in Self-use Real Estate of the Company for the Year 2017”, and the
“Proposal in relation to the Authorization of Investment in the Equity Investment Fund of the Company
for the Year 2017”, and submitted its opinions to the Board in this regard. The Strategy and Investment
Decision Committee carefully reviewed the proposals of the Company such as the annual investment
management guidelines, reviewed and approved the “Proposal in relation to the ‘Management Guidelines
on the Investment Made by China Life Asset Management Company Limited under the Entrustment of
the Company (2017)’”, the “Proposal in relation to the ‘Management Guidelines on the Investment Made
by China Life Franklin Asset Management Company Limited under the Entrustment of the Company
(2017)’” and the “Proposal in relation to the ‘Management Guidelines on the Investment Made by China
Life Investment Holding Company Limited under the Entrustment of the Company (2017)’”, and agreed to
submit the above proposals to the Board for review and approval.
(3) Finalizing the Company’s development plans and reports. In 2016, the Strategy and Investment
Decision Committee discussed and reviewed the assessment report for the outline of the “12th Five-year”
development plan for the year 2015 and at the end of the planning period, and the outline of the “13th
Five-year” development plan of the Company, and submitted its opinions to the Board.
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Corporate Governance
INDEPENDENCE OF THE COMPANY FROM ITS CONTROLLING SHAREHOLDER
Employees: The Company is independent in the aspects of employment, human resources and remuneration
management.
Assets: The Company owns all assets relating to the operation of its principal business. At present, the Company does
not provide any guarantee for its shareholders. The Company’s assets are independent, complete, and independent from
the shareholders of the Company and other related parties.
Finance: The Company has established a separate financial department, and an independent financial accounting system
and financial management system; further, the Company makes financial decisions on its own; it employs separate
financial personnel, opens separate accounts with banks and does not share bank accounts with CLIC; the Company, as a
separate taxpayer, pays taxes individually according to law.
Organization: The Company has established a well-developed organizational system, under which internal bodies such as
the Board and the Supervisory Committee operate separately. There is no subordinate relationship between such internal
bodies and the functional departments of the Company’s controlling shareholder.
Business operations: The Company independently develops personal insurance businesses, including life insurance,
health insurance and accident insurance businesses, reinsurance relating to the above insurance businesses, use of funds
permitted by applicable PRC laws and regulations or the State Council, as well as its all types of personal insurance
services, consulting business and agency business, sale of securities investment funds, and other businesses permitted
by insurance administrative and regulatory authorities of the PRC. The Company currently possesses the “Insurance
Company Legal Person Permit” (Number: 000005) issued by the CIRC. The Company is independently engaged in
the businesses as prescribed in its business scope according to law, has separate sales and agency channels and is licensed
to use licensed trademarks without consideration. The completeness and independence of the Company’s business
operations will not be adversely affected by its relationship with related parties.
PERFORMANCE APPRAISAL AND INCENTIvES FOR SENIOR MANAGEMENT
The Company implements a term-of-service and target-related responsibility system for senior management. At the
beginning of each year, performance target contracts will be entered into between the Chairman of the Board and the
President, and between the President and other senior management of the Company. The performance target contract
system is an important tool in disassembling the strategic goals of the Company in a scientific manner, which is
conducive towards the breakdown of targets and transmission of responsibility, enhancing the implementation capacity
of the Company and ensuring the successful completion of its annual business targets. The performance appraisal criteria
listed in the individual performance target contracts of senior management are partially linked to the business targets of
the Company and partially formulated with reference to the duties and functions of their respective positions.
The remuneration for senior management mainly comprises position compensation, performance rewards, welfare
benefits and medium and long term incentives.
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China Life Insurance Company Limited Annual Report 2016
Corporate Governance
SHAREHOLDERS’ INTERESTS
To safeguard shareholders’ interests, in addition to the right to participate in the Company’s affairs by attending
shareholders’ general meetings, shareholders have the right to convene extraordinary shareholders’ general meetings
under certain circumstances.
If the number of Directors is less than the number stipulated in the Company Law or two-thirds of the number specified
by the Articles of Association, or the uncovered losses incurred amount to one-third of the Company’s total share capital
or if the Board or the Supervisory Committee deems necessary, or more than half of the Directors (including at least
two Independent Directors) request, or shareholders holding 10% or more shares of the Company make a requisition,
the Board shall convene an extraordinary shareholders’ general meeting within two months. Where shareholders holding
10% or more shares request an extraordinary shareholders’ general meeting, such shareholders shall make a request in
writing to the Board with a clear agenda. The Board shall, upon receipt of such a written request, convene a meeting
as soon as possible. If the Board fails to convene a meeting within 30 days of the receipt of such a written request,
shareholders making such a request may convene a meeting by themselves at the cost of the Company within four
months of the receipt by the Board of such a written request.
In accordance with the Articles of Association, when the Company convenes the shareholders’ general meeting,
shareholders individually or in aggregate holding 3% or more of the shares of the Company shall have the right to
submit proposals to the Company. The Company should include such matters that fall into the scope of the functions
and powers of the shareholders’ general meeting in the agenda of the meeting. Shareholders individually or in aggregate
holding 3% or more of the shares of the Company may submit provisional proposals in writing to the convenor sixteen
days prior to the shareholders’ general meeting. The provisional proposals shall fall into the scope of the functions and
powers of the shareholders’ general meeting and specify explicit topics and specific resolution matters.
Shareholders may put forward enquiries to the Board through the Board Secretary or the Company Secretary, or put
forward proposals at shareholders’ general meetings through their proxies. The Company has made available its contact
details in its correspondence with shareholders to enable such enquiries or proposals to be properly directed.
INFORMATION DISCLOSURE AND INvESTOR RELATIONS
The Company has established a well-developed and practical information disclosure system in strict compliance with
the laws and regulations of its listed jurisdictions and continued to improve the quality of its information disclosure so
as to ensure that domestic and overseas investors obtain true, accurate and complete information. The Company has
proactively developed investor relations and strengthened its contact and communication with domestic and overseas
investors, and addressed hot issues as earlier as possible, which enabled domestic and overseas investors to understand the
business operations of the Company in a timely manner.
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China Life Insurance Company Limited Annual Report 2016
Corporate Governance
In 2016, the Company continued to strengthen the construction of its information disclosure system and implement
the regulatory requirements relating to information disclosure in a practical manner in order to ensure the timeliness,
fairness, truthfulness, accuracy and completeness of information disclosure. The Company constantly enhanced the
quality of information disclosure, actively studied and improved the method of disclosure of key information from
the perspective of investors, in particular medium and small investors, to enable them to have a deeper understanding
of the development strategies, business operations and major issues of the Company, and extended the scope and
depth of information disclosure of periodic reports and special reports, so as to ensure investors to obtain timely and
accurate information affecting its decisions. The Company also regularly organized internal training courses relating to
information disclosure, carried out timely study and promotion of new regulatory rules of its listed jurisdictions in the
PRC and overseas, and explained the key points and difficulties of information disclosure. The Company also strictly
implemented the registration and filing procedures of persons who have knowledge of inside information, strengthened
the confidentiality of the Company’s inside information, and safeguarded the legitimate rights and interests of investors,
with a view to maintaining the fairness, impartiality and openness of the information disclosure of the Company.
In 2016, the Company continuously improved and strengthened its relations with investors, which mainly included
holding the Annual General Meeting, holding results release conferences, embarking on global non-deal roadshows,
meeting and holding conference calls with investors and analysts, attending investors’ meetings, frequently updating
information on its investor relations website, and timely responding to enquiries from investors and analysts. The
Company attached great importance to the innovation of investor relations, and kept abreast with the development pace
of technology era. In the third quarter of 2016, the Company held a global conference call in relation to the release of
its operating results for the first time since its listing to convey the message of the management directly to the capital
market. Looking back to 2016, the Company communicated with more than 3,000 investors and analysts through
different channels, including the reception at the Company of 110 groups of investors and analysts consisting of over
850 individuals in total, communicating with more than 1,000 investors by participating in 16 investors’ meetings held
locally or internationally, and meeting and visiting more than 130 investors in roadshows. In addition, the Company
kept in close contact with investors by phone and email, communicated with them through more than 1,500 emails, and
answered their calls and emails for more than 300 person-times.
In the assessment and selection of the “Gold Bull Award for the PRC Listed Companies in 2015” held by China
Securities Journal in 2016, the Company was awarded the titles of the “Gold Bull Award for Top 100 Listed Companies
in 2015” and the “Gold Bull Award for the Most Profitable Companies in 2015”. In the assessment and selection of the
“Golden Governance-Outstanding Board Secretaries of Listed Companies in 2015” held by Shanghai Securities News
in 2016, Mr. Zheng Yong, the Board Secretary, was awarded the title of the “Golden Governance-Board Secretary for
Information Disclosure”.
CHANGES OF THE ARTICLES OF ASSOCIATION
With the approval at the 2014 Annual General Meeting held on 28 May 2015, the Company included the “fund sales
business” into its business scope as stipulated in the Articles of Association and amended certain articles pursuant to the
regulatory requirements. For details of such amendment, please refer to the Supplemental Notice of Annual General
Meeting published by the Company on the HKExnews website of the Hong Kong Exchanges and Clearing Limited on 8
May 2015. The amendment was approved by the CIRC on 20 April 2016.
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China Life Insurance Company Limited Annual Report 2016
Internal Control and Risk Management
1.
INTERNAL CONTROL
The Company has been devoting significant effort towards the promotion of internal control and the
establishment of internal control related systems. In accordance with the requirements of the “Standard
Regulations on Corporate Internal Control”, the “Implementation Guidelines for Corporate Internal Control”, the
“Guidance on Internal Control for Companies Listed on the Shanghai Stock Exchange”, the “Rules Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited”, and the “Basic Standards of Internal Control
for Insurance Companies” issued by the CIRC, the Company has carried out a lot of work on its internal control
system establishment, rules implementation and risk management by strictly following its corporate governance
structure. The Company has also formulated and issued the “Internal Control Implementation Manual of China
Life Insurance Company Limited (2016 Edition)” to strengthen the implementation of internal control standards
and internal control assessments, and actively promoted the culture and philosophy of internal control, thereby
continuously enhancing the internal control of the Company.
Pursuant to the requirements of the “Notice on the Proper Preparation for Disclosure of 2016 Annual Reports
of Listed Companies” promulgated by the SSE, the Company shall release an Internal Control Self-assessment
Report simultaneously with the publication of its 2016 annual report. The Company, as an overseas private issuer,
was required to provide a specific assessment report on its internal control system relating to financial reporting
for the year ended 31 December 2016 in its Form 20-F (U.S. Annual Report) submitted to the U.S. Securities
and Exchange Commission (the “SEC”) in accordance with Section 404 of the U.S. Sarbanes-Oxley Act. In
accordance with the requirements of laws and regulations relating to internal control of the jurisdictions where the
Company is listed, the Company has completed internal control self-assessments in relation to the requirements
of Section 404 of the U.S. Sarbanes-Oxley Act and the SSE for the year ended 31 December 2016 in two stages,
namely, interim assessment and supplementary test, and confirmed after the assessments that its internal controls
were effective. The Company has also received from its independent auditors an unqualified opinion on the
effectiveness of its internal control in relation to financial reporting as at 31 December 2016. The Company’s
assessment report and the report of its independent auditors will be included as an attachment to its annual report
submitted to the SSE and its Form 20-F submitted to the SEC.
It is the responsibility of the Board of the Company to establish and effectively implement well-established
internal control systems, assess their effectiveness and disclose the report on the internal control assessment. The
Board and the Audit Committee are responsible for leading the implementation of internal control measures of
the Company, and the Supervisory Committee supervises the internal control assessments performed by the Board.
The Company has established Risk Management Department in its headquarters and branches. The Company
also conducts tests on the management level, assesses the effectiveness of the established and implemented internal
control systems in accordance with the regulatory requirements of the jurisdictions where the Company is listed,
and reports to the Board, the Audit Committee and the management.
In compliance with regulatory requirements and having considered the characteristics of its business and
management requirements, the Company has established and implemented a series of internal control measures
and procedures with respect to currency and funds, insurance operations, external investments, physical assets,
information technology, financial reporting and information disclosure to ensure the safety and integrity of its
assets. By complying with relevant PRC laws and regulations as well as the internal rules and regulations of the
Company, the quality of accounting information has been improved.
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China Life Insurance Company Limited Annual Report 2016
Internal Control and Risk Management
A relatively well-developed internal control system has been established in terms of team-building, sales and
operations, and system management for the sales channels, such as individual insurance, group insurance,
bancassurance, health insurance and e-commerce. This internal control system regulates the relevant authorizations
and operational workflows, and effectively adopts the measures to prevent and manage risks relating to
the operation of exclusive agents. The Company has promulgated clear regulations for the workflows and
authorizations relating to the verification of insurance policies, insurance claims and insurance preservation. The
Company has also formulated business operation standards and service quality standards, developed systems of
business, document and file management, and further regulated the management of business approval authority to
strengthen its control over business risk and improve the quality of its services.
In accordance with relevant laws and regulations such as the “Accounting Law of the People’s Republic of China”
and the “Enterprise Accounting Standards” and taking into account the needs of the Company for its business
development, operation and management, the Company has formulated and issued the “Accounting System
of China Life Insurance Company Limited” and the “Accounting Practices of China Life Insurance Company
Limited”. The accounting units of the Company at all levels have implemented them in strict compliance with the
requirements of the accounting system and various basic systems to regulate works relating to financial accounting
and preparation of financial reports. The accounting units of the Company at all levels have assigned positions in
a reasonable manner, clearly defined duties and responsibilities of such positions and their scope of authority on
management, and strictly prohibited employees from serving incompatible positions concurrently, thus exercising
the control over financial risks in an efficient manner.
The Company has formulated the “Measures on the Administration of the Accountability System for Major
Errors in Periodic Report Disclosures of China Life Insurance Company Limited”, which set forth provisions
governing the basic responsibilities of periodic report disclosures, the major errors in periodic report disclosures
and the responsibility attribution. As at 31 December 2016, there has been no major error in periodic report
disclosures of the Company. In order to enhance the confidentiality of its inside information and regulate the
collection, management and reporting of its material information, the Company has formulated the “Measures
for the Administration of Persons Who Have Knowledge of Inside Information of China Life Insurance Company
Limited” and the “System of Internal Reporting of Material Information of China Life Insurance Company
Limited”. In particular, the internal report on material information has been included in the indicator system
under the internal control report of the Company. Persons responsible for reporting material information
(including all departments, branches, subsidiaries and affiliates of the Company, the controlling shareholder and
the shareholders holding over 5% of shares of the Company) obtain and identify potential material information at
the level of operation and management by making use of various information technologies, and submit and report
such information to the President and the Board of the Company as earlier as possible. The Board then makes the
final decision on whether to release the material information, and discloses the same to such extent as it considers
reasonable and practicable.
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China Life Insurance Company Limited Annual Report 2016
Internal Control and Risk Management
The Company has established a well-developed system relating to investment decisions in accordance with the
relevant laws and regulations and based on the actual situation of investment management. The system defines
the approval and decision-making authority, authorization mechanism and specific decision-making procedures
for investment management. All major investment decisions shall be approved at an appropriate level and their
actual implementation shall be in strict compliance with the relevant requirements of the investment management
system. The Investment Decisions Committee is a permanent body of the Company for investment decisions,
which is responsible for reviewing major investments and providing support to any investment decisions made by
the management.
Under the management of a unified system, the Company has established a comprehensive information technology
system and formed a closed-loop mechanism focusing on centralized review and publication, periodic inspection
and continuous improvement. Further, the Company has promoted the construction of an information safety
system, and formulated and implemented a series of effective internal control measures in the course of system
development and testing and day-to-day operation and management, thereby strengthening the information safety
control and improving the information safety management of the Company.
The Risk Management Department, Audit Department and Supervision Department of the Company are
responsible for overseeing the implementation of its internal control policies. The Risk Management Department
identifies issues in the areas of system design, control implementation and risk management in a timely manner
through the adoption of various measures such as walk-through test, control test and risk analysis. It also
eliminates loopholes, guards against risks and reduces losses by adopting various measures to improve systems,
enhances legal compliance and pursues responsible persons. With the active implementation of the requirements
of regulatory departments and the management of the Company and the adherence to the risk-oriented principle,
the Audit Department has carried out routine audits and a variety of ad-hoc audits, covering the management of
orphan policies, key city projects, supplementary major medical insurance, information system security, solvency
risk management system, internal control of capital application, subsequent audit, connected transactions and
anti-money laundering. These routine and ad-hoc audits enabled the Company to identify potential risks in a
timely manner and promote the business operation of the Company in compliance with applicable laws and
regulations through improving the supervision and remedial mechanisms, strengthening the implementation of
rectification measures and enhancing the application of audit results. The Company has formulated regulations
with respect to the reporting, investigation, handling of and responsibility attribution for cases involving any
violations of laws, disciplinary rules and regulations by employees, each being implemented by the Supervision
Department, which ensures that cases involving any violations of laws, disciplinary rules and regulations by
employees are handled in a timely manner, and the persons involved will be attributed to proper responsibility.
The Supervision Department reports the cases involving insurance agents (which specifically refer to judicial
cases) and manages the responsibility attribution of such cases in accordance with regulations such as the “Notice
on the Establishment of a Reporting System of Judicial Cases involving Insurance Industry” issued by the CIRC
and internal policies such as the “Implementing Rules for Responsibility Attribution of Cases”, and constantly
optimizes the relevant internal policies pursuant to the standards for administration of cases of insurance
institutions promulgated by the competent authorities in charge of supervision of the insurance industry.
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China Life Insurance Company Limited Annual Report 2016
Internal Control and Risk Management
II. RISK MANAGEMENT
The Company has established a 5-tier organizational structure with the ultimate responsibility assumed by the
Board, under the direct leadership of the management, having reliance on the risk management departments and
with the close cooperation among the relevant functional departments. The first tier is the corporate governance
level, including the Board, the Supervisory Committee, and the Risk Management Committee and the Audit
Committee under the Board. The second tier is the headquarter level. The President’s Office of the Company
has set up the Risk Management Committee, under which several functional departments, such as the Risk
Management Department, the Legal and Compliance Department, the Supervision Department, the Audit
Department, and the departments in charge of finance and business administration, are established. The third tier
is the provincial branches level. The General Manager’s Office of the Company has set up the Risk Management
Committee, under which several functional departments, such as the Risk Management Department, the
Supervision Department, and the departments in charge of finance and business administration, are established.
The fourth tier is the local or city branches level, including Supervision (Legal and Compliance) Departments
and related functional departments. The fifth tier is the county sub-branches level, the persons responsible for
internal control and risk management of which have been determined. By establishing the organizational structure
of risk control, the Company has gradually established a criss-cross network of risk control system, with the risk
management departments at all levels as leading bodies, the relevant functional departments as main bodies, the
vertical decision-making control system and horizontal interactive collaboration mechanism as supporting systems
and the comprehensive risk management as focus, thus laying a strong foundation for the Company to achieve a
comprehensive risk management system with full coverage, all-employee participation and effective workflows.
In 2016, the Company consistently reinforced the construction of its risk management system. Pursuant to the
requirements of the CIRC on the C-ROSS, the Company established a risk management system, with the “Rules
for the Management of Comprehensive Risks” as the general outline, the risk management systems on seven types
of risks (including insurance risk, market risk, etc.) as the focus, and the implementing rules for series of business
as the base, so as to form a fundamental system and standard on the risk control of the Company. The Company
actively pushed forward the adjustment to the organizational structure of risk management by appointing the
chief risk officer, regulating the establishment of risk management departments and creating additional divisions
and offices with relevant functions. The Company also consistently optimized its mechanism for the formation,
transmission and application of risk preference, and applied such risk preference to the work such as budget, assets
allocation and strategic planning.
The Company conducts a self-assessment on solvency risk management capability every year pursuant to the
requirements of the CIRC on the C-ROSS so as to assess all work in relation to risk management at two levels: the
soundness of the system and the effectiveness of its implementation. From October to November 2016, the CIRC
conducted an inspection on the solvency risk management of the Company. According to the feedback given by
the CIRC, the Company received a leading score among its peers in the life insurance industry in the “C-ROSS
Solvency Risk Management Assessment” (“SARMRA”) of the CIRC in 2016. The Company conducts a risk
assessment on seven types of risks (including insurance risk, market risk, credit risk, operational risk, strategic risk,
reputational risk and liquidity risk) at least once every six months, and reports the same to the senior management.
Based on the assessment, the overall risk of the Company is within a controllable range.
For an analysis and management of the major risk factors of the Company, please refer to Note 4 in the Notes to
the Consolidated Financial Statements of this annual report.
It should be noted that the risk management and internal control of the Company are designed with the objectives
to reasonably ensure the legal compliance of business operation and management, safety of assets, truthfulness and
completeness of financial reports and relevant information, improvement of operating efficiency and effect, and
accomplishment of development strategy. Given the inherent limitations on risk management and internal control,
the Company can only provide reasonable assurance with respect to the accomplishment of the above objectives.
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China Life Insurance Company Limited Annual Report 2016
Honors and Awards
“Forbes”
“2016 Forbes Global 2000”, ranking No. 49
“FORTUNE China”
“2016 Top 500 Chinese Enterprises”, ranking No. 12
Hexun.com – the “14th China’s Financial Annual
Champion Awards of 2016”
“2016 Most Influential Life Insurance Company”
“The Asset” magazine
“The Asset Triple A Country Awards: Best Transaction of
the Year in China/Best Bonds of the Year in China”
“The Asset Triple A Regional Awards: Best Bonds of Fixed
Income Assets”
Millward Brown
“2016 BrandZ Top 100 Global Most Valuable Brands”,
ranking No. 59
“Financial Times” – “2016 Gold Medal List of
Chinese Financial Institutions (the 9th Session)”
“2016 Golden Dragon Award – Best Life Insurance
Company of the Year”
“National Business Daily” – Assessment and
Selection of the “Golden Tripod Award”
(the 7th Session)
“21st Century Business Herald” – “Assessment
and Selection of the Competitiveness of Asian
Financial Enterprises in 2016”
“Assessment and Selection of the Supervisory
Committees of Listed Companies with the
Best Practice” jointly organized by the Listed
Companies Association of the PRC, the Shanghai
Stock Exchange and the Shenzhen Stock
Exchange
“2016 Excellent Customer Service Award”
“2016 Best Life Insurance Company in Asia”
“Top 20 Supervisory Committees of Listed Companies with
the Best Practice”
China Association for Quality Promotion – “2nd
Chinese Conference on Services”
“Five-star Award of the China Service Stars”
China Association for Quality Promotion – “3.15
Themed Activities on Consumption and Right
Protection of China Association for Quality
Promotion in 2016”
“Service Quality and Innovation Award”
China Philanthropy Times – “2016 China
Charity Annual Conference”
“2016 China Charitable Enterprise”
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China Life Insurance Company Limited Annual Report 2016
Independent Auditor’s Report
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People’s Republic of China with limited liability)
OPINION
We have audited the consolidated financial statements of China Life Insurance Company Limited (the “Company”)
and its subsidiaries (the “Group”) set out on pages 113 to 226, which comprise the consolidated statement of financial
position as at 31 December 2016, and the consolidated statement of comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of
the Group as at 31 December 2016, and of its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with International Financial Reporting Standards (“IFRSs”) issued by the International
Accounting Standards Board (“IASB”) and have been properly prepared in compliance with the disclosure requirements
of the Hong Kong Companies Ordinance.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (“ISAs”) issued by the International
Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent
of the Group in accordance with the Code of Ethics for Professional Accountants (the “Code”) issued by the Hong Kong
Institute of Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with
the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in
that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the performance
of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial
statements. The results of our audit procedures, including the procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying consolidated financial statements.
107
China Life Insurance Company Limited Annual Report 2016
Independent Auditor’s Report
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People’s Republic of China with limited liability)
KEY AUDIT MATTERS (continued)
Key audit matter
How our audit addressed the key audit matter
Valuation of insurance contract liabilities
The Group had significant insurance contract liabilities
stated at RMB1,847.99 billion as at 31 December 2016,
representing 77.34% of the Group’s total liabilities. This is
an area that involves significant judgement over uncertain
future outcomes, including primarily the timing and
amount of ultimate full settlement of policyholder liabilities.
Actuarial models are used to support the calculation of
insurance contract liabilities. The complexity of the models
may give rise to errors as a result of inaccurate/incomplete
data or the design or application of the models. Assumptions
used in actuarial models, such as mortality, morbidity,
expenses, lapse rates, and so on, are set up applying estimates
and judgements based on the experience analysis and future
expectations by management.
The Group’s disclosures about valuation of insurance
contract liabilities are included in Note 3.1, which
specifically explains the uncertainty of key assumptions
applied in the valuation. Please also refer to Note 4.1.3 for
the sensitivity analysis of the impact of key assumptions
changes on the performance of the Group.
In our audit, we involved our internal actuarial specialists
to assist us in performing the following audit procedures
in this area, which included among others:
•
•
•
•
Assessing the design and testing the operating
effectiveness of internal controls over the insurance
contract liabilities’ processes including management’s
determination and approval processes for experience
analysis and setting of assumptions, calculation
processes for actuarial estimation and actual result,
and so on;
Assessing the assumptions by reference to the
industry data, and considering both historical
experience and business expectation of the Group;
Establishing models independently to test the
valuation of liabilities for selected insurance
products; and
A n a l y s i n g t h e m o v e m e n t o f t h e s e l i a b i l i t i e s
considering the changes in actuarial assumptions of
the reporting period.
We tested the underlying data used in the valuation of
these liabilities, and compared it with original documents.
By applying our insurance industry knowledge and
experience, we compared the methodology, models
and assumptions used by the Group against recognised
actuarial practices.
108
China Life Insurance Company Limited Annual Report 2016
Independent Auditor’s Report
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People’s Republic of China with limited liability)
KEY AUDIT MATTERS (continued)
Key audit matter
How our audit addressed the key audit matter
In our audit, our internal valuation specialists were
involved to assist us in reviewing the technique and the
discount rate used in the impairment test with reference
to valuation guidelines and industry practices, which
including:
•
•
Assessing the comparable companies selected to
generate certain inputs in calculating the Weighted
Average Cost of Capital by reference to the financial
and operational information of those companies and
the Group; and
Calculating the Weighted Average Cost of Capital
using the Capital Asset Pricing Model.
We assessed the objectivity and capability of the external
valuer. We compared the selling prices of development
properties and rentals of investment properties with
the historical business performance of Sino-Ocean and
industry data to review the assumptions used in the cash
flow projection of the external valuer.
Our internal valuation specialists were involved to assist
us to assess the valuation techniques against industry
practice and valuation guidelines, compare assumptions
used against industry benchmarks, investigate significant
differences and perform our own independent valuations
where applicable.
We tested valuation, verification and model approval
processes, and evaluated the design and operating
effectiveness of the internal controls over those processes.
The impairment test for investment in an associate
The Group held material investment in an associate,
Sino-Ocean Group Holding Limited (“Sino-Ocean”), a
company listed on the Stock Exchange of Hong Kong
Limited, with a carrying value of RMB12.68 billion as at
31 December 2016. As the quoted market price of this
investment had been below its carrying value for more
than one year, the Group performed an impairment
test with the assistance from an external valuer in 2015,
based on which an impairment loss of RMB1.01 billion
was recorded as at 31 December 2015. During 2016,
the quoted market price of this investment was still
below its carrying value, and the Group performed an
impairment test with the assistance from an external valuer
at the year end of 2016 as well, with the result that no
further impairment loss needed to be recorded. In the
assessment of the value in use of this investment, business
assumptions for the projection of future cash flows and
the determination of the discount rate were made by
management based on their analysis of the historical
operating results and the estimation of future expectations.
Disclosure of the impairment of this investment is
disclosed in Note 8.
Fair value of financial assets
The Group held material investments in certain financial
assets such as private equity funds, preference shares, other
equity and debt investments, which are accounted for as
available-for-sale securities at fair value and securities at
fair value through profit or loss with the total amount
of RMB91.24 billion as at 31 December 2016. These
investments are classified as level 3 in the fair value
hierarchy, as their fair value are measured using valuation
techniques with unobservable significant inputs. Fair
value measurement can be a subjective area and more so
for areas of the market reliant on model based valuation
or with weak liquidity and price discovery. The selection
of valuation techniques for these financial assets can be
subjective and is so for assumptions. The use of different
valuation techniques and assumptions could produce
significantly different estimates of fair value.
Note 4.3 discloses the balance of these investments,
the valuation techniques and significant unobservable
inputs used in the measurement of the fair value of these
investments.
109
China Life Insurance Company Limited Annual Report 2016
Independent Auditor’s Report
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People’s Republic of China with limited liability)
KEY AUDIT MATTERS (continued)
Key audit matter
How our audit addressed the key audit matter
Valuation of identifiable intangible assets generated from an acquisition
On 29 August 2016, the Group completed the acquisition
of an additional 23.686% equity interest in an existing
associate, China Guangfa Bank Co., Ltd. (“CGB”), which
remained an associate accounted for under the equity
method. The Group performed a purchase price allocation
exercise that involved valuing the identifiable net assets
of CGB, especially for the identifiable intangible assets
which are mainly the core deposit intangibles and the
credit card client relationship arising from the acquisition.
The Group engaged an external valuer to perform the
valuation of the identifiable intangible assets, as the
valuation involved complex assumptions and judgements,
the change to which can have a material impact on the
valuation adopted in the financial statements.
Please refer to Note 3.3 for the key assumptions involved
in the valuation.
Our internal valuation specialists were involved to assist us
to review the valuation methodologies and key valuation
assumptions used by management, and the procedures
included among others:
•
•
•
Assessing the methodology of the valuation of the
intangible assets;
Testing the cash flow projection by comparing the
key assumptions it based on against the historical
business data and market practice; and
Assessing the discount rate by verifying the selection
of comparable companies based on bank industry
experience and performing a corroborative analysis
using the Capital Asset Pricing Model independently.
We assessed the objectivity and capability of the external
valuer and tested the historical financial information, from
which the assumptions for the cash flow projection were
generated.
OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT
The directors of the Company are responsible for the other information. The other information comprises the
information included in the Annual Report, other than the consolidated financial statements and our auditor’s report
thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
110
China Life Insurance Company Limited Annual Report 2016
Independent Auditor’s Report
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People’s Republic of China with limited liability)
RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL
STATEMENTS
The directors of the Company are responsible for the preparation of consolidated financial statements that give a
true and fair view in accordance with IFRSs issued by the IASB and the disclosure requirements of the Hong Kong
Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of
the consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors of the Company either intend to liquidate the Company or to
cease operations or have no realistic alternative but to do so.
The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the
Group’s financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Our report is made solely to you, as a body, and for no other purpose. We do not assume responsibility towards or
accept liability to any other person for the contents of this report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
•
•
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
111
China Life Insurance Company Limited Annual Report 2016
Independent Auditor’s Report
To the shareholders of China Life Insurance Company Limited
(Incorporated in the People’s Republic of China with limited liability)
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS (continued)
•
•
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
regarding independence and to communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Audit Committee, we determine those matters that were of most significance
in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
The engagement partner on the audit resulting in this independent auditor’s report is Ng Chi Keung.
Ernst & Young
Certified Public Accountants
Hong Kong
23 March 2017
112
Consolidated Statement of Financial Position
China Life Insurance Company Limited Annual Report 2016
As at 31 December 2016
ASSETS
Property, plant and equipment
Investment properties
Investments in associates and joint ventures
Held-to-maturity securities
Loans
Term deposits
Statutory deposits – restricted
Available-for-sale securities
Securities at fair value through profit or loss
Securities purchased under agreements to resell
Accrued investment income
Premiums receivable
Reinsurance assets
Other assets
Cash and cash equivalents
As at
31 December
2016
RMB million
As at
31 December
2015
RMB million
30,389
1,191
119,766
594,730
226,573
538,325
6,333
766,423
209,124
43,538
55,945
13,421
2,134
22,013
67,046
26,974
1,237
47,175
504,075
207,267
562,622
6,333
770,516
137,990
21,503
49,552
11,913
1,420
23,642
76,096
Notes
6
7
8
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
11
12
13
Total assets
2,696,951
2,448,315
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
113
China Life Insurance Company Limited Annual Report 2016
Consolidated Statement of Financial Position
As at 31 December 2016
LIABILITIES AND EQUITY
Liabilities
Insurance contracts
Investment contracts
Policyholder dividends payable
Interest-bearing loans and borrowings
Bonds payable
Financial liabilities at fair value through profit or loss
Securities sold under agreements to repurchase
Annuity and other insurance balances payable
Premiums received in advance
Other liabilities
Deferred tax liabilities
Current income tax liabilities
Statutory insurance fund
Total liabilities
Equity
Share capital
Other equity instruments
Reserves
Retained earnings
As at
31 December
2016
RMB million
As at
31 December
2015
RMB million
Notes
14
15
16
17
18
19
28
20
34
35
36
1,847,986
195,706
87,725
16,170
37,998
2,031
81,088
39,038
35,252
36,836
7,768
1,214
491
1,715,985
84,106
107,774
2,643
67,994
856
31,354
30,092
32,266
26,514
16,953
5,347
217
2,389,303
2,122,101
28,265
7,791
145,007
122,558
28,265
7,791
163,381
123,055
Attributable to equity holders of the Company
303,621
322,492
Non-controlling interests
Total equity
Total liabilities and equity
4,027
3,722
307,648
326,214
2,696,951
2,448,315
Approved and authorised for issue by the Board of Directors on 23 March 2017.
Yang Mingsheng
Director
Lin Dairen
Director
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
114
Consolidated Statement of Comprehensive Income
China Life Insurance Company Limited Annual Report 2016
For the year ended 31 December 2016
REvENUES
Gross written premiums
Less: premiums ceded to reinsurers
Net written premiums
Net change in unearned premium reserves
Net premiums earned
Investment income
Net realised gains on financial assets
Net fair value gains/(losses) through profit or loss
Other income
Total revenues
BENEFITS, CLAIMS AND EXPENSES
Insurance benefits and claims expenses
Life insurance death and other benefits
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
Investment contract benefits
Policyholder dividends resulting from participation in profits
Underwriting and policy acquisition costs
Finance costs
Administrative expenses
Other expenses
Statutory insurance fund contribution
Total benefits, claims and expenses
Share of profit of associates and joint ventures, net
Profit before income tax
Income tax
Net profit
Attributable to:
– Equity holders of the Company
– Non-controlling interests
Notes
2016
RMB million
2015
RMB million
430,498
(1,758)
428,740
(2,510)
363,971
(978)
362,993
(692)
426,230
362,301
109,147
6,038
(7,094)
6,460
97,582
32,297
10,209
5,060
540,781
507,449
(253,157)
(27,269)
(126,619)
(5,316)
(15,883)
(52,022)
(4,767)
(31,854)
(4,859)
(1,048)
(221,701)
(21,009)
(109,509)
(2,264)
(33,491)
(35,569)
(4,320)
(27,458)
(7,428)
(743)
(522,794)
(463,492)
5,855
1,974
23,842
(4,257)
45,931
(10,744)
19,585
35,187
19,127
458
34,699
488
21
22
23
24
24
24
25
26
20
8
27
28
Basic and diluted earnings per share
30
RMB0.66
RMB1.22
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
115
China Life Insurance Company Limited Annual Report 2016
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
Other comprehensive income
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods:
Fair value gains/(losses) on available-for-sale securities
Amount transferred to net profit from other comprehensive income
Portion of fair value changes on available-for-sale securities
attributable to participating policyholders
Share of other comprehensive income of associates and joint ventures
under the equity method
Exchange differences on translating foreign operations
Income tax relating to components of other comprehensive income
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods
Other comprehensive income that will not be reclassified to
profit or loss in subsequent periods
Notes
2016
RMB million
2015
RMB million
28
(44,509)
(6,038)
54,080
(32,297)
17,372
(12,767)
(864)
21
8,242
353
10
(2,242)
(25,776)
7,137
–
–
Other comprehensive income for the year, net of tax
(25,776)
7,137
Total comprehensive income for the year, net of tax
(6,191)
42,324
Attributable to:
– Equity holders of the Company
– Non-controlling interests
(6,647)
456
41,775
549
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
116
Consolidated Statement of Changes in Equity
China Life Insurance Company Limited Annual Report 2016
For the year ended 31 December 2016
Attributable to equity holders
of the Company
Non-controlling
interests
Total
Share
capital
RMB million
(Note 34)
Other equity
instruments
RMB million
(Note 35)
Reserves
RMB million
(Note 36)
Retained
earnings
RMB million
RMB million
RMB million
As at 1 January 2015
Net profit
Other comprehensive income
Total comprehensive income
Transactions with owners
Capital paid in by
non-controlling interests
Capital paid in by other equity
instruments holders
Appropriation to reserves (Note 36)
Dividends paid (Note 32)
Dividends to non-controlling interests
Others
Total transactions with owners
28,265
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,791
–
–
–
–
7,791
145,919
–
7,076
109,937
34,699
–
3,210
488
61
287,331
35,187
7,137
7,076
34,699
549
42,324
–
–
–
10,090
–
–
296
–
(10,090)
(11,491)
–
–
80
–
–
–
(117)
–
80
7,791
–
(11,491)
(117)
296
10,386
(21,581)
(37)
(3,441)
As at 31 December 2015
28,265
7,791
163,381
123,055
3,722
326,214
As at 1 January 2016
Net profit
Other comprehensive income
Total comprehensive income
Transactions with owners
Appropriation to reserves (Note 36)
Dividends paid (Note 32)
Dividends to non-controlling
interests
Others
Total transactions with owners
28,265
–
–
7,791
–
–
163,381
–
(25,774)
123,055
19,127
–
3,722
458
(2)
326,214
19,585
(25,776)
–
–
–
–
–
–
–
–
–
–
–
–
(25,774)
19,127
456
(6,191)
7,367
–
–
33
(7,367)
(12,257)
–
–
–
–
(151)
–
–
(12,257)
(151)
33
7,400
(19,624)
(151)
(12,375)
As at 31 December 2016
28,265
7,791
145,007
122,558
4,027
307,648
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
117
China Life Insurance Company Limited Annual Report 2016
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
CASH FLOWS FROM OPERATING ACTIvITIES
Profit before income tax
Adjustments for:
Investment income
Net realised and unrealised losses/(gains) on financial assets
Insurance contracts
Depreciation and amortisation
Foreign exchange gains
Share of profit of associates and joint ventures, net
Changes in operating assets and liabilities:
Securities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
Receivables and payables
Income tax paid
Interest received – securities at fair value through profit or loss
Dividends received – securities at fair value through profit or loss
2016
RMB million
2015
RMB million
23,842
45,931
(109,147)
1,056
131,354
2,083
(582)
(5,855)
(76,318)
1,539
124,466
(9,331)
5,465
526
(97,582)
(42,506)
112,142
2,036
(812)
(1,974)
(100,089)
403
70,482
(8,380)
1,225
313
Net cash inflows/(outflows) from operating activities
89,098
(18,811)
CASH FLOWS FROM INvESTING ACTIvITIES
Disposals and maturities:
Disposals of debt securities
Maturities of debt securities
Disposals of equity securities
Property, plant and equipment
Disposal of subsidiaries
Purchases:
Debt securities
Equity securities
Property, plant and equipment
Capital contribution to associates and joint ventures
Decrease/(increase) in term deposits, net
Decrease/(increase) in securities purchased under agreements to resell, net
Interest received
Dividends received
Decrease/(increase) in policy loans, net
10,447
50,101
508,476
114
(11)
(173,628)
(537,012)
(5,310)
(65,158)
37,515
(22,035)
78,891
20,390
(7,483)
11,546
41,806
400,451
199
3,875
(53,340)
(522,787)
(8,384)
(766)
124,838
(9,602)
81,688
8,828
(11,305)
Net cash inflows/(outflows) from investing activities
(104,703)
67,047
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
118
China Life Insurance Company Limited Annual Report 2016
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
2016
RMB million
2015
RMB million
49,999
–
(4,891)
(12,257)
(151)
13,831
2,939
(30,000)
(13,200)
(13,757)
7,791
(4,471)
(11,491)
(117)
–
2,630
–
–
CASH FLOWS FROM FINANCING ACTIvITIES
Increase/(decrease) in securities sold under agreements to
repurchase, net
Cash received from issuing other equity instruments
Interest paid
Dividends paid to equity holders of the Company
Dividends paid to non-controlling interests
Cash received from borrowings
Capital injected into subsidiaries by non-controlling interests
Cash repaid to lenders
Cash paid related to other financing activities
Net cash inflows/(outflows) from financing activities
6,270
(19,415)
Foreign exchange gains/(losses) on cash and cash equivalents
285
241
Net increase/(decrease) in cash and cash equivalents
(9,050)
29,062
Cash and cash equivalents
Beginning of the year
End of the year
Analysis of balances of cash and cash equivalents
Cash at banks and in hand
Short-term bank deposits
76,096
47,034
67,046
76,096
64,364
2,682
74,135
1,961
The notes on pages 120 to 226 form an integral part of these consolidated financial statements.
119
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
1 ORGANIzATION AND PRINCIPAL ACTIvITIES
China Life Insurance Company Limited (the “Company”) was established in the People’s Republic of China
(“China” or the “PRC”) on 30 June 2003 as a joint stock company with limited liability as part of a group
restructuring of China Life Insurance (Group) Company (“CLIC”, formerly China Life Insurance Company) and
its subsidiaries (the “Restructuring”). The Company and its subsidiaries are hereinafter collectively referred to
as the “Group”. The Group’s principal activity is the writing of life insurance business, providing life, annuity,
accident and health insurance products in China.
The Company is a joint stock company incorporated in the PRC with limited liability. The address of its
registered office is 16 Financial Street, Xicheng District, Beijing, the PRC. The Company is listed on the New
York Stock Exchange, the Stock Exchange of Hong Kong Limited, and the Shanghai Stock Exchange.
These consolidated financial statements are presented in millions of Renminbi (“RMB million”) unless otherwise
stated. These consolidated financial statements have been approved and authorised for issue by the Board of
Directors on 23 March 2017.
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The Group 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”). These consolidated financial statements also comply with the
applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited (the “Listing Rules”) and the applicable disclosure requirements of the Hong Kong
Companies Ordinance. The Group has prepared the consolidated financial statements under the historical
cost convention, except for financial assets and liabilities at fair value through profit or loss, available-for-
sale securities, insurance contract liabilities and certain property, plant and equipment at deemed cost as
part of the Restructuring process. The preparation of financial statements in compliance with IFRSs requires
the use of certain critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the consolidated financial statements
are disclosed in Note 3.
2.1.1 New accounting standards and amendments adopted by the Group for the first time for
the financial year beginning on 1 January 2016
Standards/Amendments
Content
Effective for annual periods
beginning on or after
IAS 1 Amendments
IAS 27 Amendments
IFRS 10, IFRS 12 and
IAS 28 Amendments
IFRS 11 Amendments
Disclosure Initiative
Equity Method in Separate Financial Statements
Investment Entities: Applying the
Consolidation Exception
Accounting for Acquisitions of Interests
in Joint Operations
1 January 2016
1 January 2016
1 January 2016
1 January 2016
120
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.1 New accounting standards and amendments adopted by the Group for the first time for
the financial year beginning on 1 January 2016 (continued)
Amendments to IAS 1 – Disclosure Initiative
The amendments to IAS 1 clarify, rather than significantly change, existing IAS 1 requirements. The
amendments clarify: the materiality requirements in IAS 1; that specific line items in the statement of
comprehensive income and the statement of financial position should be disaggregated; that entities have
flexibility as to the order in which they present the notes to financial statements; that the share of other
comprehensive income (“OCI”) of associates and joint ventures accounted for using the equity method
must be presented in aggregate as a single line item, and classified between those items that will or will not
be subsequently reclassified to profit or loss. Furthermore, the amendments clarify the requirements that
apply when additional subtotals are presented in the statement of financial position and the statement of
comprehensive income. The Group’s consolidated financial statements have complied with the amendments.
IAS 27 Amendments – Equity Method in Separate Financial Statements
The amendments to IAS 27 allow entities to use the equity method to account for investments in
subsidiaries, joint ventures and associates in their separate financial statements. The Group does not elect
to change to the equity method in the separate financial statements, and the amendments do not have any
impact on the Group’s consolidated financial statements.
IFRS 10, IFRS 12 and IAS 28 Amendments – Investment Entities: Applying the Consolidation Exception
Amendments to IFRS 10 clarify that the exemption from presenting consolidated financial statements
applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures
all of its subsidiaries at fair value. The amendments to IFRS 10 also clarify that only a subsidiary that is not
an investment entity itself and provides support services to the investment entity is consolidated. All other
subsidiaries of an investment entity are measured at fair value. Consequential amendments were made to
IFRS 12 to require an investment entity that prepares financial statements in which all of its subsidiaries are
measured at fair value through profit or loss in accordance with IFRS 9 to present the disclosures in respect
of investment entities in accordance with IFRS 12. IAS 28 was also amended to allow an investor that is not
itself an investment entity, and has an interest in an investment entity associate or joint venture, to retain
the fair value measurement applied by the investment entity associate or joint venture to the interest in its
subsidiaries. The amendments to IFRS 10 and IFRS 12 do not have any material impact on the Group’s
consolidated financial statements as the Company is not an investment entity as defined in IFRS 10. The
Group applied the amendments to IAS 28 when accounting for associates which are investment entities
themselves.
IFRS 11 Amendments – Accounting for Acquisitions of Interests in Joint Operations
The amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a
joint operation, in which the activity of the joint operation constitutes a business, must apply the relevant
IFRS 3 principles for business combinations accounting. The amendments also clarify that a previously held
interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint
operation while joint control is retained. The amendments are not relevant to the Group, since the Group
had no joint operation as at 31 December 2016.
In addition, the Annual Improvements 2012-2014 Cycle issued in September 2014 sets out amendments
to other standards. These annual improvements were established to make non-urgent but necessary
amendments to IFRSs. There are no material changes to the accounting policies of the Group as a result of
these annual improvements.
121
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2016
Standards/Amendments
Content
Effective for annual period
beginning on or after
IAS 7 Amendments
IAS 12 Amendments
IFRS 2 Amendments
IFRS 9
IFRS 15
IFRS 15 Amendments
IFRS 4 Amendments
IFRS 16
IFRS 10 and IAS 28
Amendments
Disclosure Initiative
Recognition of Deferred Tax Assets for
Unrealised Losses
Classification and Measurement of
Share-based Payment Transactions
Financial Instruments
Revenue from Contracts with Customers
Clarifications to IFRS 15 Revenue from
Contracts with Customers
Applying IFRS 9 Financial Instruments
with IFRS 4 Insurance Contracts
Leases
Sale or Contribution of Assets
between an Investor and its
Associate or Joint Venture
1 January 2017
1 January 2017
1 January 2018
1 January 2018
1 January 2018
1 January 2018
1 January 2018
1 January 2019
No mandatory effective
date yet determined but
available for adoption
The Group has not early adopted any standard, interpretation or amendment that has been issued but is not
yet effective.
IAS 7 Amendments – Disclosure Initiative
Amendments to IAS 7 Statement of Cash Flows require an entity to provide disclosures that enable users of
financial statements to evaluate changes in liabilities arising from financing activities, including both changes
arising from cash flows and non-cash changes. The amendments will result in additional disclosure to be
provided in the financial statements. The Group expects to adopt the amendments from 1 January 2017.
IAS 12 Amendments – Recognition of Deferred Tax Assets for Unrealised Losses
Amendments to IAS 12 were issued with the purpose of addressing the recognition of deferred tax assets
for unrealised losses related to debt instruments measured at fair value, although they also have a broader
application for other situations. The amendments clarify that an entity, when assessing whether taxable
profits will be available against which it can utilise a deductible temporary difference, needs to consider
whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal
of that deductible temporary difference. Furthermore, the amendments provide guidance on how an
entity should determine future taxable profits and explain the circumstances in which taxable profit may
include the recovery of some assets for more than their carrying amount. The Group expects to adopt the
amendments from 1 January 2017.
122
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2016 (continued)
IFRS 2 Amendments – Classification and Measurement of Share-based Payment Transactions
In June 2016, the IASB issued amendments to IFRS 2 Share-based Payment that address three main areas:
the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the
classification of a share-based payment transaction with net settlement features for withholding a certain
amount in order to meet the employee’s tax obligations associated with the share-based payment; and
accounting where a modification to the terms and conditions of a share-based payment transaction changes
its classification from cash-settled to equity-settled. The amendments clarify that the approach used to
account for vesting conditions when measuring equity-settled share-based payments also applies to cash-
settled share-based payments. The amendments introduce an exception so that a share-based payment
transaction with net share settlement features for withholding a certain amount in order to meet the
employee’s tax obligation is classified in its entirety as an equity-settled share-based payment transaction
when certain conditions are met. Furthermore, the amendments clarify that if the terms and conditions
of a cash-settled share-based payment transaction are modified, with the result that it becomes an equity-
settled share-based payment transaction, the transaction is accounted for as an equity-settled transaction
from the date of the modification. The Group expects to adopt the amendments from 1 January 2018.
The amendments are not expected to have any significant impact on the Group’s consolidated financial
statements.
IFRS 9 – Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9, bringing together all phases of the financial
instruments project to replaces IAS 39 and all previous versions of IFRS 9. The standard introduces new
requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for
annual periods beginning on or after 1 January 2018, with early adoption permitted. The Group is currently
assessing the impact of the standard upon adoption, and expects that the adoption of IFRS 9 will have an
impact on the classification, measurement and impairment of the Group’s financial instruments in the
Group’s consolidated financial statements.
IFRS 15 – Revenue from Contracts with Customers and IFRS 15 Amendments
IFRS 15 establishes a new five-step model to account for revenue arising from contracts with customers.
Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects
to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide
a more structured approach for measuring and recognising revenue. The standard also introduces extensive
qualitative and quantitative disclosure requirements, including disaggregation of total revenue, information
about performance obligations, changes in contract asset and liability account balances between periods and
key judgements and estimates. The standard will supersede all current revenue recognition requirements
under IFRSs. In April 2016, the IASB issued amendments to IFRS 15 to address the implementation issues
on identifying performance obligations, application guidance on principal-versus-agent consideration,
licences of intellectual property, and transition. The amendments are also intended to help ensure a more
consistent application when entities adopt IFRS 15 and decrease the cost and complexity of applying the
standard. IFRS 15 and the amendments are effective for annual periods beginning on or after 1 January
2018, early adoption is permitted. The Group plans to adopt the new standard on the required effective date
using the full retrospective method.
Given insurance contracts are scoped out of IFRS 15, the Group expects the main impact of the new
standard to be on the accounting for income from administrative and investment management services.
The Group does not expect the impact to be significant. The Group is currently assessing the impact on the
Group’s consolidated financial statements.
123
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2016 (continued)
IFRS 4 Amendments – Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
Amendments to IFRS 4 address issues arising from the different effective dates of IFRS 9 and the upcoming
new insurance contracts standard (IFRS 17). The amendments introduce two alternative options that
allow entities issuing contracts within the scope of IFRS 4 for the adoption of IFRS 9, notably a temporary
exemption and an overlay approach. The temporary exemption enables entities whose activities are
predominantly connected with insurance to defer the implementation date of IFRS 9 until the earlier of
the effective date of the new insurance contracts standard and annual reporting periods beginning on or
after 1 January 2021. The overlay approach allows entities applying IFRS 9 from 2018 onwards to remove
from profit or loss the effects arising from the adoption of IFRS 9 and reclassify the amounts to OCI for
designated financial assets. An entity can apply the temporary exemption from IFRS 9 for annual periods
beginning on or after 1 January 2018, or apply the overlay approach when it applies IFRS 9 for the first
time. The Group is currently performing an assessment of the amendments to conclude which approach to
apply.
IFRS 16 – Leases
IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRS Interpretations Committee
Interpretation No.4 Determining whether an Arrangement contains a Lease, Standing Interpretations
Committee (“SIC”) Interpretation No.15 Operating Leases-Incentives and SIC-27 Evaluating the Substance
of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition,
measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single
on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes
two recognition exemptions for lessees-leases of low-value assets and short-term leases (i.e., leases with a
lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability
to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying
asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the
interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will
be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the
lease term, a change in future lease payments resulting from a change in an index or rate used to determine
those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability
as an adjustment to the right-of-use asset. Lessor accounting under IFRS 16 is substantially unchanged from
today’s accounting under IAS 17. Lessors will continue to classify all leases using the same classification
principle as in IAS 17 and distinguish between two types of leases: operating and finance leases. IFRS 16 also
requires lessees and lessors to make more extensive disclosures than under IAS 17. IFRS 16 is effective for
annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity
applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified
retrospective approach. The standard’s transition provisions permit certain reliefs. In 2017, the Group plans
to assess the potential effect of IFRS 16 on its consolidated financial statements.
124
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
2.1.2 New accounting standards and amendments that are not yet effective and have not been
early adopted by the Group for the financial year beginning on 1 January 2016 (continued)
IFRS 10 and IAS 28 Amendments – Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture
Amendments to IFRS 10 and IAS 28 address an inconsistency between the requirements in IFRS 10 and IAS
28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture.
The amendments require a full recognition of a gain or loss when the sale or contribution of assets between
an investor and its associate or joint venture constitutes a business. For a transaction involving assets that
do not constitute a business, a gain or loss resulting from the transaction is recognised in the investor’s
profit or loss only to the extent of the unrelated investor’s interest in that associate or joint venture. The
amendments are to be applied prospectively. The previous mandatory effective date of amendments to IFRS
10 and IAS 28 was removed and a new mandatory effective date will be determined after the completion of
a broader review of accounting for associates and joint ventures. However, the amendments are available for
application now.
In addition, the Annual Improvements 2014-2016 Cycle issued in December 2016 set out amendments to
other standards. There are no material changes to the accounting policies of the Group as a result of these
annual improvements.
2.2 Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries
for the year ended 31 December 2016. Subsidiaries are those entities which are controlled by the Group
(including the structured entities controlled by the Group). Control is achieved when the Group is exposed,
or has rights, to variable returns from its involvement with the investee and has the ability to affect those
returns through its power over the investee. Specifically, the Group controls an investee if and only if the
Group has:
•
•
•
power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee);
exposure, or rights, to variable returns from its involvement with the investee; and
the ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an investee, including:
•
•
•
the contractual arrangement with the other vote holders of the investee;
rights arising from other contractual arrangements; and
the Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the
Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.
Profit or loss and each component of OCI are attributed to the equity holders of the Company and to
the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions between members of the Group are eliminated in full upon
consolidation.
125
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.2 Consolidation (continued)
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it:
•
•
•
•
•
•
•
derecognises the assets (including goodwill) and liabilities of the subsidiary;
derecognises the carrying amount of any non-controlling interests;
derecognises the cumulative translation differences recorded in equity;
recognises the fair value of the consideration received;
recognises the fair value of any investment retained;
recognises any surplus or deficit in profit or loss; and
reclassifies the Group’s share of components previously recognised in OCI to profit or loss or retained
earnings, as appropriate, as if the Group had directly disposed of the related assets or liabilities.
The Group uses the acquisition method of accounting to account for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the
liabilities incurred and the equity interest issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related
costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair value at the acquisition date. On an acquisition-
by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or
at the non-controlling interest’s proportionate share of the acquiree’s net assets.
The excess of the aggregate of the consideration transferred, the fair value of any non-controlling interest in
the acquiree, and the fair value of any previous equity interest in the acquiree at the acquisition date over the
fair value of the net identifiable assets acquired and liabilities assumed is recorded as goodwill. If this is less
than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the Group
re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed,
and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-
assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration
transferred, then the gain is recognised in profit or loss. Goodwill is tested annually for impairment and
carried at cost less accumulated impairment losses. If there is any indication that goodwill is impaired,
recoverable amount is estimated and the difference between carrying amount and recoverable amount is
recognised as an impairment charge. Impairment losses on goodwill are not reversed in subsequent periods.
Gains or losses on the disposal of an entity take into consideration the carrying amount of goodwill relating
to the entity sold.
The investments in subsidiaries are accounted for only in the Company’s statement of financial position
at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent
consideration amendments. Cost also includes direct attributable costs of investment. The results of
subsidiaries are accounted for by the Company on the basis of dividends received and receivable.
Transactions with non-controlling interests
The Group treats transactions with non-controlling interests that do not result in loss of controls as equity
transactions. For shares purchased from non-controlling interests, the difference between any consideration
paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity.
Gains or losses on disposal of shares to non-controlling interests are also recorded in equity.
When the Group ceases to have control or significant influence, any retained interest in the entity is re-
measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value
is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an
associate, joint venture or financial asset. In addition, any amounts previously recognised in OCI in respect
of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This
may mean that amounts previously recognised in OCI are reclassified to profit or loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate
share of the amounts previously recognised in OCI is reclassified to profit or loss as appropriate.
126
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.3 Associates and joint ventures
Associates are entities over which the Group has significant influence, generally accompanying a
shareholding of between 20% and 50% of the voting rights of the investee. Significant influence is the
power to participate in the financial and operating policy decisions of the investee, but is not control or joint
control over those policies.
Joint ventures are the type of joint arrangements whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities require
the unanimous consent of the parties sharing control.
Investments in associates and joint ventures are accounted for using the equity method of accounting and are
initially recognised at cost.
The Group’s share of post-acquisition profit or loss of its associates and joint ventures is recognised in net
profit, and its share of post-acquisition movements in OCI is recognised in the consolidated statement
of comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying
amount of the investment. When the Group’s share of losses in an associate or joint venture equals or
exceeds its interest in the associate or joint venture, including any other unsecured receivables, the Group
does not recognise further losses unless it has obligations to make payments on behalf of the associate or
joint venture.
Unrealised gains on transactions between the Group and its associates or joint ventures are eliminated to the
extent of the Group’s interests in the associates or joint ventures. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the asset transferred. Associates and joint ventures’
accounting policies have been changed where necessary to ensure consistency with the policies adopted by
the Group.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of acquired associates or joint ventures at the date of acquisition. Goodwill on acquisitions
of associates and joint ventures is included in investments in associates and joint ventures and is tested
annually for impairment as part of the overall balance. Impairment losses on goodwill are not reversed.
Gains or losses on the disposal of an entity take into consideration the carrying amount of goodwill relating
to the entity sold.
The Group determines at each reporting date whether there is any objective evidence that the investments in
associates and joint ventures are impaired. If this is the case, an impairment loss is recognised for the amount
by which the investment’s carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of the investment’s fair value less costs of disposal and value in use. The impairment of investments in
the associates and joint ventures is reviewed for possible reversal at each reporting date.
The investments in associates and joint ventures are stated at cost less impairment in the Company’s
statement of financial position. The results of associates and joint ventures are accounted for by the
Company on the basis of dividends received and receivable.
2.4 Segment reporting
The Group’s operating segments are presented in a manner consistent with the internal management
reporting provided to the operating decision maker-president office for deciding how to allocate resources
and for assessing performance.
Operating segment refers to the segment within the Group that satisfies the following conditions: i)
the segment generates income and incurs costs from daily operating activities; ii) management evaluates
the operating results of the segment to make resource allocation decision and to evaluate the business
performance; and iii) the Group can obtain relevant financial information of the segment, including
financial condition, operating results, cash flows and other financial performance indicators.
127
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.5 Foreign currency translation
The Company’s functional currency is RMB. Each entity in the Group determines its own functional
currency and items included in the financial statements of each entity are measured using that functional
currency. The reporting currency of the consolidated financial statements of the Group is RMB.
Transactions in foreign currencies are translated at the exchange rates ruling at the transaction dates.
Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates ruling
at the end of the reporting period. Exchange differences arising in these cases are recognised in net profit.
2.6 Property, plant and equipment
Property, plant and equipment, are stated at historical costs less accumulated depreciation and any
accumulated impairment losses, except for those acquired prior to 30 June 2003, which are stated at deemed
cost less accumulated depreciation and any accumulated impairment losses.
The historical costs of property, plant and equipment comprise its purchase price, including import
duties and non-refundable purchase taxes, and any directly attributable costs of bringing the asset to its
working condition and location for its intended use. Expenditure incurred after terms of property, plant
and equipment have been put into operation, such as repairs and maintenance, is normally charged to the
statement of comprehensive income in the period in which it is incurred. In situations where the recognition
criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the assets
as a replacement. Where significant parts of property, plant and equipment are required to be replaced at
intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them
accordingly.
Depreciation
Depreciation is computed on a straight-line basis to write down the cost of each asset to its residual value
over its estimated useful lives as follows:
Buildings
Office equipment, furniture and fixtures
Motor vehicles
Leasehold improvements
Estimated useful lives
15 to 35 years
3 to 11 years
4 to 8 years
Over the shorter of the remaining term of
the lease and the useful lives
The residual values, depreciation method and useful lives are reviewed periodically to ensure that the
method and period of depreciation are consistent with the expected pattern of economic benefits from items
of property, plant and equipment.
Assets under construction mainly represent buildings under construction, which are stated at cost less any
impairment losses and are not depreciated, except for those acquired prior to 30 June 2003, which are stated
at deemed cost less any accumulated impairment losses. Cost comprises the direct costs of construction
and capitalised borrowing costs on related borrowed funds during the period of construction. Assets under
construction are reclassified to the appropriate category of property, plant and equipment, investment
properties or other assets when completed and ready for use.
Impairment and gains or losses on disposals
Property, plant and equipment are reviewed for impairment losses whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in
net profit for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is
the higher of an asset’s net selling price and value in use.
The gain or loss on disposal of an item of property, plant and equipment is the difference between the net
sales proceeds and the carrying amount of the relevant asset, and is recognised in net profit.
128
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.7 Investment properties
Investment properties are interests in land and buildings that are held to earn rental income and/or for
capital appreciation, rather than for the supply of services or for administrative purposes.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost less accumulated depreciation and any impairment loss.
Depreciation is computed on the straight-line basis over the estimated useful lives. The estimated useful lives
of investment properties are 15 to 35 years.
Overseas investment properties that are held by the Group in the forms of property ownership, equity
investment, or other forms, have expected useful lives not longer than 50 years, determined based on the
usage in their locations.
The useful lives and depreciation method are reviewed periodically to ensure that the method and period of
depreciation are consistent with the expected pattern of economic benefits from the individual investment
properties.
An investment property is derecognised when either it has been disposed of or when the investment property
is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any
gains or losses on the retirement or disposal of an investment property are recognised in the statement of
comprehensive income in the year of retirement or disposal. A transfer to, or from, an investment property is
made when, and only when, there is evidence of a change in use.
2.8 Financial assets
2.8.a Classification
The Group classifies its financial assets into the following categories: securities at fair value through profit
or loss, held-to-maturity securities, loans and receivables and available-for-sale securities. Management
determines the classification of its financial assets at initial recognition which depends on the purpose for
which the assets are acquired. The Group’s investments in securities fall into the following four categories:
(i)
Securities at fair value through profit or loss
This category has two sub-categories: securities held for trading and those designated as at fair value
through profit or loss at inception. Securities are classified as held for trading at inception if acquired
principally for the purpose of selling in the short term or if they form part of a portfolio of financial
assets in which there is evidence of short term profit-taking. The Group may classify other financial
assets as at fair value through profit or loss if they meet the criteria in IAS 39 and designated as such at
inception.
(ii) Held-to-maturity securities
Held-to-maturity securities are non-derivative financial assets with fixed or determinable payments
and fixed maturities that the Group has the positive intention and ability to hold to maturity and
do not meet the definition of loans and receivables nor designated as available-for-sale securities or
securities at fair value through profit or loss.
(iii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market other than those that the Group intends to sell in the short term
or held as available-for-sale. Loans and receivables mainly comprise term deposits, loans, securities
purchased under agreements to resell, accrued investment income and premium receivables as
presented separately in the statement of financial position.
(iv) Available-for-sale securities
Available-for-sale securities are non-derivative financial assets that are either designated in this
category or not classified in any of the other categories.
129
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.8 Financial assets (continued)
2.8.b Recognition and measurement
Purchase and sale of investments are recognised on the trade date, when the Group commits to purchase
or sell assets. Investments are initially recognised at fair value plus, in the case of all financial assets not
carried at fair value through profit or loss, transaction costs that are directly attributable to their acquisition.
Investments are derecognised when the rights to receive cash flows from the investments have expired or
when they have been transferred and the Group has also transferred substantially all risks and rewards of
ownership.
Securities at fair value through profit or loss and available-for-sale securities are carried at fair value. Equity
investments that do not have a quoted price in an active market and whose fair value cannot be reliably
measured are carried at cost, net of allowance for impairments. Held-to-maturity securities are carried at
amortised cost using the effective interest method. Investment gains and losses on sales of securities are
determined principally by specific identification. Realised and unrealised gains and losses arising from
changes in the fair value of the securities at fair value through profit or loss category, and the change of fair
value of available-for-sale debt securities due to foreign exchange impact on the amortised cost are included
in net profit in the period in which they arise. The remaining unrealised gains and losses arising from
changes in the fair value of available-for-sale securities are recognised in OCI. When securities classified as
available-for-sale securities are sold or impaired, the accumulated fair value adjustments are included in net
profit as realised gains on financial assets.
Term deposits primarily represent traditional bank deposits which have fixed maturity dates and are stated at
amortised cost.
Loans are carried at amortised cost, net of allowance for impairment.
The Group purchases securities under agreements to resell substantially identical securities. These
agreements are classified as secured loans and are recorded at amortised cost, i.e. their costs plus accrued
interests at the end of the reporting period, which approximates fair value. The amounts advanced under
these agreements are reflected as assets in the consolidated statement of financial position. The Group
does not take physical possession of securities purchased under agreements to resell. Sale or transfer of the
securities is not permitted by the respective clearing house on which they are registered while the lended
money is outstanding. In the event of default by the counterparty, the Group has the right to the underlying
securities held by the clearing house.
2.8.c Impairment of financial assets other than securities at fair value through profit or loss
Financial assets other than those accounted for as at fair value through profit or loss are adjusted for
impairment, where there are declines in value that are considered to be impairment. In evaluating whether a
decline in value is an impairment for these financial assets, the Group considers several factors including, but
not limited to, the following:
•
•
•
•
significant financial difficulty of the issuer or debtor;
a breach of contract, such as a default or delinquency in payments;
it becomes probable that the issuer or debtor will enter into bankruptcy or other financial
reorganisation; and
the disappearance of an active market for that financial asset because of financial difficulties.
In evaluating whether a decline in value is impairment for equity securities, the Group also considers the
extent or the duration of the decline. The quantitative factors include the following:
•
•
•
the market price of the equity securities was more than 50% below their cost at the reporting date;
the market price of the equity securities was more than 20% below their cost for a period of at least six
months at the reporting date; and
the market price of the equity securities was below their cost for a period of more than one year
(including one year) at the reporting date.
130
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.8 Financial assets (continued)
2.8.c Impairment of financial assets other than securities at fair value through profit or loss
(continued)
When the decline in value is considered impairment, held-to-maturity debt securities are written down
to their present value of estimated future cash flows discounted at the securities’ effective interest rates;
available-for-sale debt securities and equity securities are written down to their fair value, and the change is
recorded in net realised gains on financial assets in the period the impairment is recognised. The impairment
loss is reversed through net profit if in a subsequent period the fair value of a debt security increases and the
increase can be objectively related to an event occurring after the impairment loss was recognised through
net profit. The impairment losses recognised in net profit on equity instruments are not reversed through
net profit.
2.9 Fair value measurement
The Group measures financial instruments, such as securities at fair value through profit or loss and
available-for-sale securities, at fair value at each reporting date. Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. The fair value measurement of assets and liabilities is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either:
•
•
in the principal market for the asset or liability, or
in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to by the Group at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximising the use of relevant observable inputs and minimising the use
of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements
are categorised within the fair value hierarchy, described in Notes 4.3, 7, 10 and 39(b) based on the lowest
level input that is significant to the fair value measurement as a whole.
For assets and liabilities that are measured at fair value on a recurring basis, the Group determines whether
transfers have occurred between each level in the hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting
period.
2.10 Cash and cash equivalents
Cash amounts represent cash on hand and demand deposits. Cash equivalents are short-term, highly liquid
investments with original maturities of 90 days or less, whose carrying value approximates fair value.
131
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.11 Insurance contracts and investment contracts
2.11.1 Classification
The Group issues contracts that transfer insurance risk or financial risk or both. The contracts issued by
the Group are classified as insurance contracts and investment contracts. Insurance contracts are those
contracts that transfer significant insurance risk. They may also transfer financial risk. Investment contracts
are those contracts that transfer financial risk without significant insurance risk. A number of insurance
and investment contracts contain a discretionary participating feature (“DPF”). This feature entitles the
policyholders to receive additional benefits or bonuses that are, at least in part, at the discretion of the
Group.
2.11.2 Insurance contracts
2.11.2.a Recognition and measurement
(i)
Short-term insurance contracts
Premiums from the sale of short duration accident and health insurance products are recorded when
written and are accreted to earnings on a pro-rata basis over the term of the related policy coverage.
Reserves for short duration insurance products consist of unearned premium reserve and expected
claims and claim adjustment expenses reserve. Actual claims and claim adjustment expenses are
charged to net profit as incurred.
The unearned premium reserve represents the portion of the premiums written net of certain
acquisition costs relating to the unexpired terms of coverage.
Reserves for claims and claim adjustment expenses consist of the reserves for reported and unreported
claims and reserves for claim expenses with respect to insured events. In developing these reserves, the
Group considers the nature and distribution of the risks, claims cost development, and experiences in
deriving the reasonable estimated amount and the applicable margins. The methods used for reported
and unreported claims include the case-by-case estimation method, average cost per claim method,
chain ladder method, etc. The Group calculates the reserves for claim expenses based on the reasonable
estimates of the future payments for claim expenses.
(ii)
Long-term insurance contracts
Long-term insurance contracts include whole life insurance, term life insurance, endowment insurance
and annuity policies with significant life contingency risk. Premiums are recognised as revenue when
due from policyholders.
The Group uses the discounted cash flow method to estimate the reserve of long-term insurance
contracts. The reserve of long-term insurance contracts consists of a reasonable estimate of liability,
a risk margin and a residual margin. The long-term insurance contract liabilities are calculated using
various assumptions, including assumptions on mortality rates, morbidity rates, lapse rates, discount
rates, and expense assumptions, and based on the following principles:
132
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.11 Insurance contracts and investment contracts (continued)
2.11.2 Insurance contracts (continued)
2.11.2.a Recognition and measurement (continued)
(ii)
Long-term insurance contracts (continued)
(a) The reasonable estimate of liability for long-term insurance contracts is the present value of
reasonable estimates of future cash outflows less future cash inflows. The expected future cash
inflows include cash inflows of future premiums arising from the undertaking of insurance
obligations, with consideration of decrement mostly from death and surrenders. The expected
future cash outflows are cash outflows incurred to fulfil contractual obligations, consisting of the
following:
•
•
•
guaranteed benefits based on contractual terms, including payments for deaths,
disabilities, diseases, survivals, maturities and surrenders;
additional non-guaranteed benefits, such as policyholder dividends; and
reasonable expenses incurred to manage insurance contracts or to process claims,
including maintenance expenses and claim settlement expenses. Future administration
expenses are included in the maintenance expenses. Expenses are determined based on
expense analysis with consideration of future inflation and the Group’s expense
management control.
On each reporting date, the Group reviews the assumptions for reasonable estimates of liability
and risk margins, with consideration of all available information, taking into account the
Group’s historical experience and expectation of future events. Changes in assumptions are
recognised in net profit. Assumptions for the amortization of residual margin are locked in at
policy issuance and are not adjusted at each reporting date.
(b) Margin has been taken into consideration while computing the reserve of insurance contracts,
measured separately and recognised in net profit in each period over the life of the contracts. At
the inception of the contracts, the Group does not recognise Day 1 gain, whereas on the other
hand, Day 1 loss is recognised in net profit immediately.
Margin comprises risk margin and residual margin. Risk margin is the reserve accrued to
compensate for the uncertain amount and timing of future cash flows. At the inception
of the contract, the residual margin is calculated net of certain acquisition costs, mainly
consist of underwriting and policy acquisition costs, by the Group representing Day 1 gain
and will be amortised over the life of the contracts. For insurance contracts of which future
returns are affected by investment yields of corresponding investment portfolios, their related
residual margins are amortised based on estimated future participating dividends payable to
policyholders. For insurance contracts of which future returns are not affected by investment
yields of corresponding investment portfolios, their related residual margins are amortised based
on sum assured of outstanding policies. The subsequent measurement of the residual margin is
independent from the reasonable estimate of future discounted cash flows and risk margin. The
assumption changes have no effect on the subsequent measurement of the residual margin.
(c) The Group has considered the impact of time value on the reserve calculation for insurance
contracts.
133
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.11 Insurance contracts and investment contracts (continued)
2.11.2 Insurance contracts (continued)
2.11.2.a Recognition and measurement (continued)
(iii) Universal life contracts and unit-linked contracts
Universal life contracts and unit-linked contracts are unbundled into the following components:
•
•
insurance components
non-insurance components
The insurance components are accounted for as insurance contracts; and the non-insurance
components are accounted for as investment contracts (Note 2.11.3), which are stated in the
investment contract liabilities.
2.11.2.b Liability adequacy test
The Group assesses the adequacy of insurance contract reserves using the current estimate of future cash
flows with available information at the end of each reporting period. If that assessment shows that the
carrying amount of its insurance liabilities (less related intangible assets, if applicable) is inadequate in light
of the estimated future cash flows, the insurance contract reserves will be adjusted accordingly, and any
changes of the insurance contract liabilities will be recognised in net profit.
2.11.2.c Reinsurance contracts held
Contracts with reinsurers under which the Group is compensated for losses on one or more contracts
issued by the Group and that meet the classification requirements for insurance contracts are classified as
reinsurance contracts held. Contracts with reinsurers that do not meet these classification requirements are
classified as financial assets. Insurance contracts entered into by the Group under which the contract holder
is another insurer (inwards reinsurance) are included with insurance contracts.
The benefits to which the Group is entitled under its reinsurance contracts held are recognised as
reinsurance assets. Amounts recoverable from or due to reinsurers are measured consistently with the
amounts associated with the reinsured insurance contracts and in accordance with the terms of each
reinsurance contract. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and
are recognised as expenses when due.
The Group assesses its reinsurance assets for impairment as at the end of reporting period. If there is
objective evidence that the reinsurance asset is impaired, the Group reduces the carrying amount of the
reinsurance asset to its recoverable amount and recognises that impairment loss in net profit.
2.11.3 Investment contracts
Revenue from investment contracts with or without DPF is recognised as policy fee income, which consists
of various fee incomes (policy fees, handling fees and management fees, etc.) during the period. Policy fee
income net of acquisition cost is deferred as unearned revenue and amortised over the expected life of the
contracts.
Except for unit-linked contracts, of which the liabilities are carried at fair value, the liabilities of investment
contracts are carried at amortised cost.
134
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.11 Insurance contracts and investment contracts (continued)
2.11.4 DPF in long-term insurance contracts and investment contracts
DPF is contained in certain long-term insurance contracts and investment contracts. These contracts are
collectively called participating contracts. The Group is obligated to pay to the policyholders of participating
contracts as a group at the higher of 70% of accumulated surplus available and the rate specified in the
contracts. The accumulated surplus available mainly arises from net investment income and gains and losses
arising from the assets supporting these contracts. To the extent unrealised gains or losses from available-
for-sale securities are attributable to policyholders, shadow adjustments are recognised in OCI. The surplus
owed to policyholders is recognised as policyholder dividend payable whether it is declared or not. The
amount and timing of distribution to individual policyholders of participating contracts are subject to future
declarations by the Group.
2.12 Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss are the portions owned by the external investors in
the consolidated structured entities (open-ended funds). Such financial liabilities are designated at fair value
upon initial recognition, and all realised or unrealised gains or losses are recognised in net profit.
2.13 Securities sold under agreements to repurchase
The Group retains substantially all the risk and rewards of ownership of securities sold under agreements
to repurchase which generally mature within 180 days from the transaction date. Therefore securities sold
under agreements to repurchase are classified as secured borrowings. The Group may be required to provide
additional collateral based on the fair value of the underlying securities. Securities sold under agreements
to repurchase are recorded at amortised cost, i.e. their cost plus accrued interest at the end of the reporting
period. It is the Group’s policy to maintain effective control over securities sold under agreements to
repurchase which includes maintaining physical possession of the securities. Accordingly, such securities
continue to be carried on the consolidated statement of financial position.
2.14 Bonds payable
Bonds payable primarily include subordinated debts. Subordinated debts are initially recognised at fair value
and subsequently measured at amortised cost using the effective interest rate method. Amortised cost is
calculated by taking into account any discount or premium at acquisition and transaction costs.
2.15 Derivative instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and
are subsequently re-measured at their fair value. The resulting gain or loss of derivative financial instruments
is recognised in net profit. Fair values are obtained from quoted market prices in active market, taking into
consideration of recent market transactions or valuation techniques, including discounted cash flow models
and option pricing models, as appropriate. All derivatives are carried as assets when fair value is positive and
as liabilities when fair value is negative.
Embedded derivatives that are not closely related to their host contracts and meet the definition of a
derivative are separated and fair valued through profit or loss. The Group does not separately measure
embedded derivatives that meet the definition of an insurance contract or embedded derivatives that are
closely related to host insurance contracts including embedded options to surrender insurance contracts for a
fixed amount (or an amount based on a fixed amount and an interest rate).
135
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.16 Employee benefits
Pension benefits
Full-time employees of the Group are covered by various government-sponsored pension plans under which
the employees are entitled to a monthly pension based on certain formulae. These government agencies
are responsible for the pension liability to these employees upon retirement. The Group contributes on a
monthly basis to these pension plans. In addition to the government-sponsored pension plans, the Group
established an employee annuity fund pursuant to the relevant laws and regulations in the PRC, whereby the
Group is required to contribute to the schemes at fixed rates of the employees’ salary costs. Contributions to
these plans are expensed as incurred. Under these plans, the Group has no legal or constructive obligation
for retirement benefit beyond the contributions made.
Housing benefits
All full-time employees of the Group are entitled to participate in various government-sponsored housing
funds. The Group contributes on a monthly basis to these funds based on certain percentages of the salaries
of the employees. The Group’s liability in respect of these funds is limited to the contributions payable in
each year.
Stock appreciation rights
Compensation under the stock appreciation rights is measured based on the fair value of the liabilities
incurred and is expensed over the vesting period. Valuation techniques including option pricing models are
used to estimate fair value of relevant liabilities. The liability is re-measured at the end of each reporting
period to its fair value until settlement. Fair value changes in the vesting period is included in administrative
expenses and changes after the vesting period is included in net fair value gains/(losses) through profit or loss
in net profit. The related liability is included in other liabilities.
2.17 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of equity
instruments are shown in equity as a deduction, net of tax, from the proceeds.
2.18 Other equity instruments
Other equity instruments are Core Tier 2 Capital Securities issued by the Group. These securities contain no
contractual obligation to deliver cash or another financial asset; or to exchange financial assets or financial
liabilities with another entity under conditions that are potentially unfavorable to the Group; or to be settled
in the Group’s own equity instruments. Therefore, the Group classifies these securities as other equity
instruments. Fees, commissions and other transaction costs of these securities’ issuance are deducted from
equity. The distributions of the securities are recognised as profit distribution at the time of declaration.
2.19 Revenue recognition
Turnover of the Group represents the total revenues which include the following:
Premiums
Premiums from long-term insurance contracts are recognised as revenue when due from the policyholders.
Premiums from the sale of short duration accident and health insurance products are recorded when written
and are accreted to earnings on a pro-rata basis over the term of the related policy coverage.
Policy fee income
Revenue from investment contracts is recognised as policy fee income, which consists of various fee incomes
(policy fees, handling fees and management fees, etc.) over the period of which the service is provided.
Policy fee income net of certain acquisition costs is deferred as unearned revenue and amortised over the
expected life of the contracts. Policy fee income is recognised in revenue as part of other income.
Investment income
Investment income comprises interest income from term deposits, cash and cash equivalents, debt securities,
securities purchased under agreements to resell, loans and dividend income from equity securities. Interest
income is recorded on an accrual basis using the effective interest rate method. Dividend income is
recognised when the right to receive dividend payment is established.
136
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.20 Finance costs
Interest expenses for bonds payable, securities sold under agreements to repurchase and interest-bearing
loans and borrowings are recognised within finance costs in net profit using the effective interest rate
method.
2.21 Current and deferred income taxation
Income tax expense for the period comprises current and deferred tax. Income tax is recognised in net profit,
except to the extent that it relates to items recognised directly in OCI where the income tax is recognised in
OCI.
Current income tax assets and liabilities for the current period are calculated on the basis of the tax laws
enacted or substantively enacted at the end of each reporting period in the jurisdictions where the Company
and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken
with respect to situations in which applicable tax regulation is subject to interpretation.
Deferred income tax is recognised, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Substantively enacted tax rates are used in the determination of deferred income tax.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates
and joint ventures except where the timing of the reversal of the temporary difference can be controlled and
it is probable that the temporary difference will not be reversed in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised. Conversely, previously unrecognised deferred tax assets are reassessed by the
end of each reporting period and are recognised to the extent that it is probable that sufficient taxable profit
will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.
2.22 Operating leases
Leases where substantially all the risks and rewards of ownership of assets remain with the lessor company
are accounted for as operating leases.
Where the Group is the lessor, assets leased by the Group under operating leases are included in investment
properties and rentals receivable under such operating leases are credited to the consolidated statement of
comprehensive income on the straight-line basis over the lease terms.
Where the Group is the lessee, rentals payable under operating leases are charged to the consolidated
statement of comprehensive income on the straight-line basis over the lease terms. The aggregate benefit of
incentives provided by the lessor is recognised as a reduction in rental expenses over the lease terms on the
straight-line basis.
137
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.23 Provisions and contingencies
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past
events; it is probable that an outflow of resources will be required to settle the obligation; and the amount
has been reliably estimated. Provisions are not recognised for future operating losses.
A contingent liability is a possible obligation that arises from past events and whose existence will only be
confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within
the control of the Group. It can also be a present obligation arising from past events that is not recognised
because it is not probable that outflow of economic resources will be required or the amount of obligation
cannot be measured reliably.
A contingent liability is not recognised in the consolidated statement of financial position but is disclosed in
the notes to the consolidated financial statements. When a change in the probability of an outflow occurs so
that such outflow is probable and can be reliably measured, it will then be recognised as a provision.
2.24 Dividend distribution
Dividend distribution to the Company’s equity holders is recognised as a liability in the Group’s
consolidated financial statements in the year in which the dividends are approved by the Company’s equity
holders.
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates
and judgements are continually evaluated and based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. The Group exercises
significant judgement in making appropriate assumptions.
Areas susceptible to changes in critical estimates and judgements, which affect the carrying value of assets and
liabilities, are set out below. It is possible that actual results may be different from the estimates and judgements
referred to below.
3.1 Estimate of future benefit payments and premiums arising from long-term insurance
contracts
The determination of the liabilities under long-term insurance contracts is based on estimates of future
benefit payments, premiums and relevant expenses made by the Group and the margins. Assumptions about
mortality rates, morbidity rates, lapse rates, discount rates, and expense assumptions are made based on the
most recent historical analysis and current and future economic conditions. The liability uncertainty arising
from uncertain future benefit payments, premiums and relevant expenses is reflected in the risk margin.
The residual margin relating to the long-term insurance contracts is amortised over the expected life of
the contracts, based on the assumptions (mortality rates, morbidity rates, lapse rates, discount rates, and
expenses assumption) that are determined at inception of the contracts and remain unchanged for the
duration of the contracts.
The judgements exercised in the valuation of insurance contract liabilities (including contracts with DPF)
affect the amounts recognised in the consolidated financial statements as insurance contract benefits and
insurance contract liabilities.
The impact of the various assumptions and their changes are described in Note 14.
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China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3.2 Financial instruments
The Group’s principal investments are debt securities, equity securities, term deposits and loans. The critical
estimates and judgements are those associated with the recognition of impairment and the measurement of
fair value.
The Group considers a wide range of factors in the impairment assessment as described in Note 2.8.c.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. When the fair values of financial assets
and liabilities recorded in the consolidated statement of financial position cannot be measured based on
quoted prices in active markets, their fair value is measured using valuation techniques which require a
degree of judgements. The methods and assumptions used by the Group in measuring the fair value of
financial instruments are as follows:
•
•
•
debt securities: fair values are generally based upon current bid prices. Where current bid prices are
not readily available, fair values are estimated using either prices observed in recent transactions, values
obtained from current bid prices of comparable investments or valuation techniques when the market
is not active.
equity securities: fair values are generally based upon current bid prices. Where current bid prices are
not readily available, fair values are estimated using either prices observed in recent transactions or
commonly used market pricing models. Equity securities, for which fair values cannot be measured
reliably, are recognised at cost less impairment.
securities purchased under agreements to resell, policy loans, term deposits, interest-bearing loans and
borrowings, and securities sold under agreements to repurchase: the carrying amounts of these assets in
the consolidated statement of financial position approximate fair value.
•
fair value of other Loans are obtained from valuation techniques.
For the description of valuation techniques, please refer to Note 4.3. Using different valuation techniques
and parameter assumptions may lead to some differences of fair value estimations.
3.3 The fair value of identifiable intangible assets arising from acquisition
When the Group performed a purchase price allocation exercise of the investment in China Guangfa Bank
Co., Ltd. (“CGB”) (refer to Note 8), the fair value of the identifiable net assets of CGB should be evaluated.
Identifiable intangible assets arising from the acquisition are mainly the core deposit intangibles and the
credit card client relationship, and the valuation of the fair value involved complex assumptions. The Group
applied the appropriate methodology to estimate the core deposit intangibles and the credit card client
relationship. The Group estimated the future cash flow data based on the historical business data of CGB
and chose the appropriate discount rate to determine the discount rate of present value of future cash flows.
3.4 Impairment of investments in associates and joint ventures
The Group assesses whether there are any indicators of impairment for investments in associates and joint
ventures at the end of each reporting period. Investments in associates and joint ventures are tested for
impairment when there are indicators that the carrying amounts may not be recoverable. An impairment
exists when the carrying value of investments in associates and joint ventures exceeds its recoverable amount,
which is the higher of its fair value less costs of disposal and its value in use. The calculation of the fair value
less costs of disposal is based on available data from binding sales transactions in an arm’s length transaction
of similar assets or observable market prices less incremental costs for disposing of investments in associates
and joint ventures. When value in use calculations are undertaken, the Group must estimate the expected
future cash flows from investments in associates and joint ventures and choose a suitable discount rate in
order to calculate the present value of those cash flows. Further details are given in Note 8.
139
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3.5 Income tax
The Group is subject to income tax in numerous jurisdictions. During the normal course of business, certain
transactions and activities for which the ultimate tax determination is uncertain, the Group needs to exercise
significant judgement when determining the income tax. If the final settlement results of the tax matters are
different from the amounts recorded, these differences will impact the final income tax expense and deferred
tax for the period.
3.6 Determination of control over investee
The Group applies its judgment to determine whether the control indicators set out in Note 2.2 indicate
that the Group controls structured entities such as funds and asset management products.
The Group issues certain structured entities (e.g. funds and asset management plans), and acts as a manager
for such entities according to the contracts. In addition, the Group may be exposed to variability of
returns as a result of holding shares of the structured entities. Determining whether the Group controls
such structured entities usually focuses on the assessment of the aggregate economic interests of the Group
in the entities (including any carried interests and expected management fees) and the decision-making
rights on the entity. As at 31 December 2016, the Group has consolidated some fund products issued and
managed by the Company’s subsidiary, China Life AMP Asset Management Company (“CL AMP”), an asset
management plan issued and managed by the Company’s subsidiary, China Life Wealth Management Co.,
Limited (“CL Wealth”) and some trust schemes issued and managed by third parties in the consolidated
financial statements. Please refer to Note 39(c) for the details.
4
RISK MANAGEMENT
Risk management is carried out by the Company’s Risk Management Committee under policies approved by the
Company’s Board of Directors.
The Group issues contracts that transfer insurance risk or financial risk or both. This section summarises these
risks and the way the Group manages them.
4.1 Insurance risk
4.1.1 Types of insurance risks
The risk under any one insurance contract is the possibility that an insured event occurs and the uncertainty
about the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and
therefore unpredictable. For a portfolio of insurance contracts where the theory of probability is applied to
the pricing and provisioning, the principal risk that the Group faces under its insurance contracts is that the
actual claims and benefit payments are less favourable than the underlying assumptions used in establishing
the insurance liabilities. This occurs when the frequency or severity of claims and benefits exceeds the
estimates. Insurance events are random, and the actual number of claims and the amount of benefits paid
will vary each year from estimates established using statistical techniques.
Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative
variability of the expected outcome will be. In addition, a more diversified portfolio is less likely to be
affected across the board by a change in any subset of the portfolio. The Group has developed its insurance
underwriting strategy to diversify the types of insurance risks accepted and within each of these categories to
achieve a sufficiently large population to reduce the variability of the expected outcome. The Group manages
insurance risk through underwriting strategies, reinsurance arrangements and claims handling.
The Group manages insurance risks through two types of reinsurance agreements, ceding on a quota share
basis or a surplus basis, to cover insurance liability risk. Reinsurance contracts cover almost all products,
which contain risk liabilities. The products reinsured include: life insurance, accident and health insurance
or death, disability, accident, illness and assistance in terms of product category or function, respectively.
These reinsurance agreements spread insured risk to a certain extent and reduce the effect of potential
losses to the Group. However, the Group’s direct insurance liabilities to the policyholder are not eliminated
because of the credit risk associated with the failure of reinsurance companies to fulfil their responsibilities.
140
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks
All insurance operations of the Group are located in the PRC. There are no significant differences among
the regions where the Group underwrites insurance contracts.
The table below presents the Group’s major products of long-term insurance contracts:
Product name
For the year ended 31 December
2016
2015
RMB million
%
RMB million
%
Premiums of long-term insurance contracts
New Xin Feng Endowment (Type A) (a)
Xin Annuity (b)
Xin Fu Nian Nian Annuity (c)
Kang Ning Whole Life (d)
Hong Ying Participating Endowment (e)
Others (f)
38,059
30,944
29,739
22,420
4,968
264,308
9.75%
7.93%
7.62%
5.74%
1.27%
67.69%
38,314
35,606
888
23,508
7,388
225,878
11.55%
10.74%
0.27%
7.09%
2.23%
68.12%
Total
390,438
100.00%
331,582
100.00%
Insurance benefits of long-term
insurance contracts
New Xin Feng Endowment (Type A) (a)
Xin Annuity (b)
Xin Fu Nian Nian Annuity (c)
Kang Ning Whole Life (d)
Hong Ying Participating Endowment (e)
Others (f)
67
132
5,366
3,949
73,261
97,127
0.04%
0.07%
2.98%
2.20%
40.72%
53.99%
80
13
120
3,692
499
110,873
0.07%
0.01%
0.10%
3.20%
0.43%
96.19%
Total
179,902
100.00%
115,277
100.00%
As at 31 December 2016
As at 31 December 2015
RMB million
%
RMB million
%
Liabilities of long-term insurance contracts
New Xin Feng Endowment (Type A) (a)
Xin Annuity (b)
Xin Fu Nian Nian Annuity (c)
Kang Ning Whole Life (d)
Hong Ying Participating Endowment (e)
Others (f)
43,794
69,846
13,300
244,112
117,946
1,336,958
2.40%
3.83%
0.73%
13.37%
6.46%
73.21%
43,788
38,917
429
214,120
187,781
1,213,738
2.58%
2.29%
0.03%
12.60%
11.05%
71.45%
Total
1,825,956
100.00%
1,698,773
100.00%
141
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks (continued)
(a) New Xin Feng is an endowment insurance contract with single premium. Its insured period is 5
years. This product is applicable to healthy policyholders between 18-year-old and 70-year-old. Both
maturity and death benefits are paid at the basic sum insured. Accident death benefit is paid at 300%
of the basic sum insured.
(b) Xin Annuity is an annuity insurance contract with single premium. Its insured period is 10 years. This
product is applicable to healthy policyholders between 28-day-old and 65-year-old. Annuity is paid
at the basic sum insured. Maturity benefit is paid at the premium received (without interest). Death
benefit is paid at the premium received (without interest) or the cash value of the insurance contract,
whichever greater.
(c) Xin Fu Nian Nian Annuity is an annuity insurance contract with regular premium of 3 years, 5
years or 10 years and it is sold with Xin Fu Nian Nian Pension Annuity as a product portfolio. Its
insured period extends from the effective date of the Xin Fu Nian Nian Annuity to the contractual
date starting to claim of Xin Fu Nian Nian Pension Annuity. This product is applicable to healthy
policyholders between 28-day-old and 65-year-old. The annuity payment of first policy year is paid at
12% of the first premium of Xin Fu Nian Nian Annuity and Xin Fu Nian Nian Pension Annuity, the
following annuity payments are paid at 15% of the basic sum insured by Xin Fu Nian Nian Annuity;
maturity benefit is paid at the premium received (without interest) of Xin Fu Nian Nian Annuity;
death benefit is paid at the premium received (without interest) of Xin Fu Nian Nian Annuity or the
cash value of Xin Fu Nian Nian Pension Annuity, whichever greater.
(d) Kang Ning is a whole life insurance contract with the options for single premium or regular premium
of 10 years or 20 years. This product is applicable to healthy policyholders under 70-year-old. The
critical illness benefit is paid at 200% of the basic sum insured. Both death and disability benefits are
paid at 300% of the basic sum insured less any critical illness benefits paid.
(e) Hong Ying is a participating endowment insurance contract with the options for single premium or
regular premium of 3 years, 5 years or 10 years. Its insured period can be 6 years, 10 years or 15 years.
This product is applicable to healthy policyholders between 30-day-old and 70-year-old. Maturity
benefit of a single premium policy is paid at the basic sum insured, while that of a regular premium
policy is paid at the basic sum insured multiplied by the number of years of the premium payments.
Disease death benefit incurred within the first policy year is paid at the premium received (without
interest). Disease death benefit incurred after the first policy year is paid at the basic sum insured
for a single premium policy or the basic sum insured multiplied by the number of years of premium
payments for a regular premium policy. When accidents occurred during taking a train, a ship or a
flight period, death benefit is paid at 300% of the basic sum insured for a single premium policy or
300% of the basic sum insured multiplied by the number of years of premium payments for a regular
premium policy. When accidents occurred out of the period of taking a train, a ship or a flight, death
benefit is paid at 200% of the basic sum insured for a single premium policy or 200% of the basic sum
insured multiplied by the number of years of premium payments for a regular premium policy.
(f) Others consist of various long-term insurance contracts with no significant concentration.
142
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.3 Sensitivity analysis
Sensitivity analysis of long-term insurance contracts
Liabilities for long-term insurance contracts and liabilities unbundled from universal life insurance contracts
and unit-linked insurance contracts with insurance risk are calculated based on the assumptions on mortality
rates, morbidity rates, lapse rates and discount rates. Changes in insurance contract reserve assumptions
reflect the Company’s actual operating results and changes in its expectation of future events. The Company
considers the potential impact of future risk factors on its operating results and incorporates such potential
impact in the determination of assumptions.
Holding all other variables constant, if mortality rates and morbidity rates were to increase or decrease
from the current best estimate by 10%, pre-tax profit for the year would have been RMB16,746 million
or RMB17,492 million (as at 31 December 2015: RMB14,597 million or RMB15,253 million) lower or
higher, respectively.
Holding all other variables constant, if lapse rates were to increase or decrease from the current best estimate
by 10%, pre-tax profit for the year would have been RMB2,823 million or RMB2,953 million (as at 31
December 2015: RMB4,032 million or RMB4,229 million) lower or higher, respectively.
Holding all other variables constant, if the discount rates were 50 basis points higher or lower than the
current best estimate, pre-tax profit for the year would have been RMB57,591million or RMB65,427
million (as at 31 December 2015: RMB45,811 million or RMB52,049 million) higher or lower,
respectively.
Sensitivity analysis of short-term insurance contracts
The assumptions of reserves for claims and claim adjustment expenses may be affected by other variables
such as claims payment of short-term insurance contracts, which may result in the synchronous changes to
reserves for claims and claim adjustment expenses.
Holding all other variables constant, if claim ratios are 100 basis points higher or lower than the current
assumption, pre-tax profit is expected to be RMB372 million (as at 31 December 2015: RMB315 million)
lower or higher, respectively.
143
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.3 Sensitivity analysis (continued)
Sensitivity analysis of short-term insurance contracts (continued)
The following table indicates the claim development for short-term insurance contracts without taking
impacts of ceded business into account:
Estimated claims expenses
2012
Short-term insurance contracts (accident year)
2013
2015
2014
2016
Total
Current year
1 year later
2 years later
3 years later
4 years later
Estimated accumulated
claims expenses
Accumulated claims
expenses paid
8,056
8,164
8,123
8,123
8,123
11,476
11,872
11,775
11,775
16,499
17,265
16,726
20,497
21,427
27,120
8,123
11,775
16,726
21,427
27,120
85,171
(8,123)
(11,775)
(16,726)
(20,645)
(16,364)
(73,633)
Unpaid claims expenses
–
–
–
782
10,756
11,538
The following table indicates the claim development for short-term insurance contracts taking impacts of
ceded business into account:
Estimated claims expenses
2012
Short-term insurance contracts (accident year)
2013
2014
2015
2016
Total
Current year
1 year later
2 years later
3 years later
4 years later
Estimated accumulated
claims expenses
Accumulated claims
expenses paid
7,916
8,035
7,997
7,997
7,997
11,331
11,743
11,645
11,645
16,379
17,127
16,589
20,359
21,262
26,897
7,997
11,645
16,589
21,262
26,897
84,390
(7,997)
(11,645)
(16,589)
(20,487)
(16,237)
(72,955)
Unpaid claims expenses
–
–
–
775
10,660
11,435
144
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.2 Financial risk
The Group’s activities are exposed to a variety of financial risks. The key financial risk is that proceeds from
the sale of financial assets will not be sufficient to fund the obligations arising from the Group’s insurance
and investment contracts. The most important components of financial risk are market risk, credit risk and
liquidity risk.
The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the financial performance of the Group. Risk management is carried
out by a designated department under policies approved by management. The responsible department
identifies, evaluates and manages financial risks in close cooperation with the Group’s operating units. The
Group provides written principles for overall risk management, as well as written policies covering specific
areas, such as managing market risk, credit risk, and liquidity risk.
The Group manages financial risk by holding an appropriately diversified investment portfolio as permitted
by laws and regulations designed to reduce the risk of concentration in any one specific industry or issuer.
The structure of the investment portfolio held by the Group is disclosed in Note 9.
The sensitivity analyses below are based on a change in an assumption while holding all other assumptions
constant. In practice this is unlikely to occur, and changes in some of the assumptions may be correlated,
such as change in interest rate and change in market price.
4.2.1 Market risk
(i)
Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate
due to changes in market interest rates. The Group’s financial assets are principally composed of
term deposits, debt securities and loans which are exposed to interest rate risk. Changes in the level
of interest rates could have a significant impact on the Group’s overall investment return. Many of
the Group’s insurance policies offer guaranteed returns to policyholders. These guarantees expose the
Group to interest rate risk.
The Group manages interest rate risk through adjustments to portfolio structure and duration, and, to
the extent possible, by monitoring the mean duration of its assets and liabilities.
The sensitivity analysis for interest rate risk illustrates how changes in interest income and the fair
value of future cash flows of a financial instrument will fluctuate because of changes in market interest
rates at the end of the reporting period.
As at 31 December 2016, if market interest rates were 50 basis points higher or lower with all other
variables held constant, pre-tax profit for the year would have been RMB160 million (as at 31
December 2015: RMB416 million) higher or lower, respectively, mainly as a result of higher or lower
interest income on floating rate cash and cash equivalents, term deposits, statutory deposits-restricted,
debt securities and loans and the fair value losses or gains on debt securities assets at fair value through
profit or loss. Pre-tax available-for-sale reserve in equity would have been RMB6,948 million (as at 31
December 2015: RMB6,928 million) lower or higher respectively, as a result of a decrease or increase
in the fair value of available-for-sale securities.
145
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.1 Market risk (continued)
(ii)
Price risk
Price risk arises mainly from the volatility of prices of equity securities held by the Group. Prices of
equity securities are determined by market forces. The Group is subject to increased price risk largely
because China’s stock markets are relatively volatile.
The Group manages price risk by holding an appropriately diversified investment portfolio as
permitted by laws and regulations designed to reduce the risk of concentration in any one specific
industry or issuer.
As at 31 December 2016, if all the Group’s equity securities’ prices had increased or decreased by
10% with all other variables held constant, pre-tax profit for the year would have been RMB3,263
million or RMB3,400 million (as at 31 December 2015: RMB2,248 million or RMB2,248 million)
higher or lower, respectively, mainly as a result of an increase or decrease in fair value of equity
securities excluding available-for-sale securities. Pre-tax available-for-sale reserve in equity would have
been RMB24,999 million or RMB28,153 million (as at 31 December 2015: RMB22,999 million or
RMB22,999 million) higher or lower, respectively, as a result of an increase or decrease in fair value of
available-for-sale equity securities. If prices decreased to the extent that the impairment criteria were
met, a portion of such decrease of the available-for-sale equity securities would reduce pre-tax profit
through impairment.
(iii) Currency risk
Currency risk is the volatility of fair value or future cash flows of financial instruments resulted from
changes in foreign currency exchange rates. The Group’s currency risk exposure mainly arises from
cash and cash equivalents, term deposits, debt investments, equity investments, interest-bearing loans
and borrowings denominated in currencies other than the functional currency, such as US dollar, HK
dollar, GB pound and EUR, etc.
146
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.1 Market risk (continued)
(iii) Currency risk (continued)
The following table summarises financial assets and financial liabilities denominated in currencies
other than RMB as at 31 December 2016 and 2015, expressed in RMB equivalent:
As at 31 December 2016
US dollar
HK dollar
GB pound
EUR
Others
Total
Financial assets
Equity securities
– Available-for-sale securities
– Securities at fair value
6,968
12,791
–
–
148
19,907
through profit or loss
3,906
128
1,115
2,475
1,135
8,759
Debt securities
– Held-to-maturity securities
– Securities at fair value through
profit or loss
Term deposits
Cash and cash equivalents
164
348
6,106
2,685
–
–
–
2,083
–
14
–
145
–
3
–
39
–
13
–
9
164
378
6,106
4,961
Total
20,177
15,002
1,274
2,517
1,305
40,275
Financial liabilities
Interest-bearing loans and
other borrowings
Total
13,100
13,100
–
–
2,339
2,339
731
731
–
–
16,170
16,170
As at 31 December 2015
US dollar
HK dollar
GB pound
EUR
Others
Total
Financial assets
Equity securities
– Available-for-sale securities
– Securities at fair value
through profit or loss
Debt securities
– Held-to-maturity securities
– Available-for-sale securities
– Securities at fair value
through profit or loss
Term deposits
Cash and cash equivalents
4,715
8,442
–
–
172
13,329
3,413
68
266
371
5,431
3,743
70
–
–
–
–
636
1,139
2,190
1,056
7,868
–
–
15
–
132
–
–
8
–
14
–
–
8
–
6
68
266
402
5,431
4,531
Total
18,007
9,148
1,286
2,212
1,242
31,895
Financial liabilities
Interest-bearing loans and borrowings
Total
–
–
–
–
2,643
2,643
–
–
–
–
2,643
2,643
147
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.1 Market risk (continued)
(iii) Currency risk (continued)
As at 31 December 2016, if RMB had strengthened or weakened by 10% against US dollar, HK
dollar, GB pound, EUR and other foreign currencies, with all other variables held constant, pre-tax
profit for the year would have been RMB420 million (as at 31 December 2015: RMB1,592 million)
lower or higher, respectively, mainly as a result of foreign exchange losses or gains on translation of
US dollar, HK dollar, GB pound, EUR and other foreign currencies denominated financial assets and
financial liabilities other than the available-for-sale equity securities included in the table above. Pre-
tax available-for-sale reserve in equity would have been RMB1,743 million (as at 31 December 2015:
RMB1,085 million) lower or higher, respectively, as a result of foreign exchange losses or gains on
translation of the available-for-sale equity securities at fair value. The actual exchange gains in 2016
were RMB582 million (2015: exchange gains of RMB812 million).
4.2.2 Credit risk
Credit risk is the risk that one party of a financial transaction or the issuer of a financial instrument will
fail to discharge its obligation and cause another party to incur a financial loss. Because the Group’s
investment portfolio is restricted to the types of investments as permitted by the China Insurance Regulatory
Commission (“CIRC”) and a significant portion of the portfolio is in government bonds, government
agency bonds and term deposits with the state-owned commercial banks, the Group’s overall exposure to
credit risk is relatively low.
Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. The
Group manages credit risk through in-house research and analysis of the Chinese economy and the
underlying obligors and transaction structures. Where appropriate, the Group obtains collateral in the form
of rights to cash, securities, property and equipment to lower the credit risk.
Credit risk exposure
The carrying amount of financial assets included on the consolidated statement of financial position
represents the maximum credit risk exposure at the reporting date without taking account of any collateral
held or other credit enhancements attached. The Group has no credit risk exposure relating to off-balance
sheet items as at 31 December 2016 and 2015.
Collateral and other credit enhancements
Securities purchased under agreements to resell are pledged by counterparties’ debt securities or term
deposits of which the Group could take the ownership if the owner of the collateral defaults. Policy loans
and most of premium receivables are collateralised by their policies’ cash value according to the terms and
conditions of policy loan contracts and policy contracts, respectively.
148
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.2 Credit risk (continued)
Credit quality
The Group’s debt securities investment mainly includes government bonds, government agency bonds,
corporate bonds and subordinated bonds or debts, and most of the debt securities are guaranteed by either
the Chinese government or Chinese government controlled financial institutions. As at 31 December 2016,
99.0% (as at 31 December 2015: 98.9%) of the corporate bonds held by the Group or the issuers of these
corporate bonds had credit ratings of AA/A-2 or above. As at 31 December 2016, 99.9% (as at 31 December
2015: 99.6%) of the subordinated bonds or debts held by the Group either have credit ratings of AA/A-2
or above, or were issued by national commercial banks. The bonds, debts or their issuers’ credit ratings
are assigned by a qualified appraisal institution in the PRC at the time of its issuance and updated at each
reporting date.
As at 31 December 2016, 99.5% (as at 31 December 2015: 99.9%) of the Group’s bank deposits are with
the four largest state-owned commercial banks, other national commercial banks and China Securities
Depository and Clearing Corporation Limited (“CSDCC”) in the PRC. The Group believes these
commercial banks, and CSDCC have a high credit quality. The Group’s most other loans excluding
policyholder loans, are guaranteed by third parties or with pledge, or have the fiscal annual budget income
as the source of repayment, or have higher credit rating borrowers. As a result, the Group concludes that
the credit risk associated with term deposits and accrued investment income thereof, statutory deposits-
restricted, other loans, and cash and cash equivalents will not cause a material impact on the Group’s
consolidated financial statements as at 31 December 2016 and 2015.
The credit risk associated with securities purchased under agreements to resell, policy loans and most of
premium receivables will not cause a material impact on the Group’s consolidated financial statements
taking into consideration their collateral held and maturity term of no more than one year as at 31
December 2016 and 2015.
4.2.3 Liquidity risk
Liquidity risk is the risk that the Group is unable to obtain funds at a reasonable funding cost when required
to meet a repayment obligation and fund its asset portfolio within a certain time.
In the normal course of business, the Group attempts to match the maturity of financial assets to the
maturity of insurance and financial liabilities.
149
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.3 Liquidity risk (continued)
The following tables set forth the contractual and expected undiscounted cash flows for financial assets and
liabilities and insurance liabilities:
As at 31 December 2016
Financial assets
Contractual cash inflows
Equity securities
Debt securities
Loans
Term deposits
Statutory deposits – restricted
Securities purchased under
agreements to resell
Accrued investment income
Premiums receivable
Cash and cash equivalents
Carrying
value
Without
maturity
Contractual and expected cash flows (undiscounted)
Later than 1 year Later than 3 years
but not later
than 5 years
but not later
than 3 years
Not later
than 1 year
421,383
1,148,894
226,573
538,325
6,333
43,538
55,945
13,421
67,046
421,383
–
–
–
–
–
–
–
–
–
210,589
119,247
199,657
1,909
43,538
44,722
13,421
67,046
–
214,105
47,606
260,065
4,720
–
11,100
–
–
–
188,740
41,697
117,012
209
–
123
–
–
Later than
5 years
–
1,014,074
55,106
8,858
–
–
–
–
–
Subtotal
2,521,458
421,383
700,129
537,596
347,781
1,078,038
Financial and insurance liabilities
Expected cash outflows
Insurance contracts
Investment contracts
Contractual cash outflows
Securities sold under
agreements to repurchase
Financial liabilities at fair
value through profit or loss
Annuity and other insurance
balances payable
Interest-bearing loans and other
borrowings
Bonds payable
(43,322)
(15,880)
97,236
(34,147)
35,088
(33,128)
(3,229,394)
(259,905)
1,847,986
195,706
81,088
–
–
–
(81,088)
2,031
(2,031)
–
39,038
16,170
37,998
–
–
–
(39,038)
(1,138)
(39,032)
–
–
–
(16,159)
–
–
–
–
–
–
–
–
–
–
–
Subtotal
2,220,017
(2,031)
(219,498)
46,930
1,960
(3,489,299)
Net cash inflows/(outflows)
301,441
419,352
480,631
584,526
349,741
(2,411,261)
150
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.3 Liquidity risk (continued)
As at 31 December 2015
Financial assets
Contractual cash inflows
Equity securities
Debt securities
Loans
Term deposits
Statutory deposits – restricted
Securities purchased under
agreements to resell
Accrued investment income
Premiums receivable
Cash and cash equivalents
Carrying
value
Without
maturity
Contractual and expected cash flows (undiscounted)
Later than 1 year Later than 3 years
but not later
than 5 years
but not later
than 3 years
Not later
than 1 year
411,623
1,000,958
207,267
562,622
6,333
21,503
49,552
11,913
76,096
411,623
–
–
–
–
–
–
–
–
–
130,340
96,901
190,658
484
21,503
31,218
11,913
76,096
–
214,106
48,829
296,268
6,404
–
18,327
–
–
–
170,658
56,003
128,322
232
–
7
–
–
Later than
5 years
–
910,196
41,634
–
–
–
–
–
–
Subtotal
2,347,867
411,623
559,113
583,934
355,222
951,830
Financial and insurance liabilities
Expected cash outflows
Insurance contracts
Investment contracts
Contractual cash outflows
Securities sold under
agreements to repurchase
Financial liabilities at fair
value through profit or loss
Annuity and other insurance
balances payable
Interest-bearing loans and
borrowings
Bonds payable
1,715,985
84,106
31,354
856
30,092
2,643
67,994
–
–
–
(81,630)
(16,199)
(44,697)
(16,207)
26,347
(11,334)
(2,789,186)
(108,091)
(31,354)
(856)
–
–
–
–
(30,092)
(107)
(33,424)
–
–
–
–
–
–
(214)
(39,774)
(2,693)
–
–
–
–
–
–
Subtotal
1,933,030
(856)
(192,806)
(100,892)
12,320
(2,897,277)
Net cash inflows/(outflows)
414,837
410,767
366,307
483,042
367,542
(1,945,447)
151
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.3 Liquidity risk (continued)
The amounts set forth in the tables above for insurance and investment contracts in each column are the
cash flows representing expected future benefit payments taking into consideration of future premiums
payments or deposits from policyholders. The excess cash inflows from matured financial assets will
be reinvested to cover any future liquidity exposures. The estimate is subject to assumptions related to
mortality, morbidity, the lapse rate, the loss ratio of short term insurance contracts, expense and other
assumptions. Actual experience may differ from estimates.
The liquidity analysis above does not include policyholder dividends payable amounting to RMB87,725
million as at 31 December 2016 (as at 31 December 2015: RMB107,774 million). As at 31 December
2016, declared dividends of RMB64,623 million (as at 31 December 2015: RMB56,597 million) included
in policyholder dividends payable have a maturity not later than one year. For the remaining policyholder
dividends payable, the amount and timing of the undiscounted cash flows are indeterminate due to the
uncertainty of future experiences including investment returns and are subject to future declarations by the
Group.
Although all investment contracts with DPF and investment contracts without DPF contain contractual
options to surrender that can be exercised immediately by all policyholders at any time, the Group’s
expected cash flows as shown in the above tables are based on past experience and future expectations.
Should these contracts were surrendered immediately, it would cause a cash outflow of RMB53,271 million
and RMB140,565 million, respectively for the year ended 31 December 2016 (2015: RMB49,905 million
and RMB33,471 million, respectively), payable within one year.
4.2.4 Capital management
The Group’s objectives for managing capital are to comply with the insurance capital requirements based on
the minimum capital and actual capital required by the CIRC, prevent risk in operation and safeguard the
Group’s ability to continue as a going concern so that it can continue to provide returns for equity holders
and benefits for other stakeholders. The Group replenishes capital to improve the solvency ratio by issuing
subordinated bonds and Core Tier 2 Capital Securities according to the relevant laws and the approval of the
relevant authorities.
The Group is also subject to other local capital requirements, such as statutory deposits-restricted
requirement, statutory reserve fund requirement, general reserve requirement and statutory insurance fund
requirement discussed in detail in Note 9.4, Note 36 and Note 20, respectively.
The Group manages capital to ensure its continuous and full compliance with the regulations mainly
through monitoring its quarterly solvency ratios, as well as the solvency ratio based on annual stress testing.
According to Bao Jian Hui Ling [2008] No.1, Solvency Regulations of Insurance Companies (“Solvency I”),
the table below summarises the solvency ratio, the actual capital, the minimum capital and the solvency
surplus of the Company under Solvency I as at 31 December 2015:
Actual capital
Minimum capital
Solvency surplus
Solvency ratio
152
As at 31 December 2015
RMB million
282,820
85,676
197,144
330%
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.4 Capital management (continued)
Pursuant to Notification of Related Matters on Official Implementation of China Risk Oriented Solvency System
released by the CIRC, insurance companies should implement Insurance Institution Solvency Regulations
(No.1-No.17) (“Solvency II”) from 1 January 2016. The Company computes the solvency ratio in
accordance with Solvency II, identifying, assessing and managing various risks starting from 1 January 2016.
The table below summarises the core and comprehensive solvency ratio, core capital, actual capital and
minimum capital of the Company under Solvency II as at 31 December 2016:
Core capital
Actual capital
Minimum capital
Core solvency ratio
Comprehensive solvency ratio
As at 31 December 2016
RMB million
639,396
677,768
228,080
280%
297%
According to the solvency ratios results mentioned above, and the unquantifiable evaluation results of
operational risk, strategic risk, reputational risk and liquidity risk of insurance companies, the CIRC
evaluates the comprehensive solvency of insurance companies and supervises insurance companies by
classifying them into four categories:
(i) Category A: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational
risk and liquidity risk are very low;
(ii) Category B: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational
risk and liquidity risk are low;
(iii) Category C: solvency ratios do not meet the requirements or solvency ratios meet the requirements but
one or several risks in operation, strategy, reputation and liquidity are high;
(iv) Category D: solvency ratios do not meet the requirements or solvency ratios meet the requirements
but one or several risks in operation, strategy, reputation and liquidity are severe.
According to Cai Kuai Bu Han [2017] No.457 Notification of the Evaluation Results of Integrated Risk Rating
(Classification Regulation) for the Fourth Quarter of 2016, released by the CIRC, the latest Integrated Risk
Rating result of the Company was Category A.
153
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.3 Fair value hierarchy
Level 1 fair value is based on quoted prices (unadjusted) in active markets for identical assets or liabilities
that the entity can obtain at the measurement date.
Other than Level 1 quoted prices, Level 2 fair value is based on valuation techniques using significant
inputs, that are observable for the asset being measured, either directly or indirectly, for substantially the
full term of the asset through corroboration with observable market data. Observable inputs generally used
to measure the fair value of securities classified as Level 2 include quoted market prices for similar assets in
active markets; quoted market prices in markets that are not active for identical or similar assets and other
market observable inputs. This level includes the debt securities for which quotations are available from
pricing services providers. Fair values provided by pricing services providers are subject to a number of
validation procedures by management. These procedures include a review of the valuation models utilised
and the results of these models, as well as the recalculation of prices obtained from pricing services at the end
of each reporting period.
Under certain conditions, the Group may not receive a price quote from independent third party pricing
services. In this instance, the Group’s valuation team may choose to apply internally developed valuation
method to the assets or liabilities being measured, determine the main inputs for valuation, and analyse the
change of the valuation and report it to management. Key inputs involved in internal valuation services are
not based on observable market data. They reflect assumptions made by management based on judgements
and experiences. The assets or liabilities valued by this method are generally classified as Level 3.
As at 31 December 2016, assets classified as Level 1 accounted for approximately 31.61% of assets
measured at fair value on a recurring basis. Fair value measurements classified as Level 1 include certain
debt securities, equity securities that are traded in an active exchange market or interbank market and
open-ended funds with public market price quotation. The Group considers a combination of certain
factors to determine whether a market for a financial instrument is active, including the occurrence of
trades within the specific period, the respective trading volume, and the degree which the implied yields
for a debt security for observed transactions differs from the Group’s understanding of the current relevant
market rates and information. Trading prices from the Chinese interbank market are determined by both
trading counterparties and can be observed publicly. The Company adopted this price of the debt securities
traded on the Chinese interbank market at the reporting date as their fair market value and classified the
investments as Level 1. Open-ended funds also have active markets. Fund management companies publish
the net asset value of these funds on their websites on each trade date. Investors subscribe for and redeem
units of these funds in accordance with the fund net asset value published by the fund management
companies on each trade date. The Company adopted the unadjusted net asset value of the funds at
reporting date as their fair market value and classified the investments as Level 1.
As at 31 December 2016, assets classified as Level 2 accounted for approximately 58.84% of assets measured
at fair value on a recurring basis. They primarily include certain debt securities and equity securities.
Valuations are generally obtained from third party pricing services for identical or comparable assets, or
through the use of valuation methodologies using observable market inputs, or recent quoted market prices.
Valuation service providers typically gather, analyse and interpret information related to market transactions
and other key valuation model inputs from multiple sources, and through the use of widely accepted internal
valuation models, provide a theoretical quote on various securities. Debt securities are classified as Level 2
when they are valued at recent quoted prices from the Chinese interbank market or from valuation service
providers.
At 31 December 2016, assets classified as Level 3 accounted for approximately 9.55% of assets measured at
fair value on a recurring basis. They primarily include unlisted equity securities and unlisted debt securities.
Fair values are determined using valuation techniques, including discounted cash flow valuations, the market
comparison approach, etc.
For the accounting policies regarding the determination of fair values of financial assets and liabilities, see
Note 3.2.
154
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.3 Fair value hierarchy (continued)
The following table presents the Group’s quantitative disclosures of fair value measurement hierarchy for
assets and liabilities measured at fair value as at 31 December 2016:
Fair value measurement using
Total
Quoted prices
in active
markets
Level 1
RMB million
Significant
observable
inputs
Level 2
RMB million
Significant
unobservable
inputs
Level 3
RMB million
RMB million
Assets measured at fair value
Available-for-sale securities
– Equity securities
– Debt securities
Securities at fair value
through profit or loss
– Equity securities
– Debt securities
183,222
28,562
52,790
37,172
86,161
357,463
867
117,234
76,445
13,733
1,061
–
345,828
399,758
54,718
154,406
Total
301,746
561,725
91,239
954,710
Liabilities measured at fair value
Financial liabilities at fair value
through profit or loss
Investment contracts at fair value
through profit or loss
Total
(2,031)
(12)
(2,043)
–
–
–
–
–
–
(2,031)
(12)
(2,043)
The following table presents the changes in Level 3 assets for the year ended 31 December 2016:
Available-for-sale securities
Debt securities
RMB million
Equity securities
RMB million
Securities at fair
value through
profit or loss
Equity securities
RMB million
Total
RMB million
Opening balance
Purchases
Transferred into Level 3
Transferred out of Level 3
Total gains/(losses) recorded
in profit or loss
Total gains/(losses) recorded
in other comprehensive income
Maturity
501
13,533
–
–
–
–
(301)
62,343
12,499
1,326
(2,054)
–
2,331
–
1,884
–
1,128
(1,884)
(67)
–
–
64,728
26,032
2,454
(3,938)
(67)
2,331
(301)
Closing balance
13,733
76,445
1,061
91,239
155
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.3 Fair value hierarchy (continued)
The following table presents the Group’s quantitative disclosures of fair value measurement hierarchy for
assets and liabilities measured at fair value as at 31 December 2015:
Fair value measurement using
Total
Quoted prices
in active
markets
Level 1
RMB million
Significant
observable
inputs
Level 2
RMB million
Significant
unobservable
inputs
Level 3
RMB million
RMB million
Assets measured at fair value
Available-for-sale securities
– Equity securities
– Debt securities
Securities at fair value through
profit or loss
– Equity securities
– Debt securities
233,527
20,575
40,411
18,304
51,940
380,823
711
76,680
62,343
501
1,884
–
347,810
401,899
43,006
94,984
Total
312,817
510,154
64,728
887,699
Liabilities measured at fair value
Financial liabilities at fair value
through profit or loss
Investment contracts at fair value
through profit or loss
Total
(856)
(14)
(870)
–
–
–
–
–
–
(856)
(14)
(870)
The following table presents the changes in Level 3 assets for the year ended 31 December 2015:
Available-for-sale securities
Debt securities
RMB million
Equity securities
RMB million
Securities at fair
value through
profit or loss
Equity securities
RMB million
Total
RMB million
Opening balance
Purchases
Transferred into Level 3
Transferred out of Level 3
Total gains/(losses) recorded
in profit or loss
Total gains/(losses) recorded
in other comprehensive income
Sales
501
–
–
–
–
–
–
21,635
39,449
2,785
(390)
–
3,664
(4,800)
542
–
1,319
(329)
352
–
–
22,678
39,449
4,104
(719)
352
3,664
(4,800)
Closing balance
501
62,343
1,884
64,728
156
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
4
RISK MANAGEMENT (continued)
4.3 Fair value hierarchy (continued)
The assets whose fair value measurements are classified under Level 3 above do not have any material impact
on the profit or loss of the Group.
For the assets and liabilities measured at fair value, during the year ended 31 December 2016, RMB8,932
million (2015: RMB59,214 million) debt securities were transferred from Level 1 to Level 2 within the fair
value hierarchy, whereas RMB8,668 million (2015: RMB12,129 million) debt securities were transferred
from Level 2 to Level 1. No material equity securities were transferred between Level 1 and Level 2.
For the years ended 31 December 2016 and 2015, there were no significant changes in the business or
economic circumstances that affected the fair value of the Group’s financial assets and liabilities. There were
also no reclassifications of financial assets.
As at 31 December 2016 and 2015, unobservable inputs such as the weighted average cost of capital and
liquidity discount were used in the valuation of assets at fair value classified as Level 3. The fair value was
not significantly sensitive to reasonable changes in these unobservable inputs.
5
SEGMENT INFORMATION
5.1 Operating segments
The Group operates in four operating segments:
(i)
Life insurance business (Life)
Life insurance business relates primarily to the sale of life insurance policies, including those life
insurance policies without significant insurance risk transferred.
(ii) Health insurance business (Health)
Health insurance business relates primarily to the sale of health insurance policies, including those
health insurance policies without significant insurance risk transferred.
(iii) Accident insurance business (Accident)
Accident insurance business relates primarily to the sale of accident insurance policies.
(iv) Other businesses (Others)
Other businesses relate primarily to income and allocated cost of insurance agency business in respect
of services to CLIC as described in Note 33, net share of profit of associates and joint ventures,
income and expenses of subsidiaries, and unallocated income and expenditure of the Group.
5.2 Allocation basis of income and expenses
Investment income, net realised gains/(losses) on financial assets, net fair value gains/(losses) through
profit or loss and foreign exchange gains/(losses) within other expenses are allocated among segments in
proportion to the respective segments’ average liabilities of insurance contracts and investment contracts at
the beginning and end of the year. Administrative expenses are allocated among segments in proportion to
the unit cost of respective products in the different segments. Unallocated other income and other expenses
are presented in the “Others” segment directly. Income tax is not allocated.
5.3 Allocation basis of assets and liabilities
Financial assets and securities sold under agreements to repurchase are allocated among segments in
proportion to the respective segment’s average liabilities of insurance contracts and investment contracts
at the beginning and end of the year. Insurance and investment contract liabilities are presented under the
respective segments. The remaining assets and liabilities are not allocated.
157
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
5
SEGMENT INFORMATION (continued)
Revenues
Gross written premiums
– Term life
– Whole life
– Endowment
– Annuity
Net premiums earned
Investment income
Net realised gains/(losses) on financial assets
Net fair value gains/(losses) through profit or loss
Other income
Including: inter-segment revenue
For the year ended 31 December 2016
Life
Health
Accident
Others
Elimination
Total
RMB million
361,905
3,871
29,524
188,415
140,095
361,649
103,723
5,823
(6,436)
1,345
–
54,010
–
–
–
–
50,590
4,122
231
(255)
86
–
14,583
–
–
–
–
13,991
403
23
(25)
–
–
–
–
–
–
–
–
899
(39)
(378)
5,919
890
–
–
–
–
–
–
–
–
–
(890)
(890)
430,498
426,230
109,147
6,038
(7,094)
6,460
–
Segment revenues
466,104
54,774
14,392
6,401
(890)
540,781
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits
Accident and health claims and claim
adjustment expenses
Increase in insurance contract liabilities
Investment contract benefits
Policyholder dividends resulting from
participation in profits
Underwriting and policy acquisition costs
Finance costs
Administrative expenses
Other expenses
Including: inter-segment expenses
Statutory insurance fund contribution
(251,155)
(1,977)
(25)
–
(109,767)
(5,091)
(21,958)
(16,578)
(225)
(15,787)
(38,459)
(4,395)
(22,248)
(3,666)
(853)
(804)
(96)
(6,906)
(174)
(4,373)
(256)
(34)
(138)
(5,311)
(274)
–
–
(4,441)
(17)
(2,899)
(467)
(3)
(106)
–
–
–
–
–
(2,216)
(181)
(2,334)
(1,360)
–
–
Segment benefits, claims and expenses
(451,372)
(52,681)
(13,540)
(6,091)
Share of profit of associates and joint ventures, net
–
–
14,732
2,093
–
852
5,855
6,165
Segment results
Income tax
Net profit
Attributable to
– Equity holders of the Company
– Non-controlling interests
Other comprehensive income attributable
to equity holders of the Company
(23,433)
(930)
(91)
(1,320)
Depreciation and amortisation
1,490
257
196
140
158
–
–
–
–
–
–
–
–
890
890
–
890
–
–
(253,157)
(27,269)
(126,619)
(5,316)
(15,883)
(52,022)
(4,767)
(31,854)
(4,859)
–
(1,048)
(522,794)
5,855
23,842
(4,257)
19,585
19,127
458
–
–
(25,774)
2,083
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
5
SEGMENT INFORMATION (continued)
Life
Health
Accident
Others
Elimination
Total
As at 31 December 2016
RMB million
Assets
Financial assets (including cash
and cash equivalents)
Others
2,379,782
8,165
92,220
6,776
8,906
491
27,392
119,766
Segment assets
2,387,947
98,996
9,397
147,158
Unallocated
Property, plant and equipment
Others
Total
Liabilities
Insurance contracts
Investment contracts
Securities sold under agreements to repurchase
Others
Segment liabilities
Unallocated
Others
Total
1,762,363
183,773
77,649
73,277
77,837
11,933
3,081
3,563
2,097,062
96,414
7,786
–
302
338
8,426
–
–
56
18,194
18,250
–
–
–
–
–
–
–
–
2,508,300
135,198
2,643,498
30,389
23,064
2,696,951
1,847,986
195,706
81,088
95,372
2,220,152
169,151
2,389,303
159
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
5
SEGMENT INFORMATION (continued)
Revenues
Gross written premiums
– Term life
– Whole life
– Endowment
– Annuity
Net premiums earned
Investment income
Net realised gains/(losses) on financial assets
Net fair value gains/(losses) through profit or loss
Other income
Including: inter-segment revenue
For the year ended 31 December 2015
Life
Health
Accident
Others
Elimination
Total
RMB million
308,169
3,476
28,119
177,871
98,703
308,081
93,819
31,259
9,863
1,074
–
42,041
–
–
–
–
40,855
2,983
992
313
61
–
13,761
–
–
–
–
13,365
344
115
36
–
–
–
–
–
–
–
–
436
(69)
(3)
5,006
1,081
–
–
–
–
–
–
–
–
–
(1,081)
(1,081)
363,971
362,301
97,582
32,297
10,209
5,060
–
Segment revenues
444,096
45,204
13,860
5,370
(1,081)
507,449
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits
Accident and health claims and claim
adjustment expenses
Increase in insurance contract liabilities
Investment contract benefits
Policyholder dividends resulting from
participation in profits
Underwriting and policy acquisition costs
Finance costs
Administrative expenses
Other expenses
Including: inter-segment expenses
Statutory insurance fund contribution
(219,944)
(1,737)
(20)
–
(93,668)
(2,076)
(33,328)
(24,921)
(4,054)
(18,293)
(6,345)
(1,044)
(546)
(16,858)
(15,803)
(188)
(163)
(5,528)
(129)
(3,811)
(327)
(33)
(103)
(4,151)
(38)
–
–
(3,813)
(15)
(3,136)
(840)
(4)
(94)
–
–
–
–
–
(1,307)
(122)
(2,218)
(997)
–
–
–
–
–
–
–
–
–
–
1,081
1,081
–
(221,701)
(21,009)
(109,509)
(2,264)
(33,491)
(35,569)
(4,320)
(27,458)
(7,428)
–
(743)
Segment benefits, claims and expenses
(403,175)
(44,647)
(12,107)
(4,644)
1,081
(463,492)
Share of profit of associates and joint ventures, net
Segment results
Income tax
Net profit
Attributable to
– Equity holders of the Company
– Non-controlling interests
Other comprehensive income attributable
to equity holders of the Company
Depreciation and amortisation
–
40,921
–
557
–
1,753
1,974
2,700
6,359
1,388
202
263
23
240
492
145
–
–
–
–
1,974
45,931
(10,744)
35,187
34,699
488
7,076
2,036
160
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
5
SEGMENT INFORMATION (continued)
Life
Health
Accident
Others
Elimination
Total
As at 31 December 2015
RMB million
Assets
Financial assets (including
cash and cash equivalents)
Others
Segment assets
Unallocated
Property, plant and equipment
Others
Total
Liabilities
Insurance contracts
Investment contracts
Securities sold under agreements to repurchase
Others
Segment liabilities
Unallocated
Others
Total
2,243,403
7,904
2,251,307
69,565
4,917
74,482
7,968
475
8,443
14,900
47,175
62,075
1,652,469
74,046
29,329
94,589
1,850,433
57,024
10,060
931
3,278
71,293
6,492
–
108
401
7,001
–
–
986
3,499
4,485
–
–
–
–
–
–
–
–
2,335,836
60,471
2,396,307
26,974
25,034
2,448,315
1,715,985
84,106
31,354
101,767
1,933,212
188,889
2,122,101
161
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
6
PROPERTY, PLANT AND EQUIPMENT
Office
equipment,
furniture and
fixtures
Buildings
Motor Assets under
vehicles
Leasehold
construction improvements
Total
RMB million
Cost
As at 1 January 2016
Transfers upon completion
Additions
Disposals
24,253
1,176
37
(104)
6,616
–
653
(432)
1,387
–
177
(140)
7,565
(1,438)
4,896
(475)
1,308
256
16
(27)
41,129
(6)
5,779
(1,178)
As at 31 December 2016
25,362
6,837
1,424
10,548
1,553
45,724
Accumulated depreciation
As at 1 January 2016
Charge for the year
Disposals
(7,446)
(901)
36
(4,738)
(622)
426
(1,005)
(130)
137
As at 31 December 2016
(8,311)
(4,934)
(998)
Impairment
As at 1 January 2016
Charge for the year
Disposals
As at 31 December 2016
Net book value
As at 1 January 2016
(24)
–
–
(24)
–
–
–
–
16,783
1,878
As at 31 December 2016
17,027
1,903
–
–
–
–
382
426
–
–
–
–
–
–
–
–
7,565
10,548
(942)
(148)
22
(14,131)
(1,801)
621
(1,068)
(15,311)
–
–
–
–
366
485
(24)
–
–
(24)
26,974
30,389
162
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
6
PROPERTY, PLANT AND EQUIPMENT (continued)
Office
equipment,
furniture and
fixtures
Buildings
Motor
vehicles
Assets under
construction
Leasehold
improvements
Total
RMB million
Cost
As at 1 January 2015
Transfers upon completion
Additions
Disposals
22,777
1,486
54
(64)
6,676
6
352
(418)
1,392
–
128
(133)
6,333
(1,686)
2,981
(63)
1,246
172
13
(123)
38,424
(22)
3,528
(801)
As at 31 December 2015
24,253
6,616
1,387
7,565
1,308
41,129
Accumulated depreciation
As at 1 January 2015
Charge for the year
Disposals
(6,640)
(839)
33
(4,473)
(658)
393
(996)
(135)
126
As at 31 December 2015
(7,446)
(4,738)
(1,005)
Impairment
As at 1 January 2015
Charge for the year
Disposals
As at 31 December 2015
Net book value
As at 1 January 2015
(24)
–
–
(24)
–
–
–
–
16,113
2,203
As at 31 December 2015
16,783
1,878
–
–
–
–
396
382
–
–
–
–
–
–
–
–
6,333
7,565
(943)
(116)
117
(13,052)
(1,748)
669
(942)
(14,131)
–
–
–
–
303
366
(24)
–
–
(24)
25,348
26,974
163
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
7
INvESTMENT PROPERTIES
Cost
As at 1 January 2016
Additions
As at 31 December 2016
Accumulated depreciation
As at 1 January 2016
Charge for the year
As at 31 December 2016
Net book value
As at 1 January 2016
As at 31 December 2016
Fair value
As at 1 January 2016
As at 31 December 2016
Buildings
RMB million
1,435
–
1,435
(198)
(46)
(244)
1,237
1,191
2,238
2,201
164
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
7
INvESTMENT PROPERTIES (continued)
Cost
As at 1 January 2015
Additions
As at 31 December 2015
Accumulated depreciation
As at 1 January 2015
Charge for the year
As at 31 December 2015
Net book value
As at 1 January 2015
As at 31 December 2015
Fair value
As at 1 January 2015
As at 31 December 2015
Buildings
RMB million
1,435
–
1,435
(152)
(46)
(198)
1,283
1,237
2,080
2,238
The Company leases part of its investment properties to its subsidiaries and charges rentals based on the areas
occupied by the respective entities. These properties are categorised as property, plant and equipment of the Group
in the consolidated statement of financial position.
The Group has no restrictions on the use of its investment properties and no contractual obligations to each
investment property purchased, constructed or developed or for repairs, maintenance and enhancements.
There were no investment properties without title certificates as at 31 December 2016.
The fair value of investment properties of the Group as at 31 December 2016 amounted to RMB2,201 million
(as at 31 December 2015: RMB2,238 million), which was estimated by the Group having regards to valuations
performed by an independent appraiser. The investment properties were classified as Level 3 in the fair value
hierarchy.
The Group uses the market comparison approach as its primary method to estimate the fair value of its investment
properties. Under the market comparison approach, the estimated fair value of a property is based on the
average sale price of comparable properties recently sold, with consideration of the comprehensive adjustment
coefficient, which is composed of a number of adjusting factors, including the time and the conditions of sale, the
geographical location, age, decoration, floor area, lot size of the property and other factors.
Under the market comparison approach, an increase (decrease) in the comprehensive adjustment coefficient will
result in an increase (decrease) in the fair value of investment properties.
165
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
8
INvESTMENTS IN ASSOCIATES AND JOINT vENTURES
As at 1 January
Change of the cost
Share of profit or loss
Declared dividends
Other equity movements
Provision of impairment (i)
As at 31 December
2016
RMB million
2015
RMB million
47,175
68,387
5,855
(820)
(831)
–
119,766
44,390
766
2,984
(604)
649
(1,010)
47,175
(i)
The Group’s investments in associates and joint ventures are unlisted except for Sino-Ocean Group Holding
Limited (“Sino-Ocean”), which is listed on the Stock Exchange of Hong Kong Limited. On 31 December
2016, the stock price of Sino-Ocean was HKD3.47 per share. As at 31 December 2015, an impairment loss
of RMB1.01 billion for the investment in Sino-Ocean had been made by the Group. The Group performed
an impairment test to this investment on 31 December 2016. The recoverable amount of this investment
valued by the Group approximated to the carrying amount and therefore no impairment loss was made for
this investment in 2016.
Accounting
Method
As at 31
December
2015
Cost
Change
of the
cost
Share of
profit
or loss
Other
Declared
equity
dividends movements
Provision
of
impairment
As at 31
December
2016
Percentage Accumulated
amount of
of equity
impairment
interest
Movement
Associates
CGB (i)
Sino-Ocean (ii)
China Life Property &
Casualty Insurance
Company Limited
(“CLP&C”)
COFCO Futures
Company Limited
(“COFCO Futures”)
Sinopec Sichuan to East
China Gas Pipeline
Co., Ltd.
(“Pipeline Company”) (iii)
Others (iv)
Subtotal
Joint ventures
China Life (Sanya) Health
Investments Co., Ltd
(“Sanya Company”)
Others (iv)
Subtotal
Total
Equity Method
Equity Method
32,162
11,245
22,553
12,397
23,492
–
4,675
551
–
(248)
(491)
(20)
Equity Method
6,000
7,812
Equity Method
1,339
1,397
–
–
463
(135)
(211)
22
–
–
Equity Method
Equity Method
20,000
9,948
–
246
20,000
9,698
–
285
–
(266)
–
444
80,694
44,405
53,190
5,996
(649)
(278)
Equity Method
Equity Method
306
18,068
306
2,464
–
15,197
(5)
(136)
–
(171)
–
(553)
18,374
2,770
15,197
(141)
(171)
(553)
99,068
47,175
68,387
5,855
(820)
(831)
–
–
–
–
–
–
–
–
–
–
–
50,229
12,680
43.686%
29.991%
–
(1,010)
7,929
40.00%
1,419
35.00%
20,000
10,407
43.86%
–
–
–
–
102,664
(1,010)
301
16,801
51.00%
–
–
17,102
–
119,766
(1,010)
166
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
8
INvESTMENTS IN ASSOCIATES AND JOINT vENTURES (continued)
(i) On 29 February 2016, the Company entered into an acquisition agreement with Citigroup Inc.
(“Citigroup”) and a tripartite share transfer agreement with IBM Credit LLC (“IBM Credit”) and Citigroup.
According to the investment agreements, the Company acquired 3,648,276,645 shares of CGB from
Citigroup and IBM Credit (3,080,479,452 shares from Citigroup and 567,797,193 shares from IBM
Credit) with a total consideration of approximately RMB23.3 billion at RMB6.39 per share. The transaction
was settled on 29 August 2016, after which the Company holds 43.686% of CGB’s equity interest. The
Company imposes a significant influence over CGB’s financial and operating decisions through its Board
of Directors, and therefore CGB has been accounted for as an associate. The new investment cost of CGB
includes the capitalised direct cost of the transaction.
(ii) The 2015 final dividend of HKD0.05 in cash per ordinary share was approved and declared in the Annual
General Meeting of Sino-Ocean on 12 May 2016. The Company received a cash dividend amounting
to RMB95 million. The 2016 interim dividend of HKD0.079 in cash per ordinary share was approved
and declared by the board of directors of Sino-Ocean on 18 August 2016. The Company received a cash
dividend amounting to RMB153 million.
(iii)
In December 2016, the Company contributed RMB20 billion in Pipeline Company, holding 43.86% of
its equity interest. According to the provisions of the investment agreement and the articles of Pipeline
Company, the Company can impose a significant influence over Pipeline Company’s financial and operating
decisions through its Board of Directors, and therefore accounted for it as an associate. As at 31 December
2016, the Company had not yet completed the valuation of fair value for the identifiable net assets of
Pipeline Company, therefore the carrying value of investment in Pipeline Company was stated at its
investment cost.
(iv) Others are mainly overseas enterprises invested by the Group. The Group invested in real estate, industrial
logistics assets and other industries through these overseas enterprises.
167
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
8
INvESTMENTS IN ASSOCIATES AND JOINT vENTURES (continued)
As at 31 December 2016, the major associates and joint venture of the Group are as follows:
Name
Associates
CGB
Sino-Ocean
CLP&C
COFCO Futures
Pipeline Company
Joint venture
Sanya Company
Country of incorporation
Percentage of equity interest held
PRC
Hong Kong, PRC
PRC
PRC
PRC
PRC
43.686%
29.991%
40.00%
35.00%
43.86%
51.00%
As at 31 December 2015, the major associates and joint venture of the Group are as follows:
Name
Associates
CGB
Sino-Ocean
CLP&C
COFCO Futures
Joint venture
Sanya Company
Country of incorporation
Percentage of equity interest held
PRC
Hong Kong, PRC
PRC
PRC
PRC
20.00%
29.998%
40.00%
35.00%
51.00%
The following table illustrates the financial information of the Group’s major associates and joint venture as at 31
December 2016 and for the year ended 31 December 2016:
Total assets
Total liabilities
Total equity
Total equity attributable to equity holders
of the associates and joint ventures
Total adjustments (i)
Total equity attributable to equity holders of the
associates and joint ventures after adjustments
Proportion of the Group’s ownership
Gross carrying value of the investments
Impairment
Net carrying value of the investments
Total revenues
Net profit/(loss)
Other comprehensive income
Total comprehensive income
CGB
RMB
million
Sino-Ocean
RMB
million
2,047,592
1,941,618
105,974
151,265
101,935
49,330
105,974
3,163
43,999
(1,576)
109,137
43.686%
50,229
–
50,229
55,318
9,504
(1,070)
8,434
42,423
29.991%
13,690
(1,010)
12,680
37,748
4,446
(164)
4,282
CLP&C
RMB
million
72,773
52,950
19,823
19,823
–
19,823
40.00%
7,929
–
7,929
55,728
1,157
(526)
631
COFCO
Futures
RMB
million
11,287
8,710
2,577
2,496
–
2,496
35.00%
1,419
–
1,419
375
66
–
66
Pipeline
Company
RMB
million
Sanya
Company
RMB
million
37,231
5,014
32,217
32,217
–
32,217
43.86%
20,000
–
20,000
2,339
631
–
631
799
208
591
591
–
591
51.00%
301
–
301
1
(9)
–
(9)
168
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
8
INvESTMENTS IN ASSOCIATES AND JOINT vENTURES (continued)
The following table illustrates the summarised financial information of the Group’s major associates and joint
venture as at 31 December 2015 and for the year ended 31 December 2015:
Total assets
Total liabilities
Total equity
Total equity attributable to equity
holders of the associates and
joint ventures
Total adjustments (i)
Total equity attributable to equity
holders of the associates and joint
ventures after adjustments
Proportion of the Group’s ownership
Gross carrying value of the investments
Impairment
Net carrying value of the investments
Total revenues
Net profit
Other comprehensive income
Total comprehensive income
CGB
RMB
million
Sino-Ocean
RMB
million
1,836,587
1,739,047
97,540
148,185
99,995
48,190
CLP&C
RMB
million
65,634
46,103
19,531
97,540
–
41,231
239
19,531
–
97,540
20.00%
22,553
–
22,553
54,735
9,064
1,028
10,092
41,470
29.998%
13,407
(1,010)
12,397
31,226
2,251
(80)
2,171
19,531
40.00%
7,812
–
7,812
46,829
2,258
379
2,637
COFCO
Futures
RMB
million
Sanya
Company
RMB
million
8,598
6,146
2,452
2,452
–
2,452
35.00%
1,397
–
1,397
390
15
(15)
–
600
–
600
600
–
600
51.00%
306
–
306
–
–
–
–
The Group had no contingent liabilities with the associates and joint ventures as at 31 December 2016 and 31
December 2015. The Group had a capital contribution commitment of RMB2,991 million with a joint venture
as at 31 December 2016 (31 December 2015: Nil). The amount has been included in the capital commitments in
Note 38.
(i)
Including adjustments for the difference of accounting policies, fair value and others.
169
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
9
FINANCIAL ASSETS
9.1 Held-to-maturity securities
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Total
Debt securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed in Singapore
Unlisted
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
97,196
169,001
178,444
150,089
79,438
126,097
146,405
152,135
594,730
504,075
64,192
144
20
530,374
61,916
50
24
442,085
594,730
504,075
The estimated fair value of all held-to-maturity securities was RMB619,152 million as at 31 December 2016
(as at 31 December 2015: RMB550,844 million).
Unlisted debt securities include those traded on the Chinese interbank market.
Debt securities – Contractual maturity schedule
Maturing:
Within one year
After one year but within five years
After five years but within ten years
After ten years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
30,615
71,661
231,608
260,846
594,730
2,000
86,198
167,450
248,427
504,075
170
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
92,442
134,131
84,959
122,308
226,573
207,267
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
112,592
70,978
25,503
17,500
90,250
84,078
24,239
8,700
226,573
207,267
9
FINANCIAL ASSETS (continued)
9.2 Loans
Policy loans
Other loans (i)
Total
Maturing:
Within one year
After one year but within five years
After five years but within ten years
After ten years
Total
(i) Other loans mainly consisted of different types of asset management products. As at 31 December
2016, asset management products of RMB37,679 million (as at 31 December 2015: RMB37,978
million) were owned by the Group, which are issued by China Life Asset Management Company
Limited (“AMC”) (including its subsidiaries), a subsidiary of the Company. The total assets of those
products were RMB114,499 million (as at 31 December 2015: RMB172,983 million). Meanwhile,
the Group also owned asset management products of RMB77,999 million (as at 31 December 2015:
RMB75,936 million) issued by other financial institutions. Asset management products are guaranteed
by third parties or with pledge, or have the fiscal annual budget income as the source of repayment, or
have higher credit rating borrowers. The Group did not guarantee or provide any financing support
for other loans, and considers that the carrying value of other loans represents its maximum risk
exposure.
During the year ended 31 December 2016, the Group’s investment income from the above asset
management products was RMB6,820 million (2015: RMB6,455 million), and the related asset
management fee received by AMC (including its subsidiaries) for all asset management products it
issued was RMB236 million (2015: RMB224 million).
171
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
9
FINANCIAL ASSETS (continued)
9.3 Term deposits
Maturing:
Within one year
After one year but within five years
After five years but within ten years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
185,835
344,790
7,700
181,780
380,842
–
538,325
562,622
As at December 31 2016, term deposits of RMB13.2 billion (2015: Nil) deposited in banks for an oversea
borrowings backed by domestic deposits business are restricted to use. In September 2016, CL Hotel
Investor, L.P. and Glorious Fortune Forever Limited, the subsidiaries of the Company, entered into a
loan agreement with the New York and Seoul branch of the Agricultural Bank of China, respectively.
The Company applied to the Beijing Xicheng branch of the Agricultural Bank of China for an overseas
borrowings backed by domestic deposits business with amounts of RMB6.5 billion and RMB6.7 billion,
respectively, for the above loans.
9.4 Statutory deposits – restricted
Contractual maturity schedule:
Within one year
After one year but within five years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
1,720
4,613
6,333
300
6,033
6,333
Insurance companies in China are required to deposit an amount that equals 20% of their registered capital
with banks in compliance with regulations of the CIRC. These funds may not be used for any purpose other
than for paying off debts during liquidation proceedings.
172
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
9
FINANCIAL ASSETS (continued)
9.5 Available-for-sale securities
Available-for-sale securities, at fair value
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Wealth management products
Others (i)
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
21,653
146,310
188,337
16,708
11,321
15,429
25,713
145,399
206,767
19,298
–
4,722
Subtotal
399,758
401,899
Equity securities
Funds
Common stocks
Preferred stocks
Wealth management products
Others (i)
Subtotal
Available-for-sale securities, at cost
Equity securities
Others (i)
Total
105,290
100,131
27,880
81,854
30,673
163,366
74,629
18,712
50,053
41,050
345,828
347,810
20,837
20,807
766,423
770,516
(i) Other available-for-sale securities mainly include unlisted equity investments, private equity funds and
trust schemes. The Group did not guarantee or provide any financing support for other available-for-
sale securities, and considered that the carrying value of other available-for-sale securities represents its
maximum risk exposure.
173
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
9
FINANCIAL ASSETS (continued)
9.5 Available-for-sale securities (continued)
Debt securities
Listed in Mainland, PRC
Listed in Singapore
Unlisted
Subtotal
Equity securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted
Subtotal
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
37,163
–
362,595
42,022
266
359,611
399,758
401,899
91,011
25,034
232
250,388
85,658
8,391
172
274,396
366,665
368,617
766,423
770,516
Unlisted debt securities include those traded on the Chinese interbank market and those not publicly traded.
Unlisted equity securities include those not traded on stock exchanges, which are mainly open-ended funds
with public market price quotation and wealth management products.
Debt securities – Contractual maturity schedule
Maturing:
Within one year
After one year but within five years
After five years but within ten years
After ten years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
33,261
144,443
113,779
108,275
32,598
135,866
112,419
121,016
399,758
401,899
174
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
9
FINANCIAL ASSETS (continued)
9.6 Securities at fair value through profit or loss
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Others
Subtotal
Equity securities
Funds
Common stocks
Subtotal
Total
Debt securities
Listed in Mainland, PRC
Listed overseas
Unlisted
Subtotal
Equity securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted
Subtotal
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
380
6,762
144,131
3,133
154,406
14,683
40,035
54,718
603
5,689
88,291
401
94,984
6,119
36,887
43,006
209,124
137,990
19,512
89
134,805
154,406
37,614
74
6,284
10,746
54,718
8,852
56
86,076
94,984
32,427
70
6,099
4,410
43,006
209,124
137,990
Unlisted debt securities include those traded on the Chinese interbank market and those not publicly traded.
Unlisted equity securities include those not traded on stock exchanges, which are mainly open-ended funds
with public market price quotation.
175
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
9
FINANCIAL ASSETS (continued)
9.7 Securities purchased under agreements to resell
Maturing:
Within 30 days
After 30 but within 90 days
Total
9.8 Accrued investment income
Bank deposits
Debt securities
Others
Total
Current
Non-current
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
43,518
20
43,538
21,503
–
21,503
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
35,763
17,642
2,540
55,945
44,722
11,223
55,945
31,705
15,703
2,144
49,552
31,218
18,334
49,552
176
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
10 FAIR vALUE OF FINANCIAL ASSETS AND LIABILITIES
The table below presents the carrying value and estimated fair value of major financial assets and liabilities, and
investment contracts:
Carrying value
Estimated fair value (i)
As at 31
As at 31
December 2016 December 2015 December 2016 December 2015
RMB million
RMB million
RMB million
RMB million
As at 31
As at 31
Held-to-maturity securities (ii)
Loans (iii)
Term deposits
Statutory deposits – restricted
Available-for-sale securities, at fair value
Securities at fair value through profit or loss
Securities purchased under agreements to resell
Cash and cash equivalents
Investment contracts (iii)
Financial liabilities at fair value through profit or loss
Securities sold under agreements to repurchase
Bonds payable (iii)
Interest-bearing loans and borrowings
594,730
226,573
538,325
6,333
745,586
209,124
43,538
67,046
(195,706)
(2,031)
(81,088)
(37,998)
(16,170)
504,075
207,267
562,622
6,333
749,709
137,990
21,503
76,096
(84,106)
(856)
(31,354)
(67,994)
(2,643)
619,152
231,005
538,325
6,333
745,586
209,124
43,538
67,046
(192,373)
(2,031)
(81,088)
(38,204)
(16,170)
550,844
207,267
562,622
6,333
749,709
137,990
21,503
76,096
(82,644)
(856)
(31,354)
(69,580)
(2,643)
(i)
The estimates and judgements to determine the fair value of financial assets are described in Note 3.2.
(ii) The fair value of held-to-maturity securities is determined by reference with other debt securities which are
measured by fair value. Please refer to Note 4.3. The fair value of held-to-maturity securities under Level 1
was RMB76,299 million and that under Level 2 was RMB542,853 million as at 31 December 2016 (as at 31
December 2015: Level 1 RMB29,777 million and Level 2 RMB521,067 million).
(iii)
Investment contracts at fair value through profit or loss have quoted prices in active markets, and therefore,
their fair value was classified as Level 1.
The fair value of policy loans approximated its carrying amounts. The fair values of other loans and
investment contracts at amortised cost, and bonds payable were determined using valuation techniques,
with consideration of the present value of expected cash flows arising from contracts using a risk-adjusted
discount rate, allowing for the risk-free rate available on the valuation date, credit risk and risk margin
associated with the future cash flows. The fair values of other loans and investment contracts at amortised
cost, and bonds payable were classified as Level 3.
177
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
11 PREMIUMS RECEIvABLE
As at 31 December 2016, the carrying value of premiums receivable within one year was RMB13,346 million (as
at 31 December 2015: RMB11,899 million).
12 REINSURANCE ASSETS
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
1,783
123
125
103
2,134
351
1,783
2,134
1,246
37
87
50
1,420
174
1,246
1,420
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
6,571
5,855
2,814
1,718
927
911
69
3,148
22,013
15,665
6,348
22,013
6,341
5,998
2,520
1,023
772
4,242
936
1,810
23,642
17,274
6,368
23,642
Long-term insurance contracts ceded (Note 14)
Due from reinsurance companies
Ceded unearned premiums (Note 14)
Claims recoverable from reinsurers (Note 14)
Total
Current
Non-current
Total
13 OTHER ASSETS
Prepaid to constructors
Land use rights
Automated policy loans
Disbursements
Due from related parties
Investments receivable
Tax refundable
Others
Total
Current
Non-current
Total
178
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
14
INSURANCE CONTRACTS
(a) Process used to decide on assumptions
(i)
For the insurance contracts of which future insurance benefits are affected by investment yields of
corresponding investment portfolios, the discount rate assumption is based on expected investment
returns of the asset portfolio backing these liabilities, considering the impacts of time value on
reserves.
In developing discount rate assumptions, the Group considers investment experience, the current
investment portfolio and trend of the relevant yield curves. The assumed discount rates reflect the
future economic outlook as well as the Group’s investment strategy. The assumed discount rates with
risk margin are as follows:
As at 31 December 2016
As at 31 December 2015
Discount rate assumptions
4.45%~4.85%
4.80%~5.00%
For the insurance contracts of which future insurance benefits are not affected by investment yields of
the corresponding investment portfolios, the discount rate assumption is based on the “Yield curve of
reserve computation benchmark for insurance contracts”, published on the “China Bond” website with
consideration of liquidity spreads, taxation and other relevant factors. The assumed discount rates with
risk margin for the past two years are as follows:
As at 31 December 2016
As at 31 December 2015
Discount rate assumptions
3.23%~5.32%
3.42%~5.78%
There is uncertainty on the discount rate assumption, which is affected by factors such as future
macro-economy, monetary and foreign exchange policies, capital market and availability of investment
channels of insurance funds. The Group determines the discount rate assumption based on the
information obtained at the end of each reporting period including consideration of risk margin.
179
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
14
INSURANCE CONTRACTS (continued)
(a) Process used to decide on assumptions (continued)
(ii) The mortality and morbidity assumptions are based on the Group’s historical mortality and morbidity
experience. The assumed mortality rates and morbidity rates vary with the age of the insured and
contract type.
The Group bases its mortality assumptions on China Life Insurance Mortality Table (2000-2003),
adjusted where appropriate to reflect the Group’s recent historical mortality experience. The main
source of uncertainty with life insurance contracts is that epidemics and wide-ranging lifestyle changes
could result in deterioration in future mortality experience, thus leading to an inadequate reserving of
liability. Similarly, improvements in longevity due to continuing advancements in medical care and
social conditions may expose the Group to longevity risk.
The Group bases its morbidity assumptions for critical illness products on analysis of historical
experience and expectations of future developments. There are two main sources of uncertainty. First,
wide-ranging lifestyle changes could result in future deterioration in morbidity experience. Second,
future development of medical technologies and improved coverage of medical facilities available
to policyholders may bring forward the timing of diagnosing critical illness, which demands earlier
payment of the critical illness benefits. Both could ultimately result in an inadequate reserving of
liability if current morbidity assumptions do not properly reflect such trends.
Risk margin is considered in the Group’s mortality and morbidity assumptions.
(iii) Expense assumptions are based on expected unit costs with the consideration of previous expense
studies and future trends. Expense assumptions are affected by certain factors such as future inflation
and market competition which bring uncertainty to these assumptions. The Group considers risk
margin for expense assumptions based on information obtained at the end of each reporting period.
Components of expense assumptions include cost per policy and percentage of premium as follows:
Individual Life
Group Life
RMB Per Policy
% of Premium
RMB Per Policy
% of Premium
As at 31 December 2016
As at 31 December 2015
37.00~45.00
37.00~45.00
0.85%~0.90%
0.85%~0.90%
15.00
15.00
0.90%
0.90%
(iv) The lapse rates and other assumptions are affected by certain factors, such as future macro-economy,
availability of financial substitutions, and market competition, which bring uncertainty to these
assumptions. The lapse rates and other assumptions are determined with reference to creditable past
experience, current conditions, future expectations and other information.
180
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
14
INSURANCE CONTRACTS (continued)
(a) Process used to decide on assumptions (continued)
(v) The Group applied a consistent method to determine risk margin. The Group considers risk margin
for discount rate, mortality and morbidity and expense assumptions to compensate for the uncertain
amount and timing of future cash flow. When determining risk margin, the Group considers historical
experience, future expectations and other factors. The Group determines the risk margin level by itself
as the regulations have not imposed any specific requirement on it.
The Group adopted a consistent process to decide on assumptions for the insurance contracts
disclosed in this note. On each reporting date, the Group reviews the assumptions for reasonable
estimates of liability and risk margin, with consideration of all available information, and taking into
account the Group’s historical experience and expectation of future events.
(b) Net liabilities of insurance contracts
Gross
Long-term insurance contracts
Short-term insurance contracts
– Claims and claim adjustment expenses
– Unearned premiums
Total, gross
Recoverable from reinsurers
Long-term insurance contracts (Note 12)
Short-term insurance contracts
– Claims and claim adjustment expenses (Note 12)
– Unearned premiums (Note 12)
Total, ceded
Net
Long-term insurance contracts
Short-term insurance contracts
– Claims and claim adjustment expenses
– Unearned premiums
Total, net
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
1,825,956
1,698,773
11,538
10,492
9,268
7,944
1,847,986
1,715,985
(1,783)
(1,246)
(103)
(125)
(50)
(87)
(2,011)
(1,383)
1,824,173
1,697,527
11,435
10,367
9,218
7,857
1,845,975
1,714,602
181
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
14
INSURANCE CONTRACTS (continued)
(c) Movements in liabilities of short-term insurance contracts
The table below presents movements in claims and claim adjustment expense reserve:
2016
RMB million
2015
RMB million
2,135
5,181
7,316
(12,349)
(6,865)
20,497
669
9,268
1,748
7,520
9,268
Net
7,165
7,857
(7,165)
7,857
Notified claims
Incurred but not reported
Total as at 1 January – Gross
Cash paid for claims settled
– Cash paid for current year claims
– Cash paid for prior year claims
Claims incurred
– Claims arising in current year
– Claims arising in prior years
Total as at 31 December – Gross
Notified claims
Incurred but not reported
Total as at 31 December – Gross
The table below presents movements in unearned premium reserves:
1,748
7,520
9,268
(16,364)
(8,877)
27,120
391
11,538
2,085
9,453
11,538
2016
RMB million
Ceded
Net
Gross
2015
RMB million
Ceded
As at 1 January
Increase
Release
Gross
7,944
10,492
(7,944)
(87)
(125)
87
7,857
10,367
(7,857)
7,230
7,944
(7,230)
(65)
(87)
65
(87)
As at 31 December
10,492
(125)
10,367
7,944
182
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
14
INSURANCE CONTRACTS (continued)
(d) Movements in liabilities of long-term insurance contracts
The table below presents movements in the liabilities of long-term insurance contracts:
As at 1 January
Premiums
Release of liabilities (i)
Accretion of interest
Change in assumptions
– Change in discount rates
– Change in other assumptions (ii)
Other movements
2016
RMB million
2015
RMB million
1,698,773
390,438
(353,048)
73,644
14,262
474
1,413
1,588,900
331,582
(300,990)
68,741
8,510
987
1,043
As at 31 December
1,825,956
1,698,773
(i)
The release of liabilities mainly consists of release due to death or other termination and related
expenses, release of residual margin and change of reserves for claims and claim adjustment expenses.
(ii) For the year ended 31 December 2016, the change in other assumptions was mainly caused by
the change in morbidity rate assumptions of certain products, which increased insurance contract
liabilities by RMB464 million. This change reflected the Group’s most recent experience and future
expectations about the morbidity rates as at the reporting date. Changes in assumptions other than
morbidity rates increased insurance contract liabilities by RMB10 million.
For the year ended 31 December 2015, the change in other assumptions was mainly caused by
the change in morbidity rate assumptions of certain products, which increased insurance contract
liabilities by RMB980 million. This change reflected the Group’s most recent experience and future
expectations about morbidity rate as at the reporting date. Changes in assumptions other than
morbidity rates increased insurance contract liabilities by RMB7 million.
15
INvESTMENT CONTRACTS
Investment contracts with DPF at amortised cost
Investment contracts without DPF
– At amortised cost
– At fair value through profit or loss
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
53,688
142,006
12
195,706
50,295
33,797
14
84,106
183
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
15
INvESTMENT CONTRACTS (continued)
The table below presents movements of investment contracts with DPF:
As at 1 January
Deposits received
Deposits withdrawn, payments on death and other benefits
Policy fees deducted from account balances
Interest credited
As at 31 December
2016
RMB million
2015
RMB million
50,295
4,680
(2,357)
(36)
1,106
47,962
3,746
(2,543)
(34)
1,164
53,688
50,295
16
INTEREST-BEARING LOANS AND BORROWINGS
Maturity date
Interest rate
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
Guaranteed loans
Guaranteed loans
Guaranteed loans
Guaranteed loans
Total
17 June 2019
27 September 2019
30 September 2019
9 June 2017
3.54%
2.30%
2.40%
1.50%
2,339
6,579 –
6,521 –
731 –
2,643
16,170
2,643
17 BONDS PAYABLE
As at 31 December 2016, all bonds payable were subordinated bonds with a total carrying value of RMB37,998
million (as at 31 December 2015: RMB67,994 million) and the par value of RMB38,000 million (as at 31
December 2015: RMB68,000 million).
Issue date
Maturity date
Interest rate p.a.
26 October 2011
29 June 2012
5 November 2012
Total
26 October 2021
29 June 2022
5 November 2022
5.50%
4.70%
4.58%
Par value
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
–
28,000
10,000
38,000
30,000
28,000
10,000
68,000
184
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
17 BONDS PAYABLE (continued)
The Company issued the above three subordinated bonds with a maturity term of 10 years to qualified investors
who met the relevant regulatory requirements. The coupon rates per annum for the first 5 years are 5.50%, 4.70%,
4.58%, respectively, for bonds issued on 26 October 2011, 29 June 2012 and 5 November 2012. The Company
has the right to call the subordinated bonds at par at the end of the fifth year after issuance. If the Company
does not exercise the call option, the coupon rate per annum for the remaining 5 years will be raised by 200 basis
points. On 26 October 2016, the Company exercised the option right to redeem the subordinated bonds issued on
26 October 2011, and redeemed all of the subordinated bonds registered on the record date of redemption, with
the amount of RMB30,000 million.
Subordinated bonds are measured at amortised cost as described in Note 2.14.
18 SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Interbank market
Stock exchange market
Total
Maturing:
Within 30 days
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
65,479
15,609
81,088
81,088
81,088
27,922
3,432
31,354
31,354
31,354
As at 31 December 2016, bonds with a carrying value of RMB76,207 million (as at 31 December 2015:
RMB28,802 million) were pledged as collateral for financial assets sold under agreements to repurchase resulting
from repurchase transactions entered into by the Group in the interbank market.
For debt repurchase transactions through the stock exchange, the Group is required to deposit certain exchange-
traded bonds into a collateral pool with fair value converted at a standard rate pursuant to the stock exchange’s
regulation which should be no less than the balance of the related repurchase transaction. As at 31 December
2016, the carrying value of securities deposited in the collateral pool was RMB81,280 million (as at 31 December
2015: RMB67,169 million). The collateral is restricted from trading during the period of the repurchase
transaction.
185
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
19 OTHER LIABILITIES
Interest payable to policyholders
Salary and welfare payable
Payable to third party holders of consolidated trust schemes
Brokerage and commission payable
Agent deposits
Payable to constructors
Interest payable of debts
Tax payable
Stock appreciation rights (Note 31)
Others
Total
Current
Non-current
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
8,006
7,234
5,488
3,713
1,611
1,032
742
657
654
7,699
36,836
36,836
–
36,836
6,410
5,220
2,550
2,598
1,117
634
1,045
511
845
5,584
26,514
26,514
–
26,514
20 STATUTORY INSURANCE FUND
As required by the CIRC Order [2008] No. 2, “Measures for Administration of Statutory Insurance Fund”, all
insurance companies have to pay the statutory insurance fund contribution to the CIRC from 1 January 2009.
The Group is subject to the statutory insurance fund contribution, (i) at 0.15% and 0.05% of premiums and
accumulated policyholder deposits from life policies with guaranteed benefits and life policies without guaranteed
benefits, respectively; (ii) at 0.8% and 0.15% of premiums from short-term health policies and long-term health
policies, respectively; (iii) at 0.8% of premiums from accident insurance contracts, at 0.08% and 0.05% of
accumulated policyholder deposits from accident investment contracts with guaranteed benefits and without
guaranteed benefits, respectively. When the accumulated statutory insurance fund contributions reach 1% of total
assets, no additional contribution to the statutory insurance fund is required.
186
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
21
INvESTMENT INCOME
Debt securities
– held-to-maturity securities
– available-for-sale securities
– at fair value through profit or loss
Equity securities
– available-for-sale securities
– at fair value through profit or loss
Bank deposits
Loans
Securities purchased under agreements to resell
Others
Total
For the year ended 31 December
2015
RMB million
2016
RMB million
24,854
17,499
5,683
19,744
527
27,851
12,018
971
–
109,147
24,541
18,526
1,382
8,950
326
32,285
11,115
368
89
97,582
For the year ended 31 December 2016, the interest income included in investment income was RMB88,876
million (2015: RMB88,306 million). All interest income was accrued using the effective interest method.
22 NET REALISED GAINS ON FINANCIAL ASSETS
Debt securities
Realised gains
Impairment
Subtotal
Equity securities
Realised gains
Impairment
Subtotal
Total
For the year ended 31 December
2015
RMB million
2016
RMB million
189
(143)
46
8,505
(2,513)
5,992
6,038
(4)
–
(4)
32,622
(321)
32,301
32,297
Net realised gains on financial assets are from available-for-sale securities.
During the year ended 31 December 2016, the Group recognised an impairment charge of RMB1,615 million
(2015: RMB147 million) of available-for-sale funds, an impairment charge of RMB898 million (2015: RMB174
million) of available-for-sale common stocks, and an impairment charge of RMB143 million (2015: Nil) of
available-for-sale debt securities, for which the Group determined that objective evidence of impairment existed.
187
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
23 NET FAIR vALUE GAINS/(LOSSES) THROUGH PROFIT OR LOSS
Debt securities
Equity securities
Stock appreciation rights
Financial liabilities at fair value through profit or loss
Total
24
INSURANCE BENEFITS AND CLAIMS EXPENSES
For the year ended 31 December
2015
RMB million
2016
RMB million
(918)
(6,319)
191
(48)
766
9,324
180
(61)
(7,094)
10,209
Gross
RMB million
Ceded
RMB million
Net
RMB million
For the year ended 31 December 2016
Life insurance death and other benefits
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
253,824
27,519
127,156
(667)
(250)
(537)
253,157
27,269
126,619
Total
408,499
(1,454)
407,045
For the year ended 31 December 2015
Life insurance death and other benefits
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
Total
221,949
21,166
109,847
352,962
(248)
(157)
(338)
(743)
221,701
21,009
109,509
352,219
25
INvESTMENT CONTRACT BENEFITS
Benefits of investment contracts are mainly the interest credited to investment contracts.
26 FINANCE COSTS
Interest expenses for bonds payable
Interest expenses for securities sold under agreements to repurchase
Interest expenses for interest-bearing loans and borrowings
Total
For the year ended 31 December
2015
RMB million
2016
RMB million
3,126
1,460
181
4,767
3,430
784
106
4,320
188
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
27 PROFIT BEFORE INCOME TAX
Profit before income tax is stated after charging/(crediting) the following:
Employee salaries and welfare costs
Housing benefits
Contribution to the defined contribution pension plan
Depreciation and amortisation
Foreign exchange losses/(gains)
Auditor’s remuneration
For the year ended 31 December
2015
RMB million
2016
RMB million
15,955
838
1,798
2,083
(582)
58
13,045
824
1,678
2,036
(812)
60
28 TAXATION
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income tax relates to the same tax authority.
(a) The amount of taxation charged to net profit represents:
Current taxation – Enterprise income tax
Deferred taxation
Taxation charges
For the year ended 31 December
2015
RMB million
2016
RMB million
5,200
(943)
4,257
15,408
(4,664)
10,744
(b) The reconciliation between the Group’s effective tax rate and the statutory tax rate of 25% in the PRC
(2015: 25%) is as follows:
Profit before income tax
Tax computed at the statutory tax rate
Non-taxable income (i)
Expenses not deductible for tax purposes (i)
Unused tax losses
Tax losses utilised from previous periods
Others
For the year ended 31 December
2015
RMB million
2016
RMB million
23,842
5,961
(6,080)
4,259
58
(49)
108
45,931
11,483
(3,324)
2,655
1
(41)
(30)
Income tax at the effective tax rate
4,257
10,744
(i)
Non-taxable income mainly includes interest income from government bonds, and dividend income from
applicable equity securities, etc. Expenses not deductible for tax purposes mainly include brokerages, commissions,
donations and other expenses that do not meet the criteria for deduction according to the relevant tax regulations.
189
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
28 TAXATION (continued)
(c) As at 31 December 2016 and 2015, deferred income tax was calculated in full on temporary differences
under the liability method using a principal tax rate of 25%. The movements in deferred tax assets and
liabilities during the year are as follows:
Insurance
RMB million
(i)
Investments
RMB million
(ii)
Others
RMB million
(iii)
Total
RMB million
(8,316)
3,673
(12,095)
843
1,036
148
Deferred tax assets/(liabilities)
As at 1 January 2015
(Charged)/credited to net profit
(Charged)/credited to other
comprehensive income
– Available-for-sale securities
– Portion of fair value changes on
available-for-sale securities
attributable to participating
policyholders
– Others
–
(5,445)
3,192
–
–
11
As at 31 December 2015
(1,451)
(16,686)
As at 1 January 2016
(Charged)/credited to net profit
(Charged)/credited to other
comprehensive income
– Available-for-sale securities
– Portion of fair value changes on
available-for-sale securities
attributable to participating
policyholders
– Others
(1,451)
(614)
(16,686)
1,126
–
12,639
(4,343)
–
–
(54)
–
–
–
1,184
1,184
431
–
–
–
(19,375)
4,664
(5,445)
3,192
11
(16,953)
(16,953)
943
12,639
(4,343)
(54)
(7,768)
As at 31 December 2016
(6,408)
(2,975)
1,615
(i)
The deferred tax arising from the insurance category is mainly related to the change of long-term
insurance contract liabilities at 31 December 2008 as a result of the first time adoption of IFRSs
in 2009 and the temporary differences of short-term insurance contract liabilities and policyholder
dividends payable.
(ii) The deferred tax arising from the investments category is mainly related to the temporary differences
of unrealised gains/(losses), which includes available-for-sale securities, securities at fair value through
profit or loss, and others.
(iii) The deferred tax arising from the others category is mainly related to the temporary differences of
employee salaries and welfare costs payable.
190
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
28 TAXATION (continued)
(continued)
(c)
Unrecognised deductible tax losses of the Group amounted to RMB807 million as at 31 December 2016
(as at 31 December 2015: RMB727 million). Unrecognised deductible temporary differences of the Group
amounted to RMB219 million as at 31 December 2016 (as at 31 December 2015: RMB186 million).
(d) The analysis of deferred tax assets and deferred tax liabilities is as follows:
Deferred tax assets:
– deferred tax assets to be recovered after 12 months
– deferred tax assets to be recovered within 12 months
Subtotal
Deferred tax liabilities:
– deferred tax liabilities to be settled after 12 months
– deferred tax liabilities to be settled within 12 months
Subtotal
Net deferred tax liabilities
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
3,024
3,626
6,650
9,528
2,639
12,167
(13,037)
(1,381)
(26,850)
(2,270)
(14,418)
(29,120)
(7,768)
(16,953)
29 NET PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Net profit attributable to equity holders of the Company is recognised in the financial statements of the Company
to the extent of RMB14,014 million (2015: RMB32,638 million).
30 EARNINGS PER SHARE
There is no difference between basic and diluted earnings per share. The basic and diluted earnings per share for
the year ended 31 December 2016 are based on the net profit for the year attributable to ordinary equity holders
of the Company and the weighted average number of 28,264,705,000 ordinary shares (2015: 28,264,705,000
ordinary shares).
191
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
31 STOCK APPRECIATION RIGHTS
The Board of Directors of the Company approved, on 5 January 2006, an award of stock appreciation rights of
4.05 million units and on 21 August 2006, another award of stock appreciation rights of 53.22 million units to
eligible employees. The exercise prices of the two awards were HKD5.33 and HKD6.83, respectively, the average
closing price of shares in the five trading days prior to 1 July 2005 and 1 January 2006, the dates for vesting and
exercise price setting purposes of this award. The exercise prices of stock appreciation rights were the average
closing price of the shares in the five trading days prior to the date of the award. Upon the exercise of stock
appreciation rights, exercising recipients will receive payments in RMB, subject to any withholding tax, equal to
the number of stock appreciation rights exercised times the difference between the exercise price and market price
of the H shares at the time of exercise.
Stock appreciation rights have been awarded in units, with each unit representing the value of one H share. No
shares of common stock will be issued under the stock appreciation rights plan. According to the Company’s
plan, all stock appreciation rights will have an exercise period of five years from the date of award and will not
be exercisable before the fourth anniversary of the date of award unless specific market or other conditions have
been met. On 26 February 2010, the Board of Directors of the Company extended the exercise period of all stock
appreciation rights, which is also subject to government policy.
All the stock appreciation rights awarded were fully vested as at 31 December 2016. As at 31 December 2016,
there were 55.01 million units outstanding and exercisable (as at 31 December 2015: 55.01 million units). As at
31 December 2016, the amount of intrinsic value for the vested stock appreciation rights was RMB641 million (as
at 31 December 2015: RMB832 million).
The fair value of the stock appreciation rights is estimated on the date of valuation at each reporting date using
lattice-based option valuation models based on expected volatility from 25% to 45%, an expected dividend yield of
no higher than 3% and a risk-free interest rate ranging from 0.10% to 0.81%.
The Company recognised a gain of RMB191 million in the net fair value through profit or loss in the consolidated
comprehensive income representing the fair value change of the rights during the year ended 31 December 2016
(2015: fair value gain of RMB180 million). RMB641 million and RMB13 million were included in salary and
staff welfare payable included under other liabilities for the units not exercised and exercised but not paid as at
31 December 2016 (as at 31 December 2015: RMB832 million and RMB13 million), respectively. There was no
unrecognised compensation cost for the stock appreciation rights as at 31 December 2016 (as at 31 December
2015: Nil).
32 DIvIDENDS
Pursuant to the shareholders’ approval at the Annual General Meeting on 30 May 2016, a final dividend of
RMB0.42 (inclusive of tax) per ordinary share totalling RMB11,871 million in respect of the year ended 31
December 2015 was declared and paid in 2016. The dividend has been recorded in the consolidated financial
statements for the year ended 31 December 2016.
A distribution of RMB386 million (inclusive of tax) to the holders of Core Tier 2 Capital Securities was approved
by management according to the authorization by the Board of Directors in 2016.
Pursuant to a resolution passed at the meeting of the Board of Directors on 23 March 2017, a final dividend of
RMB0.24 (inclusive of tax) per ordinary share totalling approximately RMB6,784 million for the year ended
31 December 2016 was proposed for shareholders’ approval at the forthcoming Annual General Meeting. The
dividend has not been recorded in the consolidated financial statements for the year ended 31 December 2016.
192
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
33 SIGNIFICANT RELATED PARTY TRANSACTIONS
(a) Related parties with control relationship
Information of the parent company is as follows:
Name
CLIC
Location of
registration Principal business
Relationship with
the Company
Nature of
ownership
Legal
representative
Immediate and
ultimate holding
company
State-owned
Yang
Mingsheng
Beijing,
China
Insurance services including receipt
of premiums and payment of benefits
in respect of the in-force life, health,
accident and other types of personal
insurance business, and the reinsurance
business; holding or investing in
domestic and overseas insurance
companies or other financial insurance
institutions; fund management
business permitted by national laws
and regulations or approved by the
State Council of the People’s Republic
of China; and other businesses
approved by insurance regulatory
agencies.
(b) Subsidiaries
Refer to Note 39(c) for the basic and related information of subsidiaries.
(c) Associates and joint ventures
Refer to Note 8 for the basic and related information of associates and joint ventures.
(d) Other related parties
Significant related parties
Relationship with the Company
China Life Real Estate Co., Limited (“CLRE”)
China Life Insurance (Overseas) Company Limited
Under common control of CLIC
Under common control of CLIC
(“CL Overseas”)
China Life Investment Holding Company
Limited (“CLI”)
China Life Ecommerce Company Limited
(“CL Ecommerce”)
Under common control of CLIC
Under common control of CLIC
China Life Enterprise Annuity Fund (“EAP”)
A pension fund jointly set up by the Company and others
193
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(e) Registered capital of related parties with control relationship and changes during the year
Increase
million
Decrease
million
As at 31
December 2016
million
As at 31
December 2015
million
RMB4,600
RMB4,000
RMB3,400
–
–
–
Name of related party
CLIC
AMC
China Life Pension Company
Limited (“Pension Company”)
China Life (Suzhou) Pension
and Retirement Investment
Company Limited
(“Suzhou Pension Company”) (i)
CL AMP
CL Wealth
Shanghai Rui Chong
Investment Co., Limited
(“Rui Chong Company”)
China Life (Beijing) Health
Management Co., Limited
(“CL Health”)
China Life Franklin (Shenzhen)
Equity Investment Fund
Management Co., Limited
(“Franklin Shenzhen Company”) (ii)
RMB300
RMB588
RMB200
RMB760
–
–
RMB6,800
–
–
–
RMB1,730
USD2
–
–
–
–
–
–
–
–
–
RMB4,600
RMB4,000
RMB3,400
RMB1,060
RMB588
RMB200
RMB6,800
RMB1,730
USD2
(i) On 6 February 2016, Suzhou Pension Company completed its business registration modification
procedure, and the registered capital was changed to RMB1,060 million. In December 2016, the
Company completed a RMB526 million capital contribution to Suzhou Pension Company. After the
contribution, the paid-in capital of Suzhou Pension Company increased from RMB800 to RMB1,326
million. As at 31 December 2016, since the business registration modification procedure for the
registered capital of Suzhou Pension Company was still in progress, the registered capital remained
RMB1,060 million.
(ii) Registered capital of Franklin Shenzhen Company is USD2 million, and its paid-in capital is USD0.6
million as at 31 December 2016.
(iii) For those subsidiaries which were not set up or invested in Mainland China, the legal definition of
registered capital is not applicable for them.
194
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(f) Percentages of holding of related parties with control relationship and changes during the
year
Shareholder
As at 31 December 2015
Percentage
Amount
of holding
million
Increase
million
Decrease
million
As at 31 December 2016
Percentage
Amount
of holding
million
CLIC
RMB19,324
68.37%
–
–
RMB19,324
68.37%
Subsidiaries
As at 31 December 2015
Percentage
Amount
of holding
million
Increase
million
Decrease
million
As at 31 December 2016
Percentage
Amount
of holding
million
AMC
RMB1,680
Pension Company
RMB2,746
China Life Franklin Asset
Management Company
Limited (“AMC HK”)
Suzhou Pension Company
CL AMP
CL Wealth
Golden Phoenix Tree Limited
King Phoenix Tree Limited
HKD130
RMB800
RMB500
RMB200
–
–
Rui Chong Company
RMB6,199
New Aldgate Limited (i)
Glorious Fortune
Forever Limited (i)
CL Hotel Investor, L.P. (i)
Golden Bamboo Limited (i)
Sunny Bamboo Limited (i)
Fortune Bamboo Limited (i)
China Century Core
Fund Limited
(“Century Core Fund”) (i)
CL Health (i)
Franklin Shenzhen Company (ii)
–
–
–
–
–
–
–
–
–
60.00%
directly
74.27%
directly
and indirectly
50.00%
indirectly
100.00%
directly
85.03%
indirectly
100.00%
indirectly
100.00%
directly
100.00%
indirectly
100.00%
directly
–
–
–
–
–
–
–
–
–
–
–
–
RMB 526
–
–
–
–
–
–
–
–
–
–
–
–
RMB1,730
USD0.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
RMB1,680
RMB2,746
HKD130
RMB1,326
RMB500
RMB200
–
–
RMB6,199
–
–
–
–
–
–
–
RMB1,730
USD0.6
60.00%
directly
74.27%
directly
and indirectly
50.00%
indirectly
100.00%
directly
85.03%
indirectly
100.00%
indirectly
100.00%
directly
100.00%
indirectly
100.00%
directly
100.00%
directly
100.00%
directly
100.00%
directly
100.00%
directly
100.00%
directly
100.00%
directly
100.00%
indirectly
100.00%
directly
100.00%
indirectly
195
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(f) Percentages of holding of related parties with control relationship and changes during the
year (continued)
(i)
New Aldgate Limited, Glorious Fortune Forever Limited, CL Hotel Investor, L.P., Golden Bamboo Limited,
Sunny Bamboo Limited, Fortune Bamboo Limited, Century Core Fund and CL Health are new subsidiaries set up
or invested by the Company in 2016.
(ii)
Franklin Shenzhen Company is a new subsidiary set up by AMC HK in 2016.
(g) Transactions with significant related parties
The following table summarises significant transactions carried out by the Group with its significant related
parties:
Transactions with CLIC and its subsidiaries
Policy management fee received from CLIC
Asset management fee received from CLIC
Payment of dividends from the Company to CLIC
Distribution of profits from AMC to CLIC
Asset management fee received from CL Overseas
Asset management fee received from CLP&C
Payment of insurance premium to CLP&C
Claim and other payments received from CLP&C
Agency fee received from CLP&C
Payment of an agency fee to CLP&C
Rental and a service fee received from CLP&C
Payment of rental, project fee and others expenses to CLRE
Property leasing expenses charged by CLI
Asset management fee received from CLI
Payment to CLI for purchase of fixed assets
Payment of an asset management fee to CLI
Property leasing income received from CLI
Payment of a business management service fee to
CL Ecommerce
Transactions between CGB and the Group
Interest on deposits received from CGB
Commission expenses charged by CGB
Transactions between Sino-Ocean and the Group
Cash dividend from Sino-Ocean (Note 8)
Interest payment of subordinated debts and corporate
bonds received from Sino-Ocean
Project management fee paid to Sino-Ocean
Transactions between EAP and the Group
Contribution to EAP
Notes
(i)(viii)
(ii.a)
(ii.b)
(ii.c)
(iii)(viii)
(iii)
(iv)
(ii.d)(viii)
(vi)
(v)
For the year ended 31 December
2015
RMB million
2016
RMB million
869
124
8,116
143
74
36
49
18
2,337
2
43
44
81
13
141
298
38
56
685
42
248
38
60
337
950
133
7,729
106
39
26
51
17
1,464
4
49
38
84
17
97
167
38
29
524
15
422
34
59
303
196
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Transactions with significant related parties (continued)
Transactions between AMC and the Company
Payment of an asset management fee to AMC
Distribution of profits from AMC
Transactions between Pension Company and the Company
Rental received from Pension Company
Agency fee received from Pension Company for
entrusted sales of annuity funds
Marketing fee income for promotion of annuity
business from Pension Company
Transactions between AMC HK and the Company
Payment of an investment management fee to AMC HK
Transactions between Suzhou Pension Company and the Company
Investment in Suzhou Pension Company
Transactions between the Group’s consolidated
structured entities and the Company
Distribution from the Group’s consolidated structured
entities to the Company
Notes
(ii.e)(viii)
For the year ended 31 December
2015
RMB million
2016
RMB million
1,081
215
1,020
158
(vii)
(ii.f)
(ix)
34
31
14
14
24
20
14
14
526
500
443
187
Notes:
(i)
On 29 December 2014, the Company and CLIC signed a renewable insurance agency agreement, effective from
1 January 2015 to 31 December 2017. The agreement was subject to an automatic three-year renewal if no
objections were raised by both parties. The Company performs its duties of insurance agents in accordance with
the agreement, but does not acquire any rights and profits or assume any obligations, losses and risks as an insurer
of the non-transferrable policies. The policy management fee was payable semi-annually, and is equal to the sum
of (1) the number of policies in force as at the last day of the period, multiplied by RMB8.00 per policy and (2)
2.50% of the actual premiums and deposits received during the period, in respect of such policies. The policy
management fee income is included in other income in the consolidated statement of comprehensive income.
(ii.a) On 30 December 2015, CLIC renewed an asset management agreement with AMC, entrusting AMC to manage
and make investments for its insurance funds. The agreement is effective from 1 January 2016 to 31 December
2018. In accordance with the agreement, CLIC paid AMC a basic service fee at the rate of 0.05% per annum for
the management of insurance funds. The service fee was calculated and payable on a monthly basis, by multiplying
the average book value of the assets under management (after deducting the funds obtained and interests accrued
for from repurchase transactions, deducting debt and equity investment schemes, project asset-backed schemes, the
principal and interests of customised non-standard products) at the beginning and the end of any given month by
the rate of 0.05%, divided by 12. At the end of each year, CLIC assessed the investment performance of the assets
managed by AMC, compared the actual results against benchmark returns and made adjustment to the basic service
fee.
(ii.b) On 24 January 2014, CL Overseas renewed an investment management agreement with AMC HK, effective from
1 January 2014 to 31 December 2014. On 27 April 2015, agreed by both parties, the agreement was renewed for
one year. In accordance with the agreement, CL Overseas entrusted AMC HK to manage and make investments
for its insurance funds and paid AMC HK a basic investment management fee and an investment performance fee.
The basic investment management fee was accrued by multiplying the weighted average total funds by the basic fee
rate. The investment performance fee was calculated based on the difference between the total actual annual yield
and predetermined net realised yield. The basic investment management fee was calculated and payable on a semi-
annual basis. The investment performance fee was payable according to the total actual annual yield at the end of
each year. As at the approval date of the consolidated financial statements, CL Overseas has reached a consensus
with AMC HK on the renewal and clauses of the agreement. The sign-off is still pending for the approval from
Hong Kong local supervision department. The original terms are effective until the new agreement is signed.
197
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Transactions with significant related parties (continued)
Notes (continued):
(ii.c) In 2015, CLP&C signed an agreement for the management of insurance funds with AMC, entrusting AMC to
manage and make investments for its insurance funds. The agreement is effective from 1 January 2015 to 31
December 2016. In accordance with the agreement, CLP&C paid AMC a fixed service fee and a variable service
fee. The fixed service fee was calculated and payable on a monthly basis, by multiplying the average net asset value
of assets of each category under management at the beginning and the end of any given month by the responding
annual investment management fee rate, divided by 12. The variable service fee was linked to investment
performance.
(ii.d) On 3 February 2016, the Company and CLI renewed a management agreement of alternative investment of
insurance funds, which is effective from 1 January 2016 to 30 June 2017. In accordance with the agreement, the
Company entrusted CLI to engage in specialised investment, operation and management of equities, real estate
and related financial products, and securitised financial products under the instructions of the annual guidelines.
The Company paid CLI an asset management fee and a performance related bonus based on the agreement. For
fixed-income projects, the management fee rate was 0.05%-0.6% according to different ranges of returns and
without a performance-related bonus; for non-fixed-income projects, the management fee rate was 0.3% and the
performance-related bonus was linked to the return on comprehensive investment upon expiry of the project.
(ii.e) On 29 December 2015, the Company and AMC renewed a renewable agreement for the management of insurance
funds, effective from 1 January 2016 to 31 December 2018. In accordance with the agreement, the Company
entrusted AMC to manage and make investments for its insurance funds and paid AMC a fixed service fee and a
variable service fee. The fixed annual service fee was calculated and payable on a monthly basis, by multiplying
the average net value of the assets under management by the rate of 0.05%; the variable service fee was payable
annually, based on the results of performance evaluation, at 20% of the fixed service fee per annum. The service
fees were determined by the Company and AMC based on an analysis of the cost of service, market practice and the
size and composition of the asset pool to be managed. Asset management fees charged to the Company by AMC are
eliminated in the consolidated statement of comprehensive income.
(ii.f) On 19 September 2013, the Company and AMC HK renewed the offshore investment management service
agreement, effective for two years starting from the signing date. The agreement was subject to an automatic one-
year renewal if no objections were raised by both parties upon expiry. On 19 September 2015, the agreement
was automatically renewed for one year. In accordance with the agreement, the Company entrusted AMC HK
to manage and make investments for its insurance funds and paid AMC HK an asset management fee. The asset
management fee was calculated at a fixed rate of 0.40% of the portfolio asset value and a performance bonus
capped at 0.15% of the portfolio asset value for assets managed on a discretionary basis. Management fees on assets
managed on a non-discretionary basis are calculated at 0.05% of the portfolio asset value. The above management
fee was calculated based on the net value of the entrusted asset from the monthly reports provided by the trustee,
without deducting the monthly management fee payable. The fixed management fee was calculated monthly
and payable quarterly. A performance bonus was calculated and payable on an annual basis. The agreement was
automatically renewed for one year on 19 September 2015. On 18 September 2016, the Company and AMC
HK renewed the agreement, which became effective from 19 September 2016 and expires on 31 December 2018.
Asset management fees charged to the Company by AMC HK are eliminated in the consolidated statement of
comprehensive income.
(iii) On 8 March 2015, the Company and CLP&C signed a new 2-year framework insurance agency agreement,
whereby CLP&C entrusted the Company to act as an agent to sell designated P&C insurance products in certain
authorised jurisdictions. The agency fee was determined based on cost (tax included) plus a margin. The agreement
was subject to an automatic one-year renewal if no objections were raised by both parties upon expiry.
On 8 March 2015, the Company and CLP&C signed a new 2-year framework insurance agency agreement,
whereby the Company entrusted CLP&C to act as an agent to sell designated life insurance products in certain
authorised jurisdictions. The brokerage fee was determined based on market practice. The agreement was subject to
an automatic one-year renewal if no objections were raised by both parties upon expiry.
(iv) On 31 December 2014, the Company signed a property leasing agreement with CLI, effective till 31 December
2017, pursuant to which CLI leased to the Company certain owned buildings. Annual rental payable by the
Company to CLI in relation to the CLI properties is determined either by reference to the market rent, or, the
costs incurred by CLI in holding and maintaining the properties, plus a margin of approximately 5%. The rental
was paid on a semi-annual basis, and each payment was equal to one half of the total annual rental.
198
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Transactions with significant related parties (continued)
Notes (continued):
(v) On 19 April 2012, the Company and CGB renewed an insurance agency agreement to distribute insurance
products. All individual insurance products suitable for distribution through bancassurance channels are included
in the agreement. CGB provides agency services, including the selling of insurance products, and collecting
premiums and paying benefits. The Company paid the agency commission by multiplying the net amount of total
premiums received from sale of each category individual insurance product after deducting the withdrawn policies
premiums in the hesitation period, by the responding fixed commission rate. The commission rates for various
insurance products sold by CGB are agreed based on arm’s length transactions. The commissions are payable on
a monthly basis. The agreement is effective for three years and subject to an automatic one-year renewal with no
limitation of times if no objections were raised by either party upon expiry. On 19 April 2015, the agreement was
automatically renewed for another one year. On 12 August 2016, the Company and CGB renewed the insurance
agency agreement to distribute insurance products. The agreement is effective for two years starting from the
signing date and is subject to an automatic one-year renewal with no limitation of times if no objections were
raised by either party upon expiry. The transactions between the Company and CGB before the effective date of
the renewed agreement complied with the previous agreement.
On 23 March 2016, the Company and CGB signed an insurance agency agreement to distribute group insurance
products. The group insurance products suitable for distribution through bancassurance channels are included
in the agreement. CGB provides agency services, including the selling of group insurance products, collecting
premiums and paying benefits, and so on. The Company paid the agency commission by multiplying the net
amount of total premiums received from sale of each category group insurance product after deducting the
withdrawn policies premiums in the hesitation period, by the responding fixed commission rate. The commission
rates for various insurance products sold by CGB are agreed by referring to comparable quoted market prices
of independent third-parties. The commissions are payable on a monthly basis. The agreement is effective on 1
January 2016 for two years and is subject to an automatic one-year renewal if no objections were raised by either
party upon expiry.
(vi) On 18 March 2015, the Company and CL Ecommerce signed a one year agreement for managing the regional
telemarketing centre, effective on the signing date. Pursuant to the agreement, the Company entrusted CL
Ecommerce to manage the operation of its telemarketing centre, and paid the management fee accordingly. The
total amount of the management fee is not expected to exceed RMB100 million, but is still pending for negotiation
between the two parties based on the actual circumstance. On 26 October 2016, the Company and CL Ecommerce
renewed the agreement, which was effective from 1 January 2016 and expired on 31 December 2016. The previous
agreement was terminated automatically when the renewed agreement came into effect. The agreement is subject to
an automatic one-year renewal if no objections are raised by both parties.
(vii) On 27 November 2014, the Company and Pension Company signed an agency agreement for the distribution
and customer service of enterprise annuity funds, the pension management business and the occupational pension
management business. The agreement was effective from 28 November 2014 and expired after one year, and
was subject to an automatic one-year renewal if no objections were raised by either party upon expiry. On 28
November 2015, the agreement was automatically renewed for one year. The commissions for the entrusting
service of enterprise annuity fund management, which is the core business of Pension Company, are calculated at
30% to 80% of the annual entrusting management fee revenues, depending on the duration of the agreement. The
commissions for account management service are calculated at 60% of the first year’s account management fee and
were only charged for the first year, regardless of the duration of the agreement. The commissions for investment
management service, in accordance with the duration of the agreement, are calculated at 60% to 3% of the annual
investment management fee (excluding risk reserves for investment), and decreased annually. The calculation
base, method and charge rate of the agency fee of occupation annuity should be in line with those of enterprise
annuity funds. The charge rate of the agency fee of the group pension plan is in line with that of the investment
management fee of enterprise annuity funds. The agency fee of the personal pension plan is 30% of the daily
management fee of the personal pension plan annually.
On 28 November 2016, the Company and Pension Company signed a new agency agreement for the distribution
and customer service of enterprise annuity funds, the pension management business and the occupational pension
management business. The agreement was effective from 28 November 2016 and expires on 31 December 2017,
subject to an automatic one-year renewal if no objections were raised by either party upon expiry. There are
two types of commissions agreed upon in the agreement, which are commissions that occur in daily business
and occur according to the annual promotional plans. Provisions of the commissions for entrusting service of
enterprise annuity funds management remain the same as those in the previous agreement; the agency fee of the
group pension plan is, in accordance with the duration of the contracts, calculated at 50% to 3% of the annual
investment management fee, and decreased annually; the agency fee of the personal pension plan is calculated at
30% to 50% of the annual investment management fee according to the various rates of daily management fee
applied to the various individual pension management products in all of the management years; the agency fee of
occupation annuity is in accordance with the provision of annual promotional plans, which should be determined
by both parties on a separate occasion. The commissions charged to the Company by Pension Company are
eliminated in the consolidated income statement of the Group.
199
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Transactions with significant related parties (continued)
Notes (continued):
(viii) These transactions constitute continuing connected transactions which are subject to reporting and announcement
requirements but are exempt from independent shareholders’ approval requirements under Chapter 14A of the
Listing Rules. The Company has complied with the disclosure requirements in accordance with Chapter 14A of the
Listing Rules.
(ix)
In December 2016, the Company completed a RMB526 million capital contribution to Suzhou Pension Company.
Please refer to Note 33(e).
(h) Amounts due from/to significant related parties
The following table summarises the balances due from and to significant related parties. The balances are
non-interest bearing, unsecured and have no fixed repayment dates except for the deposits with CGB and
the subordinated debts and corporate bonds issued by Sino-Ocean.
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
The resulting balance due from and to significant related parties of the Group
Amount due from CLIC
Amount due to CLIC
Amount due from CL Overseas
Amount due from CLP&C
Amount due to CLP&C
Amount due from CLI
Amount due to CLI
Amount due from CLRE
Amount due to CLRE
Amount deposited with CGB
Amount due from CGB
Amount due to CGB
Subordinated debts and corporate bonds of Sino-Ocean
Amount due from Sino-Ocean
Amount due from CL Ecommerce
Amount due to CL Ecommerce
The resulting balance due from and to subsidiaries of the Company
Amount due from Pension Company
Amount due to Pension Company
Amount due to AMC
Amount due to AMC HK
529
–
47
332
–
12
(206)
2
–
26,342
365
(17)
643
8
5
(66)
47
(17)
(604)
(8)
526
(1)
21
203
(2)
16
(71)
2
(1)
9,660
194
(13)
872
11
4
(40)
50
(6)
(325)
(7)
200
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(i) Key management personnel compensation
Salaries and other benefits
For the year ended 31 December
2015
RMB million
2016
RMB million
18
25
The total compensation package for the Company’s key management personnel for the year ended 31
December 2016 has not yet been finalised in accordance with regulations of the relevant PRC authorities.
The final compensation will be disclosed in a separate announcement when determined. The compensation
of 2015 has been approved by the relevant authorities. The total compensation of 2015 was RMB25 million,
including a deferred payment about RMB5 million.
(j) Transactions with state-owned enterprises
Under IAS 24 Related Party Disclosures (“IAS 24”), business transactions between state-owned enterprises
controlled by the PRC government are within the scope of related party transactions. CLIC, the ultimate
holding company of the Group, is a state-owned enterprise. The Group’s key business is insurance and
investment related and therefore the business transactions with other state-owned enterprises are primarily
related to insurance and investment activities. The related party transactions with other state-owned
enterprises were conducted in the ordinary course of business. Due to the complex ownership structure, the
PRC government may hold indirect interests in many companies. Some of these interests may, in themselves
or when combined with other indirect interests, be controlling interests which may not be known to the
Group. Nevertheless, the Group believes that the following captures the material related parties and has
applied IAS 24 exemption and disclosed only qualitative information.
As at 31 December 2016, most of the bank deposits of the Group were with state-owned banks; the issuers
of corporate bonds and subordinated bonds held by the Group were mainly state-owned enterprises. For the
year ended 31 December 2016, a large portion of its group insurance business of the Group were with state-
owned enterprises; the majority of bancassurance commission charges were paid to state-owned banks and
postal offices; and the majority of the reinsurance agreements of the Group were entered into with a state-
owned reinsurance company.
34 SHARE CAPITAL
As at 31 December 2016
As at 31 December 2015
No. of shares
RMB million
No. of shares
RMB million
Registered, authorised, issued and fully paid
Ordinary shares of RMB1 each
28,264,705,000
28,265
28,264,705,000
28,265
201
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
34 SHARE CAPITAL (continued)
As at 31 December 2016, the Company’s share capital was as follows:
Owned by CLIC (i)
Owned by other equity holders
Including: Domestic listed
Overseas listed (ii)
Total
As at 31 December 2016
No. of shares
RMB million
19,323,530,000
8,941,175,000
1,500,000,000
7,441,175,000
28,264,705,000
19,324
8,941
1,500
7,441
28,265
(i)
All shares owned by CLIC are domestic listed shares.
(ii) Overseas listed shares are traded on the Stock Exchange of Hong Kong Limited and the New York Stock Exchange.
35 OTHER EQUITY INSTRUMENTS
(a) Basic information
As at 31
December 2015
Increase
Decrease
As at 31
December 2016
Quantity million
RMB million Quantity million
RMB million Quantity million
RMB million Quantity million
RMB million
Core Tier 2 Capital Securities
Total
1,280
1,280
7,791
7,791
–
–
–
–
–
–
–
–
1,280
1,280
7,791
7,791
The Company issued Core Tier 2 Capital Securities at par with the nominal value of USD1,280 million on
3 July 2015, and obtained an approval to list such securities on the Stock Exchange of Hong Kong Limited,
effective on 6 July 2015. After a deduction of the issue expense, the total amount of the proceeds raised
from this issuance was USD1,274 million or RMB7,791 million. The issued capital securities have a term
of 60 years, extendable upon expiry. The initial distribution rate for the first five interest-bearing years is
4.00%, and the Company may redeem the securities at its option at the end of the fifth year after issuance.
If the Company does not exercise this option, the rate of distribution will be reset based on comparable US
treasury yield plus a margin of 2.294% at the end of the fifth year and every five years thereafter.
(b) Equity attributable to equity holders
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
Equity attributable to equity holders of the Company
Equity attributable to ordinary equity holders of the Company
Equity attributable to other equity instruments holders of the Company
Equity attributable to non-controlling interests
Equity attributable to ordinary equity holders of non-controlling interests
303,621
295,830
7,791
4,027
4,027
322,492
314,701
7,791
3,722
3,722
Refer to Note 32 for the information of distribution to other equity instruments holders of the Company
for the year ended 31 December 2016. As at 31 December 2016, there were no accumulated distributions
unpaid attributable to other equity instruments holders of the Company.
202
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
36 RESERvES
Share of other
Unrealised comprehensive
income
of investees
under
the equity
method
gains/
(losses) from
available-
for-sale
securities
Share
premium
Other
reserves
Total
RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
Statutory Discretionary
reserve
fund
reserve
fund
Exchange
differences on
translating
foreign
operations
General
reserve
(a)
(b)
(c)
As at 1 January 2015
Other comprehensive income for the year
Appropriation to reserves
Others
53,860
–
–
–
817
–
–
296
23,254
6,709
–
–
(184)
364
–
–
24,801
–
3,438
–
21,627
–
3,160
–
21,747
–
3,492
–
As at 31 December 2015
53,860
1,113
29,963
180
28,239
24,787
25,239
As at 1 January 2016
Other comprehensive income for the year
Appropriation to reserves
Others
53,860
–
–
–
1,113
–
–
33
29,963
(24,863)
–
–
180
(918)
–
–
28,239
–
1,927
–
24,787
–
3,438
–
25,239
–
2,002
–
As at 31 December 2016
53,860
1,146
5,100
(738)
30,166
28,225
27,241
(3)
3
–
–
–
–
7
–
–
7
145,919
7,076
10,090
296
163,381
163,381
(25,774)
7,367
33
145,007
(a)
(b)
(c)
Pursuant to the relevant PRC laws, the Company appropriated 10% of its net profit under Chinese Accounting Standards
(“CAS”) to statutory reserve which amounted to RMB1,927 million for the year ended 31 December 2016 (2015:
RMB3,438 million).
Approved at the Annual General Meeting in May 2016, the Company appropriated RMB3,438 million to the
discretionary reserve fund for the year ended 31 December 2015 based on net profit under CAS (2015: RMB3,160
million).
Pursuant to “Financial Standards of Financial Enterprises – Implementation Guide” issued by the Ministry of Finance of the
PRC on 30 March 2007, for the year ended 31 December 2016, the Company appropriated 10% of net profit under CAS
which amounted to RMB1,927 million to the general reserve for future uncertain catastrophes, which cannot be used for
dividend distribution or conversion to share capital increment (2015: RMB3,438 million). In addition, pursuant to the
CAS, the Group appropriated RMB75 million to the general reserve of its subsidiaries attributable to the Company in the
consolidated financial statements (2015: RMB54 million).
Under related PRC law, dividends may be paid only out of distributable profits. Any distributable profits that are
not distributed in a given year are retained and available for distribution in subsequent years.
203
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
37 PROvISIONS AND CONTINGENCIES
The following is a summary of the significant contingent liabilities:
Pending lawsuits
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
588
440
The Group involves in certain lawsuits arising from the ordinary course of businesses. In order to accurately
disclose the contingent liabilities for pending lawsuits, the Group analysed all pending lawsuits case by case at the
end of each reporting period. A provision will only be recognised if management determines, based on third-party
legal advice, that the Group has present obligations and the settlement of which is expected to result in an outflow
of the Group’s resources embodying economic benefits, and the amount of such obligations could be reasonably
estimated. Otherwise, the Group will disclose the pending lawsuits as contingent liabilities. As at 31 December
2016 and 2015, the Group had other contingent liabilities but disclosure of such was not practical because the
amounts of liabilities could not be reliably estimated and were not material in aggregate.
38 COMMITMENTS
(a) Capital commitments
The Group had the following capital commitments relating to property development projects and
investments:
Contracted, but not provided for
Investments
Property, plant and equipment
Others
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
39,616
5,462
1
45,079
30,453
5,820
34
36,307
(b) Operating lease commitments - as lessee
The future minimum lease payments under non-cancellable operating leases are as follows:
Not later than one year
Later than one year but not later than five years
Later than five years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
632
764
27
534
721
20
1,423
1,275
The operating lease payments charged to profit before income tax for the year ended 31 December 2016
were RMB994 million (2015: RMB857 million).
204
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
38 COMMITMENTS (continued)
(c) Operating lease commitments - as lessor
The future minimum rentals receivable under non-cancellable operating leases are as follows:
Not later than one year
Later than one year but not later than five years
Later than five years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
186
267
10
463
258
253
13
524
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS
Statement of financial position
As at 31 December 2016
ASSETS
Property, plant and equipment
Investment properties
Investments in subsidiaries
Investments in associates and joint ventures
Held-to-maturity securities
Loans
Term deposits
Statutory deposits - restricted
Available-for-sale securities
Securities at fair value through profit or loss
Securities purchased under agreements to resell
Accrued investment income
Premiums receivable
Reinsurance assets
Other assets
Cash and cash equivalents
Notes
39(a)
39(b)
39(c)
39(d)
39(e)
39(f)
39(g)
39(h)
39(i)
39(j)
39(k)
39(l)
11
12
39(m)
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
29,722
1,247
27,353
76,427
594,054
221,535
535,361
5,653
758,802
204,046
43,100
55,774
13,421
2,134
14,252
62,606
26,421
1,296
11,843
27,810
503,489
203,152
560,807
5,653
766,799
135,733
21,461
49,385
11,913
1,420
16,294
74,750
Total assets
2,645,487
2,418,226
205
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
Statement of financial position (continued)
As at 31 December 2016
LIABILITIES AND EQUITY
Liabilities
Insurance contracts
Investment contracts
Policyholder dividends payable
Bonds payable
Securities sold under agreements to repurchase
Annuity and other insurance balances payable
Premiums received in advance
Other liabilities
Deferred tax liabilities
Current income tax liabilities
Statutory insurance fund
Total liabilities
Equity
Share capital
Other equity instruments
Reserves
Retained earnings
Total equity
Total liabilities and equity
Notes
14
15
17
39(n)
39(o)
39(p)
20
34
39(q)
39(r)
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
1,847,986
195,706
87,725
37,998
81,039
39,038
35,252
30,556
7,543
1,141
491
1,715,985
84,106
107,774
67,994
30,368
30,092
32,266
23,182
16,883
5,256
217
2,364,475
2,114,123
28,265
7,791
144,116
100,840
28,265
7,791
161,672
106,375
281,012
304,103
2,645,487
2,418,226
206
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment
Buildings
Office
equipment
furniture and
fixtures
Assets
under
construction
Motor
vehicles
RMB million
Leasehold
improvements
Total
Cost
As at 1 January 2016
Transfers upon completion
Additions
Disposals
23,587
1,174
31
(104)
6,481
–
631
(430)
1,368
–
177
(140)
7,544
(1,438)
4,754
(473)
1,282
256
13
(26)
40,262
(8)
5,606
(1,173)
As at 31 December 2016
24,688
6,682
1,405
10,387
1,525
44,687
Accumulated depreciation
As at 1 January 2016
Charge for the year
Disposals
(7,249)
(875)
36
(4,652)
(596)
426
As at 31 December 2016
(8,088)
(4,822)
Impairment
As at 1 January 2016
Charge for the year
Disposals
As at 31 December 2016
Net book value
As at 1 January 2016
(24)
–
–
(24)
–
–
–
–
16,314
1,829
As at 31 December 2016
16,576
1,860
(990)
(129)
136
(983)
–
–
–
–
378
422
–
–
–
–
–
–
–
–
7,544
10,387
(926)
(144)
22
(13,817)
(1,744)
620
(1,048)
(14,941)
–
–
–
–
356
477
(24)
–
–
(24)
26,421
29,722
207
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment (continued)
Office
equipment
furniture
and fixtures
Buildings
Motor
vehicles
RMB million
Assets under
construction
Leasehold
improvements
Cost
As at 1 January 2015
Transfers upon completion
Additions
Disposals
22,114
1,486
51
(64)
6,527
6
341
(393)
1,373
–
128
(133)
6,332
(1,680)
2,955
(63)
1,222
166
8
(114)
Total
37,568
(22)
3,483
(767)
As at 31 December 2015
23,587
6,481
1,368
7,544
1,282
40,262
Accumulated depreciation
As at 1 January 2015
Charge for the year
Disposals
(6,469)
(813)
33
(4,382)
(639)
369
As at 31 December 2015
(7,249)
(4,652)
Impairment
As at 1 January 2015
Charge for the year
Disposals
As at 31 December 2015
Net book value
As at 1 January 2015
As at 31 December 2015
(24)
–
–
(24)
–
–
–
–
15,621
16,314
2,145
1,829
(982)
(134)
126
(990)
–
–
–
–
391
378
–
–
–
–
–
–
–
–
6,332
7,544
(919)
(115)
108
(12,752)
(1,701)
636
(926)
(13,817)
–
–
–
–
303
356
(24)
–
–
(24)
24,792
26,421
208
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Investment properties
Cost
As at 1 January 2016
Additions
Transfer from property, plant and equipment
As at 31 December 2016
Accumulated depreciation
As at 1 January 2016
Charge for the year
Transfer from property, plant and equipment
As at 31 December 2016
Net book value
As at 1 January 2016
As at 31 December 2016
Fair value
As at 1 January 2016
As at 31 December 2016
Buildings
RMB million
1,513
–
–
1,513
(217)
(49)
–
(266)
1,296
1,247
2,415
2,377
209
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Investment properties (continued)
Cost
As at 1 January 2015
Additions
Transfer from property, plant and equipment
As at 31 December 2015
Accumulated depreciation
As at 1 January 2015
Charge for the year
Transfer from property, plant and equipment
As at 31 December 2015
Net book value
As at 1 January 2015
As at 31 December 2015
Fair value
As at 1 January 2015
As at 31 December 2015
Buildings
RMB Million
1,513
–
–
1,513
(168)
(49)
–
(217)
1,345
1,296
2,231
2,415
The fair value of investment properties of the Company as at 31 December 2016 amounted to RMB2,377
million (as at 31 December 2015: RMB2,415 million), which was estimated by the Company having regards
to valuations performed by an independent appraiser. The investment properties were classified as Level 3 in
the fair value hierarchy.
210
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(c)
Investments in subsidiaries
Unlisted investments at cost
As at
31 December
2016
RMB million
As at
31 December
2015
RMB million
27,353
11,843
(i)
The table below presents the basic information of the Company’s subsidiaries as at 31 December
2016:
Name
AMC
Pension Company
Place of
incorporation
and operation
PRC
PRC
AMC HK
Suzhou Pension Company
Hong Kong, PRC
PRC
CL AMP
CL Wealth
Golden Phoenix Tree Limited
King Phoenix Tree Limited
Rui Chong Company
New Aldgate Limited
Glorious Fortune
Forever Limited
CL Hotel Investor, L.P.
Golden Bamboo Limited
Sunny Bamboo Limited
Fortune Bamboo Limited
Century Core Fund
CL Health
Franklin Shenzhen Company
PRC
PRC
Hong Kong, PRC
The British Jersey Island
PRC
Hong Kong, PRC
Hong Kong, PRC
USA
The British virgin Islands
The British virgin Islands
The British virgin Islands
The British
Cayman Islands
PRC
PRC
Percentage of
equity interest held
60.00% directly
74.27% directly
and indirectly
50.00% indirectly
100.00% directly
85.03% indirectly
100.00% indirectly
100.00% directly
100.00% indirectly
100.00% directly
100.00% directly
100.00% directly
100.00% directly
100.00% directly
100.00% directly
100.00% directly
100.00% indirectly
Registered capital
Principal activities
RMB4,000 million
RMB3,400 million
Asset management
Pension and annuity
Not applicable
RMB1,060 million
RMB588 million
RMB200 million
Not applicable
Not applicable
RMB6,800 million
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Asset management
Investment in
retirement properties
Fund management
Financial service
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
100.00% directly
100.00% indirectly
RMB1,730 million
USD2 million
Health management
Investment
Non-controlling interests in subsidiaries are not significant to the Company.
211
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(c)
Investments in subsidiaries (continued)
(ii) The table below presents the basic information of the Company’s major consolidated structured
entities as at 31 December 2016:
Name
Percentage of shares held
Trust/investments received
Principal activities
Shang Xin – Ningbo Wu Lu Si Qiao
PPP Collective Fund Trust Scheme
Shang Xin Lv Di Collective
Fund Trust Scheme
CL AMP CSI 300 Index Securities
Investment Fund
Kun Lun Trust • China
Communications Construction
No. 1 Collective Fund
Trust Scheme
Jiao Yin Guo Xin • Wen Jian
No. 798 Collective Fund Trust
Scheme (the second batch)
Shang Xin – Huarong Capital
Perpetual Debt Investment
Collective Fund Trust Scheme
Huarun Trust • Guokai New
Urbanization Developing Fund
Collective Fund Trust Scheme
Shang Xin Jing Neng Jin Tai
Indemnificatory Housing
Collective Fund Trust Scheme
88.02% directly
RMB8,758 million
Investment management
49.00% directly and
indirectly
80.24% directly
RMB4,000 million
Investment management
RMB3,698 million
Investment management
66.67% directly
RMB3,000 million
Investment management
100.00% directly
RMB2,000 million
Investment management
90.00% directly
RMB2,000 million
Investment management
76.42% directly
RMB1,975 million
Investment management
66.67% directly
RMB1,500 million
Investment management
(d) Investments in associates and joint ventures
As at 1 January
Investments in associates and joint ventures
As at 31 December
2016
RMB million
2015
RMB million
27,810
48,617
76,427
27,044
766
27,810
212
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(e) Held-to-maturity securities
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Total
Debt securities
Listed in Mainland, PRC
Unlisted
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
97,196
169,001
177,768
150,089
79,438
126,097
145,824
152,130
594,054
503,489
64,192
529,862
61,916
441,573
594,054
503,489
The estimated fair value of all held-to-maturity securities was RMB618,436 million as at 31 December 2016
(as at 31 December 2015: RMB550,199 million).
Unlisted debt securities include those traded on the Chinese interbank market.
Debt securities – Contractual maturity schedule
Maturing:
Within one year
After one year but within five years
After five years but within ten years
After ten years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
30,614
71,502
231,391
260,547
2,000
86,072
167,290
248,127
594,054
503,489
213
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(f) Loans
Policy loans
Other loans
Total
Maturing:
Within one year
After one year but within five years
After five years but within ten years
After ten years
Total
(g) Term deposits
Maturing:
Within one year
After one year but within five years
After five years but within ten years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
92,442
129,093
84,959
118,193
221,535
203,152
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
109,979
69,753
24,303
17,500
90,102
80,311
24,039
8,700
221,535
203,152
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
182,871
344,790
7,700
179,965
380,842
–
535,361
560,807
As at 31 December 2016, the term deposits of RMB13.2 billion (2015: Nil) applying for an overseas
borrowings backed by domestic deposits business are restricted to use. Please refer to Note 9.3 for the
details.
214
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(h) Statutory deposits – restricted
Contractual maturity schedule:
Within one year
After one year but within five years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
1,600
4,053
5,653
300
5,353
5,653
Insurance companies in China are required to deposit an amount that equals to 20% of their registered
capital with banks in compliance with regulations of the CIRC. These funds may not be used for any
purpose other than for paying off debts during liquidation proceedings.
(i) Available-for-sale securities
Available-for-sale securities, at fair value
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Subordinated bonds/debts
Wealth management products
Others (i)
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
21,198
146,310
187,287
16,708
11,000
11,683
25,258
145,399
205,149
19,298
–
4,706
Subtotal
394,186
399,810
Equity securities
Funds
Common stocks
Preferred stocks
Wealth management products
Others (i)
Subtotal
Available-for-sale securities, at cost
Equity securities
Others (i)
Total
104,432
100,116
27,880
81,544
29,885
162,563
74,592
18,712
50,053
40,310
343,857
346,230
20,759
20,759
758,802
766,799
215
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(i) Available-for-sale securities (continued)
(i) Other available-for-sale securities mainly include unlisted equity investments and private equity
funds, etc. The Company did not guarantee or provide any financing support for other available-for-
sale securities, and considers that the carrying value of other available-for-sale securities represents its
maximum risk exposure.
Debt securities
Listed in Mainland, PRC
Listed in Singapore
Unlisted
Subtotal
Equity securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted
Subtotal
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
36,691
–
357,495
41,549
266
357,995
394,186
399,810
90,756
25,034
232
248,594
85,403
8,391
172
273,023
364,616
366,989
758,802
766,799
Unlisted debt securities include those traded on the Chinese interbank market and those not publicly
traded. Unlisted equity securities include those not traded on stock exchanges, which are mainly open-
ended funds with public market price quotation and wealth management products.
Debt securities – Contractual maturity schedule
Maturing:
Within one year
After one year but within five years
After five years but within ten years
After ten years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
32,941
143,840
113,161
104,244
32,062
135,733
112,012
120,003
394,186
399,810
216
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(j) Securities at fair value through profit or loss
Debt securities
Government bonds
Government agency bonds
Corporate bonds
Others
Subtotal
Equity securities
Funds
Common stocks
Subtotal
Total
Debt securities
Listed in Mainland, PRC
Listed overseas
Unlisted
Subtotal
Equity securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted
Subtotal
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
372
6,578
143,871
3,133
153,954
14,093
35,999
50,092
553
5,218
86,816
401
92,988
5,858
36,887
42,745
204,046
135,733
19,486
89
134,379
153,954
33,339
74
6,284
10,395
50,092
8,194
56
84,738
92,988
32,427
70
6,099
4,149
42,745
204,046
135,733
Unlisted debt securities include those traded on the Chinese interbank market and those not publicly traded.
Unlisted equity securities include those not traded on stock exchanges, which are mainly open-ended funds
with public market price quotation.
217
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(k) Securities purchased under agreements to sell
Maturing:
Within 30 days
Total
(l) Accrued investment income
Bank deposits
Debt securities
Others
Total
Current
Non-current
Total
(m) Other assets
Land use rights
Automated policy loans
Disbursements
Investments receivable
Due from related parties
Tax refundable
Others
Total
Current
Non-current
Total
218
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
43,100
43,100
21,461
21,461
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
35,633
17,613
2,528
55,774
44,632
11,142
55,774
31,612
15,642
2,131
49,385
31,129
18,256
49,385
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
5,671
2,814
1,718
883
846
69
2,251
14,252
8,484
5,768
14,252
5,809
2,520
1,023
4,126
756
936
1,124
16,294
10,394
5,900
16,294
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(n) Securities sold under agreements to repurchase
Interbank market
Stock exchange market
Total
Maturing:
Within 30 days
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
65,430
15,609
81,039
81,039
81,039
27,466
2,902
30,368
30,368
30,368
As at 31 December 2016, bonds with a carrying value of RMB76,157 million (as at 31 December 2015:
RMB28,185 million) were pledged as collateral for financial assets sold under agreements to repurchase
resulted from repurchase transactions entered into by the Company in the interbank market.
For debt repurchase transactions through the stock exchange, the Company is required to deposit certain
exchange-traded bonds into a collateral pool with fair value converted at a standard rate pursuant to the
stock exchange’s regulation which should be no less than the balance of the related repurchase transaction.
As at 31 December 2016, the carrying value of securities deposited in the collateral pool was RMB81,280
million (as at 31 December 2015: RMB66,027 million). The collateral is restricted from trading during the
period of the repurchase transaction.
(o) Other liabilities
Interest payable to policyholders
Salary and welfare payable
Brokerage and commission payable
Agent deposits
Payable to constructors
Interest payable of subordinated debts
Stock appreciation rights (Note 31)
Tax payable
Others
Total
Current
Non-current
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
8,006
6,466
3,713
1,611
1,024
742
654
620
7,720
30,556
30,556
–
30,556
6,410
4,561
2,598
1,117
634
1,045
845
484
5,488
23,182
23,182
–
23,182
219
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(p) Deferred tax liabilities
(i)
The movements in deferred tax assets and liabilities during the year are as follows:
Deferred tax assets/(liabilities)
As at 1 January 2015
(Charged)/credited to net profit
(Charged)/credited to other
comprehensive income
– Available-for-sale securities
– Portion of fair value changes on
available-for-sale securities
attributable to participating
policyholders
As at 31 December 2015
As at 1 January 2016
(Charged)/credited to net profit
(Charged)/credited to other
comprehensive income
– Available-for-sale securities
– Portion of fair value changes on
available-for-sale securities
attributable to participating
policyholders
As at 31 December 2016
Insurance
RMB million
Investments
RMB million
Others
RMB million
Total
RMB million
(8,316)
3,673
(11,637)
534
–
(5,401)
3,192
(1,451)
(1,451)
(614)
–
(16,504)
(16,504)
1,208
–
12,626
(4,343)
(6,408)
–
(2,670)
1,535
930
142
–
–
1,072
1,072
463
–
–
(19,023)
4,349
(5,401)
3,192
(16,883)
(16,883)
1,057
12,626
(4,343)
(7,543)
(ii) The analysis of deferred tax assets and deferred tax liabilities during the year is as follows:
Deferred tax assets:
– deferred tax assets to be recovered after 12 months
– deferred tax assets to be recovered within 12 months
Subtotal
Deferred tax liabilities:
– deferred tax liabilities to be settled after 12 months
– deferred tax liabilities to be settled within 12 months
Subtotal
Net deferred tax liabilities
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
2,758
3,561
6,319
9,247
2,553
11,800
(12,552)
(1,310)
(26,500)
(2,183)
(13,862)
(28,683)
(7,543)
(16,883)
220
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(q) Other equity instruments
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
Equity attributable to equity holders of the Company
Equity attributable to ordinary equity holders of the Company
Equity attributable to other equity instruments holders of the Company
281,012
273,221
7,791
304,103
296,312
7,791
Refer to Note 32 for the information of distribution to other equity instruments holders of the Company
for the year ended 31 December 2016. As at 31 December 2016, there were no accumulated distributions
unpaid attributable to other equity instruments holders of the Company.
(r) Reserves
Unrealised
gains/(losses)
from
Share available-for-sale
securities
RMB million
premium
RMB million
Statutory
reserve fund
RMB million
Discretionary
reserve fund
RMB million
General
reserve
RMB million
Total
RMB million
As at 1 January 2015
Other comprehensive
income for the year
Appropriation to reserves
53,860
23,177
24,753
21,627
21,589
145,006
–
–
6,630
–
–
3,438
–
3,160
–
3,438
6,630
10,036
As at 31 December 2015
53,860
29,807
28,191
24,787
25,027
161,672
As at 1 January 2016
Other comprehensive
income for the year
Appropriation to reserves
53,860
29,807
28,191
24,787
25,027
161,672
–
–
(24,848)
–
–
1,927
–
3,438
–
1,927
(24,848)
7,292
As at 31 December 2016
53,860
4,959
30,118
28,225
26,954
144,116
(s) Provisions and contingencies
The following is a summary of the significant contingent liabilities:
Pending lawsuits
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
588
440
221
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
39 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(t) Commitments
(i)
Capital commitments
Capital commitments of the Company relating to property development projects and investments:
Contracted, but not provided for
Investments
Property, plant and equipment
Others
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
40,804
4,248
1
45,053
31,314
4,851
34
36,199
(ii) Operating lease commitments – as lessee
The future minimum lease payments under non-cancellable operating leases are as follows:
Not later than one year
Later than one year but not later than five years
Later than five years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
591
761
27
495
644
20
1,379
1,159
(iii) Operating lease commitments – as lessor
The future minimum rentals receivable under non-cancellable operating leases are as follows:
Not later than one year
Later than one year but not later than five years
Later than five years
Total
As at 31
December 2016
RMB million
As at 31
December 2015
RMB million
208
324
10
542
272
261
13
546
222
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
40 DIRECTORS’, SUPERvISORS’, CHIEF EXECUTIvE’S AND SENIOR MANAGEMENT’S
REMUNERATION
The total compensation package for the directors, supervisors, chief executive and senior management for the year
ended 31 December 2016 in accordance with the related measures for compensation management of the Company
has not yet been finalised. The amount of the compensation not provided for is not expected to have a significant
impact on the Group’s 2016 consolidated financial statements. The final compensation will be disclosed in a
separate announcement when determined.
(a) Directors’ and chief executive’s emoluments
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the year
ended 31 December 2016 are as follows:
Name
Yang Mingsheng
Lin Dairen
Miao Jianmin
Zhang Xiangxian (i)
Wang Sidong
Anthony Francis Neoh (ii)
Chang Tso Tung Stephen
Huang Yiping (iii)
Xu Hengping
Xu Haifeng
Liu Jiade
Robinson Drake Pike
Tang Xin (iv)
Leung Oi-Sie Elsie (v)
Remuneration
paid
Benefits in kind
Pension scheme
contributions
RMB thousand
–
1,400.0
–
–
–
150.0
320.0
53.3
1,134.0
1,134.0
–
320.0
266.7
150.0
–
125.7
–
–
–
–
–
–
125.6
125.3
–
–
–
–
–
119.9
–
–
–
–
–
–
119.2
116.5
–
–
–
–
Total
–
1,645.6
–
–
–
150.0
320.0
53.3
1,378.8
1,375.8
–
320.0
266.7
150.0
(i)
Zhang Xiangxian resigned as non-executive director on 3 August 2016.
(ii)
Anthony Francis Neoh retired as independent director on 20 July 2016.
(iii) Huang Yiping resigned as independent director on 26 August 2015. The resignation became effective on 7 March
2016, pursuant to the CIRC’s approval on the qualification of a newly appointed independent director.
(iv) Tang Xin was appointed as independent director on 7 March 2016.
(v)
Leung Oi-Sie Elsie was appointed as independent director on 20 July 2016.
223
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
40 DIRECTORS’, SUPERvISORS’, CHIEF EXECUTIvE’S AND SENIOR MANAGEMENT’S
REMUNERATION (continued)
(a) Directors’ and chief executive’s emoluments (continued)
The aggregate amounts of emoluments paid to directors and chief executive of the Company for the year
ended 31 December 2015 are as follows:
Performance
related
bonuses
Subtotal of
salary
income
Basic
salaries
Deferred
payment
included in
salary income
Benefits
in kind
RMB thousand
Pension
scheme
contributions
–
525.6
–
–
–
104.2
173.2
250.0
259.9
250.0
250.0
259.9
259.9
–
125.0
–
1,158.1
–
–
–
29.1
381.8
50.0
572.7
70.0
70.0
572.7
544.0
–
35.0
–
1,683.7
–
–
–
133.3
555.0
300.0
832.6
320.0
320.0
832.6
803.9
–
160.0
–
579.1
–
–
–
–
190.9
–
286.4
–
–
286.4
272.0
–
–
–
213.4
–
–
–
–
99.0
–
145.3
–
–
68.2
63.8
–
–
–
100.6
–
–
–
–
32.7
–
49.2
–
–
49.7
51.9
–
–
Deferred
payment
included
in total
Actual paid
included
in total
–
579.1
–
–
–
–
190.9
–
286.4
–
–
286.4
272.0
–
–
–
1,418.6
–
–
–
133.3
495.8
300.0
740.7
320.0
320.0
664.1
647.6
–
160.0
Total
–
1,997.7
–
–
–
133.3
686.7
300.0
1,027.1
320.0
320.0
950.5
919.6
–
160.0
Name
Yang Mingsheng
Lin Dairen
Miao Jianmin
Zhang Xiangxian
Wang Sidong
Bruce Douglas Moore
Su Hengxuan
Anthony Francis Neoh
Miao Ping
Chang Tso Tung Stephen
Huang Yiping
Xu Hengping
Xu Haifeng
Liu Jiade
Robinson Drake Pike
The compensation amounts disclosed above for these directors and the chief executive for the year ended 31
December 2015 were restated based on the finalised amounts determined during 2016.
The directors and chief executive received the compensation amounts disclosed above during their term of
office in 2016 and 2015.
In addition to the directors’ emoluments disclosed above, certain directors of the Company receive
emoluments from CLIC, the amounts of which have not been apportioned between their services to the
Company and their services to CLIC.
224
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
40 DIRECTORS’, SUPERvISORS’, CHIEF EXECUTIvE’S AND SENIOR MANAGEMENT’S
REMUNERATION (continued)
(b) Supervisors’ emoluments
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December
2016 are as follows:
Name
Miao Ping
Shi Xiangming
Xiong Junhong
Zhan Zhong
Wang Cuifei
Remuneration
paid
Benefits in kind
Pension scheme
contributions
RMB thousand
1,148.0
1,179.1
–
1,223.8
1,087.8
125.6
190.2
–
189.8
191.4
119.2
110.1
–
114.7
101.5
Total
1,392.8
1,479.4
–
1,528.3
1,380.7
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December
2015 are as follows:
Performance
related
bonuses
Subtotal of
salary
income
Basic
salaries
Deferred
payment
included in
salary income
Benefits
in kind
RMB thousand
Pension
scheme
contributions
303.2
641.2
359.0
359.0
–
259.9
333.4
307.7
634.7
655.0
335.5
395.9
–
572.7
371.4
264.6
937.9
1,296.2
694.5
754.9
–
832.6
704.8
572.3
317.4
–
–
–
–
286.4
–
–
155.9
245.6
163.9
161.0
–
68.4
87.7
88.7
57.6
96.5
54.3
53.8
–
51.6
49.8
47.8
Deferred
payment
included
in total
Actual paid
included
in total
317.4
–
–
–
–
286.4
–
–
834.0
1,638.3
912.7
969.7
–
666.2
842.3
708.8
Total
1,151.4
1,638.3
912.7
969.7
–
952.6
842.3
708.8
Name
Xia Zhihua
Shi Xiangming
Yang Cuilian
Li Xuejun
Xiong Junhong
Miao Ping
Zhan Zhong
Wang Cuifei
The compensation amounts disclosed above for these supervisors for the year ended 31 December 2015 were
restated based on the finalised amounts determined during 2016.
The supervisors received the compensation amounts disclosed above during their term of office in 2016 and
2015.
225
China Life Insurance Company Limited Annual Report 2016
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
40 DIRECTORS’, SUPERvISORS’, CHIEF EXECUTIvE’S AND SENIOR MANAGEMENT’S
REMUNERATION (continued)
(c) Five highest paid individuals
For the year ended 31 December 2016, the five individuals whose emoluments were the highest in the
Company include one director and four supervisors (2015: two directors and one supervisor).
Details of the remuneration of the five highest paid individuals are as follows:
Basic salaries, housing allowances, other allowances and benefits in kind
Pension scheme contributions
Total
The emoluments fell within the following bands:
RMB0 – RMB1,000,000
RMB1,000,001 – RMB2,000,000
RMB2,000,001 – RMB3,000,000
RMB3,000,001 – RMB4,000,000
RMB4,000,001 – RMB4,500,000
For the year ended 31 December
2015
RMB thousand
2016
RMB thousand
6,861
565
7,426
9,393
502
9,895
Number of individuals
For the year ended 31 December
2015
2016
–
5
–
–
–
–
5
–
–
–
For the year ended 31 December 2016, no emoluments have been paid by the Company to the directors,
chief executive, supervisors or any of the five highest paid individuals as an inducement to join or upon
joining the Company or as compensation for loss of office (2015: Nil).
The emoluments of the five highest paid individuals are the total emoluments paid to them during the year.
There was no arrangement under which a director, chief executive or supervisor waived or agreed to waive
any remuneration during the year.
226
China Life Insurance Company Limited Annual Report 2016
Embedded value
BACKGROUND
China Life Insurance Company Limited prepares financial statements to public investors in accordance with the relevant
accounting standards. An alternative measure of the value and profitability of a life insurance company can be provided
by the embedded value method. Embedded value is an actuarially determined estimate of the economic value of the life
insurance business of an insurance company based on a particular set of assumptions about future experience, excluding
the economic value of future new business. In addition, the value of one year’s sales represents an actuarially determined
estimate of the economic value arising from new life insurance business issued in one year based on a particular set of
assumptions about future experience.
China Life Insurance Company Limited believes that reporting the Company’s embedded value and value of one
year’s sales provides useful information to investors in two respects. First, the value of the Company’s in-force business
represents the total amount of shareholders’ interest in distributable earnings, in present value terms, which can be
expected to emerge over time, in accordance with the assumptions used. Second, the value of one year’s sales provides
an indication of the value created for investors by new business activity based on the assumptions used and hence the
potential of the business. However, the information on embedded value and value of one year’s sales should not be
viewed as a substitute of financial measures under the relevant accounting basis. Investors should not make investment
decisions based solely on embedded value information and the value of one year’s sales.
It is important to note that actuarial standards with respect to the calculation of embedded value are still evolving. There
is still no universal standard which defines the form, calculation methodology or presentation format of the embedded
value of an insurance company. Hence, differences in definition, methodology, assumptions, accounting basis and
disclosures may cause inconsistency when comparing the results of different companies.
Also, the calculation of embedded value and value of one year’s sales involves substantial technical complexity and
estimates can vary materially as key assumptions are changed. Therefore, special care is advised when interpreting
embedded value results.
The values shown below do not consider the future financial impact of transactions between the Company and CLIC,
CLI, AMC, Pension Company, CLP&C, and etc.
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Embedded value
DEFINITIONS OF EMBEDDED vALUE AND vALUE OF ONE YEAR’S SALES
The embedded value of a life insurer is defined as the sum of the adjusted net worth and the value of in-force business
allowing for the cost of required capital.
“Adjusted net worth” is equal to the sum of:
•
•
Net assets, defined as assets less corresponding policy liabilities and other liabilities valued; and
Net-of-tax adjustments for relevant differences between the market value and the book value of assets, together
with relevant net-of-tax adjustments to certain liabilities.
The market value of assets can fluctuate significantly over time due to the impact of the prevailing market environment.
Hence the adjusted net worth can fluctuate significantly between valuation dates.
The “value of in-force business” and the “value of one year’s sales” are defined here as the discounted value of the
projected stream of future shareholders’ interest in distributable earnings for existing in-force business at the valuation
date and for one year’s sales in the 12 months immediately preceding the valuation date.
The value of in-force business and the value of one year’s sales have been determined using a traditional deterministic
discounted cash flow methodology. This methodology makes implicit allowance for the cost of investment guarantees
and policyholder options, asset/liability mismatch risk, credit risk, the risk of operating experience’s fluctuation and the
economic cost of capital through the use of a risk-adjusted discount rate.
PREPARATION AND REvIEW
The embedded value and the value of one year’s sales were prepared by China Life Insurance Company Limited
in accordance with the “CAA Standards of Actuarial Practice: Appraisal of Embedded Value” issued by the China
Association of Actuaries (“CAA”) in November 2016. Willis Towers Watson, an international firm of consultants,
performed a review of China Life’s embedded value. The review statement from Willis Towers Watson is contained in
the “Willis Towers Watson’s review opinion report on embedded value” section.
ASSUMPTIONS
Economic assumptions: The calculations are based upon assumed corporate tax rate of 25% for all years. The investment
returns are assumed to be grading from 4.6% to 5% by 0.2% every year (remaining level thereafter). 13% grading to
17% (remaining level thereafter) of the investment return is assumed to be exempt from income tax. These investment
return and tax exempt assumptions are based on the Company’s strategic asset mix and expected future returns. The risk-
adjusted discount rate used is 10%.
Other operating assumptions such as mortality, morbidity, lapses and expenses are based on the Company’s recent
operating experience and expected future outlook.
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Embedded value
SUMMARY OF RESULTS
The embedded value as at 31 December 2016 and the value of one year’s sales for the 12 months to 31 December 2016,
the corresponding results as at 31 December 2015 are shown below:
Table 1
Components of Embedded value and value of One Year’s Sales
ITEM
A
B
C
D
E
F
G
H
Adjusted Net Worth
Value of In-Force Business before Cost of Required Capital
Cost of Required Capital
Value of In-Force Business after Cost of Required Capital (B + C)
Embedded value (A + D)
Value of One Year’s Sales before Cost of Required Capital
Cost of Required Capital
value of One Year’s Sales after Cost of Required Capital (F + G)
Note: Numbers may not be additive due to rounding.
vALUE OF ONE YEAR’S SALES BY CHANNEL
The value of one year’s sales by channel is shown below:
Table 2
value of One Year’s Sales by Channel
Channel
Exclusive Individual Agent Channel
Group Insurance Channel
Bancassurance Channel
Total
Note: Numbers may not be additive due to rounding.
RMB million
31 December
2016
31 December
2015
349,528
332,317
(29,787)
302,530
652,057
53,952
(4,641)
49,311
268,729
335,500
(43,951)
291,549
560,277
35,684
(4,155)
31,528
RMB million
31 December
2016
31 December
2015
46,326
375
2,610
49,311
28,851
371
2,306
31,528
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China Life Insurance Company Limited Annual Report 2016
Embedded value
MOvEMENT ANALYSIS
The following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period:
Table 3
Analysis of Embedded value Movement in 2016
ITEM
Embedded Value at Start of Year
Expected Return on Embedded Value
Value of New Business in the Period
Operating Experience Variance
Investment Experience Variance
Methodology, Model and Assumption Changes
A
B
C
D
E
F
G Market Value and Other Adjustments
H
I
J
K
Exchange Gains or Losses
Shareholder Dividend Distribution and Capital Injection
Other
Embedded value as at 31 December 2016 (sum A through J)
RMB million
560,277
52,168
49,311
(1,792)
(31,029)
48,116
(13,973)
651
(12,257)
585
652,057
Notes: 1) Numbers may not be additive due to rounding.
2) Items B through J are explained below:
B
Reflects expected impact of covered business, and the expected return on investments supporting the 2016 opening net
C
D
E
F
worth.
Value of one year’s sales in 2016.
Reflects the difference between actual operating experience in 2016 (including mortality, morbidity, lapse, and
expenses etc.) and the assumptions.
Compares actual with expected investment returns during 2016.
Reflects the effect of change of appraisal methodology, model and assumption enhancements. The change of appraisal
methodology increased embedded value by RMB64,335 million. The enhancements of assumptions decreased
embedded value by RMB16,218 million.
G
Change in the market value adjustment from the beginning of year 2016 to 31 December 2016 and other related
adjustments.
H
I
J
Reflects the gains or losses due to changes in exchange rate.
Reflects dividends distributed to shareholders.
Other miscellaneous items.
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China Life Insurance Company Limited Annual Report 2016
Embedded value
SENSITIvITY RESULTS
Sensitivity testing was performed using a range of alternative assumptions. In each of the sensitivity tests, only the
assumption referred to was changed, with all other assumptions remaining unchanged. The results are summarized
below:
Table 4
Sensitivity Results
Base case scenario
1
2
3
4
5
6
7
Risk discount rate +50bps
Risk discount rate -50bps
Investment return +50bps
Investment return -50bps
10% increase in expenses
10% decrease in expenses
10% increase in mortality rate for non-annuity products
and 10% decrease in mortality rate for annuity products
10% decrease in mortality rate for non-annuity products
and 10% increase in mortality rate for annuity products
10% increase in lapse rates
10% decrease in lapse rates
10% increase in morbidity rates
10% decrease in morbidity rates
8
9
10
11
12
RMB million
value of In-Force
Business after Cost of
Required Capital
value of One Year’s
Sales after Cost of
Required Capital
302,530
289,475
316,555
353,748
251,560
298,764
306,295
300,225
304,829
301,530
303,441
298,350
306,744
49,311
47,069
51,712
57,745
40,898
46,623
51,998
48,696
49,926
48,340
50,251
48,385
50,238
Adjusted Net Worth
value of In-Force
Business after Cost of
Required Capital
value of One Year’s
Sales after Cost of
Required Capital
Restatement of 2015 results
355,613
269,939
31,912
Note: 2015 results are recalculated in accordance with the “CAA Standards of Actuarial Practice” and using the new assumptions
(including economic and operating assumptions).
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China Life Insurance Company Limited Annual Report 2016
Embedded value
WILLIS TOWERS WATSON’S REvIEW OPINION REPORT ON EMBEDDED vALUE
To The Directors of China Life Insurance Company Limited
China Life Insurance Company Limited (“China Life”) has prepared embedded value results for the financial year ended
31 December 2016 (“EV Results”). The disclosure of these EV Results, together with a description of the methodology
and assumptions that have been used, are shown in the Embedded Value section.
China Life has engaged Willis Towers Watson Management Consulting (Shenzhen) Co. Ltd. Beijing Branch (“Willis
Towers Watson”) to review its EV Results. This report is addressed solely to China Life in accordance with the terms
of our engagement letter, and sets out the scope of our work and our conclusions. To the fullest extent permitted by
applicable law, we do not accept or assume any responsibility, duty of care or liability to anyone other than China Life
for or in connection with our review work, the opinions we have formed, or for any statement set forth in this report.
Scope of work
Our scope of work covered:
•
•
•
a review of the methodology used to develop the embedded value and value of one year’s sales as at 31 December
2016, in accordance with the “CAA Standards of Actuarial Practice: Appraisal of Embedded Value” issued by the
China Association of Actuaries (“CAA”) in November 2016;
a review of the economic and operating assumptions used to develop the embedded value and value of one year’s
sales as at 31 December 2016;
a review of the results of China Life’s calculation of the EV Results.
In carrying out our review, we have relied on the accuracy of audited and unaudited data and information provided by
China Life.
Opinion
Based on the scope of work above, we have concluded that:
•
•
•
•
the embedded value methodology used by China Life is in accordance with the “CAA Standards of Actuarial
Practice: Appraisal of Embedded Value” issued by the CAA;
the economic assumptions used by China Life are internally consistent, have been set with regard to current
economic conditions, and have made allowance for the company’s current and expected future asset mix and
investment strategy;
the operating assumptions used by China Life have been set with appropriate regard to past, current and expected
future experience; and
the EV Results have been prepared, in all material respects, in accordance with the methodology and assumptions
set out in the Embedded Value section.
For and on behalf of Willis Towers Watson
Michael Freeman
Wesley Cui
23 March 2017
232
In case of any discrepancy between the Chinese version and the English version of
this report, the Chinese version shall prevail; in case of any discrepancy between
the printed version and the website version of this report, the website version shall
prevail.
The cover photo of the printed version of this report was photographed by
Mr. Han Chunhai, an employee of the Company.